Document:

<PAGE>   1

FLEXIBLE STANDARDIZED 401(k) PROFIT SHARING PLAN
ADOPTION AGREEMENT
================================================================================

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                        SECTION 1. EMPLOYER INFORMATION
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Name of Employer     Antigenics, LLC
                   -------------------------------------------------------------

Address     630 Fifth Avenue, Suite 2170
          ----------------------------------------------------------------------

City     New York                State     NY                Zip     10111
       ---------------------             ---------------           -------------

Telephone 212-332-4774  Employer's Federal Tax Identification Number  13-3769335
          ------------                                                ----------

<TABLE>
<S>                                 <C>                       <C>               <C>               <C>
Type of Business (Check only one)   [ ] Sole Proprietorship   [ ] Partnership   [ ] Corporation   [ ] Corporation

[X] Other (Specify)     Limited Liability Company
                      ----------------------------------------------------------
</TABLE>

[ ]      Check here if Related Employers may participate in this Plan and attach
         a Related Employer Participation Agreement for each Related Employer
         who will participate in this Plan.

Business Code
                  ----------------------------------------------

Name of Plan        Antigenics 401(k)
                  --------------------------------------------------------------

Name of Trust (if different from Plan name)
                                                --------------------------------

Plan Sequence Number   001   (Enter 001 if this is the first qualified plan the
                       ---    Employer has ever maintained, enter 002 if it is
                              the second, etc.)

<TABLE>
<S>                                                             <C>
Trust Identification Number (if applicable)                     Account Number (Optional)       41145
                                             --------------                                --------------
</TABLE>

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                           SECTION 2. EFFECTIVE DATES
COMPLETE PARTS A AND B
--------------------------------------------------------------------------------
PART A.   GENERAL EFFECTIVE DATES (Check and Complete Option 1 or 2):

          OPTION 1:  [X]  This is the initial adoption of a profit sharing plan
                          by the Employer.

                          The Effective Date of this Plan is 01-01-1997.

                          NOTE: The effective date is usually the first day of
                          the Plan Year in which this Adoption Agreement is
                          signed.

          OPTION 2:  [ ]  This is an amendment and restatement of an existing
                          profit sharing plan (a Prior Plan).

                          The Prior Plan was initially effective on
                          __________________ .

                          The Effective Date of this amendment and restatement
                          is __________________ .

                          NOTE: The effective date is usually the first day of
                          the Plan Year in which this Adoption Agreement is
                          signed.

PART B.   COMMENCEMENT OF ELECTIVE DEFERRALS:

          Elective Deferrals may commence on 06-12-1997.
                                             -----------

          NOTE: This date may be no earlier than the date this Adoption
          Agreement is signed because Elective Deferrals cannot be made
          retroactively.
--------------------------------------------------------------------------------
                        SECTION 3. RELEVANT TIME PERIODS
COMPLETE PARTS A THROUGH C
--------------------------------------------------------------------------------
PART A.   EMPLOYER'S FISCAL YEAR:

          The Employer's fiscal year ends (Specify month and date) 12-31
                                                                   -----

PART B.   PLAN YEAR MEANS:

<PAGE>   2

          OPTION 1: [ ]  The 12-consecutive month period which coincides with
                         the Employers fiscal year.

          OPTION 2: [X]  The calendar year.

          OPTION 3: [ ]  Other 12-consecutive month period (Specify)
                                                                    ------------

          NOTE: If no option is selected, Option 1 will be deemed to be
          selected.

          If the initial Plan Year is less than 12 months (a short Plan Year)
          specify such Plan Year's beginning and ending dates.
          ___________________________________________________________________

PART C.   LIMITATION YEAR MEANS:

          OPTION 1: [X]  The Plan Year.

          OPTION 2: [ ]  The calendar year.

          OPTION 3: [ ]  Other 12-consecutive month period (Specify)
                                                                    ------------

     NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                      SECTION 4. ELIGIBILITY REQUIREMENTS
COMPLETE PARTS A THROUGH F
--------------------------------------------------------------------------------
PART A.  YEARS OF ELIGIBILITY SERVICE REQUIREMENT:

         1.  ELECTIVE DEFERRALS.

             An Employee will be eligible to become a Contributing Participant
             in the Plan (and thus be eligible to make Elective Deferrals) and
             receive Matching Contributions (including Qualified Matching
             Contributions, if applicable) after completing 1 (enter 0, 1 or any
             fraction less than 1) Years of Eligibility Service.

         2.  EMPLOYER PROFIT SHARING CONTRIBUTIONS.

             An Employee will be eligible to become a Participant in the Plan
             for purposes of receiving an allocation of any Employer Profit
             Sharing Contribution made pursuant to Section 10 of the Adoption
             Agreement after completing 1 (enter 0, 1, 2 or any fraction less
             than 2) Years of Eligibility Service.

         NOTE: If more than 1 year is selected for Item 2, the immediate 100%
         vesting schedule of Section 12 will automatically apply for
         contributions described in such item. If either item is left blank, the
         Years of Eligibility Service required for such item will be deemed to
         be 0. If a fraction is selected, an Employee will not be required to
         complete any specified number of Hours of Service to receive credit for
         a fractional year. If a single Entry Date is selected in Section 4,
         Part F for an item, the Years of Eligibility Service required for such
         item cannot exceed 1 1/2 (1/2 for Elective Deferrals).

PART B.  AGE REQUIREMENT:

         1.  ELECTIVE DEFERRALS.

             An Employee will be eligible to become a Contributing Participant
             (and thus be eligible to make Elective Deferrals) and receive
             Matching Contributions (including Qualified Matching Contributions,
             if applicable) after attaining age 21 (no more than 21).

         2.  EMPLOYER PROFIT SHARING CONTRIBUTIONS.

             An Employee will be eligible to become a Participant in the Plan
             for purposes of receiving an allocation of any Employer Profit
             Sharing Contribution made pursuant to Section 10 of the Adoption
             Agreement after attaining age 21 (no more than 21).

         NOTE: If either of the above items in this Section 4, Part B is left
         blank, it will be deemed there is no age requirement for such item. If
         a single Entry Date is selected in Section 4, Part F for an item, no
         age requirement can exceed 20 1/2 for such item.

PART C.  EMPLOYEES EMPLOYED AS OF EFFECTIVE DATE:

                                       2
<PAGE>   3

         Will all Employees employed as of the Effective Date of this Plan who
         have not otherwise met the requirements of Part A or Part B above be
         considered to have met those requirements as of the Effective Date?
         [X] Yes [ ] No

         NOTE: If a box is not checked for any item in this Section 4, Part C,
         "No" will be deemed to be selected.

PART D.  EXCLUSION OF CERTAIN CLASSES OF EMPLOYEES:

         All Employees will be eligible to become Participants in the Plan
         except:
         a. [X]  Those Employees included in a unit of Employees covered by a
                 collective bargaining agreement between the Employer and
                 Employee representatives, if retirement benefits were the
                 subject of good faith bargaining and if two percent or less of
                 the Employees who are covered pursuant to that agreement are
                 professionals as defined in Section 1.410(b)-9 of the
                 regulations. For this purpose, the term "employee
                 representatives" does not include any organization more than
                 half of whose members are Employees who are owners, officers,
                 or executives of the Employer.

         b. [X]  Those Employees who are non-resident aliens (within the meaning
                 of Section 7701(b)(1)(B) of the Code) and who received no
                 earned income (within the meaning of Section 911(d)(2) of the
                 Code) from the Employer which constitutes income from sources
                 within the United States (within the meaning of Section
                 861(a)(3) of the Code).

PART E.  HOURS REQUIRED FOR ELIGIBILITY PURPOSES:

         1.       1000 Hours of Service (no more than 1,000) shall be required
                  to constitute a Year of Eligibility Service.

         2.       500 Hours of Service (no more than 500 but less than the
                  number of specified in Section 4, Part E, Item 1, above) must
                  be exceeded to avoid a Break in Eligibility Service.

         3.       For purposes of determining Years of Eligibility Service,
                  Employees shall be given credit for Hours of Service with the
                  following predecessor employer(s): (Complete if applicable)

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

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

PART F.  ENTRY DATES:

         The Entry Dates for participation shall be (Choose one):

         OPTION 1: [ ]  The first day of the Plan Year and the first day of the
                        seventh month of the Plan Year.

         OPTION 2: [X}  Other (Specify)   THE FIRST DAY OF EACH MONTH
                                        ----------------------------------------

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

         NOTE: If no option is selected, Option 1 will be deemed to be selected
         Option 2 can be selected for an item only if the eligibility
         requirements and Entry Dates are coordinated such that each Employee
         will become a Participant in the Plan no later than the earlier of: (1)
         the first day of the Plan Year beginning after the date the Employee
         satisfies the age and service requirements of Section 410(a) of the
         Code; or (2) 6 months after the date the Employee satisfies such
         requirements..
--------------------------------------------------------------------------------
                    SECTION 5. METHOD OF DETERMINING SERVICE
COMPLETE PART A OR B
--------------------------------------------------------------------------------
PART A.  HOURS OF SERVICE EQUIVALENCIES:

         Service will be determined on the basis of the method selected below.
         Only one method may be selected. The method selected will be applied to
         all Employees covered under the Plan. (Choose one):

         OPTION 1: [X]  On the basis of actual hours for which an Employee is
                        paid or entitled to payment.

         OPTION 2: [ ]  On the basis of days worked. An Employee will be
                        credited with 10 Hours of Service if under Section 1.24
                        of the Plan such Employee would be credited with at
                        least 1 Hour of Service during the day.

                                       3
<PAGE>   4

         OPTION 3: [ ]  On the basis of weeks worked. An Employee will be
                        credited with 45 Hours of Service if under Section 1.24
                        of the Plan such Employee would be credited with at
                        least 1 Hour of Service during the week.

         OPTION 4: [ ]  On the basis of months worked. An Employee will be
                        credited with 190 Hours of Service if under Section 1.24
                        of the Plan such Employee would be credited with at
                        least 1 Hour of Service during the month.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
         This Section 5, Part A will not apply if the Elapsed Time Method of
         Section 5, Part B is selected.

PART B.  ELAPSED TIME METHOD:

         In lieu of tracking Hours of Service of Employees, will the elapsed
         time method described in Section 2.07 of the Plan be used? (Choose
         one):

         OPTION 1: [ ]  No.

         OPTION 2: [ ]  Yes.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                         SECTION 6. ELECTIVE DEFERRALS
--------------------------------------------------------------------------------
PART A.  AUTHORIZATION OF ELECTIVE DEFERRALS:

         Will Elective Deferrals be permitted under this Plan? (Choose one):

         OPTION 1: [X]  Yes.

         OPTION 2: [ ]  No.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
         Complete the remainder of Section 6 only if Option 1 is selected.

PART B.  LIMITS ON ELECTIVE DEFERRALS:

         If Elective Deferrals are permitted under the Plan, a contributing
         Participant may elect under a salary reduction agreement to have his or
         her Compensation reduced by an amount as described below (Choose one):

         OPTION 1: [X]  An amount equal to a percentage of the Contributing
                        Participant's Compensation from 1% to 15% in increments
                        of 1%.

         OPTION 2: [ ]  An amount of the Contributing Participant's Compensation
                        not less than ______ and not more than ______.

         The amount of such reduction shall be contributed to the Plan by the
         Employer on behalf of the Contributing Participant. For any taxable
         year, a Contributing Participant's Elective Deferrals shall not exceed
         the limit contained in Section 402(g) of the Code in effect at the
         beginning of such taxable year.

PART C.  ELECTIVE DEFERRALS BASED ON BONUSES:

         Instead of or in addition to making Elective Deferrals through payroll
         deduction, may a Contributing Participant elect to contribute to the
         Plan, as an Elective Deferral, part or all of a bonus rather than
         receive such bonus in cash? (Choose one):

         OPTION 1: [ ]  Yes.

         OPTION 2: [X]  No.

         NOTE: If no option is selected, Option 2 will be deemed to be selected.

PART D.  RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS:

         A Participant who ceases Elective Deferrals by revoking a salary
         reduction agreement may return as a Contributing Participant as of such
         times established by the Plan Administrator in a uniform and
         nondiscriminatory manner.

                                       4
<PAGE>   5

PART E.  CHANGING ELECTIVE DEFERRALS AMOUNTS:

         A Contributing Participant may modify a salary reduction agreement to
         prospectively increase or decrease the amount of his or her Elective
         Deferrals as of such times established by the Plan Administrator in a
         uniform and nondiscriminatory manner.

PART F.  CLAIMING EXCESS ELECTIVE DEFERRALS:

         Participants who claim Excess Elective Deferrals for the preceding
         calendar year must submit their claims in writing to the Plan
         Administrator by (Choose one):

         OPTION 1: [X]  March 1.

         OPTION 2: [ ]  Other (Specify a date not later than April 15)______

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

--------------------------------------------------------------------------------
                       SECTION 7. MATCHING CONTRIBUTIONS
--------------------------------------------------------------------------------
PART A.  AUTHORIZATION OF MATCHING CONTRIBUTIONS:

         Will the Employer make Matching Contributions to the Plan on behalf of
         Qualifying Contributing Participants? (Choose one):

         OPTION 1: [X]  Yes, but only with respect to a Contributing
                        Participant's Elective Deferrals.

         OPTION 2: [ ]  Yes, but only with respect to a Participant's
                        Nondeductible Employee Contributions.

         OPTION 3: [ ]  Yes, with respect to both Elective Deferrals and
                        Nondeductible Employee Contributions.

         OPTION 4: [ ]  No.

         NOTE: If no option is selected, Option 4 will be deemed to be selected.
         Complete the remainder of Section 7 only if Option 1, 2 or 3 is
         selected.

PART B.  MATCHING CONTRIBUTION FORMULA:

         If the Employer will make Matching Contributions, then the amount of
         such Matching Contributions made on behalf of a Qualifying Contributing
         Participant each Plan Year shall be (Choose one):

         OPTION 1: [X]  An amount equal to 100% of such Contributing
                        Participant's Elective Deferral (and/or Nondeductible
                        Employee Contribution, if applicable).

         OPTION 2: [ ]  An amount equal to the sum of _____% of the portion of
                        such Contributing Participant's Elective Deferral
                        (and/or Nondeductible Employee Contribution, if
                        applicable) which does not exceed _____% of the
                        Contributing Participant's Compensation plus _____% of
                        the portion of such Contributing Participant's Elective
                        Deferral (and/or Nondeductible Employee Contribution, if
                        applicable) which exceeds _____% of the Contributing
                        Participant's Compensation.

         OPTION 3: [ ]  Such amount, if any, equal to that percentage of each
                        Contributing Participant's Elective Deferral (and/or
                        Nondeductible Employee Contribution, if applicable)
                        which the Employer, in its sole discretion, determines
                        from year to year.

         OPTION 4: [ ]  Other Formula. (Specify)
                                                 -------------------------------

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

         NOTE: If Option 4 is selected, the formula specified can only allow
         Matching Contributions to be made with respect to a Contributing
         Participant's Elective Deferrals (and/or Nondeductible Employee
         Contribution, if applicable).

PART C.  LIMIT ON MATCHING CONTRIBUTIONS:

                                       5
<PAGE>   6

         Notwithstanding the Matching Contribution formula specified above, no
         Matching Contribution will be made with respect to a Contributing
         Participant's Elective Deferrals (and/or Nondeductible Employee
         Contributions, if applicable) in excess of ________ or _____% of such
         Contributing Participant's Compensation.

PART D.  QUALIFYING CONTRIBUTING PARTICIPANTS:

         A Contributing Participant who satisfies the eligibility requirements
         described in Section 4 will be a Qualifying Contributing Participant
         and thus entitled to share in Matching Contribution for any Plan Year
         only in the Participant is a Contributing Participant and satisfies the
         following additional conditions (Check one or more Options):

         OPTION 1: [ ]  No Additional Conditions.

         OPTION 2: [X]  Hours of Service Requirement. The Contributing
                        Participant completes at least 500 (not more than 500)
                        Hours of Service during the Plan Year. However, this
                        condition will be waived for the following reasons
                        (Check at least one):

                        [X]  The Contributing Participant's Death.

                        [X]  The Contributing Participant's Termination of
                             Employment after having incurred a Disability.

                        [X]  The Contributing Participant's Termination of
                             Employment after having reached Normal Retirement
                             Age.

                        [ ]  This condition will not be waived.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                 SECTION 8. QUALIFIED NONELECTIVE CONTRIBUTIONS
--------------------------------------------------------------------------------
PART A.  AUTHORIZATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:

         Will the Employer make Qualified Nonelective Contributions to the Plan?
         (Choose one):

         OPTION 1: [ ]  Yes.

         OPTION 2: [X]  No.

         If the Employer elects to make Qualified Nonelective Contributions,
         then the amount, if any, of such contribution to the Plan for each Plan
         Year shall be an amount determined by the Employer.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
         Complete the remainder of Section 8 only if Option 1 is selected.

PART B.  PARTICIPANTS ENTITLED TO QUALIFIED NONELECTIVE CONTRIBUTIONS:

         Allocation of Qualified Nonelective Contributions shall be made to the
         Individual Accounts of (Choose one):

         OPTION 1: [ ]  Only Participants who are not Highly Compensated
                        Employees.

         OPTION 2: [ ]  All Participants.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART C.  ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:

         Allocation of Qualified Nonelective Contributions to Participants
         entitled thereto shall be made (Choose one):

         OPTION 1: [ ]  In the ratio which each Participant's Compensation for
                        the Plan Year bears to the total Compensation of all
                        Participants for such Plan Year.

         OPTION 2: [ ]  In the ratio which each Participant's Compensation not
                        in excess of ______ for the Plan Year bears to the total
                        Compensation of all Participants not in excess of ______
                        for such Plan Year.

                                       6
<PAGE>   7

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                  SECTION 9. QUALIFIED MATCHING CONTRIBUTIONS
--------------------------------------------------------------------------------
PART A.  AUTHORIZATION OF QUALIFIED MATCHING CONTRIBUTIONS:

         Will the Employer make Qualified Matching Contributions to the Plan on
         behalf of Qualifying Contributing Participants? (Choose one):

         OPTION 1: [ ]  Yes, but only with respect to a Contributing
                        Participant's Elective Deferrals.

         OPTION 2: [ ]  Yes, but only with respect to a Participant's
                        Nondeductible Employee Contributions.

         OPTION 3: [ ]  Yes, with respect to both Elective Deferrals and
                        Nondeductible Employee Contributions.

         OPTION 4: [X]  No.

         NOTE: If no option is selected, Option 3 will be deemed to be selected.
         Complete the remainder of Section 9 only if Option 1, 2 or 3 is
         selected.

PART B.  QUALIFIED MATCHING CONTRIBUTION FORMULA:

         If the Employer will make Qualified Matching Contributions, then the
         amount of such Qualified Matching Contributions made on behalf of a
         Qualifying Contributing Participant each Plan Year shall be (Choose
         one):

         OPTION 1: [ ]  An amount equal to ______% of such Contributing
                        Participant's Elective Deferral (and/or Nondeductible
                        Employee Contribution, if applicable).

         OPTION 2: [ ]  An amount equal to the sum of _______% of the portion of
                        such Contributing Participant's Elective Deferral
                        (and/or Nondeductible Employee Contribution, if
                        applicable) which does not exceed ________% of the
                        Contributing Participant's Compensation plus ________%
                        of the portion of such Contributing Participant's
                        Elective  Deferral (and/or Nondeductible Employee
                        Contribution, if applicable) which exceeds ________% of
                        the Contributing Participant's Compensation.

         OPTION 3: [ ]  Such amount, if any, as determined by the Employer in
                        its sole discretion, equal to that percentage of the
                        Elective Deferrals (and/or Nondeductible Employee
                        Contribution, if applicable) of each Contributing
                        Participant entitled thereto which would be sufficient
                        to cause the Plan to satisfy the Actual Contribution
                        Percentage tests (described in Section 11.402 of the
                        Plan) for the Plan Year.

         OPTION 4: [ ]  Other Formula. (Specify)
                                                --------------------------------

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

         NOTE: If no option is selected, Option 3 will be deemed to be selected.

PART C.  PARTICIPANTS ENTITLED TO QUALIFIED MATCHING CONTRIBUTIONS:

         Qualified Matching Contributions, if made to the Plan, will be made on
         behalf of (Choose one):

         OPTION 1: [ ]  Only Contributing Participants who make Elective
                        Deferrals who are not Highly Compensated Employees.

         OPTION 2: [ ]  All Contributing Participants who make Elective
                        Deferrals.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART D.  LIMIT ON QUALIFIED MATCHING CONTRIBUTIONS:

         Notwithstanding the Qualified Matching Contribution formula specified
         above, the Employer will not match a Contributing Participant's
         Elective Deferrals (and/or Nondeductible Employee Contribution, if
         applicable) in excess of ________ or _____% of such Contributing
         Participant's Compensation.

                                       7
<PAGE>   8

--------------------------------------------------------------------------------
               SECTION 10. EMPLOYER PROFIT SHARING CONTRIBUTIONS
COMPLETE PARTS A, B AND C
--------------------------------------------------------------------------------
PART A.  CONTRIBUTION FORMULA:

         For each Plan Year the Employer will contribute an Amount to be
         determined from year to year.

PART B.  ALLOCATION FORMULA:  (Choose one)

         OPTION 1: [ ]  Pro Rata Formula. Employer Profit Sharing Contributions
                        shall be allocated to the Individual Accounts of
                        Qualifying Participants in the ratio that each
                        Qualifying Participant's Compensation for the Plan Year
                        bears to the total Compensation of all Qualifying
                        Participants for the Plan Year.

         OPTION 2: [X]  Integrated Formula.  Employer Profit Sharing
                        Contributions shall be allocated as follows (Start with
                        Step 3 if this Plan is not a Top-Heavy Plan):

                        Step 1.  Employer Profit Sharing Contributions shall
                                 first be allocated pro rata to Qualifying
                                 Participants in the manner described in Section
                                 10, Part B, Option 1. The percent so allocated
                                 shall not exceed 3% of each Qualifying
                                 Participant's Compensation.

                        Step 2.  Any Employer Profit Sharing Contributions
                                 remaining after the allocation in Step 1 shall
                                 be allocated to each Qualifying Participant's
                                 Individual Account in the ratio that each
                                 Qualifying Participant's Compensation for the
                                 Plan Year in Excess of the integration level
                                 bears to all Qualifying Participants'
                                 Compensation in excess of the integration
                                 level, but not in excess of 3%.

                        Step 3.  Any Employer Profit Sharing Contributions
                                 remaining after the allocation in Step 2 shall
                                 be allocated to each Qualifying Participant's
                                 Individual Account in the ratio that the sum of
                                 each Qualifying Participant's total
                                 Compensation and Compensation in excess of the
                                 integration level bears to the sum of all
                                 Qualifying Participants' total Compensation and
                                 Compensation in excess of the integration
                                 level, but not in excess of the profit sharing
                                 maximum disparity rate as described in Section
                                 3.01(B)(3) of the Plan.

                        Step 4.  Any Employer Profit Sharing Contributions
                                 remaining after the allocation in Step 3 shall
                                 be allocated pro rata to Qualifying
                                 Participants in the manner described in Section
                                 10, Part B, Option 1.

                        The integration level shall be (Choose one):

                        SUBOPTION (a): [X]  The Taxable Wage Base.

                        SUBOPTION (b): [ ]  _________ (a dollar amount less than
                                            the Taxable Wage Base).

                        SUBOPTION (c): [ ]  _____% (not more than 100%) of the
                                            Taxable Wage Base.

                        NOTE:    If no option is selected, Suboption (a) will be
                                 deemed to be selected.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART C.  QUALIFYING PARTICIPANTS:

         A Participant will be a Qualifying Participant and thus entitled to
         share in the Employer Profit Sharing Contribution for any Plan Year
         only if the Participant is a Participant on at least one day of such
         Plan Year and satisfies the following additional conditions (Check one
         or more Options):

         OPTION 1: [ ]  No Additional Conditions.

                                       8
<PAGE>   9

         OPTION 2: [X]  Hours of Service Requirement. The Participant completes
                        at least 500 (not more than 500) Hours of Service during
                        the Plan Year. However, this condition will be waived
                        for the following reasons (Check at least one):

                        [X]  The Participant's Death.

                        [X]  The Participant's Termination of Employment after
                             having incurred a Disability.

                        [X]  The Participant's Termination of Employment after
                             having reached Normal Retirement Age.

                        [ ]  This condition will not bewaived.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                            SECTION 11. COMPENSATION
COMPLETE PARTS A THROUGH D
--------------------------------------------------------------------------------
PART A.  BASIC DEFINITION:

         Compensation will mean all of each Participant's (Choose one):

         OPTION 1: [X]  W-2 wages.

         OPTION 2: [ ]  Section 3401(a) wages.

         OPTION 3: [ ]  415 safe-harbor compensation.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART B.  MEASURING PERIOD FOR COMPENSATION:

         Compensation shall be determined over the following applicable period
         (Choose one):

         OPTION 1: [ ]  The Plan Year.

         OPTION 2: [X]  The calendar year ending with or within the Plan Year.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART C.  INCLUSION OF ELECTIVE DEFERRALS:

         Does Compensation include Employer Contributions made pursuant to a
         salary reduction agreement which are not includible in the gross income
         of the Employee under Section 125, 402(e)(3), 402(h)(1)(B), and 403(b)
         of the Code?   [X]  Yes     [ ]  No

         NOTE: If neither box is checked, "Yes" will be deemed to be selected.

PART D.  PRE-ENTRY DATE COMPENSATION:

         For the Plan Year in which an Employee enters the Plan, the Employee's
         Compensation which shall be taken into account for purposes of the Plan
         shall be (Choose one):

         OPTION 1: [ ]  The Employee's Compensation only from the time the
                        Employee became a Participant in the Plan.

         OPTION 2: [X]  The Employee's Compensation for the whole of such Plan
                        Year.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                      SECTION 12. VESTING AND FORFEITURES
COMPLETE PARTS A THROUGH G
--------------------------------------------------------------------------------
PART A.  VESTING SCHEDULE FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS. A
         Participant shall become Vested in his or her Individual Account
         derived from Profit Sharing Contributions made pursuant to Section 10
         of the Adoption Agreement as follows (Choose one):
================================================================================

                                       9
<PAGE>   10

<TABLE>
<CAPTION>
                                                             VESTED PERCENTAGE
   YEARS OF
VESTING SERVICE     Option 1 [ ]    Option 2 [ ]    Option 3 [ ]    Option 4 [ ]    Option 5 [X]    (Complete if Chosen)
------------------------------------------------------------------------------------------------------------------------

<S>                     <C>             <C>             <C>             <C>          <C>            <C>
       1                 0%               0%            100%              0%              0%
                                                                                     -----------

       2                 0%              20%            100%              0%             25%
                                                                                     -----------

       3                 0%              40%            100%             20%             50%        (not less than 20%)
                                                                                     -----------

       4                 0%              60%            100%             40%             75%        (not less than 40%)
                                                                                     -----------

       5                100%             80%            100%             60%            100%        (not less than 60%)
                                                                                     -----------

       6                100%            100%            100%             80%            100%        (not less than 80%)
                                                                                     -----------

       7                100%            100%            100%            100%            100%        (not less than 100%)
                                                                                     -----------
</TABLE>

NOTE:  If no option is selected, Option 3 will be deemed to be selected.
================================================================================
PART B.  VESTING SCHEDULE FOR MATCHING CONTRIBUTIONS. A Participant shall become
         Vested in his or her Individual Account derived from Matching
         Contributions made pursuant to Section 7 of the Adoption Agreement as
         follows (Choose one):
================================================================================

<TABLE>
<CAPTION>
                                                             VESTED PERCENTAGE
   YEARS OF
VESTING SERVICE     Option 1 [ ]    Option 2 [ ]    Option 3 [ ]    Option 4 [ ]    Option 5 [X]    (Complete if Chosen)
------------------------------------------------------------------------------------------------------------------------

<S>                      <C>             <C>             <C>            <C>          <C>             <C>
       1                  0%               0%            100%             0%              0%
                                                                                     -----------

       2                  0%              20%            100%             0%             25%
                                                                                     -----------

       3                  0%              40%            100%            20%             50%         (not less than 20%)
                                                                                     -----------

       4                  0%              60%            100%            40%             75%         (not less than 40%)
                                                                                     -----------

       5                 100%             80%            100%            60%            100%         (not less than 60%)
                                                                                     -----------

       6                 100%            100%            100%            80%            100%         (not less than 80%)
                                                                                     -----------

       7                 100%            100%            100%           100%            100%         (not less than 100%)
                                                                                     -----------
</TABLE>

NOTE:  If no option is selected, Option 3 will be deemed to be selected.
================================================================================
PART C.  HOURS REQUIRED FOR VESTING PURPOSES:

         1.       1000 Hours of Service (no more than 1,000) shall be required
                  to constitute a Year of Vesting Service.

         2.       500 Hours of Service (no more than 500 but less than the
                  number of specified in Section 12, Part C, Item 1, above) must
                  be exceeded to avoid a Break in Vesting Service.

         3.       For purposes of determining Years of Vesting Service,
                  Employees shall be given credit for Hours of Service with the
                  following predecessor employer(s): (Complete if applicable)

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

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

PART D.  EXCLUSION OF CERTAIN YEARS OF VESTING SERVICE:

         All of an Employee's Years of Vesting Service with the Employer are
         counted to determine the vesting percentage in the Participant's
         Individual Account except (Check any that apply):

         [ ]  Years of Vesting Service before the Employee reaches age 18.

         [ ]  Years of Vesting Service before the Employer maintained this Plan
              or a predecessor plan.

PART E.  ALLOCATION OF FORFEITURES OF EMPLOYER PROFIT SHARING CONTRIBUTIONS:

         Forfeitures of Employer Profit Sharing Contributions shall be
         (Choose one):

                                       10
<PAGE>   11

         OPTION 1: [ ]  Allocated to the Individual Accounts of the Participants
                        specified below in the manner as described in Section
                        10, Part B (for Employer Profit sharing Contributions).

                        The Participants entitled to receive allocations of such
                        Forfeitures shall be (Choose one):

                        SUBOPTION (a): [ ]  Only Qualifying Participants.

                        SUBOPTION (b): [ ]  All Participants.

         OPTION 2: [X]  Applied to reduce Employer Profit Sharing Contributions
                        (Choose one):

                        SUBOPTION (a): [X]  For the Plan Year for which the
                                            Forfeiture arises.

                        SUBOPTION (b): [ ]  For any Plan Year subsequent to the
                                            Plan Year for which the Forfeiture
                                            arises.

         OPTION 3: [ ]  Applied first to the payment of the Plan's
                        administrative expenses and any excess applied to reduce
                        Employer Profit Sharing Contributions (Choose one):

                        SUBOPTION (a): [ ]  For the Plan Year for which the
                                            Forfeiture arises.

                        SUBOPTION (b): [ ]  For any Plan Year subsequent to the
                                            Plan Year for which the Forfeiture
                                            arises.

         NOTE: If no option is selected, Option 1 and Suboption (a) will be
         deemed to be selected.

PART F.  ALLOCATION OF FORFEITURES OF MATCHING CONTRIBUTIONS:

         Forfeitures of Matching Contributions shall be (Choose one):

         OPTION 1: [ ]  Allocated, after all other Forfeitures under the Plan,
                        to each Participant's Individual Account in the ratio
                        which each Participant's Compensation for the Plan Year
                        bears to the total Compensation of all Participants for
                        such Plan Year.

                        The Participants entitled to receive allocations of such
                        Forfeitures shall be (Choose one):

                        SUBOPTION (a): [ ]  Only Qualifying Contributing
                                            Participants.

                        SUBOPTION (b): [ ]  Only Qualifying Participants.

                        SUBOPTION (c): [ ]  All Participants.

         OPTION 2: [X]  Applied to reduce Matching Contributions (Choose one):

                        SUBOPTION (a): [X]  For the Plan Year for which the
                                            Forfeiture arises.

                        SUBOPTION (b): [ ]  For any Plan Year subsequent to the
                                            Plan Year for which the Forfeiture
                                            arises.

         OPTION 3: [ ]  Applied first to the payment of the Plan's
                        administrative expenses and any excess applied to reduce
                        Matching Contributions (Choose one):

                        SUBOPTION (a): [ ]  For the Plan Year for which the
                                            Forfeiture arises.

                        SUBOPTION (b): [ ]  For any Plan Year subsequent to the
                                            Plan Year for which the Forfeiture
                                            arises.

         NOTE: If no option is selected, Option 1 and Suboption (a) will be
         deemed to be selected.

PART G.  ALLOCATION OF FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS:

         Forfeitures of Excess Aggregate Contributions shall be (Choose one):

                                       11
<PAGE>   12

         OPTION 1: [ ]  Allocated, after all other Forfeitures under the Plan,
                        to each Contributing Participant's Matching Contribution
                        account in the ratio which each Contributing
                        Participant's Compensation for the Plan Year bears to
                        the total Compensation of all Contributing Participants
                        for such Plan Year. Such Forfeitures will not be
                        allocated to the account of any Highly Compensated
                        Employee.

         OPTION 2: [X]  Applied to reduce Matching Contributions (Choose one):

                        SUBOPTION (a): [X]  For the Plan Year for which the
                                            Forfeiture arises.

                        SUBOPTION (b): [ ]  For any Plan Year subsequent to the
                                            Plan Year for which the Forfeiture
                                            arises.

         OPTION 3: [ ]  Applied first to the payment of the Plan's
                        administrative expenses and any excess applied to reduce
                        Matching Contributions (Choose one):

                        SUBOPTION (a):  For the Plan Year for which the
                                        Forfeiture arises.

                        SUBOPTION (b):  For any Plan Year subsequent to the Plan
                                        Year for which the Forfeiture arises.

         NOTE: If no option is selected, Option 2 and Suboption (a) will be
         deemed to be selected.
--------------------------------------------------------------------------------
           SECTION 13. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE
--------------------------------------------------------------------------------
PART A.  THE NORMAL RETIREMENT AGE UNDER THE PLAN SHALL BE (Check and complete
         one option):

         OPTION 1: [X]  Age 65.

         OPTION 2: [ ]  Age ________ (not to exceed 65).

         OPTION 3: [ ]  The later of age _______ (not to exceed 65) or the ____
                        (not to exceed 5th) anniversary of the first day of the
                        first Plan Year in which the Participant commenced
                        participation in the Plan.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART B.  EARLY RETIREMENT AGE (Choose one option):

         OPTION 1: [X]  An Early Retirement Age is not applicable under the
                        Plan.

         OPTION 2: [ ]  Age ________ (not less than 55 nor more than 65).

         OPTION 3: [ ]  A Participant satisfies the Plan's Early Retirement Age
                        conditions by attaining age _______ (not less than 55)
                        and completing _____ Years of Vesting Service.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                           SECTION 14. DISTRIBUTIONS
--------------------------------------------------------------------------------

DISTRIBUTABLE EVENTS.  ANSWER EACH OF THE FOLLOWING ITEMS.

A.   Termination of Employment Before Normal Retirement Age. May a Participant
     who has not reached Normal Retirement Age request a distribution from the
     Plan upon Termination of Employment?   [X]  Yes   [ ]  No

B.   Disability. May a Participant who has incurred a Disability request a
     distribution from the Plan?   [X]  Yes   [ ]  No

C.   Attainment of Normal Retirement Age. May a Participant who has attained
     Normal Retirement Age but has not incurred a Termination of Employment
     request a distribution from the Plan?   [X]  Yes   [ ]  No

D.   Attainment of Age 59 1/2. Will Participants who have attained age 59 1/2 be
     permitted to withdraw Elective Deferrals while still employed by the
     Employer?   [ ]  Yes   [X]  No

                                       12
<PAGE>   13

E.   Hardship Withdrawals of elective Deferrals. will Participants be permitted
     to withdraw Elective Deferrals on account of hardship pursuant to Section
     11.503 of the Plan?   [X]  Yes   [ ]  No

F.   In-Service Withdrawals. Will Participants be permitted to request a
     distribution during service pursuant to Section 6.01(A)(3) of the Plan?
     [ ]  Yes   [X]  No

G.   Hardship Withdrawals. Will Participants be permitted to make hardship
     withdrawals pursuant to Section 6.01(A)(4) of the Plan?  [ ]  Yes   [X]  No

H.   Withdrawals of Rollover or Transfer Contributions. Will Employees be
     permitted to withdraw their Rollover or Transfer Contributions at any time?
     [X]  Yes   [ ]  No

NOTE: If a box is not checked for an item, "Yes" will be deemed to be selected
for that item. Section 411(d)(6) of the Code prohibits the elimination of
protected benefits. In general, protected benefits include the forms and timing
of payout options. If the Plan is being adopted to amend and replace a Prior
Plan that permitted a distribution option described above, you must answer "Yes"
to that item.
--------------------------------------------------------------------------------
                     SECTION 15. JOINT AND SURVIVOR ANNUITY
--------------------------------------------------------------------------------
PART A.  RETIREMENT EQUITY ACT SAFE HARBOR:

         OPTION 1: [ ]  Yes.

         OPTION 2: [X]  No.

         NOTE: You must select "No" if you are adopting this Plan as an
         amendment and restatement of a Prior Plan that was subject to the joint
         and survivor annuity requirements.

PART B.  SURVIVOR ANNUITY PERCENTAGE:  (Complete only if your answer in Section
                                       15, Part A is "No")

         The survivor annuity portion of the Joint and Survivor Annuity shall be
         a percentage equal to 50% (at least 50% but no more than 100%) of the
         amount paid to the Participant prior to his or her death.

--------------------------------------------------------------------------------
                            SECTION 16. OTHER OPTIONS
ANSWER "YES" OR "NO" TO EACH OF THE FOLLOWING QUESTIONS BY CHECKING THE
APPROPRIATE BOX. IF A BOX IS NOT CHECKED FOR A QUESTION, THE ANSWER WILL BE
DEEMED TO BE "NO.
--------------------------------------------------------------------------------

A.   Loans: Will loans to Participants pursuant to Section    [X] Yes  [ ] No
     6.08 of the Plan be permitted?

B.   Insurance: Will the Plan allow for the investment in     [X] Yes  [ ] No
     insurance policies pursuant to Section 5.13 of the
     Plan?

C.   Employer Securities: Will the Plan allow for the         [ ] Yes  [X] No
     investment in qualifying Employer securities or
     qualifying Employer real property?

D.   Rollover Contributions: Will Employees be permitted to   [X] Yes  [ ] No
     make rollover contributions to the Plan pursuant to
     Section 3.03 of the Plan?                                [ ] Yes, but only
                                                                  after becoming
                                                                  a Participant.

E.   Transfer Contributions: Will Employees be permitted to   [ ] Yes  [X] No
     make transfer contributions to the Plan pursuant to
     Section 3.04 of the Plan?                                [ ] Yes, but only
                                                                  after becoming
                                                                  a Participant.

F.   Nondeductible Employee Contributions: Will Employees be  [ ] Yes  [X] No
     permitted to make Nondeductible Employee Contributions
     pursuant to Section 11.305 of the Plan?

     Check here if such contributions will be mandatory.      [ ]

G.   Will Participants be permitted to direct the investment  [X] Yes  [ ] No
     of their Plan assets pursuant to Section 5.14 of the
     Plan?

                             13
<PAGE>   14

--------------------------------------------------------------------------------
                      SECTION 17. LIMITATION ON ALLOCATIONS
                               MORE THAN ONE PLAN.
--------------------------------------------------------------------------------

If you maintain or ever maintained another qualified plan (other than a paired
standardized money purchase pension plan using the same Basic Plan Document as
this Plan) in which any Participant in this Plan is (or was) a Participant or
could become a Participant, you must complete this section. You must also
complete this section if you maintain a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account, as defined in
Section 415(1)(2) of the Code, under which amounts are treated as annual
additions with respect to any Participant in this Plan.

PART C.  INDIVIDUALLY DESIGNED DEFINED CONTRIBUTION PLAN:

         If the Participant is covered under another qualified defined
         contribution plan maintained by the Employer, other than a master or
         prototype plan:

         1. [X]  The provisions of Section 3.05(B)(1) through 3.05(B)(6) of the
                 Plan will apply as if the other plan were a master or prototype
                 plan.

         2. [ ]  Other method. (Provide the method under which the plans will
                 limit total annual additions to the maximum permissible amount,
                 and will properly reduce any excess amounts, in a manner that
                 precludes Employer discretion.) _______________________________
                 _______________________________________________________________
                 _______________________________________________________________

PART D.  DEFINED BENEFIT PLAN:

         If the Participant is or has ever been a participant in a defined
         benefit plan maintained by the Employer, the Employer will provide
         below the language which will satisfy the 1.0 limitation of Section
         415(e) of the Code.

         1. [X]  If the projected annual addition to this Plan to the account of
                 a Participant for any limitation year would cause the 1.0
                 limitation of Section 415(e) of the Code to be exceeded, the
                 annual benefit of the defined benefit plan for such limitation
                 year shall be reduced so that the 1.0 limitation shall be
                 satisfied.

                 If it is not possible to reduce the annual benefit of the
                 defined benefit plan and the projected annual addition to this
                 Plan to the account of a Participant for a limitation year
                 would cause the 1.0 limitation to be exceeded, the Employer
                 shall reduce the Employer Contribution which is to be allocated
                 to this Plan on behalf of such Participant so that the 1.0
                 limitation will be satisfied. (The provisions of Section 415(e)
                 of the Code are incorporated herein by reference under the
                 authority of Section 1106(h) of the Tax Reform Act of 1986.)

         2. [ ]  Other method. (Provide language describing another method. Such
                 language must preclude Employer discretion.) __________________
                 _______________________________________________________________
                 _______________________________________________________________

--------------------------------------------------------------------------------
                          SECTION 18. TOP-HEAVY MINIMUM
                             COMPLETE PARTS A AND B
--------------------------------------------------------------------------------
PART E.  MINIMUM ALLOCATION OR BENEFIT:

         For any Plan Year with respect to which this Plan is a Top-Heavy Plan,
         any minimum allocation required pursuant to Section 3.01(E) of the Plan
         shall be made (Choose one):

         OPTION 1: [X]  To this Plan.

         OPTION 2: [ ]  To the following other plan maintained by the Employer
                        (Specify name and plan number of plan)

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

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

                                       14
<PAGE>   15

         OPTION 3: [ ]  In accordance with the method described on an attachment
                        to this Adoption Agreement. (Attach language describing
                        the method that will be used to satisfy Section 416 of
                        the Code. Such method must preclude Employer
                        discretion.)

         NOTE: If no option is selected, Option 1 will be deemed to be selected.

PART F.  TOP-HEAVY VESTING SCHEDULE:

         Pursuant to Section 6.01(C) of the Plan, the vesting schedule that will
         apply when this Plan is a Top-Heavy Plan (unless the Plan's regular
         vesting schedule provides for more rapid vesting) shall be (Choose
         one):

         OPTION 1: [X]  6 Year Graded.

         OPTION 2: [ ]  3 Year Cliff.

         NOTE: If no option is selected, Option 1 will be deemed to be selected.
--------------------------------------------------------------------------------
                          SECTION 19. PROTOTYPE SPONSOR
--------------------------------------------------------------------------------
Name of Prototype Sponsor   TRAVELERS INSURANCE COMPANY
                          ------------------------------------------------------

Address   ONE TOWER SQUARE, HARTFORD, CT  06183
        ------------------------------------------------------------------------

Telephone Number   888-822-4710
                 ---------------------------------------------------------------

PERMISSIBLE INVESTMENTS

The assets of the Plan shall be invested only in those investments described
below (To be completed by the Prototype Sponsor):

VARIABLE ANNUITY CONTRACT
--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------
                        SECTION 20. TRUSTEE OR CUSTODIAN
--------------------------------------------------------------------------------

OPTION A:  [X]  Financial Organization as Trustee or Custodian

CHECK ONE: [X]  Custodian,   [ ]  Trustee without full trust powers, or
           [ ]  Trustee with full trust powers

Financial Organization   SMITH BARNEY
                       ---------------------------------------------------------

Signature
          ----------------------------------------------------------------------

Type Name
          ----------------------------------------------------------------------

COLLECTIVE OR COMMINGLED FUNDS

List any collective or commingled funds maintained by the financial organization
Trustee in which assets of the Plan may be invested (Complete if applicable).

