Document:

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                                                               Exhibit 10.20

                         BIOSANTE PHARMACEUTICALS, INC.

                             SUBSCRIPTION AGREEMENT

BioSante Pharmaceuticals, Inc.
175 Olde Half Day Road, Suite 247
Lincolnshire, IL  60069
Attn:    Mr. Stephen M. Simes

Ladies and Gentlemen:

         1. SUBSCRIPTION. The undersigned is hereby purchasing from BioSante
Pharmaceuticals, Inc., a Wyoming corporation, ______ units (must be at least
100,000 units, unless BioSante in its sole discretion otherwise agrees) for a
purchase price of $.50 per unit. Each unit consists of (i) one share of
BioSante's common stock, no par value, and (ii) a warrant to purchase .25 shares
of BioSante's common stock at an exercise price of $.625 per full share, in
substantially the form of warrant attached as ANNEX A hereto. This subscription
is being made in connection with BioSante's private placement of units to
certain "accredited investors" (within the meaning of Rule 501 under Regulation
D of the Securities Act of 1933, as amended) and existing accredited investors
in BioSante.

         2. CLOSING. The undersigned shall pay the purchase price for the units
by electronic wire transfer in accordance with the following instructions:

                  Bank Name:  HARRIS BANK, BARRINGTON
                  ABA #:  071919463 CODE 10
                  Account #:  7154100
                  Credit to the account of:  BIOSANTE PHARMACEUTICALS, INC.

or by delivery of a bank check or certified check made payable to "BioSante
Pharmaceuticals, Inc." All checks should be delivered, together with an executed
copy of this subscription agreement, to BioSante as follows:

                  BioSante Pharmaceuticals, Inc.
                  175 Olde Half Day Road, Suite 247
                  Lincolnshire, IL  60069
                  Attn:    Mr. Stephen M. Simes

In the event, BioSante does not receive subscriptions for the minimum placement
of $2,000,000, which may include a minimum of $500,000 from investors identified
by Sunrise Securities Corp., the Company will return the purchase price to the
undersigned, without any interest thereon.

         3. REPRESENTATIONS AND WARRANTIES OF BIOSANTE. To induce the
undersigned to enter into this subscription agreement and to purchase the units,
BioSante hereby represents and warrants to the undersigned the following:

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                  (a) ORGANIZATION STANDING, ETC. BioSante is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wyoming and has the requisite corporate power and authority to own or lease its
properties and to carry on its business as it is now being conducted. BioSante
has the requisite corporate power and authority to issue the units and to
perform its obligations under this subscription agreement.

                  (b) VALID ISSUANCE. The units, when issued and delivered
pursuant to terms of this subscription agreement, will be duly and validly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights and no personal liability will attach to the ownership thereof. The
shares of BioSante common stock underlying the units and issuable upon exercise
of the warrants underlying the units, when issued and delivered pursuant to
terms of this subscription agreement and the warrants, will be duly and validly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights and no personal liability will attach to the ownership thereof.

                  (c) CORPORATE ACTS AND PROCEEDINGS. This subscription
agreement and this offering have been duly authorized by all necessary corporate
action on behalf of BioSante. This subscription agreement has been duly executed
and delivered by authorized officers of BioSante, is a valid and binding
agreement on the part of BioSante and is enforceable against BioSante in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the rights of creditors generally
or by general equitable principles. All corporate actions necessary to the
authorization, creation, issuance and delivery of the units and the conducting
of this offering have been taken by BioSante.

                  (d) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS.
Neither the execution or delivery of, nor the performance of or compliance with
this subscription agreement, nor the issuance of the units, nor the consummation
of the transactions contemplated hereby will, with or without the giving of
notice or passage of time, result in any material breach of, or constitute a
material default under, or result in the imposition of any material lien or
encumbrance upon any asset or property of BioSante pursuant to any material
agreement or other instrument to which BioSante is a party or by which it or any
of its properties, assets or rights is bound or affected, and will not violate
BioSante's Articles of Incorporation or Bylaws.

                  (e) SECURITIES LAWS. Based in part upon the representations of
the undersigned in SECTION 5 hereof, no consent, authorization, approval, permit
or order of or filing with any governmental or regulatory authority is required
under current laws and regulations in connection with the execution and delivery
of this subscription agreement or the offer, issuance, sale or delivery of the
units other than (i) the filing of a Form D pursuant to Regulation D under the
Securities Act of 1933, as amended, (ii) the filing, if required, of any notice
with any state whose laws require such filing, (iii) the qualification thereof,
if required, under other applicable state laws, which qualification has been or
will be effected as a condition of this offering, and (iv) the filing, if
required, of any notice or other document with the Canadian Venture Exchange.
Under the circumstances contemplated by this subscription agreement, the offer,
issuance, sale and delivery of the units will not, under current laws and
regulations, require compliance with the prospectus delivery or registration
requirements in the Securities Act.

