Document:

<PAGE>

                                                                     EXHIBIT 4.4

                                U.S. $170,000,000

                           THREE YEAR CREDIT AGREEMENT

                          Dated as of November 19, 2001

                                      Among

                                  RAYONIER INC.
                                   as Borrower
                                   -- --------

                                       and

                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders
                               -- ------- -------

                                       and

                                 CITIBANK, N.A.

                             as Administrative Agent
                             -- -------------- -----

                                       and

                              BANK OF AMERICA, N.A.
                              THE BANK OF NEW YORK
                                  SUNTRUST BANK

                              as Syndication Agents
                              -- ----------- ------

                            SALOMON SMITH BARNEY INC.
                         BANC OF AMERICA SECURITIES INC.

                                  as Arrangers
                                  -- ---------

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                                              <C>
ARTICLE I

         SECTION 1.01.  Certain Defined Terms                                                                     1
                        ---------------------

         SECTION 1.02.  Computation of Time Periods                                                              11
                        ---------------------------

         SECTION 1.03.  Accounting Terms                                                                         11
                        ----------------

ARTICLE II

         SECTION 2.01.  The Revolving Credit Advances                                                            11
                        -----------------------------

         SECTION 2.02.  Making the Revolving Credit Advances                                                     11
                        ------------------------------------

         SECTION 2.03.  The Competitive Bid Advances                                                             12
                        ----------------------------

         SECTION 2.04.  Fees                                                                                     15
                        ----

         SECTION 2.05.  Termination or Reduction of the Commitments                                              15
                        -------------------------------------------

         SECTION 2.06.  Repayment of Revolving Credit Advances                                                   15
                        --------------------------------------

         SECTION 2.07.  Interest on Revolving Credit Advances                                                    15
                        -------------------------------------

         SECTION 2.08.  Interest Rate Determination                                                              16
                        ---------------------------

         SECTION 2.09.  Optional Conversion of Revolving Credit Advances                                         17
                        ------------------------------------------------

         SECTION 2.10.  Prepayments of Revolving Credit Advances                                                 17
                        ----------------------------------------

         SECTION 2.11.  Increased Costs                                                                          17
                        ---------------

         SECTION 2.12.  Illegality                                                                               18
                        ----------

         SECTION 2.13.  Payments and Computations                                                                18
                        -------------------------

         SECTION 2.14.  Taxes                                                                                    19
                        -----

         SECTION 2.15.  Sharing of Payments, Etc.                                                                21
                        ------------------------

         SECTION 2.16.  Evidence of Debt                                                                         21
                        ----------------

         SECTION 2.17.  Use of Proceeds                                                                          22
                        ---------------

         SECTION 2.18.  Increase in the Aggregate Commitments                                                    22
                        -------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                              <C>
ARTICLE III

         SECTION 3.01.  Conditions Precedent to Effectiveness of Sections 2.01 and 2.03                          23

         SECTION 3.02.  Conditions Precedent to Each Revolving Credit Borrowing and Commitment Increase.         24
                        -------------------------------------------------------------------------------

         SECTION 3.03.  Conditions Precedent to Each Competitive Bid Borrowing                                   24
                        ------------------------------------------------------

         SECTION 3.04.  Determinations Under Section 3.01                                                        25
                        ---------------------------------

ARTICLE IV

         SECTION 4.01.  Representations and Warranties of the Borrower                                           25

ARTICLE V

         SECTION 5.01.  Affirmative Covenants                                                                    27
                        ---------------------

         SECTION 5.02.  Negative Covenants                                                                       30
                        ------------------

         SECTION 5.03.  Financial Covenant                                                                       32
                        ------------------

ARTICLE VI

         SECTION 6.01.  Events of Default                                                                        33
                        -----------------

ARTICLE VII

         SECTION 7.01.  Authorization and Action                                                                 35
                        ------------------------

         SECTION 7.02.  Agent's Reliance, Etc.                                                                   35
                        ---------------------

         SECTION 7.03.  Citibank and Affiliates                                                                  35
                        -----------------------

         SECTION 7.04.  Lender Credit Decision                                                                   35
                        ----------------------

         SECTION 7.05.  Indemnification                                                                          36
                        ---------------

         SECTION 7.06.  Successor Agent                                                                          36
                        ---------------

         SECTION 7.07.  Other Agents.                                                                            36
                        -------------

ARTICLE VIII

         SECTION 8.01.  Amendments, Etc.                                                                         36
                        ---------------

         SECTION 8.02.  Notices, Etc.                                                                            37
                        ------------

         SECTION 8.03.  No Waiver; Remedies                                                                      37
                        -------------------
</TABLE>

                                       ii

<PAGE>

<TABLE>
         <S>                                                                                                     <C>
         SECTION 8.04.  Costs and Expenses                                                                       37
                        ------------------

         SECTION 8.05.  Right of Set-off                                                                         38
                        ----------------

         SECTION 8.06.  Binding Effect                                                                           38
                        --------------

         SECTION 8.07.  Assignments and Participations                                                           38
                        ------------------------------

         SECTION 8.08.  Confidentiality                                                                          41
                        ---------------

         SECTION 8.09.  Governing Law                                                                            41
                        -------------

         SECTION 8.10.  Execution in Counterparts                                                                41
                        -------------------------

         SECTION 8.11.  Jurisdiction, Etc.                                                                       41
                        -----------------

         SECTION 8.12.  Waiver of Jury Trial                                                                     42
                        --------------------
</TABLE>

                                      iii

<PAGE>

Schedules
---------

Schedule I                 -        List of Applicable Lending Offices

Schedule 3.01(b)           -        Disclosed Litigation

Schedule 4.01(i)           -        Environmental Matters

Schedule 4.01(o)           -        Post Retirement Benefit Obligations

Schedule 5.02(a)           -        Existing Liens

Schedule 5.02(d)           -        Existing Subsidiary Debt

Exhibits
--------

Exhibit A-1                -        Form of Revolving Credit Note

Exhibit A-2                -        Form of Competitive Bid Note

Exhibit B-1                -        Form of Notice of Revolving Credit Borrowing

Exhibit B-2                -        Form of Notice of Competitive Bid Borrowing

Exhibit C                  -        Form of Assignment and Acceptance

Exhibit D                  -        Form of Opinion of Counsel for the Borrower

                                       iv

<PAGE>

                           THREE YEAR CREDIT AGREEMENT

                          Dated as of November 19, 2001

          RAYONIER INC., a North Carolina corporation (the "Borrower"), the
                                                            --------
banks, financial institutions and other institutional lenders (the "Initial
                                                                    -------
Lenders") listed on the signature pages hereof, and CITIBANK, N.A. ("Citibank"),
-------                                                              --------
as agent (the "Agent") for the Lenders (as hereinafter defined), agree as
               -----
follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
                        ---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

          "Advance" means a Revolving Credit Advance or a Competitive Bid
           -------
     Advance.

          "Affiliate" means, as to any Person, any other Person that, directly
           ---------
     or indirectly, controls, is controlled by or is under common control with
     such Person or is a director or officer of such Person. For purposes of
     this definition, the term "control" (including the terms "controlling",
     "controlled by" and "under common control with") of a Person means the
     possession, direct or indirect, of the power to vote 5% or more of the
     Voting Stock of such Person or to direct or cause the direction of the
     management and policies of such Person, whether through the ownership of
     Voting Stock, by contract or otherwise.

          "Agent's Account" means the account of the Agent maintained by the
           ---------------
     Agent at Citibank at its office at 388 Greenwich Street, New York, New York
     10013, Account No. 36852248, Attention: Bank Loan Syndications.

          "Applicable Lending Office" means, with respect to each Lender, such
           -------------------------
     Lender's Domestic Lending Office in the case of a Base Rate Advance and
     such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
     Advance and, in the case of a Competitive Bid Advance, the office of such
     Lender notified by such Lender to the Agent as its Applicable Lending
     Office with respect to such Competitive Bid Advance.

          "Applicable Margin" means (a) for Base Rate Advances, 0% per annum and
           -----------------
     (b) for Eurodollar Rate Advances, as of any date, a percentage per annum
     determined by reference to the Public Debt Rating in effect on such date as
     set forth below:

    Public Debt Rating         Applicable Margin for
       S&P/Moody's           Eurodollar Rate Advances
-------------------------    ------------------------
Level 1
-------
BBB+ or Baa1 or above                 0.450%

Level 2
-------
Lower than Level 1 but at             0.675%
least BBB or Baa2

Level 3
-------
Lower than Level 2 but at             0.875%
least BBB- and Baa3

<PAGE>

Level 4
-------
Lower than Level 3 but at             0.950%
least BBB- or Baa3

Level 5
-------
Lower than Level 4 but at             1.125%
least BB+ and Ba1

Level 6
-------
Lower than Level 5                    1.375%

          "Applicable Percentage" means, as of any date, a percentage per annum
           ---------------------
     determined by reference to the Public Debt Rating in effect on such date as
     set forth below:

   Public Debt Rating        Applicable
      S&P/Moody's            Percentage
-------------------------    ----------
Level 1
-------
BBB+ or Baa1 or above          0.175%

Level 2
-------
Lower than Level 1 but at      0.200%
least BBB or Baa2

Level 3
-------
Lower than Level 2 but at      0.250%
least BBB- and Baa3

Level 4
-------
Lower than Level 3 but at      0.300%
least BBB- or Baa3

Level 5
-------
Lower than Level 4 but at      0.375%
least BB+ and Ba1

Level 6
-------
Lower than Level 5             0.500%

          "Applicable Utilization Fee" means, as of any date that the aggregate
           --------------------------
     Advances exceed 33% of the aggregate Commitments, a percentage per annum
     determined by reference to the Public Debt Rating in effect on such date as
     set forth below:

   Public Debt Rating          Applicable
      S&P/Moody's            Utilization Fee
-------------------------    ----------------
Level 1
-------
BBB+ or Baa1 or above            0.125%

Level 2
-------
Lower than Level 1 but at        0.125%
least BBB or Baa2

Level 3
-------
Lower than Level 2 but at        0.250%
least BBB- and Baa3

Level 4
-------
Lower than Level 3 but at        0.250%
least BBB- or Baa3

Level 5
-------
Lower than Level 4 but at        0.250%
least BB+ and Ba1

                                        2

<PAGE>

Level 6
-------
Lower than Level 5               0.375%

          "Arrangers" means Salomon Smith Barney Inc. and Banc of America
           ---------
     Securities LLC.

          "Assignment and Acceptance" means an assignment and acceptance entered
           -------------------------
     into by a Lender and an Eligible Assignee, and accepted by the Agent, in
     substantially the form of Exhibit C hereto.

          "Assuming Lender" has the meaning specified in Section 2.18(d).
           --------------

          "Assumption Agreement" has the meaning specified in Section
           --------------------
     2.18(d)(ii).

          "Base Rate" means a fluctuating interest rate per annum in effect from
           ---------
     time to time, which rate per annum shall at all times be equal to the
     higher of:

               (a) the rate of interest announced publicly by Citibank in New
          York, New York, from time to time, as Citibank's base rate; and

               (b) 1/2 of one percent per annum above the Federal Funds Rate.

          "Base Rate Advance" means a Revolving Credit Advance that bears
           -----------------
     interest as provided in Section 2.07(a)(i).

          "Borrower's Form 10-K for 2000" has the meaning specified in Section
           -----------------------------
     4.01(f).

          "Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
           ---------
     Borrowing.

          "Business Day" means a day of the year on which banks are not required
           ------------
     or authorized by law to close in New York City and, if the applicable
     Business Day relates to any Eurodollar Rate Advances, on which dealings are
     carried on in the London interbank market.

          "CERCLA" means the Comprehensive Environmental Response, Compensation
           ------
     and Liability Act of 1980, as amended.

          "CERCLIS" has the meaning specified in Section 4.01(k).
           -------

          "Commitment" means, with respect to any Lender at any time (a) the
           ----------
     amount set forth opposite such Lender's name on the signature pages hereof,
     (b) if such Lender has become a Lender hereunder pursuant to an Assumption
     Agreement, the amount set forth in such Assumption Agreement or (c) if such
     Lender has entered into any Assignment and Acceptance, the amount set forth
     for such Lender in the Register maintained by the Agent pursuant to Section
     8.07(d), as such amount may be reduced pursuant to Section 2. 05 or
     increased pursuant to Section 2.18.

          "Commitment Date" has the meaning specified in Section 2.18(b).
           ---------------

          "Commitment Increase" has the meaning specified in Section 2.18(a).
           -------------------

          "Competitive Bid Advance" means an advance by a Lender to the Borrower
           -----------------------
     as part of a Competitive Bid Borrowing resulting from the competitive
     bidding procedure described in Section 2.03.

          "Competitive Bid Borrowing" means a borrowing consisting of
           -------------------------
     simultaneous Competitive Bid Advances from each of the Lenders whose offer
     to make one or more Competitive Bid Advances as part of such borrowing has
     been accepted under the competitive bidding procedure described in Section
     2.03.

                                       3

<PAGE>

          "Competitive Bid Note" means a promissory note of the Borrower payable
           --------------------
     to the order of any Lender, in substantially the form of Exhibit A-2
     hereto, evidencing the indebtedness of the Borrower to such Lender
     resulting from a Competitive Bid Advance made by such Lender.

          "Competitive Bid Reduction" has the meaning specified in Section 2.01.
           -------------------------

          "Confidential Information" means information that the Borrower
           ------------------------
     furnishes to the Agent or any Lender in a writing designated as
     confidential, but does not include any such information that is or becomes
     generally available to the public or that is or becomes available to the
     Agent or such Lender from a source other than the Borrower, that is not
     acting in violation of a confidentiality agreement with the Borrower.

          "Consolidated" refers to the consolidation of accounts in accordance
           ------------
     with GAAP.

          "Consolidated Assets" means on any date of determination, all amounts
           -------------------
     that are or should, in accordance with GAAP be included under assets on a
     Consolidated balance sheet of the Borrower and its Subsidiaries determined
     in accordance with GAAP as at such date.

          "Convert", "Conversion" and "Converted" each refers to a conversion of
           -------    ----------       ---------
     Revolving Credit Advances of one Type into Revolving Credit Advances of the
     other Type pursuant to Section 2.08 or 2.09.

          "Debt" of any Person means, without duplication, (a) all indebtedness
           ----
     of such Person for borrowed money, (b) all obligations of such Person for
     the deferred purchase price of property or services (other than trade
     payables incurred in the ordinary course of such Person's business and that
     are not overdue for a period that is not consistent with the ordinary
     course of business of such Person), (c) all obligations of such Person
     evidenced by notes, bonds, debentures or other similar instruments, (d) all
     obligations of such Person created or arising under any conditional sale or
     other title retention agreement with respect to property acquired by such
     Person (even though the rights and remedies of the seller or lender under
     such agreement in the event of default are limited to repossession or sale
     of such property), (e) all obligations of such Person as lessee under
     leases that have been or should be, in accordance with GAAP, recorded as
     capital leases, (f) all obligations, contingent or otherwise, of such
     Person in respect of acceptance, letter of credit or similar facilities
     (other than obligations under (i) Trade Letters of Credit, (ii) performance
     bonds or letters of credit issued in connection with the purchase of
     inventory, including prepaid timber stumpage, by the Borrower or any of its
     Subsidiaries in the ordinary course of business, (iii) performance bonds or
     letters of credit to secure obligations under workers' compensation laws or
     similar legislation, (iv) performance bonds or letters of credit issued for
     the account of the Borrower or any of its Subsidiaries to secure
     obligations under self-insurance programs to the extent permitted by the
     terms of this Agreement and in an aggregate maximum available amount with
     respect to all such performance bonds and letters of credit not to exceed
     at any one time $20,000,000 and (v) performance bonds or letters of credit
     issued for the account of the Borrower or any of its Subsidiaries not
     otherwise excluded from this definition in an aggregate maximum available
     amount with respect to all such performance bonds and letters of credit not
     to exceed at any one time $2,000,000, provided that in each case such
                                           --------
     performance bond or letter of credit (including, without limitation, any
     Trade Letters of Credit but excluding performance bonds or letters of
     credit described in clause (f)(v) above) does not secure Debt, (g) all
     Guarantees issued by such Person and (h) all Debt referred to in clauses
     (a) through (g) above secured by (or for which the holder of such Debt has
     an existing right, contingent or otherwise, to be secured by) any Lien on
     property (including, without limitation, accounts and contract rights)
     owned by such Person, even though such Person has not assumed or become
     liable for the payment of such Debt. The Debt of any Person shall include
     the Debt of any partnership in which such Person is a general partner, but
     shall not include obligations under a financial assurance statement that a
     Person is required to provide under Environmental Law in support of the
     closure and post-closure obligations of one or more of its Subsidiaries.

          "Default" means any Event of Default or any event that would
           -------
     constitute an Event of Default but for the requirement that notice be given
     or time elapse or both.

                                       4

<PAGE>

          "Disclosed Litigation" has the meaning specified in Section 3.01(b).
           --------------------

          "Domestic Lending Office" means, with respect to any Lender, the
           -----------------------
     office of such Lender specified as its "Domestic Lending Office" opposite
     its name on Schedule I hereto or in the Assumption Agreement or the
     Assignment and Acceptance pursuant to which it became a Lender, or such
     other office of such Lender as such Lender may from time to time specify to
     the Borrower and the Agent.

          "EBITDA" means, for any Person during any period, earnings (income)
           ------
     from continuing operations before the cumulative effect of accounting
     changes and any provision for dispositions, income taxes, interest expense
     and depreciation, depletion and amortization and the non-cash cost of
     timberland and real estate sales, provided, that for purposes of
     calculating compliance with Section 5.03(a), the EBITDA attributable to any
     Person or business unit acquired by the Borrower or any of its Subsidiaries
     during any period of four full fiscal quarters shall be included on a pro
     forma basis for such period of four full fiscal quarters (assuming the
     consummation of each such acquisition occurred on the first day of such
     period of four full fiscal quarters).

          "Effective Date" has the meaning specified in Section 3.01.
           --------------

          "Eligible Assignee" means (a) any Lender; (b) an Affiliate of a
           -----------------
     Lender; (c) a commercial bank organized under the laws of the United
     States, or any State thereof, and having total assets in excess of
     $10,000,000,000; (d) a commercial bank organized under the laws of any
     other country that is a member of the Organization for Economic Cooperation
     and Development or has concluded special lending arrangements with the
     International Monetary Fund associated with its General Arrangements to
     Borrow or of the Cayman Islands, or a political subdivision of any such
     country, and having total assets in excess of $10,000,000,000, so long as
     such bank is acting through a branch or agency located in the country in
     which it is organized or another country that is described in this clause
     (d); (e) the central bank of any country that is a member of the
     Organization for Economic Cooperation and Development; and (f) any other
     Person approved by the Agent; provided, however, that (x) each Eligible
                                   --------  -------
     Assignee shall maintain a branch or representative office or similar
     presence in the United States and (y) neither the Borrower nor an Affiliate
     of the Borrower shall qualify as an Eligible Assignee.

          "Environmental Action" means any (a) administrative, regulatory or
           --------------------
     judicial action, suit, written demand, demand letter, written claim, notice
     of noncompliance or violation, notice of liability or potential liability,
     investigation, proceeding, consent order or consent agreement relating in
     any way to any Environmental Law, Environmental Permit or Hazardous
     Materials or arising from alleged injury or threat of injury to health,
     safety or the environment including, without limitation, (i) by any
     governmental or regulatory authority for enforcement, cleanup, removal,
     response, remedial or other actions or damages and (ii) by any governmental
     or regulatory authority for damages, contribution, indemnification, cost
     recovery, compensatory or injunctive relief; and (b) any administrative,
     regulatory or judicial action, suit or proceeding brought by any third
     party properly before a forum of competent jurisdiction relating in any way
     to any Environmental Law, Environmental Permit or Hazardous Materials or
     arising from alleged injury or threat of injury to health, safety or the
     environment.

          "Environmental Law" means any federal, state, local or foreign
           -----------------
     statute, law, ordinance, rule, regulation, code, order, judgment, decree or
     judicial or agency interpretation, policy or guidance relating to pollution
     or protection of the environment, health, safety or natural resources,
     including, without limitation, those relating to the use, handling,
     transportation, treatment, storage, disposal, release or discharge of
     Hazardous Materials all as amended or hereafter amended.

          "Environmental Permit" means any permit, approval, identification
           --------------------
     number, license or other authorization required under any Environmental
     Law.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
     amended from time to time, and the regulations promulgated and rulings
     issued thereunder.

                                       5

<PAGE>

          "ERISA Affiliate" means any Person that for purposes of Title IV of
           ---------------
     ERISA is a member of the Borrower's controlled group, or under common
     control with the Borrower, within the meaning of Section 414 of the
     Internal Revenue Code.

          "ERISA Event" means (a) (i) the occurrence of a reportable event,
           -----------
     within the meaning of Section 4043 of ERISA, with respect to any Plan
     unless the 30-day notice requirement with respect to such event has been
     waived by the PBGC, or (ii) the requirements of subsection (1) of Section
     4043(b) of ERISA (without regard to subsection (2) of such Section) are met
     with respect to a contributing sponsor, as defined in Section 4001(a)(13)
     of ERISA, of a Plan, and an event described in paragraph (9), (10), (11),
     (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
     with respect to such Plan within the following 30 days; (b) the application
     for a minimum funding waiver with respect to a Plan; (c) the provision by
     the administrator of any Plan of a notice of intent to terminate such Plan
     pursuant to Section 4041(a)(2) of ERISA (including any such notice with
     respect to a plan amendment referred to in Section 4041(e) of ERISA); (d)
     the cessation of operations at a facility of the Borrower or any of its
     ERISA Affiliates in the circumstances described in Section 4062(e) of
     ERISA; (e) the withdrawal by the Borrower or any of its ERISA Affiliates
     from a Multiple Employer Plan during a plan year for which it was a
     substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
     conditions for the imposition of a lien under Section 302(f) of ERISA shall
     have been met with respect to any Plan; (g) the adoption of an amendment to
     a Plan requiring the provision of security to such Plan pursuant to Section
     307 of ERISA; or (h) the institution by the PBGC of proceedings to
     terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of
     any event or condition described in Section 4042 of ERISA that could
     constitute grounds for the termination of, or the appointment of a trustee
     to administer, a Plan.

          "Eurocurrency Liabilities" has the meaning assigned to that term in
           ------------------------
     Regulation D of the Board of Governors of the Federal Reserve System, as in
     effect from time to time.

          "Eurodollar Lending Office" means, with respect to any Lender, the
           -------------------------
     office of such Lender specified as its "Eurodollar Lending Office" opposite
     its name on Schedule I hereto or in the Assumption Agreement or the
     Assignment and Acceptance pursuant to which it became a Lender (or, if no
     such office is specified, its Domestic Lending Office), or such other
     office of such Lender as such Lender may from time to time specify to the
     Borrower and the Agent.

          "Eurodollar Rate" means, for any Interest Period for each Eurodollar
           ---------------
     Rate Advance comprising part of the same Revolving Credit Borrowing, an
     interest rate per annum equal to the rate per annum obtained by dividing
     (a) the rate per annum (rounded upward to the nearest whole multiple of
     1/16 of 1% per annum) appearing on Telerate Markets Page 3750 (or any
     successor page) as the London interbank offered rate for deposits in U.S.
     dollars at approximately 11:00 A.M. (London time) two Business Days prior
     to the first day of such Interest Period for a term comparable to such
     Interest Period or, if for any reason such rate is not available, the
     average (rounded upward to the nearest whole multiple of 1/16 of 1% per
     annum, if such average is not such a multiple) of the rate per annum at
     which deposits in U.S. dollars are offered by the principal office of each
     of the Reference Banks in London, England to prime banks in the London
     interbank market at 11:00 A.M. (London time) two Business Days before the
     first day of such Interest Period in an amount substantially equal to such
     Reference Bank's Eurodollar Rate Advance comprising part of such Revolving
     Credit Borrowing to be outstanding during such Interest Period and for a
     period equal to such Interest Period by (b) a percentage equal to 100%
     minus the Eurodollar Rate Reserve Percentage for such Interest Period. If
     the Telerate Markets Page 3750 (or any successor page) is unavailable, the
     Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance
     comprising part of the same Revolving Credit Borrowing shall be determined
     by the Agent on the basis of applicable rates furnished to and received by
     the Agent from the Reference Banks two Business Days before the first day
     of such Interest Period, subject, however, to the provisions of Section
                              -------  -------
     2.08.

          "Eurodollar Rate Advance" means a Revolving Credit Advance that bears
           -----------------------
     interest as provided in Section 2.07(a)(ii).

                                       6

<PAGE>

          "Eurodollar Rate Reserve Percentage" for any Interest Period for all
           ----------------------------------
     Eurodollar Rate Advances comprising part of the same Borrowing means the
     reserve percentage applicable two Business Days before the first day of
     such Interest Period under regulations issued from time to time by the
     Board of Governors of the Federal Reserve System (or any successor) for
     determining the maximum reserve requirement (including, without limitation,
     any emergency, supplemental or other marginal reserve requirement) for a
     member bank of the Federal Reserve System in New York City with respect to
     liabilities or assets consisting of or including Eurocurrency Liabilities
     (or with respect to any other category of liabilities that includes
     deposits by reference to which the interest rate on Eurodollar Rate
     Advances is determined) having a term equal to such Interest Period.

          "Events of Default" has the meaning specified in Section 6.01.
           -----------------

          "Existing Subsidiary Debt" has the meaning specified in Section
           ------------------------
     5.02(d)(ii).

          "Federal Funds Rate" means, for any period, a fluctuating interest
           ------------------
     rate per annum equal for each day during such period to the weighted
     average of the rates on overnight Federal funds transactions with members
     of the Federal Reserve System arranged by Federal funds brokers, as
     published for such day (or, if such day is not a Business Day, for the next
     preceding Business Day) by the Federal Reserve Bank of New York, or, if
     such rate is not so published for any day that is a Business Day, the
     average of the quotations for such day on such transactions received by the
     Agent from three Federal funds brokers of recognized standing selected by
     it.

          "Fiscal Quarter" means each consecutive three calendar month period
           --------------
     ending March 31, June 30, September 30 or December 31 of any fiscal year.

          "GAAP" has the meaning specified in Section 1.03.
           ----

          "Guarantee" by any Person, means any obligation, contingent or
           ---------
     otherwise, of such Person guaranteeing directly or indirectly in any manner
     the Debt of any other Person, or in effect guaranteeing directly or
     indirectly the Debt of any other Person through an agreement (i) to pay or
     purchase such Debt or to advance or supply funds for the payment or
     purchase of such Debt, (ii) to purchase, sell or lease (as lessee or
     lessor) property, or to purchase or sell services, primarily for the
     purpose of enabling the debtor to make payment of such Debt or to assure
     the holder of such Debt against loss, (iii) to supply funds to or in any
     other manner invest in the debtor (including any agreement to pay for
     property or services irrespective of whether such property is received or
     such services are rendered) or (iv) otherwise to assure a creditor against
     loss.

          "Hazardous Materials" means petroleum and petroleum products,
           -------------------
     byproducts or breakdown products, radioactive materials,
     asbestos-containing materials, polychlorinated biphenyls and radon gas and
     any other chemicals, materials or substances designated, classified or
     regulated as being "hazardous" or "toxic" or words of similar import, under
     any applicable Environmental Law.

          "Increase Date" has the meaning specified in Section 2.18(a).
           -------------

          "Increasing Lender" has the meaning specified in Section 2.18(b).
           -----------------

          "Indemnified Liabilities" has the meaning specified in Section
           -----------------------
     8.04(b).

          "Indemnified Party" has the meaning specified in Section 8.04(b).
           -----------------

          "Insufficiency" means, with respect to any Plan, the amount, if any,
           -------------
     of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
     ERISA.

                                       7

<PAGE>

          "Interest Period" means, for each Eurodollar Rate Advance comprising
           ---------------
     part of the same Revolving Credit Borrowing, the period commencing on the
     date of such Eurodollar Rate Advance or the date of the Conversion of any
     Base Rate Advance into such Eurodollar Rate Advance and ending on the last
     day of the period selected by the Borrower pursuant to the provisions below
     and, thereafter, each subsequent period commencing on the last day of the
     immediately preceding Interest Period and ending on the last day of the
     period selected by the Borrower pursuant to the provisions below. The
     duration of each such Interest Period shall be one, two, three or six
     months, and subject to clause (c) of this definition, nine or twelve
     months, as the Borrower may, upon notice received by the Agent not later
     than 12:00 Noon (New York City time) on the third Business Day prior to the
     first day of such Interest Period, select; provided, however, that:
                                                --------  -------

               (a) the Borrower may not select any Interest Period that ends
          after the Termination Date;

               (b) Interest Periods commencing on the same date for Eurodollar
          Rate Advances comprising part of the same Revolving Credit Borrowing
          shall be of the same duration;

               (c) in the case of any such Revolving Credit Borrowing, the
          Borrower shall not be entitled to select an Interest Period having
          duration of nine or twelve months unless, by 2:00 P.M. (New York City
          time) on the third Business Day prior to the first day of such
          Interest Period, each Lender notifies the Agent that such Lender will
          be providing funding for such Revolving Credit Borrowing with such
          Interest Period (the failure of any Lender to so respond by such time
          being deemed for all purposes of this Agreement as an objection by
          such Lender to the requested duration of such Interest Period);
          provided that, if any or all of the Lenders object to the requested
          --------
          duration of such Interest Period, the duration of the Interest Period
          for such Revolving Credit Borrowing shall be one, two, three or six
          months, as specified by the Borrower in the applicable Notice of
          Revolving Credit Borrowing as the desired alternative to an Interest
          Period of nine or twelve months;

               (d) whenever the last day of any Interest Period would otherwise
          occur on a day other than a Business Day, the last day of such
          Interest Period shall be extended to occur on the next succeeding
          Business Day, provided, however, that, if such extension would cause
                        --------  -------
          the last day of such Interest Period to occur in the next following
          calendar month, the last day of such Interest Period shall occur on
          the next preceding Business Day; and

               (e) whenever the first day of any Interest Period occurs on a day
          of an initial calendar month for which there is no numerically
          corresponding day in the calendar month that succeeds such initial
          calendar month by the number of months equal to the number of months
          in such Interest Period, such Interest Period shall end on the last
          Business Day of such succeeding calendar month.

          "Internal Revenue Code" means the Internal Revenue Code of 1986, as
           ---------------------
     amended from time to time, and the regulations promulgated and rulings
     issued thereunder.

          "Lenders" means the Initial Lenders, each Assuming Lender that shall
           -------
     become a party hereto pursuant to Section 2.18 and each Person that shall
     become a party hereto pursuant to Section 8.07.

          "Lien" means any lien, security interest or other charge or
           ----
     encumbrance of any kind, or any other type of preferential arrangement,
     including, without limitation, the lien or retained security title of a
     conditional vendor and any easement, right of way or other encumbrance on
     title to real property.

          "Material Adverse Change" means any material adverse change in the
           -----------------------
     business, condition (financial or otherwise), operations, performance or
     properties of the Borrower and its Subsidiaries taken as a whole.

                                       8

<PAGE>

          "Material Adverse Effect" means a material adverse effect on (a) the
           -----------------------
     business, condition (financial or otherwise), operations, performance or
     properties of the Borrower and its Subsidiaries taken as a whole, (b) the
     rights and remedies of the Agent or any Lender under this Agreement or any
     Note or (c) the ability of the Borrower to perform its obligations under
     this Agreement or any Note.

          "Moody's" means Moody's Investors Service, Inc.
           -------

          "Multiemployer Plan" means a multiemployer plan, as defined in Section
           ------------------
     4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates
     is making or accruing an obligation to make contributions, or has within
     any of the preceding five plan years made or accrued an obligation to make
     contributions.

          "Multiple Employer Plan" means a single employer plan, as defined in
           ----------------------
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
     Borrower or any ERISA Affiliate and at least one Person other than the
     Borrower and its ERISA Affiliates or (b) was so maintained and in respect
     of which the Borrower or any of its ERISA Affiliates could have liability
     under Section 4064 or 4069 of ERISA in the event such plan has been or were
     to be terminated.

          "Note" means a Revolving Credit Note or a Competitive Bid Note.
           ----

          "Notice of Competitive Bid Borrowing" has the meaning specified in
           -----------------------------------
     Section 2.03(a).

          "Notice of Revolving Credit Borrowing" has the meaning specified in
           ------------------------------------
     Section 2.02(a).

          "NPL" has the meaning specified in Section 4.01(k).
           ---

          "Other Taxes" has the meaning specified in Section 2.15(b).
           -----------

          "PBGC" means the Pension Benefit Guaranty Corporation (or any
           ----
     successor).

          "Permitted Liens" means such of the following as to which no
           ---------------
     enforcement, collection, execution, levy or foreclosure proceeding shall
     have been commenced: (a) Liens for taxes, assessments and governmental
     charges or levies to the extent not required to be paid under Section
     5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
     mechanics', carriers', workmen's and repairmen's Liens and other similar
     Liens arising in the ordinary course of business securing obligations that
     are not overdue for a reasonable period and which, individually or when
     aggregated with all other Permitted Liens outstanding on any date, do not
     materially affect the use of the property to which they relate; (c) pledges
     or deposits to secure obligations under workers' compensation laws or
     similar legislation or to secure public or statutory obligations; and (d)
     easements, rights of way, encumbrances and minor defects or irregularities
     in title to real property not interfering in any material respect with the
     ordinary conduct of the business of the Borrower or any of its
     Subsidiaries.

          "Person" means an individual, partnership, corporation (including a
           ------
     business trust), limited liability company, joint stock company, trust,
     unincorporated association, joint venture or other entity, or a government
     or any political subdivision or agency thereof.

          "Plan" means a Single Employer Plan or a Multiple Employer Plan.
           ----

          "Public Debt Rating" means, as of any date, the highest rating that
           ------------------
     has been most recently announced by either S&P or Moody's, as the case may
     be, for any class of non-credit enhanced long-term senior unsecured debt
     issued by the Borrower. For purposes of the foregoing, (a) if only one of
     S&P and Moody's shall have in effect a Public Debt Rating, the Applicable
     Margin, the Applicable Percentage and the Applicable Utilization Fee shall
     be determined by reference to the available rating; (b) if neither S&P nor
     Moody's shall have in effect a Public Debt Rating, the Applicable Margin,
     the Applicable Percentage

                                       9

<PAGE>

     and the Applicable Utilization Fee will be set in accordance with Level 6
     under the definition of "Applicable Margin", "Applicable Percentage" or
                              -----------------    ---------------------
     "Applicable Utilization Fee", as the case may be; (c) if any rating
      --------------------------
     established by S&P or Moody's shall be changed, such change shall be
     effective as of the date on which such change is first announced publicly
     by the rating agency making such change; and (d) if S&P or Moody's shall
     change the basis on which ratings are established, each reference to the
     Public Debt Rating announced by S&P or Moody's, as the case may be, shall
     refer to the then equivalent rating by S&P or Moody's, as the case may be.

          "Reference Banks" means Citibank, Bank of America, N.A.,
           ---------------                                         ----------
     and           .
         ----------

          "Register" has the meaning specified in Section 8.07(d).
           --------

          "Required Lenders" means at any time Lenders owed at least a majority
           ----------------
     in interest of the then aggregate unpaid principal amount of the Revolving
     Credit Advances owing to Lenders, or, if no such principal amount is then
     outstanding, Lenders having at least a majority in interest of the
     Commitments.

          "Revolving Credit Advance" means an advance by a Lender to the
           ------------------------
     Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate
     Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of
                                                                     ----
     Revolving Credit Advance).

          "Revolving Credit Borrowing" means a borrowing consisting of
           --------------------------
     simultaneous Revolving Credit Advances of the same Type made by each of the
     Lenders pursuant to Section 2.01.

          "Revolving Credit Note" means a promissory note of the Borrower
           ---------------------
     payable to the order of any Lender, delivered pursuant to a request made
     under Section 2.16 in substantially the form of Exhibit A-1 hereto,
     evidencing the aggregate indebtedness of the Borrower to such Lender
     resulting from the Revolving Credit Advances made by such Lender.

          "S&P" means Standard & Poor's, a division of The McGraw-Hill
           ---
     Companies, Inc.