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

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

OPTION B: [X]  Individual Trustee(s)

Signature   /s/  Elma S. Hawkins        Signature
            -----------------------                 ----------------------------

Type Name   /s/  Elma S. Hawkins        Type Name
            -----------------------                 ----------------------------

Signature                               Signature
            -----------------------                 ----------------------------

Type Name                               Type Name
            -----------------------                 ----------------------------

--------------------------------------------------------------------------------
                              SECTION 21. RELIANCE
--------------------------------------------------------------------------------

                                       15
<PAGE>   16

An Employer who has ever maintained or who later adopts any plan (including a
welfare benefit fund, as defined in Section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate accounts for key
employees, as defined in Section A(d)(3) of the Code, or an individual medical
account, as defined in Section 415(1)(2) of the Code) in addition to this Plan
(other than a paired standardized money purchase pension plan using the same
Basic Plan Document as this Plan) may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as evidence that this Plan
is qualified under Section 401 of the Internal Revenue Code. If the Employer who
adopts or maintains multiple plans wishes to obtain reliance that his or her
plan(s) are qualified, application for a determination letter should be made to
the appropriate Key District Director of Internal Revenue.

The Employer may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is qualified under
Section 401 of the code unless the terms of the Plan, as herein adopted or
amended, that pertain to the requirements of Sections 401(a)(4), 401(a)(17),
401(1), 401(a)(5), 410(b) and 414(s) of the Code, as amended by the Tax Reform
Act of 1986, or later laws, (a) are made effective retroactively to the first
day of the first Plan Year beginning after December 31, 1988 (or such later date
on which these requirements first become effective with respect to this Plan);
or (b) are made effective no later than the first day on which the Employer is
no longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the Plan
constitute such an interpretation.

This Adoption Agreement may be used only in conjunction with Basic Plan Document
No. 04.
--------------------------------------------------------------------------------
                         SECTION 22. EMPLOYER SIGNATURE
                      IMPORTANT: PLEASE READ BEFORE SIGNING
--------------------------------------------------------------------------------

I am an authorized representative of the Employer named above and I state the
following:

1.   I acknowledge that I have relied upon my own advisors regarding the
     completion of this Adoption Agreement and the legal tax implications of
     adopting this Plan.

2.   I understand that my failure to properly complete this Adoption Agreement
     may result in disqualification of the Plan.

3.   I understand that the Prototype Sponsor will inform me of any amendments
     made to the Plan and will notify me should it discontinue or abandon the
     Plan.

4.   I have received a copy of this Adoption Agreement and the corresponding
     Basic Plan Document.

Signature for Employer   /s/  Elma S. Hawkins    Date Signed     8/13/97
                       ------------------------                -----------------

Type Name   Elma S Hawkins                       Title   Chief Operating Officer
          -------------------------------------        -------------------------

                                       16
<PAGE>   17

QUALIFIED RETIREMENT PLAN/403(b)
LOAN DISCLOSURE
================================================================================

As a participant in the qualified retirement plan/403(b) adopted by your
employer, you may be able to borrow a portion of your vested account balance.
The loan program adopted by your employer is available on a uniform basis to all
parties in interest to the plan who meet loan qualification requirements. For
additional information about the loan program available under your employer's
plan, contact the loan program administrator listed below.

NOTE: THIS LOAN DISCLOSURE CONSTITUTES PART OF THE SUMMARY PLAN DESCRIPTION
(SPD) OF YOUR QUALIFIED RETIREMENT PLAN AND SHOULD BE KEPT WITH YOUR OTHER SPD
DOCUMENTS.

--------------------------------------------------------------------------------
                              PLAN LOAN INFORMATION
--------------------------------------------------------------------------------
Plan Name                  Antigenics 401(k)
          ----------------------------------------------------------------------
Plan Number            001              Plan Year-End           12-31
            --------------------------                --------------------------

--------------------------------------------------------------------------------
                                 EFFECTIVE DATE
--------------------------------------------------------------------------------
The effective date of the plan loan program is      01-01-1997
                                               ---------------------------------

--------------------------------------------------------------------------------
                           LOAN PROGRAM ADMINISTRATOR
--------------------------------------------------------------------------------
The person responsible for administering your loan program is ELENA HAWKINS
Your loan program administrator may be reached at the following address and/or
telephone number:     212-332-4774
                  --------------------------------------------------------------

--------------------------------------------------------------------------------
                           LOAN APPLICATION PROCEDURE
--------------------------------------------------------------------------------
To apply for a loan under this plan, you must complete and return to the loan
program administrator a Loan Application Form, furnishing all information
requested and pay any required loan application processing fees. In addition,
you must follow the procedures described below. (specify)
                                                         -----------------------

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

--------------------------------------------------------------------------------
                          LIMITATIONS ON TYPES OF LOANS
--------------------------------------------------------------------------------
Loans from this plan may be used for the following purposes:

[X] all

[ ] purchase of your principal residence

[ ] post-secondary tuition for you or your immediate family

[ ] medical expenses for you or your immediate family

[ ] rent or mortgage payments to prevent eviction or foreclosure from your
    principal residence

[ ] other (specify)
                   -------------------------------------------------------------

--------------------------------------------------------------------------------
                             LOAN APPROVAL STANDARDS
--------------------------------------------------------------------------------

Decisions approving or denying loans from this Plan will be based on the
following criteria:

[X]  the value of your vested individual account balance

[ ]  other (specify)
                    ------------------------------------------------------------

<PAGE>   18

NOTE: LOAN APPROVAL BASIS SELECTED MUST NOT CAUSE LOANS TO BE MADE AVAILABLE ON
A DISCRIMINATORY BASIS.

--------------------------------------------------------------------------------
                           LOAN PRINCIPAL LIMITATIONS
--------------------------------------------------------------------------------
Loans from this plan shall be in a minimum amount of: $ 500.00 (may not exceed
$1,000.)
The maximum amount of all loans outstanding cannot exceed: [X] one-half of your
vested account balance or $50,000
[ ] other (specify)
                   -------------------------------------------------------------

NOTE: IF THE "OTHER" OPTION IS SELECTED, THE AMOUNT ENTERED CANNOT EXCEED THE
LESSER OF ONE-HALF THE VESTED BALANCE OR $50,000.

--------------------------------------------------------------------------------
                              INTEREST CALCULATION
--------------------------------------------------------------------------------
Interest on loans from this plan will be computed on the following basis:

[ ]  prime rate (as specified in the Wall Street Journal)
                                                         -----------------------

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

[ ]  prime rate (as specified in the Wall Street Journal)                   plus
                                                         -------------------
percent
       -------------------------------------------------------------------------

[X]  other (specify)   the prime rate as of the first day of each month plus two
                     -----------------------------------------------------------
                       percent
                     -----------------------------------------------------------

NOTE: THE INTEREST RATE MUST BE COMPARABLE TO THAT CHARGED BY COMMERCIAL LENDERS
IN A SIMILAR TRANSACTION. ANY LOAN RENEWALS ARE SUBJECT TO INTEREST RATE
MODIFICATION.

--------------------------------------------------------------------------------
                                COLLATERAL PLEDGE
--------------------------------------------------------------------------------
A percentage of your vested account balance equal to the amount borrowed divided
by your vested account balance is pledged as security of repayment of loans
under this program.

--------------------------------------------------------------------------------
                               DEFAULT PROVISIONS
--------------------------------------------------------------------------------
The following are deemed to be acts of default under your qualified plan/403(b)
loan program:

*    failure to remit payment in a timely manner as required under the Loan
     Agreement

*    breach of any of your obligations or duties under the Loan Agreement

*    termination of employment

*    other (specify)
                    ------------------------------------------------------------

Upon default, your loan program administrator is entitled to foreclose its
security interest in your vested account balance pledged for repayment upon the
occurrence of an event which triggers a distribution of your benefits.

In addition, the loan program administrator will report as taxable any amounts
which are deemed distributed as a result of failing to make loan payments.

                                       2
<PAGE>   19

QUALIFIED RETIREMENT PLAN AND TRUST
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT 04

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

SECTION ONE       DEFINITIONS

                  The following words and phrases when used in the Plan with
                  initial capital letters shall, for the purpose of this Plan,
                  have the meanings set forth below unless the context indicates
                  that other meanings are intended:

         1.01     ADOPTION AGREEMENT

                  Means the document executed by the Employer through which it
                  adopts the Plan and Trust and thereby agrees to be bound by
                  all terms and conditions of the Plan and Trust.

         1.02     BASIC PLAN DOCUMENT

                  Means this prototype Plan and Trust document.

         1.03     BENEFICIARY

                  Means the individual or individuals designated pursuant to
                  Section 6.03(A) of the Plan.

         1.04     BREAK IN ELIGIBILITY SERVICE

                  Means a 12 consecutive month period which coincides with an
                  Eligibility Computation Period during which an Employee fails
                  to complete more than 500 Hours of Service (or such lesser
                  number of Hours of Service specified in the Adoption Agreement
                  for this purpose).

         1.05     BREAK IN VESTING SERVICE

                  Means a Plan Year (or other vesting computation period
                  described in Section 1.50) during which an Employee fails to
                  complete more than 500 Hours of Service (or such lesser number
                  of Hours of Service specified in the Adoption Agreement for
                  this purpose).

         1.06     CODE

                  Means the Internal Revenue Code of 1986 as amended from
                  time-to-time.

<PAGE>   20

         1.07     COMPENSATION

                  A.       Basic Definition

                           For Plan Years beginning on or after January 1, 1989,
                           the following definition of Compensation shall apply:

                           As elected by the Employer in the Adoption Agreement
                           (and if no election is made, W-2 wages will be deemed
                           to have been selected), Compensation shall mean one
                           of the following:

                           1.       W-2 wages. Compensation is defined as
                                    information required to be reported under
                                    Sections 6041 and 6051, and 6052 of the Code
                                    (Wages, tips and other compensation as
                                    reported on Form W-2). Compensation is
                                    defined as wages within the meaning of
                                    Section 3401(a) of the Code and all other
                                    payments of compensation to an Employee by
                                    the Employer (in the course of the
                                    Employer's trade or business) for which the
                                    Employer is required to furnish the Employee
                                    a written statement under Sections 6041(d)
                                    and 6051(a)(3), and 6052 of the Code.
                                    Compensation must be determined without
                                    regard to any rules under Section 3401(a)
                                    that limit the remuneration included in
                                    wages based on the nature or location of the
                                    employment or the services performed (such
                                    as the exception for agricultural labor in
                                    Section 3401(a)(2)).

                           2.       Section 3401(a) wages. Compensation is
                                    defined as wages within the meaning of
                                    Section 3401(a) of the Code, for the
                                    purposes of income tax withholding at the
                                    source but determined without regard to any
                                    rules that limit the remuneration included
                                    in wages based on the nature or location of
                                    the employment or the services performed
                                    (such as the exception for agricultural
                                    labor in Section 3401(a)(2)).

                           3.       415 safe-harbor compensation. Compensation
                                    is defined as wages, salaries, and fees for
                                    professional services and other amounts
                                    received (without regard to whether or not
                                    an amount is paid in cash) for personal
                                    services actually rendered in the course of
                                    employment with the Employer maintaining the
                                    Plan to the extent that the amounts are
                                    includible in gross income (including, but
                                    not limited to, commissions paid salesmen,
                                    compensation for services on the basis of a
                                    percentage of profits, commissions on
                                    insurance premiums, tips, bonuses, fringe
                                    benefits, and reimbursements or other
                                    expense allowances under a nonaccountable
                                    plan (as described in 1.62-2(c)), and
                                    excluding the following:

                                    a.    Employer contributions to a plan of
                                          deferred compensation which are not
                                          includible in the Employee's gross
                                          income for the taxable year in which
                                          contributed, or employer contributions
                                          under a

                                       2
<PAGE>   21

                                          simplified employee pension plan to
                                          the extent such contributions are
                                          deductible by the Employee, or any
                                          distributions from a plan of deferred
                                          compensation;

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

                                    c.    Amounts realized from the sale,
                                          exchange or other disposition of stock
                                          acquired under a qualified stock
                                          option; and

                                    d.    Other amounts which received special
                                          tax benefits, or contributions made by
                                          the Employer (whether or not under a
                                          salary reduction agreement) towards
                                          the purchase of an annuity contract
                                          described in Section 403(b) of the
                                          Code (whether or not the contributions
                                          are actually excludable from the gross
                                          income of the Employee).

                           For any Self-Employed Individual covered under the
                           Plan, Compensation will mean Earned Income.

                  B.       Determination Period And Other Rules

                           Compensation shall include only that Compensation
                           which is actually paid to the Participant during the
                           determination period. Except as provided elsewhere in
                           this Plan, the determination period shall be the Plan
                           Year unless the Employer has selected another period
                           in the Adoption Agreement. If the Employer makes no
                           election, the determination period shall be the Plan
                           Year.

                           Unless otherwise indicated in the Adoption Agreement,
                           Compensation shall include any amount which is
                           contributed by the Employer pursuant to a salary
                           reduction agreement and which is not includible in
                           the gross income of the Employee under Sections 125,
                           402(e)(3), 402(h)(1)(B) or 403(b) of the Code.

                           Where this Plan is being adopted as an amendment and
                           restatement to bring a Prior Plan into compliance
                           with the Tax Reform Act of 1986, such Prior Plan's
                           definition of Compensation shall apply for Plan Years
                           beginning before January 1, 1989.

                  C.       Limits On Compensation

                           For years beginning after December 31, 1988 and
                           before January 1, 1994, the annual Compensation of
                           each Participant taken into account for determining
                           all benefits provided under the Plan for any
                           determination period shall not exceed $200,000. This
                           limitation shall be adjusted by the Secretary at the
                           same time and in the same manner as under Section 4

                                       3
<PAGE>   22

                           15(d) of the Code, except that the dollar increase in
                           effect on January 1 of any calendar year is effective
                           for Plan Years beginning in such calendar year and
                           the first adjustment to the $200,000 limitation is
                           effective on January 1, 1990.

                           For Plan Years beginning on or after January 1, 1994,
                           the annual Compensation of each Participant taken
                           into account for determining all benefits provided
                           under the Plan for any Plan Year shall not exceed
                           $150,000, as adjusted for increases in the
                           cost-of-living in accordance with Section
                           401(a)(17)(B) of the Internal Revenue Code. The
                           cost-of-living adjustment in effect for a calendar
                           year applies to any determination period beginning in
                           such calendar year.

                           If the period for determining Compensation used in
                           calculating an Employee's allocation for a
                           determination period is a short Plan Year (i.e.,
                           shorter than 12 months), the annual Compensation
                           limit is an amount equal to the otherwise applicable
                           annual Compensation limit multiplied by a fraction,
                           the numerator of which is the number of months in the
                           short Plan Year, and the denominator of which is 12.

                           In determining the Compensation of a Participant for
                           purposes of this limitation, the rules of Section
                           414(q)(6) of the Code shall apply, except in applying
                           such rules, the term "family" shall include only the
                           spouse of the Participant and any lineal descendants
                           of the Participant who have not attained age 19
                           before the close of the year. If, as a result of the
                           application of such rules the adjusted $200,000
                           limitation is exceeded, then (except for purposes of
                           determining the portion of Compensation up to the
                           integration level, if this Plan provides for
                           permitted disparity), the limitation shall be
                           prorated among the affected individuals in proportion
                           to each such individual's Compensation as determined
                           under this Section prior to the application of this
                           limitation.

                           If Compensation for any prior determination period is
                           taken into account in determining an Employee's
                           allocations or benefits for the current determination
                           period, the Compensation for such prior determination
                           period is subject to the applicable annual
                           Compensation limit in effect for that prior period.
                           For this purpose, in determining allocations in Plan
                           Years beginning on or after January 1, 1989, the
                           annual Compensation limit in effect for determination
                           periods beginning before that date is $200,000. In
                           addition, in determining allocations in Plan Years
                           beginning on or after January 1, 1994, the annual
                           Compensation limit in effect for determination
                           periods beginning before that date is $150,000.

         1.08     CUSTODIAN

                  Means an entity specified in the Adoption Agreement as
                  Custodian or any duly appointed successor as provided in
                  Section 5.09.

                                       4
<PAGE>   23

         1.09     DISABILITY

                  Unless the Employer has elected a different definition in the
                  Adoption Agreement, Disability means the inability to engage
                  in any substantial, gainful activity by reason of any
                  medically determinable physical or mental impairment that can
                  be expected to result in death or which has lasted or can be
                  expected to last for a continuous period of not less than 12
                  months. The permanence and degree of such impairment shall be
                  supported by medical evidence.

         1.10     EARLY RETIREMENT AGE

                  Means the age specified in the Adoption Agreement. The Plan
                  will not have an Early Retirement Age if none is specified in
                  the Adoption Agreement.

         1.11     EARNED INCOME

                  Means the net earnings from self-employment in the trade or
                  business with respect to which the Plan is established, for
                  which personal services of the individual are a material
                  income-producing factor. Net earnings will be determined
                  without regard to items not included in gross income and the
                  deductions allocable to such items. Net earnings are reduced
                  by contributions by the Employer to a qualified plan to the
                  extent deductible under Section 404 of the Code.

                  Net earnings shall be determined with regard to the deduction
                  allowed to the Employer by Section 164(t) of the Code for
                  taxable years beginning after December 31, 1989.

         1.12     EFFECTIVE DATE

                  Means the date the Plan becomes effective as indicated in the
                  Adoption Agreement. However, as indicated in the Adoption
                  Agreement, certain provisions may have specific effective
                  dates. Further, where a separate date is stated in the Plan as
                  of which a particular Plan provision becomes effective, such
                  date will control with respect to that provision.

         1.13     ELIGIBILITY COMPUTATION PERIOD

                  An Employee's initial Eligibility Computation Period shall be
                  the 12 consecutive month period commencing on the Employee's
                  Employment Commencement Date. The Employee's subsequent
                  Eligibility Computation Periods shall be the 12 consecutive
                  month periods commencing on the anniversaries of his or her
                  Employment Commencement Date; provided, however, if pursuant
                  to the Adoption Agreement, an Employee is required to complete
                  one or less Years of Eligibility Service to become a
                  Participant, then his or her subsequent Eligibility
                  Computation Periods shall be the Plan Years commencing with
                  the Plan Year beginning during his or her initial Eligibility
                  Computation Period. An Employee does not complete a Year of
                  Eligibility Service before the end of the 12 consecutive month
                  period regardless of when during such period the Employee
                  completes the required number of Hours of Service.

                                       5
<PAGE>   24

         1.14     EMPLOYEE

                  Means any person employed by an Employer maintaining the Plan
                  or of any other employer required to be aggregated with such
                  Employer under Sections 4 14(b), (c), (m) or (0) of the Code.

                  The term Employee shall also include any Leased Employee
                  deemed to be an Employee of any Employer described in the
                  previous paragraph as provided in Section 414(n) or (0) of the
                  Code.

         1.15     EMPLOYER

                  Means any corporation, partnership, sole-proprietorship or
                  other entity named in the Adoption Agreement and any successor
                  who by merger, consolidation, purchase or otherwise assumes
                  the obligations of the Plan. A partnership is considered to be
                  the Employer of each of the partners and a sole-proprietorship
                  is considered to be the Employer of a sole proprietor. Where
                  this Plan is being maintained by a union or other entity that
                  represents its member Employees in the negotiation of
                  collective bargaining agreements, the term Employer shall mean
                  such union or other entity.

         1.16     EMPLOYER CONTRIBUTION

                  Means the amount contributed by the Employer each year as
                  determined under this Plan.

         1.17     EMPLOYMENT COMMENCEMENT DATE

                  An Employee's Employment Commencement date means the date the
                  Employee first performs an Hour of Service for the Employer.

         1.18     EMPLOYER PROFIT SHARING CONTRIBUTION

                  Means an Employer Contribution made pursuant to the Section of
                  the Adoption Agreement titled "Employer Profit Sharing
                  Contributions." The Employer may make Employer Profit Sharing
                  Contributions without regard to current or accumulated
                  earnings or profits.

         1.19     ENTRY DATES

                  Means the first day of the Plan Year and the first day of the
                  seventh month of the Plan Year, unless the Employer has
                  specified different dates in the Adoption Agreement.

         1.20     ERISA

                  Means the Employee Retirement Income Security Act of 1974 as
                  amended from time-to-time.

                                       6
<PAGE>   25

         1.21     FORFEITURE

                  Means that portion of a Participant's Individual Account
                  derived from Employer Contributions which he or she is not
                  entitled to receive (i.e., the nonvested portion).

         1.22     FUND

                  Means the Plan assets held by the Trustee for the
                  Participants' exclusive benefit.

         1.23     HIGHLY COMPENSATED EMPLOYEE

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

                  A highly compensated active employee includes any Employee who
                  performs service for the Employer during the determination
                  year and who, during the look-back year: (a) received
                  Compensation from the Employer in excess of $75,000 (as
                  adjusted pursuant to Section 415(d) of the Code); (b)received
                  Compensation from the Employer in excess of $50,000 (as
                  adjusted pursuant to Section 415(d) of the Code) and was a
                  member of the top-paid group for such year; or (c) was an
                  officer of the Employer and received Compensation during such
                  year that is greater than 50% of the dollar limitation in
                  effect under Section 415(b)(1)(A) of the Code. The term Highly
                  Compensated Employee also includes: (a) Employees who are both
                  described in the preceding sentence if the term "determination
                  year" is substituted for the term "look-back year" and the
                  Employee is one of the 100 Employees who received the most
                  Compensation from the Employer during the determination year;
                  and (b) Employees who are 5% owners at any time during the
                  look-back year or determination year.

                  If no officer has satisfied the Compensation requirement of
                  (c) above during either a determination year or look-back
                  year, the highest paid officer for such year shall be treated
                  as a Highly Compensated Employee.

                  For this purpose, the determination year shall be the Plan
                  Year. The look-back year shall be the 12 month period
                  immediately preceding the determination year.

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

                  If an Employee is, during a determination year or look-back
                  year, a family member of either a 5% owner who is an active or
                  former Employee or a Highly Compensated Employee who is one of
                  the 10 most Highly Compensated Employees ranked on the basis
                  of Compensation paid by the Employer during such year, then
                  the family member and the 5% owner or top 10 Highly
                  Compensated Employee shall be aggregated. In such case, the
                  family member and 5% owner or top 10 Highly Compensated
                  Employee shall be treated as a single Employee receiving
                  Compensation and Plan contributions or benefits equal to the
                  sum of such Compensation and contributions or benefits

                                       7
<PAGE>   26

                  equal to the sum of such Compensation and contributions or
                  benefits of the family member and 5% owner or top 10 Highly
                  Compensated Employee. For purposes of this Section, family
                  member includes the spouse, lineal ascendants and descendants
                  of the Employee or former Employee and the spouses of such
                  lineal ascendants and descendants.

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

         1.24     HOURS OF SERVICE - Means

                  A.       Each hour for which an Employee is paid, or entitled
                           to payment, for the performance of duties for the
                           Employer. These hours will be credited to the
                           Employee for the computation period in which the
                           duties are performed; and

                  B.       Each hour for which an Employee is paid, or entitled
                           to payment, by the Employer on account of a period of
                           time during which no duties are performed
                           (irrespective of whether the employment relationship
                           has terminated) due to vacation, holiday, illness,
                           incapacity (including disability), layoff, jury duty,
                           military duty or leave of absence. No more than 501
                           Hours of Service will be credited under this
                           paragraph for any single continuous period (whether
                           or not such period occurs in a single computation
                           period). Hours under this paragraph shall be
                           calculated and credited pursuant to Section
                           2530.200b-2 of the Department of Labor Regulations
                           which is incorporated herein by this reference; and

                  C.       Each hour for which back pay, irrespective of
                           mitigation of damages, is either awarded or agreed to
                           by the Employer. The same Hours of Service will not
                           be credited both under paragraph (A) or paragraph
                           (B), as the case may be, and under this paragraph
                           (C). These hours will be credited to the Employee 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.

                  D.       Solely for purposes of determining whether a Break in
                           Eligibility Service or a Break in Vesting Service has
                           occurred in a computation period (the computation
                           period for purposes of determining whether a Break in
                           Vesting Service has occurred is the Plan Year or
                           other vesting computation period described in Section
                           1.50) an individual who is absent from work for
                           maternity or paternity reasons shall receive credit
                           for the Hours of Service which would otherwise have
                           been credited to such individual but for such
                           absence, or in any case in which such hours cannot be
                           determined, 8 Hours of Service per day of such
                           absence. For purposes of this paragraph, an absence
                           from work for maternity or paternity reasons means an
                           absence (1) by reason of the pregnancy of the
                           individual, (2) by reason of a birth of a child of
                           the individual, (3) by reason of the placement of a
                           child with the individual in connection with

                                       8
<PAGE>   27

                           the adoption of such child by such individual, or (4)
                           for purposes of caring for such child for a period
                           beginning immediately following such birth or
                           placement. The Hours of Service credited under this
                           paragraph shall be credited (1) in the Eligibility
                           Computation Period or Plan Year or other vesting
                           computation period described in Section 1.50 in which
                           the absence begins if the crediting is necessary to
                           prevent a Break in Eligibility Service or a Break in
                           Vesting Service in the applicable period, or (2) in
                           all other cases, in the following Eligibility
                           Computation Period or Plan Year or other vesting
                           computation period described in Section 1.50.

                  E.       Hours of Service will be credited for employment with
                           other members of an affiliated service group (under
                           Section 4 14(m) of the Code), a controlled group of
                           corporations (under Section 414(b) of the Code), or a
                           group of trades or businesses under common control
                           (under Section 4 14(c) of the Code) of which the
                           adopting. Employer is a member, and any other entity
                           required to be aggregated with the Employer pursuant
                           to Section 4 14(o) of the Code and the regulations
                           thereunder.

                           Hours of Service will also be credited for any
                           individual considered an Employee for purposes of
                           this Plan under Code Sections 4 14(n) or 4 14(o) and
                           the regulations thereunder.

                  F.       Where the Employer maintains the plan of a
                           predecessor employer, service for such predecessor
                           employer shall be treated as service for the
                           Employer.

                  G.       The above method for determining Hours of Service may
                           be altered as specified in the Adoption Agreement.

         1.25     INDIVIDUAL ACCOUNT

                  Means the account established and maintained under this Plan
                  for each Participant in accordance with Section 4.01.

         1.26     INVESTMENT FUND

                  Means a subdivision of the Fund established pursuant to
                  Section 5.05.

         1.27     KEY EMPLOYEE

                  Means any person who is determined to be a Key Employee under
                  Section 10.08.

         1.28     LEASED EMPLOYEE

                  Means any person (other than an Employee of the recipient) who
                  pursuant to an agreement between the recipient and any other
                  person ("leasing organization") has performed services for the
                  recipient (or for the recipient and related persons determined
                  in accordance with Section 414(n)(6) of the Code) on a
                  substantially full time basis for a period of at least one
                  year, and such services are of a type historically performed
                  by Employees in the business field of the recipient

                                       9
<PAGE>   28

                  Employer. Contributions or benefits provided a Leased Employee
                  by the leasing organization which are attributable to services
                  performed for the recipient Employer shall be treated as
                  provided by the recipient Employer.

                  A Leased Employee shall not be considered an Employee of the
                  recipient if: (1) such employee is covered by a money purchase
                  pension plan providing: (a) a nonintegrated employer
                  contribution rate of at least 10% of compensation, as defined
                  in Section 415(c)(3) of the Code, but including amounts
                  contributed pursuant to a salary reduction agreement which are
                  excludable from the employee's gross income under Section 125,
                  Section 402(e)(3), Section 402(h)(l)(B) or Section 403(b) of
                  the Code, (b)immediate participation, and (c) full and
                  immediate vesting; and (2) Leased Employees do not constitute
                  more than 20% of the recipient's nonhighly compensated work
                  force.

         1.29     NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS

                  Means any contribution made to the Plan by or on behalf of a
                  Participant that is included in the Participant's gross income
                  in the year in which made and that is maintained under a
                  separate account to which earnings and losses are allocated.

         1.30     NORMAL RETIREMENT AGE

                  Means the age specified in the Adoption Agreement. However, if
                  the Employer enforces a mandatory retirement age which is less
                  than the Normal Retirement Age, such mandatory age is deemed
                  to be the Normal Retirement Age. If no age is specified in the
                  Adoption Agreement, the Normal Retirement Age shall be age 65.

         1.31     OWNER - EMPLOYEE

                  Means an individual who is a sole proprietor, or who is a
                  partner owning more than 10% of either the capital or profits
                  interest of the partnership.

         1.32     PARTICIPANT

                  Means any Employee or former Employee of the Employer who has
                  met the Plan's eligibility requirements, has entered the Plan
                  and who is or may become eligible to receive a benefit of any
                  type from this Plan or whose Beneficiary may be eligible to
                  receive any such benefit.

         1.33     PLAN

                  Means the prototype defined contribution plan adopted by the
                  Employer. The Plan consists of this Basic Plan Document plus
                  the corresponding Adoption Agreement as completed and signed
                  by the Employer.

         1.34     PLAN ADMINISTRATOR

                  Means the person or persons determined to be the Plan
                  Administrator in accordance with Section 8.01.

                                       10
<PAGE>   29

         1.35     PLAN YEAR

                  Means the 12 consecutive month period which coincides with the
                  Employer's fiscal year or such other 12 consecutive month
                  period as is designated in the Adoption Agreement.

         1.36     PRIOR PLAN

                  Means a plan which was amended or replaced by adoption of this
                  Plan document as indicated in the Adoption Agreement.

         1.37     PROTOTYPE SPONSOR

                  Means the entity specified in the Adoption Agreement that
                  makes this prototype plan available to employers for adoption.

         1.38     QUALIFYING PARTICIPANT

                  Means a Participant who has satisfied the requirements
                  described in Section 3.01(B)(2) to be entitled to share in any
                  Employer Contribution (and Forfeitures, if applicable) for a
                  Plan Year.

         1.39     RELATED EMPLOYER

                  Means an employer that may be required to be aggregated with
                  the Employer adopting this Plan for certain qualification
                  requirements under Sections 414(b), (c), (m) or (o) of the
                  Code (or any other employer that has ownership in common with
                  the Employer). A Related Employer may participate in this Plan
                  if so indicated in the Section of the Adoption Agreement
                  titled "Employer Information" or if such Related Employer
                  executes a Related Employer Participation Agreement.

         1.40     RELATED EMPLOYER PARTICIPATION AGREEMENT

                  Means the agreement under this prototype Plan that a Related
                  Employer may execute to participate in this Plan.

         1.41     SELF-EMPLOYED INDIVIDUAL

                  Means an individual who has Earned Income for the taxable year
                  from the trade or business for which the Plan is established;
                  also, an individual who would have had Earned Income but for
                  the fact that the trade or business had no net profits for the
                  taxable year.

         1.42     SEPARATE FUND

                  Means a subdivision of the Fund held in the name of a
                  particular Participant representing certain assets held for
                  that Participant. The assets which comprise a Participant's
                  Separate Fund are those assets earmarked for him or her and
                  those assets subject to the Participant's individual direction
                  pursuant to Section 5.14.

                                       11
<PAGE>   30

         1.43     TAXABLE WAGE BASE

                  Means, with respect to any taxable year, the contribution and
                  benefit base in effect under Section 230 of the Social
                  Security Act at the beginning of the Plan Year.

         1.44     TERMINATION OF EMPLOYMENT

                  A Termination of Employment of an Employee of an Employer
                  shall occur whenever his or her status as an Employee of such
                  Employer ceases for any reason other than death. An Employee
                  who does not return to work for the Employer on or before the
                  expiration of an authorized leave of absence from such
                  Employer shall be deemed to have incurred a Termination of
                  Employment when such leave ends.

         1.45     TOP-HEAVY PLAN

                  This Plan is a Top-Heavy Plan for any Plan Year if it is
                  determined to be such pursuant to Section 10.08.

         1.46     TRUSTEE

                  Means an individual, individuals or corporation specified in
                  the Adoption Agreement as Trustee or any duly appointed
                  successor as provided in Section 5.09. Trustee shall mean
                  Custodian in the event the financial organization named as
                  Trustee does not have full trust powers.

         1.47     VALUATION DATE

                  Means the date or dates as specified in the Adoption
                  Agreement. If no date is specified in the Adoption Agreement,
                  the Valuation Date shall be the last day of the Plan Year and
                  each other date designated by the Plan Administrator which is
                  selected in a uniform and nondiscriminatory manner when the
                  assets of the Fund are valued at their then fair market value.

         1.48     VESTED

                  Means nonforfeitable, that is, a claim which is unconditional
                  and legally enforceable against the Plan obtained by a
                  Participant or the Participant's Beneficiary to that part of
                  an immediate or deferred benefit under the Plan which arises
                  from a Participant's Years of Vesting Service.

         1.49     YEAR OF ELIGIBILITY SERVICE

                  Means a 12 consecutive month period which coincides with an
                  Eligibility Computation Period during which an Employee
                  completes at least 1,000 Hours of Service (or such lesser
                  number of Hours of Service specified in the Adoption Agreement
                  for this purpose). An Employee does not complete a Year of
                  Eligibility Service before the end of the 12 consecutive month
                  period regardless of when during such period the Employee
                  completes the required number of Hours of Service.

                                       12
<PAGE>   31

         1.50     YEAR OF VESTING SERVICE

                  Means a Plan Year during which an Employee completes at least
                  1,000 Hours of Service (or such lesser number of Hours of
                  Service specified in the Adoption Agreement for this purpose).
                  Notwithstanding the preceding sentence, where the Employer so
                  indicates in the Adoption Agreement, vesting shall be computed
                  by reference to the 12 consecutive month period beginning with
                  the Employee's Employment Commencement Date and each
                  successive 12 month period commencing on the anniversaries
                  thereof.

                  In the case of a Participant who has 5 or more consecutive
                  Breaks in Vesting Service, all Years of Vesting Service after
                  such Breaks in Vesting Service will be disregarded for the
                  purpose of determining the Vested portion of his or her
                  Individual Account derived from Employer Contributions that
                  accrued before such breaks. Such Participant's prebreak
                  service will count in vesting the postbreak Individual Account
                  derived from Employer Contributions only if either:

                  (A)      such Participant had any Vested right to any portion
                           of his or her Individual Account derived from
                           Employer Contributions at the time of his or her
                           Termination of Employment; or

                  (B)      upon returning to service, the number of consecutive
                           Breaks in Vesting Service is less than his or her
                           number of Years of Vesting Service before such
                           breaks.

                  Separate subaccounts will be maintained for the Participant's
                  prebreak and postbreak portions of his or her Individual
                  Account derived from Employer Contributions. Both subaccounts
                  will share in the gains and losses of the Fund.

                  Years of Vesting Service shall not include any period of time
                  excluded from Years of Vesting Service in the Adoption
                  Agreement.

                  In the event the Plan Year is changed to a new 12-month
                  period, Employees shall receive credit for Years of Vesting
                  Service, in accordance with the preceding provisions of this
                  definition, for each of the Plan Years (the old and new Plan
                  Years) which overlap as a result of such change.

SECTION TWO       ELIGIBILITY AND PARTICIPATION

         2.01     ELIGIBILITY TO PARTICIPATE

                  Each Employee of the Employer, except those Employees who
                  belong to a class of Employees which is excluded from
                  participation as indicated in the Adoption Agreement, shall be
                  eligible to participate in this Plan upon the satisfaction of
                  the age and Years of Eligibility Service requirements
                  specified in the Adoption Agreement.

                                       13
<PAGE>   32

         2.02     PLAN ENTRY

                  A.       If this Plan is a replacement of a Prior Plan by
                           amendment or restatement, each Employee of the
                           Employer who was a Participant in said Prior Plan
                           before the Effective Date shall continue to be a
                           Participant in this Plan.

                  B.       An Employee will become a Participant in the Plan as
                           of the Effective Date if the Employee has met the
                           eligibility requirements of Section 2.01 as of such
                           date. After the Effective Date, each Employee shall
                           become a Participant on the first Entry Date
                           following the date the Employee satisfies the
                           eligibility requirements of Section 2.01 unless
                           otherwise indicated in the Adoption Agreement.

                  C.       The Plan Administrator shall notify each Employee who
                           becomes eligible to be a Participant under this Plan
                           and shall furnish the Employee with the application
                           form, enrollment forms or other documents which are
                           required of Participants. The eligible Employee shall
                           execute such forms or documents and make available
                           such information as may be required in the
                           administration of the Plan.

         2.03     TRANSFER TO OR FROM INELIGIBLE CLASS

                  If an Employee who had been a Participant becomes ineligible
                  to participate because he or she is no longer a member of an
                  eligible class of Employees, but has not incurred a Break in
                  Eligibility Service, such Employee shall participate
                  immediately upon his or her return to an eligible class of
                  Employees. If such Employee incurs a Break in Eligibility
                  Service, his or her eligibility to participate shall be
                  determined by Section 2.04.

                  An Employee who is not a member of the eligible class of
                  Employees will become a Participant immediately upon becoming
                  a member of the eligible class provided such Employee has
                  satisfied the age and Years of Eligibility Service
                  requirements. If such Employee has not satisfied the age and
                  Years of Eligibility Service requirements as of the date he or
                  she becomes a member of the eligible class, such Employee
                  shall become a Participant on the first Entry Date following
                  the date he or she satisfies those requirements unless
                  otherwise indicated in the Adoption Agreement.

         2.04     RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILiTY SERVICE

                  A.       Employee Not Participant Before Break - If an
                           Employee incurs a Break in Eligibility Service before
                           satisfying the Plan's eligibility requirements, such
                           Employee's Years of Eligibility Service before such
                           Break in Eligibility Service will not be taken into
                           account.

                  B.       Nonvested Participants - In the case of a Participant
                           who does not have a Vested interest in his or her
                           Individual Account derived from Employer
                           Contributions, Years of Eligibility Service before a
                           period of consecutive Breaks in Eligibility Service
                           will not be taken into account for eligibility
                           purposes if the number of consecutive Breaks in
                           Eligibility Service in

                                       14
<PAGE>   33

                           such period equals or exceeds the greater of 5 or the
                           aggregate number of Years of Eligibility Service
                           before such break. Such aggregate number of Years of
                           Eligibility Service will not include any Years of
                           Eligibility Service disregarded under the preceding
                           sentence by reason of prior breaks.

                           If a Participant's Years of Eligibility Service are
                           disregarded pursuant to the preceding paragraph, such
                           Participant will be treated as a new Employee for
                           eligibility purposes. If a Participant's Years of
                           Eligibility Service may not be disregarded pursuant
                           to the preceding paragraph, such Participant shall
                           continue to participate in the Plan, or, if
                           terminated, shall participate immediately upon
                           reemployment.

                  C.       Vested Participants - A Participant who has sustained
                           a Break in Eligibility Service and who had a Vested
                           interest in all or a portion of his or her Individual
                           Account derived from Employer Contributions shall
                           continue to participate in the Plan, or, if
                           terminated, shall participate immediately upon
                           reemployment.

         2.05     DETERMINATIONS UNDER THIS SECTION

                  The Plan Administrator shall determine the eligibility of each
                  Employee to be a Participant. This determination shall be
                  conclusive and binding upon all persons except as otherwise
                  provided herein or by law.

         2.06     TERMS OF EMPLOYMENT

                  Neither the fact of the establishment of the Plan nor the fact
                  that a common law Employee has become a Participant shall give
                  to that common law Employee any right to continued employment;
                  nor shall either fact limit the right of the Employer to
                  discharge or to deal otherwise with a common law Employee
                  without regard to the effect such treatment may have upon the
                  Employee's rights under the Plan.

         2.07     SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED

                  This Section 2.07 shall apply where the Employer has indicated
                  in the Adoption Agreement that the elapsed time method will be
                  used. When this Section applies, the definitions of year of
                  service, break in service and hour of service in this Section
                  will replace the definitions of Year of Eligibility Service,
                  Year of Vesting Service, Break in Eligibility Service, Break
                  in Vesting Service and Hours of Service found in the
                  Definitions Section of the Plan (Section One).

                  For purposes of determining an Employee's initial or continued
                  eligibility to participate in the Plan or the Vested interest
                  in the Participant's Individual Account balance derived from
                  Employer Contributions, (except for periods of service which
                  may be disregarded on account of the "rule of parity"
                  described in Sections 1.50 and 2.04) an Employee will receive
                  credit for the aggregate of all time period(s) commencing with
                  the Employee's first day of employment or reemployment and
                  ending on the date a break in service begins. The first day of
                  employment or reemployment is the first day the Employee
                  performs an hour of

                                       15
<PAGE>   34

                  service. An Employee will also receive credit for any period
                  of severance of less than 12 consecutive months. Fractional
                  periods of a year will be expressed in terms of days.

                  For purposes of this Section, hour of service will mean each
                  hour for which an Employee is paid or entitled to payment for
                  the performance of duties for the Employer. Break in service
                  is a period of severance of at least 12 consecutive months.
                  Period of severance is a continuous period of time during
                  which the Employee is not employed by the Employer. Such
                  period begins on the date the Employee retires, quits or is
                  discharged, or if earlier, the 12 month anniversary of the
                  date on which the Employee was otherwise first absent from
                  service.

                  In the case of an individual who is absent from work for
                  maternity or paternity reasons, the 12 consecutive month
                  period beginning on the first anniversary of the first date of
                  such absence shall not constitute a break in service. For
                  purposes of this paragraph, an absence from work for maternity
                  or paternity reasons means an absence (1) by reason of the
                  pregnancy of the individual, (2) by reason of the birth of a
                  child of the individual, (3) by reason of the placement of a
                  child with the individual in connection with the adoption of
                  such child by such individual, or (4) for purposes of caring
                  for such child for a period beginning immediately following
                  such birth or placement.

                  Each Employee will share in Employer Contributions for the
                  period beginning on the date the Employee commences
                  participation under the Plan and ending on the date on which
                  such Employee severs employment with the Employer or is no
                  longer a member of an eligible class of Employees.

                  If the Employer is a member of an affiliated service group
                  (under Section 414(m) of the Code), a controlled group of
                  corporations (under Section 414(b) of the Code), a group of
                  trades or businesses under common control (under Section 4
                  14(c) of the Code), or any other entity required to be
                  aggregated with the Employer pursuant to Section 414(o) of the
                  Code, service will be credited for any employment for any
                  period of time for any other member of such group. Service
                  will also be credited for any individual required under
                  Section 4 14(n) or Section 4 14(o) to be considered an
                  Employee of any Employer aggregated under Section 414(b), (c),
                  or (m) of the Code.

         2.08     ELECTION NOT TO PARTICIPATE

                  This Section 2.08 will apply if this Plan is a nonstandardized
                  plan and the Adoption Agreement so provides. If this Section
                  applies, then an Employee or a Participant may elect not to
                  participate in the Plan for one or more Plan Years. The
                  Employer may not contribute for an Employee or Participant for
                  any Plan Year during which such Employee's or Participant's
                  election not to participate is in effect. Any election not to
                  participate must be in writing and filed with the Plan
                  Administrator.

                  The Plan Administrator shall establish such uniform and
                  nondiscriminatory rules as it deems necessary or advisable to
                  carry out the terms of this Section, including, but not
                  limited to, rules prescribing the timing of the filing of
                  elections not to participate and the procedures for electing
                  to re-participate in the Plan.

                                       16
<PAGE>   35

                  An Employee or Participant continues to earn credit for
                  vesting and eligibility purposes for each Year of Vesting
                  Service or Year of Eligibility Service he or she completes and
                  his or her Individual Account (if any) will share in the gains
                  or losses of the Fund during the periods he or she elects not
                  to participate.

SECTION THREE     CONTRIBUTIONS

         3.01     EMPLOYER CONTRIBUTIONS

                  A.       Obligation to Contribute - The Employer shall make
                           contributions to the Plan in accordance with the
                           contribution formula specified in the Adoption
                           Agreement. If this Plan is a profit sharing plan, the
                           Employer shall, in its sole discretion, make
                           contributions without regard to current or
                           accumulated earnings or profits.

                  B.       Allocation Formula and the Right to Share in the
                           Employer Contribution -

                           1.       General - The Employer Contribution for any
                                    Plan Year will be allocated or contributed
                                    to the Individual Accounts of Qualifying
                                    Participants in accordance with the
                                    allocation or contribution formula specified
                                    in the Adoption Agreement. The Employer
                                    Contribution for any Plan Year will be
                                    allocated to each Participant's Individual
                                    Account as of the last day of that Plan
                                    Year.

                                    Any Employer Contribution for a Plan Year
                                    must satisfy Section 401(a)(4) and the
                                    regulations thereunder for such Plan Year.

                           2.       Qualifying Participants - A Participant is a
                                    Qualifying Participant and is entitled to
                                    share in the Employer Contribution for any
                                    Plan Year if the Participant was a
                                    Participant on at least one day during the
                                    Plan Year and satisfies any additional
                                    conditions specified in the Adoption
                                    Agreement. If this Plan is a standardized
                                    plan, unless the Employer specifies more
                                    favorable conditions in the Adoption
                                    Agreement, a Participant will not be a
                                    qualifying Participant for a Plan Year if he
                                    or she incurs a Termination of Employment
                                    during such Plan Year with not more than 500
                                    Hours of Service if he or she is not an
                                    Employee on the last day of the Plan Year.
                                    The determination of whether a Participant
                                    is entitled to share in the Employer
                                    Contribution shall be made as of the last
                                    day of each Plan Year.