          "Significant Subsidiary" means, at any time, a Subsidiary of the
           ----------------------
     Borrower having (a) at least 10% of the total Consolidated Assets of the
     Borrower and its Subsidiaries (determined as of the last day of the most
     recent Fiscal Quarter of the Borrower ended on or prior to such date) or
     (b) at least 5% of the Consolidated revenues of the Borrower and its
     Subsidiaries for the four most recent Fiscal Quarters of the Borrower ended
     on or prior to such date.

          "Single Employer Plan" means a single employer plan, as defined in
           --------------------
     Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
     Borrower or any of its ERISA Affiliates and no Person other than the
     Borrower and its ERISA Affiliates or (b) was so maintained and in respect
     of which the Borrower or any of its ERISA Affiliates could have liability
     under Section 4069 of ERISA in the event such plan has been or were to be
     terminated.

          "Subsidiary" of any Person means any corporation, partnership, joint
           ----------
     venture, limited liability company, trust or estate of which (or in which)
     more than 50% of (a) the issued and outstanding capital stock having
     ordinary voting power to elect a majority of the Board of Directors of such
     corporation (irrespective of whether, at the time, capital stock of any
     other class or classes of such corporation shall or might have voting power
     upon the occurrence of any contingency), (b) the interest in the capital or
     profits of such partnership, joint venture or limited liability company or
     (c) the beneficial interest in such trust or estate is at the time directly
     or indirectly owned or controlled by such Person, by such Person and one or
     more of its other Subsidiaries or by one or more of such Person's other
     Subsidiaries.

          "Tangible Net Worth" means, with respect to any Person as of any date
           ------------------
     of determination, the excess of total assets over total liabilities, total
     assets and total liabilities each to be determined in accordance with GAAP,
     excluding, however, from the determination of total assets, (a) goodwill,
     ---------  -------

                                       10

<PAGE>

     experimental or organizational expenses, research and development expenses,
     franchises, trademarks, service marks, trade names, copyrights, patents,
     patent applications, licenses and rights in any thereof, and other similar
     intangibles, (b) all unamortized debt discount and expense, (c) treasury
     stock and capital stock, obligations or other securities of, or capital
     contributions to, or investments in, any Subsidiary, and (d) any items not
     included in clauses (a) through (c) above which are treated as intangibles
     in conformity with GAAP, in each case, determined on a Consolidated basis
     and in accordance with GAAP.

          "Taxes" has the meaning specified in Section 2.14(a).
           -----

          "Termination Date" means the earlier of (a) November 19, 2004 and (b)
           ----------------
     the date of termination in whole of the Commitments pursuant to Section
     2.05 or 6.01.

          "Trade Letter of Credit" means any letter of credit that is issued for
           ----------------------
     the benefit of a supplier of inventory or provider of a service necessary
     for the conduct of the business of the Borrower or any of its Subsidiaries
     (other than any financial services) to the Borrower or any of its
     Subsidiaries to effect payment for such inventory or service.

          "Voting Stock" means capital stock issued by a corporation, or
           ------------
     equivalent interests in any other Person, the holders of which are
     ordinarily, in the absence of contingencies, entitled to vote for the
     election of directors (or persons performing similar functions) of such
     Person, even though the right so to vote has been suspended by the
     happening of such a contingency.

          "Withdrawal Liability" has the meaning specified in Part 1 of Subtitle
           --------------------
     E of Title IV of ERISA.

          SECTION 1.02. Computation of Time Periods. In this Agreement in the
                        ---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".

          SECTION 1.03. Accounting Terms. All accounting terms not specifically
                        ----------------
defined herein shall be construed in accordance with United States generally
accepted accounting principles as in effect from time to time ("GAAP").
                                                                ----

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

          SECTION 2.01. The Revolving Credit Advances. Each Lender severally
                        -----------------------------
agrees, on the terms and conditions hereinafter set forth, to make Revolving
Credit Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an aggregate amount
not to exceed at any time outstanding such Lender's Commitment provided that the
                                                               --------
aggregate amount of the Commitments of the Lenders shall be deemed used from
time to time to the extent of the aggregate amount of the Competitive Bid
Advances then outstanding and such deemed use of the aggregate amount of the
Commitments shall be allocated among the Lenders ratably according to their
respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "Competitive Bid Reduction"). Each Revolving Credit
                     -------------------------
Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances
of the same Type made on the same day by the Lenders ratably according to their
respective Commitments. Within the limits of each Lender's Commitment, the
Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10 and
reborrow under this Section 2.01.

          SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving
                        ------------------------------------
Credit Borrowing shall be made on notice, given not later than (x) 12:00 Noon
(New York City time) on the third Business Day prior to the date of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing to be
comprised of Eurodollar Rate Advances or (y) 11:00 A.M. (New York City time) on
the Business Day of the proposed Revolving Credit Borrowing in the case of a
Revolving Credit Borrowing to be comprised of Base Rate Advances, by the
Borrower to the Agent, which shall give to each Lender prompt notice thereof by
telecopier or by

                                       11

<PAGE>

telex. Each such notice of a Revolving Credit Borrowing (a "Notice of Revolving
                                                            -------------------
Credit Borrowing") shall be by telephone, confirmed immediately in writing, or
----------------
telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying
therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of
Revolving Credit Advances comprising such Revolving Credit Borrowing, (iii)
aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall on the
date of such Revolving Credit Borrowing, before 11:00 A.M. (New York City time)
, in the case of a Revolving Credit Borrowing to be comprised of Eurodollar Rate
Advances, and before 1:00 P.M. (New York City time), in the case of a Revolving
Credit Borrowing to be comprised of Base Rate Advances, make available for the
account of its Applicable Lending Office to the Agent at the Agent's Account, in
same day funds, such Lender's ratable portion of such Revolving Credit
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Section 3.02, the Agent will make such funds
available to the Borrower at the Agent's address referred to in Section 8.02.

          (b) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for any Revolving
Credit Borrowing if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the
Eurodollar Rate Advances may not be outstanding as part of more than eight
separate Revolving Credit Borrowings.

          (c) Each Notice of Revolving Credit Borrowing shall be irrevocable and
binding on the Borrower. In the case of any Revolving Credit Borrowing that the
related Notice of Revolving Credit Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Revolving Credit
Borrowing for such Revolving Credit Borrowing the applicable conditions set
forth in Section 3.02, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Revolving Credit Advance to be made by such
Lender as part of such Revolving Credit Borrowing when such Revolving Credit
Advance, as a result of such failure, is not made on such date.

          (d) Unless the Agent shall have received notice from a Lender prior to
the date of any Revolving Credit Borrowing (in the case of a Revolving Credit
Borrowing to be comprised of Eurodollar Rate Advances) and not later than 12:00
Noon (New York City time) on the Business Day of the proposed Revolving Credit
Borrowing (in the case of a Revolving Credit Borrowing to be comprised of Base
Rate Advances) that such Lender will not make available to the Agent such
Lender's ratable portion of such Revolving Credit Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the date
of such Revolving Credit Borrowing in accordance with subsection (a) of this
Section 2.02 and the Agent may, in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the Agent,
such Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, the interest
rate applicable at such time to Revolving Credit Advances comprising such
Revolving Credit Borrowing and (ii) in the case of such Lender, the Federal
Funds Rate. If such Lender shall repay to the Agent such corresponding amount,
such amount so repaid shall constitute such Lender's Revolving Credit Advance as
part of such Revolving Credit Borrowing for purposes of this Agreement.

          (e) The failure of any Lender to make the Revolving Credit Advance to
be made by it as part of any Revolving Credit Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.

          SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally
                        ----------------------------
agrees that the Borrower may make Competitive Bid Borrowings under this Section
2.03 from time to time on any Business Day during the period from the Effective
Date until the date occurring 7 days prior to the Termination Date in the manner
set forth below; provided that (x) each Competitive Bid Borrowing shall be in an
                 --------
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and (y) following the making of each Competitive Bid

                                       12

<PAGE>

Borrowing, the aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the Commitments of the Lenders.

          (i) The Borrower may request a Competitive Bid Borrowing under this
     Section 2.03 by delivering to the Agent, by telecopier or telex, a notice
     of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrowing"),
                                        -----------------------------------
     in substantially the form of Exhibit B-2 hereto, specifying the date and
     aggregate amount of the proposed Competitive Bid Borrowing, the maturity
     date for repayment of each Competitive Bid Advance to be made as part of
     such Competitive Bid Borrowing (which maturity date may not be earlier than
     the date occurring 7 days after the date of such Competitive Bid Borrowing
     or later than the earlier of (x) 180 days after the date of such
     Competitive Bid Borrowing and (y) the Termination Date), the interest
     payment date or dates relating thereto, and any other terms to be
     applicable to such Competitive Bid Borrowing, not later than 10:00 A.M.
     (New York City time) (A) at least one Business Day prior to the date of the
     proposed Competitive Bid Borrowing, if the Borrower shall specify in the
     Notice of Competitive Bid Borrowing that the rates of interest to be
     offered by the Lenders shall be fixed rates per annum and (B) at least four
     Business Days prior to the date of the proposed Competitive Bid Borrowing,
     if the Borrower shall instead specify in the Notice of Competitive Bid
     Borrowing the basis to be used by the Lenders in determining the rates of
     interest to be offered by them. The Agent shall in turn promptly notify
     each Lender of each request for a Competitive Bid Borrowing received by it
     from the Borrower by sending such Lender a copy of the applicable Notice of
     Competitive Bid Borrowing.

          (ii) Each Lender may, if, in its sole discretion, it elects to do so,
     irrevocably offer to make one or more Competitive Bid Advances to the
     Borrower as part of such proposed Competitive Bid Borrowing at a rate or
     rates of interest specified by such Lender in its sole discretion, by
     notifying the Agent (which shall give prompt notice thereof to the
     Borrower), before 10:00 A.M. (New York City time) (x) on the date of such
     proposed Competitive Bid Borrowing, in the case of a Notice of Competitive
     Bid Borrowing delivered pursuant to clause (A) of paragraph (i) above and
     (y) three Business Days before the date of such proposed Competitive Bid
     Borrowing, in the case of a Notice of Competitive Bid Borrowing delivered
     pursuant to clause (B) of paragraph (i) above of the minimum amount and
     maximum amount of each Competitive Bid Advance that such Lender would be
     willing to make as part of such proposed Competitive Bid Borrowing (which
     amounts may, subject to the proviso to the first sentence of Section
     2.03(a), exceed such Lender's Commitment, if any), the rate or rates of
     interest therefor and such Lender's Applicable Lending Office with respect
     to such Competitive Bid Advance, provided that if the Agent in its capacity
                                      --------
     as a Lender shall, in its sole discretion, elect to make any such offer, it
     shall notify the Borrower of such offer before 9:00 A.M. (New York City
     time) on the date on which notice of such election is to be given to the
     Agent, by the other Lenders. If any Lender shall elect not to make such an
     offer, such Lender shall so notify the Agent before 10:00 A.M. (New York
     City time) on the date on which notice of such election is to be given to
     the Agent by the other Lenders, and such Lender shall not be obligated to,
     and shall not, make any Competitive Bid Advance as part of such Competitive
     Bid Borrowing; provided that the failure by any Lender to give such notice
                    --------
     shall not cause such Lender to be obligated to make any Competitive Bid
     Advance as part of such proposed Competitive Bid Borrowing.

          (iii) The Borrower shall, in turn, (x) before 11:00 A.M. (New York
     City time) on the date of such proposed Competitive Bid Borrowing, in the
     case of a Notice of Competitive Bid Borrowing delivered pursuant to clause
     (A) of paragraph (i) above and (y) before 11:00 A.M. (New York City time)
     three Business Days before the date of such proposed Competitive Bid
     Borrowing, in the case of a Notice of Competitive Bid Borrowing delivered
     pursuant to clause (B) of paragraph (i) above, either:

               (A) cancel such Competitive Bid Borrowing by giving the Agent
          notice to that effect, or

               (B) accept one or more of the offers made by any Lender or
          Lenders pursuant to paragraph (ii) above, in order of the lowest to
          the highest rates of interest or margins (or if two or more Lenders
          bid at the same rate of interest, and the amount of accepted offers is
          less than the aggregate amount of such offers, the amount to be
          borrowed from such Lenders as part of such

                                       13

<PAGE>

          Competitive Bid Borrowing shall be allocated among such Lenders pro
                                                                          ---
          rata on the basis of the maximum amount offered by such Lenders at
          ----
          such rates or margin in connection with such Competitive Bid
          Borrowing), by giving notice to the Agent of the amount of each
          Competitive Bid Advance (which amount shall be equal to or greater
          than the minimum amount, and equal to or less than the maximum amount,
          notified to the Borrower by the Agent on behalf of such Lender for
          such Competitive Bid Advance pursuant to paragraph (ii) above) to be
          made by each Lender as part of such Competitive Bid Borrowing, and
          reject any remaining offers made by Lenders pursuant to paragraph (ii)
          above by giving the Agent notice to that effect.

          (iv) If the Borrower notifies the Agent that such Competitive Bid
     Borrowing is cancelled pursuant to subsection (iii)(A) above, the Agent
     shall give prompt notice thereof to the Lenders and such Competitive Bid
     Borrowing shall not be made.

          (v) If the Borrower accepts one or more of the offers made by any
     Lender or Lenders pursuant to paragraph (iii)(B) above, the Agent shall in
     turn promptly notify (A) each Lender that has made an offer as described in
     paragraph (ii) above, of the date and aggregate amount of such Competitive
     Bid Borrowing and whether or not any offer or offers made by such Lender
     pursuant to paragraph (ii) above have been accepted by the Borrower, (B)
     each Lender that is to make a Competitive Bid Advance as part of such
     Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to
     be made by such Lender as part of such Competitive Bid Borrowing, and (C)
     each Lender that is to make a Competitive Bid Advance as part of such
     Competitive Bid Borrowing, upon receipt, that the Agent has received forms
     of documents appearing to fulfill the applicable conditions set forth in
     Section 3.03. Each Lender that is to make a Competitive Bid Advance as part
     of such Competitive Bid Borrowing shall, before 12:00 Noon (New York City
     time) on the date of such Competitive Bid Borrowing specified in the notice
     received from the Agent pursuant to clause (A) of the preceding sentence or
     any later time when such Lender shall have received notice from the Agent
     pursuant to clause (C) of the preceding sentence, make available for the
     account of its Applicable Lending Office to the Agent at the Agent's
     Account, in same day funds, such Lender's portion of such Competitive Bid
     Borrowing. Upon fulfillment of the applicable conditions set forth in
     Section 3.03 and after receipt by the Agent of such funds, the Agent will
     make such funds available to the Borrower at the Agent's address referred
     to in Section 8.02. Promptly after each Competitive Bid Borrowing the Agent
     will notify each Lender of the amount of the Competitive Bid Borrowing, the
     consequent Competitive Bid Reduction and the dates upon which such
     Competitive Bid Reduction commenced and will terminate and the range of
     interest rates with respect to the Competitive Bid Advances made as part of
     such Competitive Bid Borrowing.

          (vi) If the Borrower notifies the Agent that it accepts one or more of
     the offers made by any Lender or Lenders pursuant to paragraph (iii)(y)
     above, such notice of acceptance shall be irrevocable and binding on the
     Borrower. The Borrower shall indemnify each Lender against any loss, cost
     or expense incurred by such Lender as a result of any failure to fulfill on
     or before the date specified in the related Notice of Competitive Bid
     Borrowing for such Competitive Bid Borrowing the applicable conditions set
     forth in Section 3.03, including, without limitation, any loss, cost or
     expense incurred by reason of the liquidation or reemployment of deposits
     or other funds acquired by such Lender to fund the Competitive Bid Advance
     to be made by such Lender as part of such Competitive Bid Borrowing when
     such Competitive Bid Advance, as a result of such failure, is not made on
     such date.

          (b) Within the limits and on the conditions set forth in this Section
2.03, the Borrower may from time to time borrow under this Section 2.03, repay
pursuant to subsection (c) below and reborrow under this Section 2.03, provided
                                                                       --------
that a Competitive Bid Borrowing shall not be made within three Business Days of
the date of any other Competitive Bid Borrowing.

          (c) The Borrower shall repay to the Agent for the account of each
Lender that has made a Competitive Bid Advance, on the maturity date of such
Competitive Bid Advance (such maturity date being that specified by the Borrower
for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and
provided in the Competitive Bid Note evidencing such

                                       14

<PAGE>

Competitive Bid Advance), the then unpaid principal amount of such Competitive
Bid Advance. The Borrower shall have the right to prepay any Competitive Bid
Advance only upon the terms agreed to in connection with such Competitive Bid
Advance.

          (d) The Borrower shall pay interest on the unpaid principal amount of
each Competitive Bid Advance from the date of such Competitive Bid Advance until
the date the principal amount of such Competitive Bid Advance is paid in full at
the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in the notice delivered pursuant to
subsection (a)(ii) above, payable on the interest payment date or dates
specified by the Borrower for such Competitive Bid Advance in the related Notice
of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as
provided in the Competitive Bid Note evidencing such Competitive Bid Advance. At
any time during which the Borrower shall fail (x) to pay any principal of any
Advance, any interest on any Advance or make any other payment in connection
with this Agreement when the same becomes due and payable or (y) to perform or
observe any term, covenant or agreement contained in Section 5.03, the Borrower
shall pay interest on the amount of unpaid principal of and interest on each
Competitive Bid Advance owing to a Lender, payable in arrears on the date or
dates interest is payable thereon, at a rate per annum equal at all times to 2%
per annum above the rate per annum required to be paid on such Competitive Bid
Advance under the terms of the Competitive Bid Note evidencing such Competitive
Bid Advance unless otherwise agreed in such Competitive Bid Note.

          (e) The indebtedness of the Borrower resulting from each Competitive
Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced by a separate Competitive Bid Note of the Borrower payable to the
order of the Lender making such Competitive Bid Advance.

          (f) Following the making of each Competitive Bid Borrowing, the
Borrower shall be in compliance with the limitation set forth in clause (y) of
the proviso to the first sentence of Section 2.03(a).

          (g) The Borrower shall pay to the Agent for its own account such fees
as may be agreed between the Borrower and the Agent in connection with each
request for a Competitive Bid Borrowing whether or not any Competitive Bid
Borrowing is in fact made.

          SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to
                        ----      ------------
the Agent for the ratable account of each Lender a facility fee on the aggregate
amount of such Lender's Commitment from the date hereof until the Termination
Date at a rate per annum equal to the Applicable Percentage in effect from time
to time, payable in arrears quarterly on the last day of each March, June,
September and December, commencing December 31, 2001, and on the Termination
Date.

          (b) Agent's Fees. The Borrower shall pay to the Agent for its own
              ------------
account such fees as may from time to time be agreed between the Borrower and
the Agent.

          SECTION 2.05. Termination or Reduction of the Commitments. The
                        -------------------------------------------
Borrower shall have the right, upon at least three Business Days' notice to the
Agent, to terminate in whole or permanently reduce ratably in part the unused
portions of the respective Commitments of the Lenders, provided that the
                                                       --------
aggregate amount of the Commitments of the Lenders shall not be reduced to an
amount that is less than the aggregate principal amount of the Competitive Bid
Advances then outstanding, and provided further that each partial reduction
                               -------- -------
shall be in the aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.

          SECTION 2.06. Repayment of Revolving Credit Advances. The Borrower
                        --------------------------------------
shall repay to the Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.

          SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled
                        -------------------------------------      ---------
Interest. The Borrower shall pay interest on the unpaid principal amount of each
--------
Revolving Credit Advance owing to each Lender from the date of such Revolving
Credit Advance until such principal amount shall be paid in full, at the
following rates per annum:

                                       15

<PAGE>

          (i) Base Rate Advances. During such periods as such Revolving Credit
              ------------------
     Advance is a Base Rate Advance, a rate per annum equal at all times to the
     sum of (x) the Base Rate in effect from time to time plus (y) the
     Applicable Margin in effect from time to time plus (z) the Applicable
                                                   ----
     Utilization Fee in effect from time to time, payable in arrears quarterly
     on the last day of each March, June, September and December during such
     periods and on the date such Base Rate Advance shall be Converted or paid
     in full.

          (ii) Eurodollar Rate Advances. During such periods as such Revolving
               ------------------------
     Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all
     times during each Interest Period for such Revolving Credit Advance to the
     sum of (x) the Eurodollar Rate for such Interest Period for such Revolving
     Credit Advance plus (y) the Applicable Margin in effect from time to time
                    ----
     plus (z) the Applicable Utilization Fee in effect from time to time,
     ----
     payable in arrears on the last day of such Interest Period and, if such
     Interest Period has a duration of more than three months, on each day that
     occurs during such Interest Period every three months from the first day of
     such Interest Period and on the date such Eurodollar Rate Advance shall be
     Converted or paid in full.

          (b) Default Interest. At any time during which the Borrower shall fail
              ----------------
(i) to pay any principal of any Advance, any interest on any Advance or make any
other payment in connection with this Agreement when the same becomes due and
payable or (ii) to perform or observe any term, covenant or agreement contained
in Section 5.03, the Agent may, and upon the request of the Required Lenders
shall, require the Borrower to pay interest ("Default Interest") on (i) the
                                              ----------------
unpaid principal amount of each Revolving Credit Advance owing to each Lender,
payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Revolving Credit Advance pursuant to clause (a)(i)
or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of
any interest, fee or other amount payable hereunder that is not paid when due,
from the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on Base Rate Advances pursuant to clause (a)(i) above,
provided, however, that following acceleration of the Advances pursuant to
--------  -------
Section 6.01, Default Interest shall accrue and be payable hereunder whether or
not previously required by the Agent.

          SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank
                        ---------------------------
agrees to furnish to the Agent timely information for the purpose of determining
each Eurodollar Rate. If any one or more of the Reference Banks shall not
furnish such timely information to the Agent for the purpose of determining such
interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks.

          (b) The Agent shall give prompt notice to the Borrower and the Lenders
of the applicable interest rate determined by the Agent for purposes of Section
2.07(a)(i) or (ii), and the applicable rate, if any, furnished by each Reference
Bank for the purpose of determining the applicable interest rate under Section
2.07(a)(ii).

          (c) If Telerate Markets Page 3750 is unavailable and fewer than two
Reference Banks furnish timely information to the Agent for determining the
Eurodollar Rate for any Eurodollar Rate Advances,

          (i) the Agent shall forthwith notify the Borrower and the Lenders that
     the interest rate cannot be determined for such Eurodollar Rate Advances,

          (ii) each such Advance will automatically, on the last day of the then
     existing Interest Period therefor, Convert into a Base Rate Advance (or if
     such Advance is then a Base Rate Advance, will continue as a Base Rate
     Advance), and

          (iii) the obligation of the Lenders to make, or to Convert Revolving
     Credit Advances into, Eurodollar Rate Advances shall be suspended until the
     Agent shall notify the Borrower and the Lenders that the circumstances
     causing such suspension no longer exist.

                                       16

<PAGE>

          (d) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving
Credit Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.

          (e) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Eurodollar Rate Advances having an Interest Period of one month.

          (f) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.

          (g) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

          SECTION 2.09. Optional Conversion of Revolving Credit Advances. The
                        ------------------------------------------------
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12,
Convert all Revolving Credit Advances of one Type comprising the same Borrowing
into Revolving Credit Advances of the other Type; provided, however, that any
                                                  --------  -------
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified for Revolving Credit
Borrowings in Section 2.01 and no Conversion of any Revolving Credit Advances
shall result in more separate Revolving Credit Borrowings than permitted under
Section 2.02(b). Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Revolving
Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
Borrower.

          SECTION 2.10. Prepayments of Revolving Credit Advances. The Borrower
                        ----------------------------------------
may, upon notice to the Agent no later than 11:00 A.M. (New York City time) on
the proposed date of the prepayment in the case of Base Rate Advances and on the
second Business Day prior to the proposed date of the prepayment in the case of
Eurodollar Rate Advances, in each case stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Revolving Credit Advances
comprising part of the same Revolving Credit Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each partial prepayment
                          --------  -------
shall be in an aggregate principal amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and (y) in the event of any
such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

          SECTION 2.11. Increased Costs. (a) If, due to either (i) the
                        ---------------
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) issued after the date hereof, there shall be any
increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances (excluding for purposes of this Section
2.11 any such increased costs resulting from (i) Taxes or Other Taxes (as to
which Section 2.14 shall govern) and (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or by the
foreign jurisdiction or state

                                       17

<PAGE>

under the laws of which such Lender is organized or has its Applicable Lending
Office or any political subdivision thereof), then the Borrower shall from time
to time, upon demand by such Lender (with a copy of such demand to the Agent),
pay to the Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost provided, however, that, any
                                               --------  -------
Lender claiming additional amounts under this Section 2.12 shall use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if such change
would avoid the need for, or reduce the amount of, such increased cost that may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. A certificate as to the amount of such
increased cost, submitted to the Borrower and the Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.

          (b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority enacted or made after the date hereof (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation controlling such
Lender and that the amount of such capital is increased by or based upon the
existence of such Lender's commitment to lend hereunder and other commitments of
this type, then, upon demand by such Lender (with a copy of such demand to the
Agent), the Borrower shall pay to the Agent for the account of such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender or such corporation in the light of such circumstances,
to the extent that such Lender reasonably determines such increase in capital to
be allocable to the existence of such Lender's commitment to lend hereunder. A
certificate as to such amounts submitted to the Borrower and the Agent by such
Lender shall be conclusive and binding for all purposes, absent manifest error.

          (c) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.11 shall not constitute a waiver of such Lender's
right to demand such compensation; provided that the Borrower shall not be
                                   --------
required to compensate a Lender pursuant to this Section 2.11 for any increased
costs or reductions incurred more than four months prior to the date that such
Lender notifies the Borrower of the change giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the change giving rise to such increased costs or
-------- -------
reductions is retroactive, than the four-month period referred to above shall be
included to include the period of retroactive effect thereof.

          SECTION 2.12. Illegality. Notwithstanding any other provision of this
                        ----------
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (i) the obligation of the Lenders to make, or to
Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist and (ii) the Borrower
shall forthwith prepay in full all Eurodollar Rate Advances of all Lenders then
outstanding, together with interest accrued thereon, unless the Borrower, within
five Business Days of notice from the Agent, Converts all Eurodollar Rate
Advances of all Lenders then outstanding into Base Rate Advances in accordance
with Section 2.09.

          SECTION 2.13. Payments and Computations. (a) The Borrower shall make
                        -------------------------
each payment hereunder, irrespective of any right of counterclaim or set-off,
not later than 12:00 Noon (New York City time) on the day when due in U.S.
dollars to the Agent at the Agent's Account in same day funds. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal or interest or facility fees ratably (other than amounts payable
pursuant to Section 2.03, 2.11, 2.14 or 8.04(c)) to the Lenders for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon any Assuming Lender becoming a Lender
hereunder as a result of a Commitment Increase pursuant to Section 2.18, and
upon the Agent's receipt of such Lender's Assumption Agreement and recording of
the information contained therein in the Register, from and after the applicable
Increase Date, the Agent shall make all payments hereunder and under any Notes
issued in connection therewith in respect of the interest assumed thereby to the
Assuming Lender. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(c), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder and under the Notes
in respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such

                                       18

<PAGE>

Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

          (b) All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Eurodollar Rate or the Federal Funds
Rate and of facility fees shall be made by the Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

          (c) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause payment of
        --------  -------
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

          (d) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate.

          SECTION 2.14. Taxes. (a) Any and all payments by the Borrower to or
                        -----
for the account of any Lender or the Agent hereunder or under the Notes or any
other documents to be delivered hereunder shall be made, in accordance with
Section 2.13 or the applicable provisions of such other documents, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, taxes imposed on
         ---------
its overall net income, minimum taxes, alternative minimum taxes, doing business
taxes, franchise taxes and value added taxes imposed on it in lieu of net income
taxes, by the jurisdiction under the laws of which such Lender or the Agent (as
the case may be) is organized (federal or state) or doing business or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
its overall net income, minimum taxes, alternative minimum taxes, doing business
taxes, franchise taxes and value added taxes imposed on it in lieu of net income
taxes, by the jurisdiction of such Lender's Applicable Lending Office (federal
or state) or in which such Lender is doing business or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities in respect of payments hereunder or under the Notes
being hereinafter referred to as "Taxes"). If the Borrower shall be required by
                                  -----
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note or any other documents to be delivered hereunder to any Lender or the
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.14) such Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.

          (b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under the Notes or
any other documents to be delivered hereunder or from the execution, delivery or
registration of, performing under, or otherwise with respect to, this Agreement
or the Notes or any other documents to be delivered hereunder imposed by the
jurisdiction under the laws of which the Borrower is organized or any political
subdivision thereof, or by the jurisdiction in which the Borrower's principal
office is located or from which any payments hereunder are made (hereinafter
referred to as "Other Taxes").
                -----------

                                       19

<PAGE>

          (c) The Borrower will indemnify each Lender and the Agent for and hold
it harmless against the full amount of Taxes or Other Taxes (including, without
limitation, taxes of any kind imposed or asserted by any jurisdiction on amounts
payable under this Section 2.14) imposed on or paid by such Lender or the Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as the case may
be) makes written demand therefor; provided, however, that in no event shall any
                                   --------  -------
such indemnification be due earlier than five Business Days after such Lender or
the Agent (as the case may be) has paid such Taxes or Other Taxes; provided,
                                                                   --------
further, that any such demand shall be accompanied by copies of all
-------
correspondence to and from the applicable taxing authority and a copy of the
calculation of such Taxes or Other Taxes.

          (d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing such payment to the
extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Agent. In the case of any payment
hereunder or under the Notes or any other documents to be delivered hereunder by
or on behalf of the Borrower through an account or branch outside the United
States or by or on behalf of the Borrower by a payor that is not a United States
person, if the Borrower determines that no Taxes are payable in respect thereof,
the Borrower shall furnish, or shall cause such payor to furnish, to the Agent,
at such address, an opinion of counsel reasonably acceptable to the Agent
stating that such payment is exempt from Taxes. For purposes of this subsection
(d) and subsection (e), the terms "United States" and "United States person"
                                   -------------       --------------------
shall have the meanings specified in Section 7701 of the Internal Revenue Code.

          (e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assumption
Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender, and from time to time thereafter as reasonably
requested in writing by the Borrower (but only so long as such Lender remains
lawfully able to do so), shall provide each of the Agent and the Borrower with
two original Internal Revenue Service forms W-8BEN or W-8ECI, as appropriate, or
any successor or other form prescribed by the Internal Revenue Service,
certifying that such Lender is exempt from or entitled to a reduced rate of
United States withholding tax on payments pursuant to this Agreement or the
Notes. If the form provided by a Lender at the time such Lender first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
      --------  -------
pursuant to which a Lender assignee becomes a party to this Agreement, the
Lender assignor was entitled to payments under subsection (a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender assignee on such date. If any form or document referred to in this
subsection (e) requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service form W-8BEN or W-8ECI, that the Lender reasonably
considers to be confidential, the Lender shall give notice thereof to the
Borrower and shall not be obligated to include in such form or document such
confidential information.

          (f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form, certificate or other document
described in Section 2.14(e) (other than if such failure is due to a change in
                              ----- ----
law, or in the interpretation or application thereof, occurring subsequent to
the date on which a form, certificate or other document originally was required
to be provided, or if such form, certificate or other document otherwise is not
required under subsection (e) above), such Lender shall not be entitled to
indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
                                             --------  -------
Lender become subject to Taxes because of its failure to deliver a form,
certificate or other document required hereunder, the Borrower shall take such
steps as such Lender shall reasonably request to assist the Lender to recover
such Taxes (and such Lender reimburse the Borrower for reasonable out-of-pocket
costs and expenses of the Borrower in connection therewith).

                                       20

<PAGE>

          (g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.14 shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender, provided, that should the Borrower be required
                                --------
to pay any amounts under Section 2.14(a) or (c), and the Borrower delivers to
each Lender that received such amounts an opinion of counsel that payments to
the Lender or the Agent were not in fact subject to Taxes, each Lender shall use
reasonable efforts to cooperate with the Borrower, including, but not limited to
filing and pursuing a claim of refund in its own name (provided that the
Borrower agrees in writing to indemnify and reimburse such Lender for its actual
out-of-pocket expenses in connection with such claim for refund), in obtaining a
refund of Taxes, and if such Lender receives a refund of Taxes shall promptly
pay such Taxes over to the Borrower.

          (h) If any Lender determines, in its sole discretion, that it has
actually and finally realized, by reason of a refund, deduction or credit of any
Taxes paid or reimbursed by the Borrower pursuant to subjection (a) or (c) above
in respect of payments under the Credit Agreement or the Notes, a current
monetary benefit that it would otherwise not have obtained, and that would
result in the total payments under this Section 2.14 exceeding the amount needed
to make such Lender whole, such Lender shall pay to the Borrower, with
reasonable promptness following the date on which it actually realized such
benefit, an amount equal to the lesser of the amount of such benefit or the
amount of such excess, in each case net of all out-of-pocket expenses in
securing such refund, deduction or credit.

          SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain any
                        ------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Revolving Credit Advances owing to it
(other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its ratable
share of payments on account of the Revolving Credit Advances obtained by all
the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Credit Advances owing to them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
                   --------  -------
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.15 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

          SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in
                        ----------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Revolving Credit
Advance owing to such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder in respect of Revolving Credit Advances. The Borrower agrees that upon
notice by any Lender to the Borrower (with a copy of such notice to the Agent)
to the effect that a Revolving Credit Note is required or appropriate in order
for such Lender to evidence (whether for purposes of pledge, enforcement or
otherwise) the Revolving Credit Advances owing to, or to be made by, such
Lender, the Borrower shall promptly execute and deliver to such Lender a
Revolving Credit Note payable to the order of such Lender in a principal amount
up to the Commitment of such Lender.

          (b) The Register maintained by the Agent pursuant to Section 8.07(d)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the terms of
each Assumption Agreement and each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and (iv)
the amount of any sum received by the Agent from the Borrower hereunder and each
Lender's share thereof.

                                       21

<PAGE>

          (c) Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender in its account or accounts pursuant
to subsection (a) above, shall be prima facie evidence of the amount of
                                  ----- -----
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an
--------  -------
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.

          SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be
                        ---------------
available (and the Borrower agrees that it shall use such proceeds) solely for
working capital and general corporate purposes of the Borrower and its
Subsidiaries (including, without limitation, acquisitions, repayment of debt and
repurchase of stock).

          SECTION 2.18. Increase in the Aggregate Commitments. (a) The Borrower
                        -------------------------------------
may, at any time but in any event not more than once in any calendar year prior
to the Termination Date, by notice to the Agent, request that the aggregate
amount of the Commitment be increased by an amount of $25,000,000 or an integral
multiple of $25,000,000 in excess thereof (each a "Commitment Increase") to be
                                                   -------------------
effective as of a date that is at least 90 days prior to the scheduled
Termination Date then in effect (the "Increase Date") as specified in the
                                      -------------
related notice to the Agent; provided, however that (i) in no event shall the
                             --------  -------
aggregate amount of the Commitments at any time exceed $245,000,000 and (ii) on
the date of any request by the Borrower for a Commitment Increase and on the
related Increase Date, no Default shall have occurred and be continuing.

          (b) The Agent shall promptly notify the Lenders of a request by the
Borrower for a Commitment Increase, which notice shall include (i) the proposed
amount of such requested Commitment Increase, (ii) the proposed Increase Date
and (iii) the date by which Lenders wishing to participate in the Commitment
Increase must commit to an increase in the amount of their respective
Commitments (the "Commitment Date"). Each Lender that is willing to participate
                  ---------------
in such requested Commitment Increase (each an "Increasing Lender") shall, in
                                                -----------------
its sole discretion, give written notice to the Agent on or prior to the
Commitment Date of the amount by which it is willing to increase its Commitment.
If the Lenders notify the Agent that they are willing to increase the amount of
their respective Commitments by an aggregate amount that exceeds the amount of
the requested Commitment Increase, the requested Commitment Increase shall be
allocated among the Lenders willing to participate therein in such amounts as
are agreed between the Borrower and the Agent.