                           3.       Special Rules for Integrated Plans - This
                                    Plan may not allocate contributions based on
                                    an integrated formula if the Employer
                                    maintains any other plan that provides for
                                    allocation of contributions based on an
                                    integrated formula that benefits any of the
                                    same Participants. If the Employer has
                                    selected the integrated contribution or
                                    allocation formula in the Adoption
                                    Agreement, then the maximum disparity rate
                                    shall be determined in accordance with the
                                    following table.

                                       17
<PAGE>   36

<TABLE>
<CAPTION>
                                           MAXIMUM DISPARITY RATE

Integration Level                                           Top-Heavy               Nonstandardized and
                                   Money Purchase        Profit Sharing        Non-Top-Heavy Profit Sharing

<S>                                     <C>                    <C>                        <C>
Taxable Wage Base (TWB)                 5.7%                   2.7%                       5.7%

More than $0 but not more
than 20% of TWB                         5.7%                   2.7%                       5.7%

More than 20% of TWB but
not more than 80% of TWB                4.3%                   1.3%                       4.3%

More than 80% of TWB but
not more than TWB                       5.4%                   2.4%                       5.4%
</TABLE>

                  C.       Allocation of Forfeitures - Forfeitures for a Plan
                           Year which arise as a result of the application of
                           Section 6.01(D) shall be allocated as follows:

                           1.       Profit Sharing Plan - If this is a profit
                                    sharing plan, unless the Adoption Agreement
                                    indicates otherwise, Forfeitures shall be
                                    allocated in the manner provided in Section
                                    3.01(B) (for Employer Contributions) to the
                                    Individual Accounts of Qualifying
                                    Participants who are entitled to share in
                                    the Employer Contribution for such Plan
                                    Year. Forfeitures shall be allocated as of
                                    the last day of the Plan Year during which
                                    the Forfeiture arose (or any subsequent Plan
                                    Year if indicated in the Adoption
                                    Agreement).

                           2.       Money Purchase Pension and Target Benefit
                                    Plan - If this Plan is a money purchase plan
                                    or a target benefit plan, unless the
                                    Adoption Agreement indicates otherwise,
                                    Forfeitures shall be applied towards the
                                    reduction of Employer Contributions to the
                                    Plan. Forfeitures shall be allocated as of
                                    the last day of the Plan Year during which
                                    the Forfeiture arose (or any subsequent Plan
                                    Year if indicated in the Adoption
                                    Agreement).

                  D.       Timing of Employer Contribution - The Employer
                           Contribution for each Plan Year shall be delivered to
                           the Trustee (or Custodian, if applicable) not later
                           than the due date for filing the Employer's income
                           tax return for its fiscal year in which the Plan Year
                           ends, including extensions thereof.

                  E.       Minimum Allocation for Top-Heavy Plans - The
                           contribution and allocation provisions of this
                           Section 3.01(E) shall apply for any Plan Year with
                           respect to which this Plan is a Top-Heavy Plan.

                           1.       Except as otherwise provided in (3) and (4)
                                    below, the Employer Contributions and
                                    Forfeitures allocated on behalf of any
                                    Participant who is not a Key Employee shall
                                    not be less than the lesser of 3% of such
                                    Participant's Compensation or (in the case
                                    where the Employer has no defined benefit
                                    plan which

                                       18
<PAGE>   37

                                    designates this Plan to satisfy Section 401
                                    of the Code) the largest percentage of
                                    Employer Contributions and Forfeitures, as a
                                    percentage of the first $200,000 ($150,000
                                    for Plan Years beginning after December 31,
                                    1993), (increased by any cost of living
                                    adjustment made by the Secretary of Treasury
                                    or the Secretary's delegate) of the Key
                                    Employee's Compensation, allocated on behalf
                                    of any Key Employee for that year. The
                                    minimum allocation is determined without
                                    regard to any Social Security contribution.
                                    The Employer may, in the Adoption Agreement,
                                    limit the Participants who are entitled to
                                    receive the minimum allocation. This minimum
                                    allocation shall be made even though under
                                    other Plan provisions, the Participant would
                                    not otherwise be entitled to receive an
                                    allocation, or would have received a lesser
                                    allocation for the year because of (a) the
                                    Participant's failure to complete 1,000
                                    Hours of Service (or any equivalent provided
                                    in the Plan), or (b) the Participant's
                                    failure to make mandatory Nondeductible
                                    Employee Contributions to the Plan, or (c)
                                    Compensation less than a stated amount.

                           2.       For purposes of computing the minimum
                                    allocation, Compensation shall mean
                                    Compensation as defined in Section 1.07 of
                                    the Plan and shall include any amounts
                                    contributed by the Employer pursuant to a
                                    salary reduction agreement and which is not
                                    includible in the gross income of the
                                    Employee under Sections 125, 402(e)(3),
                                    402(h)(1)(B) or 403(b) of the Code even if
                                    the Employer has elected to exclude such
                                    contributions in the definition of
                                    Compensation used for other purposes under
                                    the Plan.

                           3.       The provision in (1) above shall not apply
                                    to any Participant who was not employed by
                                    the Employer on the last day of the Plan
                                    Year.

                           4.       The provision in (1) above shall not apply
                                    to any Participant to the extent the
                                    Participant is covered under any other plan
                                    or plans of the Employer and the Employer
                                    has provided in the adoption agreement that
                                    the minimum allocation or benefit
                                    requirement applicable to Top-Heavy Plans
                                    will be met in the other plan or plans.

                           5.       The minimum allocation required under this
                                    Section 3.01(E) and Section 3.0l(F)(1) (to
                                    the extent required to be nonforfeitable
                                    under Code Section 4 16(b)) may not be
                                    forfeited under Code Section 41 1(a)(3)(B)
                                    or 41 1(a)(3)(D).

                  F.       Special Requirements for Paired Plans - The Employer
                           maintains paired plans if the Employer has adopted
                           both a standardized profit sharing plan and a
                           standardized money purchase pension plan using this
                           Basic Plan Document.

                                       19
<PAGE>   38

                           1.       Minimum Allocation - When the paired plans
                                    are top-heavy, the top-heavy requirements
                                    set forth in Section 3.01(E)(1) of the Plan
                                    shall apply.

                                    a.    Same eligibility requirements. In
                                          satisfying the top-heavy minimum
                                          allocation requirements set forth in
                                          Section 3.01(E) of the Plan, if the
                                          Employees benefiting under each of the
                                          paired plans are identical, the
                                          top-heavy minimum allocation shall be
                                          made to the money purchase pension
                                          plan.

                                    b.    Different eligibility requirements. In
                                          satisfying the top-heavy minimum
                                          allocation requirements set forth in
                                          Section 3.01(E) of the Plan, if the
                                          Employees benefiting under each of the
                                          paired plans are not identical, the
                                          top-heavy minimum allocation will be
                                          made to both of the paired plans.

                                          A Participant is treated as benefiting
                                          under the Plan for any Plan Year
                                          during which the Participant received
                                          or is deemed to receive an allocation
                                          in accordance with
                                          Section 1 .410(b)-3(a).

                           2.       Only One Plan Can Be Integrated - If the
                                    Employer maintains paired plans, only one of
                                    the Plans may provide for the disparity in
                                    contributions which is permitted under
                                    Section 40 1(l) of the Code. In the event
                                    that both Adoption Agreements provide for
                                    such integration, only the money purchase
                                    pension plan shall be deemed to be
                                    integrated.

                  G.       Return of the Employer Contribution to the Employer
                           Under Special Circumstances - Any contribution made
                           by the Employer because of a mistake of fact must be
                           returned to the Employer within one year of the
                           contribution.

                           In the event that the Commissioner of Internal
                           Revenue determines that the Plan is not initially
                           qualified under the Code, any contributions made
                           incident to that initial qualification by the
                           Employer must be returned to the Employer within one
                           year after the date the initial qualification is
                           denied, but only if the application for qualification
                           is made by the time prescribed by law for filing the
                           Employer's return for the taxable year in which the
                           Plan is adopted, or such later date as the Secretary
                           of the Treasury may prescribe.

                           In the event that a contribution made by the Employer
                           under this Plan is conditioned on deductibility and
                           is not deductible under Code Section 404, the
                           contribution, to the extent of the amount disallowed,
                           must be returned to the Employer within one year
                           after the deduction is disallowed.

                                       20
<PAGE>   39

                  H.       Omission of Participant

                           1.       If the Plan is a money purchase plan or a
                                    target benefit plan and, if in any Plan
                                    Year, any Employee who should be included as
                                    a Participant is erroneously omitted and
                                    discovery of such omission is not made until
                                    after a contribution by the Employer for the
                                    year has been made and allocated, the
                                    Employer shall make a subsequent
                                    contribution to include earnings thereon,
                                    with respect to the omitted Employee in the
                                    amount which the Employer would have
                                    contributed with respect to that Employee
                                    had he or she not been omitted.

                           2.       If the Plan is a profit sharing plan, and if
                                    in any Plan Year, any Employee who should be
                                    included as a Participant is erroneously
                                    omitted and discovery of such omission is
                                    not made until after the Employer
                                    Contribution has been made and allocated,
                                    then the Plan Administrator must re-do the
                                    allocation (if a correction can be made) and
                                    inform the Employee. Alternatively, the
                                    Employer may choose to contribute for the
                                    omitted Employee the amount to include
                                    earnings thereon, which the Employer would
                                    have contributed for the Employee.

         3.02     NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS

                  This Plan will not accept Nondeductible Employee Contributions
                  and matching contributions for Plan Years beginning after the
                  Plan Year in which this Plan is adopted by the Employer.
                  Nondeductible Employee Contributions for Plan Years beginning
                  after December 31, 1986, together with any matching
                  contributions as defined in Section 401(m) of the Code, will
                  be limited so as to meet the nondiscrimination test of Section
                  40 1(m) of the Code.

                  A separate account will be maintained by the Plan
                  Administrator for the Nondeductible Employee Contributions of
                  each Participant.

                  A Participant may, upon a written request submitted to the
                  Plan Administrator withdraw the lesser of the portion of his
                  or her Individual Account attributable to his or her
                  Nondeductible Employee Contributions or the amount he or she
                  contributed as Nondeductible Employee Contributions.

                  Nondeductible Employee Contributions and earnings thereon will
                  be nonforfeitable at all times. No Forfeiture will occur
                  solely as a result of an Employee's withdrawal of
                  Nondeductible Employee Contributions.

                  The Plan Administrator will not accept deductible employee
                  contributions which are made for a taxable year beginning
                  after December 31, 1986. Contributions made prior to that date
                  will be maintained in a separate account which will be
                  nonforfeitable at all times. The account will share in the
                  gains and losses of the Fund in the same manner as described
                  in Section 4.03 of the Plan. No part of the deductible
                  employee contribution account will be used to purchase life
                  insurance. Subject to Section 6.05, joint and survivor annuity
                  requirements (if applicable),

                                       21
<PAGE>   40

                  the Participant may withdraw any part of the deductible
                  employee contribution account by making a written application
                  to the Plan Administrator.

         3.03     ROLLOVER CONTRIBUTIONS

                  If so indicated in the Adoption Agreement, an Employee may
                  contribute a rollover contribution to the Plan. The Plan
                  Administrator may require the Employee to submit a written
                  certification that the contribution qualifies as a rollover
                  contribution under the applicable provisions of the Code. If
                  it is later determined that all or part of a rollover
                  contribution was ineligible to be rolled into the Plan, the
                  Plan Administrator shall direct that any ineligible amounts,
                  plus earnings attributable thereto, be distributed from the
                  Plan to the Employee as soon as administratively feasible.

                  A separate account shall be maintained by the Plan
                  Administrator for each Employee's rollover contributions which
                  will be nonforfeitable at all times. Such account will share
                  in the income and gains and losses of the Fund in the manner
                  described in Section 4.03 and shall be subject to the Plan's
                  provisions governing distributions.

                  The Employer may, in a uniform and nondiscriminatory manner,
                  only allow Employees who have become Participants in the Plan
                  to make rollover contributions.

         3.04     TRANSFER CONTRIBUTIONS

                  If so indicated in the Adoption Agreement, the Trustee (or
                  Custodian, if applicable) may receive any amounts transferred
                  to it from the trustee or custodian of another plan qualified
                  under Code Section 40 1(a). If it is later determined that all
                  or part of a transfer contribution was ineligible to be
                  transferred into the Plan, the Plan Administrator shall direct
                  that any ineligible amounts, plus earnings attributable
                  thereto, be distributed from the Plan to the Employee as soon
                  as administratively feasible.

                  A separate account shall be maintained by the Plan
                  Administrator for each Employee's transfer contributions which
                  will be nonforfeitable at all times. Such account will share
                  in the income and gains and losses of the Fund in the manner
                  described in Section 4.03 and shall be subject to the Plan's
                  provisions governing distributions.

                  The Employer may, in a uniform and nondiscriminatory manner,
                  only allow Employees who have become Participants in the Plan
                  to make transfer contributions.

         3.05     LIMITATION ON ALLOCATIONS

                  A.       If the Participant does not participate in, and has
                           never participated in another qualified plan
                           maintained by the Employer or a welfare benefit fund,
                           as defined in Section 4 19(e) of the Code maintained
                           by the Employer, or an individual medical account, as
                           defined

                                       22
<PAGE>   41

                           in Section 415(l)(2) of the Code, or a simplified
                           employee pension plan, as defined in Section 408(k)
                           of the Code, maintained by the Employer, which
                           provides an annual addition as defined in Section
                           3.08(E)(l), the following rules shall apply:

                           1.       The amount of annual additions which may be
                                    credited to the Participant's Individual
                                    Account for any limitation year will not
                                    exceed the lesser of the maximum permissible
                                    amount or any other limitation contained in
                                    this Plan. If the Employer Contribution that
                                    would otherwise be contributed or allocated
                                    to the Participant's Individual Account
                                    would cause the annual additions for the
                                    limitation year to exceed the maximum
                                    permissible amount, the amount contributed
                                    or allocated will be reduced so that the
                                    annual additions for the limitation year
                                    will equal the maximum permissible amount.

                           2.       Prior to determining the Participant's
                                    actual Compensation for the limitation year,
                                    the Employer may determine the maximum
                                    permissible amount for a Participant on the
                                    basis of a reasonable estimation of the
                                    Participant's Compensation for the
                                    limitation year, uniformly determined for
                                    all Participants similarly situated.

                           3.       As soon as is administratively feasible
                                    after the end of the limitation year, the
                                    maximum permissible amount for the
                                    limitation year will be determined on the
                                    basis of the Participant's actual
                                    Compensation for the limitation year.

                           4.       If pursuant to Section 3.05(A)(3) or as a
                                    result of the allocation of Forfeitures
                                    there is an excess amount, the excess will
                                    be disposed of as follows:

                                    a.    Any Nondeductible Employee
                                          Contributions, to the extent they
                                          would reduce the excess amount, will
                                          be returned to the Participant;

                                    b.    If after the application of paragraph
                                          (a) an excess amount still exists, and
                                          the Participant is covered by the Plan
                                          at the end of the limitation year, the
                                          excess amount in the Participant's
                                          Individual Account will be used to
                                          reduce Employer Contributions
                                          (including any allocation of
                                          Forfeitures) for such Participant in
                                          the next limitation year, and each
                                          succeeding limitation year if
                                          necessary;

                                    c.    If after the application of paragraph
                                          (b) an excess amount still exists, and
                                          the Participant is not covered by the
                                          Plan at the end of a limitation year,
                                          the excess amount will be held
                                          unallocated in a suspense account. The
                                          suspense account will be applied to
                                          reduce future Employer Contributions
                                          (including allocation of any
                                          Forfeitures) for all remaining
                                          Participants in the next limitation
                                          year, and each succeeding limitation
                                          year if necessary;

                                       23
<PAGE>   42

                                    d.    If a suspense account is in existence
                                          at any time during a limitation year
                                          pursuant to this Section, it will not
                                          participate in the allocation of the
                                          Fund's investment gains and losses. If
                                          a suspense account is in existence at
                                          any time during a particular
                                          limitation year, all amounts in the
                                          suspense account must be allocated and
                                          reallocated to Participants'
                                          Individual Accounts before any
                                          Employer Contributions or any
                                          Nondeductible Employee Contributions
                                          may be made to the Plan for that
                                          limitation year. Excess amounts may
                                          not be distributed to Participants or
                                          former Participants.

                  B.       If, in addition to this Plan, the Participant is
                           covered under another qualified master or prototype
                           defined contribution plan maintained by the Employer,
                           a welfare benefit fund maintained by the Employer, an
                           individual medical account maintained by the
                           Employer, or a simplified employee pension maintained
                           by the Employer that provides an annual addition as
                           defined in Section 3.05(E)(1), during any limitation
                           year the following rules apply:

                           1.       The annual additions which may be credited
                                    to a Participant's Individual Account under
                                    this Plan for any such limitation year will
                                    not exceed the maximum permissible amount
                                    reduced by the annual additions credited to
                                    a Participant's Individual Account under the
                                    other qualified master or prototype plans,
                                    welfare benefit funds, individual medical
                                    accounts and simplified employee pensions
                                    for the same limitation year. If the annual
                                    additions with respect to the Participant
                                    under other qualified master or prototype
                                    defined contribution plans, welfare benefit
                                    funds, individual medical accounts and
                                    simplified employee pensions maintained by
                                    the Employer are less than the maximum
                                    permissible amount and the Employer
                                    Contribution that would otherwise be
                                    contributed or allocated to the
                                    Participant's Individual Account under this
                                    Plan would cause the annual additions for
                                    the limitation year to exceed this
                                    limitation, the amount contributed or
                                    allocated will be reduced so that the annual
                                    additions under all such plans and funds for
                                    the limitation year will equal the maximum
                                    permissible amount. If the annual additions
                                    with respect to the Participant under such
                                    other qualified master or prototype defined
                                    contribution plans, welfare benefit funds,
                                    individual medical accounts and simplified
                                    employee pensions in the aggregate are equal
                                    to or greater than the maximum permissible
                                    amount, no amount will be contributed or
                                    allocated to the Participant's Individual
                                    Account under this Plan for the limitation
                                    year.

                           2.       Prior to determining the Participant's
                                    actual Compensation for the limitation year,
                                    the Employer may determine the maximum
                                    permissible amount for a Participant in the
                                    manner described in Section 3.05(A)(2).

                                       24
<PAGE>   43

                           3.       As soon as is administratively feasible
                                    after the end of the limitation year, the
                                    maximum permissible amount for the
                                    limitation year will be determined on the
                                    basis of the Participant's actual
                                    Compensation for the limitation year.

                           4.       If, pursuant to Section 3.05(B)(3) or as a
                                    result of the allocation of Forfeitures a
                                    Participant's annual additions under this
                                    Plan and such other plans would result in an
                                    excess amount for a limitation year, the
                                    excess amount will be deemed to consist of'
                                    the annual additions last allocated, except
                                    that annual additions attributable to a
                                    simplified employee pension will be deemed
                                    to have been allocated first, followed by
                                    annual additions to a welfare benefit fund
                                    or individual medical account, regardless of
                                    the actual allocation date.

                           5.       If an excess amount was allocated to a
                                    Participant on an allocation date of this
                                    Plan which coincides with an allocation date
                                    of another plan, the excess amount
                                    attributed to this Plan will be the product
                                    of,

                                    a.    the total excess amount allocated as
                                          of such date, times

                                    b.    the ratio of (i) the annual additions
                                          allocated to the Participant for the
                                          limitation year as of such date under
                                          this Plan to (ii) the total annual
                                          additions allocated to the Participant
                                          for the limitation year as of such
                                          date under this and all the other
                                          qualified prototype defined
                                          contribution plans.

                           6.       Any excess amount attributed to this Plan
                                    will be disposed in the manner described in
                                    Section 3.05(A)(4).

                  C.       If the Participant is covered under another qualified
                           defined contribution plan maintained by the Employer
                           which is not a master or prototype plan, annual
                           additions which may be credited to the Participant's
                           Individual Account under this Plan for any limitation
                           year will be limited in accordance with Sections
                           3.05(B)(l) through 3.05(B)(6) as though the other
                           plan were a master or prototype plan unless the
                           Employer provides other limitations in the Section of
                           the Adoption Agreement titled "Limitation on
                           Allocation - More Than One Plan."

                  D.       If the Employer maintains, or at any time maintained,
                           a qualified defined benefit plan covering any
                           Participant in this Plan, the sum of the
                           Participant's defined benefit plan fraction and
                           defined contribution plan fraction will not exceed
                           1.0 in any limitation year. The ANNUAL additions
                           which may be credited to the Participant's Individual
                           Account under this Plan for any limitation year will
                           be limited in accordance with the Section of the
                           Adoption Agreement titled "Limitation on Allocation -
                           More Than One Plan."

                                       25
<PAGE>   44

                  E.       The following terms shall have the following meanings
                           when used in this Section 3.05:

                           1.       Annual additions: The sum of the following
                                    amounts credited to a Participant's
                                    Individual Account for the limitation year:

                                    a.    Employer Contributions,

                                    b.    Nondeductible Employee Contributions,

                                    c.    Forfeitures,

                                    d.    amounts allocated, after March 31,
                                          1984, to an individual medical
                                          account, as defined in Section
                                          415(l)(2) of the Code, which is part
                                          of a pension or annuity plan
                                          maintained by the Employer are treated
                                          as annual additions to a defined
                                          contribution plan. Also amounts
                                          derived from contributions paid or
                                          accrued after December 31, 1985, in
                                          taxable years ending after such date,
                                          which are attributable to
                                          post-retirement medical benefits,
                                          allocated to the separate account of a
                                          key employee, as defined in Section
                                          419A(d)(3) of the Code, under a
                                          welfare benefit fund, as defined in
                                          Section 4 19(e) of the Code,
                                          maintained by the Employer are treated
                                          as annual additions to a defined
                                          contribution plan, and

                                    e.    allocations under a simplified
                                          employee pension.

                                    For this purpose, any excess amount applied
                                    under Section 3.05(A)(4) or 3.05(B)(6) in
                                    the limitation year to reduce Employer
                                    Contributions will be considered annual
                                    additions for such limitation year.

                           2.       Compensation: Means Compensation as defined
                                    in Section 1.07 of the Plan except that
                                    Compensation for purposes of this Section
                                    3.05 shall not include any amounts
                                    contributed by the Employer pursuant to a
                                    salary reduction agreement and which is not
                                    includible in the gross income of the
                                    Employee under Sections 125, 402(e)(3),
                                    402(h)(1)(B) or 403(b) of the Code even if
                                    the Employer has elected to include such
                                    contributions in the definition of
                                    Compensation used for other purposes under
                                    the Plan. Further, any other exclusion the
                                    Employer has elected (such as the exclusion
                                    of certain types of pay or pay earned before
                                    the Employee enters the Plan) will not apply
                                    for purposes of this Section.

                                    Notwithstanding the preceding sentence,
                                    Compensation for a Participant in a defined
                                    contribution plan who is permanently and
                                    totally disabled (as defined in Section
                                    22(e)(3) of the Code) is the Compensation
                                    such Participant would have received for

                                       26
<PAGE>   45

                                    the limitation year if the Participant had
                                    been paid at the rate of Compensation paid
                                    immediately before becoming permanently and
                                    totally disabled; such imputed Compensation
                                    for the disabled Participant may be taken
                                    into account only if the Participant is not
                                    a Highly Compensated Employee (as defined in
                                    Section 414(q) of the Code) and
                                    contributions made on behalf of such
                                    Participant are nonforfeitable when made.

                           3.       Defined benefit fraction: A fraction, the
                                    numerator of which is the sum of the
                                    Participant's projected annual benefits
                                    under all the defined benefit plans (whether
                                    or not terminated) maintained by the
                                    Employer, and the denominator of which is
                                    the lesser of 125% of the dollar limitation
                                    determined for the limitation year under
                                    Section 4 15(b) and (d) of the Code or 140%
                                    of the highest average compensation,
                                    including any adjustments under Section
                                    415(b) of the Code.

                                    Notwithstanding the above, if the
                                    Participant was a Participant 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 last 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
                                    the requirements of Section 415 of the Code
                                    for all limitation years beginning before
                                    January 1, 1987.

                           4.       Defined contribution dollar limitation:
                                    $30,000 or if greater, one-fourth of the
                                    defined benefit dollar limitation set forth
                                    in Section 415(b)(l) of the Code as in
                                    effect for the limitation year.

                           5.       Defined contribution fraction: A fraction,
                                    the numerator of which is the sum of the
                                    annual additions to the Participant's
                                    account under all the defined contribution
                                    plans (whether or not terminated) maintained
                                    by the Employer for the current and all
                                    prior limitation years (including the ANNUAL
                                    additions attributable to the Participant's
                                    nondeductible employee contributions to all
                                    defined benefit plans, whether or not
                                    terminated, maintained by the Employer, and
                                    the animal additions attributable to all
                                    welfare benefit funds, as defined in Section
                                    419(e) of the Code, individual medical
                                    accounts, and simplified employee pensions,
                                    maintained by the Employer), and the
                                    denominator of which is the sum of the
                                    maximum aggregate amounts for the current
                                    and all prior limitation years of service
                                    with the Employer (regardless of whether a
                                    defined contribution plan was maintained by
                                    the Employer). The maximum aggregate amount
                                    in any limitation year is the lesser of 125%
                                    of the dollar

                                       27
<PAGE>   46

                                    limitation determined under Section 4 15(b)
                                    and (d) of the Code in effect under Section
                                    415(c)(l)(A) of the Code or 35% of the
                                    Participant's Compensation for such year.

                                    If the Employee was a Participant as of the
                                    end of the first day of the first limitation
                                    year beginning after December 31, 1986, in
                                    one or more defined contribution plans
                                    maintained by the Employer which were in
                                    existence on May 6, 1986, the numerator of
                                    this fraction will be adjusted if the sum of
                                    this fraction and the defined benefit
                                    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 Section 415 limitation
                                    applicable to the first limitation year
                                    beginning on or after January 1, 1987.

                                    The annual addition for any limitation year
                                    beginning before January 1, 1987, shall not
                                    be recomputed to treat all Nondeductible
                                    Employee Contributions as annual additions.

                           6.       Employer: For purposes of this Section 3.05,
                                    Employer shall mean the Employer that adopts
                                    this Plan, and all members of a controlled
                                    group of corporations (as defined in Section
                                    4 14(b) of the Code as modified by Section
                                    415(h)), all commonly controlled trades or
                                    businesses (as defined in Section 414(c) as
                                    modified by Section 4 15(b)) or affiliated
                                    service groups (as defined in Section
                                    414(m)) of which the adopting Employer is a
                                    part, and any other entity required to be
                                    aggregated with the Employer pursuant to
                                    regulations under Section 414(o) of the
                                    Code.

                           7.       Excess amount: The excess of the
                                    Participant's annual additions for the
                                    limitation year over the maximum permissible
                                    amount.

                           8.       Highest average compensation: The average
                                    compensation for the three consecutive years
                                    of service with the Employer that produces
                                    the highest average.

                           9.       Limitation year: A calendar year, or the
                                    12-consecutive month period elected by the
                                    Employer in the Adoption Agreement. All
                                    qualified plans maintained by the Employer
                                    must use the same limitation year. If the
                                    limitation year is amended to a different
                                    12-consecutive month period, the new
                                    limitation year must begin on a date within
                                    the limitation year in which the amendment
                                    is made.

                                       28
<PAGE>   47

                           10.      Master or prototype plan: A plan the form of
                                    which is the subject of a favorable opinion
                                    letter from the Internal Revenue Service.

                           11.      Maximum permissible amount: The maximum
                                    annual addition that may be contributed or
                                    allocated to a Participant's Individual
                                    Account under the Plan for any limitation
                                    year shall not exceed the lesser of:

                                    a.    the defined contribution dollar
                                          limitation, or

                                    b.    25% of the Participant's Compensation
                                          for the limitation year.

                                    The compensation limitation referred to in
                                    (b) shall not apply to any contribution for
                                    medical benefits (within the meaning of
                                    Section 401(h) or Section 419A(f)(2) of the
                                    Code) which is otherwise treated as an
                                    annual addition under Section 415(l)(1) or
                                    419A(d)(2) of the Code.

                                    If a short limitation year is created
                                    because of an amendment changing the
                                    limitation year to a different
                                    12-consecutive month period, the maximum
                                    permissible amount will not exceed the
                                    defined contribution dollar limitation
                                    multiplied by the following fraction:

                                   Number of months in the short limitation year
                                   ---------------------------------------------
                                                         12

                           12.      Projected annual benefit: 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.

                                    Straight life annuity means an annuity
                                    payable in equal installments for the life
                                    of the Participant that terminates upon the
                                    Participants' death.

                                       29
<PAGE>   48

SECTION FOUR      INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION

         4.01     INDIVIDUAL ACCOUNTS

                  A.       The Plan Administrator shall establish and maintain
                           an Individual Account in the name of each Participant
                           to reflect the total value of his or her interest in
                           the Fund. Each Individual Account established
                           hereunder shall consist of such subaccounts as may be
                           needed for each Participant including:

                           1.       a subaccount to reflect Employer
                                    Contributions and Forfeitures allocated on
                                    behalf of a Participant;

                           2.       a subaccount to reflect a Participant's
                                    rollover contributions;

                           3.       a subaccount to reflect a Participant's
                                    transfer contributions;

                           4.       a subaccount to reflect a Participant's
                                    Nondeductible Employee Contributions; and

                           5.       a subaccount to reflect a Participant's
                                    deductible employee contributions.

                  B.       The Plan Administrator may establish additional
                           accounts as it may deem necessary for the proper
                           administration of the Plan, including, but not
                           limited to, a suspense account for Forfeitures as
                           required pursuant to Section 6.01(D).

         4.02     VALUATION OF FUND

                  The Fund will be valued each Valuation Date at fair market
                  value.

         4.03     VALUATION OF INDIVIDUAL ACCOUNTS

                  A.       Where all or a portion of the assets of a
                           Participant's Individual Account are invested in a
                           Separate Fund for the Participant, then the value of
                           that portion of such Participant's Individual Account
                           at any relevant time equals the sum of the fair
                           market values of the assets in such Separate Fund,
                           less any applicable charges or penalties.

                  B.       The fair market value of the remainder of each
                           Individual Account is determined in the following
                           manner:

                           1.       First, the portion of the Individual Account
                                    invested in each Investment Fund as of the
                                    previous Valuation Date is determined. Each
                                    such portion is reduced by any withdrawal
                                    made from the applicable Investment Fund to
                                    or for the benefit of a Participant or the
                                    Participant's Beneficiary, further reduced
                                    by any amounts forfeited by the Participant
                                    pursuant to Section 6.01(D) and further
                                    reduced by any transfer to another

                                       30
<PAGE>   49

                                    Investment Fund since the previous Valuation
                                    Date and is increased by any amount
                                    transferred from another Investment Fund
                                    since the previous Valuation Date. The
                                    resulting amounts are the net Individual
                                    Account portions invested in the Investment
                                    Funds.

                           2.       Secondly, the net Individual Account
                                    portions invested in each Investment Fund
                                    are adjusted upwards or downwards, pro rata
                                    (i.e., ratio of each net Individual Account
                                    portion to the sum of all net Individual
                                    Account portions) so that the sum of all the
                                    net Individual Account portions invested in
                                    an Investment Fund will equal the then fair
                                    market value of the Investment Fund.
                                    Notwithstanding the previous sentence, for
                                    the first Plan Year only, the net Individual
                                    Account portions shall be the sum of all
                                    contributions made to each Participant's
                                    Individual Account during the first Plan
                                    Year.

                           3.       Thirdly, any contributions to the Plan and
                                    Forfeitures are allocated in accordance with
                                    the appropriate allocation provisions of
                                    Section 3. For purposes of Section 4,
                                    contributions made by the Employer for any
                                    Plan Year but after that Plan Year will be
                                    considered to have been made on the last day
                                    of that Plan Year regardless of when paid to
                                    the Trustee (or Custodian, if applicable):

                                    Amounts contributed between Valuation Dates
                                    will not be credited with investment gains
                                    or losses until the next following Valuation
                                    Date.

                           4.       Finally, the portions of the Individual
                                    Account invested in each Investment Fund
                                    (determined in accordance with (1), (2) and
                                    (3) above) are added together.

         4.04     MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS

                  If necessary or appropriate, the Plan Administrator may
                  establish different or additional procedures (which shall be
                  uniform and nondiscriminatory) for determining the fair market
                  value of the Individual Accounts.

         4.05     SEGREGATION OF ASSETS

                  If a Participant elects a mode of distribution other than a
                  lump sum, the Plan Administrator may place that Participant's
                  account balance into a segregated Investment Fund for the
                  purpose of maintaining the necessary liquidity to provide
                  benefit installments on a periodic basis.

         4.06     STATEMENT OF INDIVIDUAL ACCOUNTS

                  No later than 270 days after the close of each Plan Year, the
                  Plan Administrator shall furnish a statement to each
                  Participant indicating the Individual Account balances of such
                  Participant as of the last Valuation Date in such Plan Year.

                                       31
<PAGE>   50

SECTION FIVE      TRUSTEE OR CUSTODIAN

         5.01     CREATION OF FUND

                  By adopting this Plan, the Employer establishes the Fund which
                  shall consist of the assets of the Plan held by the Trustee
                  (or Custodian, if applicable) pursuant to this Section 5.
                  Assets within the Fund may be pooled on behalf of all
                  Participants, earmarked on behalf of each Participant or be a
                  combination of pooled and earmarked. To the extent that assets
                  are earmarked for a particular Participant, they will be held
                  in a Separate Fund for that Participant.

                  No part of the corpus or income of the Fund may be used for,
                  or diverted to, purposes other than for the exclusive benefit
                  of Participants or their Beneficiaries.

         5.02     INVESTMENT AUTHORITY

                  Except as provided in Section 5.14 (relating to individual
                  direction of investments by Participants), the Employer, not
                  the Trustee (or Custodian, if applicable), shall have
                  exclusive management and control over the investment of the
                  Fund into any permitted investment. Notwithstanding the
                  preceding sentence, a Trustee may make an agreement with the
                  Employer whereby the Trustee will manage the investment of all
                  or a portion of the Fund. Any such agreement shall be in
                  writing and set forth such matters as the Trustee deems
                  necessary or desirable.

         5.03     FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST
                  POWERS

                  This Section 5.03 applies where a financial organization has
                  indicated in the Adoption Agreement that it will serve, with
                  respect to this Plan, as Custodian or as Trustee without full
                  trust powers (under applicable law). Hereinafter, a financial
                  organization Trustee without full trust powers (under
                  applicable law) shall be referred to as a Custodian. The
                  Custodian shall have no discretionary authority with respect
                  to the management of the Plan or the Fund but will act only as
                  directed by the entity who has such authority.

                  A.       Permissible Investments - The assets of the Plan
                           shall be invested only in those investments which are
                           available through the Custodian in the ordinary
                           course of business which the Custodian may legally
                           hold in a qualified plan and which the Custodian
                           chooses to make available to Employers for qualified
                           plan investments. Notwithstanding the preceding
                           sentence, the Prototype Sponsor may, as a condition
                           of making the Plan available to the Employer, limit
                           the types of property in which the assets of the Plan
                           may be invested.

                  B.       Responsibilities of the Custodian - The
                           responsibilities of the Custodian shall be limited to
                           the following:

                           1.       To receive Plan contributions and to hold,
                                    invest and reinvest the Fund without
                                    distinction between principal and interest;

                                       32
<PAGE>   51

                                    provided, however, that nothing in this Plan
                                    shall require the Custodian to maintain
                                    physical custody of stock certificates (or
                                    other indicia of ownership of any type of
                                    asset) representing assets within the Fund;

                           2.       To maintain accurate records of
                                    contributions, earnings, withdrawals and
                                    other information the Custodian deems
                                    relevant with respect to the Plan;

                           3.       To make disbursements from the Fund to
                                    Participants or Beneficiaries upon the
                                    proper authorization of the Plan
                                    Administrator; and

                           4.       To furnish to the Plan Administrator a
                                    statement which reflects the value of the
                                    investments in the hands of the Custodian as
                                    of the end of each Plan Year and as of any
                                    other times as the Custodian and Plan
                                    Administrator may agree.

                  C.       Powers of the Custodian - Except as otherwise
                           provided in this Plan, the Custodian shall have the
                           power to take any action with respect to the Fund
                           which it deems necessary or advisable to discharge
                           its responsibilities under this Plan including, but
                           not limited to, the following powers:

                           1.       To invest all or a portion of the Fund
                                    (including idle cash balances) in time
                                    deposits, savings accounts, money market
                                    accounts or similar investments bearing a
                                    reasonable rate of interest in the
                                    Custodian's own savings department or the
                                    savings department of another financial
                                    organization;

                           2.       To vote upon any stocks, bonds, or other
                                    securities; to give general or special
                                    proxies or powers of attorney with or
                                    without power of substitution; to exercise
                                    any conversion privileges or subscription
                                    rights and to make any payments incidental
                                    thereto; to oppose, or to consent to, or
                                    otherwise participate in, corporate
                                    reorganizations or other changes affecting
                                    corporate securities, and to pay any
                                    assessment or charges in connection
                                    therewith; and generally to exercise any of
                                    the powers of an owner with respect to
                                    stocks, bonds, securities or other property;

                           3.       To hold securities or other property of the
                                    Fund in its own name, in the name of its
                                    nominee or in bearer form; and

                           4.       To make, execute, acknowledge, and deliver
                                    any and all documents of transfer and
                                    conveyance and any and all other instruments
                                    that may be necessary or appropriate to
                                    carry out the powers herein granted.

                                       33
<PAGE>   52

         5.04     FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
                  INDIVIDUAL TRUSTEE

                  This Section 5.04 applies where a financial organization has
                  indicated in the Adoption Agreement that it will serve as
                  Trustee with full trust powers. This Section also applies
                  where one or more individuals are named in the Adoption
                  Agreement to serve as Trustee(s).

                  A.       Permissible Investments - The Trustee may invest the
                           assets of the Plan in property of any character, real
                           or personal, including, but not limited to the
                           following: stocks, including shares of open-end
                           investment companies (mutual funds); bonds; notes;
                           debentures; options; limited partnership interests;
                           mortgages; real estate or any interests therein; unit
                           investment trusts; Treasury Bills, and other U.S.
                           Government obligations; common trust funds, combined
                           investment trusts, collective trust funds or
                           commingled funds maintained by a bank or similar
                           financial organization (whether or not the Trustee
                           hereunder); savings accounts, time deposits or money
                           market accounts of a bank or similar financial
                           organization (whether or not the Trustee hereunder);
                           annuity contracts; life insurance policies; or in
                           such other investments as is deemed proper without
                           regard to investments authorized by statute or rule
                           of law governing the investment of trust funds but
                           with regard to ERISA and this Plan.

                           Notwithstanding the preceding sentence, the Prototype
                           Sponsor may, as a condition of making the Plan
                           available to the Employer, limit the types of
                           property in which the assets of the Plan may be
                           invested.

                  B.       Responsibilities of the Trustee - The
                           responsibilities of the Trustee shall be limited to
                           the following:

                           1.       To receive Plan contributions and to hold,
                                    invest and reinvest the Fund without
                                    distinction between principal and interest;
                                    provided, however, that nothing in this Plan
                                    shall require the Trustee to maintain
                                    physical custody of stock certificates (or
                                    other indicia of ownership) representing
                                    assets within the Fund;

                           2.       To maintain accurate records of
                                    contributions, earnings, withdrawals and
                                    other information the Trustee deems relevant
                                    with respect to the Plan;

                           3.       To make disbursements from the Fund to
                                    Participants or Beneficiaries upon the
                                    proper authorization of the Plan
                                    Administrator; and

                           4.       To furnish to the Plan Administrator a
                                    statement which reflects the value of the
                                    investments in the hands of the Trustee as
                                    of the end of each Plan Year and as of any
                                    other times as the Trustee and Plan
                                    Administrator may agree.

                                       34
<PAGE>   53

                  C.       Powers of the Trustee - Except as otherwise provided
                           in this Plan, the Trustee shall have the power to
                           take any action with respect to the Fund which it
                           deems necessary or advisable to discharge its
                           responsibilities under this Plan including, but not
                           limited to, the following powers:

                           1.       To hold any securities or other property of
                                    the Fund in its own name, in the name of its
                                    nominee or in bearer form;

                           2.       To purchase or subscribe for securities
                                    issued, or real property owned, by the
                                    Employer or any trade or business under
                                    common control with the Employer but only if
                                    the prudent investment and diversification
                                    requirements of ERISA are satisfied;

                           3.       To sell, exchange, convey, transfer or
                                    otherwise dispose of any securities or other
                                    property held by the Trustee, by private
                                    contract or at public auction. No person
                                    dealing with the Trustee shall be bound to
                                    see to the application of the purchase money
                                    or to inquire into the validity, expediency,
                                    or propriety of any such sale or other
                                    disposition, with or without advertisement;

                           4.       To vote upon any stocks, bonds, or other
                                    securities; to give general or special
                                    proxies or powers of attorney with or
                                    without power of substitution; to exercise
                                    any conversion privileges or subscription
                                    rights and to make any payments incidental
                                    thereto; to oppose, or to consent to, or
                                    otherwise participate in, corporate
                                    reorganizations or other changes affecting
                                    corporate securities, and to delegate
                                    discretionary powers, and to pay any
                                    assessments or charges in connection
                                    therewith; and generally to exercise any of
                                    the powers of an owner with respect to
                                    stocks, bonds, securities or other property;

                           5.       To invest any part or all of the Fund
                                    (including idle cash balances) in
                                    certificates of deposit, demand or time
                                    deposits, savings accounts, money market
                                    accounts or similar investments of the
                                    Trustee (if the Trustee is a bank or similar
                                    financial organization), the Prototype
                                    Sponsor or any affiliate of such Trustee or
                                    Prototype Sponsor, which bear a reasonable
                                    rate of interest;

                           6.       To provide sweep services without the
                                    receipt by the Trustee of additional
                                    compensation or other consideration (other
                                    than reimbursement of direct expenses
                                    properly and actually incurred in the
                                    performance of such services);

                           7.       To hold in the form of cash for distribution
                                    or investment such portion of the Fund as,
                                    at any time and from time-to-time, the
                                    Trustee shall deem prudent and deposit such
                                    cash in interest bearing or noninterest
                                    bearing accounts;

                                       35
<PAGE>   54

                           8.       To make, execute, acknowledge, and deliver
                                    any and all documents of transfer and
                                    conveyance and any and all other instruments
                                    that may be necessary or appropriate to
                                    carry out the powers herein granted;

                           9.       To settle, compromise, or submit to
                                    arbitration any claims, debts, or damages
                                    due or owing to or from the Plan, to
                                    commence or defend suits or legal or
                                    administrative proceedings, and to represent
                                    the Plan in all suits and legal and
                                    administrative proceedings;

                           10.      To employ suitable agents and counsel, to
                                    contract with agents to perform
                                    administrative and recordkeeping duties and
                                    to pay their reasonable expenses, fees and
                                    compensation, and such agent or counsel may
                                    or may not be agent or counsel for the
                                    Employer;

                           11.      To cause any part or all of the Fund,
                                    without limitation as to amount, to be
                                    commingled with the funds of other trusts
                                    (including trusts for qualified employee
                                    benefit plans) by causing such money to be
                                    invested as a part of any pooled, common,
                                    collective or commingled trust fund
                                    (including any such fund described in the
                                    Adoption Agreement) heretofore or hereafter
                                    created by any Trustee (if the Trustee is a
                                    bank), by the Prototype Sponsor, by any
                                    affiliate bank of such a Trustee or by such
                                    a Trustee or the Prototype Sponsor, or by
                                    such an affiliate in participation with
                                    others; the instrument or instruments
                                    establishing such trust fund or funds, as
                                    amended, being made part of this Plan and
                                    trust so long as any portion of the Fund
                                    shall be invested through the medium
                                    thereof; and

                           12.      Generally to do all such acts, execute all
                                    such instruments, initiate such proceedings,
                                    and exercise all such rights and privileges
                                    with relation to property constituting the
                                    Fund as if the Trustee were the absolute
                                    owner thereof.