          (c) Promptly following each Commitment Date, the Agent shall notify
the Borrower as to the amount, if any, by which the Lenders are willing to
participate in the requested Commitment Increase. If the aggregate amount by
which the Lenders are willing to participate in any requested Commitment
Increase on any such Commitment Date is less than the requested Commitment
Increase, then the Borrower may extend offers to one or more Eligible Assignees
to participate in any portion of the requested Commitment Increase that has not
been committed to by the Lenders as of the applicable Commitment Date; provided,
                                                                       --------
however, that the Commitment of each such Eligible Assignee shall be in an
-------
amount of not less than $10,000,000.

          (d) On each Increase Date, each Eligible Assignee that accepts an
offer to participate in a requested Commitment Increase in accordance with
Section 2.18(b) (each such Eligible Assignee, an "Assuming Lender") shall become
                                                  ---------------
a Lender party to this Agreement as of such Increase Date and the Commitment of
each Increasing Lender for such requested Commitment Increase shall be so
increased by such amount (or by the amount allocated to such Lender pursuant to
the last sentence of Section 2.18(b)) as of such Increase Date; provided,
                                                                --------
however, that the Agent shall have received on or before such Increase Date the
-------
following, each dated such date:

          (i) (A) certified copies of resolutions of the Board of Directors of
     the Borrower or the Executive Committee of such Board approving the
     Commitment Increase and the corresponding modifications to this Agreement
     and (B) an opinion of counsel for the Borrower (which may be in-house
     counsel), in substantially the form of Exhibit E hereto;

                                       22

<PAGE>

          (ii) an assumption agreement from each Assuming Lender, if any, in
     form and substance satisfactory to the Borrower and the Agent (each an
     "Assumption Agreement"), duly executed by such Eligible Assignee, the Agent
      --------------------
     and the Borrower; and

          (iii) confirmation from each Increasing Lender of the increase in the
     amount of its Commitment in a writing satisfactory to the Borrower and the
     Agent.

On each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.18(d), the Agent shall notify
the Lenders (including, without limitation, each Assuming Lender) and the
Borrower, on or before 1:00 P.M. (New York City time), by telecopier or telex,
of the occurrence of the Commitment Increase to be effected on such Increase
Date and shall record in the Register the relevant information with respect to
each Increasing Lender and each Assuming Lender on such date.

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

          SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01
                        ------------------------------------------------------
and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and
--------
as of the first date (the "Effective Date") on which the following conditions
                           --------------
precedent have been satisfied:

          (a) There shall have occurred no Material Adverse Change since
     December 31, 2000.

          (b) There shall exist no action, suit, investigation, litigation or
     proceeding affecting the Borrower or any of its Subsidiaries pending or, to
     the best knowledge of the Borrower, threatened before any court,
     governmental agency or arbitrator that (i) could be reasonably likely to
     have a Material Adverse Effect, except as set forth in Schedule 3.01(b)
     (the "Disclosed Litigation") or (ii) purports to affect the legality,
           --------------------
     validity or enforceability of this Agreement or any Note or the
     consummation of the transactions contemplated hereby, and there shall have
     been no material adverse change in the status or financial effect on the
     Borrower or any of its Subsidiaries, of the Disclosed Litigation from that
     described on Schedule 3.01(b).

          (c) All governmental and third party consents and approvals necessary
     in connection with the transactions contemplated hereby shall have been
     obtained (without the imposition of any conditions that are not reasonably
     acceptable to the Lenders) and shall remain in effect, and no law or
     regulation shall be applicable in the reasonable judgment of the Lenders
     that restrains, prevents or imposes materially adverse conditions upon the
     transactions contemplated hereby.

          (d) The Borrower shall have notified each Lender and the Agent in
     writing as to the proposed Effective Date.

          (e) The Borrower shall have paid all accrued fees and expenses of the
     Agent and the Arrangers (including the accrued fees and expenses of counsel
     to the Agent and the Arrangers then due and payable).

          (f) On the Effective Date, the following statements shall be true and
     the Agent shall have received for the account of each Lender a certificate
     signed by a duly authorized officer of the Borrower, dated the Effective
     Date, stating that:

               (i) the representations and warranties contained in Section 4.01
          are correct on and as of the Effective Date; and

               (ii) no event has occurred and is continuing that constitutes a
          Default.

                                       23

<PAGE>

          (g) The Agent shall have received on or before the Effective Date the
     following, each dated such day, in form and substance satisfactory to the
     Agent and (except for the Revolving Credit Notes) in sufficient copies for
     each Lender:

               (i) The Revolving Credit Notes to the order of the Lenders to the
          extent requested by any Lender pursuant to Section 2.16.

               (ii) Certified copies of the resolutions of the Board of
          Directors of the Borrower approving this Agreement and the Notes, and
          of all documents evidencing other necessary corporate action and
          governmental approvals, if any, with respect to this Agreement and the
          Notes.

               (iii) A certificate of the Secretary or an Assistant Secretary of
          the Borrower certifying the names and true signatures of the officers
          of the Borrower authorized to sign this Agreement and the Notes and
          the other documents to be delivered hereunder.

               (iv) A favorable opinion of Womble Carlyle Sandridge & Rice,
          PLLC, special counsel for the Borrower, substantially in the form of
          Exhibit E hereto and as to such other matters as any Lender through
          the Agent may reasonably request.

               (v) A favorable opinion of Shearman & Sterling, counsel for the
          Agent, in form and substance satisfactory to the Agent.

          (h) The Borrower shall have terminated the commitments, and paid in
     full all Debt, interest, fees and other amounts outstanding under the
     Amended and Restated Revolving Credit Agreement dated as of April 11, 1997,
     as amended, among the Borrower, the lenders parties thereto and Citibank,
     as administrative agent, and each of the Lenders that is a party to such
     Amended and Restated Revolving Credit Agreement hereby waives the
     requirement of three Business Days' prior notice to the termination of
     their commitments thereunder as provided in Section 2.06 of said agreement.

          SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing.
                        --------------------------------------------------------
The obligation of each Lender to make a Revolving Credit Advance on the occasion
of each Revolving Credit Borrowing shall be subject to the conditions precedent
that the Effective Date shall have occurred and on the date of such Revolving
Credit Borrowing (a) the following statements shall be true (and each of the
giving of the applicable Notice of Revolving Credit Borrowing and the acceptance
by the Borrower of the proceeds of such Revolving Credit Borrowing shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing such statements are true):

          (i) the representations and warranties contained in Section 4.01
     (except the representations set forth in subsection (e) and in subsection
     (f)(i) thereof) are correct on and as of such date, before and after giving
     effect to such Revolving Credit Borrowing and to the application of the
     proceeds therefrom, as though made on and as of such date, and

          (ii) no event has occurred and is continuing, or would result from
     such Revolving Credit Borrowing or from the application of the proceeds
     therefrom, that constitutes a Default;

and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.

          SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing.
                        ------------------------------------------------------
The obligation of each Lender that is to make a Competitive Bid Advance on the
occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as
part of such Competitive Bid Borrowing is subject to the conditions precedent
that the Effective Date shall have occurred and (a) the Agent shall have
received the written confirmatory Notice of Competitive Bid Borrowing with
respect thereto, (b) on or before the date of such Competitive Bid Borrowing,
but

                                       24

<PAGE>

prior to such Competitive Bid Borrowing, the Agent shall have received a
Competitive Bid Note payable to the order of such Lender for each of the one or
more Competitive Bid Advances to be made by such Lender as part of such
Competitive Bid Borrowing, in a principal amount equal to the principal amount
of the Competitive Bid Advance to be evidenced thereby and otherwise on such
terms as were agreed to for such Competitive Bid Advance in accordance with
Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Competitive Bid Borrowing and the acceptance by the Borrower of the
proceeds of such Competitive Bid Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Competitive Bid Borrowing such
statements are true):

          (i) the representations and warranties contained in Section 4.01
     (except the representations set forth in subsection (e) and subsection
     (f)(i) thereof) are correct on and as of the date of such Competitive Bid
     Borrowing, before and after giving effect to such Competitive Bid Borrowing
     and to the application of the proceeds therefrom, as though made on and as
     of such date, and

          (ii) no event has occurred and is continuing, or would result from
     such Competitive Bid Borrowing or from the application of the proceeds
     therefrom, that constitutes a Default.

          SECTION 3.04. Determinations Under Section 3.01. For purposes of
                        ---------------------------------
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agent shall promptly notify the Lenders, with a copy
to the Borrower, of the occurrence of the Effective Date.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

          SECTION 4.01. Representations and Warranties of the Borrower. The
                        ----------------------------------------------
Borrower represents and warrants as follows:

          (a) The Borrower is a corporation duly organized, validly existing and
     in good standing under the laws of the State of North Carolina.

          (b) The execution, delivery and performance by the Borrower of this
     Agreement and the Notes to be delivered by it, and the consummation of the
     transactions contemplated hereby, are within the Borrower's corporate
     powers, have been duly authorized by all necessary corporate action, and do
     not contravene (i) the Borrower's charter or by-laws or (ii) law or any
     material contractual restriction binding on or affecting the Borrower or,
     to the actual knowledge of a responsible officer of the Borrower, any other
     contractual restriction binding on or affecting the Borrower.

          (c) No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority, regulatory body or any other
     third party is required for the due execution, delivery and performance by
     the Borrower of this Agreement or the Notes to be delivered by it.

          (d) This Agreement has been, and each of the Notes to be delivered by
     it when delivered hereunder will have been, duly executed and delivered by
     the Borrower. This Agreement is, and each of the Notes when delivered
     hereunder will be, the legal, valid and binding obligation of the Borrower
     enforceable against the Borrower in accordance with their respective terms;
     provided that the enforceability hereof and thereof is subject in each case
     to general principles of equity and to bankruptcy, insolvency and similar
     laws affecting the enforcement of creditors' rights generally.

                                       25

<PAGE>

          (e) The Consolidated balance sheet of the Borrower and its
     Subsidiaries as at December 31, 2000, and the related Consolidated
     statements of income and cash flows of the Borrower and its Subsidiaries
     for the fiscal year then ended, accompanied by an opinion of Arthur
     Andersen L.L.P., independent public accountants, and the Consolidated
     balance sheet of the Borrower and its Subsidiaries as at June 30, 2001, and
     the related Consolidated statements of income and cash flows of the
     Borrower and its Subsidiaries for the six months then ended, duly certified
     by the chief financial officer of the Borrower, copies of which have been
     furnished to each Lender, fairly present, subject, in the case of said
     balance sheet as at June 30, 2001, and said statements of income and cash
     flows for the six months then ended, to year-end audit adjustments, the
     Consolidated financial condition of the Borrower and its Subsidiaries as at
     such dates and the Consolidated results of the operations of the Borrower
     and its Subsidiaries for the periods ended on such dates, all in accordance
     with generally accepted accounting principles consistently applied. Since
     December 31, 2000, there has been no Material Adverse Change.

          (f) There is no pending or, to the knowledge of the Borrower,
     threatened action or proceeding, including, without limitation, any
     Environmental Action, affecting the Borrower or any of its Subsidiaries
     before any court, governmental agency or arbitrator that (i) could be
     reasonably likely to have a Material Adverse Effect (other than the
     Disclosed Litigation), and since the date of Schedule 3.01(b) was prepared
     there has been no material adverse change in the status, or financial
     effect on the Borrower or any of its Subsidiaries, of the Disclosed
     Litigation from that described in Schedule 3.01(b) or (ii) purports to
     affect the legality, validity or enforceability of this Agreement or any
     Note or the consummation of the transactions contemplated hereby.

          (g) No written information, report, financial statement, exhibit or
     schedule furnished by or on behalf of the Borrower to the Agent or any
     Lender in connection with the negotiation of this Agreement or included
     herein or delivered pursuant hereto contained or contains any material
     misstatement of fact or omitted or omits to state any material fact
     necessary to make the statements therein, in the light of the circumstances
     under which they were or are made, not misleading.

          (h) The Borrower is not engaged in the business of extending credit
     for the purpose of purchasing or carrying margin stock (within the meaning
     of Regulation U issued by the Board of Governors of the Federal Reserve
     System).

          (i) (A) Except as set forth in Schedule 4.01(i), the operations and
     properties of the Borrower and each of its Subsidiaries comply in all
     material respects with all Environmental Laws, all material and necessary
     Environmental Permits have been obtained and are in effect for the
     operations and properties of the Borrower and each of its Subsidiaries, and
     the Borrower and each of its Subsidiaries are in compliance in all material
     respects with all such Environmental Permits.

          (B) Except as set forth in the Borrower's Form 10-K for 2000 and in
     Schedule 4.01(i), to the knowledge of the Borrower, there are no
     circumstances that are reasonably likely to form the basis of an
     Environmental Action against the Borrower or any of its Subsidiaries that
     could be reasonably likely to have a Material Adverse Effect.

          (j) Except as set forth in Schedule 4.01(i), none of the properties
     currently or formerly owned or operated by the Borrower or any of its
     Subsidiaries is listed or, to the knowledge of the Borrower, proposed for
     listing on the National Priorities List under CERCLA (the "NPL") or on the
                                                                ---
     Comprehensive Environmental Response, Compensation and Liability
     Information System maintained by the U.S. Environmental Protection Agency
     ("CERCLIS") or any analogous state list if such listing or proposed listing
       -------
     could reasonably be likely to have a Material Adverse Effect.

          (k) Except as set forth in Schedule 4.01(i), to the knowledge of the
     Borrower, neither the Borrower nor any of its Subsidiaries has transported
     or arranged for the transportation of any Hazardous Materials to any
     location that is listed or proposed for listing on the NPL or on the
     CERCLIS, which could reasonably be likely to lead to claims against the
     Borrower or such Subsidiary for any remedial work,

                                       26

<PAGE>

     damage to natural resources or personal injury that have, or could
     reasonably be likely to have, a Material Adverse Effect.

          (l) No ERISA Event has occurred or is reasonably expected to occur
     with respect to any Plan.

          (m) Neither the Borrower nor any of its ERISA Affiliates has incurred
     or is reasonably expected to incur any Withdrawal Liability to any
     Multiemployer Plan.

          (n) Neither the Borrower nor any of its ERISA Affiliates has been
     notified by the sponsor of a Multiemployer Plan that such Multiemployer
     Plan is in reorganization or has been terminated, within the meaning of
     Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to
     be in reorganization or to be terminated, within the meaning of Title IV of
     ERISA.

          (o) Except as set forth in Schedule 4.01(o), as of the date indicated
     on Schedule 4.01(o) the Borrower and its Subsidiaries have no material
     liability with respect to "accumulated post-retirement benefit obligations"
     within the meaning of Statement of Financial Accounting Standards No. 106.

          (p) Schedule B (Actuarial Information) to the most recent annual
     report (Form 5500 Series) for each Plan, copies of which have been filed
     with the Internal Revenue Service and, if requested, furnished to the Agent
     pursuant to Section 5.01(l)(ix) hereof, is complete and accurate in all
     material respects and fairly presents the funding status of such Plan, and
     since the date of such Schedule B there has been no material adverse change
     in such funding status.

          (q) The Borrower is not an "investment company", or a company
     "controlled" by an "investment company", within the meaning of the
     Investment Company Act of 1940, as amended.

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

          SECTION 5.01. Affirmative Covenants. So long as any Advance shall
                        ---------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
              -------------------------
     Subsidiaries to comply in all material respects, with all applicable laws,
     rules, regulations and orders, such compliance to include, without
     limitation, compliance with (i) ERISA and (ii) Environmental Laws to the
     extent set forth in Section 5.01(d).

          (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
              ---------------------
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all federal and other material taxes, assessments and governmental
     charges or levies imposed upon it or upon its property and (ii) all lawful
     claims that, if unpaid, might by law become a Lien upon its property;
     provided, however, that neither the Borrower nor any of its Subsidiaries
     --------- --------
     shall be required to pay or discharge any such tax, assessment, charge or
     claim that is being contested in good faith and by proper proceedings and
     as to which appropriate reserves, if any, to the extent required in
     accordance with GAAP, are being maintained.

          (c) Payment of Obligations. Pay, discharge or otherwise satisfy at or
              ----------------------
     before maturity or before they become delinquent, as the case may be, all
     its material obligations of whatever nature, or in the case of any trade
     payable before such trade payable becomes Debt, except where the amount or
     validity thereof is currently being contested in good faith and by
     appropriate proceedings and as to which appropriate reserves, if any, to
     the extent required in accordance with GAAP, are being maintained.

                                       27

<PAGE>

          (d) Compliance with Environmental Laws. (i) Comply and cause each of
              ----------------------------------
     its Subsidiaries to comply, in all material respects, with all
     Environmental Laws and Environmental Permits that are material to the
     conduct of the business of the Borrower or any of its Subsidiaries or
     necessary for their operations and properties, and (ii) obtain and renew,
     and cause each of its Subsidiaries to obtain and renew, all Environmental
     Permits that are material to the conduct of the business of the Borrower or
     any of its Subsidiaries or necessary for their operations and properties;
     except, with respect to (i) and (ii) above, to the extent that any such
     Environmental Law or the terms of any Environmental Permit are being
     contested in good faith and by proper proceedings and as to which
     appropriate reserves, if any, to the extent required in accordance with
     GAAP, are being maintained.

          (e) Maintenance of Insurance. Maintain, and cause each of its
              ------------------------
     Subsidiaries to maintain, insurance (including self-insurance, in amounts
     consistent with industry practice and custom) with responsible insurance
     companies or associations in such amounts and covering such risks as is
     usually carried by companies engaged in similar businesses and owning
     similar properties in the same general areas in which the Borrower or such
     Subsidiary operates.

          (f) Preservation of Corporate Existence, Etc. Preserve and maintain,
              -----------------------------------------
     and cause each of its Subsidiaries to preserve and maintain, its corporate
     existence, rights (charter and statutory) and franchises; provided,
                                                               ---------
     however, that the Borrower and its Subsidiaries may consummate any merger
     -------
     or consolidation permitted under Section 5.02(b) and provided further that
                                                          -------- -------
     neither the Borrower nor any of its Subsidiaries shall be required to
     preserve any right or franchise or the corporate existence of any
     Subsidiary of the Borrower if the Board of Directors of the Borrower or
     such Subsidiary shall determine that the preservation thereof is no longer
     desirable in the conduct of the business of the Borrower or such
     Subsidiary, as the case may be, and that the loss thereof is not
     disadvantageous in any material respect to the Borrower and its
     Subsidiaries taken as a whole or the Lenders.

          (g) Visitation Rights. At any reasonable time and from time to time,
              -----------------
     upon reasonable prior notice, permit the Agent or, subject to the proviso
     hereto, any of the Lenders or any agents or representatives thereof to
     examine and make copies of and abstracts from the records and books of
     account of, and visit the properties of the Borrower and any of its
     Subsidiaries, as shall be reasonably requested, and to discuss the affairs,
     finances and accounts of the Borrower and any of its Subsidiaries with any
     of their officers and with their independent certified public accountants,
     provided, that unless (x) an Event of Default has occurred and is
     --------
     continuing or (y) the Public Debt Rating assigned by S&P is lower than BBB-
     and the Public Debt Rating assigned by Moody's is lower than Baa3, the
     Borrower shall not be required to comply with this subsection (g) with
     respect to any of the Lenders or any agents or representatives thereof
     (other than the Agent).

          (h) Keeping of Books. Keep, and cause each of its Subsidiaries to
              ----------------
     keep, proper books of record and account, in which appropriate entries that
     are correct in all material respects shall be made, of all financial
     transactions and the assets and business of the Borrower and each such
     Subsidiary so as to permit preparation of their Consolidated financial
     statements in accordance with GAAP.

          (i) Maintenance of Properties, Etc. Maintain and preserve, and cause
              ------------------------------
     each of its Subsidiaries to maintain and preserve, all of its properties
     that are necessary or, in the reasonable judgment of the Borrower or such
     Subsidiary, useful in the conduct of its business in good working order and
     condition, ordinary wear and tear excepted.

          (j) Transactions with Affiliates. Conduct, and cause each of its
              ----------------------------
     Subsidiaries to conduct, all transactions otherwise permitted under this
     Agreement with any of their Affiliates on terms that are fair and
     reasonable and no less favorable to the Borrower or such Subsidiary than it
     would obtain in a comparable arm's-length transaction with a Person not an
     Affiliate other than:

               (i) transactions among the Borrower and any of its wholly owned
          Subsidiaries; and

                                       28

<PAGE>

               (ii) transactions among wholly owned Subsidiaries of the
          Borrower.

          (k) Reporting Requirements. Furnish to the Lenders:
              ----------------------

               (i) as soon as available and in any event within 60 days after
          the end of each of the first three quarters of each fiscal year of the
          Borrower, Consolidated balance sheets of the Borrower and its
          Subsidiaries as of the end of such quarter and Consolidated statements
          of income and cash flows of the Borrower and its Subsidiaries for the
          period commencing at the end of the previous fiscal year and ending
          with the end of such quarter, duly certified (subject to year-end
          audit adjustments) by the chief financial officer of the Borrower as
          having been prepared in accordance with GAAP;

               (ii) as soon as available and in any event within 90 days after
          the end of each fiscal year of the Borrower, a copy of the annual
          audit report for such year for the Borrower and its Subsidiaries,
          containing Consolidated balance sheets of the Borrower and its
          Subsidiaries as of the end of such fiscal year and Consolidated
          statements of income and cash flows of the Borrower and its
          Subsidiaries for such fiscal year, in each case accompanied by an
          opinion reasonably acceptable to the Required Lenders by Arthur
          Andersen L.L.P. or other independent public accountants acceptable to
          the Required Lenders;

               (iii) together with the financial statements required to be
          delivered in accordance with clauses (i) and (ii) above, (A) a
          certificate of the chief financial officer of the Borrower stating
          that no Default has occurred and is continuing or, if a Default has
          occurred and is continuing, a statement as to the nature thereof and
          the action that the Borrower has taken and proposes to take with
          respect thereto and (B) a schedule in form and substance satisfactory
          to the Agent of the computations used by the Borrower in determining
          compliance with the covenants contained in Section 5.03;

               (iv) promptly after the Borrower becomes aware of and in any
          event within five Business Days after becoming aware of each Default,
          continuing on the date of such statement, a statement of the chief
          financial officer of the Borrower setting forth details of such
          Default and the action that the Borrower has taken and proposes to
          take with respect thereto;

               (v) promptly after the sending or filing thereof, copies of all
          reports that the Borrower sends to any of its securityholders, and
          copies of all reports and registration statements that the Borrower or
          any Subsidiary files with the Securities and Exchange Commission or
          any national securities exchange;

               (vi) promptly after the Borrower becomes aware of the
          commencement thereof, notice of all actions and proceedings before any
          court, governmental agency or arbitrator affecting the Borrower or any
          of its Subsidiaries of the type described in the first sentence of
          Section 4.01(f);

               (vii) promptly and in any event within 10 days after the Borrower
          or any of its ERISA Affiliates knows that any ERISA Event has
          occurred, a statement of the chief financial officer of the Borrower
          describing such ERISA Event and the action, if any, that the Borrower
          or such ERISA Affiliate has taken and proposes to take with respect
          thereto;

               (viii) promptly and in any event within three Business Days after
          receipt thereof by the Borrower or any of its ERISA Affiliates, copies
          of each notice from the PBGC stating its intention to terminate any
          Plan or to have a trustee appointed to administer any such Plan;

                                       29

<PAGE>

               (ix) upon the request of the Agent after the filing thereof with
          the Internal Revenue Service, copies of each Schedule B (Actuarial
          Information) to the annual report (Form 5500 Series) with respect to
          each Plan;

               (x) promptly and in any event within five Business Days after
          receipt thereof by the Borrower or any of its ERISA Affiliates from
          the sponsor of a Multiemployer Plan, copies of each notice concerning
          (x) the imposition of Withdrawal Liability by any such Multiemployer
          Plan, (y) the reorganization or termination, within the meaning of
          Title IV of ERISA, of any such Multiemployer Plan or (z) the amount of
          liability incurred, or that may be incurred, by the Borrower or any of
          its ERISA Affiliates in connection with any event described in clause
          (x) or (y);

               (xi) as soon as practical and in any event promptly after the
          receipt thereof by the Borrower, copies of all written claims,
          complaints, notices or inquiries relating to compliance by the
          Borrower or any of its Subsidiaries with any Environmental Law or
          Environmental Permit that could reasonably be likely to have a
          Material Adverse Effect or could reasonably be likely to (x) form the
          basis of an Environmental Action against the Borrower or any of its
          Subsidiaries or such property that could reasonably be likely to have
          a Material Adverse Effect or (y) cause any such property to be subject
          to any restrictions on ownership, occupancy, use or transferability
          under any Environmental Law that could reasonably be likely to have a
          Material Adverse Effect; and

               (xii) such other information respecting the condition or
          operations, financial or otherwise, of the Borrower or any of its
          Subsidiaries as any Lender through the Agent may from time to time
          reasonably request.

          Notwithstanding any of the foregoing, at any time when the Borrower is
subject to the reporting requirements of Section 13(a)(2) of the Securities
Exchange Act of 1934, the Borrower shall be deemed to have complied with the
requirements of clauses (i), (ii) and (vi) above, if the Borrower shall include
such information in timely filings made with the Securities and Exchange
Commission by the Borrower.

          SECTION 5.02. Negative Covenants. So long as any Advance shall remain
                        ------------------
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

          (a) Liens, Etc. Create or suffer to exist, or permit any of its
              ----------
     Subsidiaries to create or suffer to exist, any Lien on or with respect to
     any of its properties, whether now owned or hereafter acquired, or assign,
     or permit any of its Subsidiaries to assign, any right to receive income,
     other than:

               (i) Permitted Liens,

               (ii) purchase money Liens upon or in any property acquired or
          held by the Borrower or any Subsidiary in the ordinary course of
          business to secure the purchase price of such property or to secure
          Debt incurred solely for the purpose of financing the acquisition of
          such property, or Liens existing on such property at the time of its
          acquisition (other than any such Lien created in contemplation of such
          acquisition) or extensions, renewals or replacements of any of the
          foregoing for the same or a lesser amount; provided, however, that no
                                                     --------  -------
          such Lien shall extend to or cover any property other than the
          property being acquired, and no such extension, renewal or replacement
          shall extend to or cover any property not theretofore subject to the
          Lien being extended, renewed or replaced,

               (iii) Liens on property of a Person existing at the time such
          Person is merged into or consolidated with the Borrower or any
          Subsidiary of the Borrower or becomes a Subsidiary of the Borrower;
          provided that such Liens were not created in contemplation of such
          --------
          merger, consolidation or acquisition and do not extend to any assets
          other than those of the Person so

                                       30

<PAGE>

          merged into or consolidated with the Borrower or such Subsidiary or
          acquired by the Borrower or such Subsidiary,

               (iv) the Liens described on Schedule 5.02(a),

               (v) the replacement, extension or renewal of any Lien permitted
          by clauses (ii), (iii) and (iv) above upon or in the same property
          theretofore subject thereto or the replacement, extension or renewal
          (without increase in the amount or change in any direct or contingent
          obligor) of the Debt secured thereby,

               (vi) Liens on margin stock (as defined in Regulation U issued by
          the Board of Governors of the Federal Reserve Bank) to the extent that
          such margin stock exceeds 25% of the value of all assets subject to
          this Section 5.02(a); and

               (vii) other Liens securing Debt; provided that the principal
                                                --------
          amount of Debt secured pursuant to this clause (vii), together with
          the principal amount of Debt permitted to be outstanding in accordance
          with Section 5.02(d)(vi), shall not in the aggregate at any time
          outstanding exceed 15% of the Consolidated Tangible Net Worth of the
          Borrower and its Subsidiaries.

          (b) Mergers, Etc. Merge or consolidate with or into, or convey,
              ------------
     transfer, lease or otherwise dispose of (whether in one transaction or in a
     series of transactions) all or substantially all of its assets (whether now
     owned or hereafter acquired) to, any Person, or permit any of its
     Subsidiaries to do so, except that (i) any wholly owned Subsidiary of the
     Borrower may merge or consolidate with or into, or dispose of all or
     substantially all of its assets to, any other wholly owned Subsidiary of
     the Borrower, (ii) any wholly owned Subsidiary of the Borrower may merge
     into or dispose of all or substantially all of its assets to the Borrower,
     and (iii) the Borrower may merge with any other Person, provided in each
                                                             --------
     case that no Default shall have occurred and be continuing at the time of
     such proposed transaction or would result therefrom and, in the case of any
     merger to which the Borrower is a party, (A) the Borrower is the surviving
     corporation, (B) after giving effect to the consummation of such merger,
     the Borrower shall be in compliance with the covenants set forth in Section
     5.03 (calculated on a pro forma basis, as of the date of the consummation
     of such merger) and (C) the Borrower shall be in the same line of business
     as conducted by it immediately prior to such merger.

          (c) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
              ---------------------
     of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
     dispose of, any assets, or grant any option or other right to purchase,
     lease or otherwise acquire any assets, except (i) as permitted by Section
     5.02(b), (ii) any such sale, lease, transfer or disposition that is made in
     the ordinary course of its business, (iii) any such sale, lease, transfer
     or disposition by a Subsidiary of the Borrower to the Borrower or to
     another wholly owned Subsidiary of the Borrower (whether by dissolution,
     liquidation or otherwise), (iv) any such sale, lease transfer or
     disposition to the extent the net book value of any single asset sold,
     leased, transferred or disposed of from and after the date hereof in any
     given calendar year pursuant to this clause (iv) is less than $2,000,000,
     and the aggregate of all such single assets sold, leased, transferred or
     disposed of from and after the date hereof in any given calendar year
     pursuant to this clause (iv) is less than $10,000,000 and (v) any such
     sale, lease, transfer or disposition to the extent the net book value of
     all assets sold, leased, transferred or disposed of from and after the date
     hereof pursuant to this clause (v) does not exceed the greater of (x) in
     any calendar year an amount equal to the greater of an amount equal to 10%
     of the Borrower's Consolidated Assets or $160,000,000 or (y) in the
     aggregate from and after the date hereof the greater of an amount equal to
     25% of the Borrower's Consolidated Assets or $400,000,000, in each case
     measured as of the last day of the most recent Fiscal Quarter of the
     Borrower ended on or prior to such date of determination.

          (d) Subsidiary Debt. Permit any of its Subsidiaries to create or
              ---------------
     suffer to exist, any Debt other than:

                                       31

<PAGE>

               (i) Debt owed to the Borrower or to a wholly owned Subsidiary of
          the Borrower,

               (ii) Debt existing on the Effective Date and described on
          Schedule 5.02(d) (including as Debt permitted under this subsection
          any credit facilities or credit lines of any Subsidiary listed on such
          Schedule 5.02(d), whether or not such facilities or lines have been
          drawn upon by such Subsidiary) (the "Existing Subsidiary Debt"), and
                                               ------------------------
          any Debt extending the maturity of, or refunding or refinancing, in
          whole or in part, the Existing Subsidiary Debt, provided that the
                                                          --------
          terms of any such extending, refunding or refinancing Debt, and of any
          agreement entered into and of any instrument issued in connection
          therewith, are otherwise permitted by this Agreement and provided
                                                                   --------
          further that the principal amount of such Existing Subsidiary Debt
          -------
          shall not be increased above the principal amount thereof outstanding
          immediately prior to such extension, refunding or refinancing, and the
          direct and contingent obligors therefor shall not be changed, as a
          result of or in connection with such extension, refunding or
          refinancing,

               (iii) Debt secured by Liens permitted by Section 5.02(a)(ii) or
          (iii),

               (iv) Debt permitted to be outstanding in accordance with Section
          5.03(c),

               (v) endorsement of negotiable instruments for deposit or
          collection or similar transactions in the ordinary course of business,
          and

               (vi) Debt other than Debt described in clauses (i) through (v) of
          this Section 5.02(d); provided that the principal amount of Debt
                                --------
          permitted to be outstanding pursuant to this clause (vi), together
          with the principal amount of Debt permitted to be secured pursuant to
          Section 5.02(a)(vii), shall not in the aggregate at any time
          outstanding exceed 15% of the Consolidated Tangible Net Worth of the
          Borrower and its Subsidiaries.

          (e) Change in Nature of Business. Make, or permit any of its
              ----------------------------
     Subsidiaries to make, any material change in the nature of the business of
     the Borrower and its Subsidiaries taken as a whole as carried on at the
     date hereof.

          (f) Accounting Changes. Make or permit, or permit any of its
              ------------------
     Subsidiaries to make or permit, any change in accounting policies or
     reporting practices that would prevent the Borrower from preparing its
     Consolidated financial statements in accordance with GAAP.

          SECTION 5.03. Financial Covenants. So long as any Advance shall remain
                        -------------------
unpaid or any Lender shall have any Commitment hereunder, the Borrower will:

          (a) Leverage Ratio. Cause, on the last day of each Fiscal Quarter of
              --------------
     the Borrower, the ratio of (i) Consolidated Debt of the Borrower and its
     Subsidiaries on such date of determination to (ii) Consolidated EBITDA of
     the Borrower and its Subsidiaries for the four Fiscal Quarters ended on
     such date not to exceed 4.0 to 1.

          (b) Interest Coverage Ratio. Cause, on the last day of each Fiscal
              -----------------------
     Quarter of the Borrower, the ratio of (i) Consolidated EBITDA of the
     Borrower and its Subsidiaries for the four Fiscal Quarters ended on such
     date of determination to (ii) Consolidated interest expense of the Borrower
     and its Subsidiaries to the four Fiscal Quarters ended on such date not to
     be less than 2.5 to 1.

          (c) Certain Subsidiary Debt. Cause the aggregate outstanding principal
              -----------------------
     amount of all Debt of Rayonier Timberlands Operating Company not to exceed
     $800,000,000 at any time outstanding.