         5.05     DIVISION OF FUND INTO INVESTMENT FUNDS

                  The Employer may direct the Trustee (or Custodian) from
                  time-to-time to divide and redivide the Fund into one or more
                  Investment Funds. Such Investment Funds may include, but not
                  be limited to, Investment Funds representing the assets under
                  the control of an investment manager pursuant to Section 5.12
                  and Investment Funds representing investment options available
                  for individual direction by Participants pursuant to Section
                  5.14. Upon each division or redivision, the Employer may
                  specify the part of the Fund to be allocated to each such
                  Investment Fund and the terms and conditions, if any, under
                  which the assets in such Investment Fund shall be invested.

         5.06     COMPENSATION AND EXPENSES

                  The Trustee (or Custodian, if applicable) shall receive such
                  reasonable compensation as may be agreed upon by the Trustee
                  (or Custodian) and the

                                       36
<PAGE>   55

                  Employer. The Trustee (or Custodian) shall be entitled to
                  reimbursement by the Employer for all proper expenses incurred
                  in carrying out his or her duties under this Plan, including
                  reasonable legal, accounting and actuarial expenses. If not
                  paid by the Employer, such compensation and expenses may be
                  charged against the Fund.

                  All taxes of any kind that may be levied or assessed under
                  existing or future laws upon, or in respect of, the Fund or
                  the income thereof shall be paid from the Fund.

         5.07     NOT OBLIGATED TO QUESTION DATA

                  The Employer shall furnish the Trustee (or Custodian, if
                  applicable) and Plan Administrator the information which each
                  party deems necessary for the administration of the Plan
                  including, but not limited to, changes in a Participant's
                  status, eligibility, mailing addresses and other such data as
                  may be required. The Trustee (or Custodian) and Plan
                  Administrator shall be entitled to act on such information as
                  is supplied them and shall have no duty or responsibility to
                  further verify or question such information.

         5.08     LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS

                  The Plan Administrator shall be responsible for withholding
                  federal income taxes from distributions from the Plan, unless
                  the Participant (or Beneficiary, where applicable) elects not
                  to have such taxes withheld. The Trustee (or Custodian) or
                  other payor may act as agent for the Plan Administrator to
                  withhold such taxes and to make the appropriate distribution
                  reports, if the Plan Administrator furnishes all the
                  information to the Trustee (or Custodian) or other payor it
                  may need to do withholding and reporting.

         5.09     RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)

                  The Trustee (or Custodian, if applicable) may resign at any
                  time by giving 30 days advance written notice to the Employer.
                  The resignation shall become effective 30 days after receipt
                  of such notice unless a shorter period is agreed upon.

                  The Employer may remove any Trustee (or Custodian) at any time
                  by giving written notice to such Trustee (or Custodian) and
                  such removal shall be effective 30 days after receipt of such
                  notice unless a shorter period is agreed upon. The Employer
                  shall have the power to appoint a successor Trustee (or
                  Custodian).

                  Upon such resignation or removal, if the resigning or removed
                  Trustee (or Custodian) is the sole Trustee (or Custodian), he
                  or she shall transfer all of the assets of the Fund then held
                  by such Trustee (or Custodian) as expeditiously as possible to
                  the successor Trustee (or Custodian) after paying or reserving
                  such reasonable amount as he or she shall deem necessary to
                  provide for the expense in the settlement of the accounts and
                  the amount of any compensation due him or her and any sums
                  chargeable against the Fund for which he or she may be liable.
                  If the Funds as reserved are not sufficient for such purpose,
                  then he or she shall be entitled to reimbursement from the
                  successor Trustee (or Custodian) out of the

                                       37
<PAGE>   56

                  assets in the successor Trustee's (or Custodian's) hands under
                  this Plan. If the amount reserved shall be in excess of the
                  amount actually needed, the former Trustee (or Custodian)
                  shall return such excess to the successor Trustee (or
                  Custodian).

                  Upon receipt of the transferred assets, the successor Trustee
                  (or Custodian) shall thereupon succeed to all of the powers
                  and responsibilities given to the Trustee (or Custodian) by
                  this Plan.

                  The resigning or removed Trustee (or Custodian) shall render
                  an accounting to the Employer and unless objected to by the
                  Employer within 30 days of its receipt, the accounting shall
                  be deemed to have been approved and the resigning or removed
                  Trustee (or Custodian) shall be released and discharged as to
                  all matters set forth in the accounting. Where a financial
                  organization is serving as Trustee (or Custodian) and it is
                  merged with or bought by another organization (or comes under
                  the control of any federal or state agency), that organization
                  shall serve as the successor Trustee (or Custodian) of this
                  Plan, but only if it is the type of organization that can so
                  serve under applicable law.

                  Where the Trustee or Custodian is serving as a nonbank trustee
                  or custodian pursuant to Section 1.401-12(n) of the Income Tax
                  Regulations, the Employer will appoint a successor Trustee (or
                  Custodian) upon notification by the Commissioner of Internal
                  Revenue that such substitution is required because the Trustee
                  (or Custodian) has failed to comply with the requirements of
                  Section 1.401-12(n) or is not keeping such records or making
                  such returns or rendering such statements as are required by
                  forms or regulations.

         5.10     DEGREE OF CARE - LIMITATIONS OF LIABILITY

                  The Trustee (or Custodian) shall not be liable for any losses
                  incurred by the Fund by any direction to invest communicated
                  by the Employer, Plan Administrator, investment manager
                  appointed pursuant to Section 5.12 or any Participant or
                  Beneficiary. The Trustee (or Custodian) shall be under no
                  liability for distributions made or other action taken or not
                  taken at the written direction of the Plan Administrator. It
                  is specifically understood that the Trustee (or Custodian)
                  shall have no duty or responsibility with respect to the
                  determination of matters pertaining to the eligibility of any
                  Employee to become a Participant or remain a Participant
                  hereunder, the amount of benefit to which a Participant or
                  Beneficiary shall be entitled to receive hereunder, whether a
                  distribution to Participant or Beneficiary is appropriate
                  under the terms of the Plan or the size and type of any policy
                  to be purchased from any insurer for any Participant hereunder
                  or similar matters; it being understood that all such
                  responsibilities under the Plan are vested in the Plan
                  Administrator.

         5.11     INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR
                  CUSTODIAN)

                  Notwithstanding any other provision herein, and except as may
                  be otherwise provided by ERISA, the Employer shall indemnify
                  and hold harmless the Trustee (or Custodian, if applicable)
                  and the Prototype Sponsor, their officers, directors,
                  employees, agents, their heirs, executors, successors and
                  assigns, from and

                                       38
<PAGE>   57

                  against any and all liabilities, damages, judgments,
                  settlements, losses, costs, charges, or expenses (including
                  legal expenses) at any time arising out of or incurred in
                  connection with any action taken by such parties in the
                  performance of their duties with respect to this Plan, unless
                  there has been a final adjudication of gross negligence or
                  willful misconduct in the performance of such duties.

                  Further, except as may be otherwise provided by ERISA, the
                  Employer will indemnify the Trustee (or Custodian) and
                  Prototype Sponsor from any liability, claim or expense
                  (including legal expense) which the Trustee (or Custodian) and
                  Prototype Sponsor shall incur by reason of or which results,
                  in whole or in part, from the Trustee's (or Custodian's) or
                  Prototype Sponsor's reliance on the facts and other directions
                  and elections the Employer communicates or fails to
                  communicate.

         5.12     INVESTMENT MANAGERS

                  A.       Definition of Investment Manager - The Employer may
                           appoint one or more investment managers to make
                           investment decisions with respect to all or a portion
                           of the Fund. The investment manager shall be any firm
                           or individual registered as an investment adviser
                           under the Investment Advisers Act of 1940, a bank as
                           defined in said Act or an insurance company qualified
                           under the laws of more than one state to perform
                           services consisting of the management, acquisition or
                           disposition of any assets of the Plan.

                  B.       Investment Manager's Authority - A separate
                           Investment Fund shall be established representing the
                           assets of the Fund invested at the direction of the
                           investment manager. The investment manager so
                           appointed shall direct the Trustee (or Custodian, if
                           applicable ) with respect to the investment of such
                           Investment Fund. The investments which may be
                           acquired at the direction of the investment manager
                           are those described in Section 5.03(A) (for
                           Custodians) or Section 5.04(A) (for Trustees).

                  C.       Written Agreement - The appointment of any investment
                           manager shall be by written agreement between the
                           Employer and the investment manager and a copy of
                           such agreement (and any modification or termination
                           thereof) must be given to the Trustee (or Custodian).

                  The agreement shall set forth, among other matters, the
                  effective date of the investment manager's appointment and an
                  acknowledgement by the investment manager that it is a
                  fiduciary of the Plan under ERISA.

                  D.       Concerning the Trustee (or Custodian) - Written
                           notice of each appointment of an investment manager
                           shall be given to the Trustee (or Custodian) in
                           advance of the effective date of such appointment.
                           Such notice shall specify which portion of the Fund
                           will constitute the Investment Fund subject to the
                           investment manager's direction. The Trustee (or
                           Custodian) shall comply with the investment direction
                           given to it by the investment manager and will not be
                           liable for any loss which may result by reason of any
                           action (or inaction) it takes at the direction of the
                           investment manager.

                                       39
<PAGE>   58

         5.13     MATTERS RELATING TO INSURANCE

                  A.       If a life insurance policy is to be purchased for a
                           Participant, the aggregate premium for certain life
                           insurance for each Participant must be less than a
                           certain percentage of the aggregate Employer
                           Contributions and Forfeitures allocated to a
                           Participant's Individual Account at any particular
                           time as follows:

                           1.       Ordinary Life Insurance - For purposes of
                                    these incidental insurance provisions,
                                    ordinary life insurance contracts are
                                    contracts with both nondecreasing death
                                    benefits and nonincreasing premiums. If such
                                    contracts are purchased, less than 50% of
                                    the aggregate Employer Contributions and
                                    Forfeitures allocated to any Participant's
                                    Individual Account will be used to pay the
                                    premiums attributable to them,

                           2.       Term and Universal Life Insurance - No more
                                    than 25% of the aggregate Employer
                                    Contributions and Forfeitures allocated to
                                    any Participant's Individual Account will be
                                    used to pay the premiums on term life
                                    insurance contracts, universal life
                                    insurance contracts, and all other life
                                    insurance contracts which are not ordinary
                                    life.

                           3.       Combination - The sum of 50% of the ordinary
                                    life insurance premiums and all other life
                                    insurance premiums will not exceed 25% of
                                    the aggregate Employer Contributions and
                                    Forfeitures allocated to any Participant's
                                    Individual Account.

                           If this Plan is a profit sharing plan, the above
                           incidental benefits limits do not apply to life
                           insurance contracts purchased with Employer
                           Contributions and Forfeitures that have been in the
                           Participant's Individual Account for at least 2 full
                           Plan Years, measured from the date such contributions
                           were allocated.

                  B.       Any dividends or credits earned on insurance
                           contracts for a Participant shall be allocated to
                           such Participant's Individual Account.

                  C.       Subject to Section 6.05, the contracts on a
                           Participant's life will be converted to cash or an
                           annuity or distributed to the Participant upon
                           commencement of benefits.

                  D.       The Trustee (or Custodian, if applicable) shall apply
                           for and will be the owner of any insurance
                           contract(s) purchased under the terms of this Plan.
                           The insurance contract(s) must provide that proceeds
                           will be payable to the Trustee (or Custodian),
                           however, the Trustee (or Custodian) shall be required
                           to pay over all proceeds of the contract(s) to the
                           Participant's designated Beneficiary in accordance
                           with the distribution provisions of this Plan. A
                           Participant's spouse will be the designated
                           Beneficiary of the proceeds in all circumstances
                           unless a qualified election has been made in
                           accordance with Section 6.05. Under no circumstances
                           shall the Fund retain any part of the proceeds. In
                           the

                                       40
<PAGE>   59

                           event of any conflict between the terms of this Plan
                           and the terms of any insurance contract purchased
                           hereunder, the Plan provisions shall control.

                  E.       The Plan Administrator may direct the Trustee (or
                           Custodian) to sell and distribute insurance or
                           annuity contracts to a Participant (or other party as
                           may be permitted) in accordance with applicable law
                           or regulations.

         5.14     DIRECTION OF INVESTMENTS BY PARTICIPANT

                  If so indicated in the Adoption Agreement, each Participant
                  may individually direct the Trustee (or Custodian, if
                  applicable) regarding the investment of part or all of his or
                  her Individual Account. To the extent so directed, the
                  Employer, Plan Administrator, Trustee (or Custodian) and all
                  other fiduciaries are relieved of their fiduciary
                  responsibility under Section 404 of ERISA.

                  The Plan Administrator shall direct that a Separate Fund be
                  established in the name of each Participant who directs the
                  investment of part or all of his or her Individual Account.
                  Each Separate Fund shall be charged or credited (as
                  appropriate) with the earnings, gains, losses or expenses
                  attributable to such Separate Fund. No fiduciary shall be
                  liable for any loss which results from a Participant's
                  individual direction. The assets subject to individual
                  direction shall not be invested in collectibles as that term
                  is defined in Section 408(m) of the Code.

                  The Plan Administrator shall establish such uniform and
                  nondiscriminatory rules relating to individual direction as it
                  deems necessary or advisable including, but not limited to,
                  rules describing (1) which portions of Participant's
                  Individual Account can be individually directed; (2) the
                  frequency of investment changes; (3) the forms and procedures
                  for making investment changes; and (4) the effect of a
                  Participant's failure to make a valid direction.

                  The Plan Administrator may, in a uniform and nondiscriminatory
                  manner, limit the available investments for Participants'
                  individual direction to certain specified investment options
                  (including, but not limited to, certain mutual funds,
                  investment contracts, deposit accounts and group trusts). The
                  Plan Administrator may permit, in a uniform and
                  nondiscriminatory manner, a Beneficiary of a deceased
                  Participant or the alternate payee under a qualified domestic
                  relations order (as defined in Section 414(p) of the Code) to
                  individually direct in accordance with this Section.

SECTION SIX       VESTING AND DISTRIBUTION

         6.01     DISTRIBUTION TO PARTICIPANT

                  A.       Distributable Events

                           1.       Entitlement to Distribution - The Vested
                                    portion of a Participant's Individual
                                    Account shall be distributable to the
                                    Participant upon (1) the occurrence of any
                                    of the distributable events specified in the
                                    Adoption Agreement; (2) the Participant's

                                       41
<PAGE>   60

                                    Termination of Employment after attaining
                                    Normal Retirement Age; (3) the termination
                                    of the Plan; and (4) the Participant's
                                    Termination of Employment after satisfying
                                    any Early Retirement Age conditions.

                                    If a Participant separates from service
                                    before satisfying the Early Retirement Age
                                    requirement, but has satisfied the service
                                    requirement, the Participant will be
                                    entitled to elect an early retirement
                                    benefit upon satisfaction of such age
                                    requirement.

                           2.       Written Request: When Distributed - A
                                    Participant entitled to distribution who
                                    wishes to receive a distribution must submit
                                    a written request to the Plan Administrator.
                                    Such request shall be made upon a form
                                    provided by the Plan Administrator. Upon a
                                    valid request, the Plan Administrator shall
                                    direct the Trustee (or Custodian, if
                                    applicable) to commence distribution no
                                    later than the time specified in the
                                    Adoption Agreement for this purpose and, if
                                    not specified in the Adoption Agreement,
                                    then no later than 90 days following the
                                    later of:

                                    a.    the close of the Plan Year within
                                          which the event occurs which entitles
                                          the Participant to distribution; or

                                    b.    the close of the Plan Year in which
                                          the request is received.

                           3.       Special Rules for Withdrawals During Service
                                    - If this is a profit sharing plan and the
                                    Adoption Agreement so provides, a
                                    Participant may elect to receive a
                                    distribution of all or part of the Vested
                                    portion of his or her Individual Account,
                                    subject to the requirements of Section 6.05
                                    and further subject to the following limits:

                                    a.    Participant for 5 or more years. An
                                          Employee who has been a Participant in
                                          the Plan for 5 or more years may
                                          withdraw up to the entire Vested
                                          portion of his or her Individual
                                          Account.

                                    b.    Participant for less than 5 years. An
                                          Employee who has been a Participant in
                                          the Plan for less than 5 years may
                                          withdraw only the amount which has
                                          been in his or her Individual Account
                                          attributable to Employer Contributions
                                          for at least 2 full Plan Years.
                                          measured from the date such
                                          contributions were allocated. However,
                                          if the distribution is on account of
                                          hardship, the Participant may withdraw
                                          up to his or her entire Vested portion
                                          of the Participant's Individual
                                          Account. For this purpose, hardship
                                          shall have the meaning set forth in
                                          Section 6.01(A)(4) of the Code.

                                       42
<PAGE>   61

                           4.       Special Rules for Hardship Withdrawals - If
                                    this is a profit sharing plan and the
                                    Adoption Agreement so provides, a
                                    Participant may elect to receive a hardship
                                    distribution of all or part of the Vested
                                    portion of his or her Individual Account,
                                    subject to the requirements of Section 6.05
                                    and further subject to the following limits:

                                    a.    Participant for 5 or more years. An
                                          Employee who has been a Participant in
                                          the Plan for 5 or more years may
                                          withdraw up to the entire Vested
                                          portion of his or her Individual
                                          Account.

                                    b.    Participant for less than 5 years. An
                                          Employee who has been a Participant in
                                          the Plan for less than 5 years may
                                          withdraw only the amount which has
                                          been in his or her Individual Account
                                          attributable to Employer Contributions
                                          for at least 2 full Plan Years,
                                          measured from the date such
                                          contributions were allocated.

                                          For purposes of this Section
                                          6.01(A)(4) and Section 6.0l(A)(3)
                                          hardship is defined as an immediate
                                          and heavy financial need of the
                                          Participant where such Participant
                                          lacks other available resources. The
                                          following are the only financial needs
                                          considered immediate and heavy:
                                          expenses incurred or necessary for
                                          medical care, described in Section 2
                                          13(d) of the Code, of the Employee,
                                          the Employee's spouse or dependents;
                                          the purchase (excluding mortgage
                                          payments) of a principal residence for
                                          the Employee; payment of tuition and
                                          related educational fees for the next
                                          12 months of post-secondary education
                                          for the Employee, the Employee's
                                          spouse, children or dependents; or the
                                          need to prevent the eviction of the
                                          Employee from, or a foreclosure on the
                                          mortgage of, the Employee's principal
                                          residence.

                                          A distribution will be considered as
                                          necessary to satisfy an immediate and
                                          heavy financial need of the Employee
                                          only if:

                                          1)       The employee has obtained all
                                                   distributions, other than
                                                   hardship distributions, and
                                                   all nontaxable loans under
                                                   all plans maintained by the
                                                   Employer;

                                          2)       The distribution is not in
                                                   excess of the amount of an
                                                   immediate and heavy financial
                                                   need (including amounts
                                                   necessary to pay any federal,
                                                   state or local income taxes
                                                   or penalties reasonably
                                                   anticipated to result from
                                                   the distribution).

                                       43
<PAGE>   62

                           5.       One-Time In-Service Withdrawal Option - If
                                    this is a profit sharing plan and the
                                    Employer has elected the one-time in-service
                                    withdrawal option in the Adoption Agreement,
                                    then Participants will be permitted only one
                                    in-service withdrawal during the course of
                                    such Participants employment with the
                                    Employer. The amount which the Participant
                                    can withdraw will be limited to the lesser
                                    of the amount determined under the limits
                                    set forth in Section 6.01(A)(3) or the
                                    percentage of the Participant's Individual
                                    Account specified by the Employer in the
                                    Adoption Agreement. Distributions under this
                                    Section will be subject to the requirements
                                    of Section 6.05.

                           6.       Commencement of Benefits - Notwithstanding
                                    any other provision, unless the Participant
                                    elects otherwise, distribution of benefits
                                    will begin no later than the 60th day after
                                    the latest of the close of the Plan Year in
                                    which:

                                    a.    the Participant attains Normal
                                          Retirement Age;

                                    b.    occurs the 10th anniversary of the
                                          year in which the Participant
                                          commenced participation in the Plan;
                                          or

                                    c.    the Participant incurs a Termination
                                          of Employment.

                           Notwithstanding the foregoing, the failure of a
                           Participant and spouse to consent to a distribution
                           while a benefit is immediately distributable, within
                           the meaning of Section 6.02(B) of the Plan, shall be
                           deemed to be an election to defer commencement of
                           payment of any benefit sufficient to satisfy this
                           Section.

                  B.       Determining the Vested Portion - In determining the
                           Vested portion of a Participant's Individual Account,
                           the following rules apply:

                           1.       Employer Contributions and Forfeitures - The
                                    Vested portion of a Participant's Individual
                                    Account derived from Employer Contributions
                                    and Forfeitures is determined by applying
                                    the vesting schedule selected in the
                                    Adoption Agreement (or the vesting schedule
                                    described in Section 6.01(C) if the Plan is
                                    a Top-Heavy Plan).

                           2.       Rollover and Transfer Contributions - A
                                    Participant is fully Vested in his or her
                                    rollover contributions and transfer
                                    contributions.

                           3.       Fully Vested Under Certain Circumstances - A
                                    Participant is fully Vested in his or her
                                    Individual Account if any of the following
                                    occurs:

                                    a.    the Participant reaches Normal
                                          Retirement Age;

                                       44
<PAGE>   63

                                    b.    the Plan is terminated or partially
                                          terminated; or

                                    c.    there exists a complete discontinuance
                                          of contributions under the Plan.

                                    Further, unless otherwise indicated in the
                                    Adoption Agreement, a Participant is fully
                                    Vested if the Participant dies, incurs a
                                    Disability, or satisfies the conditions for
                                    Early Retirement Age (if applicable).

                           4.       Participants in a Prior Plan - If a
                                    Participant was a participant in a Prior
                                    Plan on the Effective Date, his or her
                                    Vested percentage shall not be less than it
                                    would have been under such Prior Plan as
                                    computed on the Effective Date.

                  C.       Minimum Vesting Schedule for Top-Heavy Plans - The
                           following vesting provisions apply for any Plan Year
                           in which this Plan is a Top-Heavy Plan.

                           Notwithstanding the other provisions of this Section
                           6.01 or the vesting schedule selected in the Adoption
                           Agreement (unless those provisions or that schedule
                           provide for more rapid vesting), a Participant's
                           Vested portion of his or her Individual Account
                           attributable to Employer Contributions and
                           Forfeitures shall be determined in accordance with
                           the vesting schedule elected by the Employer in the
                           Adoption Agreement (and if no election is made the 6
                           year graded schedule will be deemed to have been
                           elected) as described below:

            6 YEAR GRADED                             3 YEAR CLIFF

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

       1                    0                    1                    0
       2                   20                    2                    0
       3                   40                    3                  100
       4                   60
       5                   80
       6                  100

                           This minimum vesting schedule applies to all benefits
                           within the meaning of Section 411 (a)(7) of the Code,
                           except those attributable to Nondeductible Employee
                           Contributions including benefits accrued before the
                           effective date of Section 416 of the Code and
                           benefits accrued before the Plan became a Top-Heavy
                           Plan. Further, no decrease in a Participant's Vested
                           percentage may occur in the event the Plan's status
                           as a Top-Heavy Plan changes for any Plan Year.
                           However, this Section 6.0 1(C) does not apply to the
                           Individual Account of any Employee who does not have
                           an Hour of Service after the Plan has initially
                           become a Top-Heavy Plan and such Employee's
                           Individual Account attributable to

                                       45
<PAGE>   64

                           Employer Contributions and Forfeitures will be
                           determined without regard to this Section.

                           If this Plan ceases to be a Top-Heavy Plan, then in
                           accordance with the above restrictions, the vesting
                           schedule as selected in the Adoption Agreement will
                           govern. If the vesting schedule under the Plan shifts
                           in or out of top-heavy status, such shift is an
                           amendment to the vesting schedule and the election in
                           Section 9.04 applies.

                  D.       Break in Vesting Service and Forfeitures - If a
                           Participant incurs a Termination of Employment, any
                           portion of his or her Individual Account which is not
                           Vested shall be held in a suspense account. Such
                           suspense account shall share in any increase or
                           decrease in the fair market value of the assets of
                           the Fund in accordance with Section 4 of the Plan.
                           The disposition of such suspense account shall be as
                           follows:

                           1.       Breaks in Vesting Service - If a Participant
                                    neither receives nor is deemed to receive a
                                    distribution pursuant to Section 6.01(D)(3)
                                    or (4) and the Participant returns to the
                                    service of the Employer before incurring 5
                                    consecutive Breaks in Vesting Service, there
                                    shall be no Forfeiture and the amount in
                                    such suspense account shall be recredited to
                                    such Participant's Individual Account.

                           2.       Five Consecutive Breaks in Vesting Service -
                                    If a Participant neither receives nor is
                                    deemed to receive a distribution pursuant to
                                    Section 6.01(D)(3) or (4) and the
                                    Participant does not return to the service
                                    of the Employer before incurring 5
                                    consecutive Breaks in Vesting Service, the
                                    portion of the Participant's Individual
                                    Account which is not Vested shall be treated
                                    as a Forfeiture and allocated in accordance
                                    with Section 3.01(C).

                           3.       Cash-out of Certain Participants - If the
                                    value of the Vested portion of such
                                    Participant's Individual Account derived
                                    from Nondeductible Employee Contributions
                                    and Employer Contributions does not exceed
                                    $3,500, the Participant shall receive a
                                    distribution of the entire Vested portion of
                                    such Individual Account and the portion
                                    which is not Vested shall be created as a
                                    Forfeiture and allocated in accordance with
                                    Section 3.01(C). For purposes of this
                                    Section, if the value of the Vested portion
                                    of a Participant's Individual Account is
                                    zero, the Participant shall be deemed to
                                    have received a distribution of such Vested
                                    Individual Account. A Participant's Vested
                                    Individual Account balance shall not include
                                    accumulated deductible employee
                                    contributions within the meaning of Section
                                    72(o)(5)(B) of the Code for Plan Years
                                    beginning prior to January 1, 1989.

                           4.       Participants Who Elect to Receive
                                    Distributions - If such Participant elects
                                    to receive a distribution, in accordance
                                    with Section 6.02(B), of the value of the
                                    Vested portion of his or her

                                       46
<PAGE>   65

                                    Individual Account derived from
                                    Nondeductible Employee Contributions and
                                    Employer Contributions, the portion which is
                                    not Vested shall be treated as a Forfeiture
                                    and allocated in accordance with Section
                                    3.01(C).

                           5.       Re-employed Participants - If a Participant
                                    receives or is deemed to receive a
                                    distribution pursuant to Section 6.0l(D)(3)
                                    or (4) above and the Participant resumes
                                    employment covered under this Plan, the
                                    Participant's Employer-derived Individual
                                    Account balance will be restored to the
                                    amount on the date of distribution if the
                                    Participant repays to the Plan the full
                                    amount of the distribution attributable to
                                    Employer Contributions before the earlier of
                                    5 years after the first date on which the
                                    Participant is subsequently re-employed by
                                    the Employer, or the date the Participant
                                    incurs 5 consecutive Breaks in Vesting
                                    Service following the date of the
                                    distribution.

                           Any restoration of a Participant's Individual Account
                           pursuant to Section 6.01(D)(5) shall be made from
                           other Forfeitures, income or gain to the Fund or
                           contributions made by the Employer.

                  E.       Distribution Prior to Full Vesting - If a
                           distribution is made to a Participant who was not
                           then fully Vested in his or her Individual Account
                           derived from Employer Contributions and the
                           Participant may increase his or her Vested percentage
                           in his or her Individual Account, then the following
                           rules shall apply:

                           1.       a separate account will be established for
                                    the Participant's interest in the Plan as of
                                    the time of the distribution, and

                           2.       at any relevant time the Participant's
                                    Vested portion of the separate account will
                                    be equal to an amount ("X") determined by
                                    the formula: X=P (AB + (R x D)) - (R x D)
                                    where "P" is the Vested percentage at the
                                    relevant time, "AB" is the separate account
                                    balance at the relevant time; "D" is the
                                    amount of the distribution; and "R" is the
                                    ratio of the separate account balance at the
                                    relevant time to the separate account
                                    balance after distribution.

         6.02     FORM OF DISTRIBUTION TO A PARTICIPANT

                  A.       Value of Individual Account Does Not Exceed $3,500 -
                           If the value of the Vested portion of a Participant's
                           Individual Account derived from Nondeductible
                           Employee Contributions and Employer Contributions
                           does not exceed $3,500, distribution from the Plan
                           shall be made to the Participant in a single lump sum
                           in lieu of all other forms of distribution from the
                           Plan as soon as administratively feasible.

                  B.       Value of Individual Account Exceeds $3,500

                                       47
<PAGE>   66

                           1.       If the value of the Vested portion of a
                                    Participant's Individual Account derived
                                    from Nondeductible Employee Contributions
                                    and Employer Contributions exceeds (or at
                                    the time of any prior distribution exceeded)
                                    $3,500, and the Individual Account is
                                    immediately distributable, the Participant
                                    and the Participant's spouse (or where
                                    either the Participant or the spouse died,
                                    the survivor) must consent to any
                                    distribution of such Individual Account. The
                                    consent of the Participant and the
                                    Participant's spouse shall be obtained in
                                    writing within the 90-day period ending on
                                    the annuity starting date. The annuity
                                    starting date is the first day of the first
                                    period for which an amount is paid as an
                                    annuity or any other form. The Plan
                                    Administrator shall notify the Participant
                                    and the Participant's spouse of the right to
                                    defer any distribution until the
                                    Participant's Individual Account is no
                                    longer immediately distributable. Such
                                    notification shall include a general
                                    description of the material features, and an
                                    explanation of the relative values of, the
                                    optional forms of benefit available under
                                    the Plan in a manner that would satisfy the
                                    notice requirements of Section 417(a)(3) of
                                    the Code, and shall be provided no less than
                                    30 days and no more than 90 days prior to
                                    the annuity starting date.

                                    If a distribution is one to which Sections
                                    401(a)(11) and 417 of the Internal Revenue
                                    Code do not apply, such distribution may
                                    commence less than 30 days after the notice
                                    required under Section 1.411(a)-11(c) of the
                                    Income Tax Regulations is given, provided
                                    that:

                                    a.    the Plan Administrator clearly informs
                                          the Participant that the Participant
                                          has a right to a period of at least 30
                                          days after receiving the notice to
                                          consider the decision of whether or
                                          not to elect a distribution (and, if
                                          applicable, a particular distribution
                                          option), and

                                    b.    the Participant, after receiving the
                                          notice, affirmatively elects a
                                          distribution.

                                    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
                                    Individual Account is immediately
                                    distributable.

                                    Neither the consent of the Participant nor
                                    the Participant's spouse shall be required
                                    to the extent that a distribution is
                                    required to satisfy Section 40l(a)(9) or
                                    Section 415 of the Code. In addition, upon
                                    termination of this Plan if the Plan does
                                    not offer an annuity option (purchased from
                                    a commercial provider), the Participant's
                                    Individual Account may, without the
                                    Participant's consent, be distributed to the
                                    Participant or transferred to another
                                    defined contribution plan (other than an

                                       48
<PAGE>   67

                                    employee stock ownership plan as defined in
                                    Section 4975(e)(7) of the Code) within the
                                    same controlled group.

                                    An Individual Account is immediately
                                    distributable if any part of the Individual
                                    Account could be distributed to the
                                    Participant (or surviving spouse) before the
                                    Participant attains or would have attained
                                    (if not deceased) the later of Normal
                                    Retirement Age or age 62.

                           2.       For purposes of determining the
                                    applicability of the foregoing consent
                                    requirements to distributions made before
                                    the first day of the first Plan Year
                                    beginning after December 31, 1988, the
                                    Vested portion of a Participant's Individual
                                    Account shall not include amounts
                                    attributable to accumulated deductible
                                    employee contributions within the meaning of
                                    Section 72(o)(5)(B) of the Code.

                  C.       Other Forms of Distribution to Participant - If the
                           value of the Vested portion of a Participant's
                           Individual Account exceeds $3,500 and the Participant
                           has properly waived the joint and survivor annuity,
                           as described in Section 6.05, the Participant may
                           request in writing that the Vested portion of his or
                           her Individual Account be paid to him or her in one
                           or more of the following forms of payment: (1) in a
                           lump sum; (2) in installment payments over a period
                           not to exceed the life expectancy of the Participant
                           or the joint and last survivor life expectancy of the
                           Participant and his or her designated Beneficiary; or
                           (3) applied to the purchase of an annuity contract.

                           Notwithstanding anything in this Section 6.02 to the
                           contrary, a Participant cannot elect payments in the
                           form of an annuity if the Retirement Equity Act safe
                           harbor rules of Section 6.05(F) apply.

         6.03     DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT

                  A.       Designation of Beneficiary - Spousal Consent - Each
                           Participant may designate, upon a form provided by
                           and delivered to the Plan Administrator, one or more
                           primary and contingent Beneficiaries to receive all
                           or a specified portion of the Participant's
                           Individual Account in the event of his or her death.
                           A Participant may change or revoke such Beneficiary
                           designation from time to time by completing and
                           delivering the proper form to the Plan Administrator.

                           In the event that a Participant wishes to designate a
                           primary Beneficiary who is not his or her spouse, his
                           or her spouse must consent in writing to such
                           designation, and the spouse's consent must
                           acknowledge the effect of such designation and be
                           witnessed by a notary public or plan representative.
                           Notwithstanding this consent requirement, if the
                           Participant establishes to the satisfaction of the
                           Plan Administrator that such written consent may not
                           be obtained because there is no spouse or the spouse
                           cannot be located, no consent shall be required. Any
                           change of Beneficiary will require a new spousal
                           consent.

                                       49
<PAGE>   68

                  B.       Payment to Beneficiary - If a Participant dies before
                           the Participant's entire Individual Account has been
                           paid to him or her, such deceased Participant's
                           Individual Account shall be payable to any surviving
                           Beneficiary designated by the Participant, or, if no
                           Beneficiary survives the Participant, to the
                           Participant's estate. C. Written Request: When
                           Distributed - A Beneficiary of a deceased Participant
                           entitled to a distribution who wishes to receive a
                           distribution must submit a written request to the
                           Plan Administrator. Such request shall be made upon a
                           form provided by the Plan Administrator, Upon a valid
                           request, the Plan Administrator shall direct the
                           Trustee (or Custodian) to commence distribution no
                           later than the time specified in the Adoption
                           Agreement for this purpose and if not specified in
                           the Adoption Agreement, then no later than 90 days
                           following the later of:

                           1.       the close of the Plan Year within which the
                                    Participant dies; or

                           2.       the close of the Plan Year in which the
                                    request is received.

         6.04     FORM OF DISTRIBUTION TO BENEFICIARY

                  A.       Value of Individual Account Does Not Exceed $3,500 -
                           If the value of the Participant's Individual Account
                           derived from Nondeductible Employee Contributions and
                           Employer Contributions does not exceed $3,500, the
                           Plan Administrator shall direct the Trustee (or
                           Custodian, if applicable) to make a distribution to
                           the Beneficiary in a single lump sum in lieu of all
                           other forms of distribution from the Plan.

                  B.       Value of Individual Account Exceeds $3,500 - If the
                           value of a Participant's Individual Account derived
                           from Nondeductible Employee Contributions and
                           Employer Contributions exceeds $3,500 the
                           preretirement survivor annuity requirements of
                           Section 6.05 shall apply unless waived in accordance
                           with that Section or unless the Retirement Equity Act
                           safe harbor rules of Section 6.05(F) apply. However,
                           a surviving spouse Beneficiary may elect any form of
                           payment allowable under the Plan in lieu of the
                           preretirement survivor annuity. Any such payment to
                           the surviving spouse must meet the requirements of
                           Section 6.06.

                  C.       Other Forms of Distribution to Beneficiary - If the
                           value of a Participant's Individual Account exceeds
                           $3,500 and the Participant has properly waived the
                           preretirement survivor annuity, as described in
                           Section 6.05 (if applicable) or if the Beneficiary is
                           the Participant's surviving spouse, the Beneficiary
                           may, subject to the requirements of Section 6.06,
                           request in writing that the Participant's Individual
                           Account be paid as follows: (1) in a lump sum; or (2)
                           in installment payments over a period not to exceed
                           the life expectancy of such Beneficiary.

                                       50
<PAGE>   69

         6.05     JOINT AND SURVIVOR ANNUITY REQUIREMENTS

                  A.       The provisions of this Section shall apply to any
                           Participant who is credited with at least one Hour of
                           Eligibility Service with the Employer on or after
                           August 23, 1984, and such other Participants as
                           provided in Section 6.05(G).

                  B.       Qualified Joint and Survivor Annuity - Unless an
                           optional form of benefit is selected pursuant to a
                           qualified election within the 90-day period ending on
                           the annuity starting date, a married Participant's
                           Vested account balance will be paid in the form of a
                           qualified joint and survivor annuity and an unmarried
                           Participant's Vested account balance will be paid in
                           the form of a life annuity. The Participant may elect
                           to have such annuity distributed upon attainment of
                           the earliest retirement age under the Plan.

                  C.       Qualified Preretirement Survivor Annuity - Unless an
                           optional form of benefit has been selected within the
                           election period pursuant to a qualified election, if
                           a Participant dies before the annuity starting date
                           then the Participant's Vested account balance shall
                           be applied toward the purchase of an annuity for the
                           life of the surviving spouse. The surviving spouse
                           may elect to have such annuity distributed within a
                           reasonable period after the Participant's death.

                  D.       Definitions

                           1.       Election Period - The period which begins on
                                    the first day of the Plan Year in which the
                                    Participant attains age 35 and ends on the
                                    date of the Participant's death. If a
                                    Participant separates from service prior to
                                    the first day of the Plan Year in which age
                                    35 is attained, with respect to the account
                                    balance as of the date of separation, the
                                    election period shall begin on the date of
                                    separation.

                                    Pre-age 35 waiver - A Participant who will
                                    not yet attain age 35 as of the end of any
                                    current Plan Year may make special qualified
                                    election to waive the qualified
                                    preretirement survivor annuity for the
                                    period beginning on the date of such
                                    election and ending on the first day of the
                                    Plan Year in which the Participant will
                                    attain age 35. Such election shall not be
                                    valid unless the Participant receives a
                                    written explanation of the qualified
                                    preretirement survivor annuity in such terms
                                    as are comparable to the explanation
                                    required under Section 6.05(E)(1). Qualified
                                    preretirement survivor annuity coverage will
                                    be automatically reinstated as of the first
                                    day of the Plan Year in which the
                                    Participant attains age 35. Any new waiver
                                    on or after such date shall be subject to
                                    the full requirements of this Section 6.05.

                           2.       Earliest Retirement Age - The earliest date
                                    on which, under the Plan, the Participant
                                    could elect to receive retirement benefits.

                                       51
<PAGE>   70

                           3.       Qualified Election - A waiver of a qualified
                                    joint and survivor annuity or a qualified
                                    preretirement survivor annuity. Any waiver
                                    of a qualified joint and survivor annuity or
                                    a qualified preretirement survivor annuity
                                    shall not be effective unless: (a) the
                                    Participant's spouse consents in writing to
                                    the election, (b) the election designates a
                                    specific Beneficiary, including any class of
                                    beneficiaries or any contingent
                                    beneficiaries, which may not be changed
                                    without spousal consent (or the spouse
                                    expressly permits designations by the
                                    Participant without any further spousal
                                    consent); (c) the spouse's consent
                                    acknowledges the effect of the election; and
                                    (d) the spouse's consent is witnessed by a
                                    plan representative or notary public.
                                    Additionally, a Participant's waiver of the
                                    qualified joint and survivor annuity shall
                                    not be effective unless the election
                                    designates a form of benefit payment which
                                    may not be changed without spousal consent
                                    (or the spouse expressly permits
                                    designations by the Participant without any
                                    further spousal consent). If it is
                                    established to the satisfaction of a plan
                                    representative that there is no spouse or
                                    that the spouse cannot be located, a waiver
                                    will be deemed a qualified election.

                                    Any consent by a spouse obtained under this
                                    provision (or establishment that the consent
                                    of a spouse may not be obtained) shall be
                                    effective only with respect to such spouse.
                                    A consent that permits designations by the
                                    Participant without any requirement of
                                    further consent by such spouse must
                                    acknowledge that the spouse has the right to
                                    limit consent to a specific Beneficiary, and
                                    a specific form of benefit where applicable,
                                    and that the spouse voluntarily elects to
                                    relinquish either or both of such rights. A
                                    revocation of a prior waiver may be made by
                                    a Participant without the consent of the
                                    spouse at any time before the commencement
                                    of benefits.

                           The number of revocations shall not be limited. No
                           consent obtained under this provision shall be valid
                           unless the Participant has received notice as
                           provided in Section 61)5(E) below.

                           4.       Qualified Joint and Survivor Annuity - An
                                    immediate annuity for the life of the
                                    Participant with a survivor annuity for the
                                    life of the spouse which is not less than
                                    50% and not more than 100% of the amount of
                                    the annuity which is payable during the
                                    joint lives of the Participant and the
                                    spouse and which is the amount of benefit
                                    which can be purchased with the
                                    Participant's vested account balance. The
                                    percentage of the survivor annuity under the
                                    Plan shall be 50% (unless a different
                                    percentage is elected by the Employer in the
                                    Adoption Agreement).

                           5.       Spouse (surviving spouse) - The spouse or
                                    surviving spouse of the Participant,
                                    provided that a former spouse will be
                                    treated as the spouse or surviving spouse
                                    and a current spouse will not be treated as
                                    the spouse or surviving spouse to the extent
                                    provided

                                       52
<PAGE>   71

                                    under a qualified domestic relations order
                                    as described in Section 414(p) of the Code.

                           6.       Annuity Starting Date - The first day of the
                                    first period for which an amount is paid as
                                    an annuity or any other form.

                           7.       Vested Account Balance - The aggregate value
                                    of the Participant's Vested account balances
                                    derived from Employer and Nondeductible
                                    Employee Contributions (including
                                    rollovers), whether Vested before or upon
                                    death, including the proceeds of insurance
                                    contracts, if any, on the Participant's
                                    life. The provisions of this Section 6.05
                                    shall apply to a Participant who is Vested
                                    in amounts attributable to Employer
                                    Contributions, Nondeductible Employee
                                    Contributions (or both) at the time of death
                                    or distribution.

                  E.       Notice Requirements

                           1.       In the case of a qualified joint and
                                    survivor annuity, the Plan Administrator
                                    shall no less than 30 days and not more than
                                    90 days prior to the annuity starting date
                                    provide each Participant a written
                                    explanation of: (a) the terms and conditions
                                    of a qualified joint and survivor annuity;
                                    (b) the Participant's right to make and the
                                    effect of an election to waive the qualified
                                    joint and survivor annuity form of benefit;
                                    (c) the rights of a Participant's spouse;
                                    and (d) the right to make, and the effect
                                    of, a revocation of a previous election to
                                    waive the qualified joint and survivor
                                    annuity.

                           2.       In the case of a qualified preretirement
                                    annuity as described in Section 6.05(C), the
                                    Plan Administrator shall provide each
                                    Participant within the applicable period for
                                    such Participant a written explanation of
                                    the qualified preretirement survivor annuity
                                    in such terms and in such manner as would be
                                    comparable to the explanation provided for
                                    meeting the requirements of Section
                                    6.05(E)(1) applicable to a qualified joint
                                    and survivor annuity.

                                    The applicable period for a Participant is
                                    whichever of the following periods ends
                                    last: (a) the period beginning with the
                                    first day of the Plan Year in which the
                                    Participant attains age 32 and ending with
                                    the close of the Plan Year preceding the
                                    Plan Year in which the Participant attains
                                    age 35; (b) a reasonable period ending after
                                    the individual becomes a Participant; (c) a
                                    reasonable period ending after Section
                                    6.05(E)(3) ceases to apply to the
                                    Participant; and (d) a reasonable period
                                    ending after this Section 6.05 first applies
                                    to the Participant. Notwithstanding the
                                    foregoing, notice must be provided within a
                                    reasonable period ending after separation
                                    from service in the case of a Participant
                                    who separates from service before attaining
                                    age 35.

                                       53
<PAGE>   72

                                    For purposes of applying the preceding
                                    paragraph, a reasonable period ending after
                                    the enumerated events described in (b), (c)
                                    and (d) is the end of the two-year period
                                    beginning one year prior to the date the
                                    applicable event occurs, and ending one year
                                    after that date. In the case of a
                                    Participant who separates from service
                                    before the Plan Year in which age 35 is
                                    attained, notice shall be provided within
                                    the two-year period beginning one year prior
                                    to separation and ending one year after
                                    separation. If such a Participant thereafter
                                    returns to employment with the Employer, the
                                    applicable period for such Participant shall
                                    be redetermined.