                                   ARTICLE VI

                                       32

<PAGE>

                                EVENTS OF DEFAULT

          SECTION 6.01. Events of Default. If any of the following events
                        -----------------
("Events of Default") shall occur and be continuing:
  -----------------

          (a) The Borrower shall fail to pay any principal of any Advance when
     the same becomes due and payable or the Borrower shall fail to pay any
     interest on any Advance or make any other payment due in connection with
     this Agreement or any Note within five days after the same becomes due and
     payable; or

          (b) Any representation or warranty made or deemed made by or on behalf
     of the Borrower herein or in any notice, report, certificate, financial
     statement, instrument, agreement or other writing delivered or prepared in
     connection with this Agreement, shall prove to have been incorrect in any
     material respect when made; or

          (c) (i) The Borrower shall fail to perform or observe any term,
     covenant or agreement contained in Section 5.01(f), (g) or (k), Section
     5.02(a), (b), (c), (d) or (e) or Section 5.03, or (ii) the Borrower shall
     fail to perform or observe any other term, covenant or agreement contained
     in this Agreement on its part to be performed or observed if such failure
     shall remain unremedied for 30 days after written notice thereof shall have
     been given to the Borrower by the Agent or any Lender; or

          (d) (i) The Borrower or any of its Subsidiaries shall fail to pay any
     principal of or premium, interest or other amount payable with respect to
     any Debt that is outstanding in a principal amount of at least $10,000,000
     in the aggregate (but excluding Debt outstanding hereunder) of the Borrower
     or such Subsidiary (as the case may be), when the same becomes due and
     payable (whether by scheduled maturity, required prepayment, acceleration,
     demand or otherwise), and such failure shall continue after the applicable
     grace period, if any, specified in the agreement or instrument relating to
     such Debt; or (ii) any event shall occur or condition shall exist
     (including, without limitation, any event of the type described in clause
     (i) above) under any agreement or instrument relating to any Debt that is
     outstanding in a principal amount of at least $25,000,000 in the aggregate
     (but excluding Debt outstanding hereunder) of the Borrower or any of its
     Subsidiaries (as the case may be) and shall continue after the applicable
     grace period, if any, specified in such agreement or instrument, if the
     effect of such event or condition is to accelerate the maturity of such
     Debt, or any such Debt shall be accelerated, declared to be due and
     payable, or required to be prepaid or redeemed (other than by a regularly
     scheduled required prepayment or redemption), purchased or defeased, or an
     offer to prepay, redeem, purchase or defease such Debt shall be required to
     be made, in each case prior to the stated maturity thereof; or

          (e) The Borrower or any of its Significant Subsidiaries shall
     generally not pay its debts as such debts become due, or shall admit in
     writing its inability to pay its debts generally, or shall make a general
     assignment for the benefit of creditors; or any proceeding shall be
     instituted by or against the Borrower or any of its Significant
     Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
     liquidation, winding up, reorganization, arrangement, adjustment,
     protection, relief, or composition of it or its debts, in each such case,
     under any law relating to bankruptcy, insolvency or reorganization or
     relief of debtors, or seeking the entry of an order for relief or the
     appointment of a receiver, trustee, custodian or other similar official for
     it or for any substantial part of its property and, in the case of any such
     proceeding instituted against it (but not instituted by it), either such
     proceeding shall remain undismissed or unstayed for a period of 60 days, or
     any of the actions sought in such proceeding (including, without
     limitation, the entry of an order for relief against, or the appointment of
     a receiver, trustee, custodian or other similar official for, it or for any
     substantial part of its property) shall occur; or the Borrower or any of
     its Significant Subsidiaries shall take any corporate action to authorize
     any of the actions set forth above in this subsection (e); or

          (f) Any judgment or order for the payment of money in excess of
     $10,000,000 shall be rendered against the Borrower or any of its
     Subsidiaries and either (i) enforcement proceedings shall have

                                       33

<PAGE>

     been commenced by any creditor upon such judgment or order or (ii) there
     shall be any period of 30 consecutive days during which a stay of
     enforcement of such judgment or order, by reason of a pending appeal or
     otherwise, shall not be in effect; or

          (g) Any non-monetary judgment or order shall be rendered against the
     Borrower or any of its Subsidiaries that could be reasonably expected to
     have a Material Adverse Effect, and there shall be any period of 30
     consecutive days during which a stay of enforcement of such judgment or
     order, by reason of a pending appeal or otherwise, shall not be in effect;
     or

          (h) (i) Any Person or two or more Persons acting in concert shall have
     acquired beneficial ownership (within the meaning of Rule 13d-3 of the
     Securities and Exchange Commission under the Securities Exchange Act of
     1934), directly or indirectly, of Voting Stock of the Borrower (or other
     securities convertible into such Voting Stock) representing 30% or more of
     the combined voting power of all Voting Stock of the Borrower; or (ii)
     during any period of up to 24 consecutive months, commencing after the date
     of this Agreement, individuals who at the beginning of such 24-month period
     were directors of the Borrower shall cease for any reason (other than due
     to death or disability) to constitute a majority of the board of directors
     of the Borrower (except to the extent that individuals who at the beginning
     of such 24-month period were replaced by individuals (x) elected by 66-2/3%
     of the remaining members of the board of directors of the Borrower or (y)
     nominated for election by a majority of the remaining members of the board
     of directors of the Borrower and thereafter elected as directors by the
     shareholders of the Borrower); or (iii) any Person or two or more Persons
     acting in concert shall have acquired by contract or otherwise, or shall
     have entered into a contract or arrangement that, upon consummation, will
     result in its or their acquisition of, the power to exercise, directly or
     indirectly, a controlling influence over the management or policies of the
     Borrower; or (iv) the Borrower or an Affiliate of the Borrower shall cease
     to be the managing partner of Rayonier Timberlands Operating Company, L.P.
     ("RTOC") or the Borrower ceases to consolidate RTOC in its consolidated
       ----
     financial statements; or

          (i) Any ERISA Event shall have occurred and the sum (determined as of
     the date of occurrence of such ERISA Event) of the Insufficiency of the
     Plan with respect to which such ERISA Event shall have occurred and the
     Insufficiency of any and all other Plans with respect to which an ERISA
     Event shall have occurred and then exist (or the liability of the Borrower
     and its ERISA Affiliates related to any such ERISA Event) exceeds
     $10,000,000; or

          (j) The Borrower or any of its ERISA Affiliates shall have been
     notified by the sponsor of a Multiemployer Plan that it has incurred
     Withdrawal Liability to such Multiemployer Plan in an amount that, when
     aggregated with all other amounts required to be paid to Multiemployer
     Plans by the Borrower and its ERISA Affiliates as Withdrawal Liability
     (determined as of the date of such notification), exceeds $10,000,000 or
     requires payments exceeding $5,000,000 per annum; or

          (k) The Borrower or any of its ERISA Affiliates shall have been
     notified by the sponsor of a Multiemployer Plan that such Multiemployer
     Plan is in reorganization or is being terminated, within the meaning of
     Title IV of ERISA, and as a result of such reorganization or termination
     the aggregate annual contributions of the Borrower and its ERISA Affiliates
     to all Multiemployer Plans that are then in reorganization or being
     terminated have been or will be increased over the amounts contributed to
     such Multiemployer Plans for the plan years of such Multiemployer Plans
     immediately preceding the plan year in which such reorganization or
     termination occurs by an amount exceeding $10,000,000;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
                                             --------  -------
event of an actual or deemed

                                       34

<PAGE>

entry of an order for relief with respect to the Borrower under the Federal
Bankruptcy Code, (A) the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Advances, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.

                                   ARTICLE VII

                                    THE AGENT

          SECTION 7.01. Authorization and Action. Each Lender hereby appoints
                        ------------------------
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
                          --------  -------
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

          SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its
                        ---------------------
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
Lender that made any Advance as the holder of the Debt resulting therefrom until
the Agent receives and accepts an Assumption Agreement entered into by an
Assuming Lender as provided in Section 2.18 or an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 8.07; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance, observance or satisfaction of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or the existence at any
time of any Default or to inspect the property (including the books and records)
of the Borrower; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
and (vi) shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopier, telegram or telex) believed by it to be genuine and
signed or sent by the proper party or parties.

          SECTION 7.03. Citibank and Affiliates. With respect to its Commitment,
                        -----------------------
the Advances made by it and the Note issued to it, Citibank shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent; and the term "Lender" or "Lenders" shall,
unless otherwise expressly indicated, include Citibank in its individual
capacity. Citibank and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, accept investment banking engagements from
and generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders. The Agent shall have no
duty to disclose information obtained or received by it or any of its Affiliates
relating to the Borrower or its Subsidiaries to the extent such information was
obtained or received in any capacity other than as Agent.

          SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it
                        ----------------------
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem

                                       35

<PAGE>

appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

          SECTION 7.05. Indemnification. The Lenders agree to indemnify the
                        ---------------
Agent (to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Revolving Credit Advances then owed to each
of them (or if no Revolving Credit Advances are at the time outstanding, ratably
according to the respective amounts of their Commitments), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent in
any way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under this Agreement (collectively, the "Indemnified
                                                              -----------
Costs"), provided that no Lender shall be liable for any portion of the
-----    --------
Indemnified Costs resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Agent is not reimbursed for such expenses by the
Borrower. In the case of any investigation, litigation or proceeding giving rise
to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by the Agent, any Lender or a
third party.

          SECTION 7.06. Successor Agent. The Agent may resign at any time by
                        ---------------
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent, with the consent of the Borrower (which consent shall not be
unreasonably withheld or delayed) if no Event of Default has occurred and is
continuing. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

          SECTION 7.07. Other Agents. Each Lender hereby acknowledges that
                        ------------
neither the documentation agent nor any other Lender designated as any "Agent"
on the signature pages hereof has any liability hereunder other than in its
capacity as a Lender.

                                  ARTICLE VIII

                                  MISCELLANEOUS

          SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision
                        ---------------
of this Agreement or the Revolving Credit Notes, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
                 --------  -------
unless in writing and signed by each of the Lenders directly affected thereby,
do any of the following: (a) waive any of the conditions specified in Section
3.01, (b) increase the Commitments of such Lenders (other than pursuant to
Section 2.18) or subject such Lenders to any additional obligations, (c) reduce
the principal of, or interest on, the Revolving Credit Advances or any fees or
other amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Revolving Credit Advances or any fees or other
amounts payable hereunder, (e) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Revolving Credit Advances that
shall be required for the Lenders or any of them to take any action hereunder or
(f) amend this Section 8.01; and provided further that no amendment, waiver or
                                 -------- -------

                                       36

<PAGE>

consent shall, unless in writing and signed by the Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Agent under this Agreement or any Note.

          SECTION 8.02. Notices, Etc. All notices and other communications
                        ------------
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and mailed, telecopied, telegraphed, telexed or delivered,
if to the Borrower, at its address at 50 North Laura Street, Suite 1900,
Jacksonville, Florida 32202, Attention: Treasurer, with a copy to: Corporate
Secretary; if to any Initial Lender, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other Lender, at its Domestic
Lending Office specified in the Assumption Agreement or the Assignment and
Acceptance pursuant to which it became a Lender; and if to the Agent, at its
address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan
Syndications Department; or, as to the Borrower or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the Agent. All
such notices and communications shall, when mailed, telecopied, telegraphed or
telexed, be effective when deposited in the mails, telecopied, delivered to the
telegraph company or confirmed by telex answerback, respectively, except that
notices and communications to the Agent pursuant to Article II, III or VII shall
not be effective until received by the Agent. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.

          SECTION 8.03. No Waiver; Remedies. No failure on the part of any
                        -------------------
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

          SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on
                        ------------------
demand all out-of-pocket costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all due diligence, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under this
Agreement, provided that all such costs and expenses of the Agent (other than
           --------
(i) fees and expenses of counsel for the Agent, (ii) printing costs of the
Arrangers incurred in connection with the syndication of the Commitments and
(iii) expenses arising under Section 5.01(h)) in excess of $1,000 shall be
subject to the prior consent of the Borrower, such consent not to be
unreasonably withheld. The Borrower further agrees to pay on demand all costs
and expenses of the Agent and the Lenders, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, reasonable fees and expenses of counsel for the
Agent and each Lender in connection with the enforcement of rights under this
Section 8.04(a).

          (b) The Borrower agrees to indemnify, exonerate and hold harmless the
Agent and each Lender and each of their Affiliates and their officers,
directors, employees, agents, advisors, representatives and controlling persons
(each, an "Indemnified Party") from and against any and all claims, damages,
           -----------------
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
(i) the Notes, this Agreement, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Advances or (ii) the actual or
alleged presence of Hazardous Materials on any property currently or formerly
owned or operated by the Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to the Borrower or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, equityholders or creditors
or an Indemnified Party or any other Person, whether or not any Indemnified
Party is otherwise a party thereto and

                                       37

<PAGE>

whether or not the transactions contemplated hereby are consummated. The
Borrower also agrees not to assert any claim for special, indirect,
consequential or punitive damages against the Agent, any Lender, any of their
Affiliates, or any of their respective officers, directors, employees, agents,
advisors, representatives and controlling persons, on any theory of liability,
arising out of or otherwise relating to (i) the Notes, this Agreement, any of
the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances or (ii) the actual or alleged presence of Hazardous
Materials on an property of the Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to the Borrower or any of its
Subsidiaries.

          (c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.08(f) or (g), 2.09, 2.10 or 2.12,
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, or by an Eligible Assignee to a Lender other than on the last day
of the Interest Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a result of a
demand by the Borrower pursuant to Section 8.07(a), the Borrower shall, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.

          (d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

          SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
                        ----------------
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, whether or not such Lender shall
have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application, provided that the failure to give such
                                        --------
notice shall not affect the validity of such set-off and application. The rights
of each Lender and its Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender and its Affiliates may have.

          SECTION 8.06. Binding Effect. This Agreement shall become effective
                        --------------
(other than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.

          SECTION 8.07. Assignments and Participations. (a) Each Lender may and,
                        ------------------------------
if demanded by the Borrower (following a demand by such Lender pursuant to
Section 2.11 or 2.14) upon at least five Business Days' notice to such Lender
and the Agent, will assign to one or more Persons all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Revolving Credit Advances owing to it and the
Revolving Credit Note or Notes held by it); provided, however, that (i) other
                                            --------  -------
than in the case of an assignment to an Affiliate of such Lender, another
Lender, or assignments of the type described in subsection (g) below, such
Lender shall have obtained the prior written consent of the Agent and, unless an
Event of Default has occurred and is continuing, the Borrower, such consent not
to be unreasonably withheld, (ii) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under this Agreement
(other than any right to make Competitive Bid Advances, Competitive Bid Advances
owing to it and Competitive

                                       38

<PAGE>

Bid Notes), (iii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of all of a
Lender's rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be an integral multiple of $1,000,000 unless the Borrower and the Agent
otherwise agree, and if the assigning Lender is assigning less than all of its
Commitments after giving effect to such assignment, the amount of the commitment
of the assigning Lender shall be equal to or greater than $5,000,000, (iv) each
such assignment shall be to an Eligible Assignee, (v) each such assignment made
as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall
be arranged by the Borrower after consultation with the Agent and shall be
either an assignment of all of the rights and obligations of the assigning
Lender under this Agreement or an assignment of a portion of such rights and
obligations made concurrently with another such assignment or other such
assignments that together cover all of the rights and obligations of the
assigning Lender under this Agreement, (vi) no Lender shall be obligated to make
any such assignment as a result of a demand by the Borrower pursuant to this
Section 8.07(a) unless and until such Lender shall have received one or more
payments from either the Borrower or one or more Eligible Assignees in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, and (vi) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Revolving Credit Note
subject to such assignment and a processing and recordation fee of $3,500 (such
fee payable by the assignor or assignee, as agreed by the parties). Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (other than
its rights under Section 2.11, 2.14 and 8.04 to the extent any claim thereunder
relates to an event arising prior to such assignment) and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

          (b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of this Agreement are required to be performed by it as a Lender.

          (c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.

                                       39

<PAGE>

          (d) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assumption Agreement and each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of each of the Lenders and the Commitment of, and principal amount
of the Advances owing to, each Lender from time to time (the "Register"). The
                                                              --------
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

          (e) Each Lender may sell participations to one or more banks or other
entities (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and any
Note or Notes held by it); provided, however, that (i) such Lender's obligations
                           --------  -------
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (v) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of this Agreement or any Note, or any consent to any
departure by the Borrower therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Notes or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, or postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.

          (f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 8.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided that, prior to any such disclosure, the assignee or
              --------
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information relating to the Borrower
received by it from such Lender.

          (g) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest (or any other similar
interest) in all or any portion of its rights under this Agreement (including,
without limitation, the Advances owing to it and any Note or Notes held by it)
in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.

          (h) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Bank") may grant to a special purpose funding vehicle (a
           -------- ----
"SPC"), identified as such in writing from time to time by the Granting Bank to
 ---
the Agent and the Borrower, the option to provide to the Borrower all or any
part of any Advance that such Granting Bank would otherwise be obligated to make
to the Borrower pursuant to this Agreement; provided that (i) nothing herein
                                            -------- ----
shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any part
of such Advance, the Granting Bank shall be obligated to make such Advance
pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall
utilize the Commitment of the Granting Bank to the same extent, and as if, such
Advance were made by such Granting Bank. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Bank). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section, any SPC may (i) with notice
to, but without the prior written consent of, the Borrower and the Agent and
without paying any processing fee therefor, assign all or a portion of its
interests in any Advances to the Granting Bank or to any financial institutions
(consented to by the Borrower and Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Advances and (ii) disclose on a confidential basis any non-public information
relating to its Advances to any rating agency,

                                       40

<PAGE>

commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This section may not be amended without the
written consent of the SPC.

          SECTION 8.08. Confidentiality. Neither the Agent nor any Lender shall
                        ---------------
disclose any Confidential Information to any other Person without the consent of
the Borrower other than (a) to the Agent's or such Lender's Affiliates and their
officers, directors, employees, agents and advisors and, as contemplated by
Section 8.07(f), to actual or prospective assignees and participants, and then
only on a confidential basis, (b) as required by any law, rule or regulation or
judicial process and (c) as requested or required by any state, federal or
foreign authority or examiner regulating banks or banking.

          SECTION 8.09. Governing Law. This Agreement and the Notes shall be
                        -------------
governed by, and construed in accordance with, the laws of the State of New
York.

          SECTION 8.10. Execution in Counterparts. This Agreement may be
                        -------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

          SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby
                        -----------------
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement or
the Notes in the courts of any jurisdiction.

          (b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

                                       41

<PAGE>

          SECTION 8.12. Waiver of Jury Trial. Each of the Borrower, the Agent
                        --------------------
and the Lenders hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.

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

                                                   RAYONIER INC.

                                                   By
                                                      --------------------------
                                                       Title:

                                                   CITIBANK, N.A.,
                                                       as Agent

                                                   By
                                                      --------------------------
                                                       Title:

                                 Initial Lenders
                                 ---------------

Commitment
----------

                              Administrative Agent
                              ---------------------

$26,444,445                                        CITIBANK, N.A.

                                                   By
                                                      --------------------------
                                                       Title:

                               Syndication Agents
                               ------------------

$26,444,444                                        BANK OF AMERICA, N.A.

                                                   By
                                                      --------------------------
                                                       Title:

$22,666,667                                        THE BANK OF NEW YORK

                                                   By
                                                      --------------------------
                                                       Title:

                                       42

<PAGE>

$22,666,667                                        SUNTRUST BANK

                                                   By
                                                      --------------------------
                                                       Title:

                                     Lenders
                                     -------

$11,333,333                                        COMPASS BANK

                                                   By
                                                      --------------------------
                                                       Title:

$11,333,333                                        CREDIT SUISSE FIRST BOSTON

                                                   By
                                                      --------------------------
                                                       Title:

$18,888,889                                        JPMORGAN CHASE BANK

                                                   By
                                                      --------------------------
                                                       Title:

$11,333,333                                        THE NORTHERN TRUST COMPANY

                                                   By
                                                      --------------------------
                                                       Title:

$18,888,889                                        WACHOVIA BANK N.A.

                                                   By
                                                      --------------------------
                                                       Title:

$170,000,000      Total of the Commitments

                                       43<PAGE>

                                                                    Exhibit 10.4

                                 RETIREMENT PLAN

                             FOR SALARIED EMPLOYEES

                                OF RAYONIER INC.

                          Effective as of March 1, 1994
                      Amended and Restated January 1, 2000
                  And Further Amended Through October 19, 2001

<PAGE>

                                    FOREWORD
                                    --------

The Plan as set forth in this document is known as the Retirement Plan for
Salaried Employees of Rayonier Inc. (hereinafter called the Plan).

Unless otherwise expressly provided in this Plan and consistent with applicable
law, (i) the rights and benefits of any Member who retires or whose employment
is terminated, whichever first occurs, are determined in accordance with the
provisions of the Plan in effect at the time of such retirement or termination,
and (ii) no revision to the Plan shall deprive any Member who retires or whose
employment is terminated prior to such revisions, of any rights and benefits
which theretofore had accrued under the Plan.

This Plan is intended to qualify under the Internal Revenue Code of 1986.

Subject to the preceding sentence, the Plan shall be construed, regulated and
administered under the laws of the State of Florida, to the extent such laws are
not superseded by applicable federal law.

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

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

<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                         <C>
ARTICLE 1 -- DEFINITIONS....................................................................................   1
------------------------

ARTICLE 2 -- SERVICE........................................................................................  14
--------------------

         2.01     Eligibility Service.......................................................................  14
                  -------------------

         2.02     Benefit Service...........................................................................  21
                  ---------------

         2.03     Questions Relating to Service Under the Plan..............................................  25
                  --------------------------------------------

ARTICLE 3 -- MEMBERSHIP.....................................................................................  27
-----------------------

         3.01     Persons Employed on the Effective Date....................................................  27
                  --------------------------------------

         3.02     Persons First Employed as Employees On or After the Effective Date........................  27
                  ------------------------------------------------------------------

         3.03     Reemployment After March 1, 1994 of ITT Rayonier Incorporated Salaried Employees..........  28
                  --------------------------------------------------------------------------------

         3.04     Persons Employed as a Leased Employee With the Company or an Associated Company...........  28
                  -------------------------------------------------------------------------------

         3.05     Persons Employed as Other Than Employees by the Company...................................  28
                  -------------------------------------------------------

         3.06     Reemployment of Former Employees, Former Members and Retired Members......................  29
                  --------------------------------------------------------------------

         3.07     Termination of Membership.................................................................  29
                  -------------------------

         3.08     Questions Relating to Membership in the Plan..............................................  30
                  --------------------------------------------

ARTICLE 4 -- BENEFITS.......................................................................................  31
---------------------

         4.01     Normal Retirement Allowance...............................................................  31
                  ---------------------------

         4.02     Postponed Retirement Allowance............................................................  33
                  ------------------------------

         4.03     Standard Early Retirement Allowance.......................................................  35
                  -----------------------------------

         4.04     Special Early Retirement Allowance........................................................  36
                  ----------------------------------

         4.05     Vested Benefit............................................................................  38
                  --------------

         4.06     Forms of Benefit Payment After Retirement.................................................  39
                  -----------------------------------------

         4.07     Survivor's Benefit Applicable Before Retirement...........................................  46
                  -----------------------------------------------

         4.08     Maximum Benefits..........................................................................  62
                  ----------------
</TABLE>

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

                                TABLE OF CONTENTS
                                -----------------
                                    (cont'd)

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
         4.09     No Duplication..............................................................................   63
                  --------------

         4.10     Payment of Benefits.........................................................................   64
                  -------------------

         4.11     Reemployment of Former Member or Retired Member.............................................   67
                  -----------------------------------------------

         4.12     Top-heavy Provisions........................................................................   71
                  --------------------

         4.13     Payment of Medical Benefits for Benefits for Certain Members Who Retire Under the Plan......   74
                  --------------------------------------------------------------------------------------

         4.14     Transfers From Hourly Plans Maintained by the Company or an Associated Company..............   76
                  ------------------------------------------------------------------------------

         4.15     Direct Rollover of Certain Distributions....................................................   77
                  ----------------------------------------

ARTICLE 5 -- ADMINISTRATION OF PLAN...........................................................................   79
-----------------------------------

         5.01     Appointment of Retirement Committee.........................................................   79
                  -----------------------------------

         5.02     Pension Trust Fund and Investment Committee.................................................   79
                  -------------------------------------------

         5.03     Named Fiduciaries...........................................................................   80
                  -----------------

         5.04     Meetings and Action of Majority.............................................................   80
                  -------------------------------

         5.05     Duties of Committees........................................................................   80
                  --------------------

         5.06     Management of Plan Assets...................................................................   81
                  -------------------------

         5.07     Establishment of Rules and Rights of Retirement Committee...................................   81
                  ---------------------------------------------------------

         5.09     Claims and Review Procedure.................................................................   83
                  ---------------------------

ARTICLE 6 -- CONTRIBUTIONS....................................................................................   86
--------------------------

         6.01     Company Contributions.......................................................................   86
                  ---------------------

         6.02     Return of Contributions.....................................................................   86
                  -----------------------

ARTICLE 7 -- MANAGEMENT OF FUNDS..............................................................................   87
--------------------------------

         7.01     Trustee.....................................................................................   87
                  -------

         7.02     Exclusive Benefit Rule......................................................................   87
                  ----------------------

         7.03     Investment in Company Securities or Real Property...........................................   88
                  -------------------------------------------------

         7.04     Appointment of Investment Managers..........................................................   88
                  ----------------------------------

ARTICLE 8 -- CERTAIN RIGHTS AND LIMITATIONS...................................................................   89
-------------------------------------------
</TABLE>

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

                                TABLE OF CONTENTS
                                -----------------
                                    (cont'd)

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                        <C>
         8.01     Termination of the Plan.................................................................   89
                  -----------------------

         8.02     Limitation Concerning Highly Compensated Employees or Highly Compensated Former
                  --------------------------------------------------------------------------------
                  Employees...............................................................................   90
                  ---------

         8.03     Conditions of Employment Not Affected by Plan...........................................   91
                  ---------------------------------------------

         8.04     Offsets.................................................................................   92
                  -------

         8.05     Denial of Benefits......................................................................   92
                  ------------------

         8.06     Change in Control.......................................................................   93
                  -----------------

         8.07     Prevention of Escheat...................................................................   96
                  ---------------------

ARTICLE 9 -- NONALIENATION OF BENEFITS....................................................................   98
--------------------------------------

ARTICLE 10 -- AMENDMENTS..................................................................................  100
------------------------
</TABLE>

APPENDIX A
----------

APPENDIX B
----------

APPENDIX C
----------

APPENDIX D
----------

APPENDIX E
----------

APPENDIX F
----------

<PAGE>

                     RETIREMENT PLAN FOR SALARIED EMPLOYEES
                                OF RAYONIER INC.

                            ARTICLE 1 -- DEFINITIONS
                            ------------------------

1.01     Accrued Benefit shall mean, as of any date of determination, the
         ---------------
         retirement allowance computed under Section 4.01(b) on the basis of the
         Member's Benefit Service and applicable components of the Plan formula
         as of the determination date and with respect to the amount determined
         under Section 4.01(b)(i)(4), the applicable components of the Prior
         Salaried Plan as of the determination date.

1.02     Annuity Starting Date shall mean the first day of the first period for
         -----------------------
         which an amount is due on behalf of a Member or former Member as an
         annuity or any other form of payment under the Plan.

1.03     Appendix shall mean the tables of factors which are used in determining
         --------
         the amount of the various forms of benefits payable under the Plan.

1.04     Associated Company shall mean any subsidiary or affiliated company of
         ------------------
         Rayonier Inc. not participating in the Plan which is (i) a component
         member of a controlled group of corporations (as defined in Section
         414(b) of the Code), which controlled group of corporations includes as
         a component member Rayonier Inc., (ii) any trade or business under
         common control (as defined in Section 414(c) of the Code) with Rayonier
         Inc., (iii) any organization (whether or not incorporated) which is a
         member of an affiliated service group (as defined in Section 414(m) of
         the Code) which includes Rayonier Inc. or (iv) any other entity
         required to be aggregated with Rayonier Inc. pursuant to regulations
         under Section 414(o) of the Code, during the period such entity is
         described in clause (i), (ii), (iii), or (iv). Notwithstanding the
         foregoing, for purposes of the preceding

                                                                       Article 1

<PAGE>
                                                                          Page 2

         sentence and Section 4.08 of the Plan, the definitions of Section
         414(b) and (c) of the Code shall be modified as provided in Section
         415(h) of the Code.

1.05     Beneficiary shall mean any person or entity named by a Member by
         -----------
         written designation to receive certain benefits payable in the event of
         his or her death as provided under Section 4.07.

1.06     Benefit Service shall mean employment recognized as such for the
         ----------------
         purposes of computing a benefit under the Plan as provided under
         Article 2.

1.07     Board of Directors shall mean the Board of Directors of Rayonier Inc.
         ------------------
         or of any successor to Rayonier Inc. by merger, purchase or otherwise.

1.08     Change in Control shall mean the occurrence of any one or more of the
         -----------------
         following events: (i) subject to the conditions contained in the final
         paragraph of this definition, the filing of a report on Schedule 13D
         with the Securities and Exchange Commission pursuant to Section 13(d)
         of the Securities Exchange Act of 1934 (the "Act") disclosing that any
         person, other than the Corporation or any employee benefit plan
         sponsored by the Corporation, is the beneficial owner (as the term is
         defined in Rule 13d-3 under the Act) directly or indirectly, of
         securities representing twenty percent or more of the total voting
         power represented by the Corporation's then outstanding Voting
         Securities (calculated as provided in paragraph (d) of Rule 13d-3 under
         the Act in the case of rights to acquire Voting Securities); or (ii)
         the purchase by any person, other than the Corporation or any employee
         benefit plan sponsored by the Corporation, of shares pursuant to a
         tender offer or exchange offer to acquire any Voting Securities of the
         Corporation (or securities convertible into such Voting Securities) for
         cash, securities or any other consideration, provided that after
         consummation of the offer, the person in question is the beneficial
         owner, directly or indirectly, of

                                                                       Article 1

<PAGE>
                                                                          Page 3

         securities representing twenty percent or more of the total voting
         power represented by the Corporation's then outstanding Voting
         Securities (all as calculated under clause (i)); or (iii) the approval
         by the shareholders of the Corporation of (A) any consolidation or
         merger of the Corporation in which the Corporation is not the
         continuing or surviving corporation (other than a merger of the
         Corporation in which holders of Common Shares of the Corporation
         immediately prior to the merger have the same proportionate ownership
         of Common Shares of the surviving corporation immediately after the
         merger as immediately before), or pursuant to which Common Shares of
         the Corporation would be converted into cash, securities or other
         property, or (B) any sale, lease, exchange, or other transfer (in one
         transaction or a series of related transactions) of all or
         substantially all the assets of the Corporation; or (iv) a change in
         the composition of the Board of Directors of the Corporation at any
         time during any consecutive twenty-four month period such that
         "continuing directors" cease for any reason to constitute at least a
         70% majority of the Board. For purposes of this definition of "Change
         in Control," the term "Voting Securities" means any securities of the
         Corporation which vote generally in the election of members of the
         Board of Directors and the term "continuing directors" means those
         members of the Board who either were directors at the beginning of a
         consecutive twenty-four month period or were elected during such
         period by or on the nomination or recommendation of at least a 70%
         majority of the then-existing Board.

         So long as there has not been a Change in Control within the meaning of
         clause (iv) above, the Board of Directors may adopt by a majority vote
         of the "continuing directors" a resolution to the effect that the
         occurrence of an event described in clause (i) (a "Clause (i) Event")
         does not constitute a "Change in Control" (an "Excluding Resolution")
         or a resolution to the effect that the occurrence of a Clause (i) Event
         does constitute a "Change in Control" (an "Including Resolution"). The
         adoption of an Excluding Resolution with respect to any Clause (i)
         Event shall

                                                                       Article 1

<PAGE>
                                                                          Page 4

         not deprive the Board of Directors of the right to adopt an Including
         Resolution with respect to such Clause (i) Event at a later date. A
         Clause (i) Event shall not in and of itself constitute a "Change in
         Control" until the earlier of (x) the effective date of an Including
         Resolution with respect thereto or (y) the passage of a period of five
         (5) business days after the Corporation's receipt of a copy of the
         subject report on Schedule 13D in compliance with Rule 13d-7 under the
         Act without an Excluding Resolution having been adopted with respect
         thereto; notwithstanding the adoption of an Excluding Resolution
         within the five business-day period referred to in (y), an Including
         Resolution may subsequently be adopted with respect to the relevant
         Clause (i) Event while it continues to exist, in which event a "Change
         in Control" shall be deemed to have occurred for purposes of this
         definition upon the effective date of such Including Resolution. The
         provisions of this second paragraph of the definition of "Change in
         Control" relate only to situations where a Clause (i) Event has
         occurred and no Change in Control within the meaning of clause (ii),
         (iii) or (iv) of the preceding paragraph has occurred, and nothing in
         this paragraph shall derogate from the principle that the occurrence
         of an event described in clause (ii), (iii) or (iv) of the preceding
         paragraph shall be deemed an immediate Change in Control regardless of
         whether or not a Clause (i) Event has occurred and an Excluding
         Resolution or Including Resolution become effective.

1.09     Code shall mean the Internal Revenue Code of 1986, as amended from time
         ----
         to time.

1.10     Company or Corporation shall mean Rayonier Inc. (formerly known as ITT
         -------
         Rayonier Incorporated) with respect to its Employees; and any
         Participating Unit with respect to its Employees. When used herein, the
         term Company shall collectively include Rayonier Inc. and any
         Participating Unit.

1.11     Compensation shall mean the total remuneration paid to a Member
         ------------
         (whether before or after membership in the Plan) for services rendered
         on and after the Effective Date, including annual

                                                                       Article 1

<PAGE>
                                                                          Page 5

          base salary, overtime, leadman's pay, shift differential, and bonuses
          paid under the Rayonier Inc. local bonus and gain share plans as in
          effect on March 1, 1994 (determined prior to any pre-tax contributions
          under a "qualified cash or deferred arrangement," as defined under
          Section 401(k) of the Code and its applicable regulations, under a
          "cafeteria plan," as defined under Section 125 of the Code and its
          applicable regulations or under a "qualified transportation fringe,"
          as defined under Section 132(f) of the Code and its applicable
          regulations), and for Members who receive no other source of
          remuneration from the Company, commissions, but excluding, except to
          the extent specifically included above, foreign service pay,
          automobile allowance, separation pay, incentive pay or other special
          pay or allowances of similar nature, commissions for any Member who
          receives any other form of remuneration from the Company, bonuses, and
          the cost of any public or private employee benefit plan, including the
          Plan. Commencing with the Plan Year beginning in 1994, Compensation
          taken into account for any purpose under the Plan, including the
          determination of Final Average Compensation, shall not exceed $150,000
          (as adjusted from time to time by the Secretary of the Treasury in
          accordance with Section 401(a)(17)(B) of the Code). Effective January
          1, 1997, the compensation limit shall be applied without regard to the
          family aggregation provisions of Section 414(q)(6) of the Code in
          determining benefit accruals for Plan Years beginning on and after
          January 1, 1997, and to the extent permissible under the IRS rules or
          regulations, for any earlier Plan Year.

1.12      Early Retirement Date shall mean the date as determined in the manner
          ---------------------
          set forth in Section 4.03.

1.13      Effective Date of the Plan shall mean March 1, 1994.
          --------------------------

1.14      Eligibility Service shall mean any employment recognized as such for
          -------------------
          the purposes of meeting the eligibility requirements for membership in
          the Plan and for eligibility for benefits under the Plan as provided
          under Article 2.

                                                                       Article 1

<PAGE>

                                                                          Page 6

1.15     Employee shall mean any person regularly employed by the Company who is
         --------
         paid from a payroll maintained in the continental United States,
         Hawaii, Puerto Rico or the U.S. Virgin Islands and who receives regular
         and stated compensation other than a pension or retainer; provided,
         however, that except as the Board of Directors or the Retirement
         Committee, pursuant to the authority delegated to it by the Board of
         Directors, may otherwise provide on a basis uniformly applicable to all
         persons similarly situated, no person shall be an Employee for purposes
         of the Plan who is (i) engaged as a consultant, (ii) a non-resident
         alien, (iii) paid on an hourly basis and who, under the Company's
         employment classification practices, is considered as an hourly-rated
         employee for purposes of the Company's employee benefit plans, (iv)
         accruing benefits in respect of current service under any other
         pension, retirement, qualified profit-sharing or other similar plan of
         the Company (other than the Rayonier Inc. Investment and Savings Plan
         for Salaried Employees,) or of any Associated Company, (v) a Leased
         Employee, or (vi) a Non-Benefits Worker; and provided further, that no
         person shall be an Employee for purposes of the Plan whose terms and
         conditions of employment are determined by a collective bargaining
         agreement with the Company which does not make this Plan applicable to
         such person. In addition, effective January 1, 1998, any person
         considered to be an independent contractor by the Company shall not be
         considered an Employee even if he is reclassified as an employee by any
         taxing authority such as the Internal Revenue Service or any other
         authority or agency.

1.16     Equivalent Actuarial Value shall mean equivalent value of a benefit
         --------------------------
         under the Plan determined on the basis of the applicable factors set
         forth in Appendix A, except as otherwise specified in the Plan. In any
         other event, Equivalent Actuarial Value shall be determined on the same
         actuarial basis utilized to compute the factors set forth in Appendix
         A.

                                                                       Article 1

<PAGE>

                                                                          Page 7

1.17     ERISA shall mean the Employee Retirement Income Security Act of 1974,
         -----
         as amended from time to time.

1.18     Final Average Compensation shall mean the sum of:
         --------------------------
         (a)      The average of a Member's annual base salary recognized as
                  Compensation received in any five calendar years of
                  Eligibility Service in which such annual base salary was
                  highest, plus

         (b)      The average of a Member's annual Compensation in excess of
                  annual base salary received in any five calendar years of
                  Eligibility Service in which such Compensation was highest;

         provided, however, that the calendar years on which such averages are
         based shall be any five calendar years during the last 120 calendar
         months of a Member's Eligibility Service, or if the Member has less
         than five calendar years of Eligibility Service, all of his or her
         calendar years of Eligibility Service; provided, further, however, that
         (i) the annual base salary earned in any calendar year and taken into
         account for purposes of "Final Average Compensation," and (ii) the
         amount in excess of base annual salary earned in any calendar year and
         taken into account for purposes of "Final Average Compensation," and
         (iii) the sum of (i) and (ii) taken into account for any calendar year,
         each shall be subject to the provisions of Section 401(a)(17) of the
         Code. If the Member terminates employment before the last day of the
         calendar year or otherwise experiences an interruption in Eligibility
         Service, the Retirement Committee shall, in accordance with rules
         uniformly applicable to all persons similarly situated, determine the
         amount of the Member's Final Average Compensation. The term Eligibility
         Service as used in this Section shall include all service recognized as
         Eligibility Service for purposes of eligibility requirements under
         Article 2.

1.19     Hour of Service shall mean hours of employment as defined pursuant to
         ---------------
         the provisions of Section 2.01(b).

                                                                       Article 1

<PAGE>
                                                                          Page 8

1.20     IRS Interest Rate shall mean the annual rate of interest on 30-year
         -----------------
         Treasury Securities, as specified by the Commissioner of Internal
         Revenue for the second full calendar month preceding the applicable
         Stability Period.

1.21     IRS Mortality Table shall mean the mortality table prescribed by the
         -------------------
         Secretary of the Treasury under Code Section 417(e)(3)(A)(ii)(I) as in
         effect on the first day of the applicable Stability Period.

1.22     Leased Employee shall mean any person as so defined in Section 414(n)
         ---------------
         of the Code by virtue of his or her performance of services for the
         Company or an Associated Company.

1.23     Member shall mean any person included in the membership of the Plan as
         ------
         provided in Article 3.

1.24     Non-Benefits Worker shall mean any individual designated by the Company
         -------------------
         as ineligible to participate in any Company-sponsored employee benefit
         program and any individual who the Company considers to be an
         independent contractor. The designation of an individual as a
         Non-Benefits Worker by the Company shall be final and not subject to
         any redetermination of employment classification by any taxing
         authority such as the Internal Revenue Service or any other
         governmental authority or agency.

1.25     Normal Retirement Date shall mean the first day of the calendar month
         ----------------------
         coincident with or next following the date the Employee attains age 65,
         which is his or her Normal Retirement Age.

                                                                       Article 1

<PAGE>

                                                                          Page 9

1.26     Parental Leave shall mean a period in which a person is absent from
         --------------
         work because of the person's pregnancy, the birth of a person's child,
         the adoption by a person of a child, or for purposes of caring for that
         child, for a period beginning immediately following such birth or
         adoption.

1.27     Participating Unit shall mean, in addition to Rayonier Inc., any
         ------------------
         subsidiary or affiliated company of Rayonier Inc., any designated
         location(s) only of such subsidiary or affiliated company or any
         designated unit(s) only of such subsidiary, or affiliated company which
         has by appropriate action of the Board of Directors been designated as
         a Participating Unit and the board of directors of any such subsidiary
         or affiliated company shall have taken appropriate action to adopt the
         Plan. The Board of Directors shall take action (i) to designate such
         entity as a Participating Unit, (ii) to determine that such persons are
         Employees, and (iii) to establish, by written amendment of the Plan,
         the terms and conditions under which such Employees are to be included
         in the Plan.

         If a group of persons is transferred to or assigned to a Participating
         Unit or is hired by a Participating Unit as the result of the opening
         or purchase of a plant or the merger of one unit into another, such
         persons shall not be deemed to be Employees for purposes of the Plan
         until further action by the Board of Directors, by written amendment of
         the Plan, including the determination that such persons are Employees
         for purposes of the Plan, and the establishment of the terms and
         conditions under which such Employees are to be included in the Plan.

         To the extent that the Board of Directors shall have authorized and
         established the basis for recognition under the Plan of service with a
         predecessor corporation(s), if any, reference in this Plan to service
         with a Participating Unit shall include service with the predecessor
         corporation(s) of such Participating Unit, provided that all or part of
         the business and assets of any such corporation shall have been
         acquired by Rayonier Inc. or by a Participating Unit.

                                                                       Article 1

<PAGE>

                                                                         Page 10

1.28     Pension Fund Trust and Investment Committee shall mean the committee
         -------------------------------------------
         established by Rayonier Inc. for the purposes of managing the assets of
         the Plan as provided in Article 5.

1.29     Plan shall mean the Retirement Plan for Salaried Employees of Rayonier
         ----
         Inc. as set forth herein or as hereafter amended.

1.30     Plan Year shall mean the calendar year.
         ---------

1.31     Postponed Retirement Date shall mean, with respect to an Employee who
         -------------------------
         does not retire at Normal Retirement Date but who works after such
         date, the first day of the calendar month coincident with or next
         following the date on which such Employee retires from active service.
         No retirement allowance shall be paid to the Employee until his or her
         Postponed Retirement Date, except as otherwise provided in Article 4.

1.32     Prior Salaried Plan shall mean the Retirement Plan for Salaried
         -------------------
         Employees of ITT Corporation (now known as the "ITT Industries Salaried
         Retirement Plan"), as in effect on February 28, 1994 and as thereafter
         amended from time to time.

1.33     Qualified Joint and Survivor Annuity shall mean an annuity described in
         ------------------------------------
         Section 4.06(a)(i).

1.34     Retirement Committee shall mean the committee established for the
         ---------------------
         purposes of administering the Plan as provided in Article 5.

                                                                       Article 1

<PAGE>

                                                                         Page 11

1.35     Severance Date shall mean the date an Employee is considered to have
         --------------
         severed his or her employment as defined pursuant to the provisions of
         Section 2.01(a).

1.36     Social Security Benefit shall mean the amount of annual old age or
         -----------------------
         disability insurance benefit under Title II of the Federal Social
         Security Act as determined by the Retirement Committee under reasonable
         rules uniformly applied, on the basis of such Act as in effect at the
         time of retirement or termination to which a Member or former Member is
         or would upon application be entitled, even though the Member does not
         receive such benefit because of his or her failure to apply therefor or
         he or she is ineligible therefor by reason of earnings he or she may be
         receiving in excess of any limit on earnings for full entitlement to
         such benefit. In computing the Member's Social Security Benefit, no
         wage index adjustment or cost of living adjustment shall be assumed
         with respect to any period after the end of the calendar year in which
         the Member retires or terminates service. For all years prior to
         retirement or other termination of employment with the Company where
         actual earnings are not available, the Member's Social Security Benefit
         shall be determined on the basis of the Member's actual earnings in
         conjunction with a salary increase assumption based on the actual
         yearly change in national average wages as determined by the Social
         Security Administration. If, within a reasonable time after the later
         of (i) the date of retirement or other termination of employment or
         (ii) the date on which a Member is notified of the retirement allowance
         or vested benefit to which he or she is entitled, the Member provides
         documentation from the Social Security Administration as to his or her
         actual earnings history with respect to those prior years, his or her
         Social Security Benefit shall be redetermined using the actual earnings
         history. If this recalculation results in a different Social Security
         Benefit, his or her retirement allowance or vested benefit shall be
         adjusted to reflect this change. Any adjustment to his or her
         retirement allowance or vested benefit shall be made retroactive to the
         date his or her payments

                                                                       Article 1

<PAGE>

                                                                         Page 12

         commenced. The Retirement Committee shall resolve any questions
         arising under this Section on a basis uniformly applicable to all
         Employees similarly situated.

1.37     Social Security Retirement Age shall mean age 65 with respect to a
         ------------------------------
         Member who was born before January 1, 1938; age 66 with respect to a
         Member who was born after December 31, 1937 and before January 1, 1955;
         and age 67 with respect to a Member who was born after December 31,
         1954.

1.38     Special Early Retirement Date shall mean the date as determined in the
         -----------------------------
         manner set forth in Section 4.04.

1.39     Spousal Consent shall mean written consent given by a Member's or
         ---------------
         former Member's spouse to an election made by the Member or former
         Member which specifies the form of retirement allowance, vested
         benefit, Beneficiary, or contingent annuitant designated by the Member
         or former Member. The specified form or specified Beneficiary or
         contingent annuitant shall not be changed unless further Spousal
         Consent is given. Spousal Consent shall be duly witnessed by a notary
         public, or in accordance with uniform rules of the Retirement
         Committee, by a Plan representative and shall acknowledge the effect on
         the spouse of the Member's or former Member's election. The requirement
         for Spousal Consent may be waived by the Retirement Committee in
         accordance with applicable law. Spousal Consent shall be applicable
         only to the particular spouse who provides such consent.

1.40     Stability Period shall mean the Plan Year in which occurs the Annuity
         ----------------
         Starting Date for the distribution.

                                                                       Article 1

<PAGE>

                                                                         Page 13

1.41     Transferred Employee shall mean an employee of the Company on the
         --------------------
         Effective Date who is paid on an hourly basis, classified as an
         hourly-rated employee for purposes of the Company's employee benefit
         plans, and who is entitled to a benefit under the Prior Salaried Plan.

1.42     Trustee shall mean the trustee or trustees by which the funds of the
         -------
         Plan are held as provided in Article 7.

                                                                       Article 1

<PAGE>
                                                                         Page 14

                              ARTICLE 2 -- SERVICE
                              --------------------

2.01     Eligibility Service
         -------------------

(a)      Eligibility Service On and After the Effective Date. Except as
         ---------------------------------------------------
         otherwise provided in this Article 2, all uninterrupted employment with
         the Company or with an Associated Company rendered on and after (i) the
         Effective Date or (ii) date of employment, if later, and prior to such
         Member's Severance Date shall be recognized as Eligibility Service for
         all Plan purposes. "Severance Date" shall mean the earlier of (i) the
         date a Member resigns, is discharged, retires or dies or (ii) one year
         from the date the Member is continuously absent from service for any
         other reason as provided in this Article 2. Eligibility Service for any
         period of employment rendered prior to the Effective Date shall be
         determined as set forth in Section 2.01(g).

(b)      Eligibility Service for Plan Membership by Employees Hired on Other
         -------------------------------------------------------------------
         Than a Full-Time Basis. With respect to any Employee whose employment
         ----------------------
         with the Company or with an Associated Company is on a temporary or
         less than full-time basis, "one year of Eligibility Service" for
         purposes of meeting the requirements for membership in the Plan as
         provided in Article 3 shall mean a period of 12 consecutive months of
         employment and measured from the date on which he or she first
         completes an Hour of Service or from any subsequent anniversary thereof
         and during which he or she has completed at least 1,000 Hours of
         Service with the Company or with an Associated Company. After such an
         Employee has met the requirements for membership in the Plan as
         provided in Article 3, Eligibility Service for purposes of meeting the
         eligibility requirements for benefits and for vesting shall be
         determined in accordance with Sections 2.01(a) and 2.01(g).

                                                                       Article 2

<PAGE>

                                                                         Page 15

         "Hours of Service" shall include hours worked and hours for which a
         person is compensated by the Company or by an Associated Company for
         the performance of duties for the Company or an Associated Company,
         although he or she has not worked (such as: paid holidays, paid
         vacation, paid sick leave, paid time off and back pay for the period
         for which it was awarded), and each such hour shall be computed as only
         one hour, even though he or she is compensated at more than the
         straight time rate. This definition of "Hours of Service" shall be
         applied in a consistent and non-discriminatory manner in compliance
         with 29 Code of Federal Regulations, Section 2530.200b-2(b) and (c) as
         promulgated by the United States Department of Labor and as may
         hereafter be amended.

         Solely for purposes of this paragraph (b), if a temporary or less than
         full-time Employee does not complete more than 500 Hours of Service in
         the 12 month period beginning on the date on which he or she first
         completes an Hour of Service or beginning on any subsequent anniversary
         thereof (which for purposes of this paragraph (b) shall be known as the
         "computation period"), he or she shall incur a one-year break in
         service. Solely for purposes of determining whether such an Employee
         has incurred a break in service, hours shall include each Hour of
         Service for which such Employee would otherwise have been credited
         under this paragraph (b) were it not for the Employee's absence due to
         Parental Leave. Hours of Service credited under the preceding sentence
         shall not exceed the number of hours needed to avoid a break in service
         in the computation period in which the Parental Leave first began, and
         in any event shall not exceed 501 hours; if no hours are needed to
         avoid a break in service in such computation period, then the
         provisions of the preceding sentence shall apply as though the Parental
         Leave began in the immediately following computation period. If such an
         Employee has had a break in service before becoming eligible for
         membership, Eligibility Service shall begin from the date of his or her
         return

                                                                       Article 2

<PAGE>

                                                                         Page 16

         to the employ of the Company or an Associated Company. Except as
         otherwise provided in this Article 2, his or her Eligibility Service
         before the break in service shall be restored only upon completion of
         one year of Eligibility Service within the 12-month period following
         his or her break in service. If, however, the periods of consecutive
         one-year breaks in service equals or exceeds the greater of (i) five
         years or (ii) the total number of years of Eligibility Service before
         the break in service, his or her Eligibility Service prior to the
         break shall never be restored.

 (c)     Employment With the Company or an Associated Company but not as an
         ------------------------------------------------------------------
         Employee. Eligibility Service with respect to prior employment rendered
         --------
         by any person who, on or after the Effective Date and prior to the date
         on which he or she becomes an Employee, is or was in the employ of the
         Company or an Associated Company but not as an Employee shall, subject
         to the provisions of Section 2.01(e) and Section 2.01(f), be equal to:

         (i)      the number of years credited to him, if any, on the basis of
                  the "1,000 hour rule" under a pension plan maintained by the
                  Company or an Associated Company applicable to him or her for
                  the period of such prior employment ending on the last day of
                  the calendar year preceding the date on which he or she
                  becomes an Employee or the date on which such prior employment
                  terminated, plus

         (ii)     the greater of (1) the service credited to him, if any, on the
                  basis of the "1,000 hour rule" for the portion of the calendar
                  year ending on the date immediately preceding the date he or
                  she becomes an Employee or the date on which such prior
                  employment terminated, or (2) the Eligibility Service he or
                  she would be credited with under this Plan for the entire
                  calendar year in which the transfer or termination of
                  employment took place.

         Notwithstanding the foregoing provisions of this paragraph (c), in the
         event a person's prior employment was not covered by or credited under
         a pension plan which recognized employment on

                                                                       Article 2

<PAGE>

                                                                         Page 17

         the basis of the "1,000 hour rule," any such prior employment with the
         Company or an Associated Company whether rendered before or after the
         Effective Date shall be recognized in accordance with the terms of
         this Article 2.

 (d)     Certain Absences to be Recognized as Eligibility Service. Except as
         --------------------------------------------------------
         otherwise indicated in this Article 2, the following periods of
         approved absence rendered on and after the Effective Date shall be
         recognized as Eligibility Service under the Plan and shall not be
         considered as breaks in Eligibility Service:

         (i)      The period of any leave of absence granted in respect of
                  service with the armed forces of the United States on or after
                  the Effective Date provided the Employee shall have returned
                  to the service of the Company or an Associated Company in
                  accordance with reemployment rights under applicable law and
                  shall have complied with all of the requirements of such law
                  as to reemployment.

         (ii)     Except as provided by law, the period on or after the
                  Effective Date of any leave of absence granted in respect of
                  service, not exceeding two years, with any other agency or
                  department of the United States Government.

         (iii)    The period on and after the Effective Date of any total and
                  permanent disability during which an Employee becomes entitled
                  to a disability benefit under Title II of the Federal Social
                  Security Act as amended from time to time or the period on and
                  after the Effective Date of total and permanent disability as
                  determined by the Retirement Committee on the basis of such
                  medical information as it shall require.

         (iv)     The period of any leave of absence on and after the Effective
                  Date during which Company sickness or accident benefits are
                  payable.

                                                                       Article 2

<PAGE>

                                                                         Page 18

         (v)      The period on and after the Effective Date of any leave of
                  absence approved by the Company during which an Employee is
                  paid Compensation at a rate which is at least one-half of the
                  Employee's basic rate of Compensation in effect immediately
                  prior to such leave.

         (vi)     In any event, Eligibility Service shall include the period,
                  with or without Compensation, immediately preceding the
                  Employee's Severance Date but not in excess of 12 consecutive
                  months inclusive of those periods of approved absences already
                  included in subparagraphs (i) through (v) above, during which
                  an Employee is continuously absent from service.

         (vii)    The period between an Employee's Severance Date and his or her
                  reemployment if he or she returns to the employ of the Company
                  or an Associated Company before the first anniversary date of
                  his or her Severance Date; provided, however, that the
                  combined periods recognized under subparagraph (vi) above and
                  under this subparagraph (vii) shall not exceed 12 consecutive
                  months.

         (viii)   The period of any periodic salary continuation payments an
                  Employee receives under any severance pay plan of the Company.

         Except to the extent provided under subparagraph (vi), and if
         applicable, under subparagraph (vii) above, if an Employee fails to
         return to active employment upon expiration of the approved absences
         specified in subparagraphs (i), (ii), (iv) and (v) above, such periods
         of approved absence shall not be considered as Eligibility Service
         under the Plan.

 (e)     Breaks in Service. All absences from the Company or from an Associated
         -----------------
         Company, other than the absences specified in paragraph (d) above,
         shall be considered as breaks in Eligibility Service; provided,
         however, that in no event shall there be a break in Eligibility Service
         if an Employee (i) is continuously absent from service with the Company
         or with an Associated Company and returns to

                                                                       Article 2

<PAGE>

                                                                         Page 19

         the employ of the Company or an Associated Company before the first
         anniversary of his or her Severance Date or (ii) is absent from work
         because of a Parental Leave and returns to the employ of the Company
         or an Associated Company within two years of his or her Severance
         Date. If the provisions of clause (ii) above are applicable, the first
         year of such absence for Parental Leave, measured from an Employee's
         Severance Date, shall not be considered in determining the Employee's
         period of break in service for purposes of Section 2.01(f) below.

 (f)     Bridging Breaks in Service
         --------------------------

         (i)      If an Employee has a break in service and such Employee was
                  eligible for a vested benefit under Section 4.05 at the time
                  of his or her break in service, except as otherwise provided
                  in Section 4.11, employment both before and after the
                  Employee's absence shall be immediately recognized as
                  Eligibility Service, subject to the provisions of this Section
                  2.01, upon his or her return to the employ of the Company or
                  an Associated Company.

         (ii)     If an Employee has a break in service and such Employee was
                  not eligible for a vested benefit under Section 4.05 at the
                  time of his or her break in service, Eligibility Service shall
                  begin from the date of his or her return to the employ of the
                  Company or an Associated Company. If such Employee returns to
                  the employ of the Company or an Associated Company and the
                  period of the Employee's break is less than the greater of (1)
                  five years or (2) the service rendered prior to such break,
                  the service prior to such break shall be included as
                  Eligibility Service, subject to the provisions of this Section
                  2.01, only upon completion of at least 12 months of
                  Eligibility Service following his or her break in service.
                  However, if the period of the Employee's break in service
                  equals or exceeds the greater of (1) five years or (2) the
                  service rendered prior to such break, the service rendered
                  prior to such break shall be included as Eligibility Service,
                  subject to the

                                                                       Article 2

<PAGE>

                                                                         Page 20

               provisions of this Section 2.01, only upon completion of a period
               of Eligibility Service equal to the lesser of the period of his
               or her break in service or ten years.

 (g)     Eligibility Service Prior to the Effective Date
         -----------------------------------------------

         Notwithstanding any foregoing provisions to the contrary, Eligibility
         Service shall include (i) with respect to any person who becomes a
         Member of the Plan on the Effective Date pursuant to the provisions of
         Section 3.01(a) or (b) or Section 3.05, any employment rendered by such
         Member prior to the Effective Date to the extent such employment is
         recognized as Eligibility Service under the provisions of the Prior
         Salaried Plan, (ii) with respect to any person who was employed by ITT
         Rayonier Incorporated on a salaried basis as of February 28, 1994 but
         was not a member of the Prior Salaried Plan as of such date and who
         becomes a Member of the Plan on or after the Effective Date pursuant to
         the provisions of Section 3.01(c), any uninterrupted employment with
         the Company or with an Associated Company rendered by such Member prior
         to the Effective Date and prior to his or her Severance Date, and (iii)
         with respect to any person who was employed by ITT Rayonier
         Incorporated on a salaried basis on December 1, 1993 but was not
         employed by the Company on the Effective Date, any employment rendered
         by the Member prior to the Effective Date to the extent such employment
         is recognized as Eligibility Service under the provisions of the Prior
         Salaried Plan. With respect to a person not described in clause (i),
         (ii), or (iii) of the preceding sentence who becomes a Member after the
         Effective Date, Eligibility Service for the purpose of determining
         eligibility for benefits but not for the purpose of determining
         eligibility for Plan membership or Final Average Compensation shall
         include, subject to the provisions of Section 2.01(f)(ii) with respect
         to bridging breaks in service, any employment with ITT Rayonier
         Incorporated rendered by such Member prior to the Effective Date to the
         extent such employment

                                                                       Article 2

<PAGE>

                                                                         Page 21

         is recognized or would have been recognized as Eligibility Service
         under the provisions of the Prior Salaried Plan.

2.02     Benefit Service
         ---------------

 (a)     Benefit Service On and After the Effective Date. Except as hereinafter
         -----------------------------------------------
         otherwise provided, all uninterrupted employment with the Company
         rendered by a Member as an Employee on and after the Effective Date and
         prior to his or her Severance Date shall be recognized as Benefit
         Service under the Plan. Benefit Service for any period of employment
         rendered prior to the Effective Date shall be determined as set forth
         in Section 2.02(f).

(b)      Employment With an Associated Company. Except as otherwise provided in
         -------------------------------------
         an Appendix to the Plan, no employment with an Associated Company
         rendered by a Member shall be recognized as Benefit Service under the
         Plan; except, however, if a Member completes 36 months of Eligibility
         Service as an Employee, any employment rendered on and after the
         Member's date of hire with an Associated Company before classification
         as an Employee shall be recognized as Benefit Service subject to any
         limitations for the Associated Company at which the Member was employed
         set forth in writing by the Retirement Committee. If a Member ceases to
         be an Employee and is again employed at an Associated Company, such
         further employment will not be recognized as Benefit Service unless and
         until the Member again (i) becomes an Employee and (ii) completes 36
         months of Eligibility Service as an Employee.

(c)      Employment With the Company but not as an Employee. Except as otherwise
         --------------------------------------------------
         provided in Section 3.04, with respect to (i) any person who on or
         after the Effective Date and immediately prior to the date on which he
         or she becomes an Employee, is in the employ of the Company but not as
         an

                                                                       Article 2

<PAGE>

                                                                         Page 22

         Employee and (ii) any Member who completes an Hour of Service on and
         after the Effective Date, and who thereafter ceases to be an Employee
         but remains in the employ of the Company, and on or after the
         Effective Date again becomes an Employee, uninterrupted employment
         with the Company otherwise than as an Employee rendered on and after
         the Effective Date shall be recognized as Benefit Service in
         accordance with the terms of this Section 2.02, provided such person
         is a Member of the Plan, upon completion of 36 months of Eligibility
         Service as an Employee, subject to the limitations set forth in
         writing by the Board of Directors or the Retirement Committee for the
         Participating Unit at which such person was first employed.

 (d)     Certain Absences to be Recognized as Benefit Service. Except as
         ----------------------------------------------------
         otherwise indicated below, the following periods of approved absence
         rendered on and after the Effective Date shall be recognized as Benefit
         Service and shall not be considered as breaks in Benefit Service:

         (i)      The period of any leave of absence granted in respect of
                  service with the armed forces of the United States on and
                  after the Effective Date provided the Employee shall have
                  returned to the service of the Company or an Associated
                  Company in accordance with reemployment rights under
                  applicable law and shall have complied with all of the
                  requirements of such law as to reemployment.

         (ii)     Except as provided by law, the period on and after the
                  Effective Date of any leave of absence granted in respect of
                  service, not exceeding two years, with any other agency or
                  department of the United States Government.

         (iii)    The period on and after the Effective Date of any total and
                  permanent disability during which an Employee becomes entitled
                  to a disability benefit under Title II of the Federal Social
                  Security Act as amended from time to time; provided, however,
                  that, if such disability benefit ceases to be paid solely due
                  to the Employee's age, Benefit Service shall

                                                                       Article 2

<PAGE>

                                                                         Page 23

                  include the period of total and permanent disability during
                  which the Employee is entitled or would have been entitled if
                  he or she had participated in the Company's applicable long
                  term disability plan to receive disability benefit under such
                  long term disability plan.

         (iv)     The period on and after the Effective Date of any leave of
                  absence during which Company sickness or accident benefits are
                  payable.

         (v)      The period on and after the Effective Date of any leave of
                  absence approved by the Company during which an Employee is
                  paid Compensation at a rate which is at least one-half of the
                  Employee's basic rate of Compensation in effect immediately
                  prior to such leave.

         (vi)     In any event, Benefit Service shall include the period, with
                  or without Compensation, immediately preceding the Employee's
                  Severance Date not in excess of 12 consecutive months
                  inclusive of those periods of approved absences already
                  included in subparagraphs (i) through (v) above, during which
                  an Employee is continuously absent from service.

         (vii)    The period of any periodic salary continuation payments an
                  Employee receives under any severance pay plan of the Company.

         Except to the extent provided under subparagraph (vi) above, if an
         Employee fails to return to active employment upon expiration of the
         approved absences specified in subparagraphs (i), (ii), (iv) and (v)
         above, such periods of approved absence shall not be considered as
         Benefit Service under the Plan.

         The Compensation of a Member during the periods of absence covered by
         clause (i), (ii), (iv) or (vi) above shall be the Compensation the
         Member actually receives during such period. The Compensation of a
         Member during the period of absence covered by clause (iii) above shall
         be deemed to be the Member's Final Average Compensation based on his or
         her Eligibility Service up

                                                                       Article 2

<PAGE>

                                                                         Page 24

         to such absence. Unless the Retirement Committee determines otherwise
         on a basis uniformly applicable to all persons similarly situated, the
         Social Security Benefit of a Member covered by clause (iii) above
         shall be based on the benefit awarded by the Social Security
         Administration at the date of his or her total and permanent
         disability.

(e)      All Other Absences for Employees
         --------------------------------

         (i)      No period of absence approved by the Company other than those
                  specified in Section 2.02(d) above shall be recognized as
                  Benefit Service.

         (ii)     No other absence, other than the absence covered by the
                  exception in clause (i) above, shall be recognized as Benefit
                  Service and any such absence shall be considered as a break in
                  Benefit Service; provided, however, that in no event shall
                  there be a break in Benefit Service if an Employee is
                  continuously absent from service with the Company or with an
                  Associated Company for a period not in excess of 12 months and
                  returns as an Employee to the employ of the Company before the
                  first anniversary date of his or her Severance Date. However,
                  any period between a Severance Date and a reemployment date
                  which is counted as Eligibility Service under Section
                  2.01(d)(vii) shall not be counted as Benefit Service.

                  If the Employee was eligible for a vested benefit under
                  Section 4.05 at the time of a break in service, Benefit
                  Service both before and after the Employee's absence shall be
                  immediately recognized as Benefit Service under the Plan upon
                  his or her return to service.

                  If the Employee was not eligible for a vested benefit under
                  Section 4.05 at the time of a break in service, Benefit
                  Service shall begin from the date of the Employee's return to
                  the

                                                                       Article 2

<PAGE>

                                                                         Page 25

                  employ of the Company. However, any Benefit Service rendered
                  prior to such break in service shall be included, subject to
                  the provisions of this Section 2.02, as Benefit Service only
                  at the time that he or she bridges his or her Eligibility
                  Service in accordance with the provisions of Section
                  2.01(f).

(f)      Benefit Service Prior to the Effective Date. Notwithstanding any
         -------------------------------------------
         foregoing provisions to the contrary, Benefit Service shall include (i)
         with respect to any person who becomes a Member of the Plan on the
         Effective Date pursuant to the provisions of Section 3.01(a) or (b) or
         Section 3.05, any employment rendered by such Member prior to the
         Effective Date to the extent such employment is recognized as Benefit
         Service under the provisions of the Prior Salaried Plan, (ii) with
         respect to any person who was employed by ITT Rayonier Incorporated on
         a salaried basis as of February 28, 1994 but who was not a Member of
         the Prior Salaried Plan as of such date and who becomes a Member of the
         Plan on or after the Effective Date pursuant to the provisions of
         Section 3.01(c), any uninterrupted employment with the Company rendered
         by such Member as an Employee prior to the Effective Date and prior to
         his or her Severance Date, and (iii) with respect to any person who was
         employed by ITT Rayonier Incorporated on a salaried basis on or after
         December 1, 1993 but was not employed by the Company on the Effective
         Date, any employment rendered by the Member prior to the Effective Date
         to the extent such employment is recognized as Benefit Service under
         the provisions of the Prior Salaried Plan.

2.03     Questions Relating to Service Under the Plan
         --------------------------------------------

         If any question shall arise hereunder as to an Employee's Eligibility
         Service or Benefit Service, such question shall be resolved in writing
         by the Retirement Committee on a basis uniformly applicable to all
         Employee(s) similarly situated. The Retirement Committee may, with
         respect to

                                                                       Article 2

<PAGE>

                                                                         Page 26

         any person or any group of persons which it considers to be not
         substantial in number, determine whether the employment of such
         person(s), the Company or any Associated Company shall be recognized
         under the Plan as Eligibility Service or Benefit Service. If, in the
         judgment of the Retirement Committee, a group of persons is considered
         to be substantial in number, the employment of such persons with the
         Company or any Associated Company shall not be recognized under the
         Plan as Eligibility Service or Benefit Service until further action by
         the Board of Directors. Such further documentation is hereby
         incorporated into the Plan by reference.

                                                                       Article 2

<PAGE>
                                                                         Page 27

                             ARTICLE 3 -- MEMBERSHIP
                             -----------------------

3.01     Persons Employed on the Effective Date
         --------------------------------------

 (a)     Any person who is an Employee as defined in Section 1.15 on the
         Effective Date and who was a member of the Prior Salaried Plan on
         February 28, 1994 shall become a Member of the Plan on the Effective
         Date.

 (b)     Any person who would be classified as an Employee as defined in Section
         1.15 on the Effective Date but is absent from work at the Company by
         reason of layoff, leave of absence, short term disability or long term
         disability and who is a Member of the Prior Salaried Plan on February
         28, 1994 shall become a Member of the Plan on the Effective Date.

 (c)     Any person who is an Employee as defined in Section 1.15 on the
         Effective Date and who as of February 28, 1994 was not a member of the
         Prior Salaried Plan but was in the process of satisfying the age and
         service eligibility requirements for membership in the Prior Salaried
         Plan, shall become a Member of the Plan as of the first day of the
         calendar month coincident with or next following the date he or she
         completes the age and service requirements set forth in Section 3.02(a)
         and (b).

3.02     Persons First Employed as Employees On or After the Effective Date
         ------------------------------------------------------------------

         Every person who is first employed as an Employee on or after the
         Effective Date shall become a Member of the Plan as of the first day of
         the calendar month coincident with or next following the later of:

         (a)  the date on which he or she attains the 21st anniversary of his or
              her birth, or

                                                                       Article 3

<PAGE>

                                                                         Page 28

         (b)   the date on which he or she completes one year of Eligibility
               Service.

3.03     Reemployment After March 1, 1994 of ITT Rayonier Incorporated Salaried
         ----------------------------------------------------------------------
         Employees
         ---------

         Any person who was employed by ITT Rayonier Incorporated on a salaried
         basis on December 1, 1993 and who was a member of the Prior Salaried
         Plan but who terminated employment prior to the Effective Date shall
         become a Member of the Plan on the first day he is employed as an
         Employee.

3.04     Persons Employed as a Leased Employee With the Company or an Associated
         -----------------------------------------------------------------------
         Company
         -------

         Any person who is a Leased Employee shall not be eligible to
         participate in the Plan. However notwithstanding any other Plan
         provision to the contrary, if a Leased Employee subsequently becomes an
         Employee as defined in Section 1.15 or an Employee as defined in
         Section 1.15 subsequently becomes employed as a Leased Employee,
         uninterrupted employment with the Company or an Associated Company as a
         Leased Employee, shall be counted for the sole purpose of determining
         Eligibility Service but not for the purpose of determining Benefit
         Service; provided, however, that Eligibility Service shall not be
         counted for any Leased Employee for any period of his or her employment
         during which the requirements of Section 414(n)(5) of the Code are met.

3.05     Persons Employed as Other Than Employees by the Company
         -------------------------------------------------------

         Every person employed as other than an Employee by a Participating Unit
         shall become a Member of the Plan as of the first day of the calendar
         month coincident with or next following the date on which he or she
         first becomes an Employee, but not unless and until he or she satisfies
         the same terms and conditions which would have been applicable had he
         or she always been an Employee at

                                                                       Article 3

<PAGE>

                                                                         Page 29

         such Participating Unit. Notwithstanding the foregoing, a Transferred
         Employee shall become a Member on the Effective Date.

3.06     Reemployment of Former Employees, Former Members and Retired Members
         --------------------------------------------------------------------

         Except as provided in Section 3.03, any person reemployed by the
         Company as an Employee shall be considered a new Employee for
         membership purposes under the Plan if such Employee was not previously
         a Member of the Plan.

         The membership of any person reemployed by the Company as an Employee
         shall be immediately resumed if such Employee was previously a Member
         of the Plan.

         If a retired Member or a former Member is reemployed by the Company or
         by an Associated Company in a capacity other than as a Non-Benefits
         Worker, his or her membership in the Plan shall be immediately resumed
         and any payment of a retirement allowance with respect to his or her
         original retirement or any payment of a vested benefit with respect to
         his or her original employment shall cease in accordance with the
         provisions of Section 4.11.

3.07     Termination of Membership
         -------------------------

         Unless otherwise determined by the Retirement Committee in writing
         under rules uniformly applicable to all person(s) or Employee(s)
         similarly situated, an Employee's membership in the Plan shall
         terminate if he or she ceases to be an Employee and he or she is not
         entitled to either a retirement allowance or vested benefit under
         Sections 4.01, 4.02, 4.03, 4.04 or 4.05, except that an Employee's
         membership shall continue (a) during any period while on leave of
         absence approved by the Company, (b) while absent by reason of
         temporary disability, (c) during the period of any

                                                                       Article 3

<PAGE>

                                                                         Page 30

         total and permanent disability which continues to be recognized as
         Eligibility Service and Benefit Service as provided in Article 2, (d)
         while he or she is not an Employee as herein defined but is in the
         employ of the Company or an Associated Company, or (e) during the
         period of any periodic salary continuation payments an Employee
         receives under any severance pay plan of the Company. Employees covered
         by the Plan may not waive such coverage.

3.08     Questions Relating to Membership in the Plan
         --------------------------------------------

         If any question shall arise hereunder as to the commencement, duration
         or termination of the membership of any person(s) or Employee(s)
         employed by the Company or by an Associated Company, such question
         shall be resolved by the Retirement Committee in writing under rules
         uniformly applicable to all person(s) or Employee(s) similarly
         situated. Such further documentation is hereby incorporated into the
         Plan by reference.

                                                                       Article 3

<PAGE>
                                                                         Page 31

                              ARTICLE 4 -- BENEFITS
                              ---------------------

4.01     Normal Retirement Allowance
         ---------------------------

 (a)     The right of a Member to his or her normal retirement allowance shall
         be nonforfeitable as of his or her Normal Retirement Age. A Member may
         retire from active service on a normal retirement allowance upon
         reaching his or her Normal Retirement Date. If a Member postpones his
         or her retirement and continues in active service after his or her
         Normal Retirement Date or returns to service after his or her Normal
         Retirement Date, the provisions of Section 4.02 shall be applicable.