                           3.       Notwithstanding the other requirements of
                                    this Section 6.05(E), the respective notices
                                    prescribed by this Section 6.05(E), need not
                                    be given to a Participant if (a) the Plan
                                    "fully subsidizes" the costs of a qualified
                                    joint and survivor annuity or qualified
                                    preretirement survivor annuity, and (b) the
                                    Plan does not allow the Participant to waive
                                    the qualified joint and survivor annuity or
                                    qualified preretirement survivor annuity and
                                    does not allow a married Participant to
                                    designate a nonspouse beneficiary. For
                                    purposes of this Section 6.05(E)(3), a plan
                                    fully subsidizes the costs of a benefit if
                                    no increase in cost, or decrease in benefits
                                    to the Participant may result from the
                                    Participant's failure to elect another
                                    benefit.

                  F.       Retirement Equity Act Safe Harbor Rules

                           1.       If the Employer so indicates in the Adoption
                                    Agreement, this Section 6.05(F) shall apply
                                    to a Participant in a profit sharing plan,
                                    and shall always apply to any distribution,
                                    made on or after the first day of the first
                                    Plan Year beginning after December 31, 1988:
                                    from or under a separate account
                                    attributable solely to accumulated
                                    deductible employee contributions, as
                                    defined in Section 72(o)(5)(B) of the Code,
                                    and maintained on behalf of a Participant in
                                    a money purchase pension plan, (including a
                                    target benefit plan) if the following
                                    conditions are satisfied:

                                    a.    the Participant does not or cannot
                                          elect payments in the form of a life
                                          annuity; and

                                    b.    on the death of a Participant, the
                                          Participant's Vested account balance
                                          will be paid to the Participant's
                                          surviving spouse, but if there is no
                                          surviving spouse, or if the surviving
                                          spouse has consented in a manner
                                          conforming to a qualified election,
                                          then to the Participant's designated
                                          Beneficiary. The surviving spouse may
                                          elect to have distribution of the
                                          Vested account balance commence within
                                          the 90-day period following the date
                                          of the Participant's death. The
                                          account balance shall be adjusted for
                                          gains or losses occurring after the
                                          Participant's death in accordance with

                                       54
<PAGE>   73

                                          the provisions of the Plan governing
                                          the adjustment of account balances for
                                          other types of distributions. This
                                          Section 6.05(F) shall not be operative
                                          with respect to a Participant in a
                                          profit sharing plan if the plan is a
                                          direct or indirect transferee of a
                                          defined benefit plan, money purchase
                                          plan, a target benefit plan, stock
                                          bonus, or profit sharing plan which is
                                          subject to the survivor annuity
                                          requirements of Section 401(a)(11) and
                                          Section 417 of the code. If this
                                          Section 6.05(F) is operative, then the
                                          provisions of this Section 6.05 other
                                          than Section 6.05(G) shall be
                                          inoperative.

                           2.       The Participant may waive the spousal death
                                    benefit described in this Section 6.05(F) at
                                    any time provided that no such waiver shall
                                    be effective unless it satisfies the
                                    conditions of Section 6.05(D)(3) (other than
                                    the notification requirement referred to
                                    therein) that would apply to the
                                    Participant's waiver of the qualified
                                    preretirement survivor annuity.

                           3.       For purposes of this Section 6.05(F), Vested
                                    account balance shall mean, in the case of a
                                    money purchase pension plan or a target
                                    benefit plan, the Participant's separate
                                    account balance attributable solely to
                                    accumulated deductible employee
                                    contributions within the meaning of Section
                                    72(o)(5)(B) of the Code. In the case of a
                                    profit sharing plan, Vested account balance
                                    shall have the same meaning as provided in
                                    Section 6.05(D)(7).

                  G.       Transitional Rules

                           1.       Any living Participant not receiving
                                    benefits on August 23, 1984, who would
                                    otherwise not receive the benefits
                                    prescribed by the previous subsections of
                                    this Section 6.05 must be given the
                                    opportunity to elect to have the prior
                                    subsections of this Section apply if such
                                    Participant is credited with at least one
                                    Hour of Service under this Plan or a
                                    predecessor plan in a Plan Year beginning on
                                    or after January 1, 1976, and such
                                    Participant had at least 10 Years of Vesting
                                    Service when he or she separated from
                                    service.

                           2.       Any living Participant not receiving
                                    benefits on August 23, 1984, who was
                                    credited with at least one Hour of Service
                                    under this Plan or a predecessor plan on or
                                    after September 2, 1974, and who is not
                                    otherwise credited with any service in a
                                    Plan Year beginning on or after January 1,
                                    1976, must be given the opportunity to have
                                    his or her benefits paid in accordance with
                                    Section 6.05(G)(4).

                           3.       The respective opportunities to elect (as
                                    described in Section 6.05(G)(1) and (2)
                                    above) must be afforded to the appropriate
                                    Participants during the period commencing on
                                    August 23, 1984,

                                       55
<PAGE>   74

                                    and ending on the date benefits would
                                    otherwise commence to said Participants.

                           4.       Any Participant who has elected pursuant to
                                    Section 6.05(G)(2) and any Participant who
                                    does not elect under Section 6.05(G)(I) or
                                    who meets the requirements of Section
                                    6.05(G)(1) except that such Participant does
                                    not have at least 10 Years of Vesting
                                    Service when he or she separates from
                                    service, shall have his or her benefits
                                    distributed in accordance with all of the
                                    following requirements if benefits would
                                    have been payable in the form of a life
                                    annuity:

                                    a.    Automatic Joint and Survivor Annuity -
                                          If benefits in the form of a life
                                          annuity become payable to a married
                                          Participant who:

                                          (1)      begins to receive payments
                                                   under the Plan on or after
                                                   Normal Retirement Age; or

                                          (2)      dies on or after Normal
                                                   Retirement Age while still
                                                   working for the Employer; or

                                          (3)      begins to receive payments on
                                                   or after the qualified early
                                                   retirement age; or

                                          (4)      separates from service on or
                                                   after attaining Normal
                                                   Retirement Age (or the
                                                   qualified early retirement
                                                   age) and after satisfying the
                                                   eligibility requirements for
                                                   the payment of benefits under
                                                   the Plan and thereafter dies
                                                   before beginning to receive
                                                   such benefits; then such
                                                   benefits will be received
                                                   under this Plan in the form
                                                   of a qualified joint and
                                                   survivor annuity, unless the
                                                   Participant has elected
                                                   otherwise during the election
                                                   period. The election period
                                                   must begin at least 6 months
                                                   before the Participant
                                                   attains qualified early
                                                   retirement age and ends not
                                                   more than 90 days before the
                                                   commencement of benefits. Any
                                                   election hereunder will be in
                                                   writing and may be changed by
                                                   the Participant at any time.

                                    b.    Election of Early Survivor Annuity - A
                                          Participant who is employed after
                                          attaining the qualified early
                                          retirement age will be given the
                                          opportunity to elect, during the
                                          election period, to have a survivor
                                          annuity payable on death. If the
                                          Participant elects the survivor
                                          annuity, payments under such annuity
                                          must not be less than the payments
                                          which would have been made to the
                                          spouse under the qualified joint and
                                          survivor annuity if the Participant
                                          had retired on the day before his or
                                          her death.

                                       56
<PAGE>   75

                                          Any election under this provision will
                                          be in writing and may be changed by
                                          the Participant at any time. The
                                          election period begins on the later of
                                          (1) the 90th day before the
                                          Participant attains the qualified
                                          early retirement age, or (2) the date
                                          on which participation begins, and
                                          ends on the date the Participant
                                          terminates employment.

                                    c.    For purposes of Section 6.05(G)(4):

                                          1.       Qualified early retirement
                                                   age is the latest of:

                                                   a.    the earliest date,
                                                         under the Plan, on
                                                         which the Participant
                                                         may elect to receive
                                                         retirement benefits,

                                                   b.    the first day of the
                                                         120th month beginning
                                                         before the Participant
                                                         reaches Normal
                                                         Retirement Age, or

                                                   c.    the date the
                                                         Participant begins
                                                         participation.

                                          2.       Qualified joint and survivor
                                                   annuity is an annuity for the
                                                   life of the Participant with
                                                   a survivor annuity for the
                                                   life of the spouse as
                                                   described in Section
                                                   6.05(D)(4) of this Plan.

         6.06     DISTRIBUTION REQUIREMENTS

                  A.       General Rules

                           1.       Subject to Section 6.05 Joint and Survivor
                                    Annuity Requirements, the requirements of
                                    this Section shall apply to any distribution
                                    of a Participant's interest and will take
                                    precedence over any inconsistent provisions
                                    of this Plan. Unless otherwise specified,
                                    the provisions of this Section 6.06 apply to
                                    calendar years beginning after December 31,
                                    1984.

                           2.       All distributions required under this
                                    Section 6.06 shall be determined and made in
                                    accordance with the Income Tax Regulations
                                    under Section 401(a)(9), including the
                                    minimum distribution incidental benefit
                                    requirement of Section 1 .401(a)(9)-2 of the
                                    proposed regulations.

                  B.       Required Beginning Date - The entire interest of a
                           Participant must be distributed or begin to be
                           distributed no later than the Participant's required
                           beginning date.

                                       57
<PAGE>   76

                  C.       Limits on Distribution Periods - As of the first
                           distribution calendar year, distributions, if not
                           made in a single sum, may only be made over one of
                           the following periods (or a combination thereof):

                           1.       the life of the Participant,

                           2.       the life of the Participant and a designated
                                    Beneficiary,

                           3.       a period certain not extending beyond the
                                    life expectancy of the Participant, or

                           4.       a period certain not extending beyond the
                                    joint and last survivor expectancy of the
                                    Participant and a designated Beneficiary.

                  D.       Determination of Amount to be Distributed Each Year -
                           If the Participant's interest is to be distributed in
                           other than a single sum, the following minimum
                           distribution rules shall apply on or after the
                           required beginning date:

                           1.       Individual Account

                                    a.    If a Participant's benefit is to be
                                          distributed over (1) a period not
                                          extending beyond the life expectancy
                                          of the Participant or the joint life
                                          and last survivor expectancy of the
                                          Participant and the Participant's
                                          designated Beneficiary or (2) a period
                                          not extending beyond the life
                                          expectancy of the designated
                                          Beneficiary, the amount required to be
                                          distributed for each calendar year,
                                          beginning with distributions for the
                                          first distribution calendar year, must
                                          at least equal the quotient obtained
                                          by dividing the Participant's benefit
                                          by the applicable life expectancy.

                                    b.    For calendar years beginning before
                                          January 1, 1989, if the Participant's
                                          spouse is not the designated
                                          Beneficiary, the method of
                                          distribution selected must assure that
                                          at least 50% of the present value of
                                          the amount available for distribution
                                          is paid within the life expectancy of
                                          the Participant.

                                    c.    For calendar years beginning after
                                          December 31, 1988, the amount to be
                                          distributed each year, beginning with
                                          distributions for the first
                                          distribution calendar year shall not
                                          be less than the quotient obtained by
                                          dividing the Participant's benefit by
                                          the lesser of (1) the applicable life
                                          expectancy or (2) if the Participant's
                                          spouse is not the designated
                                          Beneficiary, the applicable divisor
                                          determined from the table set forth in
                                          Q&A-4 of Section 1 .401(a)(9)-2 of the
                                          Proposed Income Tax Regulations.
                                          Distributions after the death of the
                                          Participant shall be

                                       58
<PAGE>   77

                                          distributed using the applicable life
                                          expectancy in Section 6.05(D)(1)(a)
                                          above as the relevant divisor without
                                          regard to proposed regulations 1
                                          .401(a)(9)-2.

                                    d.    The minimum distribution required for
                                          the Participant's first distribution
                                          calendar year must be made on or
                                          before the Participant's required
                                          beginning date. The minimum
                                          distribution for other calendar years,
                                          including the minimum distribution for
                                          the distribution calendar year in
                                          which the Employee's required
                                          beginning date occurs, must be made on
                                          or before December 31 of that
                                          distribution calendar year.

                           2.       Other Forms - If the Participant's benefit
                                    is distributed in the form of an annuity
                                    purchased from an insurance company,
                                    distributions thereunder shall be made in
                                    accordance with the requirements of Section
                                    401(a)(9) of the Code and the regulations
                                    thereunder.

                  E.       Death Distribution Provisions

                           1.       Distribution Beginning Before Death - If the
                                    Participant dies after distribution of his
                                    or her interest has begun, the remaining
                                    portion of such interest will continue to be
                                    distributed at least as rapidly as under the
                                    method of distribution being used prior to
                                    the Participant's death.

                           2.       Distribution Beginning After Death - If the
                                    Participant dies before distribution of his
                                    or her interest begins, distribution of the
                                    Participant's entire interest shall be
                                    completed by December 31 of the calendar
                                    year containing the fifth anniversary of the
                                    Participant's death except to the extent
                                    that an election is made to receive
                                    distributions in accordance with (a) or (b)
                                    below:

                                    a.    if any portion of the Participant's
                                          interest is payable to a designated
                                          Beneficiary, distributions may be made
                                          over the life or over a period certain
                                          not greater than the life expectancy
                                          of the designated Beneficiary
                                          commencing on or before December 31 of
                                          the calendar year immediately
                                          following the calendar year in which
                                          the Participant died;

                                    b.    if the designated Beneficiary is the
                                          Participant's surviving spouse, the
                                          date distributions are required to
                                          begin in accordance with (a) above
                                          shall not be earlier than the later of
                                          (1) December 31 of the calendar year
                                          immediately following the calendar
                                          year in which the Participant dies or
                                          (2) December 31 of the calendar year
                                          in which the Participant would have
                                          attained age 70 1/2.

                                       59
<PAGE>   78

                                          If the Participant has not made an
                                          election pursuant to this Section
                                          6.05(E)(2) by the time of his or her
                                          death, the Participant's designated
                                          Beneficiary must elect the method of
                                          distribution no later than the earlier
                                          of (1) December 31 of the calendar
                                          year in which distributions would be
                                          required to begin under this Section
                                          6.05(E)(2), or (2) December 31 of the
                                          calendar year which contains the fifth
                                          anniversary of the date of death of
                                          the Participant. If the Participant
                                          has no designated Beneficiary, or if
                                          the designated Beneficiary does not
                                          elect a method of distribution,
                                          distribution of the Participant's
                                          entire interest must be completed by
                                          December 31 of the calendar year
                                          containing the fifth anniversary of
                                          the Participant's death.

                           3.       For purposes of Section 6.06(E)(2) above, if
                                    the surviving spouse dies after the
                                    Participant, but before payments to such
                                    spouse begin, the provisions of Section
                                    6.06(E)(2), with the exception of paragraph
                                    (b) therein, shall be applied as if the
                                    surviving spouse were the Participant.

                           4.       For purposes of this Section 6.06(E), any
                                    amount paid to a child of the Participant
                                    will be treated as if it had been paid to
                                    the surviving spouse if the amount becomes
                                    payable to the surviving spouse when the
                                    child reaches the age of majority.

                           5.       For purposes of this Section 6.06(E),
                                    distribution of a Participant's interest is
                                    considered to begin on the Participant's
                                    required beginning date (or, if Section
                                    6.06(E)(3) above is applicable, the date
                                    distribution is required to begin to the
                                    surviving spouse pursuant to Section
                                    6,06(E)(2) above). If distribution in the
                                    form of an annuity irrevocably commences to
                                    the Participant before the required
                                    beginning date, the date distribution is
                                    considered to begin is the date distribution
                                    actually commences.

                  F.       Definitions

                           1.       Applicable Life Expectancy - The life
                                    expectancy (or joint and last survivor
                                    expectancy) calculated using the attained
                                    age of the Participant (or designated
                                    Beneficiary) as of the Participant's (or
                                    designated Beneficiary's) birthday in the
                                    applicable calendar year reduced by one for
                                    each calendar year which has elapsed since
                                    the date life expectancy was first
                                    calculated. If life expectancy is being
                                    recalculated, the applicable life expectancy
                                    shall be the life expectancy as so
                                    recalculated. The applicable calendar year
                                    shall be the first distribution calendar
                                    year, and if life expectancy is being
                                    recalculated such succeeding calendar year.

                                       60
<PAGE>   79

                           2.       Designated Beneficiary - The individual who
                                    is designated as the Beneficiary under the
                                    Plan in accordance with Section 401(a)(9) of
                                    the Code and the regulations thereunder.

                           3.       Distribution Calendar Year - A calendar year
                                    for which a minimum distribution is
                                    required. For distributions beginning before
                                    the Participant's death, the first
                                    distribution calendar year is the calendar
                                    year immediately preceding the calendar year
                                    which contains the Participant's required
                                    beginning date. For distributions beginning
                                    after the Participant's death, the first
                                    distribution calendar year is the calendar
                                    year in which distributions are required to
                                    begin pursuant to Section 6.05(E) above.

                           4.       Life Expectancy - Life expectancy and joint
                                    and last survivor expectancy are computed by
                                    use of the expected return multiples in
                                    Tables V and VI of Section 1.72-9 of the
                                    Income Tax Regulations.

                                    Unless otherwise elected by the Participant
                                    (or spouse, in the case of distributions
                                    described in Section 6.05(E)(2)(b) above) by
                                    the time distributions are required to
                                    begin, life expectancies shall be
                                    recalculated annually. Such election shall
                                    be irrevocable as to the Participant (or
                                    spouse) and shall apply to all subsequent
                                    years. The life expectancy of a nonspouse
                                    Beneficiary may not be recalculated.

                           5.       Participant's Benefit

                                    a.    The account balance as of the last
                                          valuation date in the valuation
                                          calendar year (the calendar year
                                          immediately preceding the distribution
                                          calendar year) increased by the amount
                                          of any Contributions or Forfeitures
                                          allocated to the account balance as of
                                          dates in the valuation calendar year
                                          after the valuation date and decreased
                                          by distributions made in the valuation
                                          calendar year after the valuation
                                          date.

                                    b.    Exception for second distribution
                                          calendar year. For purposes of
                                          paragraph (a) above, if any portion of
                                          the minimum distribution for the first
                                          distribution calendar year is made in
                                          the second distribution calendar year
                                          on or before the required beginning
                                          date, the amount of the minimum
                                          distribution made in the second
                                          distribution calendar year shall be
                                          treated as if it had been made in the
                                          immediately preceding distribution
                                          calendar year.

                           6.       Required Beginning Date

                                    a.    General Rule - The required beginning
                                          date of a Participant is the first day
                                          of April of the calendar year

                                       61
<PAGE>   80

                                          following the calendar year in which
                                          the Participant attains age 70 1/2.

                                    b.    Transitional Rules - The required
                                          beginning date of a Participant who
                                          attains age 70 1/2 before January 1,
                                          1988, shall be determined in
                                          accordance with (1) or (2) below:

                                          (1)      Non 5% Owners - The required
                                                   beginning date of a
                                                   Participant who is not a 5%
                                                   owner is the first day of
                                                   April of the calendar year
                                                   following the calendar year
                                                   in which the later of
                                                   retirement or attainment of
                                                   age 70 1/2 occurs.

                                          (2)      5% Owners - The required
                                                   beginning date of a
                                                   Participant who is a 5% owner
                                                   during any year beginning
                                                   after December 31, 1979, is
                                                   the first day of April
                                                   following the later of:

                                                   (a)   the calendar year in
                                                         which the Participant
                                                         attains age 70 1/2, or

                                                   (b)   the earlier of the
                                                         calendar year with or
                                                         within which ends the
                                                         Plan Year in which the
                                                         Participant becomes a
                                                         5% owner, or the
                                                         calendar year in which
                                                         the Participant
                                                         retires.

                                                   The required beginning date
                                                   of a Participant who is not a
                                                   5% owner who attains age 70
                                                   1/2 during 1988 and who has
                                                   not retired as of January 1,
                                                   1989, is April 1, 1990.

                                    c.    5% Owner - A Participant is treated as
                                          a 5% owner for purposes of this
                                          Section 6.06(F)(6) if such Participant
                                          is a 5% owner as defined in Section 4
                                          16(i) of the Code (determined in
                                          accordance with Section 416 but
                                          without regard to whether the Plan is
                                          top-heavy) at any time during the Plan
                                          Year ending with or within the
                                          calendar year in which such owner
                                          attains age 66 1/2 or any subsequent
                                          Plan Year.

                                    d.    Once distributions have begun to a 5%
                                          owner under this Section 6.06(F)(6)
                                          they must continue to be distributed,
                                          even if the Participant ceases to be a
                                          5% owner in-a subsequent year.

                  G.       Transitional Rule

                           1.       Notwithstanding the other requirements of
                                    this Section 6.06 and subject to the
                                    requirements of Section 6.05, Joint and
                                    Survivor

                                       62
<PAGE>   81

                                    Annuity Requirements, distribution on behalf
                                    of any Employee, including a 5% owner, may
                                    be made in accordance with all of the
                                    following requirements (regardless of when
                                    such distribution commences):

                                    a.    The distribution by the Fund is one
                                          which would not have qualified such
                                          Fund under Section 401(a)(9) of the
                                          Code as in effect prior to amendment
                                          by the Deficit Reduction Act of 1984.

                                    b.    The distribution is in accordance with
                                          a method of distribution designated by
                                          the Employee whose interest in the
                                          Fund is being distributed or, if the
                                          Employee is deceased, by a Beneficiary
                                          of such Employee.

                                    c.    Such designation was in writing, was
                                          signed by the Employee or the
                                          Beneficiary, and was made before
                                          January 1, 1984.

                                    d.    The Employee had accrued a benefit
                                          under the Plan as of December 31,
                                          1983.

                                    e.    The method of distribution designated
                                          by the Employee or the Beneficiary
                                          specifies the time at which
                                          distribution will commence, the period
                                          over which distributions will be made,
                                          and in the case of any distribution
                                          upon the Employee's death, the
                                          Beneficiaries of the Employee listed
                                          in order of priority.

                           2.       A distribution upon death will not be
                                    covered by this transitional rule unless the
                                    information in the designation contains the
                                    required information described above with
                                    respect to the distributions to be made upon
                                    the death of the Employee.

                           3.       For any distribution which commences before
                                    January 1, 1984, but continues after
                                    December 31, 1983, the Employee, or the
                                    Beneficiary, to whom such distribution is
                                    being made, will be presumed to have
                                    designated the method of distribution under
                                    which the distribution is being made if the
                                    method of distribution was specified in
                                    writing and the distribution satisfies the
                                    requirements in Sections 6.06(G)(1)(a) and
                                    (e).

                           4.       If a designation is revoked, any subsequent
                                    distribution must satisfy the requirements
                                    of Section 401(a)(9) of the Code and the
                                    regulations thereunder. If a designation is
                                    revoked subsequent to the date distributions
                                    are required to begin, the Plan must
                                    distribute by the end of the calendar year
                                    following the calendar year in which the
                                    revocation occurs the total amount not yet
                                    distributed which would have been required
                                    to have been distributed to satisfy Section
                                    401(a)(9) of the Code and the regulations
                                    thereunder, but for the Section 242(b)(2)
                                    election,

                                       63
<PAGE>   82

                                    For calendar years beginning after December
                                    31, 1988, such distributions must meet the
                                    minimum distribution incidental benefit
                                    requirements in Section 1 .401(a)(9)-2 of
                                    the Proposed Income Tax Regulations. Any
                                    changes in the designation will be
                                    considered to be a revocation of the
                                    designation. However, the mere substitution
                                    or addition of another Beneficiary (one not
                                    named in the designation) under the
                                    designation will not be considered to be a
                                    revocation of the designation, so long as
                                    such substitution or addition does not alter
                                    the period over which distributions are to
                                    be made under the designation, directly or
                                    indirectly (for example, by altering the
                                    relevant measuring life). In the case in
                                    which an amount is transferred or rolled
                                    over from one plan to another plan, the
                                    rules in Q&A J-2 and Q&A J-3 shall apply.

         6.07     ANNUITY CONTRACTS

                  Any annuity contract distributed under the Plan (if permitted
                  or required by this Section 6) must be nontransferable. The
                  terms of any annuity contract purchased and distributed by the
                  Plan to a Participant or spouse shall comply with the
                  requirements of the Plan.

         6.08     LOANS TO PARTICIPANTS

                  If the Adoption Agreement so indicates, a Participant may
                  receive a loan from the Fund, subject to the following rules:

                  A.       Loans shall be made available to all Participants on
                           a reasonably equivalent basis.

                  B.       Loans shall not be made available to Highly
                           Compensated Employees (as defined in Section 414(q)
                           of the Code) in an amount greater than the amount
                           made available to other Employees.

                  C.       Loans must be adequately secured and bear a
                           reasonable interest rate.

                  D.       No Participant loan shall exceed the present value of
                           the Vested portion of a Participant's Individual
                           Account.

                  E.       A Participant must obtain the consent of his or her
                           spouse, if any, to the use of the Individual Account
                           as security for the loan. Spousal consent shall be
                           obtained no earlier than the beginning of the 90 day
                           period that ends on the date on which the loan is to
                           be so secured. The consent must be in writing, must
                           acknowledge the effect of the loan, and must be
                           witnessed by a plan representative or notary public.
                           Such consent shall thereafter be binding with respect
                           to the consenting spouse or any subsequent spouse
                           with respect to that loan. A new consent shall be
                           required if the account balance is used for
                           renegotiations, extension, renewal, or other revision
                           of the loan. Notwithstanding the foregoing, no
                           spousal consent is necessary if, at the time the loan
                           is secured, no consent would be required for a
                           distribution under Section 417(a)(2)(B). In

                                       64
<PAGE>   83

                           addition, spousal consent is not required if the Plan
                           or the Participant is not subject to Section
                           40l(a)(11) at the time the Individual Account is used
                           as security, or if the total Individual Account
                           subject to the security is less than or equal to
                           $3,500.

                  F.       In the event of default, foreclosure on the note and
                           attachment of security will not occur until a
                           distributable event occurs in the Plan.
                           Notwithstanding the preceding sentence, a
                           Participant's default on a loan will be treated as a
                           distributable event and as soon as administratively
                           feasible after the default, the Participant's Vested
                           Individual Account will be reduced by the lesser of
                           the amount in default (plus accrued interest) or the
                           amount secured. If this Plan is a 401(k) plan, then
                           to the extent the loan is attributable to a
                           Participant's Elective Deferrals, Qualified
                           Nonelective Contributions or Qualified Matching
                           Contributions, the Participant's Individual Account
                           will not be reduced unless the Participant has
                           attained age 59 1/2 or has another distributable
                           event. A Participant will be deemed to have consented
                           to the provision at the time the loan is made to the
                           Participant.

                  G.       No loans will be made to any shareholder-employee or
                           Owner-Employee. For purposes of this requirement, a
                           shareholder-employee means an employee or officer of
                           an electing small business (Subchapter S) corporation
                           who owns (or is considered as owning within the
                           meaning of Section 3l8(a)(1) of the Code), on any day
                           during the taxable year of such corporation, more
                           than 5% of the outstanding stock of the corporation.

                  If a valid spousal consent has been obtained in accordance
                  with 6.08(E), then, notwithstanding any other provisions of
                  this Plan, the portion of the Participant's Vested Individual
                  Account used as a security interest held by the Plan by reason
                  of a loan outstanding to the Participant shall be taken into
                  account for purposes of determining the amount of the account
                  balance payable at the time of death or distribution, but only
                  if the reduction is used as repayment of the loan. If less
                  than 100% of the Participant's Vested Individual Account
                  (determined without regard to the preceding sentence) is
                  payable to the surviving spouse, then the account balance
                  shall be adjusted by first reducing the Vested Individual
                  Account by the amount of the security used as repayment of the
                  loan, and then determining the benefit payable to the
                  surviving spouse.

                  To avoid taxation to the Participant, no loan to any
                  Participant can be made to the extent that such loan when
                  added to the outstanding balance of all other loans to the
                  Participant would exceed the lesser of (a) $50,000 reduced by
                  the excess (if any) of the highest outstanding balance of
                  loans during the one year period ending on the day before the
                  loan is made, over the outstanding balance of loans from the
                  Plan on the date the loan is made, or (b) 50% of the present
                  value of the nonforfeitable Individual Account of the
                  Participant or, if greater, the total Individual Account up to
                  $10,000. For the purpose of the above limitation, all loans
                  from all plans of the Employer and other members of a group of
                  employers described in Sections 414(b), 414(c), and 414(m) of
                  the Code are aggregated. Furthermore, any loan shall by its
                  terms require that repayment (principal and interest) be
                  amortized in level payments, not less frequently than
                  quarterly, over a

                                       65
<PAGE>   84

                  period not extending beyond 5 years from the date of the loan,
                  unless such loan is used to acquire a dwelling unit which
                  within a reasonable time (determined at the time the loan is
                  made) will be used as the principal residence of the
                  Participant. An assignment or pledge of any portion of the
                  Participant's interest in the Plan and a loan, pledge, or
                  assignment with respect to any insurance contract purchased
                  under the Plan, will be treated as a loan under this
                  paragraph.

                  The Plan Administrator shall administer the loan program in
                  accordance with a written document. Such written document
                  shall include, at a minimum, the following: (i) the identity
                  of the person or positions authorized to administer the
                  Participant loan program; (ii) the procedure for applying for
                  loans; (iii) the basis on which loans will be approved or
                  denied; (iv) limitations (if any) on the types and amounts of
                  loans offered; (v) the procedure under the program for
                  determining a reasonable rate of interest; (vi) the types of
                  collateral which may secure a Participant loan; and (vii) the
                  events constituting default and the steps that will be taken
                  to preserve Plan assets in the event of such default.

         6.09     DISTRIBUTION IN KIND

                  The Plan Administrator may cause any distribution under this
                  Plan to be made either in a form actually held in the Fund, or
                  in cash by converting assets other than cash into cash, or in
                  any combination of the two foregoing ways.

         6.10     DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS

                  A.       Direct Rollover Option

                           This Section applies to distributions made on or
                           after January 1, 1993. Notwithstanding any provision
                           of the Plan to the contrary that would otherwise
                           limit a distributee's election under this Section, a
                           distributee may elect, at the time and in the manner
                           prescribed by the Plan Administrator, to have any
                           portion of an eligible rollover distribution that is
                           equal to at least $500 paid directly to an eligible
                           retirement plan specified by the distributee in a
                           direct rollover.

                  B.       Definitions

                           1.       Eligible rollover distribution - An eligible
                                    rollover distribution is any distribution of
                                    all or any portion of the balance to the
                                    credit of the distributee, except that an
                                    eligible rollover distribution does not
                                    include:

                                    a.    any distribution that is one of a
                                          series of substantially equal periodic
                                          payments (not less frequently than
                                          annually) made for the life (or life
                                          expectancy) of the distributee or the
                                          joint lives (or joint life
                                          expectancies) of the distributee and
                                          the distributee's designated
                                          Beneficiary, or for a specified period
                                          of ten years or more;

                                       66
<PAGE>   85

                                    b.    any distribution to the extent such
                                          distribution is required under Section
                                          401(a)(9) of the Code;

                                    c.    the portion of any other distribution
                                          that is not includible in gross income
                                          (determined without regard to the
                                          exclusion for net unrealized
                                          appreciation with respect to employer
                                          securities); and

                                    d.    any other distribution(s) that is
                                          reasonably expected to total less than
                                          $200 during a year.

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

                           3.       Distributee - A distributee includes an
                                    Employee or former Employee. In addition,
                                    the Employee's or former Employee's
                                    surviving spouse and the Employee's or
                                    former Employee's spouse or former spouse
                                    who is the alternate payee under a qualified
                                    domestic relations order, as defined in
                                    Section 4l4(p) of the Code, are distributees
                                    with regard to the interest of the spouse or
                                    former spouse.

                           4.       Direct rollover - A direct rollover is a
                                    payment by the Plan to the eligible
                                    retirement plan specified by the
                                    distributee.

         6.11     PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES

                  The Plan Administrator must use all reasonable measures to
                  locate Participants or Beneficiaries who are entitled to
                  distributions from the Plan. In the event that the Plan
                  Administrator cannot locate a Participant or Beneficiary who
                  is entitled to a distribution from the Plan after using all
                  reasonable measures to locate him or her, the Plan
                  Administrator may, consistent with applicable laws,
                  regulations and other pronouncements under ERISA, use any
                  reasonable procedure to dispose of distributable plan assets,
                  including any of the following: (1) establish a bank account
                  for and in the name of the Participant or Beneficiary and
                  transfer the assets to such bank account, (2) purchase an
                  annuity contract with the assets in the name of the
                  Participant or Beneficiary, or (3) after the expiration of 5
                  years after the benefit becomes payable, treat the amount
                  distributable as a Forfeiture and allocate it in accordance
                  with the terms of the Plan and if the Participant or
                  Beneficiary is later located, restore such benefit to the
                  Plan.

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<PAGE>   86

SECTION SEVEN     CLAIMS PROCEDURE

         7.01     FILING A CLAIM FOR PLAN DISTRIBUTIONS

                  A Participant or Beneficiary who desires to make a claim for
                  the Vested portion of the Participant's Individual Account
                  shall file a written request with the Plan Administrator on a
                  form to be furnished to him or her by the Plan Administrator
                  for such purpose. The request shall set forth the basis of the
                  claim, The Plan Administrator is authorized to conduct such
                  examinations as may be necessary to facilitate the payment of
                  any benefits to which the Participant or Beneficiary may be
                  entitled under the terms of the Plan.

         7.02     DENIAL OF CLAIM

                  Whenever a claim for a Plan distribution by any Participant or
                  Beneficiary has been wholly or partially denied, the Plan
                  Administrator must furnish such Participant or Beneficiary
                  written notice of the denial within 60 days of the date the
                  original claim was filed. This notice shall set forth the
                  specific reasons for the denial, specific reference to
                  pertinent Plan provisions on which the denial is based, a
                  description of any additional information or material needed
                  to perfect the claim, an explanation of why such additional
                  information or material is necessary and an explanation of the
                  procedures for appeal.

         7.03     REMEDIES AVAILABLE

                  The Participant or Beneficiary shall have 60 days from receipt
                  of the denial notice in which to make written application for
                  review by the Plan Administrator. The Participant or
                  Beneficiary may request that the review be in the nature of a
                  hearing. The Participant or Beneficiary shall have the right
                  to representation, to review pertinent documents and to submit
                  comments in writing. The Plan Administrator shall issue a
                  decision on such review within 60 days after receipt of an
                  application for review as provided for in Section 7.02. Upon a
                  decision unfavorable to the Participant or Beneficiary, such
                  Participant or Beneficiary shall be entitled to bring such
                  actions in law or equity as may be necessary or appropriate to
                  protect or clarify his or her right to benefits under this
                  Plan.

SECTION EIGHT     PLAN ADMINISTRATOR

         8.01     EMPLOYER IS PLAN ADMINISTRATOR

                  A.       The Employer shall be the Plan Administrator unless
                           the managing body of the Employer designates a person
                           or persons other than the Employer as the Plan
                           Administrator and so notifies the Trustee (or
                           Custodian, if applicable). The Employer shall also be
                           the Plan Administrator if the person or persons so
                           designated cease to be the Plan Administrator. The
                           Employer may establish an administrative committee
                           that will carry out the Plan Administrator's duties.
                           Members of the administrative committee may allocate
                           the Plan Administrator's duties among themselves.

                                       68
<PAGE>   87

                  B.       If the managing body of the Employer designates a
                           person or persons other than the Employer as Plan
                           Administrator, such person or persons shall serve at
                           the pleasure of the Employer and shall serve pursuant
                           to such procedures as such managing body may provide.
                           Each such person shall be bonded as may be required
                           by law.

         8.02     POWERS AND DUTIES OF THE PLAN ADMINISTRATOR

                  A.       The Plan Administrator may, by appointment, allocate
                           the duties of the Plan Administrator among several
                           individuals or entities. Such appointments shall not
                           be effective until the party designated accepts such
                           appointment in writing.

                  B.       The Plan Administrator shall have the authority to
                           control and manage the operation and administration
                           of the Plan. The Plan Administrator shall administer
                           the Plan for the exclusive benefit of the
                           Participants and their Beneficiaries in accordance
                           with the specific terms of the Plan.

                  C.       The Plan Administrator shall be charged with the
                           duties of the general administration of the Plan,
                           including, but not limited to, the following:

                           1.       To determine all questions of interpretation
                                    or policy in a manner consistent with the
                                    Plan's documents and the Plan
                                    Administrator's construction or
                                    determination in good faith shall be
                                    conclusive and binding on all persons except
                                    as otherwise provided herein or by law. Any
                                    interpretation or construction shall be done
                                    in a nondiscriminatory manner and shall be
                                    consistent with the intent that the Plan
                                    shall continue to be deemed a qualified plan
                                    under the terms of Section 40 1(a) of the
                                    Code, as amended from time-to-time, and
                                    shall comply with the terms of ERISA, as
                                    amended from time-to-time;

                           2.       To determine all questions relating to the
                                    eligibility of Employees to become or remain
                                    Participants hereunder;

                           3.       To compute the amounts necessary or
                                    desirable to be contributed to the Plan;

                           4.       To compute the amount and kind of benefits
                                    to which a Participant or Beneficiary shall
                                    be entitled under the Plan and to direct the
                                    Trustee (or Custodian, if applicable) with
                                    respect to all disbursements under the Plan,
                                    and, when requested by the Trustee (or
                                    Custodian), to furnish the Trustee (or
                                    Custodian) with instructions, in writing, on
                                    matters pertaining to the Plan and the
                                    Trustee (or Custodian) may rely and act
                                    thereon;

                           5.       To maintain all records necessary for the
                                    administration of the Plan;

                                       69
<PAGE>   88

                           6.       To be responsible for preparing and filing
                                    such disclosure and tax forms as may be
                                    required from time-to-time by the Secretary
                                    of Labor or the Secretary of the Treasury;
                                    and

                           7.       To furnish each Employee, Participant or
                                    Beneficiary such notices, information and
                                    reports under such circumstances as may be
                                    required by law.

                  D.       The Plan Administrator shall have all of the powers
                           necessary or appropriate to accomplish his or her
                           duties under the Plan, including, but not limited to,
                           the following:

                           1.       To appoint and retain such persons as may be
                                    necessary to carry out the functions of the
                                    Plan Administrator;

                           2.       To appoint and retain counsel, specialists
                                    or other persons as the Plan Administrator
                                    deems necessary or advisable in the
                                    administration of the Plan;

                           3.       To resolve all questions of administration
                                    of the Plan;

                           4.       To establish such uniform and
                                    nondiscriminatory rules which it deems
                                    necessary to carry out the terms of the
                                    Plan;

                           5.       To make any adjustments in a uniform and
                                    nondiscriminatory manner which it deems
                                    necessary to correct any arithmetical or
                                    accounting errors which may have been made
                                    for any Plan Year; and

                           6.       To correct any defect, supply any omission
                                    or reconcile any inconsistency in such
                                    manner and to such extent as shall be deemed
                                    necessary or advisable to carry out the
                                    purpose of the Plan.

         8.03     EXPENSES AND COMPENSATION

                  All reasonable expenses of administration including, but not
                  limited to, those involved in retaining necessary professional
                  assistance may be paid from the assets of the Fund.
                  Alternatively, the Employer may, in its discretion, pay any or
                  all such expenses. Pursuant to uniform and nondiscriminatory
                  rules that the Plan Administrator may establish from
                  time-to-time, administrative expenses and expenses unique to a
                  particular Participant may be charged to a Participant's
                  Individual Account or the Plan Administrator may allow
                  Participants to pay such fees outside of the Plan. The
                  Employer shall furnish the Plan Administrator with such
                  clerical and other assistance as the Plan Administrator may
                  need in the performance of his or her duties.

         8.04     INFORMATION FROM EMPLOYER

                  To enable the Plan Administrator to perform his or her duties,
                  the Employer shall supply full and timely information to the
                  Plan Administrator (or his or her

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<PAGE>   89

                  designated agents) on all matters relating to the Compensation
                  of all Participants, their regular employment, retirement,
                  death, Disability or Termination of Employment, and such other
                  pertinent facts as the Plan Administrator (or his or her
                  agents) may require. The Plan Administrator shall advise the
                  Trustee (or Custodian, if applicable) of such of the foregoing
                  facts as may be pertinent to the Trustee's (or Custodian's)
                  duties under the Plan. The Plan Administrator (or his or her
                  agents) is entitled to rely on such information as is supplied
                  by the Employer and shall have no duty or responsibility to
                  verify such information.

SECTION NINE      AMENDMENT AND TERMINATION

         9.01     RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN

                  A.       The Employer, by adopting the Plan, expressly
                           delegates to the Prototype Sponsor the power, but not
                           the duty, to amend the Plan without any further
                           action or consent of the Employer as the Prototype
                           Sponsor deems necessary for the purpose of adjusting
                           the Plan to comply with all laws and regulations
                           governing pension or profit sharing plans.
                           Specifically, it is understood that the amendments
                           may be made unilaterally by the Prototype Sponsor.
                           However, it shall be understood that the Prototype
                           Sponsor shall be under no obligation to amend the
                           Plan documents and the Employer expressly waives any
                           rights or claims against the Prototype Sponsor for
                           not exercising this power to amend. For purposes of
                           Prototype Sponsor amendments, the mass submitter
                           shall be recognized as the agent of the Prototype
                           Sponsor. If the Prototype Sponsor does not adopt the
                           amendments made by the mass submitter, it will no
                           longer be identical to or a minor modifier of the
                           mass submitter plan.

                  B.       An amendment by the Prototype Sponsor shall be
                           accomplished by giving written notice to the Employer
                           of the amendment to be made. The notice shall set
                           forth the text of such amendment and the date such
                           amendment is to be effective. Such amendment shall
                           take effect unless within the 30 day period after
                           such notice is provided, or within such shorter
                           period as the notice may specify, the Employer gives
                           the Prototype Sponsor written notice of refusal to
                           consent to the amendment. Such written notice of
                           refusal shall have the effect of withdrawing the Plan
                           as a prototype plan and shall cause the Plan to be
                           considered an individually designed plan. The right
                           of the Prototype Sponsor to cause the Plan to be
                           amended shall terminate should the Plan cease to
                           conform as a prototype plan as provided in this or
                           any other section.

         9.02     RIGHT OF EMPLOYER TO AMEND THE PLAN

                  The Employer may (1) change the choice of options in the
                  Adoption Agreement; (2) add overriding language in the
                  Adoption Agreement when such language is necessary to satisfy
                  Section 415 or Section 416 of the Code because of the required
                  aggregation of multiple plans; and (3) add certain model
                  amendments published by the Internal Revenue Service which
                  specifically provide that their adoption will not cause the
                  Plan to be treated as individually designed. An Employer that
                  amends the Plan for any other reason, including a waiver of
                  the

                                       71
<PAGE>   90

                  minimum funding requirement under Section 4 12(d) of the Code,
                  will no longer participate in this prototype plan and will be
                  considered to have an individually designed plan.

                  An Employer who wishes to amend the Plan to change the options
                  it has chosen in the Adoption Agreement must complete and
                  deliver a new Adoption Agreement to the Prototype Sponsor and
                  Trustee (or Custodian, if applicable). Such amendment shall
                  become effective upon execution by the Employer and Trustee
                  (or Custodian).

                  The Employer further reserves the right to replace the Plan in
                  its entirety by adopting another retirement plan which the
                  Employer designates as a replacement plan.

         9.03     LIMITATION ON POWER TO AMEND

                  No amendment to the Plan shall be effective to the extent that
                  it has the effect of decreasing a Participant's accrued
                  benefit. Notwithstanding the preceding sentence, a
                  Participant's Individual Account may be reduced to the extent
                  permitted under Section 412(c)(8) of the Code. For purposes of
                  this paragraph, a plan amendment which has the effect of
                  decreasing a Participant's Individual Account or eliminating
                  an optional form of benefit with respect to benefits
                  attributable to service before the amendment shall be treated
                  as reducing an accrued benefit. Furthermore, if the vesting
                  schedule of a Plan is amended, in the case of an Employee who
                  is a Participant as of the later of the date such amendment is
                  adopted or the date it becomes effective, the Vested
                  percentage (determined as of such date) of such Employee's
                  Individual Account derived from Employer Contributions will
                  not be less than the percentage computed under the Plan
                  without regard to such amendment.

         9.04     AMENDMENT OF VESTING SCHEDULE

                  If the Plan's vesting schedule is amended, or the Plan is
                  amended in any way that directly or indirectly affects the
                  computation of the Participant's Vested percentage, or if the
                  Plan is deemed amended by an automatic change to or from a
                  top-heavy vesting schedule, each Participant with at least 3
                  Years of Vesting Service with the Employer may elect, within
                  the time set forth below, to have the Vested percentage
                  computed under the Plan without regard to such amendment.