 (b)     Benefit. Prior to adjustment in accordance with Sections 4.06(a) and
         -------
         4.07(c), the annual normal retirement allowance payable on a lifetime
         basis upon retirement at a Member's Normal Retirement Date shall be
         equal to the sum of (i) and (ii) where:

         (i)      equals:

                  (1)      2 percent of the Member's Final Average Compensation
                           multiplied by the portion of the first 25 years of
                           his or her Benefit Service rendered prior to the
                           Effective Date;

                  (2)      plus 1 1/2 percent of the Member's Final Average
                           Compensation multiplied by the next 15 years of his
                           or her Benefit Service rendered prior to the
                           Effective Date, to a combined maximum of 40 years of
                           Benefit Service;

                  (3)      reduced by 1 1/4 percent of the Social Security
                           Benefit multiplied by the portion of his or her years
                           of Benefit Service rendered prior to the Effective
                           Date, and not in excess of 40 years;

                  (4)      reduced, but not below zero, by the annual normal
                           retirement allowance determined under the provisions
                           of Section 4.01(b) of the Prior Salaried Plan prior

                                                                       Article 4

<PAGE>

                                                                         Page 32

                         to the imposition of any limitations under Section 415
                         of the Code and the application of any offset
                         provisions of the Prior Salaried Plan, with respect to
                         the Member's period of employment rendered prior to the
                         Effective Date which has been credited as Benefit
                         Service hereunder pursuant to the provisions of Section
                         2.02(f); and

         (ii)    equals:

                 (1)     2 percent of the Member's Final Average Compensation
                         multiplied by the portion of the first 25 years of his
                         or her Benefit Service rendered on and after the
                         Effective Date;

                 (2)     plus 1 1/2 percent of the Member's Final Average
                         Compensation multiplied by the portion of the next 15
                         years of his or her Benefit Service rendered on or
                         after the Effective Date, to a combined maximum of 40
                         years of Benefit Service minus the total number of
                         years of Benefit Service rendered prior to the
                         Effective Date;

                 (3)     reduced by 1 1/4 percent of the Social Security Benefit
                         multiplied by the portion of the number of years of his
                         or her Benefit Service rendered on or after the
                         Effective Date not in excess of 40 years minus the
                         total number of years of Benefit Service rendered prior
                         to the Effective Date.

         The combined maximum years of Benefit Service used to compute the
         amounts under clauses (i) and (ii) above shall not exceed 40 years.

         The annual normal retirement allowance determined prior to reduction to
         be made on account of the Social Security Benefit shall be an amount
         not less than the greatest annual early retirement allowance which
         would have been payable to a Member had he or she retired under Section
         4.03 or Section 4.04 at any time before his or her Normal Retirement
         Date and as such early retirement

                                                                       Article 4

<PAGE>

                                                                         Page 33

         allowance would have been reduced to commence at such earlier date but
         without reduction on account of the Social Security Benefit. The
         reduction to be made on account of the Social Security Benefit shall in
         any event be based on the Federal Social Security Act in effect at the
         time of the Member's actual retirement.

4.02     Postponed Retirement Allowance
         ------------------------------

(a)      A Member who continues in active service after his or her Normal
         Retirement Date or returns to active service on or after his or her
         Normal Retirement Date shall be retired from active service on a
         postponed retirement allowance on the first day of the month following
         his or her termination of employment, which date shall be the Member's
         Postponed Retirement Date.

(b)      Benefit. Except as hereinafter provided and prior to adjustment in
         -------
         accordance with Sections 4.06(a) and 4.07(c), the annual postponed
         retirement allowance payable on a lifetime basis upon retirement at a
         Member's Postponed Retirement Date shall be equal to the greater of:

         (i)      an amount determined in accordance with Section 4.01(b) but
                  based on the Member's Benefit Service, Social Security Benefit
                  and Final Average Compensation, and with respect to the amount
                  determined under Section 4.01(b)(i)(4), any applicable
                  components under the Prior Salaried Plan as of his or her
                  Postponed Retirement Date or

         (ii)     the annual normal retirement allowance to which the Member
                  would have been entitled under Section 4.01(b) had he or she
                  retired on his or her Normal Retirement Date, increased by an
                  amount which is the Equivalent Actuarial Value of the monthly
                  payments which would have been payable with respect to each
                  month in which he or she worked fewer than eight days. Any
                  monthly payment determined under this subparagraph (ii) with
                  respect to any such month in which he or she worked fewer than
                  eight days shall be

                                                                       Article 4

<PAGE>

                                                                         Page 34

                computed as if the Member had retired on his or her Normal
                Retirement Date and shall reflect additional benefit accruals,
                if any, recomputed as of the first day of each subsequent Plan
                Year during which payment would have been made on the basis of
                his or her Final Average Compensation and Benefit Service
                accrued to such recomputation date.

 (c)     Benefit for Member in Active Service After He or She Attains Age
         ----------------------------------------------------------------
         70 1/2. In the event a Member's retirement allowance is required to
         ------
         begin under Section 4.10 while the Member is in active service, the
         January 1 immediately following the calendar year in which the Member
         attained age 70 1/2 shall be the Member's Annuity Starting Date for
         purposes of this Article 4 and the Member shall receive a postponed
         retirement allowance commencing on that January 1 in an amount
         determined as if he or she had retired on such date. As of each
         succeeding January 1 prior to the Member's actual Postponed Retirement
         Date and as of his or her actual Postponed Retirement Date, the
         Member's retirement allowance shall be:

         (i)    recomputed to reflect any additional retirement allowance
                attributable to his or her Compensation and Benefit Service
                earned during the immediately preceding calendar year and based
                on his or her age at each succeeding January 1 or actual
                Postponed Retirement Date, and

         (ii)   reduced by the Equivalent Actuarial Value of the total payments
                of his or her postponed retirement allowance made with respect
                to each month of continued employment in which he or she was
                credited with at least eight days of service and which were paid
                prior to each such recomputation;

         provided that no such reduction shall reduce the Member's postponed
         retirement allowance below the amount of postponed retirement allowance
         payable to the Member immediately prior to the recomputation of such
         retirement allowance.

                                                                       Article 4

<PAGE>

                                                                         Page 35

4.03     Standard Early Retirement Allowance
         -----------------------------------

 (a)     Eligibility. A Member, who has not reached his or her Normal Retirement
         -----------
         Date but has, prior to his or her termination of employment reached the
         55th anniversary of his or her birth and completed ten years of
         Eligibility Service, is eligible to retire on a standard early
         retirement allowance on the first day of the calendar month coincident
         with or next following termination of employment, which date shall be
         the Member's Early Retirement Date.

 (b)     Benefit. Except as hereinafter provided and prior to adjustment in
         -------
         accordance with Sections 4.06(a) and 4.07(c) the standard early
         retirement allowance shall be an allowance deferred to commence on the
         Member's Normal Retirement Date and shall be equal to the Member's
         Accrued Benefit earned up to his or her Early Retirement Date, computed
         on the basis of his or her Benefit Service, Final Average Compensation,
         Social Security Benefit and any applicable components of the Prior
         Salaried Plan as of his or her Early Retirement Date, with the Social
         Security Benefit determined on the assumption that the Member had no
         earnings after his or her Early Retirement Date.

         The Member may, however, elect to receive an early retirement allowance
         commencing on his or her Early Retirement Date or the first day of any
         calendar month before his or her Normal Retirement Date specified in
         his or her later request therefor in a reduced amount which, prior to
         adjustment in accordance with Sections 4.06(a) and 4.07(c) shall be
         equal to his or her Accrued Benefit earned up to his or her Early
         Retirement Date prior to the reduction for the Social Security Benefit,
         reduced by 1/4 of 1 percent per month for each month by which the
         commencement date of his or her retirement allowance precedes his or
         her Normal Retirement Date.

                                                                       Article 4

<PAGE>

                                                                         Page 36

         The reduction to be made on account of the Social Security Benefit,
         with respect to the retirement allowance payable to a Member retiring
         prior to his or her 62nd birthday, shall not be made until such time as
         the Member is or would upon proper application first be entitled to
         receive said Social Security Benefit. With respect to a Member who
         retires on and after said date and prior to attaining age 62, the
         reduction to be made to the retirement allowance payable to such Member
         or any benefit payable after his or her death to his or her spouse or
         to a contingent annuitant pursuant to the provisions of Section 4.06 on
         account of the Social Security Benefit shall not be made until such
         time as the Member is or would have, had he or she survived, upon
         proper application first been entitled to receive said Social Security
         Benefit.

4.04     Special Early Retirement Allowance
         ----------------------------------

(a)      Eligibility. A Member who has not reached his or her Normal Retirement
         -----------
         Date but who prior to his or her termination of employment (i) has
         reached the 55th anniversary of his or her birth and completed 15 years
         of Eligibility Service or (ii) has reached the 50th anniversary of his
         or her birth but not the 55th anniversary of his or her birth and whose
         age plus years of Eligibility Service equals 80 or more, is eligible,
         in either case, to retire on a special early retirement allowance on
         the first day of the calendar month coincident with or next following
         termination of employment, which date shall be the Member's Special
         Early Retirement Date.

(b)      Benefit. Except as hereinafter otherwise provided and prior to
         -------
         adjustment in accordance with Sections 4.06(a) and 4.07(c) the special
         early retirement allowance shall be an allowance deferred to commence
         on the Member's Normal Retirement Date and shall be equal to his or her
         Accrued Benefit earned up to the Member's Special Early Retirement
         Date, computed on the basis of his or

                                                                       Article 4

<PAGE>

                                                                         Page 37

         her Benefit Service, Final Average Compensation, Social Security
         Benefit and any applicable components of the Prior Salaried Plan as of
         his or her Special Early Retirement Date, with the Social Security
         Benefit determined on the assumption that the Member had no earnings
         after his or her Special Early Retirement Date.

         At or after his or her Special Early Retirement Date, however, the
         Member may elect to receive early payment of his or her Accrued Benefit
         commencing on the later of his or her Special Early Retirement Date or
         the first day of any later calendar month prior to his or her Normal
         Retirement Date as specified in his or her request therefor.

         In the event of early payment commencing on the first day of the month
         coincident with or following the 60th anniversary of a Member's birth,
         the special early retirement allowance, prior to any adjustment in
         accordance with Sections 4.06(a) and 4.07(c), payable prior to age 62
         shall be equal to his or her Accrued Benefit earned up to the Member's
         Special Early Retirement Date prior to the reduction for the Social
         Security Benefit; such retirement allowance shall not be increased to
         reflect a commencement date later than the 60th anniversary of the
         Member's birth.

         In the event of early payment commencing prior to the 60th anniversary
         of a Member's birth, the special early retirement allowance, prior to
         any adjustment in accordance with Sections 4.06(a) and 4.07(c), payable
         prior to age 62 shall be equal to his or her Accrued Benefit earned up
         to the Member's Special Early Retirement Date prior to the reduction
         for the Social Security Benefit but reduced by 5/12 of 1 percent per
         month for each month up to 60 months by which the commencement date of
         his or her special early retirement allowance precedes the first day of
         the calendar month coinciding with or next following the 60th
         anniversary of his or her birth.

                                                                       Article 4

<PAGE>

                                                                         Page 38

         The reduction to be made on account of the Social Security Benefit,
         with respect to the retirement allowance payable to a Member retiring
         prior to his or her 62nd birthday, shall be made at such time as the
         Member is or would upon proper application first be entitled to receive
         said Social Security Benefit. With respect to a Member who retires
         prior to attaining age 62, the reduction to be made to the retirement
         allowance payable to such Member or any benefit payable after his or
         her death to his or her spouse or to a contingent annuitant pursuant to
         the provisions of Section 4.06 on account of the Social Security
         Benefit shall not be made until such time as the Member is or would
         have, if he or she had survived, upon proper application first been
         entitled to receive said Social Security Benefit.

4.05     Vested Benefit
         --------------

(a)      Eligibility. A Member shall be vested in, and have a nonforfeitable
         -----------
         right to, his or her Accrued Benefit upon completion of five years of
         Eligibility Service. If such Member's services are subsequently
         terminated for reasons other than death or early retirement prior to
         his or her Normal Retirement Date, he or she shall be entitled to a
         vested benefit under the provisions of this Section 4.05.

(b)      Benefit. Prior to adjustment in accordance with Sections 4.06(a) and
         -------
         4.07(a), the vested benefit payable to a Member shall be a benefit
         deferred to commence on the former Member's Normal Retirement Date and
         shall be equal to his or her Accrued Benefit earned up to the date the
         Member's employment is terminated, computed on the basis of his or her
         Benefit Service, Final Average Compensation, Social Security Benefit
         and any applicable component of the Prior Salaried Plan as of his or
         her date of termination, with the Social Security Benefit determined on

                                                                       Article 4

<PAGE>

                                                                         Page 39

         the assumption that the Member continued in service to his or her
         Normal Retirement Date at his or her rate of Compensation in effect as
         of his or her date of termination. On or after the date on which the
         former Member shall have reached the 55th anniversary of his or her
         birth he or she may elect to receive a benefit commencing on the first
         day of any calendar month coincident with or next following the 55th
         anniversary of his or her birth and prior to his or her Normal
         Retirement Date as specified in his or her request therefor, after
         receipt by the Retirement Committee of written application therefor
         made by the former Member and filed with the Retirement Committee.
         Upon such earlier payment, the vested benefit otherwise payable at the
         former Member's Normal Retirement Date will be reduced by 1/180th for
         each month up to 60 months by which the commencement date of such
         payments precedes his or her Normal Retirement Date and further
         reduced by 1/360th for each such month in excess of 60 months.

4.06     Forms of Benefit Payment After Retirement
         -----------------------------------------

(a)      Automatic Forms of Payment
         --------------------------

         (i)    Automatic Joint and Survivor Annuity. If a Member or former
                ------------------------------------
                Member who is married on his or her Annuity Starting Date has
                not made an election of an optional form of payment as
                provided in Section 4.06(b), the retirement allowance or vested
                benefit payable to such Member or former Member shall
                automatically be adjusted as follows in order to provide that,
                after his or her death, a lifetime benefit as described below
                shall be payable to the spouse to whom he or she is married on
                his or her Annuity Starting Date:

                (1)  90/50 Spouse's Annuity. If such Member retires from active
                     ----------------------
                     service under Section 4.01, Section 4.02, Section 4.03 or
                     Section 4.04, the automatic joint and survivor annuity
                     payable to the Member shall provide (A) a reduced
                     retirement allowance payable to the Member during his or
                     her life equal to 90 percent of the

                                                                       Article 4

<PAGE>

                                                                         Page 40

                    retirement allowance otherwise payable without optional
                    modification to the Member under Section 4.01, 4.02, 4.03 or
                    4.04, as the case may be, further adjusted, if necessary, as
                    provided in the following sentence and (B) a benefit payable
                    after his or her death to his or her surviving spouse equal
                    to 50 percent of the retirement allowance otherwise payable
                    without optional modification to the Member under Section
                    4.01, 4.02, 4.03 or 4.04, as the case may be, and without
                    further adjustment as provided in the following sentence. If
                    such spouse is more than five years older than the Member,
                    the reduced retirement allowance payable to the Member shall
                    be increased for each such additional full year in excess of
                    five years, but for not more than 20 years, by one-half of 1
                    percent of the retirement allowance payable to the Member
                    prior to optional modification. If such spouse is more than
                    five years younger than the Member, the reduced retirement
                    allowance payable to the Member shall be further reduced for
                    each such additional full year in excess of five years by
                    one-half of 1 percent of the retirement allowance payable to
                    the Member prior to optional modification.

                    Notwithstanding the foregoing, the retirement allowance
                    payable to the Member shall not be less than the retirement
                    allowance otherwise payable without optional modification
                    to the Member at retirement under Section 4.01, 4.02, 4.03
                    or 4.04, as the case may be, multiplied by the appropriate
                    factor contained in Table 3 of Appendix A.

              (2)   Vested Spouse's Annuity. If such Member terminates service
                    -----------------------
                    and is entitled to a vested benefit under Section 4.05, the
                    joint and survivor annuity payable to the former Member
                    shall provide (A) a reduced vested benefit payable to the
                    former

                                                                       Article 4

<PAGE>

                                                                         Page 41

                    Member during his or her life equal to his or her vested
                    benefit computed in accordance with Section 4.05 multiplied
                    by the appropriate factor contained in Table 1 of Appendix A
                    and (B) a benefit payable after his or her death to his or
                    her surviving spouse equal to 50 percent of the reduced
                    vested benefit payable to the former Member.

        (ii)    Automatic Life Annuity. If a Member or former Member is not
                ----------------------
                married on his or her Annuity Starting Date, the retirement
                allowance or vested benefit computed in accordance with Section
                4.01, 4.02, 4.03, 4.04 or 4.05, as the case may be, shall be
                paid to the Member or former Member in the form of a lifetime
                benefit payable during his or her own lifetime with no further
                benefit payable to anyone after his or her death, unless the
                Member or former Member is eligible for and makes an election of
                an optional form of payment under Section 4.06(b).

(b)     Optional Forms of Payment
        -------------------------

        (i)     Life Annuity Option. Any Member or former Member who retires or
                -------------------
                terminates employment with the right to a retirement allowance
                or vested benefit may elect, in accordance with the provisions
                of Section 4.06(d), to provide that the retirement allowance
                payable to him or her under Section 4.01, 4.02, 4.03 or 4.04 or
                the vested benefit payable to him or her under Section 4.05
                shall be in the form of a lifetime benefit payable during his or
                her own lifetime with no further benefit payable to anyone after
                his or her death.

        (ii)    80/80 Spouse's Annuity Option. Any Member who retires from
                -----------------------------
                active service under Section 4.01, 4.02, 4.03 or 4.04, who is
                married on his or her Annuity Starting Date, may elect, in
                accordance with the provisions of Section 4.06(d), to convert
                the retirement allowance otherwise payable to him or her without
                optional modification under Section

                                                                       Article 4

<PAGE>

                                                                         Page 42

          4.01, 4.02, 4.03 or 4.04, as the case may be, into the following
          alternative benefit in order to provide that, after his or her death,
          a lifetime benefit shall be payable to the spouse to whom the Member
          is married on his or her Annuity Starting Date.

          The Member shall receive a reduced retirement allowance payable during
          his or her life equal to 80 percent of the retirement allowance
          otherwise payable without optional modification to the Member at
          retirement under Section 4.01, 4.02, 4.03 or 4.04, as the case may be,
          further adjusted, if necessary, as provided below. The Member's
          surviving spouse shall receive a benefit payable after the Member's
          death equal to the Member's retirement allowance as reduced in this
          Section 4.06(b)(ii).

          If such spouse is more than five years older than the Member, the
          reduced retirement allowance payable to the Member shall be increased
          for each such additional full year in excess of five years, but for
          not more than 20 years, by 1 percent of the retirement allowance
          payable to the Member prior to optional modification. If such spouse
          is more than five years younger than the Member, the reduced
          retirement allowance payable to the Member shall be further reduced
          for each such additional full year in excess of five years by 1
          percent of the retirement allowance payable to the Member prior to
          optional modification.

          Notwithstanding the foregoing, the retirement allowance payable to the
          Member and his or her surviving spouse shall not be less than the
          retirement allowance that would have been payable if the Member had
          elected Option 1 under Section 4.06(b)(iii).

                                                                       Article 4

<PAGE>

                                                                         Page 43

     (iii) Contingent Annuity Option. Any Member who retires from active service
           -------------------------
           under Section 4.01, 4.02, 4.03 or 4.04 may elect, in accordance with
           the provisions of Section 4.06(d), to convert the retirement
           allowance otherwise payable to him or her without optional
           modification under Section 4.01, 4.02, 4.03 or 4.04, as the case may
           be, into one of the following alternative options in order to provide
           that after his or her death, a lifetime benefit shall be payable to
           the person who, when the option became effective, was designated by
           him or her to be his or her contingent annuitant. The optional
           benefit elected shall be the Equivalent Actuarial Value of the
           retirement allowance otherwise payable without optional modification
           under Section 4.01, 4.02, 4.03 or 4.04.

           Option 1. A reduced retirement allowance payable during the Member's
           --------
           life with the provisions that after his or her death a benefit equal
           to 100 percent of his or her reduced retirement allowance shall be
           paid during the life of, and to, his or her surviving contingent
           annuitant.

           Option 2. A reduced retirement allowance payable during the Member's
           --------
           life with the provision that after his or her death a benefit equal
           to 50 percent of his or her reduced retirement allowance shall be
           paid during the life of, and to, his or her surviving contingent
           annuitant.

(c)  Required Notice. No less than 30 days and no more than 90 days before his
     ---------------
     or her Annuity Starting Date, the Retirement Committee shall furnish to
     each Member or former Member a written explanation in non-technical
     language of the terms and conditions of the Automatic Joint and Survivor
     Annuity and the Automatic Life Annuity as described in Section 4.06(a) and
     the optional forms of benefits described in Section 4.06(b). Such
     explanation shall include (i) a general description of the eligibility
     conditions for, the material features of and the relative values

                                                                       Article 4

<PAGE>

                                                                         Page 44

     of the optional forms of payment under the Plan, (ii) any rights the Member
     or former Member may have to defer commencement of his or her retirement
     allowance or vested benefit, (iii) the requirement for Spousal Consent as
     provided in Section 4.06(d) and (iv) the right of the Member or former
     Member, prior to his or her Annuity Starting Date to make and to revoke
     elections under Section 4.06.

(d)  Election of Options. A Member may, subject to the provisions of this
     -------------------
     Section 4.06(d), elect to receive his or her retirement allowance or vested
     benefit in the optional form of payment described in Section 4.06(b)(i), or
     in the case of a Member who retires under the provisions of Section 4.01,
     4.02, 4.03 or 4.04, one of the optional forms of payment described in
     Section 4.06(b)(ii) or 4.06(b)(iii), in lieu of the automatic forms of
     payment described in Section 4.06(a). A married Member's or a married
     former Member's election of a Life Annuity form of payment under Section
     4.06(b)(i) or any optional form of payment under Section 4.06(b)(ii) and
     Section 4.06(b)(iii), which does not provide for monthly payments to his or
     her spouse for life after the Member's or former Member's death, in an
     amount equal to at least 50 percent but not more than 100 percent of the
     monthly amount payable under that form of payment to the Member or former
     Member and which is not of Equivalent Actuarial Value to the Automatic
     Joint and Survivor Annuity described in Section 4.06(a)(i), shall be
     effective only with Spousal Consent; provided such Spousal Consent to the
     election has been received by the Retirement Committee.

     Any election made under Section 4.06(a) or Section 4.06(b) shall be made on
     a form approved by the Retirement Committee and may be made during the
     90-day period ending on the Member's Annuity Starting Date, but not prior
     to the date the Member or former Member receives the written explanation
     described in Section 4.06(c). Any such election shall become effective on
     the

                                                                       Article 4

<PAGE>

                                                                         Page 45

     Member's or former Member's Annuity Starting Date, provided the appropriate
     form is filed with and received by the Retirement Committee and may not be
     modified or revoked after his or her Annuity Starting Date. Any election
     made under Section 4.06(a) or Section 4.06(b) after having been filed, may
     be revoked or changed by the Member or former Member only by written notice
     received by the Retirement Committee before his or her election becomes
     effective on his or her Annuity Starting Date. Any subsequent elections and
     revocations may be made at any time and from time to time during the 90-day
     period ending on the Member's or former Member's Annuity Starting Date. A
     revocation shall be effective when the completed notice is received by the
     Retirement Committee. A re-election shall be effective on the Member's or
     former Member's Annuity Starting Date. If, however, the Member or the
     spouse or the contingent annuitant designated in the election dies before
     the election has become effective, the election shall thereby be revoked.

     Notwithstanding the provisions of paragraph (c) above, a Member may, after
     having received the notice, affirmatively elect to have his or her
     retirement allowance or vested benefit commence sooner than 30 days
     following his or her receipt of the notice, provided all of the following
     requirements are met:

     (i)  the Retirement Committee clearly informs the Member that he or she has
          a period of at least 30 days after receiving the notice to decide when
          to have his or her retirement allowance or vested benefit begin, and
          if applicable, to choose a particular optional form of payment;

     (ii) the Member affirmatively elects a date for his or her retirement
          allowance or vested benefit to begin, and if applicable, an optional
          form of payment, after receiving the notice;

                                                                       Article 4

<PAGE>

                                                                         Page 46

     (iii) the Member is permitted to revoke his or her election until the later
           of his or her Annuity Starting Date or seven days following the day
           he or she received the notice;

     (iv)  payment does not commence less than seven days following the day
           after the notice is received by the Member; and

     (v)   the Member's Annuity Starting Date is after the date the notice is
           provided.

     With respect to a Member who retires under the provisions of Section 4.03
     or Section 4.04, the reduction on account of the Social Security Benefit to
     be made to the benefit, if any, payable in accordance with Section 4.06(a)
     or Section 4.06(b) to his or her designated spouse or to his or her
     contingent annuitant shall not be made until such time as the Member would
     have, had he or she survived, upon proper application first been entitled
     to receive said Social Security Benefit.

     If a Member dies after his or her Annuity Starting Date, any payment
     continuing on to his or her spouse or contingent annuitant shall be
     distributed at least as rapidly as under the method of distribution being
     used as of the Member's date of death.

4.07 Survivor's Benefit Applicable Before Retirement
     -----------------------------------------------

     The term "Beneficiary" for purposes of this Section 4.07 shall mean any
     person or any trust established by the Member or the Member's estate, named
     by the Member by written designation to receive benefits payable under the
     automatic Pre-Retirement Survivor's Benefit and under the optional
     Supplemental Pre-Retirement Survivor's Benefit; provided, however, that,
     for any married Member the term "Beneficiary" shall automatically mean the
     Member's spouse and any prior designation to the contrary will be canceled,
     unless the Member, with Spousal Consent, designates otherwise. An election
     of a non-spouse Beneficiary by a married Member shall be effective only if

                                                                       Article 4

<PAGE>

                                                                         Page 47

     accompanied by Spousal Consent and such Spousal Consent has been received
     by the Retirement Committee. If the Member dies without an effective
     designation of Beneficiary, the Member's Beneficiary for purposes of this
     Section 4.07 shall automatically be the Member's spouse, if any, or his or
     her estate. If the Member elects the additional optional protection of the
     Supplemental Pre-Retirement Survivor's Benefit, the Member's Beneficiary
     thereunder shall be the same as the Beneficiary under the Automatic
     Pre-Retirement Survivor's Benefit. The Retirement Committee shall resolve
     any questions arising hereunder as to the meaning of "Beneficiary" on a
     basis uniformly applicable to all Members similarly situated.

(a)  Automatic Vested Spouse's Benefit
     ---------------------------------

     (i)  Automatic Vested Spouse's Benefit Applicable Before Termination of
          ------------------------------------------------------------------
          Employment. The surviving spouse of a Member who has completed five
          ----------
          years of Eligibility Service but who has not yet completed ten years
          of Eligibility Service and attained age 55 shall automatically receive
          a benefit payable under the Automatic Vested Spouse's Benefit of this
          Section 4.07(a)(i) in the event said Member should die after the
          effective date of coverage hereunder and before termination of
          employment. The benefit payable to the Member's spouse shall be equal
          to 50 percent of the benefit the Member would have received if he or
          she had terminated his or her employment on his or her date of death,
          survived to Normal Retirement Date, and on the day before he or she
          would have reached Normal Retirement Date had elected to begin
          receiving his or her vested benefit in the form of the Automatic Joint
          and Survivor Annuity under Section 4.06(a)(i)(2), or with respect to a
          Member who had met the eligibility requirements set forth in Section
          4.04(a)(ii) and who died in active employment prior to the 55th
          anniversary of his or her birth, his or her early retirement allowance
          accrued to his or her date of death in the form of the Automatic Joint

                                                                       Article 4

<PAGE>

                                                                         Page 48

          and Survivor Annuity under Section 4.06(a)(i)(1). Such benefit shall
          be payable for the life of the spouse commencing on what would have
          been the Member's Normal Retirement Date. However, the Member's spouse
          may elect, by written application filed with the Retirement Committee,
          to have payments begin as of the first day of any calendar month on or
          after the date the former Member would have reached the 55th
          anniversary of his or her birth provided, however, if the Member dies
          after having met the requirements set forth in Section 4.04(a)(ii) for
          a special early retirement allowance, the Member's spouse may elect to
          have payments begin under this Automatic Vested Spouse's Benefit as of
          the first day of any month following the Member's death.

          If the Member's spouse elects to commence payment of the Automatic
          Vested Spouse's Benefit prior to what would have been the Member's
          Normal Retirement Date, the amount of such benefit payable to the
          spouse shall be based on (i) the reduced vested benefit to which the
          Member would have been entitled, had the Member elected to have
          payments commence to himself on such earlier date in accordance with
          the provisions of Section 4.05(b) or (ii) in the case of a Member who
          dies after having met the requirements for a special early retirement
          allowance as set forth Section 4.04(a)(ii), the reduced early
          retirement allowance to which the Member would have been entitled had
          he or she elected to have payments commence to himself on such earlier
          date in accordance with the provisions of Section 4.04(b).

          Coverage hereunder shall be applicable to a married Member in active
          service who has satisfied the eligibility requirements for a vested
          benefit under Section 4.05 and shall become effective on the date the
          Member marries and shall cease on the earlier of (i) the

                                                                       Article 4

<PAGE>

          date such active Member reaches the 55th anniversary of his or her
          birth and completes ten years of Eligibility Service, (ii) the date
          such active Member reaches the 65th anniversary of his or her birth,
          (iii) the date such active Member's marriage is legally dissolved by a
          divorce decree, or (iv) the date such active Member's spouse dies.
          Coverage under Section 4.07(b)(i) shall commence on the date a Member
          in active service reaches the earlier of (i) the 55th anniversary of
          his or her birth, or if later, the date he or she completes ten years
          of Eligibility Service or (ii) the 65th anniversary of his or her
          birth.

     (ii) Automatic Vested Spouse's Benefit Applicable Upon Termination of
          ----------------------------------------------------------------
          Employment. In the case of a former Member who is married and entitled
          ----------
          to a vested benefit under Section 4.05, the provisions of this Section
          4.07(a)(ii) shall apply to the period between the date his or her
          services are terminated or the date, if later, the former Member is
          married and his or her Annuity Starting Date, or other cessation of
          coverage as later specified in this Section 4.07(a)(ii).

          In the event of a married former Member's death during any period in
          which these provisions have not been waived or revoked by the former
          Member and his or her spouse, the benefit payable to the former
          Member's spouse shall be equal to 50 percent of the vested benefit the
          former Member would have received on his or her Normal Retirement Date
          if he or she had elected to receive such benefit in the form of the
          Automatic Joint and Survivor Annuity under Section 4.06(a)(i).

          The spouse's benefit shall be payable for the life of the spouse
          commencing on what would have been the former Member's Normal
          Retirement Date. However, the former Member's spouse may elect, by
          written application filed with the Retirement Committee, to have

                                                                       Article 4

<PAGE>

                                                                         Page 50

          payments begin as of the first day of any calendar month on or after
          the date the former Member would have reached the 55th anniversary of
          his or her birth. If the former Member's spouse elects to commence
          payment of this Automatic Vested Spouse's Benefit prior to what would
          have been the former Member's Normal Retirement Date, the amount of
          such benefit payable to the spouse shall be based on the reduced
          vested benefit to which the former Member would have been entitled,
          had the former Member elected to have payments commence to himself on
          such earlier date in accordance with the provisions of Section
          4.05(b).

          The vested benefit payable to a former Member whose spouse is covered
          under this Section 4.07(a)(ii), or if applicable, the benefit payable
          to his or her spouse upon his or her death shall be reduced by the
          applicable percentages shown below. Such reduction shall commence on
          and after the first of the month coincident with or following the
          effective date of coverage hereunder and cease when coverage ceases;
          provided, however, no reduction shall be made with respect to any
          period before the later of (1) the date the Retirement Committee
          furnishes the Member the notice of his or her right to waive the
          Automatic Vested Spouse's Benefit or (2) the commencement of the
          election period specified below.

                     ANNUAL REDUCTION FOR SPOUSE'S COVERAGE
                         AFTER TERMINATION OF EMPLOYMENT

                       Age                             Reduction
                       ---                             ---------

                  Less than 40                    1/10 of 1% per year
               40 but prior to 50                 2/10 of 1% per year
               50 but prior to 55                 3/10 of 1% per year
               55 but prior to 60                 5/10 of 1% per year
               60 but less than 65                    1% per year

                                                                       Article 4

<PAGE>

                                                                         Page 51

          The Retirement Committee shall furnish to each former Member a written
          explanation which describes (1) the terms and conditions of the
          Automatic Vested Spouse's Benefit, (2) the former Member's right to
          make, and the effect of, an election to waive the Automatic Vested
          Spouse's Benefit, (3) the rights of the former Member's spouse, and
          (4) the right to make, and the effect of, a revocation of such a
          waiver. Such written explanation shall be furnished to each former
          Member before the first anniversary of the date he or she terminated
          service and shall be furnished to such former Member even though he or
          she is not married.

          The period during which the former Member may make an election to
          waive the Automatic Vested Spouse's Benefit provided under this
          Section 4.07(a)(ii) shall begin not later than the date his or her
          employment terminates and end on his or her Annuity Starting Date, or
          if earlier, his or her date of death. Any waiver, revocation or
          re-election of the Automatic Vested Spouse's Benefit shall be made on
          a form provided by the Retirement Committee and any waiver or
          revocation shall require Spousal Consent. If, upon termination of
          employment, the former Member waives coverage hereunder in accordance
          with administrative procedures established by the Retirement Committee
          for all Members similarly situated, such waiver shall be effective as
          of the Member's Severance Date. Any later re-election or revocation
          shall be effective on the first day of the month coincident with or
          next following the date the completed form is received by the
          Retirement Committee. If a former Member dies during the period after
          a waiver or revocation is in effect there shall be no benefits payable
          under the provisions of this Section 4.07.

                                                                       Article 4

<PAGE>

                                                                         Page 52

          Except as described above in the event of a waiver or revocation,
          coverage under this Section 4.07(a)(ii) shall cease to be effective
          upon a former Member's Annuity Starting Date, or upon the date a
          former Member's marriage is legally dissolved by a divorce decree, or
          upon the death of the spouse, whichever event shall first occur.

(b)  Automatic Pre-Retirement Survivor's Benefit
     -------------------------------------------

     (i)  Automatic Pre-Retirement Survivor's Benefit Applicable Before a Member
          ----------------------------------------------------------------------
          Retires Under the Provisions of Section 4.01, Section 4.02, Section
          -------------------------------------------------------------------
          4.03 or Section 4.04. The Beneficiary of a Member who has reached the
          --------------------
          65th anniversary of his or her birth or who has reached the 55th
          anniversary of his or her birth and completed ten years of Eligibility
          Service, shall automatically receive a Pre-Retirement Survivor's
          Benefit payable under the provisions of this Section 4.07(b)(i) in the
          event said Member should die before he or she retires under the
          provisions of Section 4.01, 4.02, 4.03 or 4.04 or reaches his or her
          Annuity Starting Date pursuant to the provisions of Section 4.02(d),
          if earlier. The benefit payable during the life of, and to, the
          Beneficiary shall be equal to one-half of the Member's Accrued
          Benefit, without optional modification in accordance with the
          provisions of Section 4.06, accrued to the date of his or her death,
          adjusted to take into account the Member's Social Security Benefit.
          The Social Security Benefit shall be determined on the assumption that
          the Member had no earnings after his or her date of death, and if his
          or her death occurs prior to the time the Member is or would upon
          proper application first be entitled to receive such Social Security
          Benefit, such adjustment shall nevertheless be made at the Member's
          date of death. If the Beneficiary is more than five years younger than
          the Member, the benefit payable to the Beneficiary shall be reduced by
          one-half of 1 percent for each full year the Beneficiary is more than
          five years younger.

                                                                       Article 4

<PAGE>

                                                                         Page 53

          Coverage hereunder shall be effective on the first day of the calendar
          month coincident with or next following the date the Member reaches
          his or her 55th birthday and completes ten years of Eligibility
          Service, or if earlier, his or her Normal Retirement Date. In the case
          of a married Member coverage under Section 4.07(a)(i) shall cease on
          the date coverage under this Section 4.07(b)(i) is effective as set
          forth in the preceding sentence.

     (ii) Automatic Pre-Retirement Survivor's Benefit Applicable Between Early
          --------------------------------------------------------------------
          Retirement Date or Special Early Retirement Date and the Member's
          -----------------------------------------------------------------
          Annuity Starting Date. In the case of a Member retired early under
          ---------------------
          Section 4.03 or Section 4.04 of the Plan with the payment of the early
          retirement allowance deferred to commence at a date later than his or
          her Early Retirement Date or Special Early Retirement Date, whichever
          is applicable, the provisions of this Section 4.07(b)(ii) shall apply
          to the period between his or her Early Retirement Date or Special
          Early Retirement Date and his or her Annuity Starting Date. The Member
          shall, at his or her Early Retirement Date or Special Early Retirement
          Date, complete such forms as are required under this Section
          4.07(b)(ii) and coverage hereunder shall be effective as of his or her
          Early Retirement Date or Special Early Retirement Date.

          In the event of the Member's death during the period in which these
          provisions are in effect, the benefit payable during the life of, and
          to, the Beneficiary shall be equal to one-half of the Member's Accrued
          Benefit, without optional modification in accordance with the
          provisions of Section 4.06, accrued to the date of his or her Early
          Retirement Date or Special Early Retirement Date, whichever is
          applicable, adjusted to take into account the Member's Social Security
          Benefit. If the Member's death occurs prior to the time the Member is
          or would upon proper application first be entitled to receive such
          Social

                                                                       Article 4

<PAGE>

                                                                         Page 54

          Security Benefit, such adjustment shall nevertheless be made at the
          Member's date of death. If the Beneficiary is more than five years
          younger than the Member, the benefit payable to the Beneficiary shall
          be reduced by one-half of 1 percent for each full year the Beneficiary
          is more than five years younger.

     The Automatic Pre-Retirement Survivor's Benefit shall be payable for the
     life of the Beneficiary commencing on what would have been the Member's
     Normal Retirement Date or date of death, if later. However, if a Member
     dies prior to his or her Normal Retirement Date, the Beneficiary of the
     Member may elect, by written application filed with the Retirement
     Committee, to have such payments begin as of the first day of any calendar
     month following the Member's date of death and prior to what would have
     been the Member's Normal Retirement Date. If the Beneficiary elects to
     commence payment of the Automatic Pre-Retirement Survivor's Benefit prior
     to what would have been the Member's Normal Retirement Date the amount of
     such benefit shall be determined in accordance with Sections 4.07(b)(i) and
     (ii) above, as applicable, and without reduction for such early
     commencement.

     Notwithstanding the foregoing, in the event the Member's Beneficiary is
     someone other than his or her spouse, payment of the automatic
     Pre-Retirement Survivor's Benefit shall commence within one year of the
     Member's date of death and in the event such commencement date is prior to
     the 55th anniversary of the Member's birth, the benefit payable to the
     Beneficiary shall be of Equivalent Actuarial Value to the benefit otherwise
     payable hereunder to the Beneficiary on the date the Member would have
     attained age 55.

                                                                       Article 4

<PAGE>

                                                                         Page 55

(c)  Optional Supplemental Pre-Retirement Survivor's Benefit
     -------------------------------------------------------

     (i)  Optional Supplemental Pre-Retirement Survivor's Benefit Applicable
          ------------------------------------------------------------------
          Before a Member Retires Under the Provisions of Section 4.01, Section
          ---------------------------------------------------------------------
          4.02, Section 4.03 or Section 4.04. A Member, who has reached the 65th
          ----------------------------------
          anniversary of his or her birth or who has reached the 55th
          anniversary of his or her birth and completed ten years of Eligibility
          Service, may elect to receive a reduced retirement allowance upon his
          or her retirement in order to provide that, if he or she should die
          after his or her election becomes effective but before he or she
          retires under the provisions of Section 4.01, Section 4.02, 4.03 or
          4.04 or reaches his or her Annuity Starting Date pursuant to the
          provisions of Section 4.02(d), a benefit shall be paid to the
          Beneficiary designated by him or her in accordance with the following
          terms and conditions.

          The Member may elect to reduce the retirement allowance to which he or
          she would otherwise be entitled at retirement under Section 4.01,
          4.02, 4.03 or 4.04 by one-half of 1 percent per year for each year
          between the date on which the election becomes effective and the
          earliest of the Member's Early Retirement Date, Special Early
          Retirement Date, Annuity Starting Date, or the date the election is
          revoked as provided in Section 4.07(i).

          If the Member makes such an election and dies before he or she retires
          under the provisions of Section 4.01, 4.02, 4.03 or 4.04, the benefit
          payable during the life of, and to, the Beneficiary shall be equal to
          25 percent of the Member's Accrued Benefit without optional
          modification in accordance with the provisions of Section 4.06,
          accrued to the date of his or her death adjusted (1) to take into
          account the Member's Social Security Benefit and (2) as provided
          below. The Social Security Benefit shall be determined on the

                                                                       Article 4

<PAGE>

                                                                         Page 56

          assumption that the Member had no earnings after his or her date of
          death, and if his or her death occurs prior to the time the Member is
          or would upon proper application first be entitled to receive such
          Social Security Benefit, such adjustment shall nevertheless be made at
          the Member's date of death. The benefit payable to the Beneficiary
          shall be reduced by one-half of 1 percent per year for each year
          between the date on which the election became effective and the date
          of the Member's death. If the Beneficiary is more than five years
          younger than the Member, the benefit payable to the Beneficiary shall
          be further reduced by one-half of 1 percent for each full year the
          Beneficiary is more than five years younger.

          If the Member makes an election under this Section 4.07(c)(i) at or
          prior to the time he or she is first eligible to do so, it shall
          become effective on the first day of the calendar month coincident
          with or next following the date the Member reaches his or her 55th
          birthday and completes ten years of Eligibility Service, or if
          earlier, his or her Normal Retirement Date. A Member will be deemed to
          have waived coverage under this Section 4.07(c)(i) if he or she does
          not file the appropriate forms with the Retirement Committee when
          first eligible to do so. If the Member does not make such election
          until after he or she is first eligible to do so, it shall become
          effective one year after the first day of the calendar month
          coincident with or next following (1) the date the notice is received
          by the Retirement Committee or (2) the date specified in such notice,
          if later.

     (ii) Optional Supplemental Pre-Retirement Survivor's Benefit Applicable
          ------------------------------------------------------------------
          Between Early Retirement Date or Special Early Retirement Date and the
          ----------------------------------------------------------------------
          Member's Annuity Starting Date. In the case of a Member retired early
          ------------------------------
          under the provisions of Section 4.03 or Section 4.04 of the Plan with
          the payment of the early retirement allowance deferred to commence at
          a date later than his or her Early Retirement Date or Special Early

                                                                       Article 4

<PAGE>

                                                                         Page 57

          Retirement Date, the provisions of this Section 4.07(c)(ii) shall
          apply to the period between his or her Early Retirement Date or
          Special Early Retirement Date and his or her Annuity Starting Date.

          The Member may elect to reduce the early retirement allowance to which
          he or she would otherwise be entitled under Section 4.03 or Section
          4.04 by one-half of 1 percent per year for each year between his or
          her Early Retirement Date or Special Early Retirement Date and the
          earlier of the date the election is revoked pursuant to Section
          4.07(i) or his or her Annuity Starting Date.

          If the Member makes such an election and dies during the period the
          election is in effect, the benefit payable during the life of, and to,
          his or her Beneficiary shall be equal to 25 percent of the Member's
          Accrued Benefit, without optional modification in accordance with the
          provisions of Section 4.06, accrued to his or her Early Retirement
          Date or Special Early Retirement Date, adjusted (1) to take into
          account the Member's Social Security Benefit and (2) as provided
          below. If the Member's death occurs prior to the time the Member is or
          would upon proper application first be entitled to receive such Social
          Security Benefit, such adjustment shall nevertheless be made at the
          Member's date of death. The benefit payable to the Beneficiary shall
          be reduced by one-half of 1 percent per year for each year between the
          date on which the election became effective and the date of the
          Member's death. If the Beneficiary is more than five years younger
          than the Member, the benefit payable to the Beneficiary shall be
          further reduced by one-half of 1 percent for each full year the
          Beneficiary is more than five years younger.

                                                                       Article 4

<PAGE>

                                                                         Page 58

          The Member shall, at his or her Early Retirement Date or Special Early
          Retirement Date, complete such forms as are required under this
          Section 4.07(c)(ii), and if he or she so elects, coverage hereunder
          shall be effective as of his or her Early Retirement Date or Special
          Early Retirement Date. A Member will be deemed to have waived coverage
          under this Section 4.07(c)(ii) if he or she does not file the
          appropriate forms with the Retirement Committee at his or her Early
          Retirement Date or Special Early Retirement Date. If the Member
          subsequently makes an election hereunder, it shall become effective
          one year after the first day of the calendar month coincident with or
          next following (1) the date the notice is received by the Retirement
          Committee or (2) the date specified in such notice, if later.

     The optional Supplemental Pre-Retirement Survivor's Benefit shall be
     payable for the life of the Beneficiary commencing on what would have been
     the Member's Normal Retirement Date or date of death, if later. However, if
     a Member dies prior to his or her Normal Retirement Date, the Beneficiary
     may elect, by written application filed with the Retirement Committee, to
     have such payments begin as of the first day of any calendar month
     coincident with or next following the Member's date of death and prior to
     what would have been the Member's Normal Retirement Date. If the
     Beneficiary elects to commence payment of the optional Supplemental
     Pre-Retirement Survivor's Benefit prior to what would have been the
     Member's Normal Retirement Date and after what would have been the 55th
     anniversary of the Member's birth, the amount of such benefit shall be
     determined in accordance with Section 4.07(c)(i) and (ii) above, as
     applicable and without reduction for such early commencement. If the
     Beneficiary elects to commence payment of the optional Supplemental
     Pre-Retirement Survivor's Benefit prior to what would have been the 55th
     anniversary of the Member's birth, the benefit payable to the Beneficiary
     shall be of Equivalent Actuarial Value to the benefit otherwise payable to
     Beneficiary on the date the Member would have

                                                                       Article 4

<PAGE>

                                                                         Page 59

     attained age 55. Notwithstanding any foregoing provision to the contrary,
     payment of the optional Supplemental Pre-Retirement Survivor Benefit must
     commence as of the same date payment of the Automatic Pre-Retirement
     Survivor Benefit commences.

     Notwithstanding the foregoing, in the event the Member's Beneficiary is
     someone other than his or her spouse, payment of the optional Supplemental
     Pre-Retirement Survivor's Benefit shall commence within one year of the
     Member's date of death and in the event such commencement date is prior to
     the 55th anniversary of the Member's birth, the benefit payment to the
     Beneficiary shall be of Equivalent Actuarial Value to the benefit otherwise
     payable hereunder to the Beneficiary on the date the Member would have
     attained age 55.

(d)  Notwithstanding any provision of Section 4.07(b) or Section 4.07(c) to the
     contrary, in no event shall the sum of the Automatic Pre-Retirement
     Survivor's Benefit payable under the provisions of Section 4.07(b) and the
     optional Supplemental Pre-Retirement Survivor's Benefit payable under the
     provisions of Section 4.07(c) to a Beneficiary be less than the amount of
     benefit the spouse would have received if the retirement allowance to which
     the Member was entitled at his or her date of death (i) had commenced on
     the date the spouse elects to have such Pre-Retirement Survivor's Benefit
     payments commence, (ii) in the form of an Automatic Joint and Survivor
     Annuity under Section 4.06(a)(i), and (iii) the Member had died immediately
     thereafter. However, in lieu of the Automatic Joint and Survivor Annuity
     referred to in the preceding sentence, the 80/80 Spouse's Annuity Option
     described in Section 4.06(b)(ii) shall be used to compute the amount
     payable to the spouse if, within the 90-day period prior to his or her
     Annuity Starting Date, the Member had elected such optional form of
     payment.

                                                                       Article 4

<PAGE>

                                                                         Page 60

(e)  Benefits Payable to an Estate or Trust. If a Member's Beneficiary under
     --------------------------------------
     this Section 4.07 is his or her estate or a trust, the benefits otherwise
     payable under Section 4.07(b), and if elected, under Section 4.07(c) shall
     be commuted into a single lump sum amount, which amount shall be determined
     by multiplying the benefits otherwise payable by the appropriate factor in
     Tables 4 or 5 of Appendix A and calculated by assuming the Beneficiary had
     been a person of the same age as the Member at the Member's date of death.
     In no event shall the amount of the lump sum be less than the amount
     required by applicable law. The payment of such single lump sum amount
     shall represent the full and total payment of all benefits due under the
     Plan. The Retirement Committee shall resolve any questions arising
     hereunder on a basis uniformly applicable to all Members similarly
     situated.

(f)  If the Member's Beneficiary dies during the period coverage is effective
     under Sections 4.07(b) and Section 4.07(c), the Beneficiary designation
     shall thereby be canceled. However, coverage under Section 4.07(b), and if
     elected, under Section 4.07(c) shall nevertheless continue in full effect.
     The Member's Beneficiary thereafter shall be in accordance with his or her
     subsequent designation of a new Beneficiary or in accordance with the term
     "Beneficiary" as defined herein.

     If the Member's Beneficiary is his or her spouse and if the Member's
     marriage to said spouse is legally dissolved by a divorce decree, the
     Beneficiary designation under Sections 4.07(b) and 4.07(c) shall remain in
     effect until a subsequent Beneficiary designation is submitted by the
     Member to the Retirement Committee or until the Member remarries. Coverage
     under Section 4.07(b), and if elected, under Section 4.07(c) shall continue
     in full effect.

                                                                       Article 4

<PAGE>

                                                                         Page 61

     A Member may change his or her Beneficiary designation at any time after
     receiving the written explanation described in Section 4.07(g), subject to
     Spousal Consent. Any such change shall become effective on the first day of
     the calendar month coincident with or next following the (i) date the
     notice of change is received by the Retirement Committee or (ii) the date
     specified in such notice, if later, and the original designation shall
     remain in effect until such date.

(g)  The Retirement Committee shall furnish to each Member a written explanation
     in non-technical language which describes (i) the terms and conditions of
     the Automatic Pre-Retirement Survivor's Benefit and the Optional
     Supplemental Pre-Retirement Survivor's Benefit, (ii) the Member's right to
     make an election to designate a Beneficiary other than his or her spouse
     and the effect of such election, (iii) the right to revoke, prior to the
     Annuity Starting Date, such designation and the effect of such revocation,
     and (iv) the rights of the Member's spouse, if any. The Retirement
     Committee shall furnish this written explanation to each Member during the
     period beginning one year prior to the earlier of (i) the date the Member
     retires pursuant to the provision of Section 4.04(a)(ii), (ii) the date the
     Member reaches the 55th anniversary of his or her birth and completes ten
     years of Eligibility Service, or (iii) in the Member's Normal Retirement
     Date, and ending within one year after such date.

(h)  A Member may revoke an election made under Section 4.07(c) at any time
     prior to his or her Annuity Starting Date. There shall be no further
     reduction to the Member's retirement allowance for any period during which
     an election under Section 4.07(c) is not in effect. The Member may make a
     new election at any time thereafter and any subsequent election shall
     become effective one year after the first day of the calendar month
     coincident with or next following the (i) date the notice is received by
     the Retirement Committee or (ii) the date specified in such notice, if
     later.

                                                                       Article 4

<PAGE>

                                                                         Page 62

     If the Member dies prior to the time an election under Section 4.07(c)
     becomes effective, the election shall thereby be canceled.

     Any designation of a Beneficiary and any election made under Section 4.07
     (including any waiver or revocation of either of them) shall be made on a
     form approved by and filed with the Retirement Committee and in accordance
     with the term "Beneficiary" as defined in this Section 4.07.

4.08 Maximum Benefits
     ----------------

(a)  Notwithstanding any provision of the Plan to the contrary, the maximum
     annual retirement allowance payable to a Member under the Plan shall be
     subject to the limitations set forth in Section 415 of the Code and any
     regulations or rulings issued thereunder. If the retirement allowance
     begins before the Member's 62nd birthday, the dollar limitation described
     in Section 415(b)(1)(A) of the Code shall be of Equivalent Actuarial Value
     to the maximum benefit payable at age 62. If the retirement allowance
     begins after the Member's Social Security Retirement Age, such dollar
     limitation shall be of Equivalent Actuarial Value to the maximum benefit
     payable at the Member's Social Security Retirement Age. If the retirement
     allowance is payable neither as a life annuity nor as a qualified joint and
     survivor annuity with the Member's spouse as beneficiary, the maximum
     limitation shall be of Equivalent Actuarial Value to the maximum limitation
     otherwise applicable. Effective on September 1, 1995, Equivalent Actuarial
     Value for purposes of this Section 4.08 shall be determined in accordance
     with Section 415(b) of the Code and the regulations or rulings issued
     thereunder and using the Plan's early retirement, late retirement, or
     optional benefit factors as appropriate, or if less, using factors
     calculated from the IRS Mortality Table, if applicable, and 5 percent.

                                                                       Article 4

<PAGE>

                                                                         Page 63

(b)  Notwithstanding paragraph (a) above, no Member shall be subject to the
     provisions of Code Section 415(e) on or after January 1, 2000. If a
     Member's retirement allowance, death in service benefit, or vested benefit
     commenced prior to January 1, 2000 and was limited by the provisions of
     Code Section 415(e), such retirement allowance, death in service benefit,
     or vested benefit shall be redetermined as of January 1, 2000 without
     regard to the provisions of Section 415(e) and such recomputed retirement
     allowance, death in service benefit, or vested benefit shall be payable on
     and after said date, but only if the Retirement Committee finds that doing
     so will not result in the duplication of benefits payable from this Plan
     and any other qualified or non-qualified plans sponsored by the Company.

(c)  For purposes of Section 4.08(a), "remuneration" with respect to any
     Employee shall mean the wages, salaries, and other amounts paid in respect
     of such Employee by the Company or an Associated Company for personal
     services actually rendered, determined before any pre-tax contributions
     under a "qualified cash or deferred arrangement" (as defined under Section
     401(k) of the Code and its applicable regulations) or under a "cafeteria
     plan" (as defined under Section 125 of the Code and its applicable
     regulations), or under a "qualified transportation fringe" (as defined
     under Section 132(f) of the Code and its applicable regulations), and shall
     include, but not by way of limitation, bonuses, overtime payments, and
     commissions; and shall exclude deferred compensation, stock options, and
     other distributions which receive special tax benefits under the Code.

4.09 No Duplication
     --------------

     Except as hereinafter provided, there shall be deducted from any retirement
     allowance or vested benefit payable under this Plan the part of any pension
     or comparable benefit, including any lump

                                                                       Article 4

<PAGE>

                                                                         Page 64

     sum payment, provided by employer contributions which Rayonier Inc., any
     Participating Unit, (including any former Participating Unit divested by
     Rayonier Inc.), any Associated Company or any affiliate of the Company is
     obligated to pay or has paid to or under any defined benefit plan or other
     agreement which provides for benefits comparable to those benefits paid
     under a defined benefit plan (except for any pension plan or other
     agreement which provides for the payment of that portion of any benefits
     accrued under the Plan but not payable from the Plan on account of Section
     401(a)(17)(B) of the Code or Section 4.08) with respect to any service
     rendered on or after March 1, 1994 which is Benefit Service for purposes of
     computation of benefits under this Plan.

4.10 Payment of Benefits
     -------------------

(a)  Unless otherwise provided under an optional benefit elected pursuant to
     Section 4.06, the survivor's benefits available under Section 4.07, or the
     provisions of Section 4.10(e)(ii), all retirement allowances, vested
     benefits or other benefits payable under the Plan will be paid in monthly
     installments as of the end of each month beginning with (i) the month in
     which a Member has reached his or her Normal Retirement Date and has
     retired from active service, (ii) the month in which a Member has reached
     his or her Postponed Retirement Date and has retired from active service,
     (iii) the month in which a Member, upon proper application, has requested
     commencement of his or her vested benefit or early retirement allowance, or
     (iv) the month in which benefits under an optional benefit under Section
     4.06 or the survivor's benefits under Section 4.07 become payable,
     whichever is applicable. Such monthly installments shall cease with the
     payment for the month in which the recipient dies. In no event shall a
     retirement allowance or vested benefit be payable to a Member who continues
     in or resumes active service with the Company or an Associated Company for
     any period between his or her Normal Retirement Date and Postponed
     Retirement Date, except as provided in Sections 4.02(d), and 4.10(e).

                                                                       Article 4

<PAGE>

                                                                         Page 65

(b)  In any case, a lump sum payment equal to the vested benefit payable under
     Section 4.05 or the vested spouse's benefit payable under Section 4.07(a)
     multiplied by the appropriate factor contained in Table 4, 5 or 6 of
     Appendix A shall be made in lieu of any vested benefit payable to a former
     Member or any vested spouse's benefit payable to a spouse of a Member or a
     former Member, if the lump sum present value of such benefit amounts to
     $3,500 ($5,000 effective January 1, 1998) or less. In no event, however,
     with respect to any Member who terminates employment prior to September 1,
     1995, shall that adjustment factor produce a lump sum that is less than the
     amount determined by using the interest rate assumption used by the Pension
     Benefit Guaranty Corporation for valuing benefits for determining lump sum
     payments under single employer plans that terminate on January 1 of the
     Plan Year in which the Annuity Starting Date occurs. With respect to any
     Member who terminates employment on or after September 1, 1995, the lump
     sum present value shall be based on the IRS Mortality Table and the IRS
     Interest Rate. The lump sum payment may be made at any time on or after the
     date the Member has terminated employment or died, but in any event prior
     to the date his or her benefit payment would have otherwise commenced.

     In the event a Member is not entitled to any retirement allowance or vested
     benefit upon his or her termination of employment, he or she shall be
     deemed "cashed-out" under the provisions of this paragraph (b) as of the
     date he or she terminated service.

(c)  In the event that the Retirement Committee shall find that a person to whom
     benefits are payable is unable to care for his or her affairs because of
     illness or accident or is a minor or has died, then, unless claim shall
     have been made therefor by a legal representative, duly appointed by a
     court of

                                                                       Article 4

<PAGE>

                                                                         Page 66

     competent jurisdiction, the Retirement Committee may direct that any
     benefit payment due him or her be paid to his or her spouse, a child, a
     parent or other blood relative, or to a person with whom he or she resides,
     and any such payment made shall be a complete discharge of the liabilities
     of the Plan therefor.

(d)  Before any benefit shall be payable to a Member, a former Member, or other
     person who is or may become entitled to a benefit hereunder, such Member,
     former Member, or other person shall file with the Retirement Committee
     such information as it shall require to establish his or her rights and
     benefits under the Plan.

(e)  (i)  Except as otherwise provided in this Article 4, payment of a Member's
          retirement allowance or a former Member's vested benefit shall begin
          as soon as administratively practicable following the latest of (1)
          the Member's Normal Retirement Age or (2) the date he or she
          terminates service with the Company and all Associated Companies (but
          not more than 60 days after the close of the Plan Year in which the
          latest of (1) or (2) occurs).

     (ii) Notwithstanding anything contained in the Plan to the contrary, in the
          case of a Member who owns either (1) more than 5 percent of the
          outstanding stock of the Company or (2) stock possessing more than 5
          percent of the total combined voting power of all stock of the
          Company, the Member's retirement allowance shall begin not later than
          the April 1 following the calendar year in which he or she attains age
          70 1/2.

          Effective January 1, 2000, payment of any other Member's retirement
          allowance or vested benefit shall begin not later than April 1 of the
          calendar year following the calendar year in which the later of the
          Member's retirement or attainment of age 70 1/2 occurs. Before

                                                                       Article 4

<PAGE>

                                                                         Page 67

               January 1, 2000, the payment of a retirement allowance or vested
               benefit for a Member in active service who is not a 5-percent
               owner as described above shall begin not later than April 1 of
               the calendar year following the calendar year in which he or she
               attains age 70 1/2. A Member who attained age 70 1/2 prior to
               January 1, 1988 and who is not a 5-percent owner as described
               above shall not receive payment while in active service under the
               provisions of this paragraph.

(f)      Notwithstanding any other provision of this Article 4, all
         distributions from this Plan shall conform to the regulations issued
         under Section 401(a)(9) of the Code, including the incidental death
         benefit provisions of Section 401(a)(9)(G) of the Code. Further, such
         regulations shall override any plan provision that is inconsistent with
         Section 401(a)(9) of the Code.

4.11     Reemployment of Former Member or Retired Member
         -----------------------------------------------

(a)      Cessation of Benefit Payments. If a former Member or a retired Member
         -----------------------------
         entitled to or in receipt of a vested benefit or retirement allowance
         is reemployed by the Company or by an Associated Company in a capacity
         other than as a Non-Benefits Worker, any benefit payments he or she is
         receiving shall cease, except as otherwise provided in Section 4.02(c)
         and Section 4.10(e). If a former Member or a retired Member returns to
         the Company or an Associated Company as a Non-Benefits Worker, benefit
         payments shall continue and paragraphs (b) and (c) shall not apply.

(b)      Optional Forms of Pension Benefits
         ----------------------------------

         (i)      If the Member is reemployed in a capacity other than as a
                  Non-Benefits Worker any previous election of an optional
                  benefit under Section 4.06 or a survivor's benefit under

                                                                       Article 4

<PAGE>

                                                                         Page 68

          Section 4.07 shall be revoked and the terms and conditions of
          subparagraph (ii) of this paragraph (b) shall apply.

     (ii) Any Member who is at least age 55 with ten or more years of
          Eligibility Service when he or she is reemployed in a capacity other
          than as a Non-Benefits Worker shall, with respect to the vested
          benefit or retirement allowance earned prior to his or her
          reemployment and with respect to any additional benefits earned during
          reemployment, be covered by the provisions of Section 4.07(b) -
          Pre-Retirement Survivor's Benefit - and be eligible to elect coverage
          under Section 4.07(c) Supplemental Pre-Retirement Survivor's Benefit.
          Coverage under Section 4.07(b) shall be effective on the first day of
          the calendar month coincident with or next following the date of his
          or her reemployment and any previous election shall remain in effect
          until such date. If, within 30 days after reemployment, the Member
          elects coverage under Section 4.07(c), such coverage shall be
          effective as of the first day of the calendar month coincident with or
          next following the date of his or her reemployment. If the Member does
          not make an election under Section 4.07(c) within 30 days after his or
          her reemployment or he or she waives such coverage, any later election
          shall become effective one year after the first day of the calendar
          month coincident with or next following the date notice is received by
          the Retirement Committee or on the date specified in such notice, if
          later.

          Any Member or former Member with five or more years of Eligibility
          Service who is less than age 55 when he or she is reemployed shall be
          covered by the provisions of Section 4.07(a)(i) - Automatic Vested
          Spouse's Benefit - until he or she attains age 55 and such coverage
          shall be effective on the first day of the calendar month coincident
          with or next following the date of his or her reemployment and any
          previous election shall remain in

                                                                       Article 4

<PAGE>

                                                                         Page 69

          effect until such date. Such former Member and any other Member or
          former Member shall be covered by the provisions of Section 4.07(b) -
          Pre-Retirement Survivor's Benefit - and shall be eligible to elect
          coverage under Section 4.07(c) Supplemental Pre-Retirement Survivor's
          Benefit upon the later of the date he or she attains age 55, the date
          he or she completes ten years of Eligibility Service, or his or her
          Normal Retirement Date, and such coverage shall be in accordance with
          the provisions of such Sections and shall apply with respect to his or
          her retirement allowance or vested benefit earned prior to his or her
          reemployment, as well as any additional benefits earned during
          reemployment.

(c)  Benefit Payments at Subsequent Termination or Retirement
     --------------------------------------------------------

     (i)  In accordance with the procedure established by the Retirement
          Committee on a basis uniformly applicable to all Members similarly
          situated, upon the subsequent retirement of a Member in service after
          his or her Normal Retirement Date, payment of such Member's retirement
          allowance shall resume no later than the third month after the final
          month during the reemployment period in which he or she is credited
          with at least eight days of service.

     (ii) Upon the subsequent retirement or termination of employment of a
          retired or former Member, the Retirement Committee shall, in
          accordance with rules uniformly applicable to all Members similarly
          situated, determine the amount of vested benefit or retirement
          allowance which shall be payable to such Member at such subsequent
          retirement or termination. Such vested benefit or retirement allowance
          shall not be less than the sum of (1) the original amount of vested
          benefit or retirement allowance previously earned by such Member in
          accordance with the terms of the Plan in effect during such previous
          employment adjusted to reflect the election of any survivor's benefits
          pursuant to Section

                                                                       Article 4

<PAGE>

                                                                         Page 70

               4.07(a)(ii) or 4.07(c) and reduced by an amount of equivalent
               value to the benefits, if any, he or she received before the
               earlier of the date of his or her restoration to service or his
               or her Normal Retirement Date and (2) any additional vested
               benefit or retirement allowance earned during his or her period
               of reemployment, such amounts to be adjusted to reflect the
               election during reemployment of any survivor's benefits pursuant
               to Section 4.07(a)(ii) or 4.07(c). Notwithstanding anything to
               the contrary contained in this Plan, with respect to an Employee
               who has incurred a break in service, the vested benefit or
               retirement allowance for Benefit Service credited prior to the
               date of reemployment shall not be recalculated or increased until
               the Member, regardless of his or her vested status, has completed
               at least 12 months of Eligibility Service following his or her
               reemployment, and in such event, the recalculated vested benefit
               or retirement allowance, prior to any optional modification in
               accordance with the provisions of Section 4.06, shall be reduced
               by an amount of equivalent value to any payments previously
               received by the former Member or retired Member before the
               earlier of his or her restoration to service or his or her Normal
               Retirement Date; provided that no such reduction shall reduce
               such retirement allowance or vested benefit below the amount
               determined pursuant to clause (1) of the preceding sentence.

     (d)  Questions Relating to Reemployment of Former Members or Retired
          ---------------------------------------------------------------
          Members. If, at subsequent termination of employment or retirement,
          -------
          any question shall arise under this Section 4.11 as to the calculation
          or recalculation of a reemployed former Member's or retired Member's
          vested benefit or retirement allowance or election of an optional form
          of benefit under the Plan, such question shall be resolved by the
          Retirement Committee on a basis uniformly applicable to all Members
          similarly situated.

                                                                       Article 4

<PAGE>

                                                                         Page 71

4.12     Top-heavy Provisions
         --------------------

 (a)     The following definitions apply to the terms used in this Section:

         (i)   "applicable determination date" means the last day of the
               preceding Plan Year;

         (ii)  "top-heavy ratio" means the ratio of (A) the present value of the
               cumulative Accrued Benefits under the Plan for key employees to
               (B) the present value of the cumulative Accrued Benefits under
               the Plan for all key employees and non-key employees; provided,
               however, that if a key employee has not performed services for
               the Company at any time during the five-year period ending on the
               applicable determination date, any Accrued Benefit for such
               individual (and any account balances of such individual) shall
               not be taken into account;

         (iii) "applicable valuation date" means the date within the preceding
               Plan Year as of which annual Plan costs are or would be computed
               for minimum funding purposes;

         (iv)  "key employee" means an Employee determined to be a "key
               employee" in accordance with the provisions of Section 416(i)(1)
               and (5) of the Code and any regulations thereunder, and where
               applicable, on the basis of the Employee's compensation as
               reported on Form W-2 for the applicable Plan Year;

         (v)   "non-key employee" means any employee who is not a key employee;

         (vi)  "average remuneration" means the average annual remuneration of a
               Member for the five consecutive years of his or her Eligibility
               Service during which he or she received the greatest aggregate
               remuneration, as limited by Section 401(a)(17) of the Code, from
               the Company or Associated Company, excluding any remuneration for
               service after the last Plan Year with respect to which the Plan
               is top-heavy;

                                                                       Article 4

<PAGE>

                                                                         Page 72

         (vii)    "required aggregation group" means each other qualified plan
                  of the Company or an Associated Company (including plans that
                  terminated within the five-year period ending on the
                  determination date) in which there are members who are key
                  employees or which enables the Plan to meet the requirements
                  of Section 401(a)(4) or 410 of the Code; and

         (viii)   "permissive aggregation group" means each plan in the required
                  aggregation group and any other qualified plan(s) of the
                  Company or an Associated Company in which all members are
                  non-key employees, if the resulting aggregation group
                  continues to meet the requirements of Sections 401(a)(4) and
                  410 of the Code.

(b)      For purposes of this Section 4.12, the Plan shall be "top-heavy" with
         respect to any Plan Year if, as of the applicable determination date,
         the top-heavy ratio exceeds 60 percent. The top-heavy ratio shall be
         determined as of the applicable valuation date in accordance with
         Section 416(g)(3) and (4)(B) of the Code on the basis of the same
         mortality and interest rate assumptions used to value the Plan. For
         purposes of determining whether the Plan is top-heavy, the present
         value of Accrued Benefits under the Plan will be combined with the
         present value of accrued benefits or account balances under each other
         plan in the required aggregation group, and in the Company's
         discretion, may be combined with the present value of accrued benefits
         or account balances under any other qualified plan(s) in the permissive
         aggregation group. The Accrued Benefit of a non-key employee under the
         Plan or any other defined benefit plan in the aggregation group shall
         be (i) determined under the method, if any, that uniformly applies for
         accrual purposes under all plans maintained by the Company or an
         Associated Company or (ii) if there is no such method, as if such
         benefit accrued not more rapidly than the slowest accrual rate
         permitted under the fractional rule described in Section 411(b)(i)(C)
         of the Code.

                                                                       Article 4

<PAGE>

                                                                         Page 73

(c)  The following provisions shall be applicable to Members for any Plan
     Year with respect to which the Plan is top-heavy:

     (i)   In lieu of the vesting requirements specified in Section 4.05, the
           following vesting schedule shall apply:

                 Years of Eligibility Service         Percentage Vested
                 ----------------------------         -----------------

                       Less than 2 years                      0%
                            2 years                          20
                            3 years                          40
                            4 years                          60
                        5 or more years                     100

     (ii)  The Accrued Benefit of a Member who is a non-key employee shall not
           be less than 2 percent of his or her "average remuneration"
           multiplied by the number of years of his or her Eligibility Service,
           not in excess of 10, during the Plan Years for which the Plan is
           top-heavy. Such minimum benefit shall be payable at a Member's Normal
           Retirement Date. If payments commence at a time other than the
           Member's Normal Retirement Date, the minimum Accrued Benefit shall be
           of Equivalent Actuarial Value to such minimum benefit, as determined
           on the basis of the actuarial assumptions stated in Section 4.14(b)
           above.

     (iii) The multiplier "1.25" in Sections 415(e)(2)(B)(i) and (3)(B)(i) of
           the Code shall be reduced to "1.0", and the dollar amount "$51,875"
           in Section 415(e)(7)(B)(i)(I) of the Code shall be reduced to
           "$41,500".

(d)  If the Plan is top-heavy with respect to a Plan Year and ceases to be
     top-heavy for a subsequent Plan Year, the following provisions shall be
     applicable:

                                                                       Article 4

<PAGE>

                                                                         Page 74

     (i)   The Accrued Benefit in any such subsequent Plan Year shall not be
           less than the minimum Accrued Benefit provided in Section 4.12(c)
           (ii) above, computed as of the end of the most recent Plan Year for
           which the Plan was top-heavy.

     (ii)  If a Member has completed three years of Eligibility Service on or
           before the last day of the most recent Plan Year for which the Plan
           was top-heavy, the vesting schedule set forth in Section 4.12(c)(i)
           above shall continue to be applicable.

     (iii) If a Member has completed at least two, but less than three years of
           Eligibility Service on or before the last day of the most recent Plan
           Year for which the Plan is top-heavy, the vesting provisions of
           Section 4.05 shall again be applicable; provided, however, that in no
           event shall the vested percentage of a Member's accrued benefit be
           less than the percentage determined under Section 4.12(c)(i) above as
           of the last day of the most recent Plan Year for which the Plan was
           top-heavy.

4.13 Payment of Medical Benefits for Benefits for Certain Members Who Retire
     -----------------------------------------------------------------------
     Under the Plan
     --------------

     This Section 4.13 defines the basis of providing medical benefits to
     eligible Members or their eligible dependents as defined below for those
     expenses incurred by such Members or their eligible dependents on or after
     the date specified by the Board of Directors.

(a)  In order to be eligible for the benefits provided hereunder, a person must
     be a Plan Member who retired under the Plan provisions during the period
     designated by the Retirement Committee and be currently eligible for
     post-retirement medical benefits under a plan maintained by the Company and
     hereinafter referred to as the "Medical Plan" or be an eligible dependent
     of such a Member. To the extent they are not otherwise reimbursed from
     Company assets, covered medical expenses incurred

                                                                       Article 4

<PAGE>

                                                                         Page 75

     during the applicable period shown below by such a Member or his or her
     eligible dependents shall be reimbursed hereunder.