                  For Participants who do not have at least 1 Hour of Service in
                  any Plan Year beginning after December 31, 1988, the preceding
                  sentence shall be applied by substituting "5 Years of Vesting
                  Service" for "3 Years of Vesting Service" where such language
                  appears.

                  The Period during which the election may be made shall
                  commence with the date the amendment is adopted or deemed to
                  be made and shall end the later of:

                  A.       60 days after the amendment is adopted;

                  B.       60 days after the amendment becomes effective; or

                                       72
<PAGE>   91

                  C.       60 days after the Participant is issued written
                           notice of the amendment by the Employer or Plan
                           Administrator.

         9.05     PERMANENCY

                  The Employer expects to continue this Plan and make the
                  necessary contributions thereto indefinitely, but such
                  continuance and payment is not assumed as a contractual
                  obligation. Neither the Adoption Agreement nor the Plan nor
                  any amendment or modification thereof nor the making of
                  contributions hereunder shall be construed as giving any
                  Participant or any person whomsoever any legal or equitable
                  right against the Employer, the Trustee (or Custodian, if
                  applicable) the Plan Administrator or the Prototype Sponsor
                  except as specifically provided herein, or as provided by law,

         9.06     METHOD AND PROCEDURE FOR TERMINATION

                  The Plan may be terminated by the Employer at any time by
                  appropriate action of its managing body. Such termination
                  shall be effective on the date specified by the Employer. The
                  Plan shall terminate if the Employer shall be dissolved,
                  terminated, or declared bankrupt. Written notice of the
                  termination and effective date thereof shall be given to the
                  Trustee (or Custodian), Plan Administrator, Prototype Sponsor,
                  Participants and Beneficiaries of deceased Participants, and
                  the required filings (such as the Form 5500 series and others)
                  must be made with the Internal Revenue Service and any other
                  regulatory body as required by current laws and regulations.
                  Until all of the assets have been distributed from the Fund,
                  the Employer must keep the Plan in compliance with current
                  laws and regulations by (a) making appropriate amendments to
                  the Plan and (b) taking such other measures as may be
                  required.

         9.07     CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER

                  Notwithstanding the preceding Section 9.06, a successor of the
                  Employer may continue the Plan and be substituted in the place
                  of the present Employer. The successor and the present
                  Employer (or, if deceased, the executor of the estate of a
                  deceased Self-Employed Individual who was the Employer) must
                  execute a written instrument authorizing such substitution and
                  the successor must complete and sign a new plan document.

         9.08     FAILURE OF PLAN QUALIFICATION

                  If the Plan fails to retain its qualified status, the Plan
                  will no longer be considered to be part of a prototype plan,
                  and such Employer can no longer participate under this
                  prototype. In such event, the Plan will be considered an
                  individually designed plan.

SECTION TEN       MISCELLANEOUS

         10.01    STATE COMMUNITY PROPERTY LAWS

                  The terms and conditions of this Plan shall be applicable
                  without regard to the community property laws of any state.

                                       73
<PAGE>   92

         10.02    READINGS

                  The headings of the Plan have been inserted for convenience of
                  reference only and are to be ignored in any construction of
                  the provisions hereof.

         10.03    GENDER AND NUMBER

                  Whenever any words are used herein in the masculine gender
                  they shall be construed as though they were also used in the
                  feminine gender in all cases where they would so apply, and
                  whenever any words are used herein in the singular form they
                  shall be construed as though they were also used in the plural
                  form in all cases where they would so apply.

         10.04    PLAN MERGER OR CONSOLIDATION

                  In the case of any merger or consolidation of the Plan with,
                  or transfer of assets or liabilities of such Plan to any other
                  plan, each Participant shall be entitled to receive benefits
                  immediately after the merger, consolidation, or transfer (if
                  the Plan had then terminated) which are equal to or greater
                  than the benefits he or she would have been entitled to
                  receive immediately before the merger, consolidation, or
                  transfer (if the Plan had then terminated). The Trustee (or
                  Custodian) has the authority to enter into merger agreements
                  or agreements to directly transfer the assets of this Plan but
                  only if such agreements are made with trustees or custodians
                  of other retirement plans described in Section 401(a) of the
                  Code.

         10.05    STANDARD OF FIDUCIARY CONDUCT

                  The Employer, Plan Administrator, Trustee and any other
                  fiduciary under this Plan shall discharge their duties with
                  respect to this Plan solely in the interests of Participants
                  and their Beneficiaries and with the care, skill, prudence and
                  diligence under the circumstances then prevailing that a
                  prudent man acting in like capacity and familiar with such
                  matters would use in the conduct of an enterprise of a like
                  character and with like aims. No fiduciary shall cause the
                  Plan to engage in any transaction known as a "prohibited
                  transaction" under ERISA.

         10.06    GENERAL UNDERTAKING OF ALL PARTIES

                  All parties to this Plan and all persons claiming any interest
                  whatsoever hereunder agree to perform any and all acts and
                  execute any and all documents and papers which may be
                  necessary or desirable for the carrying out of this Plan and
                  any of its provisions.

         10.07    AGREEMENT BINDS HEIRS, ETC.

                  This Plan shall be binding upon the heirs, executors,
                  administrators, successors and assigns, as those terms shall
                  apply to any and all parties hereto, present and future.

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<PAGE>   93

         10.08    DETERMINATION OF TOP-HEAVY STATUS

                  A.       For any Plan Year beginning after December 31, 1983,
                           this Plan is a Top-Heavy Plan if any of the following
                           conditions exist:

                           1.       If the top-heavy ratio for this Plan exceeds
                                    60% and this Plan is not part of any
                                    required aggregation group or permissive
                                    aggregation group of plans.

                           2.       If this Plan is part of a required
                                    aggregation group of plans but not part of a
                                    permissive aggregation group and the
                                    top-heavy ratio for the group of plans
                                    exceeds 60%.

                           3.       If this Plan is a part of a required
                                    aggregation group and part of a permissive
                                    aggregation group of plans and the top-heavy
                                    ratio for the permissive aggregation group
                                    exceeds 60%.

                           For purposes of this Section 10.08, the following
                           terms shall have the meanings indicated below:

                  B.       Key Employee - Any Employee or former Employee (and
                           the Beneficiaries of such Employee) who at any time
                           during the determination period was an officer of the
                           Employer if such individual's annual compensation
                           exceeds 50% of the dollar limitation under Section
                           415(b)(1)(A) of the Code, an owner (or considered an
                           owner under Section 318 of the Code) of one of the 10
                           largest interests in the Employer if such
                           individual's compensation exceeds 100% of the dollar
                           limitation under Section 415(c)(1)(A) of the Code, a
                           5% owner of the Employer, or a 1% owner of the
                           Employer who has an annual compensation of more than
                           $150,000. Annual compensation means compensation as
                           defined in Section 415(c)(3) of the Code, but
                           including amounts contributed by the Employer
                           pursuant to a salary reduction agreement which are
                           excludable from the Employee's gross income under
                           Section 125, Section 402(e)(3), Section 402(h)(l)(B)
                           or Section 403(b) of the Code. The determination
                           period is the Plan Year containing the determination
                           date and the 4 preceding Plan Years.

                           The determination of who is a Key Employee will be
                           made in accordance with Section 416(i)(1) of the Code
                           and the regulations thereunder.

                  C.       Top-heavy ratio

                           1.       If the Employer maintains one or more
                                    defined contribution plans (including any
                                    simplified employee pension plan) and the
                                    Employer has not maintained any defined
                                    benefit plan which during the 5-year period
                                    ending on the determination date(s) has or
                                    has had accrued benefits, the top-heavy
                                    ratio for this Plan alone or for the
                                    required or permissive aggregation group as
                                    appropriate is a fraction, the numerator of
                                    which is the sum of the account balances of
                                    all Key Employees as of the determination
                                    date(s) (including any part of any account
                                    balance

                                       75
<PAGE>   94

                                    distributed in the 5-year period ending on
                                    the determination date(s)), and the
                                    denominator of which is the sum of all
                                    account balances (including any part of any
                                    account balance distributed in the 5-year
                                    period ending on the determination date(s)),
                                    both computed in accordance with Section 416
                                    of the Code and the regulations thereunder.
                                    Both the numerator and the denominator of
                                    the top-heavy ratio are increased to reflect
                                    any contribution not actually made as of the
                                    determination date, but which is required to
                                    be taken into account on that date under
                                    Section 416 of the Code and the regulations
                                    thereunder.

                           2.       If the Employer maintains one or more
                                    defined contribution plans (including any
                                    simplified employee pension plan) and the
                                    Employer maintains or has maintained one or
                                    more defined benefit plans which during the
                                    5-year period ending on the determination
                                    date(s) has or has had any accrued benefits,
                                    the top-heavy ratio for any required or
                                    permissive aggregation group as appropriate
                                    is a fraction, the numerator of which is the
                                    sum of account balances under the aggregated
                                    defined contribution plan or plans for all
                                    Key Employees, determined in accordance with
                                    (1) above, and the present value of accrued
                                    benefits under the aggregated defined
                                    benefit plan or plans for all Key Employees
                                    as of the determination date(s), and the
                                    denominator of which is the sum of the
                                    account balances under the aggregated
                                    defined contribution plan or plans for all
                                    Participants, determined in accordance with
                                    (1) above, and the present value of accrued
                                    benefits under the defined benefit plan or
                                    plans for all Participants as of the
                                    determination date(s), all determined in
                                    accordance with Section 416 of the Code and
                                    the regulations thereunder. The accrued
                                    benefits under a defined benefit plan in
                                    both the numerator and denominator of the
                                    top-heavy ratio are increased for any
                                    distribution of an accrued benefit made in
                                    the S-year period ending on the
                                    determination date.

                           3.       For purposes of(l) and (2) 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 12-month period
                                    ending on the determination date, except as
                                    provided in Section 416 of the Code and the
                                    regulations thereunder for the first and
                                    second plan years of a defined benefit plan.
                                    The account balances and accrued benefits of
                                    a Participant (a) who is not a Key Employee
                                    but who was a Key Employee in a Prior Year,
                                    or (b) who has not been credited with at
                                    least one Hour of Service with any employer
                                    maintaining the plan at any time during the
                                    S-year period ending on the determination
                                    date will be disregarded. 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 Section 416 of the Code and
                                    the regulations thereunder. Deductible
                                    employee contributions will not be taken
                                    into account for purposes of computing the
                                    top-heavy ratio. When aggregating

                                       76
<PAGE>   95

                                    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.

                                    The accrued benefit of a Participant other
                                    than a Key Employee shall be determined
                                    under (a) the method, if any, that uniformly
                                    applies for accrual purposes under all
                                    defined benefit plans maintained by the
                                    Employer, or (b)if there is no such method,
                                    as if such benefit accrued not more rapidly
                                    than the slowest accrual rate permitted
                                    under the fractional rule of Section 41
                                    1(b)(l)(C) of the Code.

                           4.       Permissive aggregation group: The required
                                    aggregation group of plans plus any other
                                    plan or plans of the Employer which, when
                                    considered as a group with the required
                                    aggregation group, would continue to satisfy
                                    the requirements of Sections 401(a)(4) and
                                    410 of the Code.

                           5.       Required aggregation group: (a) Each
                                    qualified plan of the Employer in which at
                                    least one Key Employee participates or
                                    participated at any time during the
                                    determination period (regardless of whether
                                    the Plan has terminated), and (b) any other
                                    qualified plan of the Employer which enables
                                    a plan described in (a) to meet the
                                    requirements of Sections 401(a)(4) or 410 of
                                    the Code.

                           6.       Determination date: For any Plan Year
                                    subsequent to the first Plan Year, the last
                                    day of the preceding Plan Year. For the
                                    first Plan Year of the Plan, the last day of
                                    that year.

                           7.       Valuation date: For purposes of calculating
                                    the top-heavy ratio, the valuation date
                                    shall be the last day of each Plan Year.

                           8.       Present value: For purposes of establishing
                                    the "present value" of benefits under a
                                    defined benefit plan to compute the
                                    top-heavy ratio, any benefit shall be
                                    discounted only for mortality and interest
                                    based on the interest rate and mortality
                                    table specified for this purpose in the
                                    defined benefit plan, unless otherwise
                                    indicated in the Adoption Agreement.

         10.09    SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES

                  If this Plan provides contributions or benefits for one or
                  more Owner-Employees who control both the business for which
                  this Plan is established and one or more other trades or
                  businesses, this Plan and the plan established for other
                  trades or businesses must, when looked at as a single plan,
                  satisfy Sections 40 1(a) and (d) of the Code for the employees
                  of those trades or businesses.

                  If the Plan provides contributions or benefits for one or more
                  Owner-Employees who control one or more other trades or
                  businesses, the employees of the other trades or businesses
                  must be included in a plan which satisfies Sections 40 1(a)

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<PAGE>   96

                  and (d) of the Code and which provides contributions and
                  benefits not less favorable than provided for Owner-Employees
                  under this Plan.

                  If an individual is covered as an Owner-Employee under the
                  plans of two or more trades or businesses which are not
                  controlled and the individual controls a trade or business,
                  then the contributions or benefits of the employees under the
                  plan of the trade or business which is controlled must be as
                  favorable as those provided for him or her under the most
                  favorable plan of the trade or business which is not
                  controlled.

                  For purposes of the preceding paragraphs, an Owner-Employee,
                  or two or more Owner-Employees, will be considered to control
                  a trade or business if the Owner-Employee, or two or more
                  Owner-Employees, together:

                  A.       own the entire interest in a unincorporated trade or
                           business, or

                  B.       in the case of a partnership, own more than 50% of
                           either the capital interest or the profit interest in
                           the partnership.

                  For purposes of the preceding sentence, an Owner-Employee, or
                  two or more Owner-Employees, shall be treated as owning any
                  interest in a partnership which is owned, directly or
                  indirectly, by a partnership which such Owner-Employee, or
                  such two or more Owner-Employees, are considered to control
                  within the meaning of the preceding sentence.

         10.10    INALIENABILITY OF BENEFITS

                  No benefit or interest available hereunder will be subject to
                  assignment or alienation, either voluntarily or involuntarily.
                  The preceding sentence shall also apply to the creation,
                  assignment, or recognition of a right to any benefit payable
                  with respect to a Participant pursuant to a domestic relations
                  order, unless such order is determined to be a qualified
                  domestic relations order, as defined in Section 414(p) of the
                  Code.

                  Generally, a domestic relations order cannot be a qualified
                  domestic relations order until January 1, 1985. However, in
                  the case of a domestic relations order entered before such
                  date, the Plan Administrator:

                  (1)      shall treat such order as a qualified domestic
                           relations order if such Plan Administrator is paying
                           benefits pursuant to such order on such date, and

                  (2)      may treat any other such order entered before such
                           date as a qualified domestic relations order even if
                           such order does not meet the requirements of Section
                           414(p) of the Code.

                  Notwithstanding any provision of the Plan to the contrary, a
                  distribution to an alternate payee under a qualified domestic
                  relations order shall be permitted even if the Participant
                  affected by such order is not otherwise entitled to a
                  distribution and even if such Participant has not attained
                  earliest retirement age as defined in Section 414(p) of the
                  Code.

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<PAGE>   97

         10.11    CANNOT ELIMINATE PROTECTED BENEFITS

                  Pursuant to Section 41 1(d)(6) of the Code, and the
                  regulations thereunder, the Employer cannot reduce, eliminate
                  or make subject to Employer discretion any Section 411(d)(6)
                  protected benefit. Where this Plan document is being adopted
                  to amend another plan that contains a protected benefit not
                  provided for in this document, the Employer may attach a
                  supplement to the Adoption Agreement that describes such
                  protected benefit which shall become part of the Plan.

SECTION ELEVEN    401(K) PROVISIONS

                  In addition to Sections 1 through 10, the provisions of this
                  Section 11 shall apply if the Employer has established a
                  401(k) cash or deferred arrangement (CODA) by completing and
                  signing the appropriate Adoption Agreement.

         11.100   DEFINITIONS

                  The following words and phrases when used in the Plan with
                  initial capital letters shall, for the purposes of this Plan,
                  have the meanings set forth below unless the context indicates
                  that other meanings are intended.

         11.101   ACTUAL DEFERRAL PERCENTAGE (ADP)

                  Means, for a specified group of Participants for a Plan Year,
                  the average of the ratios (calculated separately for each
                  Participant in such group) of (1) the amount of Employer
                  Contributions actually paid over to the Fund on behalf of such
                  Participant for the Plan Year to (2) the Participant's
                  Compensation for such Plan Year (taking into account only that
                  Compensation paid to the Employee during the portion of the
                  Plan Year he or she was an eligible Participant, unless
                  otherwise indicated in the Adoption Agreement). For purposes
                  of calculating the ADP. Employer Contributions on behalf of
                  any Participant shall include: (1) any Elective Deferrals made
                  pursuant to the Participant's deferral election, (including
                  Excess Elective Deferrals of Highly Compensated Employees),
                  but excluding (a) Excess Elective Deferrals of Non-highly
                  Compensated Employees that arise solely from Elective
                  Deferrals made under the Plan or plans of this Employer and
                  (b) Elective Deferrals that are taken into account in the
                  Contribution Percentage test (provided the ADP test is
                  satisfied both with and without exclusion of these Elective
                  Deferrals); and (2) at the election of the Employer, Qualified
                  Nonelective Contributions and Qualified Matching
                  Contributions. For purposes of computing Actual Deferral
                  Percentages, an Employee who would be a Participant but for
                  the failure to make Elective Deferrals shall be treated as a
                  Participant on whose behalf no Elective Deferrals are made.

         11.102   AGGREGATE LIMIT

                  Means the sum of (1) 125% of the greater of the ADP of the
                  Participants who are not Highly Compensated Employees for the
                  Plan Year or the ACP of the Participants who are not Highly
                  Compensated Employees under the Plan subject to Code Section
                  401(m) for the Plan Year beginning with or within the Plan
                  Year of the CODA; and (2) the lesser of 200% or two plus the
                  lesser of such ADP or ACP. "Lesser" is substituted for
                  "greater" in "(1)" above, and "greater" is

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<PAGE>   98

                  substituted for "lesser" after "two plus the" in "(2)" if it
                  would result in a larger Aggregate Limit.

         11.103   AVERAGE CONTRIBUTION PERCENTAGE (ACP)

                  Means the average of the Contribution Percentages of the
                  Eligible Participants in a group.

         11.104   CONTRIBUTING PARTICIPANT

                  Means a Participant who has enrolled as a Contributing
                  Participant pursuant to Section 11.201 and on whose behalf the
                  Employer is contributing Elective Deferrals to the Plan (or is
                  making Nondeductible Employee Contributions).

         11.105   CONTRIBUTION PERCENTAGE

                  Means the ratio (expressed as a percentage) of the
                  Participant's Contribution Percentage Amounts to the
                  Participant's Compensation for the Plan Year (taking into
                  account only the Compensation paid to the Employee during the
                  portion of the Plan Year he or she was an eligible
                  Participant, unless otherwise indicated in the Adoption
                  Agreement).

         11.106   CONTRIBUTION PERCENTAGE AMOUNTS

                  Means the sum of the Nondeductible Employee Contributions,
                  Matching Contributions, and Qualified Matching Contributions
                  made under the Plan on behalf of the Participant for the Plan
                  Year. Such Contribution Percentage Amounts shall not include
                  Matching Contributions that are forfeited either to correct
                  Excess Aggregate Contributions or because the contributions to
                  which they relate are Excess Deferrals, Excess Contributions,
                  Excess Aggregate Contributions or excess annual additions
                  which are distributed pursuant to Section 11.508. If so
                  elected in the Adoption Agreement, the Employer may include
                  Qualified Nonelective Contributions in the Contribution
                  Percentage Amount. The Employer also may elect to use Elective
                  Deferrals in the Contribution Percentage Amounts so long as
                  the ADP test is met before the Elective Deferrals are used in
                  the ACP test and continues to be met following the exclusion
                  of those Elective Deferrals that are used to meet the ACP
                  test.

         11.107   ELECTIVE DEFERRALS

                  Means any Employer Contributions made to the Plan at the
                  election of the Participant, in lieu of cash compensation, and
                  shall include contributions made pursuant to a salary
                  reduction agreement or other deferral mechanism. With respect
                  to any taxable year, a Participant's Elective Deferral is the
                  sum of all Employer contributions made on behalf of such
                  Participant pursuant to an election to defer under any
                  qualified CODA as described in Section 401(k) of the Code, any
                  simplified employee pension cash or deferred arrangement as
                  described in Section 402(h)(1)(B), any eligible deferred
                  compensation plan under Section 457, any plan as described
                  under Section 501(c)(18), and any Employer contributions made
                  on the behalf of a Participant for the purchase of an annuity
                  contract under Section 403(b) pursuant to a salary reduction
                  agreement. Elective

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<PAGE>   99

                  Deferrals shall not include any deferrals properly distributed
                  as excess annual additions.

                  No Participant shall be permitted to have Elective Deferrals
                  made under this Plan, or any other qualified plan maintained
                  by the Employer, during any taxable year, in excess of the
                  dollar limitation contained in Section 402(g) of the Code in
                  effect at the beginning of such taxable year.

                  Elective Deferrals may not be taken into account for purposes
                  of satisfying the minimum allocation requirement applicable to
                  Top-Heavy Plans described in Section 3.01(E).

         11.108   ELIGIBLE PARTICIPANT

                  Means any Employee who is eligible to make a Nondeductible
                  Employee Contribution or an Elective Deferral (if the Employer
                  takes such contributions into account in the calculation of
                  the Contribution Percentage), or to receive a Matching
                  Contribution (including Forfeitures thereof) or a Qualified
                  Matching Contribution.

                  If a Nondeductible Employee Contribution is required as a
                  condition of participation in the Plan, any Employee who would
                  be a Participant in the Plan if such Employee made such a
                  contribution shall be treated as an Eligible Participant on
                  behalf of whom no Nondeductible Employee Contributions are
                  made.

         11.109   EXCESS AGGREGATE CONTRIBUTIONS

                  Means, with respect to any Plan Year, the excess of:

                  A.       The aggregate Contribution Percentage Amounts taken
                           into account in computing the numerator of the
                           Contribution Percentage actually made on behalf of
                           Highly Compensated Employees for such Plan Year, over

                  B.       The maximum Contribution Percentage Amounts permitted
                           by the ACP test (determined by reducing contributions
                           made on behalf of Highly Compensated Employees in
                           order of their Contribution Percentages beginning
                           with the highest of such percentages).

                           Such determination shall be made after first
                           determining Excess Elective Deferrals pursuant to
                           Section 11.111 and then determining Excess
                           Contributions pursuant to Section 11.110.

         11.110   EXCESS CONTRIBUTIONS

                  Means, with respect to any Plan Year, the excess of:

                  A.       The aggregate amount of Employer Contributions
                           actually taken into account in computing the ADP of
                           Highly Compensated Employees for such Plan Year, over

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<PAGE>   100

                  B.       The maximum amount of such contributions permitted by
                           the ADP test (determined by reducing contributions
                           made on behalf of Highly Compensated Employees in
                           order of the ADPs, beginning with the highest of such
                           percentages).

         11.111   EXCESS ELECTIVE DEFERRALS

                  Means those Elective Deferrals that are includible in a
                  Participant's gross income under Section 402(g) of the Code to
                  the extent such Participant's Elective Deferrals for a taxable
                  year exceed the dollar limitation under such Code section.
                  Excess Elective Deferrals shall be treated as annual additions
                  under the Plan, unless such amounts are distributed no later
                  than the first April 15 following the close of the
                  Participant's taxable year.

         11.112   MATCHING CONTRIBUTION

                  Means an Employer Contribution made to this or any other
                  defined contribution plan on behalf of a Participant on
                  account of an Elective Deferral or a Nondeductible Employee
                  Contribution made by such Participant under a plan maintained
                  by the Employer.

                  Matching Contributions may not be taken into account for
                  purposes of satisfying the minimum allocation requirement
                  applicable to Top-Heavy Plans described in Section 3.01(E).

         11.113   QUALIFIED NONELECTIVE CONTRIBUTIONS

                  Means contributions (other than Matching Contributions or
                  Qualified Matching Contributions) made by the Employer and
                  allocated to Participants' Individual Accounts that the
                  Participants may not elect to receive in cash until
                  distributed from the Plan; that are nonforfeitable when made;
                  and that are distributable only in accordance with the
                  distribution provisions that are applicable to Elective
                  Deferrals and Qualified Matching Contributions.

                  Qualified Nonelective Contribution may be taken into account
                  for purposes of satisfying the minimum allocation requirement
                  applicable to Top-Heavy Plans described in Section 3.01(E).

         11.114   QUALIFIED MATCHING CONTRIBUTIONS

                  Means Matching Contributions which are subject to the
                  distribution and nonforfeitability requirements under Section
                  401(k) of the Code when made.

         11.115   QUALIFYING CONTRIBUTING PARTICIPANT

                  Means a Contributing Participant who satisfies the
                  requirements described in Section 11.302 to be entitled to
                  receive a Matching Contribution (and Forfeitures, if
                  applicable) for a Plan Year.

         11.200   CONTRIBUTING PARTICIPANT

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<PAGE>   101

         11.201   REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT

                  A.       Each Employee who satisfies the eligibility
                           requirements specified in the Adoption Agreement may
                           enroll as a Contributing Participant as of any
                           subsequent Entry Date (or earlier if required by
                           Section 2.03) specified in the Adoption Agreement for
                           this purpose. A Participant who wishes to enroll as a
                           Contributing Participant must complete, sign and file
                           a salary reduction agreement (or agreement to make
                           Nondeductible Employee Contributions) with the Plan
                           Administrator.

                  B.       Notwithstanding the times set forth in Section
                           11.201(A) as of which a Participant may enroll as a
                           Contributing Participant, the Plan Administrator
                           shall have the authority to designate, in a
                           nondiscriminatory manner, additional enrollment times
                           during the 12 month period beginning on the Effective
                           Date (or the date that Elective Deferrals may
                           commence, if later) in order that an orderly first
                           enrollment might be completed. In addition, if the
                           Employer has indicated in the Adoption Agreement that
                           Elective Deferrals may be based on bonuses, then
                           Participants shall be afforded a reasonable period of
                           time prior to the issuance of such bonuses to elect
                           to defer them into the Plan.

         11.202   CHANGING ELECTIVE DEFERRAL AMOUNTS

                  A Contributing Participant may modify his or her salary
                  reduction agreement (or agreement to make Nondeductible
                  Employee Contributions) to increase or decrease (within the
                  limits placed on Elective Deferrals (or Nondeductible Employee
                  Contributions) in the Adoption Agreement) the amount of his or
                  her Compensation deferred into the Plan. Such modification may
                  only be made as of the dates specified in the Adoption
                  Agreement for this purpose, or as of any other more frequent
                  date(s) if the Plan Administrator permits in a uniform and
                  nondiscriminatory manner. A Contributing Participant who
                  desires to make such a modification shall complete, sign and
                  file a new salary reduction agreement (or agreement to make
                  Nondeductible Employee Contribution) with the Plan
                  Administrator. The Plan Administrator may prescribe such
                  uniform and nondiscriminatory rules it deems appropriate to
                  carry out the terms of this Section.

         11.203   CEASING ELECTIVE DEFERRALS

                  A Participant may cease Elective Deferrals (or Nondeductible
                  Employee Contributions) and thus withdraw as a Contributing
                  Participant as of the dates specified in the Adoption
                  Agreement for this purpose (or as of any other date if the
                  Plan Administrator so permits in a uniform and
                  nondiscriminatory manner) by revoking the authorization to the
                  Employer to make Elective Deferrals (or Nondeductible Employee
                  Contributions) on his or her behalf. A Participant who desires
                  to withdraw as a Contributing Participant shall give written
                  notice of withdrawal to the Plan Administrator at least thirty
                  days (or such lesser period of days as the Plan Administrator
                  shall permit in a uniform and nondiscriminatory manner) before
                  the effective date of withdrawal. A Participant shall cease to
                  be a

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<PAGE>   102

                  Contributing Participant upon his or her Termination of
                  Employment, or an account of termination of the Plan.

         11.204   RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE
                  DEFERRALS

                  A Participant who has withdrawn as a Contributing Participant
                  under Section 11.203 (or because the Participant has taken a
                  hardship withdrawal pursuant to Section 11.503) may not again
                  become a Contributing Participant until the dates set forth in
                  the Adoption Agreement for this purpose, unless the Plan
                  Administrator, in a uniform and nondiscriminatory manner,
                  permits withdrawing Participants to resume their status as
                  Contributing Participants sooner.

         11.205   CERTAIN ONE-TIME IRREVOCABLE ELECTIONS

                  This Section 11.205 applies where the Employer has indicated
                  in the Adoption Agreement that an Employee may make a one-time
                  irrevocable election to have the Employer make contributions
                  to the Plan on such Employee's behalf. In such event, an
                  Employee may elect, upon the Employee's first becoming
                  eligible to participate in the Plan, to have contributions
                  equal to a specified amount or percentage of the Employee's
                  Compensation (including no amount of Compensation) made by the
                  Employer on the Employee's behalf to the Plan (and to any
                  other plan of the Employer) for the duration of the Employee's
                  employment with the Employer. Any contributions made pursuant
                  to a one-time irrevocable election described in this Section
                  are not treated as made pursuant to a cash or deferred
                  election, are not Elective Deferrals and are not includible in
                  an Employee's gross income.

                  The Plan Administrator shall establish such uniform and
                  nondiscriminatory procedures as it deems necessary or
                  advisable to administer this provision.

         11.300   CONTRIBUTIONS

         11.301   CONTRIBUTIONS BY EMPLOYER

                  The Employer shall make contributions to the Plan in
                  accordance with the contribution formulas specified in the
                  Adoption Agreement.

         11.302   MATCHING CONTRIBUTIONS

                  The Employer may elect to make Matching Contributions under
                  the Plan on behalf of Qualifying Contributing Participants as
                  provided in the Adoption Agreement. To be a Qualifying
                  Contributing Participant for a Plan Year, the Participant must
                  make Elective Deferrals (or Nondeductible Employee
                  Contributions, if the Employer has agreed to match such
                  contributions) for the Plan Year, satisfy any age and Years of
                  Eligibility Service requirements that are specified for
                  Matching Contributions in the Adoption Agreement and also
                  satisfy any additional conditions set forth in the Adoption
                  Agreement for this purpose. In a uniform and nondiscriminatory
                  manner, the Employer may make Matching Contributions at the
                  same time as it contributes Elective Deferrals or at any other
                  time as permitted by laws and regulations.

                                       84
<PAGE>   103

         11.303   QUALIFIED NONELECTIVE CONTRIBUTIONS

                  The Employer may elect to make Qualified Nonelective
                  Contributions under the Plan on behalf of Participants as
                  provided in the Adoption Agreement.

                  In addition, in lieu of distributing Excess Contributions as
                  provided in Section 11.505 of the Plan, or Excess Aggregate
                  Contributions as provided in Section 11.506 of the Plan, and
                  to the extent elected by the Employer in the Adoption
                  Agreement, the Employer may make Qualified Nonelective
                  Contributions on behalf of Participants who are not Highly
                  Compensated Employees that are sufficient to satisfy either
                  the Actual Deferral Percentage test or the Average
                  Contribution Percentage test, or both, pursuant to regulations
                  under the Code.

         11.304   QUALIFIED MATCHING CONTRIBUTIONS

                  The Employer may elect to make Qualified Matching
                  Contributions under the Plan on behalf of Participants as
                  provided in the Adoption Agreement.

         11.305   NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS

                  Notwithstanding Section 3.02, if the Employer so allows in the
                  Adoption Agreement, a Participant may contribute Nondeductible
                  Employee Contributions to the Plan.

                  If the Employer has indicated in the Adoption Agreement that
                  Nondeductible Employee Contributions will be mandatory, then
                  the Employer shall establish uniform and nondiscriminatory
                  rules and procedures for Nondeductible Employee Contributions
                  as it deems necessary and advisable including, but not limited
                  to, rules describing in amounts or percentages of Compensation
                  Participants may or must contribute to the Plan.

                  A separate account will be maintained by the Plan
                  Administrator for the Nondeductible Employee Contributions for
                  each Participant.

                  A Participant may, upon a written request submitted to the
                  Plan Administrator, withdraw the lesser of the portion of his
                  or her Individual Account attributable to his or her
                  Nondeductible Employee Contributions or the amount he or she
                  contributed as Nondeductible Employee Contributions.

                  Nondeductible Employee Contributions and earnings thereon will
                  be nonforfeitable at all times. No Forfeiture will occur
                  solely as a result of an Employee's withdrawal of
                  Nondeductible Employee Contributions.

         11.400   NONDISCRIMINATION TESTING

         11.401   ACTUAL DEFERRAL PERCENTAGE TEST (ADP)

                  A.       Limits on Highly Compensated Employees - The Actual
                           Deferral Percentage (hereinafter "ADP") for
                           Participants who are Highly Compensated Employees for
                           each Plan Year and the ADP for

                                       85
<PAGE>   104

                           Participants who are not Highly Compensated Employees
                           for the same Plan Year must satisfy one of the
                           following tests:

                           1.       The ADP for Participants who are Highly
                                    Compensated Employees for the Plan Year
                                    shall not exceed the ADP for Participants
                                    who are not Highly Compensated Employees for
                                    the same Plan Year multiplied by 1.25; or

                           2.       The ADP for Participants who are Highly
                                    Compensated Employees for the Plan Year
                                    shall not exceed the ADP for Participants
                                    who are not Highly Compensated Employees for
                                    the same Plan Year multiplied by 2.0
                                    provided that the ADP for Participants who
                                    are Highly Compensated Employees does not
                                    exceed the ADP for Participants who are not
                                    Highly Compensated Employees by more than 2
                                    percentage points.

                  B.       Special Rules

                           1.       The ADP for any Participant who is a Highly
                                    Compensated Employee for the Plan Year and
                                    who is eligible to have Elective Deferrals
                                    (and Qualified Nonelective Contributions or
                                    Qualified Matching Contributions, or both,
                                    if treated as Elective Deferrals for
                                    purposes of the ADP test) allocated to his
                                    or her Individual Accounts under two or more
                                    arrangements described in Section 401(k) of
                                    the Code, that are maintained by the
                                    Employer, shall be determined as if such
                                    Elective Deferrals (and, if applicable, such
                                    Qualified Nonelective Contributions or
                                    Qualified Matching Contributions, or both)
                                    were made under a single arrangement. If a
                                    Highly Compensated Employee participates in
                                    two or more cash or deferred arrangements
                                    that have different Plan Years, all cash or
                                    deferred arrangements ending with or within
                                    the same calendar year shall be treated as a
                                    single arrangement. Notwithstanding the
                                    foregoing, certain plans shall be treated as
                                    separate if mandatorily disaggregated under
                                    regulations under Section 401(k) of the
                                    Code.

                           2.       In the event that this Plan satisfies the
                                    requirements of Sections 401(k), 401(a)(4),
                                    or 410(b) of the Code only if aggregated
                                    with one or more other plans, or if one or
                                    more other plans satisfy the requirements of
                                    such sections of the Code only if aggregated
                                    with this Plan, then this Section 11.401
                                    shall be applied by determining the ADP of
                                    Employees as if all such plans were a single
                                    plan. For Plan Years beginning after
                                    December 31, 1989 plans may be aggregated in
                                    order to satisfy Section 401(k) of the Code
                                    only if they have the same Plan Year.

                           3.       For purposes of determining the ADP of a
                                    Participant who is a 5% owner or one of the
                                    10 most highly paid Highly Compensated
                                    Employees, the Elective Deferrals (and
                                    Qualified Nonelective Contributions or
                                    Qualified Matching Contributions, or both,
                                    if treated as Elective Deferrals for
                                    purposes of the ADP

                                       86
<PAGE>   105

                                    test) and Compensation of such Participant
                                    shall include the Elective Deferrals (and,
                                    if applicable, Qualified Nonelective
                                    Contributions and Qualified Matching
                                    Contributions, or both) and Compensation for
                                    the Plan Year of family members (as defined
                                    in Section 414(c)(6) of the Code). Family
                                    members, with respect to such Highly
                                    Compensated Employees, shall be disregarded
                                    as separate Employees in determining the ADP
                                    both for Participants who are not Highly
                                    Compensated Employees and for Participants
                                    who are Highly Compensated Employees.

                           4.       For purposes of determining the ADP test,
                                    Elective Deferrals, Qualified Nonelective
                                    Contributions and Qualified Matching
                                    Contributions must be made before the last
                                    day of the 12 month period immediately
                                    following the Plan Year to which
                                    contributions relate.

                           5.       The Employer shall maintain records
                                    sufficient to demonstrate satisfaction of
                                    the ADP test and the amount of Qualified
                                    Nonelective Contributions or Qualified
                                    Matching Contributions, or both, used in
                                    such test.

                           6.       The determination and treatment of the ADP
                                    amounts of any Participant shall satisfy
                                    such other requirements as may be prescribed
                                    by the Secretary of the Treasury.

                           7.       If the Employer elects to take Qualified
                                    Matching Contributions into account as
                                    Elective Deferrals for purposes of the ADP
                                    test, then (subject to such other
                                    requirements as may be prescribed by the
                                    Secretary of the Treasury) unless otherwise
                                    indicated in the Adoption Agreement, only
                                    the amount of such Qualified Matching
                                    Contributions that are needed to meet the
                                    ADP test shall be taken into account.

                           8.       In the event that the Plan Administrator
                                    determines that it is not likely that the
                                    ADP test will be satisfied for a particular
                                    Plan Year unless certain steps are taken
                                    prior to the end of such Plan Year, the Plan
                                    Administrator may require Contributing
                                    Participants who are Highly Compensated
                                    Employees to reduce their Elective Deferrals
                                    for such Plan Year in order to satisfy that
                                    requirement. Said reduction shall also be
                                    required by the Plan Administrator in the
                                    event that the Plan Administrator
                                    anticipates that the Employer will not be
                                    able to deduct all Employer Contributions
                                    from its income for Federal income tax
                                    purposes.

         11.402   LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING
                  CONTRIBUTIONS

                  A.       Limits on Highly Compensated Employees - The Average
                           Contribution Percentage (hereinafter "ACP") for
                           Participants who are Highly Compensated Employees for
                           each Plan Year and the ACP for

                                       87
<PAGE>   106

                           Participants who are not Highly Compensated Employees
                           for the same Plan Year must satisfy one of the
                           following tests:

                           1.       The ACP for Participants who are Highly
                                    Compensated Employees for the Plan Year
                                    shall not exceed the ACP for Participants
                                    who are not Highly Compensated Employees for
                                    the same Plan Year multiplied by 1.25; or

                           2.       The ACP for Participants who are Highly
                                    Compensated Employees for the Plan Year
                                    shall not exceed the ACP for Participants
                                    who are not Highly Compensated Employees for
                                    the same Plan Year multiplied by 2, provided
                                    that the ACP for the Participants who are
                                    Highly Compensated Employees does not exceed
                                    the ACP for Participants who are not Highly
                                    Compensated Employees by more than 2
                                    percentage points.

                  B.       Special Rules

                           1.       Multiple Use - If one or more Highly
                                    Compensated Employees participate in both a
                                    CODA and a plan subject to the ACP test
                                    maintained by the Employer and the sum of
                                    the ADP and ACP of those Highly Compensated
                                    Employees subject to either or both tests
                                    exceeds the Aggregate Limit, then, as
                                    elected in the Adoption Agreement, the AC?
                                    or the ADP of those Highly Compensated
                                    Employees who also participate in a CODA
                                    will be reduced (beginning with such Highly
                                    Compensated Employee whose ACP (or ADP, if
                                    elected) is the highest) so that the limit
                                    is not exceeded. The amount by which each
                                    Highly Compensated Employee's Contribution
                                    Percentage Amounts (or ADP, if elected) is
                                    reduced shall be treated as an Excess
                                    Aggregate Contribution (or Excess
                                    Contribution, if elected). The ADP and ACP
                                    of the Highly Compensated Employees are
                                    determined after any corrections required to
                                    meet the ADP and ACP tests. Multiple use
                                    does not occur if the ADP and ACP of the
                                    Highly Compensated Employees does not exceed
                                    1.25 multiplied by the AD? and AC? of the
                                    Participants who are not Highly Compensated
                                    Employees.

                           2.       For purposes of this Section 11.402, the
                                    Contribution Percentage for any Participant
                                    who is a Highly Compensated Employee and who
                                    is eligible to have Contribution Percentage
                                    Amounts allocated to his or her Individual
                                    Account under two or more plans described in
                                    Section 40 1(a) of the Code, or arrangements
                                    described in Section 401(k) of the Code that
                                    are maintained by the Employer, shall be
                                    determined as if the total of such
                                    Contribution Percentage Amounts was made
                                    under each plan. If a Highly Compensated
                                    Employee participates in two or more cash or
                                    deferred arrangements that have different
                                    plan years, all cash or deferred
                                    arrangements ending with or within the same
                                    calendar year shall be treated as a single
                                    arrangement. Notwithstanding the foregoing,
                                    certain plans shall be treated as

                                       88
<PAGE>   107

                                    separate if mandatorily disaggregated under
                                    regulations under Section 40 1(m) of the
                                    Code.

                           3.       In the event that this Plan satisfies the
                                    requirements of Sections 40 1(m), 401(a)(4)
                                    or 4 10(b) of the Code only if aggregated
                                    with one or more other plans, or if one or
                                    more other plans satisfy the requirements of
                                    such Sections of the Code only if aggregated
                                    with this Plan, then this Section shall be
                                    applied by determining the Contribution
                                    Percentage of Employees as if all such plans
                                    were a single plan. For Plan Years beginning
                                    after December 31, 1989, plans may be
                                    aggregated in order to satisfy Section
                                    401(m) of the Code only if they have the
                                    same Plan Year.

                           4.       For purposes of determining the Contribution
                                    Percentage of a Participant who is a 5%
                                    owner or one of the 10 most highly paid
                                    Highly Compensated Employees, the
                                    Contribution Percentage Amounts and
                                    Compensation of such Participant shall
                                    include the Contribution Percentage Amounts
                                    and Compensation for the Plan Year of family
                                    members, (as defined in Section 414(q)(6) of
                                    the Code). Family members, with respect to
                                    Highly Compensated Employees, shall be
                                    disregarded as separate Employees in
                                    determining the Contribution Percentage both
                                    for Participants who are not Highly
                                    Compensated Employees and for Participants
                                    who are Highly Compensated Employees.

                           5.       For purposes of determining the Contribution
                                    Percentage test, Nondeductible Employee
                                    Contributions are considered to have been
                                    made in the Plan Year in which contributed
                                    to the Fund. Matching Contributions and
                                    Qualified Nonelective Contributions will be
                                    considered made for a Plan Year if made no
                                    later than the end of the 12 month period
                                    beginning on the day after the close of the
                                    Plan Year.

                           6.       The Employer shall maintain records
                                    sufficient to demonstrate satisfaction of
                                    the ACP test and the amount of Qualified
                                    Nonelective Contributions or Qualified
                                    Matching Contributions, or both, used in
                                    such test.

                           7.       The determination and treatment of the
                                    Contribution Percentage of any Participant
                                    shall satisfy such other requirements as may
                                    be prescribed by the Secretary of the
                                    Treasury.

                           8.       If the Employer elects to take Qualified
                                    Nonelective Contributions into account as
                                    Contribution Percentage Amounts for purposes
                                    of the ACP test, then (subject to such other
                                    requirements as may be prescribed by the
                                    Secretary of the Treasury) unless otherwise
                                    indicated in the Adoption Agreement, only
                                    the amount of such Qualified Nonelective
                                    Contributions that are needed to meet the
                                    ACP test shall be taken into account.

                                       89
<PAGE>   108

                           9.       If the Employer elects to take Elective
                                    Deferrals into account as Contribution
                                    Percentage Amounts for purposes of the AC?
                                    test, then (subject to such other
                                    requirements as may be prescribed by the
                                    Secretary of the Treasury) unless otherwise
                                    indicated in the Adoption Agreement, only
                                    the amount of such Elective Deferrals that
                                    are needed to meet the ACP test shall be
                                    taken into account.

         11.500   DISTRIBUTION PROVISIONS

         11.501   GENERAL RULE

                  Distributions from the Plan are subject to the provisions of
                  Section 6 and the provisions of this Section 11. In the event
                  of a conflict between the provisions of Section 6 and Section
                  11, the provisions of Section 11 shall control.

         11.502   DISTRIBUTION REQUIREMENTS

                  Elective Deferrals, Qualified Nonelective Contributions, and
                  Qualified Matching Contributions, and income allocable to each
                  are not distributable to a Participant or his or her
                  Beneficiary or Beneficiaries, in accordance with such
                  Participant's or Beneficiary or Beneficiaries' election,
                  earlier than upon separation from service, death or
                  disability.

                  Such amounts may also be distributed upon:

                  A.       Termination of the Plan without the establishment of
                           another defined contribution plan, other than an
                           employee stock ownership plan (as defined in Section
                           4975(e) or Section 409 of the Code) or a simplified
                           employee pension plan as defined in Section 408(k).

                  B.       The disposition by a corporation to an unrelated
                           corporation of substantially all of the assets
                           (within the meaning of Section 409(d)(2) of the Code
                           used in a trade or business of such corporation if
                           such corporation continues to maintain this Plan
                           after the disposition, but only with respect to
                           Employees who continue employment with the
                           corporation acquiring such assets.

                  C.       The disposition by a corporation to an unrelated
                           entity of such corporation's interest in a subsidiary
                           (within the meaning of Section 409(d)(3) of the Code)
                           if such corporation continues to maintain this Plan,
                           but only with respect to Employees who continue
                           employment with such subsidiary.

                  D.       The attainment of age 59 1/2 in the case of a profit
                           sharing plan.

                  E.       If the Employer has so elected in the Adoption
                           Agreement, the hardship of the Participant as
                           described in Section 11.503.

                           All distributions that may be made pursuant to one or
                           more of the foregoing distributable events are
                           subject to the spousal and Participant consent
                           requirements (if applicable) contained in Section
                           401(a)(1) and

                                       90
<PAGE>   109

                           417 of the Code. In addition, distributions after
                           March 31, 1988, that are triggered by any of the
                           first three events enumerated above must be made in a
                           lump sum.

         11.503   HARDSHIP DISTRIBUTION

                  A.       General - If the Employer has so elected in the
                           Adoption Agreement, distribution of Elective
                           Deferrals (and any earnings credited to a
                           Participant's account as of the end of the last Plan
                           Year, ending before July 1, 1989) may be made to a
                           Participant in the event of hardship. For the
                           purposes of this Section, hardship is defined as an
                           immediate and heavy financial need of the Employee
                           where such Employee lacks other available resources.
                           Hardship distributions are subject to the spousal
                           consent requirements contained in Sections 401(a)(l
                           1) and 417 of the Code.

                  B.       Special Rules

                           1.       The following are the only financial needs
                                    considered immediate and heavy: expenses
                                    incurred or necessary for medical care,
                                    described in Section 2 13(d) of the Code, of
                                    the Employee, the Employee's spouse or
                                    dependents; the purchase (excluding mortgage
                                    payments) of a principal residence for the
                                    Employee; payment of tuition and related
                                    educational fees for the next 12 months of
                                    post-secondary education for the Employee,
                                    the Employee's spouse, children or
                                    dependents; or the need to prevent the
                                    eviction of the Employee from, or a
                                    foreclosure on the mortgage of, the
                                    Employee's principal residence.

                           2.       A distribution will be considered as
                                    necessary to satisfy an immediate and heavy
                                    financial need of the Employee only if:

                                    a.    The Employee has obtained all
                                          distributions, other than hardship
                                          distributions, and all nontaxable
                                          loans under all plans maintained by
                                          the Employer;

                                    b.    All plans maintained by the Employer
                                          provide that the Employee's Elective
                                          Deferrals (and Nondeductible Employee
                                          Contributions) will be suspended for
                                          12 months after the receipt of the
                                          hardship distribution;

                                    c.    The distribution is not in excess of
                                          the amount of an immediate and heavy
                                          financial need (including amounts
                                          necessary to pay any Federal, state or
                                          local income taxes or penalties
                                          reasonably anticipated to result from
                                          the distribution); and

                                    d.    All plans maintained by the Employer
                                          provide that the Employee may not make
                                          Elective Deferrals for the Employee's
                                          taxable year immediately following the
                                          taxable year of the hardship
                                          distribution in excess of the

                                       91
<PAGE>   110

                                          applicable limit under Section 402(j)
                                          of the Code for such taxable year less
                                          the amount of such Employee's Elective
                                          Deferrals for the taxable year of the
                                          hardship distribution.

         11.504   DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS

                  A.       General Rule - A Participant may assign to this Plan
                           any Excess Elective Deferrals made during a taxable
                           year of the Participant by notifying the Plan
                           Administrator on or before the date specified in the
                           Adoption Agreement of the amount of the Excess
                           Elective Deferrals to be assigned to the Plan. A
                           Participant is deemed to notify the Plan
                           Administrator of any Excess Elective Deferrals that
                           arise by taking into account only those Elective
                           Deferrals made to this Plan and any other plans of
                           the Employer.

                           Notwithstanding any other provision of the Plan.
                           Excess Elective Deferrals, plus any income and minus
                           any loss allocable thereto, shall be distributed no
                           later than April 15 to any Participant to whose
                           Individual Account Excess Elective Deferrals were
                           assigned for the preceding year and who claims Excess
                           Elective Deferrals for such taxable year.

                  B.       Determination of Income or Loss - Excess Elective
                           Deferrals shall be adjusted for any income or loss up
                           to the date of distribution. The income of loss
                           allocable to Excess Elective Deferrals is the sum of:
                           (1) income or loss allocable to the Participant's
                           Elective Deferral account for the taxable year
                           multiplied by a fraction, the numerator of which is
                           such Participant's Elective Deferrals for the year
                           and the denominator is the Participant's Individual
                           Account balance attributable to Elective Deferrals
                           without regard to any income or loss occurring during
                           such taxable year; and (2) 10% of the amount
                           determined under (1) multiplied by the number of
                           whole calendar months between the end of the
                           Participant's taxable year and the date of
                           distribution, counting the month of distribution if
                           distribution occurs after the 15th of such month.
                           Notwithstanding the preceding sentence, the Plan
                           Administrator may compute the income or loss
                           allocable to Excess Elective Deferrals in the manner
                           described in Section 4 (i.e., the usual manner used
                           by the Plan for allocating income or loss to
                           Participants' Individual Accounts), provided such
                           method is used consistently for all Participants and
                           for all corrective distributions under the Plan for
                           the Plan Year.

         11.504   DISTRIBUTION OF EXCESS CONTRIBUTIONS

                  A.       General Rule - Notwithstanding any other provision of
                           this Plan, Excess Contributions, plus any income and
                           minus any loss allocable thereto, shall be
                           distributed no later than the last day of each Plan
                           Year to Participants to whose Individual Accounts
                           such Excess Contributions were allocated for the
                           preceding Plan Year. If such excess amounts are
                           distributed more than 2 1/2 months after the last day
                           of the Plan Year in which such excess amounts arose,
                           a 10% excise tax will be imposed on the Employer
                           maintaining the Plan with respect to such amounts.
                           Such distributions

                                       92
<PAGE>   111

                           shall be made to Highly Compensated Employees on the
                           basis of the respective portions of the Excess
                           Contributions attributable to each of such Employees.
                           Excess Contributions of Participants who are subject
                           to the family member aggregation rules shall be
                           allocated among the family members in proportion to
                           the Elective Deferrals (and amounts treated as
                           Elective Deferrals) of each family member that is
                           combined to determine the combined ADP.

                           Excess Contributions (including the amounts
                           recharacterized) shall be treated as annual additions
                           under the Plan.

                  B.       Determination of Income or Loss - Excess
                           Contributions shall be adjusted for any income or
                           loss up to the date of distribution. The income or
                           loss allocable to Excess Contributions is the sum of:
                           (1) income or loss allocable to Participant's
                           Elective Deferral account (and, if applicable, the
                           Qualified Nonelective Contribution account or the
                           Qualified Matching Contributions account or both) for
                           the Plan Year multiplied by a fraction, the numerator
                           of which is such Participant's Excess Contributions
                           for the year and the denominator is the Participant's
                           Individual Account balance attributable to Elective
                           Deferrals (and Qualified Nonelective Contributions or
                           Qualified Matching Contributions, or both, if any of
                           such contributions are included in the ADP test)
                           without regard to any income or loss occurring during
                           such Plan Year; and (2) 10% of the amount determined
                           under (1) multiplied by the number of whole calendar
                           months between the end of the Plan Year and the date
                           of distribution, counting the month of distribution
                           if distribution occurs after the 15th of such month.
                           Notwithstanding the preceding sentence, the Plan
                           Administrator may compute the income or loss
                           allocable to Excess Contributions in the manner
                           described in Section 4 (i.e., the usual manner used
                           by the Plan for allocating income or loss to
                           Participants' Individual Accounts), provided such
                           method is used consistently for all Participants and
                           for all corrective distributions under the Plan for
                           the Plan Year.

                  C.       Accounting for Excess Contributions - Excess
                           Contributions shall be distributed from the
                           Participant's Elective Deferral account and Qualified
                           Matching Contribution account (if applicable) in
                           proportion to the Participant's Elective Deferrals
                           and Qualified Matching Contributions (to the extent
                           used in the ADP test) for the Plan Year. Excess
                           Contributions shall be distributed from the
                           Participant's Qualified Nonelective Contribution
                           account only to the extent that such Excess
                           Contributions exceed the balance in the Participant's
                           Elective Deferral account and Qualified Matching
                           Contribution account.

         11.506   DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS

                  A.       General Rule - Notwithstanding any other provision of
                           this Plan, Excess Aggregate Contributions, plus any
                           income and minus any loss allocable thereto, shall be
                           forfeited, if forfeitable, or if not forfeitable,
                           distributed no later than the last day of each Plan
                           Year to Participants to whose accounts such Excess
                           Aggregate Contributions were allocated for the

                                       93
<PAGE>   112

                           preceding Plan Year. Excess Aggregate Contributions
                           of Participants who are subject to the family member
                           aggregation rules shall be allocated among the family
                           members in proportion to the Employee and Matching
                           Contributions (or amounts treated as Matching
                           Contributions) of each family member that is combined
                           to determine the combined ACP. If such Excess
                           Aggregate Contributions are distributed more than 2
                           1/2 months after the last day of the Plan Year in
                           which such excess amounts arose, a 10% excise tax
                           will be imposed on the Employer maintaining the Plan
                           with respect to those amounts.

                           Excess Aggregate Contributions shall be treated as
                           annual additions under the Plan.

                  B.       Determination of Income or Loss - Excess Aggregate
                           Contributions shall be adjusted for any income or
                           loss up to the date of distribution. The income or
                           loss allocable to Excess Aggregate Contributions is
                           the sum of: (1) income or loss allocable to the
                           Participant's Nondeductible Employee Contribution
                           account, Matching Contribution account (if any, and
                           if all amounts therein are not used in the ADP test)
                           and, if applicable, Qualified Nonelective
                           Contribution account and Elective Deferral account
                           for the Plan Year multiplied by a fraction, the
                           numerator of which is such Participant's Excess
                           Aggregate Contributions for the year and the
                           denominator is the Participant's Individual Account
                           balance(s) attributable to Contribution Percentage
                           Amounts without regard to any income or loss
                           occurring during such Plan Year; and (2) 10% of the
                           amount determined under (1) multiplied by the number
                           of whole calendar months between the end of the Plan
                           Year and the date of distribution, counting the month
                           of distribution if distribution occurs after the 15th
                           of such month. Notwithstanding the preceding
                           sentence, the Plan Administrator may compute the
                           income or loss allocable to Excess Aggregate
                           Contributions in the manner described in Section 4
                           (i.e., the usual manner used by the Plan for
                           allocating income or loss to Participants' Individual
                           Accounts), provided such method is used consistently
                           for all Participants and for all corrective
                           distributions under the Plan for the Plan Year.

                  B.       Forfeitures of Excess Aggregate Contributions -
                           Forfeitures of Excess Aggregate Contributions may
                           either be reallocated to the accounts of Contributing
                           Participants who are not Highly Compensated Employees
                           or applied to reduce Employer Contributions, as
                           elected by the Employer in the Adoption Agreement.

                  C.       Accounting for Excess Aggregate Contributions -
                           Excess Aggregate Contributions shall be forfeited, if
                           forfeitable or distributed on a pro rata basis from
                           the Participant's Nondeductible Employee Contribution
                           account, Matching Contribution account, and Qualified
                           Matching Contribution account (and, if applicable,
                           the Participant's Qualified Nonelective Contribution
                           account or Elective Deferral account, or both).

                                       94
<PAGE>   113

         11.506   RECHARACTERIZATION

                  A Participant may treat his or her Excess Contributions as an
                  amount distributed to the Participant and then contributed by
                  the Participant to the Plan. Recharacterized amounts will
                  remain nonforfeitable and subject to the same distribution
                  requirements as Elective Deferrals. Amounts may not be
                  recharacterized by a Highly Compensated Employee to the extent
                  that such amount in combination with other Nondeductible
                  Employee Contributions made by that Employee would exceed any
                  stated limit under the Plan on Nondeductible Employee
                  Contributions.

                  Recharacterization must occur no later than two and one-half
                  months after the last day of the Plan Year in which such
                  Excess Contributions arose and is deemed to occur no earlier
                  than the date the last Highly Compensated Employee is informed
                  in writing of the amount recharacterized and the consequences
                  thereof. Recharacterized amounts will be taxable to the
                  Participant for the Participant's tax year in which the
                  Participant would have received them in cash.

         11.508   DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS

                  Notwithstanding any other provision of the Plan, a
                  Participant's Elective Deferrals shall be distributed to him
                  or her to the extent that the distribution will reduce an
                  excess annual addition (as that term is described in Section
                  3.05 of the Plan).

         11.600   VESTING

         11.601   100% VESTING ON CERTAIN CONTRIBUTIONS

                  The Participant's accrued benefit derived from Elective
                  Deferrals, Qualified Nonelective Contributions, Nondeductible
                  Employee Contributions, and Qualified Matching Contributions
                  is nonforfeitable. Separate accounts for Elective Deferrals,
                  Qualified Nonelective Contributions, Nondeductible Employee
                  Contributions, Matching Contributions, and Qualified Matching
                  Contributions will be maintained for each Participant. Each
                  account will be credited with the applicable contributions and
                  earnings thereon.

         11.602   FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS

                  Matching Contributions shall be Vested in accordance with the
                  vesting schedule for Matching Contributions in the Adoption
                  Agreement. In any event, Matching Contributions shall be fully
                  Vested at Normal Retirement Age, upon the complete or partial
                  termination of the profit sharing plan, or upon the complete
                  discontinuance of Employer Contributions. Notwithstanding any
                  other provisions of the Plan, Matching Contributions or
                  Qualified Matching Contributions must be forfeited if the
                  contributions to which they relate are Excess Elective
                  Deferrals, Excess Contributions, Excess Aggregate
                  Contributions or excess annual additions which are distributed
                  pursuant to Section 11.508. Such Forfeitures shall be
                  allocated in accordance with Section 3.01(C).

                                       95
<PAGE>   114

                  When a Participant incurs a Termination of Employment, whether
                  a Forfeiture arises with respect to Matching Contributions
                  shall be determined in accordance with Section 6.01(D).

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                                TABLE OF CONTENTS

                                                                            PAGE

SECTION ONE           DEFINITIONS..............................................1

    1.01     ADOPTION AGREEMENT................................................1

    1.02     BASIC PLAN DOCUMENT...............................................1

    1.03     BENEFICIARY.......................................................1

    1.04     BREAK IN ELIGIBILITY SERVICE......................................1

    1.05     BREAK IN VESTING SERVICE..........................................1

    1.06     CODE..............................................................1

    1.07     COMPENSATION......................................................1

    1.08     CUSTODIAN.........................................................4

    1.09     DISABILITY........................................................4

    1.10     EARLY RETIREMENT AGE..............................................5

    1.11     EARNED INCOME.....................................................5

    1.12     EFFECTIVE DATE....................................................5

    1.13     ELIGIBILITY COMPUTATION PERIOD....................................5

    1.14     EMPLOYEE..........................................................5

    1.15     EMPLOYER..........................................................6

    1.16     EMPLOYER CONTRIBUTION.............................................6

    1.17     EMPLOYMENT COMMENCEMENT DATE......................................6

    1.18     EMPLOYER PROFIT SHARING CONTRIBUTION..............................6

    1.19     ENTRY DATES.......................................................6

    1.20     ERISA.............................................................6

    1.21     FORFEITURE........................................................6

    1.22     FUND..............................................................6

    1.23     HIGHLY COMPENSATED EMPLOYEE.......................................7

    1.24     HOURS OF SERVICE - MEANS..........................................8

    1.25     INDIVIDUAL ACCOUNT................................................9

    1.26     INVESTMENT FUND...................................................9

    1.27     KEY EMPLOYEE......................................................9

    1.28     LEASED EMPLOYEE...................................................9

    1.29     NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS.............................10

    1.30     NORMAL RETIREMENT AGE............................................10

    1.31     OWNER - EMPLOYEE.................................................10

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                                                                            PAGE

    1.32     PARTICIPANT......................................................10

    1.33     PLAN.............................................................10

    1.34     PLAN ADMINISTRATOR...............................................10

    1.35     PLAN YEAR........................................................10

    1.36     PRIOR PLAN.......................................................11

    1.37     PROTOTYPE SPONSOR................................................11

    1.38     QUALIFYING PARTICIPANT...........................................11

    1.39     RELATED EMPLOYER.................................................11

    1.40     RELATED EMPLOYER PARTICIPATION AGREEMENT.........................11

    1.41     SELF-EMPLOYED INDIVIDUAL.........................................11

    1.42     SEPARATE FUND....................................................11

    1.43     TAXABLE WAGE BASE................................................11

    1.44     TERMINATION OF EMPLOYMENT........................................12

    1.45     TOP-HEAVY PLAN...................................................12

    1.46     TRUSTEE..........................................................12

    1.47     VALUATION DATE...................................................12

    1.48     VESTED...........................................................12

    1.49     YEAR OF ELIGIBILITY SERVICE......................................12

    1.50     YEAR OF VESTING SERVICE..........................................12

SECTION TWO           ELIGIBILITY AND PARTICIPATION...........................13

    2.01     ELIGIBILITY TO PARTICIPATE.......................................13

    2.02     PLAN ENTRY.......................................................13

    2.03     TRANSFER TO OR FROM INELIGIBLE CLASS.............................14

    2.04     RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE.......14

    2.05     DETERMINATIONS UNDER THIS SECTION................................15

    2.06     TERMS OF EMPLOYMENT..............................................15

    2.07     SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED............15

    2.08     ELECTION NOT TO PARTICIPATE......................................16

SECTION THREE         CONTRIBUTIONS...........................................17

    3.01     EMPLOYER CONTRIBUTIONS...........................................17

    3.02     NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS.............................21

    3.03     ROLLOVER CONTRIBUTIONS...........................................22

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                                                                            PAGE

    3.04     TRANSFER CONTRIBUTIONS...........................................22

    3.05     LIMITATION ON ALLOCATIONS........................................22

SECTION FOUR          INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION.......29

    4.01     INDIVIDUAL ACCOUNTS..............................................29

    4.02     VALUATION OF FUND................................................30

    4.03     VALUATION OF INDIVIDUAL ACCOUNTS.................................30

    4.04     MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS...........31

    4.05     SEGREGATION OF ASSETS............................................31

    4.06     STATEMENT OF INDIVIDUAL ACCOUNTS.................................31

SECTION FIVE          TRUSTEE OR CUSTODIAN....................................31

    5.01     CREATION OF FUND.................................................31

    5.02     INVESTMENT AUTHORITY.............................................32

    5.03     FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST
             POWERS...........................................................32

    5.04     FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
             INDIVIDUAL TRUSTEE...............................................33

    5.05     DIVISION OF FUND INTO INVESTMENT FUNDS...........................36

    5.06     COMPENSATION AND EXPENSES........................................36

    5.07     NOT OBLIGATED TO QUESTION DATA...................................37

    5.08     LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS.......................37

    5.09     RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN).................37

    5.10     DEGREE OF CARE - LIMITATIONS OF LIABILITY........................38

    5.11     INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE
             (OR CUSTODIAN)...................................................38

    5.12     INVESTMENT MANAGERS..............................................39

    5.13     MATTERS RELATING TO INSURANCE....................................39

    5.14     DIRECTION OF INVESTMENTS BY PARTICIPANT..........................41

SECTION SIX           VESTING AND DISTRIBUTION................................41

    6.01     DISTRIBUTION TO PARTICIPANT......................................41

    6.02     FORM OF DISTRIBUTION TO A PARTICIPANT............................47

    6.03     DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT....................49

    6.04     FORM OF DISTRIBUTION TO BENEFICIARY..............................50

    6.05     JOINT AND SURVIVOR ANNUITY REQUIREMENTS..........................50

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    6.06     DISTRIBUTION REQUIREMENTS........................................57

    6.07     ANNUITY CONTRACTS................................................64

    6.08     LOANS TO PARTICIPANTS............................................64

    6.09     DISTRIBUTION IN KIND.............................................66

    6.10     DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS..............66

    6.11     PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES..............67

SECTION SEVEN         CLAIMS PROCEDURE........................................67

    7.01     FILING A CLAIM FOR PLAN DISTRIBUTIONS............................67

    7.02     DENIAL OF CLAIM..................................................67

    7.03     REMEDIES AVAILABLE...............................................68

SECTION EIGHT         PLAN ADMINISTRATOR......................................68

    8.01     EMPLOYER IS PLAN ADMINISTRATOR...................................68

    8.02     POWERS AND DUTIES OF THE PLAN ADMINISTRATOR......................68

    8.03     EXPENSES AND COMPENSATION........................................70

    8.04     INFORMATION FROM EMPLOYER........................................70

SECTION NINE          AMENDMENT AND TERMINATION...............................70

    9.01     RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN.....................70

    9.02     RIGHT OF EMPLOYER TO AMEND THE PLAN..............................71

    9.03     LIMITATION ON POWER TO AMEND.....................................71

    9.04     AMENDMENT OF VESTING SCHEDULE....................................72

    9.05     PERMANENCY.......................................................72

    9.06     METHOD AND PROCEDURE FOR TERMINATION.............................72

    9.07     CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER........................73

    9.08     FAILURE OF PLAN QUALIFICATION....................................73

SECTION TEN           MISCELLANEOUS...........................................73

    10.01    STATE COMMUNITY PROPERTY LAWS....................................73

    10.02    READINGS.........................................................73

    10.03    GENDER AND NUMBER................................................73

    10.04    PLAN MERGER OR CONSOLIDATION.....................................73

    10.05    STANDARD OF FIDUCIARY CONDUCE....................................74

    10.06    GENERAL UNDERTAKING OF ALL PARTIES...............................74

    10.07    AGREEMENT BINDS HEIRS, ETC.......................................74

                                      -iv-

<PAGE>   119

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

    10.08    DETERMINATION OF TOP-HEAVY STATUS................................74

    10.09    SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES..........................77

    10.10    INALIENABILITY OF BENEFITS.......................................78

    10.11    CANNOT ELIMINATE PROTECTED BENEFITS..............................78

SECTION ELEVEN        401(K) PROVISIONS.......................................78

11.100   DEFINITIONS..........................................................78

11.101   ACTUAL DEFERRAL PERCENTAGE (ADP).....................................79

11.102   AGGREGATE LIMIT......................................................79

11.103   AVERAGE CONTRIBUTION PERCENTAGE (ACP)................................79

11.104   CONTRIBUTING PARTICIPANT.............................................79

11.105   CONTRIBUTION PERCENTAGE..............................................79

11.106   CONTRIBUTION PERCENTAGE AMOUNTS......................................80

11.107   ELECTIVE DEFERRALS...................................................80

11.108   ELIGIBLE PARTICIPANT.................................................80

11.109   EXCESS AGGREGATE CONTRIBUTIONS.......................................81

11.110   EXCESS CONTRIBUTIONS.................................................81

11.111   EXCESS ELECTIVE DEFERRALS............................................81

11.112   MATCHING CONTRIBUTION................................................81

11.113   QUALIFIED NONELECTIVE CONTRIBUTIONS..................................82

11.114   QUALIFIED MATCHING CONTRIBUTIONS.....................................82

11.115   QUALIFYING CONTRIBUTING PARTICIPANT..................................82

11.200   CONTRIBUTING PARTICIPANT.............................................82

11.201   REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT.................82

11.202   CHANGING ELECTIVE DEFERRAL AMOUNTS...................................83

11.203   CEASING ELECTIVE DEFERRALS...........................................83

11.204   RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE
         DEFERRALS............................................................83

11.205   CERTAIN ONE-TIME IRREVOCABLE ELECTIONS...............................83

11.300   CONTRIBUTIONS........................................................84

11.301   CONTRIBUTIONS BY EMPLOYER............................................84

11.302   MATCHING CONTRIBUTIONS...............................................84

11.303   QUALIFIED NONELECTIVE CONTRIBUTIONS..................................84

11.304   QUALIFIED MATCHING CONTRIBUTIONS.....................................85

                                      -v-

<PAGE>   120

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

11.305   NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS.................................85

11.400   NONDISCRIMINATION TESTING............................................85

11.401   ACTUAL DEFERRAL PERCENTAGE TEST (ADP)................................85

11.402   LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING
         CONTRIBUTIONS........................................................87

11.500   DISTRIBUTION PROVISIONS..............................................89

11.501   GENERAL RULE.........................................................89

11.502   DISTRIBUTION REQUIREMENTS............................................90

11.503   HARDSHIP DISTRIBUTION................................................90

11.504   DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS............................91

11.504   DISTRIBUTION OF EXCESS CONTRIBUTIONS.................................92

11.506   DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.......................93

11.506   RECHARACTERIZATION...................................................94

11.508   DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS........95

11.600   VESTING..............................................................95

11.601   100% VESTING ON CERTAIN CONTRIBUTIONS................................95

11.602   FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS....................95

                                      -vi-

<PAGE>   121

An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.<PAGE>   1
                                                                     Exhibit 4.1

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

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

                              eLoyalty Corporation

                                       and

                    ChaseMellon Shareholder Services, L.L.C.

                                  Rights Agent

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

                                Rights Agreement

                         Dated as of [                 ]

--------------------------------------------------------------------------------
<PAGE>   2
                                Table of Contents

Section                                                                 Page
-------                                                                 ----

Section 1.  Certain Definitions.......................................    1
Section 2.  Appointment of Rights Agent...............................    5
Section 3.  Issue of Rights Certificates..............................    6
Section 4.  Form of Rights Certificates...............................    8
Section 5.  Countersignature and Registration.........................    9
Section 6.  Transfer, Split Up, Combination and Exchange
                    of Rights Certificates; Mutilated, Destroyed,
                    Lost or Stolen Rights Certificates................   10
Section 7.  Exercise of Rights; Purchase Price;
                    Expiration Date of Rights.........................   11
Section 8.  Cancellation and Destruction of Rights
                    Certificates......................................   13
Section 9.  Reservation and Availability of Capital
                    Stock.............................................   13
Section 10.  Preferred Stock Record Date..............................   15
Section 11.  Adjustment of Purchase Price, Number and
                     Kind of Shares or Number of Rights...............   16
Section 12.  Certificate of Adjusted Purchase Price or
                     Number of Shares.................................   25
Section 13.  Consolidation, Merger or Sale or Transfer
                     of Assets or Earning Power.......................   26
Section 14.  Fractional Rights and Fractional Shares..................   28
Section 15.  Rights of Action.........................................   30
Section 16.  Agreement of Rights Holders..............................   30
Section 17.  Rights Certificate Holder Not Deemed a
                     Stockholder......................................   31
Section 18.  Concerning the Rights Agent..............................   32
Section 19.  Merger or Consolidation or Change of Name
                     of Rights Agent..................................   32
Section 20.  Duties of Rights Agent...................................   33
Section 21.  Change of Rights Agent...................................   36
Section 22.  Issuance of New Rights Certificates......................   37
Section 23.  Redemption and Termination...............................   37
Section 24.  Exchange.................................................   38
Section 25.  Notice of Certain Events.................................   40
Section 26.  Notices..................................................   41
Section 27.  Supplements and Amendments...............................   41
Section 28.  Successors...............................................   42
Section 29.  Determination and Actions by the Board of
                     Directors, etc...................................   42
Section 30.  Benefits of this Agreement...............................   43
Section 31.  Severability.............................................   43
Section 32.  Governing Law............................................   43
Section 33.  Counterparts.............................................   43
Section 34.  Descriptive Headings.....................................   43

                                      -i-
<PAGE>   3
                                RIGHTS AGREEMENT

                  RIGHTS AGREEMENT, dated as of [          ] (the "Agreement"),
between eLoyalty Corporation, a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability company
(the "Rights Agent").

                              W I T N E S S E T H:

                  WHEREAS, on [        ] (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the Close of
Business on [       ], after giving effect to the distribution of shares of
Common Stock (the "Spin-off") by Technology Solutions to its stockholders (the
"Record Date"), each Right initially representing the right to purchase one
one-hundredth of a share of Series A Junior Participating Preferred Stock of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth (the "Rights"), and has further
authorized the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for each share of Common
Stock of the Company issued between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined) or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date;

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:

                  Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:

                  (a) "Acquiring Person" shall mean any Person who or which,
         together with all Affiliates and Associates of such Person, shall be
         the Beneficial Owner of 15% or more of the shares of Common Stock then
         outstanding, but shall not include the Company, any Subsidiary of the
         Company, any employee benefit plan of the Company or of any Subsidiary
         of the Company, or any Person organized, appointed or established by
         the Company for or pursuant to the terms of any such plan.
         Notwithstanding the foregoing, no Person shall become an "Acquiring
         Person" as the result of an acquisition of shares of Common Stock by
         the Company which, by reducing the number of shares outstanding,
         increases

                                      -2-
<PAGE>   4
         the proportionate number of shares beneficially owned by such Person to
         15% or more of the shares of Common Stock then outstanding; provided,
         however, that if a Person shall become the Beneficial Owner of 15% or
         more of the shares of Common Stock then outstanding by reason of share
         purchases by the Company and shall, after such share purchases by the
         Company, become the Beneficial Owner of any additional shares of Common
         Stock (other than pursuant to a dividend or distribution paid or made
         by the Company on the outstanding Common Stock or pursuant to a split
         or subdivision of the outstanding Common Stock), then such Person shall
         be deemed to be an "Acquiring Person". Notwithstanding the foregoing,
         if the Board of Directors of the Company determines in good faith that
         a Person who would otherwise be an "Acquiring Person" (as defined
         pursuant to the foregoing provisions of this paragraph (a)) has become
         such inadvertently, and such Person divests as promptly as practicable
         a sufficient number of shares of Common Stock so that such Person would
         no longer be an "Acquiring Person" (as defined pursuant to the
         foregoing provisions of this paragraph (a)), then such Person shall not
         be deemed to be an "Acquiring Person" for any purposes of this
         Agreement.

                  (b) "Act" shall mean the Securities Act of 1933, as amended.

                  (c) "Affiliate" and "Associate" shall have the respective
         meanings ascribed to such terms in Rule 12b-2 of the General Rules and
         Regulations under the Securities Exchange Act of 1934, as amended and
         in effect on the date of this Agreement (the "Exchange Act").

                  (d) A Person shall be deemed the "Beneficial Owner" of, and
         shall be deemed to "beneficially own," any securities:

                           (i) which such Person or any of such Person's
                  Affiliates or Associates, directly or indirectly, has the
                  right to acquire (whether such right is exercisable
                  immediately or only after the passage of time) pursuant to any
                  agreement, arrangement or understanding (whether or not in
                  writing) or upon the exercise of conversion rights, exchange
                  rights, rights, warrants or options, or otherwise; provided,
                  however, that a Person shall not be deemed the "Beneficial
                  Owner" of, or to "beneficially own," (A) securities tendered
                  pursuant to a tender or exchange offer made by such Person or
                  any of such Person's

                                      -2-
<PAGE>   5
                  Affiliates or Associates until such tendered securities are
                  accepted for purchase or exchange, or (B) securities issuable
                  upon exercise of Rights at any time prior to the occurrence of
                  a Triggering Event, or (C) securities issuable upon exercise
                  of Rights from and after the occurrence of a Triggering Event
                  which Rights were acquired by such Person or any such Person's
                  Affiliates or Associates prior to the Distribution Date or
                  pursuant to Section 3(a) or Section 22 hereof (the "Original
                  Rights") or pursuant to Section 11(i) hereof in connection
                  with an adjustment made with respect to any Original Rights;

                           (ii) which such Person or any of such Person's
                  Affiliates or Associates, directly or indirectly, has the
                  right to vote or dispose of or has "beneficial ownership" of
                  (as determined pursuant to Rule 13d-3 of the General Rules and
                  Regulations under the Exchange Act), including pursuant to any
                  agreement, arrangement or understanding, whether or not in
                  writing; provided, however, that a Person shall not be deemed
                  the "Beneficial Owner" of, or to "beneficially own," any
                  security under this subparagraph (ii) as a result of an
                  agreement, arrangement or understanding to vote such security
                  if such agreement, arrangement or understanding: (A) arises
                  solely from a revocable proxy given in response to a public
                  proxy or consent solicitation made pursuant to, and in
                  accordance with, the applicable provisions of the General
                  Rules and Regulations under the Exchange Act, and (B) is not
                  also then reportable by such Person on Schedule 13D under the
                  Exchange Act (or any comparable or successor report); or

                           (iii) which are beneficially owned, directly or
                  indirectly, by any other Person (or any Affiliate or Associate
                  thereof) with which such Person (or any of such Person's
                  Affiliates or Associates) has any agreement, arrangement or
                  understanding (whether or not in writing), for the purpose of
                  acquiring, holding, voting (except pursuant to a revocable
                  proxy as described in the proviso to subparagraph (ii) of this
                  paragraph (d)) or disposing of any voting securities of the
                  Company;

         provided, however, that nothing in this paragraph (d) shall cause a
         Person engaged in business as an underwriter of securities to be the
         "Beneficial Owner" of, or to "beneficially own," any securities
         acquired

                                      -3-
<PAGE>   6
         through such Person's participation in good faith in a firm commitment
         underwriting until the expiration of forty days after the date of such
         acquisition.

                  (e) "Business Day" shall mean any day other than a Saturday,
         Sunday or a day on which banking institutions in the State of Illinois
         are authorized or obligated by law or executive order to close.

                  (f) "Close of Business" on any given date shall mean 5:00
         P.M., Chicago time, on such date, provided, however, that if such date
         is not a Business Day it shall mean 5:00 P.M., Chicago time, on the
         next succeeding Business Day.

                  (g) "Common Stock" shall mean the common stock, par value $.01
         per share, of the Company, except that "Common Stock" when used with
         reference to any Person other than the Company shall mean the capital
         stock of such Person with the greatest voting power, or the equity
         securities or other equity interest having power to control or direct
         the management, of such Person.

                  (h) "Person" shall mean any individual, firm, limited
         liability company, corporation, partnership or other entity and shall
         include any successor (by merger or otherwise) of such entity.

                  (i) "Preferred Stock" shall mean shares of Series A Junior
         Participating Preferred Stock, par value $.01 per share, of the
         Company, and, to the extent that there is not a sufficient number of
         shares of Series A Junior Participating Preferred Stock authorized to
         permit the full exercise of the Rights, any other series of preferred
         stock, par value $.01 per share, of the Company designated for such
         purpose containing terms substantially similar to the terms of the
         Series A Junior Participating Preferred Stock.

                  (j) "Section 11(a)(ii) Event" shall mean the event described
         in Section 11(a)(ii) hereof.

                  (k) "Section 13 Event" shall have the meaning set forth in
         Section 13(a) hereof.

                  (l) "Stock Acquisition Date" shall mean the first date of
         public announcement (which, for purposes of this definition, shall
         include, without limitation, a report filed pursuant to Section 13(d)
         under the Exchange Act) by the Company or an Acquiring Person that an
         Acquiring Person has become such.

                                      -4-
<PAGE>   7
                  (m) "Subsidiary" shall mean, with reference to any Person, any
         corporation or other entity of which an amount of voting securities
         sufficient to elect at least a majority of the directors of such
         corporation or other entity is beneficially owned, directly or
         indirectly, by such Person, or otherwise controlled by such Person.

                  (n) "Triggering Event" shall mean any Section 11(a)(ii) Event
         or any Section 13 Event.

                  In addition, for purposes of this Agreement, the following
terms have the meanings indicated in specified sections of this Agreement: (i)
"Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii)
hereof; (ii) "common stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof; (iii) "current market price" shall have the meaning
set forth in Section 11(d) hereof; (iv) "Current Value" shall have the meaning
set forth in Section 11(a)(iii) hereof; (v) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof; (vi) "equivalent preferred stock"
shall have the meaning set forth in Section 11(b) hereof; (vii) "Exchange Ratio"
shall have the meaning set forth in Section 24(a) hereof; (viii) "Expiration
Date" shall have the meaning set forth in Section 7(a) hereof; (ix) "Final
Expiration Date" shall have the meaning set forth in Section 7(a) hereof; (x)
"Nasdaq" shall have the meaning set forth in Section 11(d)(i) hereof; (xi)
"Principal Party" shall have the meaning set forth in Section 13(b) hereof;
(xii) "Purchase Price" shall have the meaning set forth in Section 4(a) hereof;
(xiii) "Record Date" shall have the meaning set forth in the recitals hereof;
(xiv) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof; (xv) "Rights" shall have the meaning set forth in the recitals hereof;
(xvi) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof; (xvii) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof; (xviii) "Spread" shall have the meaning set forth
in Section 11(a)(iii) hereof; (xix) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof; (xx) "Summary of Rights" shall have the
meaning set forth in Section 3(b) hereof and (xxi) "Trading Day" shall have the
meaning set forth in Section 11(d)(i) hereof.

                  Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.

                  Section 3.  Issue of Rights Certificates.

                                      -5-
<PAGE>   8
                  (a) Until the earlier of (i) the Close of Business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date) or (ii) the Close of Business on the tenth Business Day (or such
later date as may be determined by action of the Board of Directors of the
Company prior to such time as any Person becomes an Acquiring Person) after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent (to the extent provided with all necessary
information) will send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more Rights certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates.

                  (b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by postage prepaid mail, to each record holder of the Common Stock as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced

                                      -6-
<PAGE>   9
by such certificates registered in the names of the holders thereof together
with a copy of the Summary of Rights attached thereto. Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer of any
certificate representing shares of Common Stock in respect of which Rights have
been issued, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with such shares of
Common Stock.

                  (c) Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date or, in certain circumstances provided in Section 22
hereof, after the Distribution Date. Certificates representing such shares of
Common Stock shall also be deemed to be certificates for Rights, and shall bear
a legend substantially in the following form:

                  This certificate also evidences and entitles the holder hereof
         to certain rights as set forth in the Rights Agreement between eLoyalty
         Corporation (the "Company") and ChaseMellon Shareholder Services,
         L.L.C. (the "Rights Agent") dated as of [         ], as the same may be
         amended from time to time (the "Rights Agreement"), the terms of which
         are hereby incorporated herein by reference and a copy of which is on
         file at the principal offices of the Company. Under certain
         circumstances, as set forth in the Rights Agreement, such Rights will
         be evidenced by separate certificates and will no longer be evidenced
         by this certificate. The Company will mail to the holder of this
         certificate a copy of the Rights Agreement, as in effect on the date of
         mailing, without charge promptly after receipt of a written request
         therefor. Under certain circumstances set forth in the Rights
         Agreement, Rights issued to, or held by, any Person who is, was or
         becomes an Acquiring Person or any Affiliate or Associate thereof (as
         such terms are defined in the Rights Agreement), whether currently held
         by or on behalf of such Person or by any subsequent holder, may become
         null and void.

With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates. In
the event the Company purchases or acquires any shares of its Common Stock after
the Record Date but prior to the Distribution Date, any Rights

                                      -7-
<PAGE>   10
associated with such shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with shares of
Common Stock that are not outstanding.

                  Section 4.  Form of Rights Certificates.

                  (a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect the
duties or responsibilities of the Rights Agent) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date or, in the case of Rights with respect to shares of
Common Stock issued or becoming outstanding after the Record Date, the same date
as the stock certificate evidencing such shares, and on their face shall entitle
the holders thereof to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price set forth therein
(such exercise price per one one-hundredth of a share, the "Purchase Price"),
but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment from time to
time as provided in Sections 11 and 13(a) hereof.

                  (b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by any Person known
to be: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this

                                      -8-
<PAGE>   11
sentence, shall contain (to the extent feasible) the following legend:

         The Rights represented by this Rights Certificate are or were
         beneficially owned by a Person who was or became an Acquiring Person or
         an Affiliate or Associate of an Acquiring Person (as such terms are
         defined in the Rights Agreement). Accordingly, this Rights Certificate
         and the Rights represented hereby may become null and void in the
         circumstances specified in Section 7(e) of such Agreement.

                  Section 5.  Countersignature and Registration.

                  (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned manually or by
facsimile signature by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

                  (b) Following the Distribution Date and subject to receipt of
the relevant materials and information, the Rights Agent will keep or cause to
be kept, at its principal office or offices designated as the appropriate place
for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of the Rights
Certificates.

                  Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time

                                      -9-
<PAGE>   12
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
(other than Rights Certificates representing Rights that have become null and
void pursuant to Section 7(e) or that have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a share of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates. The Rights Agent shall have no duty or
obligation to take any action under any Section of this Agreement which
requires the payment by a Rights holder of applicable taxes and governmental
charges unless and until the Rights Agent is satisfied that all such taxes
and/or charges have been paid.

                  (b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificates if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.

                  Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability

                                      -10-
<PAGE>   13
set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole
or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-hundredths of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earliest of (i) the Close of Business on
[           ] (the "Final Expiration Date"), (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof or (iii) the time at which such
Rights are exchanged pursuant to Section 24 hereof (the earliest of (i), (ii)
and (iii) being herein referred to as the "Expiration Date").

                  (b) The Purchase Price for each one one-hundredth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$[      ], and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.

                  (c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one one-hundredth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer tax
required to be paid by the holder of the Rights Certificate in accordance with
Section 9(e) hereof, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or

                                      -11-
<PAGE>   14
names as may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by
certified bank check or bank draft payable to the order of the Company. In the
event that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when necessary to comply with the terms of this
Agreement. The Company reserves the right to require prior to the occurrence of
a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.

                  (d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.

                  (e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a) (ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any Affiliate or Associate thereof) to holders of equity interests in
such Acquiring Person (or any Affiliate or Associate thereof) or to any Person
with whom the Acquiring Person (or any Affiliate or Associate thereof) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights Certificates or other Person as a result of
the Company's

                                      -12-
<PAGE>   15
failure to make any determinations with respect to an Acquiring Person or any of
its Affiliates, Associates or transferees hereunder.

                  (f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.

                  Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof, except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificates purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

                  Section 9. Reservation and Availability of Capital Stock. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities) or out of its
authorized and issued shares held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.

                  (b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
national securities exchange or The Nasdaq National Market (or any successor),
the

                                      -13-
<PAGE>   16
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange or The Nasdaq National Market (or any successor), upon official
notice of issuance upon such exercise.

                  (c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, a registration statement under the Act with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, and a Section 11(a)(ii) Event has not occurred, the Company may
temporarily suspend (and shall give the Rights Agent prompt notice thereof) the
exercisability of Rights until such time as a registration statement has been
declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification or exemption in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.

                  (d) The Company covenants and agrees that it will take all
such actions as may be necessary to ensure that all one one-hundredths of a
share of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.

                                      -14-
<PAGE>   17
                  (e) The Company further covenants and agrees that it will pay,
when due and payable, any and all transfer taxes and governmental charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.

                  Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares or other securities for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.

                  Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the

                                      -15-
<PAGE>   18
number and kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.

                  (a)(i) In the event the Company shall at any time after the
         date of this Agreement (A) declare a dividend on the Preferred Stock
         payable in shares of Preferred Stock, (B) subdivide the outstanding
         Preferred Stock, (C) combine the outstanding Preferred Stock into a
         smaller number of shares, or (D) issue any shares of its capital stock
         in a reclassification of the Preferred Stock (including any such
         reclassification in connection with a consolidation or merger in which
         the Company is the continuing or surviving corporation), except as
         otherwise provided in this Section 11(a) and Section 7(e) hereof, the
         Purchase Price in effect at the time of the record date for such
         dividend or of the effective date of such subdivision, combination or
         reclassification, and the number and kind of shares of Preferred Stock
         or capital stock, as the case may be, issuable on such date, shall be
         proportionately adjusted so that the holder of any Right exercised
         after such time shall be entitled to receive, upon payment of the
         Purchase Price then in effect, the aggregate number and kind of shares
         of Preferred Stock or capital stock, as the case may be, which, if such
         Right had been exercised immediately prior to such date and at a time
         when the Preferred Stock transfer books of the Company were open, such
         holder would have owned upon such exercise and been entitled to receive
         by virtue of such dividend, subdivision, combination or
         reclassification. If an event occurs which would require an adjustment
         under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
         adjustment provided for in this Section 11(a)(i) shall be in addition
         to, and shall be made prior to, any adjustment required pursuant to
         Section 11(a)(ii) hereof.