(b)  The level of medical benefits covered under the provisions of this Section
     4.13 shall be the medical coverage in effect under the terms of the Medical
     Plan. Except as provided in Article 10, such medical coverage or benefit
     plan may be withdrawn or amended from time to time as the Company shall
     determine.

(c)  Except as provided in Section 4.13(e), all contributions made to the trust
     to provide medical benefits under this Section 4.13 shall be maintained in
     a separate account and such assets may not be used for or diverted to any
     purpose other than to provide said medical benefits; provided, however,
     none of the assets so set aside may be used to provide medical benefits for
     a Member, former Member or their dependents if the Member or former Member
     is a "key employee" as determined in accordance with the provisions of
     Section 416(i)(1) and (5) of the Internal Revenue Code. Similarly, none of
     the assets accumulated to provide the retirement allowances or vested
     benefits set forth in the foregoing provisions of this Article 4 may, prior
     to the termination of the Plan and satisfaction of all the liabilities for
     such retirement allowances or vested benefits, be used or diverted to
     provide medical benefits under this Section 4.13. The assets, if any,
     accumulated to provide medical benefits under this Section 4.13 may be
     invested pursuant to the provisions of Article 7.

(d)  It is the intention of the Company to continue providing medical benefits
     under this Section 4.13 and to make contributions to the Trustee to fund
     such medical benefits in such amounts as the Company shall deem necessary
     or appropriate. The aggregate contributions made to fund the

                                                                       Article 4

<PAGE>

                                                                         Page 76

     medical benefits provided under this Section, when added to the actual
     contributions for any life insurance protection provided under the Plan,
     shall not exceed 25 percent of the total actual contributions made to the
     Plan (other than contributions to fund past service credits) after the
     later of the adoption or effective date of this Section. Any forfeitures of
     a Member's interest in the medical benefit accounts as provided hereunder
     prior to any discontinuance of medical benefits by the Board of Directors
     shall be applied to reduce any subsequent Company contributions made
     pursuant to this Section 4.13.

(e)  Except as provided in Article 10, the Board of Directors may discontinue
     providing medical benefits under this Section 4.13 for any reason at any
     time, in which event the assets allocated to provide medical benefits
     hereunder, if any remain, shall, to the extent they are not otherwise
     reimbursed from Company assets, be used to continue medical benefits to
     Members who are eligible for them prior to the discontinuance date as long
     as any assets remain. However, if, after the satisfaction of all medical
     benefits provided hereunder, there remain any assets, the program shall be
     deemed to be terminated and such remainder shall be returned to the
     Company, in accordance with Section 401(h)(5) of the Code.

4.14 Transfers From Hourly Plans Maintained by the Company or an Associated
     ----------------------------------------------------------------------
     Company
     -------

     At the discretion and direction of the Retirement Committee, the Plan may
     accept from a hourly pension plan maintained by the Company or an
     Associated Company which is qualified under Section 401(a) of the Code a
     transfer of (i) liabilities with respect to the accrued benefit under such
     hourly plan of a Member who has employment with the Company rendered
     otherwise than as an Employee recognized as Benefit Service pursuant to the
     provisions of Section 2.02(c) of the Plan and (ii) with respect to such
     liabilities, any assets determined by the Company to be applicable.

                                                                       Article 4

<PAGE>

                                                                         Page 77

         All such transfers shall be made in accordance with the provisions of
         the Code and ERISA.

4.15     Direct Rollover of Certain Distributions
         ----------------------------------------

         Notwithstanding any other provision of this Plan, with respect to any
         distribution from this Plan which is (a) payable to a "distributee" and
         (b) determined by the Retirement Committee to be an "eligible rollover
         distribution," such distributee may elect, at the time and in the
         manner prescribed by the Retirement Committee, to have the Plan make a
         "direct rollover" of all or part of such distribution to an "eligible
         retirement plan" which accepts such rollover. The following definitions
         apply to the terms used in this Section:

          (a)  a "distributee" means a Member or former Member. In addition, the
               Member's or former Member's surviving spouse and the Member's or
               former Member's spouse or former spouse who is the alternate
               payee under a qualified domestic relations order as defined in
               Section 414(p) of the Code, are distributees with regard to the
               interest of the spouse or former spouse;

         (b)   an "eligible rollover distribution" is any distribution of all or
               any portion of the retirement allowance or vested benefit owing
               to the credit of a distributee, except that the following
               distributions shall not be eligible rollover distributions: (i)
               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, (ii) any distribution to the extent such
               distribution is required under Section 401(a)(9) of the Code,
               (iii) the portion of a distribution not includible in gross
               income, and (iv) any distribution where all otherwise eligible
               distributions are expected to total less than $200;

                                                                       Article 4

<PAGE>

                                                                         Page 78

     (c)  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 eligible rollover
          distribution; however, in the case of an eligible rollover
          distribution to the Member's surviving spouse, an eligible retirement
          plan is an individual retirement account or individual retirement
          annuity only; and

     (d)  "direct rollover" means a payment by the Plan directly to the eligible
          retirement plan specified by the distributee.

     In the event that the provisions of this Section 4.15 or any part thereof
     cease to be required by law as a result of subsequent legislation or
     otherwise, this Section 4.15 or applicable part thereof shall be
     ineffective without necessity of further amendment of the Plan.

                                                                       Article 4

<PAGE>
                                                                         Page 79

                       ARTICLE 5 -- ADMINISTRATION OF PLAN
                       -----------------------------------

5.01     Appointment of Retirement Committee
         -----------------------------------

         The responsibility for carrying out all phases of the administration of
         the Plan except those phases connected with the management of assets,
         shall be placed in a Retirement Committee of not less than three
         persons appointed from time to time by the Board of Directors to serve
         at the pleasure of the Board of Directors. The Board of Directors may
         also designate alternate members to act in the absence of the regular
         members. The Board of Directors shall designate a Chairman of the
         Retirement Committee from among the regular members and a Secretary who
         may be, but need not be, one of its members. Any member of the
         Retirement Committee may resign by delivering his or her written
         resignation to the Board of Directors and the Secretary of the
         Retirement Committee.

5.02     Pension Trust Fund and Investment Committee
         -------------------------------------------

         The responsibility for the management of the assets of the Plan shall
         be placed in a Pension Fund Trust and Investment Committee of not less
         than three persons appointed from time to time by the Board of
         Directors to serve at the pleasure of the Board of Directors. The Board
         of Directors may also designate alternate members to act in the absence
         of the regular members. The Board of Directors shall designate a
         Chairman of the Pension Fund Trust and Investment Committee from among
         the regular members and a Secretary who may be, but need not be, one of
         the members of the Pension Fund Trust and Investment Committee. Any
         member of the Pension Fund Trust and Investment Committee may resign by
         delivering his or her written resignation to the Board of Directors and
         the Secretary of the Pension Fund Trust and Investment Committee.

                                                                       Article 5

<PAGE>

                                                                         Page 80

5.03     Named Fiduciaries
         -----------------

         The Retirement Committee and the Pension Fund Trust and Investment
         Committee (hereinafter collectively referred to as the ("Committees")
         are designated as named fiduciaries within the meaning of Section
         402(a) of ERISA. In addition, the Company and any officer of the
         Company appointed as a named fiduciary by the Retirement Committee
         shall also be "named fiduciaries" within the meaning of Section 402(a)
         of ERISA.

5.04     Meetings and Action of Majority
         -------------------------------

         The Committees shall hold meetings upon such notice, at such place or
         places, and at such time or times as each may respectively determine.
         The action of at least a majority of the members, or alternate members,
         of a Committee expressed from time to time by a vote at a meeting or in
         writing without a meeting shall constitute the action of that Committee
         and shall have the same effect for all purposes as if assented to by
         all members of such Committee at the time in office. No member of
         either Committee shall receive any compensation for his or her service
         as such.

5.05     Duties of Committees
         --------------------

         Each Committee may authorize one or more of its number or any agent to
         execute or deliver any instrument or make any payment on its behalf;
         may retain counsel, employ agents and such clerical, accounting and
         actuarial services as it may require in carrying out the provisions of
         the Plan for which it has responsibility; may allocate among its
         members or to other persons all or such portion of its duties hereunder
         as it, in its sole discretion, shall decide.

                                                                       Article 5

<PAGE>

                                                                         Page 81

5.06     Management of Plan Assets
         -------------------------

         The Pension Fund Trust and Investment Committee shall be responsible
         for managing the assets under the Plan. If it deems such action to be
         advisable, the Committee, subject to the provisions of the trust
         instrument(s) adopted for use in implementing the Plan pursuant to
         Section 7.01 hereof, may:

         (a)   provide direction to the trustee(s) thereunder, including, but
               not by way of limitation, the direction of investment of all or
               part of the Plan assets and the establishment of investment
               criteria, and

         (b)   appoint and provide for use of investment advisors and investment
               managers.

         In discharging its responsibility, the Committee shall evaluate and
         monitor the investment performance of the trustee(s) and investment
         manager, if any.

5.07     Establishment of Rules and Rights of Retirement Committee
         ---------------------------------------------------------

         Subject to the limitations of the Plan, the Retirement Committee from
         time to time shall establish rules or regulations for the
         administration of the Plan and the transaction of its business. The
         Retirement Committee shall have full discretionary authority, except as
         to matters which the Board of Directors from time to time may reserve
         to itself, to interpret the Plan and to make factual determinations
         regarding any and all matters arising hereunder, including but not
         limited to, the right to determine eligibility for benefits and to
         construe the terms of the Plan including the right to remedy possible
         ambiguities, inequities, inconsistencies or omissions. The Retirement
         Committee shall also have the right to exercise powers otherwise
         exercisable by the Board of Directors hereunder to the extent that the
         exercise of such powers does not involve the management of Plan assets.
         In addition, the Retirement Committee shall have the further right to
         exercise such powers

                                                                       Article 5

<PAGE>

                                                                         Page 82

     as may be delegated to the Retirement Committee by the Board of Directors.
     The Retirement Committee may delegate to any duly authorized officer, in
     writing, any or all of its authority and its right to exercise powers
     otherwise exercised or delegated by the Board of Directors.

     Subject to applicable Federal and State Law, all interpretations,
     determinations and decisions of a duly authorized officer, the Retirement
     Committee or the Board of Directors in respect of any matter hereunder
     shall be final, conclusive and binding on all parties affected thereby.

5.08 Prudent Conduct and Limitation of Liability
     -------------------------------------------

     The members of the Committees and any officer appointed pursuant to Section
     5.03 shall use that degree of care, skill, prudence and diligence in
     carrying out their duties that a prudent man, acting in a like capacity and
     familiar with such matters, would use in the conduct of an enterprise of a
     like character and with like aims. A member of either Committee and any
     officer appointed pursuant to Section 5.03 shall not be liable for the
     breach of fiduciary responsibility of another fiduciary unless:

     (a)  the person participates knowingly in, or knowingly undertakes to
          conceal, an act or omission of such other fiduciary, knowing such act
          or omission is a breach; or

     (b)  by the person's failure to discharge such person's duties solely in
          the interest of the Members and other persons entitled to benefits
          under the Plan, for the exclusive purpose of providing benefits and
          defraying reasonable expenses of administering the Plan not met by the
          Company, the person has enabled such other fiduciary to commit a
          breach; or

     (c)  the person has knowledge of a breach by such other fiduciary and does
          not make reasonable efforts to remedy the breach; or

                                                                       Article 5

<PAGE>

                                                                         Page 83

     (d)  in the case of a member of either Committee, if the Committee of which
          the person is a member improperly allocates responsibilities among its
          members or to others and the person fails to review prudently such
          allocation.

5.09 Claims and Review Procedure
     ---------------------------

(a)  Applications for benefits and inquiries concerning the Plan (or concerning
     present or future rights to benefits under the Plan) shall be submitted to
     the Company in writing. An application for benefits shall be submitted on
     the prescribed form and shall be signed by the Member, or in the case of a
     benefit payable after his death, by his Beneficiary.

(b)  In the event that an application for benefits is denied in whole or in
     part, the Company shall notify the applicant in writing of the denial and
     of the right to review of the denial. The written notice shall set forth,
     in a manner calculated to be understood by the applicant, specific reasons
     for the denial, specific references to the provisions of the Plan on which
     the denial is based, a description of any information or material necessary
     for the applicant to perfect the application, an explanation of why the
     material is necessary, and an explanation of the review procedure under the
     Plan.

     The written notice shall be given to the applicant within a reasonable
     period of time (not more than 90 days) after the Company received the
     application, unless special circumstances require further time for
     processing and the applicant is advised of the extension. In no event shall
     the notice be given more than 180 days after the Company received the
     application.

(c)  An applicant whose application for benefits was denied in whole or in part,
     or the applicant's duly authorized representative, may appeal the denial by
     submitting to the Retirement Committee a

                                                                       Article 5

<PAGE>

                                                                         Page 84

     request for a review of the application within 60 days after receiving
     written notice of the denial from the Company. The Company shall give the
     applicant or his representative an opportunity to review pertinent
     materials, other than legally privileged documents, in preparing the
     request for review. The request for a review shall be in writing and
     addressed to the Retirement Committee. The request for a review shall set
     forth all of the grounds on which it is based, all facts in support of the
     request and any other matters that the applicant deems pertinent. The
     Retirement Committee may require the applicant to submit such additional
     facts, documents, or other materials as it may deem necessary or
     appropriate in making its review.

(d)  The Retirement Committee shall act on each request for a review within 60
     days after receipt, unless special circumstances require further time for
     processing and the applicant is advised of the extension. In no event shall
     the decision on review be rendered more than 120 days after the Retirement
     Committee received the request for a review. The Retirement Committee shall
     give prompt written notice of its decision to the applicant and or the
     Company. In the event that the Retirement Committee confirms the denial of
     the application for benefits in whole or in part, the notice shall set
     forth, in a manner calculated to be understood by the applicant, the
     specific reasons for the decision and specific references to the provisions
     of the Plan on which the decision is based.

(e)  The Retirement Committee shall adopt such rules, procedures, and
     interpretations of the Plan as it deems necessary or appropriate in
     carrying out its responsibilities under this Section 5.09.

(f)  No legal action for benefits under the Plan shall be brought unless and
     until the claimant (i) has submitted a written application for benefits in
     accordance with paragraph (a), (ii) has been notified by the Company that
     the application is denied, (iii) has filed a written request for a review
     of the

                                                                       Article 5

<PAGE>

                                                                         Page 85

     application in accordance with paragraph (c), and (iv) has been notified in
     writing that the Retirement Committee has affirmed the denial of the
     application; provided, however, that legal action may be brought after the
     Company or the Retirement Committee has failed to take any action on the
     claim within the time by paragraphs (b) and (d) above.

                                                                       Article 5

<PAGE>
                                                                         Page 86

                           ARTICLE 6 -- CONTRIBUTIONS
                           --------------------------

6.01 Company Contributions
     ---------------------

     It is the intention of the Company to continue the Plan and make regular
     contributions to the Trustee each year in such amounts as are necessary to
     maintain the Plan on a sound actuarial basis and to meet minimum funding
     standards as prescribed by any applicable law. However, subject to the
     provisions of Article 8, the Company may reduce or suspend its
     contributions for any reason at any time. Any forfeitures shall be used to
     reduce the Company contributions otherwise payable, and will not be applied
     to increase the benefits any Member or other person would otherwise receive
     under the Plan.

6.02 Return of Contributions
     -----------------------

(a)  The Company's contributions to the Plan are conditioned upon their
     deductibility under Section 404 of the Code. In the event that all or part
     of the Company's deductions under Section 404 of the Code for contributions
     to the Plan are disallowed by the Internal Revenue Service, the portion of
     the contributions to which such disallowance applies shall be returned to
     the Company without interest, but reduced by any investment loss
     attributable to those contributions. Such return shall be made within one
     year after the disallowance of deduction.

(b)  The Company may recover without interest the amount of its contributions to
     the Plan made on account of a mistake in fact, reduced by any investment
     loss attributable to those contributions if recovery is made within one
     year after the date of those contributions.

                                                                       Article 5

<PAGE>

                                                                         Page 87

                        ARTICLE 7 -- MANAGEMENT OF FUNDS
                        --------------------------------

7.01  Trustee
      -------

      All the funds of the Plan shall be held by a Trustee or Trustees including
      any member(s) of the Rayonier Inc. Pension Fund Trust and Investment
      Committee, appointed from time to time by said Committee or Rayonier, in
      one or more trusts under a trust instrument or instruments approved or
      authorized by said Committee or Rayonier Inc. for use in providing the
      benefits of the Plan and paying any expenses of the Plan not paid directly
      by the Company; provided, however, that the Pension Fund Trust and
      Investment Committee may, in its discretion, also enter into any type of
      contract with any insurance company or companies selected by it for
      providing benefits under the Plan.

7.02  Exclusive Benefit Rule
      ----------------------

      Prior to the satisfaction of all liabilities with respect to persons
      entitled to benefits, except for the payment of expenses, no part of the
      corpus or income of the funds shall be used for, or diverted to, purposes
      other than for the exclusive benefit of Members and other persons who are
      or may become entitled to benefits hereunder, under the Prior Salaried
      Plan, or under any trust instrument or under any insurance contract made
      pursuant to this Plan. Subject to applicable Federal and State law, no
      person shall have any interest in or right to any part of the corpus or
      income of the funds, except as and to the extent expressly provided in the
      Plan and in any trust instrument or under any insurance contract made
      pursuant to this Plan. Subject to applicable Federal and State law, the
      Company shall have no liability for the payment of benefits under the Plan
      nor for the administration of the funds paid over to the Trustee(s) or
      insurer(s) except as expressly provided under this Plan.

                                                                       Article 7

<PAGE>

                                                                         Page 88

7.03  Investment in Company Securities or Real Property
      -------------------------------------------------

      Except as permitted by applicable Federal law, no part of the corpus or
      income of the trust shall be invested in securities of the Company or of
      any Associated Company or in real property and related personal property
      which is leased to the Company or any Associated Company or in the
      securities of the Trust or Trustees or their subsidiary companies, if any.

7.04  Appointment of Investment Managers
      ----------------------------------

      The Pension Fund Trust and Investment Committee may, in its discretion,
      appoint one or more investment managers (within the meaning of Section
      3(38) of ERISA) to manage (including the power to acquire and dispose of)
      all or part of the assets of the Plan, as the Investment Committee shall
      designate. In that event, authority over and responsibility for the
      management of the assets so designated shall be the sole responsibility of
      that investment manager.

                                                                    Article 7

<PAGE>
                                                                         Page 89

                   ARTICLE 8 -- CERTAIN RIGHTS AND LIMITATIONS
                   -------------------------------------------

The following provisions shall apply in all cases whenever a Member or any other
person is affected thereby.

8.01     Termination of the Plan
         -----------------------

(a)      The Board of Directors may terminate the Plan for any reason at any
         time. In case of termination of the Plan, the rights of Members to the
         benefits accrued under the Plan to the date of the termination, to the
         extent then funded or protected by law, if greater, shall be
         nonforfeitable. The funds of the Plan shall be used for the exclusive
         benefit of persons entitled to benefits under the Plan as of the date
         of termination, except as provided in Section 6.02. However, any funds
         not required to satisfy all liabilities of the Plan for benefits
         because of erroneous actuarial computation shall be returned to the
         Company except as otherwise provided in Section 8.06. The Retirement
         Committee shall determine on the basis of an actuarial valuation the
         share of the funds of the Plan allocable to each person entitled to
         benefits under the Plan in accordance with Section 4044 of ERISA or
         corresponding provision of any applicable law in effect at the time. In
         the event of a partial termination of the Plan, the provisions of this
         Section shall be applicable only to the Members affected by that
         partial termination.

(b)      Plan Merger or Consolidation. The Board of Directors may, in its sole
         ----------------------------
         discretion, merge this Plan with another qualified plan, subject to any
         applicable legal requirements. However, the Plan may not be merged or
         consolidated with, nor may its assets or liabilities be transferred to,
         any other plan unless each Member or other person entitled to a benefit
         under the Plan would, if the resulting plan were then terminated,
         receive a benefit immediately after the merger, consolidation, or
         transfer

                                                                       Article 8

<PAGE>

                                                                         Page 90

         which is equal to or greater than the benefit he or she would have been
         entitled to receive immediately before the merger, consolidation, or
         transfer, if the Plan had then terminated; provided that, subject to
         the provisions of Article 10 on or after the date of the first
         occurrence of a Change in Control (i) no transfer of assets or
         liabilities, except as specifically permitted under Section 8.01(a),
         between the Plan and any Employee Benefit Plan, as hereinafter
         defined, (ii) no spin-off of Plan assets or Plan liabilities to any
         Employee Benefit Plan, (iii) no withdrawal of Plan assets, in the event
         such withdrawal is permitted under applicable law or (iv) no merger or
         consolidation of the Plan with any Employee Benefit Plan shall be
         permitted.

         For purposes of this Section 8.01(b), Employee Benefit Plan has the
         same meaning as the term "employee benefit plan" has under Section 3(3)
         of ERISA.

8.02     Limitation Concerning Highly Compensated Employees or Highly
         ------------------------------------------------------------
         Compensated Former Employees
         ----------------------------

(a)      The provisions of this Section shall apply (i) in the event the Plan is
         terminated, to any Member who is a highly compensated employee or
         highly compensated former employee (as those terms are defined in
         Section 414(q) of the Code) of the Company or an Associated Company and
         (ii) in any other event, to any Member or former Member who is one of
         the 25 highly compensated employees or highly compensated former
         employees of the Company or Associated Company with the greatest
         compensation in any Plan Year. The amount of the annual payments to any
         one of the Members or former Member to whom this Section applies shall
         not be greater than an amount equal to the payments that would be made
         on behalf of the Member or former Member under a single life annuity
         that is of Equivalent Actuarial Value to the sum of the Member's or
         former Member's Accrued Benefit and any other benefits payable to the
         Member and former Member under the Plan.

                                                                       Article 8

<PAGE>

                                                                         Page 91

(b)      If, (i) after payment of an Accrued Benefit or other benefits to any
         one of the Members or to whom this Section applies, the value of Plan
         assets equals or exceeds 110 percent of the value of current
         liabilities (as that term is defined in Section 412(1)(7) of the Code)
         of the Plan, (ii) the value of the Accrued Benefit and other benefits
         of any one of the Members or former Members to whom this Section
         applies is less than 1 percent of the value of current liabilities of
         the Plan, or (iii) the value of the Accrued Benefit and other benefits
         of any one of the Members or former Members to whom this Section
         applies does not exceed $3,500 ($5,000 effective January 1, 1998), the
         provisions of paragraph (a) above will not be applicable to the payment
         of benefits to the Member or former Member.

(c)      Notwithstanding paragraph (a) of this Section, in the event the Plan is
         terminated, the restriction of this Section shall not be applicable if
         the benefits payable to any highly compensated employee and any highly
         compensated former employee is limited to a benefit that is
         nondiscriminatory under Section 401(a)(4) of the Code.

(d)      If it should subsequently be determined by statute, court decision
         acquiesced in by the Commissioner of Internal Revenue, or ruling by the
         Commissioner of Internal Revenue, that the provisions of this Section
         are no longer necessary to qualify the Plan under the Code, this
         Section shall be ineffective without the necessity of further amendment
         to the Plan.

8.03     Conditions of Employment Not Affected by Plan
         ---------------------------------------------

         The establishment of the Plan shall not be construed as conferring any
         legal rights upon any Employee or other person for a continuation of
         employment, nor shall it interfere with the rights of the Company to
         discharge any Employee or other person and to treat him or her without
         regard to the effect which such treatment might have upon him or her
         under the Plan.

                                                                       Article 8

<PAGE>

                                                                         Page 92

8.04     Offsets
         -------

         Unless the Board of Directors otherwise provides under written rules
         uniformly applicable to all Employees similarly situated, the
         Retirement Committee shall deduct from the amount of any retirement
         allowance or vested benefit under the Plan, any amount paid or payable
         to or on account of any Member under the provisions of any present or
         future law, pension or benefit scheme of any sovereign government, or
         any political subdivision thereof or any fund or organization or
         government agency or department on account of which contributions have
         been made or premiums or taxes paid by the Company, any Participating
         Unit, or any Associated Company with respect to any service which is
         Benefit Service for purposes of computation of benefits under the Plan;
         provided, however, that pensions payable for government service or
         benefits under Title II of the Social Security Act are not to be used
         to reduce the benefits otherwise provided under this Plan except as
         specifically provided herein.

8.05     Denial of Benefits
         ------------------

         The Retirement Committee may prescribe rules on a basis uniformly
         applicable to all Employees similarly situated under which an Employee
         whose employment is terminated because of dishonesty, conviction of a
         felony or other conduct prejudicial to the Company may be denied any
         benefit or benefits for which he or she would otherwise be eligible
         under the Plan, except his or her retirement allowance pursuant to
         Section 4.01 or his or her vested benefit pursuant to Section 4.05;
         provided, however, that such denial is not contrary to applicable law.

                                                                       Article 8

<PAGE>

                                                                         Page 93

8.06     Change in Control
         -----------------

         In the event of a Change in Control the following restrictions shall
         apply:

         (a)   Notwithstanding any other provision of the plan, in the event of
               a Change in Control, neither the Board of Directors, its
               designee, the Retirement Committee nor the Trustee may merge or
               consolidate the Plan with any other plan, transfer any Plan
               assets to any other retirement or welfare benefit plan, transfer
               any other welfare or retirement benefit plan's liabilities to the
               Plan, spin-off or split-off any part of the Plan or group of
               Members in the Plan, or reduce future Plan benefits, or cause or
               permit the Plan to acquire any security or real or personal
               property of the Company or any Associated Company, during the
               five-year period commencing on the date on which the Change in
               Control occurs.

         (b)   Notwithstanding any other provision of the Plan, in the event of
               a Change in Control, neither the Board of Directors nor its
               designee may, during the five-year period commencing on the date
               on which the Change in Control occurs, designate any new
               Participating Units or designate any new groups of Employees as
               eligible to participate in the Plan.

         (c)   Notwithstanding any other provision of the Plan, if at any time
               during the five-year period commencing on the date on which a
               Change in Control occurs, the Plan is terminated, any Member who
               was an Employee on the date of the Change in Control shall, if
               not previously vested, become fully vested in all Plan benefits.
               If the Plan has surplus assets, all of the surplus assets shall
               be allocated to Plan Members who were Members as of the date on
               which a Change in Control occurs (including Members who
               terminated employment with entitlement to a retirement allowance
               and Members who are, on the date on which a Change in Control
               occurs, receiving a retirement allowance) on pro rata basis, in
               relation to the benefits accrued prior to the date of Change in
               Control and none of this

                                                                       Article 8

<PAGE>

                                                                         Page 94

               surplus may be recovered by the Company, any successor or any
               Associated Company. For purposes of this Section 8.06(c) the
               amount of surplus assets will be determined as part of the
               process of purchasing non-participating group annuity contracts
               in connection with the termination of the Plan. In purchasing
               such annuities, the Plan shall seek competitive bids from at
               least three unrelated insurance companies. In no event shall the
               increase in the Retirement Allowance payable pursuant to this
               paragraph cause the retirement allowance to exceed the
               limitations in Section 4.08 of the Plan.

         (d)   Notwithstanding any other provision of the Plan, if at any time
               during the five-year period commencing on the date on which a
               Change in Control occurs (i) a Substantial Reduction in Force (as
               hereinafter defined) occurs or (ii) any action prohibited by
               paragraph (a) or (b) of this Section 8.06 is taken, then any
               Member who was an Employee on the date of the Change in Control
               shall, if not previously vested, become fully vested in all Plan
               benefits. Furthermore, if, as of the date either of the events
               described in (i) or (ii) above occurs, the fair market value of
               the Plan's assets exceeds the Plan's current liability pursuant
               to Section 412(l)(7) of the Code (based on the Plan's actuarial
               assumptions on the date the Change in Control occurs except that
               the interest rate shall be the maximum rate permitted under
               Section 412 of the Code) the amount of such excess assets shall
               be applied to increase, as described below, the Accrued Benefit
               of all Plan Members who were Members as of the date on which a
               Change in Control occurs. For purposes of determining the
               increase in Accrued Benefit under this Section 8.06(d), Plan
               Member includes both Members who are Employees as well as former
               Employees, or Beneficiaries of former Employees either entitled
               to future benefits or currently in receipt of Plan benefits. The
               Equivalent Actuarial Value of each Plan Member's Accrued Benefit
               shall be increased by the amount determined by multiplying (a)
               the Plan's excess assets as defined

                                                                       Article 8

<PAGE>

                                                                         Page 95

               in this Section 8.06(d) by (b) the ratio that the Current
               Liability of each Plan Member bears to the sum of the Current
               Liability of all Plan Members. Such increased present value will
               be converted into an enhanced Accrued Benefit for each Plan
               Member. In no event, however, shall such increase cause a Plan
               Member's Accrued Benefit to exceed the limitation of Section 4.08
               of the Plan.

               For purposes of this Section 8.06,

               (i)   a "Substantial Reduction in Force" shall mean the
                     Involuntary Separation from employment, following a Change
                     in Control, of the percentage of Members set forth below
                     who were Employees when the Change in Control occurred:

                     (1)  10 percent or more within any consecutive 12-month
                          period.

                     (2)  15 percent or more within any consecutive 24-month
                          period.

                     (3)  20 percent or more within any consecutive 36-month
                          period.

                     (4)  25 percent or more within any consecutive 48-month
                          period.

                     (5)  30 percent or more within a 60-month period; and

               (ii)  "Involuntary Separation" shall mean the termination of a
                     Member's employment with the Company as a result of Company
                     action such as a discharge, a resignation after a reduction
                     in pay, position or responsibilities, a retirement after
                     the Company has requested such Member to resign or retire,
                     a layoff, or any relocation of the work location of a
                     Member to a place more than 35 miles from such Member's
                     principal residence; provided, however, that an Involuntary
                     Separation shall not be deemed to have occurred if a Member
                     resigns or retires other than in response to a Company
                     request, or is terminated for serious misconduct in
                     connection with such Member's work.

                                                                       Article 8

<PAGE>

                                                                         Page 96

         (e)   In the event the Internal Revenue Service makes a final
               determination that the utilization of surplus assets of the Plan
               (or any portion thereof) in accordance with paragraph (c) or (d)
               of this Section 8.06 cannot be accomplished in any manner without
               disqualifying the Plan, the Company shall utilize such assets
               which cannot be so utilized to provide benefits to those Members
               who were Employees on the date of the Change in Control in any
               manner that the Company deems to be in the best interests of such
               Members and which would not disqualify the Plan. Such utilization
               may include the transfer of such assets to another employee
               benefit plan of the Company, including a voluntary employees'
               beneficiary association as described in Section 501(c)(9) of the
               Code; provided, however, that in no event shall any such assets
               be transferred to any entity other than a trust devoted
               exclusively to providing benefits to employees and retirees who
               were Plan Members as of the date of the Change in Control.

8.07     Prevention of Escheat
         ---------------------

         If the Retirement Committee cannot ascertain the whereabouts of any
         person to whom a payment is due under the Plan, the Retirement
         Committee may, no later than two years from the date such payment is
         due, mail a notice of such due and owing payment to the last known
         address of such person as shown on the records of the Retirement
         Committee or the Company. If such person has not made written claim
         therefor within three months of the date of the mailing, the Retirement
         Committee may, if it so elects and upon receiving advice from counsel
         to the Plan, direct that such payment and all remaining payments
         otherwise due such person be canceled on the records of the Plan and
         the amount thereof applied to reduce the contributions of the Company.
         Upon such cancellation, the Plan shall have no further liability
         therefor except that, in the event such person or his or her
         beneficiary later notifies the Retirement Committee of his or her
         whereabouts and

                                                                       Article 8

<PAGE>

                                                                         Page 97

         requests the payment or payments due to him or her under the Plan, the
         amount so applied shall be paid to him or her in accordance with the
         provisions of the Plan.

                                                                       Article 8

<PAGE>

                                                                         Page 98

                     ARTICLE 9 -- NONALIENATION OF BENEFITS
                     --------------------------------------

(a)   Except as required by any applicable law or by paragraph (e), no benefit
      under the Plan shall be subject in any manner to anticipation, alienation,
      sale, transfer, assignment, pledge, encumbrance or charge except any
      election to make a contribution necessary to provide post-retirement
      medical benefits under any Plan maintained by the Company, and any attempt
      so to do shall be void, except as specifically provided in the Plan, nor
      shall any such benefit be in any manner liable for or subject to
      garnishment, attachment, execution or levy or liable for or subject to the
      debts, contracts, liabilities, engagements or torts of the person entitled
      to such benefit.

(b)   Subject to applicable Federal and State law, in the event that the
      Retirement Committee shall find that any Member or other person who is or
      may become entitled to benefits hereunder has become bankrupt or that any
      attempt has been made to anticipate, alienate, sell, transfer, assign,
      pledge, encumber or charge any of his or her benefits under the Plan,
      except as specifically provided in the Plan, or if any garnishment,
      attachment, execution, levy or court order for payment of money has been
      issued against any of his or her benefits under the Plan, then such
      benefit shall cease and terminate. In such event the Retirement Committee
      shall hold or apply the payments to or for the benefit of such Member or
      other person who is or may become entitled to benefits hereunder, his or
      her spouse, children, parents or other blood relatives, or any of them.

(c)   Notwithstanding the foregoing provisions of the Plan, payment shall be
      made in accordance with the provisions of any judgment, decree, or
      domestic relations order which:

      (i)  creates for, or assigns to, a spouse, former spouse, child or other
           dependent of a Member the right to receive all or a portion of the
           Member's benefits under the Plan for the purpose

                                                                       Article 9

<PAGE>

                                                                         Page 99

            of providing child support, alimony payments or marital property
            rights to that spouse, child or dependent,

      (ii)  is made pursuant to the domestic relations law of any State (as such
            term is defined in Section 3(10) of ERISA,

      (iii) does not require the Plan to provide any type of benefit, or any
            option, not otherwise provided under the Plan, and

      (iv)  otherwise meets the requirements of Section 206(d) of ERISA to be a
            "qualified domestic relations order" as determined by the Retirement
            Committee.

      If the lump sum present value of any series of payments made under the
      criteria set forth in paragraphs (i) through (iv) above amounts to $3,500
      ($5,000 effective January 1, 1998) or less, then a lump sum payment of
      Equivalent Actuarial Value (determined in the manner described in Section
      4.10) shall be made in lieu of the series of payments.

(d)   The Retirement Committee shall resolve any questions arising under this
      Article 9 on a basis uniformly applicable to all persons similarly
      situated.

(e)   A Member's benefits under the Plan shall be offset by the amount the
      Member is required to pay to the Plan under the circumstances set forth in
      Section 401(a)(13) of the Code.

                                                                       Article 9

<PAGE>
                                                                        Page 100

                            ARTICLE 10 -- AMENDMENTS
                            ------------------------

10.01   Subject to Section 10.02, the Board of Directors or its delegate
        reserves the right at any time and from time to time, and retroactively
        if deemed necessary or appropriate to conform with governmental
        regulations or other policies, to modify or amend in whole or in part
        any or all of the provisions of the Plan; provided that no such
        modification or amendment shall make it possible for any part of the
        funds of the Plan to be used for, or diverted to, purposes other than
        for the exclusive benefit of Members, spouses, or contingent annuitants
        or other persons who are or may become entitled to benefits hereunder
        prior to the satisfaction of all liabilities with respect to them; and
        that no modification or amendment shall be made which has the effect of
        decreasing the Accrued Benefit of any Member or of reducing the
        nonforfeitable percentage of the Accrued Benefit of a Member
        attributable to Company contributions below that nonforfeitable
        percentage thereof computed under the Plan as in effect on the later of
        the date on which the amendment is adopted or becomes effective. Any
        action to amend the Plan by the Board of Directors shall be taken in
        such manner as may be permitted under the by-laws of the Company and any
        action to amend the Plan by a delegate of the Board of Director shall be
        in writing.

10.02   Notwithstanding the above, on or after the date a Change in Control
        first occurs, Section 8.01, Section 8.06 and this Article 10, as they
        pertain to events occurring on or after the date such Change in Control
        occurs, may not be further amended by the Board of Directors without
        written consent of not less than three-quarters of the Members and other
        persons then receiving benefits under the Plan.

                                                                      Article 10

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