                  (ii) Subject to Section 24 hereof, in the event any Person
         becomes an Acquiring Person, then each holder of a Right (except as
         provided below and in Section 7(e) hereof) shall thereafter have the
         right to receive, upon exercise thereof at a price equal to the then
         current Purchase Price in accordance with the terms of this Agreement,
         in lieu of a number of one one-hundredths of a share of Preferred
         Stock, such number of shares of Common Stock of the Company as shall
         equal the result obtained by (x) multiplying the then current Purchase
         Price by the then number of one one-hundredths of a share of Preferred
         Stock for which a Right was exercisable immediately prior to the first
         occurrence of a Section 11(a)(ii) Event and (y) dividing that product
         (which, following such first

                                      -16-
<PAGE>   19
         occurrence shall thereafter be referred to as the "Purchase Price" for
         each Right and for all purposes of this Agreement) by 50% of the
         current market price (determined pursuant to Section 11(d) hereof) per
         share of Common Stock on the date of such first occurrence (such number
         of shares, the "Adjustment Shares").

              (iii) In the event that the number of shares of Common Stock which
         are authorized by the Company's certificate of incorporation, as
         amended, but not outstanding or reserved for issuance for purposes
         other than upon exercise of the Rights, is not sufficient to permit the
         exercise in full of the Rights in accordance with the foregoing
         subparagraph (ii) of this Section 11(a), the Company shall: (A)
         determine the value of the Adjustment Shares issuable upon the exercise
         of a Right (the "Current Value"), and (B) with respect to each Right,
         make adequate provision to substitute for the Adjustment Shares, upon
         payment of the applicable Purchase Price, (1) cash, (2) a reduction in
         the Purchase Price, (3) Common Stock or other equity securities of the
         Company (including, without limitation, shares, or units of shares, of
         preferred stock, such as the Preferred Stock, which the Board of
         Directors of the Company has deemed to have substantially the same
         value or economic rights as shares of Common Stock (such shares of
         preferred stock, "common stock equivalents")), (4) debt securities of
         the Company, (5) other assets, or (6) any combination of the foregoing,
         having an aggregate value equal to the Current Value (less the amount
         of any reduction in the Purchase Price), where such aggregate value has
         been determined by the Board of Directors of the Company based upon the
         advice of a nationally recognized investment banking firm selected by
         the Board of Directors of the Company; provided, however, if the
         Company shall not have made adequate provision to deliver value
         pursuant to clause (B) above within thirty (30) days following the
         later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
         the date on which the Company's right of redemption pursuant to Section
         23(a) expires (the later of (x) and (y) being referred to herein as the
         "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated
         to deliver, upon the surrender for exercise of a Right and without
         requiring payment of the Purchase Price, shares of Common Stock (to the
         extent available) and then, if necessary, cash, which shares and/or
         cash have an aggregate value equal to the Spread. For purposes of the
         preceding sentence, the term "Spread" shall mean the excess of (i) the
         Current Value over (ii) the Purchase Price. If the Board of Directors
         of the Company shall determine in good faith that it is likely

                                      -17-
<PAGE>   20
         that sufficient additional shares of Common Stock could be authorized
         for issuance upon exercise in full of the Rights, the thirty (30) day
         period set forth above may be extended to the extent necessary, but not
         more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
         order that the Company may seek stockholder approval for the
         authorization of such additional shares (such thirty (30) day period,
         as it may be extended, the "Substitution Period"). To the extent that
         action is to be taken pursuant to the first and/or third sentences of
         this Section 11(a)(iii), the Company (x) shall provide, subject to
         Section 7(e) hereof, that such action shall apply uniformly to all
         outstanding Rights, and (y) may suspend the exercisability of the
         Rights until the expiration of the Substitution Period in order to seek
         such stockholder approval for such authorization of additional shares
         and/or to decide the appropriate form of distribution to be made
         pursuant to such first sentence and to determine the value thereof. In
         the event of any such suspension, the Company shall issue a public
         announcement stating that the exercisability of the Rights has been
         temporarily suspended, as well as a public announcement at such time as
         the suspension is no longer in effect (with prompt notice of such
         announcements to the Rights Agent). For purposes of this Section
         11(a)(iii), the value of each Adjustment Share shall be the current
         market price (as determined pursuant to Section 11(d) hereof) per share
         of Common Stock on the Section 11(a)(ii) Trigger Date and the value of
         any "common stock equivalent" shall be deemed to equal the current
         market price (as determined pursuant to Section 11(d) hereof) per share
         of the Common Stock on such date.

                  (b) In case the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date) Preferred
Stock (or shares having the same rights, privileges and preferences as the
shares of Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred stock at a price per
share of Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate

                                      -18-
<PAGE>   21
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

                  (c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
periodic cash dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such current market price (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.

                                      -19-
<PAGE>   22
                  (d) (i) For the purpose of any computation hereunder, other
         than computations made pursuant to Section 11(a)(iii) hereof, the
         "current market price" per share of Common Stock on any date shall be
         deemed to be the average of the daily closing prices per share of such
         Common Stock for the thirty (30) consecutive Trading Days (as such term
         is hereinafter defined) immediately prior to but not including such
         date, and for purposes of computations made pursuant to Section
         11(a)(iii) hereof, the "current market price" per share of Common Stock
         on any date shall be deemed to be the average of the daily closing
         prices per share of such Common Stock for the ten (10) consecutive
         Trading Days immediately following but not including such date;
         provided, however, that in the event that the current market price per
         share of the Common Stock is determined during a period following the
         announcement by the issuer of such Common Stock of (A) a dividend or
         distribution on such Common Stock payable in shares of such Common
         Stock or securities convertible into shares of such Common Stock (other
         than the Rights), or (B) any subdivision, combination or
         reclassification of such Common Stock, and the ex-dividend date for
         such dividend or distribution, or the record date for such subdivision,
         combination or reclassification shall not have occurred prior to the
         commencement of the requisite thirty (30) Trading Day or ten (10)
         Trading Day period, as set forth above, then, and in each such case,
         the "current market price" shall be properly adjusted to take into
         account any trading during the period prior to such ex-dividend date or
         record date. The closing price for each day shall be the last sale
         price, regular way, or, in case no such sale takes place on such day,
         the average of the closing bid and asked prices, regular way, in either
         case as reported in the principal consolidated transaction reporting
         system with respect to securities listed or admitted to trading on the
         New York Stock Exchange or, if the shares of Common Stock are not
         listed or admitted to trading on the New York Stock Exchange, as
         reported in the principal consolidated transaction reporting system
         with respect to securities listed on the principal national securities
         exchange on which the shares of Common Stock are listed or admitted to
         trading or, if the shares of Common Stock are not listed or admitted to
         trading on any national securities exchange, the last quoted price or,
         if not so quoted, the average of the high bid and low asked prices in
         the over-the-counter market, as reported by the National Association of
         Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or such
         other quotation system then in use, or, if on any such date the shares
         of Common Stock are not quoted by any such organization, the average of
         the
                                      -20-
<PAGE>   23
         closing bid and asked prices as furnished by a professional market
         maker making a market in the Common Stock selected by the Board of
         Directors of the Company. If on any such date no market maker is making
         a market in the Common Stock, the fair value of such shares on such
         date as determined in good faith by the Board of Directors of the
         Company shall be used. The term "Trading Day" shall mean a day on which
         the principal national securities exchange on which the shares of
         Common Stock are listed or admitted to trading is open for the
         transaction of business or, if the shares of Common Stock are not
         listed or admitted to trading on any national securities exchange, a
         Business Day. If the Common Stock is not publicly held or not so listed
         or traded, "current market price" per share shall mean the fair value
         per share as determined in good faith by the Board of Directors of the
         Company, whose determination shall be described in a statement filed
         with the Rights Agent and shall be conclusive for all purposes.

                  (ii) For the purpose of any computation hereunder, the
         "current market price" per share of Preferred Stock shall be determined
         in the same manner as set forth above for the Common Stock in clause
         (i) of this Section 11(d) (other than the last sentence thereof). If
         the current market price per share of Preferred Stock cannot be
         determined in the manner provided above, or if the Preferred Stock is
         not publicly held or listed or traded in a manner described in clause
         (i) of this Section 11(d), the "current market price" per share of
         Preferred Stock shall be conclusively deemed to be an amount equal to
         100 (as such number may be appropriately adjusted for such events as
         stock splits, stock dividends and recapitalizations with respect to the
         Common Stock occurring after the date of this Agreement) multiplied by
         the current market price per share of the Common Stock. If neither the
         Common Stock nor the Preferred Stock is publicly held or so listed or
         traded, "current market price" per share of the Preferred Stock shall
         mean the fair value per share as determined in good faith by the Board
         of Directors of the Company, whose determination shall be described in
         a statement filed with the Rights Agent and shall be binding on the
         Rights Agent and the holders of the Rights. For all purposes of this
         Agreement, the "current market price" of one one-hundredth of a share
         of Preferred Stock shall be equal to the "current market price" of one
         share of Preferred Stock divided by 100.

                  (e) Anything herein to the contrary notwithstanding, no
         adjustment in the Purchase Price shall be required unless such

                                      -21-
<PAGE>   24
adjustment would require an increase or decrease of at least one percent (1%) in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a share of Common Stock or other share or one one-millionth of
a share of Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the Expiration Date.

                  (f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.

                  (g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.

                  (h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths
of a share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

                  (i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the number of
one

                                      -22-
<PAGE>   25
one-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement (with prompt notice thereof to the
Rights Agent) of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.

                  (j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth of a share and the number of one one-hundredths of a share which
were expressed in the initial Rights Certificates issued hereunder.

                  (k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the number
of one one-hundredths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Preferred Stock at such
adjusted Purchase Price.

                  (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of

                                      -23-
<PAGE>   26
a record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised after
such record date the number of one one-hundredths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredths of a share of Preferred
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment (and shall provide the Rights Agent prompt notice of such election);
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.

                  (m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company, in
its good faith judgment, shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.

                  (n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger, sale or transfer there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale or transfer, the stockholders of the Person who
constitutes, or would constitute, the "Principal

                                      -24-
<PAGE>   27
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.

                  (o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.

                  (p) In the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.

                  Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts and computations accounting
for such adjustment, (b) promptly file with the Rights Agent, and with each
transfer agent for the Preferred Stock and the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.

                  Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.

                  (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate

                                      -25-
<PAGE>   28
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof) (any event
described in clauses (x), (y) or (z) of this Section 13(a) following the Stock
Acquisition Date, a "Section 13 Event"), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one one-hundredths of a share of
Preferred Stock, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal Party
(as such term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (l) multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the current market price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of

                                      -26-

<PAGE>   29
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.

                  (b) "Principal Party" shall mean:

                  (i) in the case of any transaction described in clause (x) or
         (y) of the first sentence of Section 13(a), the Person that is the
         issuer of any securities into which shares of Common Stock of the
         Company are converted in such merger or consolidation, and if no
         securities are so issued, the Person that is the other party to such
         merger or consolidation; and

                  (ii) in the case of any transaction described in clause (z) of
         the first sentence of Section 13(a), the Person that is the party
         receiving the greatest portion of the assets or earning power
         transferred pursuant to such transaction or transactions;

provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.

                  (c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger, sale or transfer of assets mentioned in paragraph (a)
of this Section 13, the Principal Party will:

                                      -27-
<PAGE>   30
                  (i) prepare and file a registration statement under the Act,
         with respect to the Rights and the securities purchasable upon exercise
         of the Rights on an appropriate form, and will use its best efforts to
         cause such registration statement to (A) become effective as soon as
         practicable after such filing and (B) remain effective (with a
         prospectus at all times meeting the requirements of the Act) until the
         Expiration Date; and

                  (ii) deliver to holders of the Rights historical financial
         statements for the Principal Party and each of its Affiliates which
         comply in all respects with the requirements for registration on Form
         10 under the Exchange Act.

                  (d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).

                  Section 14. Fractional Rights and Fractional Shares.

                  (a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported to the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use

                                      -28-
<PAGE>   31
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.

                  (b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share may, at the election of the Company,
be evidenced by depositary receipts pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, however, that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares represented by such depositary receipts. In lieu
of fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-hundredth of a share of Preferred Stock. For purposes of
this Section 14(b), the current market value of one one-hundredth of a share of
Preferred Stock shall be one one-hundredth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.

                  (c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Common Stock. For purposes
of this Section 14(c), the current market value of one share of Common Stock
shall be the closing price of one share of Common Stock (as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.

                  (d) The holder of a Right by the acceptance of the Rights
expressly waives such holder's right to receive any

                                      -29-
<PAGE>   32
fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.

                  (e) The Rights Agent shall have no duty or obligation with
respect to this Section 14 and Section 24(e) unless and until it has received
specific instructions (and sufficient cash, if required) from the Company with
respect to its duties and obligations under such Sections.

                  Section 15. Rights of Action. All rights of action in respect
of this Agreement, other than rights of action vested in the Rights Agent
pursuant to the terms of this Agreement, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in such holder's
own behalf and for such holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.

                  Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every holder of a Right that:

                  (a) prior to the Distribution Date, the Rights will be
         transferable only in connection with the transfer of Common Stock;

                  (b) after the Distribution Date, the Rights Certificates are
         transferable only on the registry books of the Rights Agent if
         surrendered at the principal office or offices of the Rights Agent
         designated for such purposes, duly endorsed or accompanied by a proper
         instrument of transfer and with the appropriate forms and certificates
         fully executed;

                  (c) subject to Section 6(a), Section 7(e) and Section 7(f)
         hereof, the Company and the Rights Agent may deem and treat the person
         in whose name a Rights Certificate (or, prior to the Distribution Date,
         the associated Common Stock certificate) is registered as the absolute
         owner thereof and of the Rights evidenced thereby (notwithstanding any
         notations of ownership or writing on the Rights Certificates or the
         associated Common Stock certificates made by anyone other than the
         Company or the Rights Agent) for all purposes

                                      -30-
<PAGE>   33
         whatsoever, and neither the Company nor the Rights Agent shall be
         required to be affected by any notice to the contrary; and

                  (d) notwithstanding anything in this Agreement to the
         contrary, neither the Company nor the Rights Agent shall have any
         liability to any holder of a Right or other Person as a result of its
         inability to perform any of its obligations under this Agreement by
         reason of any preliminary or permanent injunction or other order,
         decree, judgment or ruling issued by a court of competent jurisdiction
         or by a governmental, regulatory or administrative agency or
         commission, or any statute, rule, regulation or executive order
         promulgated or enacted by any governmental authority, prohibiting or
         otherwise restraining performance of such obligation; provided,
         however, the Company must use reasonable efforts to have any such
         order, decree, judgment or ruling lifted or otherwise overturned as
         soon as possible.

                  Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose to be the holder of the
number of one one-hundredths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.

                  Section 18.  Concerning the Rights Agent.

                  (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the preparation, execution,
delivery and amendment of this Agreement and the exercise and performance of its
duties hereunder, provided, that the aggregate amount that the Company shall be
required to pay the Rights Agent in connection with the preparation, execution
and delivery of this Agreement shall not exceed $2,500. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless against,

                                      -31-
<PAGE>   34
any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense incurred without gross negligence, bad faith or willful
misconduct (each as finally determined by a court of competent jurisdiction) on
the part of the Rights Agent for any action taken, suffered or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect, punitive consequential
or incidental loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage. Any liability of the Rights Agent under this Rights
Agreement will be limited to the amount of fees paid by the Company to the
Rights Agent.

                  (b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its acceptance and administration of this
Agreement in reliance upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20.

                  Section 19. Merger or Consolidation or Change of Name of
Rights Agent.

                  (a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the stock
transfer business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at the time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates

                                      -32-
<PAGE>   35
shall have the full force provided in the Rights Certificates and in this
Agreement.

                  (b) In case at any time the name of the Rights Agent shall be
changed, and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case, at that time, any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

                  Section 20. Duties of Rights Agent. The Rights Agent
undertakes only the duties and obligations expressly imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:

                  (a) The Rights Agent may consult with legal counsel (who may
         be legal counsel for the Company), and the opinion of such counsel
         shall be full and complete authorization and protection to the Rights
         Agent and the Rights Agent shall incur no liability for or in respect
         of any action taken, suffered or omitted by it in good faith and in
         accordance with such opinion.

                  (b) Whenever in the performance of its duties under this
         Agreement the Rights Agent shall deem it necessary or desirable that
         any fact or matter (including, without limitation, the identity of any
         Acquiring Person and the determination of "current market price") be
         proved or established by the Company prior to taking or suffering any
         action hereunder, such fact or matter (unless other evidence in respect
         thereof be herein specifically prescribed) may be deemed to be
         conclusively proved and established by a certificate signed by the
         Chairman of the Board, the President, any Vice President, the
         Treasurer, any Assistant Treasurer, the Secretary or any Assistant
         Secretary of the Company and delivered to the Rights Agent; and such
         certificate shall be full authorization and protection to the Rights
         Agent, and the Rights Agent shall incur no liability for or in respect
         of any action taken, suffered or omitted by it in good faith by it
         under the provisions of this Agreement in reliance upon such
         certificate.

                  (c) The Rights Agent shall be liable hereunder only for its
         own gross negligence, bad faith or willful misconduct (each as finally
determined by a court of competent jurisdiction).

                                      -33-
<PAGE>   36
                  (d) The Rights Agent shall not be liable for or by reason of
         any of the statements of fact or recitals contained in this Agreement
         or in the Rights Certificates or be required to verify the same (except
         as to its countersignature on such Rights Certificates), but all such
         statements and recitals are and shall be deemed to have been made by
         the Company only.

                  (e) The Rights Agent shall not be under any responsibility in
         respect of the validity of this Agreement or the execution and delivery
         hereof (except the due execution hereof by the Rights Agent) or in
         respect of the validity or execution of any Rights Certificate (except
         its countersignature thereof); nor shall it be responsible for any
         breach by the Company of any covenant or condition contained in this
         Agreement or in any Rights Certificate; nor shall it be responsible for
         any adjustment required under the provisions of Section 11, Section 13
         or Section 24 hereof or responsible for the manner, method or amount of
         any such adjustment or the ascertaining of the existence of facts that
         would require any such adjustment (except with respect to the exercise
         of Rights evidenced by Rights Certificates after actual notice of any
         such adjustment); nor shall it by any act hereunder be deemed to make
         any representation or warranty as to the authorization or reservation
         of any shares of Common Stock or Preferred Stock to be issued pursuant
         to this Agreement or any Rights Certificate or as to whether any shares
         of Common Stock or Preferred Stock will, when so issued, be validly
         authorized and issued, fully paid and nonassessable.

                  (f) The Company agrees that it will perform, execute,
         acknowledge and deliver or cause to be performed, executed,
         acknowledged and delivered all such further and other acts, instruments
         and assurances as may reasonably be required by the Rights Agent for
         the carrying out or performing by the Rights Agent of the provisions of
         this Agreement.

                  (g) The Rights Agent is hereby authorized and directed to
         accept instructions with respect to the performance of its duties
         hereunder from the Chairman of the Board, the President, any Vice
         President, the Secretary, any Assistant Secretary, the Treasurer or any
         Assistant Treasurer of the Company, and to apply to such officers for
         advice or instructions in connection with its duties, and it shall
         incur no liability for or in respect of any action taken, suffered or
         omitted by it in good faith in accordance with instructions of any such
         officer.

                                      -34-
<PAGE>   37
                  (h) The Rights Agent and any stockholder, director, Affiliate,
         officer or employee of the Rights Agent may buy, sell or deal in any of
         the Rights or other securities of the Company or become pecuniarily
         interested in any transaction in which the Company may be interested,
         or contract with or lend money to the Company or otherwise act as fully
         and freely as though it were not Rights Agent under this Agreement.
         Nothing herein shall preclude the Rights Agent from acting in any other
         capacity for the Company or for any other Person.

                  (i) The Rights Agent may execute and exercise any of the
         rights or powers hereby vested in it or perform any duty hereunder
         either itself or by or through its attorneys or agents, and the Rights
         Agent shall not be answerable or accountable for any act, default,
         neglect or misconduct of any such attorneys or agents or for any loss
         to the Company resulting from any such act, default, neglect or
         misconduct; provided, however, that reasonable care was exercised in
         the selection and continued employment thereof.

                  (j) No provision of this Agreement shall require the Rights
         Agent to expend or risk its own funds or otherwise incur any financial
         liability in the performance of any of its duties hereunder or in the
         exercise of its rights if there shall be reasonable grounds for
         believing that repayment of such funds or adequate indemnification
         against such risk or liability is not reasonably assured to it.

                  (k) If, with respect to any Rights Certificate surrendered to
         the Rights Agent for exercise or transfer, the certificate attached to
         the form of assignment or form of election to purchase, as the case may
         be, has either not been completed or indicates an affirmative response
         to clause 1 and/or 2 thereof, the Rights Agent shall not take any
         further action with respect to such requested exercise or transfer
         without first consulting with the Company.

                  Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and

                                      -35-
<PAGE>   38
Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (i) a Person organized and doing
business under the laws of the United States or of the State of Illinois or the
State of New York (or of any other state of the United States so long as such
Person is authorized to do business in the State of Illinois or the State of New
York), in good standing, having an office or agency in the State of Illinois or
the State of New York, which is authorized under such laws to exercise stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (ii) an Affiliate of
such Person. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further reasonable assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Rights Certificates. Failure
to give any notice provided for in this Section 21 or any defect therein shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

                  Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the

                                      -36-
<PAGE>   39
Company (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded prior to the Distribution Date, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing an
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.

                  Section 23.  Redemption and Termination.

                  (a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), or (ii) the Final Expiration Date, redeem all but
not less than all of the then outstanding Rights at a redemption price of $.01
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event
until such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the "current market price", as defined in Section 11(d)(i)
hereof, of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors. The redemption of
the Rights by the Board of Directors may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish.

                  (b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to

                                      -37-
<PAGE>   40
the Rights Agent and to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.

                  Section 24.  Exchange.

                  (a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)
hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty
percent (50%) or more of the Common Stock then outstanding.

                  (b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of any such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice (with prompt
notice thereof to the Rights Agent) of any exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than

                                      -38-
<PAGE>   41
Rights which have become null and void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.

                  (c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Preferred Stock (or equivalent preferred
stock, as such term is defined in paragraph (b) of Section 11 hereof) for shares
of Common Stock exchangeable for Rights, at the initial rate of one
one-hundredth of a share of Preferred Stock (or equivalent preferred stock) for
each share of Common Stock, as appropriately adjusted to reflect adjustments in
the voting rights of the Preferred Stock pursuant to the terms thereof, so that
the fraction of a share of Preferred Stock delivered in lieu of each share of
Common Stock shall have the same voting rights as one share of Common Stock.

                  (d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such actions as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.

                  (e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this subsection (e), the current
market value of a whole share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.

                  Section 25.  Notice of Certain Events.

                  (a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with

                                      -39-
<PAGE>   42
Section 11(o) hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof),
or (v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to the Rights Agent and to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock, whichever shall be the earlier.

                  (b) In case a Section 11(a)(ii) Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.

                  Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:

                  eLoyalty Corporation
                  205 North Michigan Avenue
                  Suite 1500
                  Chicago, Illinois 60601
                  Attention: President

Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company

                                      -40-
<PAGE>   43
or by the holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

                  ChaseMellon Shareholder Services, L.L.C.
                  111 Founders Plaza, 11th Floor
                  East Hartford, Connecticut 06108
                  Attention:  Relationship Manager

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.

                  Section 27. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions with respect to
the Rights which the Company may deem necessary or desirable (including, without
limitation, a supplement or amendment that changes the Purchase Price), any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights and further
provided that the Rights Agent shall not be obligated to enter into any such
supplement or amendment that would change or increase the duties, liabilities or
obligations of the Rights Agent hereunder. Prior to the Distribution Date, the
interest of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock. Without limiting the foregoing, the Company may
at any time prior to such time as any Person becomes an Acquiring Person amend
this Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) to a
percentage that (subject to exceptions for specified Persons or groups excepted
from the definition of "Acquiring Person") is not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding shares of Common
Stock then known by the Company to be beneficially owned by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, any Person organized, appointed
or established by the Company for or pursuant to the terms of any such plan or,
to the extent excepted from the definition of "Acquiring Person", other
specified Persons or groups) and (ii) 10.0%.

                  Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company

                                      -41-
<PAGE>   44
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

                  Section 29. Determination and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(l)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors of
the Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other Persons, and (y) not subject the Board of Directors of the Company to any
liability to the holders of the Rights. The Rights Agent is entitled to always
assume that the Board of Directors of the Company acted in good faith and shall
be fully protected and incur no liability in reliance thereon.

                  Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).

                  Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company

                                      -42-
<PAGE>   45
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close of Business on the tenth day following the date
of such determination by the Board of Directors of the Company.

                  Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.

                  Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

                  Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.

Attest:                                          eLoyalty Corporation

By: _________________________________        By: _______________________________
    Name:                                        Name:
    Title:                                       Title:

Attest:                                          ChaseMellon Shareholder
                                                 Services, L.L.C.

By: _________________________________        By: _______________________________
    Name:                                        Name:
    Title:                                       Title:

                                      -43-
<PAGE>   46
                                                                       Exhibit A

                           Certificate of Designations
                                       of
                  Series A Junior Participating Preferred Stock
                                       of
                              eLoyalty Corporation

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

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

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

               The undersigned do hereby certify that the following resolution
was duly adopted by the Board of Directors of eLoyalty Corporation, a Delaware
corporation (the "Corporation"), on [
      ]:

               RESOLVED, that pursuant to the authority vested in the board of
directors of the Corporation by the Certificate of Incorporation, as amended
(the "Charter"), the Board of Directors does hereby create, authorize and
provide for the issue of a series of Preferred Stock, par value $.01 per share,
of the Corporation, to be designated "Series A Junior Participating Preferred
Stock" (hereinafter referred to as the "Series A Preferred Stock"), initially
consisting of 1,000,000 shares, and to the extent that the designations, powers,
preferences and relative and other special rights and the qualifications,
limitations or restrictions of the Series A Preferred Stock are not stated and
expressed in the Charter, does hereby fix and herein state and express such
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions thereof, as follows (all terms used
herein which are defined in the Charter shall be deemed to have the meanings
provided therein):

               Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 1,000,000.

               Section 2. Dividends and Distributions.

               (A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the

<PAGE>   47

purpose, quarterly dividends payable in cash on the first business day of
January, April, July and October in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $.01 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock,
par value $.01 per share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time after [ ] (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.

               (B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, subject to the prior and superior
rights of the holders of any shares of any series of Preferred Stock ranking
prior to and superior to the shares of Series A Preferred Stock with respect to
dividends, a dividend of $.01 per share on the Series A Preferred Stock shall
nevertheless by payable on such subsequent Quarterly Dividend Payment Date.

               (C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend

<PAGE>   48

Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.

               Section 3. Voting Rights.

               The holders of shares of Series A Preferred Stock shall have the
following voting rights:

               (A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

               (B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote collectively as one class on all matters submitted to a vote of
stockholders of the Corporation.

               (C) (i) If at any time dividends on any Series A Preferred Stock
        shall be in arrears in an amount equal to six (6) quarterly dividends
        thereon, the occurrence of such contingency shall mark the beginning of
        a period (herein called a "default period") which shall extend until
        such time when all accrued and unpaid dividends for all previous
        quarterly dividend periods and for the current quarterly dividend period
        on all shares of Series A Preferred Stock then outstanding shall have
        been declared and paid or set apart for payment. During each default
        period, all holders of Preferred Stock (including holders

<PAGE>   49

        of the Series A Preferred Stock) with dividends in arrears in an amount
        equal to six (6) quarterly dividends thereon, voting as a class,
        irrespective of series, shall have the right to elect two (2) Directors.

               (ii) During any default period, such voting right of the holders
        of Series A Preferred Stock may be exercised initially at a special
        meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
        any annual meeting of stockholders, and thereafter at annual meetings of
        stockholders, provided that such voting right shall not be exercised
        unless the holders of ten percent (10%) in number of shares of Preferred
        Stock outstanding shall be present in person or by proxy. The absence of
        a quorum of the holders of Common Stock shall not affect the exercise by
        the holders of Preferred Stock of such voting rights. At any meeting at
        which the holders of Preferred Stock shall exercise such voting right
        initially during an existing default period, they shall have the right,
        voting as a class, to elect Directors to fill such vacancies, if any, in
        the Board of Directors as may then exist up to two (2) Directors or, if
        such right is exercised at an annual meeting, to elect two (2)
        Directors. If the number which may be so elected at any special meeting
        does not amount to the required number, the holders of the Preferred
        Stock shall have the right to make such increase in the number of
        Directors as shall be necessary to permit the election by them of the
        required number. After the holders of the Preferred Stock shall have
        exercised their right to elect Directors in any default period and
        during the continuance of such period, the number of Directors shall not
        be increased or decreased except by vote of the holders of Preferred
        Stock as herein provided or pursuant to the rights of any equity
        securities ranking senior to or pari passu with the Series A Preferred
        Stock.

               (iii) Unless the holders of Preferred Stock shall, during an
        existing default period, have previously exercised their right to elect
        Directors, the Board of Directors may order, or any stockholder or
        stockholders owning in the aggregate not less than ten percent (10%) of
        the total number of shares of Preferred Stock outstanding, irrespective
        of series, may request, the calling of special meeting of the holders of
        Preferred Stock, which meeting shall thereupon be called by the Chairman
        of the Board, the President, a Vice President or the Secretary of the
        Corporation. Notice of such meeting and of any annual meeting at which
        holders of Preferred Stock are entitled to vote pursuant to this
        paragraph (C)(iii) shall be given to each holder of record of Preferred
        Stock by mailing a copy of such notice to him or her at his or her last
        address as the same appears on the books of the Corporation. Such
        meeting shall be called for a time not earlier than 10 days and not
        later than 50 days after such order or request, or in default of the
        calling of such meeting within 50 days

<PAGE>   50

        after such order or request, such meeting may be called on similar
        notice by any stockholder or stockholders owning in the aggregate not
        less than ten percent (10%) of the total number of shares of Preferred
        Stock outstanding. Notwithstanding the provisions of this paragraph
        (C)(iii), no such special meeting shall be called during the period
        within 50 days immediately preceding the date fixed for the next annual
        meeting of the stockholders.

               (iv) In any default period, the holders of Common Stock, and, if
        applicable, other classes of capital stock of the Corporation, shall
        continue to be entitled to elect the whole number of Directors until the
        holders of Preferred Stock shall have exercised their right to elect two
        (2) Directors voting as a class, after the exercise of which right (x)
        the Directors so elected by the holders of Preferred Stock shall
        continue in office until their successors shall have been elected by
        such holders or until the expiration of the default period, and (y) any
        vacancy in the Board of Directors may (except as provided in paragraph
        (C)(ii) of this Section 3) be filled by vote of a majority of the
        remaining Directors theretofore elected by the holders of the class of
        capital stock which elected the Director whose office shall have become
        vacant. References in this paragraph (C) to Directors elected by the
        holders of a particular class of stock shall include Directors appointed
        by such Directors to fill vacancies as provided in clause (y) of the
        foregoing sentence.

               (v) Immediately upon the expiration of a default period, (x) the
        right of the holders of Preferred Stock as a class to elect Directors
        shall cease, (y) the term of any Directors elected by the holders of
        Preferred Stock as a class shall terminate, and (z) the number of
        Directors shall be such number as may be provided for in the certificate
        of incorporation or by-laws irrespective of any increase made pursuant
        to the provisions of paragraph (C)(ii) of this Section 3 (such number
        being subject, however, to change thereafter in any manner provided by
        law or in the certificate of incorporation or by-laws). Any vacancies in
        the Board of Directors effected by the provisions of clauses (y) and (z)
        in the preceding sentence may be filled by a majority of the remaining
        Directors.

               (D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.

               Section 4. Certain Restrictions.

               (A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and

<PAGE>   51

unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:

               (i) declare or pay dividends on, make any other distributions on,
        or redeem or purchase or otherwise acquire for consideration any shares
        of capital stock ranking junior (either as to dividends or upon
        liquidation, dissolution or winding up) to the Series A Preferred Stock;

               (ii) declare or pay dividends on or make any other distributions
        on any shares of stock ranking on a parity (either as to dividends or
        upon liquidation, dissolution or winding up) with the Series A Preferred
        Stock, except dividends paid ratably on the Series A Preferred Stock and
        all such parity stock on which dividends are payable or in arrears in
        proportion to the total amounts to which the holders of all such shares
        are then entitled;

               (iii) redeem or purchase or otherwise acquire for consideration
        shares of any capital stock ranking on a parity (either as to dividends
        or upon liquidation, dissolution or winding up) with the Series A
        Preferred Stock, provided that the Corporation may at any time redeem,
        purchase or otherwise acquire shares of any such parity stock in
        exchange for shares of any capital stock of the Corporation ranking
        junior (either as to dividends or upon dissolution, liquidation or
        winding up) to the Series A Preferred Stock; or

               (iv) purchase or otherwise acquire for consideration any shares
        of Series A Preferred Stock, or any shares of capital stock ranking on a
        parity with the Series A Preferred Stock, except in accordance with a
        purchase offer made in writing or by publication (as determined by the
        Board of Directors) to all holders of such shares upon such terms as the
        Board of Directors, after consideration of the respective annual
        dividend rates and other relative rights and preferences of the
        respective series and classes, shall determine in good faith will result
        in fair and equitable treatment among the respective series or classes.

               (B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.

               Section 5. Reacquired Shares.

<PAGE>   52

               Any shares of Series A Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.

               Section 6. Liquidation, Dissolution or Winding Up.

               (A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of capital stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as
set forth in subparagraph (C) below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Preferred Stock and Common Stock,
respectively, and the payment of liquidation preferences of all other shares of
capital stock which rank prior to or on a parity with Series A Preferred Stock,
holders of Series A Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.

               (B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.

               (C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on

<PAGE>   53

Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.

               Section 7. Consolidation, Merger, etc.

               In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series A Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of capital stock, securities, cash and/or any other
property (payable in kind), as the case may be, for which or into which each
share of Common Stock is exchanged or changed. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

               Section 8. No Redemption.

               The shares of Series A Preferred Stock shall not be redeemable.

               Section 9. Ranking.

               The Series A Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, whether or not upon the dissolution, liquidation or
winding up of the Corporation, unless the terms of any such series shall provide
otherwise.

               Section 10. Amendment.

               The Charter shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect

<PAGE>   54

them adversely without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a class.

               Section 11. Fractional Shares.

               Series A Preferred Stock may be issued in fractions of a share
which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series A
Preferred Stock.

               IN WITNESS WHEREOF, eLoyalty Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by , its , and the
same to be attested to by , its , this _______th day of ________, ____.

                                            eLoyalty Corporation

                                            By:_________________________________
                                                   Name:
                                                   Title:

(Corporate Seal)

Attest:

_________________

<PAGE>   55

                                                                       Exhibit B

                          [Form of Rights Certificate]

Certificate No. R-                                            __________ Rights

NOT EXERCISABLE AFTER [          ] OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY.  THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT, AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.  [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF SUCH AGREEMENT.]*

--------
*       The portion of the legend in brackets shall be inserted only if
        applicable and shall replace the preceding sentence.

<PAGE>   56

                               Rights Certificate

                              eLoyalty Corporation

               This certifies that _______________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of [ ], as the same may be amended from time to
time (the "Rights Agreement"), between eLoyalty Corporation, a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (Chicago time) on [ ] at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-hundredth of a fully paid, nonassessable share of Series A
Junior Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Company, at a purchase price of $[ ] per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of [ ], based on the Preferred Stock as constituted at such date. The
Company reserves the right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement) that, upon any exercise
of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.

               Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person or an Affiliate or Associate of such Person, such Rights shall
become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.

               As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.

<PAGE>   57

               This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.

               This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-hundredths
of a share of Preferred Stock as the Rights evidenced by the Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised.

               Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may, in each case at the option of the Company, be
(i) redeemed by the Company at its option at a redemption price of $.01 per
Right or (ii) exchanged in whole or in part for shares of Common Stock or other
securities of the Company. Immediately upon the action of the Board of Directors
of the Company authorizing redemption, the Rights will terminate and the only
right of the holders of Rights will be to receive the redemption price.

               No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.

               No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of

<PAGE>   58

meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

               This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned manually or by facsimile
signature by the Rights Agent.

               WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.

Dated as of _______ __, ____

ATTEST:                                  eLoyalty Corporation

_________________________                By:_________________________
        Secretary                           Name:
                                            Title:

Countersigned:

ChaseMellon Shareholder Services, L.L.C.

By:_________________________________
        Authorized Signature

<PAGE>   59

                  [Form of Reverse Side of Rights Certificate]

                               FORM OF ASSIGNMENT

             (To be executed by the registered holder if such holder
                  desires to transfer the Rights Certificate.)

FOR VALUE RECEIVED ___________________________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
               (Please print name and address of transferee) this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint __________ Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.

Dated: ___________________,______

                                              _____________________________
                                              Signature

Signature Guaranteed:

                                   Certificate

               The undersigned hereby certifies by checking the appropriate
boxes that:

               (1) this Rights Certificate [ ] is [ ] is not being sold,
        assigned and transferred by or on behalf of a Person who is or was an
        Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
        such terms are defined pursuant to the Rights Agreement);

               (2) after due inquiry and to the best knowledge of the
        undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
        Rights Certificate from any Person who is, was or subsequently became an
        Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated:  ___________________,______            ____________________________
                                              Signature

Signature Guaranteed:

<PAGE>   60

                                     NOTICE

               The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.

                          FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights represented by the Rights
Certificate.)

TO:  eLoyalty Corporation

               The undersigned hereby irrevocably elects to exercise ______
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares (or other
securities) be issued in the name of and delivered to:

Please insert social security
or other identifying number: ______________________

________________________________________________________________________________
                         (Please print name and address)
________________________________________________________________________________

               If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number: ______________________

_________________________________________________________________
                      (Please print name and address)
_________________________________________________________________

Dated: ___________________,______

                                    ________________________________________
                                    Signature

Signature Guaranteed:

<PAGE>   61

                                   Certificate

               The undersigned hereby certifies by checking the appropriate
boxes that:

               (1) the Rights evidenced by this Rights Certificate [ ] are [ ]
     are not being exercised by or on behalf of a Person who is or was an
     Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
     such terms are defined pursuant to the Rights Agreement);

               (2) after due inquiry and to the best knowledge of the
     undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
     Rights Certificate from any Person who is, was or became an Acquiring
     Person or an Affiliate or Associate of an Acquiring Person.

Dated: _________,___                      __________________________________
                                          Signature

Signature Guaranteed:

                                     NOTICE

               The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.

<PAGE>   62

                                                                       Exhibit C

                  SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

               On [ ], the Board of Directors of eLoyalty Corporation adopted a
Stockholders Rights Plan (the "Rights Plan") and declared a dividend
distribution of one Right for each outstanding share of eLoyalty's common stock,
to stockholders of record at the close of business on [ ]. Each Right will
entitle its holder, under the circumstances described below, to purchase from
eLoyalty one one-hundredth of a share of its Series A Junior Participating
Preferred Stock, $.01 par value, (the "Series A Preferred Stock"), at an
exercise price of $[ ] per Right, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between eLoyalty and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.

               Initially, the Rights will be associated with the common stock
and evidenced by the common stock certificates, which will contain a notation
incorporating the Rights Agreement by reference, and will be transferred with
and only with underlying shares of common stock. The Rights will become
exercisable and separately certificated only upon the "Distribution Date," which
will occur upon the earlier of:

        -      ten days following a public announcement that a person or group
               (an "Acquiring Person") has acquired, or obtained the right to
               acquire, beneficial ownership of 15% or more of the outstanding
               shares of common stock then outstanding (the date of the
               announcement being the "Stock Acquisition Date"); or

        -      ten business days (or later if determined by eLoyalty's board of
               directors prior to any person becoming an Acquiring Person)
               following the commencement of a tender offer or exchange offer
               that would result in a person or group becoming an Acquiring
               Person.

               Until the Distribution Date, the surrender for transfer of any
shares of common stock outstanding will also constitute the transfer of the
Rights associated with such shares.

               As soon as practicable after the Distribution Date, separate
certificates or book-entry statements for the Rights will be mailed to holders
of record of common stock as of the close of business on the Distribution Date.
From and after the Distribution Date, the separate certificates or book-entry
statements alone will represent the Rights. Except as otherwise provided in the
Rights Agreement, only shares of common stock issued prior to the Distribution
Date will be issued with Rights.

<PAGE>   63

               The Rights are not exercisable until the Distribution Date and
will expire at the close of business on [ ], unless earlier redeemed or
exchanged by eLoyalty as described below.

               In the event (a "Flip-In Event") that a person or group becomes
an Acquiring Person, each holder of a Right (other than any Acquiring Person and
certain related parties, whose Rights will automatically become null and void)
will have the right to receive, upon exercise, common stock, or, in certain
circumstances, cash, property or other securities of eLoyalty, with a value
equal to two times the exercise price of the Right. The Rights may not be
exercised following a Flip-In Event while eLoyalty has the ability to cause the
Rights to be redeemed. eLoyalty's ability to redeem the Rights is described
below.

               For example, at an exercise price of $100 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following a
Flip-In Event would entitle its holder to purchase $200 worth of common stock
(or other consideration, as noted above) for $100. Assuming that the common
stock had a per share value of $50 at that time, the holder of each valid Right
would be entitled to purchase 4 shares of common stock for $100.

               In the event (a "Flip-Over Event") that, at any time following
the Stock Acquisition Date:

        -      eLoyalty is acquired in a merger or other business
               combination in which it is not the surviving entity,

        -      eLoyalty is acquired in a merger or other business combination in
               which it is the surviving entity and all or part of its common
               stock is converted into or exchanged for securities of another
               entity, cash or other property, or

        -      50% or more of eLoyalty's assets or earning power is
               sold or transferred,

then each holder of a Right (except Rights which previously have been voided as
set forth above) will have the right to receive, upon exercise, common stock of
the acquiring company having a value equal to two times the exercise price of
the Right. Flip-In Events and Flip-Over Events are collectively referred to as
"Triggering Events."

               The exercise price payable, and the number of shares of Series A
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution:

<PAGE>   64

        -      in the event of a stock dividend on, or a subdivision,
               combination or reclassification of, the Series A
               Preferred Stock,

        -      if holders of the Series A Preferred Stock are granted certain
               rights, options or warrants to subscribe for Series A Preferred
               Stock or convertible securities at less than the current market
               price of the Series A Preferred Stock, or

        -      upon the distribution to holders of the Preferred Stock of
               evidences of indebtedness or assets (excluding regular periodic
               cash dividends) or of subscription rights or warrants (other than
               those referred to above).

               With certain exceptions, no adjustment in the exercise price will
be required until cumulative adjustments amount to at least 1% of the then
current exercise price. No fractional shares of Series A Preferred Stock will be
issued and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Series A Preferred Stock on the last trading day prior to
the date of exercise. eLoyalty may require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Series A Preferred Stock will be issued.

               eLoyalty may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (subject to adjustment and payable in cash, common stock
or other consideration deemed appropriate by eLoyalty's board of directors) at
any time until ten days following the Stock Acquisition Date. Immediately upon
the action of eLoyalty's board of directors authorizing any redemption, the
Rights will terminate and the only right of the holders of Rights will be to
receive the redemption price.

               At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by that person or group of 50% or more of the
outstanding shares of common stock, eLoyalty may exchange the Rights (other than
Rights owned by that person or group which will have become void), in whole or
in part, at an exchange ratio of one share of common stock, or one one-hundredth
of a share of Series A Preferred Stock (or of a share of a class or series of
our preferred stock having equivalent rights, preferences and privileges), per
Right (subject to adjustment).

               Until a Right is exercised, its holder, as such, will have no
rights as a stockholder of eLoyalty, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not
result in the recognition of taxable income by eLoyalty or its stockholders,
stockholders may, depending upon the circumstances, recognize taxable income
after a Triggering Event.

<PAGE>   65

               The terms of the Rights may be amended by eLoyalty's board of
directors without the consent of the holders of the Rights. The board of
directors could, among other things, lower the thresholds described above to the
greater of 10% or .001% more than the largest percentage of the outstanding
shares of common stock then known to eLoyalty to be beneficially owned by any
person or group of affiliated or associated persons. Once a person or group has
become an Acquiring Person no amendment can adversely affect the interests of
the holders of the Rights.

               A copy of the Rights Agreement is available free of charge from
the Rights Agent. This description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.

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