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                  (f) CAPITAL STOCK. As of February 15, 2001, the authorized and
issued capital stock of BioSante is correctly set forth in the term sheet
attached as ANNEX B hereto. All of the outstanding shares of BioSante capital
stock were duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in the term sheet attached as ANNEX B hereto,
there are no outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible securities or other agreements or arrangements
of any character or nature whatever, other than in connection with this
offering, pursuant to which BioSante is obligated to issue any securities of any
kind representing an ownership interest in BioSante. Neither the offer nor the
issuance or sale of the units constitutes an event under any anti-dilution
provisions of any securities issued (or issuable pursuant to outstanding rights,
warrants or options) by BioSante or any agreements with respect to the issuance
of securities by BioSante, which will either increase the number of securities
issuable pursuant to such provisions or decrease the consideration per share to
be received by BioSante pursuant to such provisions. No holder of any securities
of BioSante is entitled to any preemptive or similar rights to purchase any
securities of BioSante in connection with this offering, other than the
investors in BioSante's private placement completed in May 1999, which
pre-emptive rights have been waived with respect to this offering.

                  (g) SEC FILINGS. BioSante has furnished the undersigned true
and complete copies of BioSante's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999, Quarterly Reports on Form 10-QSB for the quarters
ended March 31, June 30 and September 30, 2000, and a Current Report on Form 8-K
dated June 13, 2000 and all subsequent filings, if any, made by BioSante with
the SEC. As of their respective filing dates, the SEC filings complied in all
material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended. None of the SEC filings as of their respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, except to the extent amendments thereto were made in compliance with
SEC rules and regulations subsequent to the date thereof.

         4.       TRANSFER RESTRICTIONS.

                  (a) The undersigned realizes that the units, the shares of
BioSante common stock and warrants underlying the units and the shares of
BioSante common stock issuable upon exercise of the warrants, are not registered
under the Securities Act or any foreign or state securities laws. The
undersigned agrees that the units, the shares of BioSante common stock and
warrants underlying the units and the shares of BioSante common stock issuable
upon exercise of the warrants will not be sold, offered for sale, pledged,
hypothecated or otherwise transferred, except in compliance with the Securities
Act and applicable foreign and state securities laws. The undersigned
understands that the undersigned can only transfer the units, the shares of
BioSante common stock and warrants underlying the units and the shares of
BioSante common stock issuable upon exercise of the warrants pursuant to
registration under the Securities Act or pursuant to an exemption therefrom. The
undersigned understands that to transfer the units, the shares of BioSante
common stock and warrants underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants may require in certain
jurisdictions specific approval by the appropriate governmental agency or
commission in such jurisdiction. The undersigned has been advised that, except
as set forth in SECTION 6 hereof, BioSante has no

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obligation, and does not intend, to cause the units, the shares of BioSante
common stock and warrants underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants to be registered under the
Securities Act or the securities law of any other jurisdiction or to comply with
the requirements for any exemption under the Securities Act, including but not
limited to, those provided by Rule 144 and Rule 144A promulgated under the
Securities Act, or under the securities law of any other jurisdiction.

                  (b) To enable BioSante to enforce the transfer restrictions
contained in SECTION 4(a) hereof, the undersigned hereby consents to the placing
of legends upon, and stop-transfer orders with the transfer agent of the common
stock with respect to, the units, the shares of BioSante common stock and
warrants underlying the units and the shares of BioSante common stock issuable
upon exercise of the warrants.

         5. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. To induce
BioSante to accept the undersigned's subscription, the undersigned hereby
represents and warrants to BioSante that:

                  (a) The undersigned, if an individual, has reached the age of
majority in the jurisdiction in which the undersigned resides, is a bona fide
resident of the jurisdiction contained in the address set forth on the signature
page of this subscription agreement, is legally competent to execute this
subscription agreement, and does not intend to change residence to another
jurisdiction;

                  (b) The undersigned, if an entity, was not formed solely for
purposes of making this investment and is duly authorized to execute this
subscription agreement and this subscription agreement, when executed and
delivered by the undersigned, will constitute a legal, valid and binding
obligation enforceable against the undersigned in accordance with its terms; and
the execution, delivery and performance of this subscription agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate or other necessary action on the part of the
undersigned;

                  (c) The units subscribed for hereby are being acquired by the
undersigned for investment purposes only, for the account of the undersigned and
not with the view to any resale or distribution thereof, and the undersigned is
not participating, directly or indirectly, in a distribution of such units and
will not take, or cause to be taken, any action that would cause the undersigned
to be deemed an "underwriter" of such units as defined in Section 2(11) of the
Securities Act;

                  (d) The undersigned has had access to all materials, books,
records, documents and information relating to BioSante which the undersigned
has requested, including the SEC filings, and has been provided the opportunity
to verify the accuracy of the information contained therein;

                  (e) The undersigned acknowledges and understands that
investment in the units involves a high degree of risk, has read and understood
the risk factors contained in Annex C attached hereto and in the SEC filings
made by BioSante and provided to the undersigned;

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                  (f) The undersigned acknowledges that the undersigned has been
offered an opportunity to ask questions of, and receive answers from, officers
of BioSante concerning all material aspects of BioSante and its business and
this offering, and that any request for such information has been fully complied
with to the extent BioSante possesses such information or can acquire it without
unreasonable effort or expense;

                  (g) The undersigned has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of an investment in BioSante and can afford a complete loss of
the undersigned's investment in BioSante;

                  (h) The undersigned has, in connection with the undersigned's
decision to purchase the units, relied solely upon this subscription agreement
and the SEC filings;

                  (i) The undersigned represents and warrants to and covenants
with BioSante that the undersigned has not engaged and will not engage in any
sales of the units, including a short sale covered by the units, prior to the
effectiveness of a resale registration statement (as defined in SECTION 6),
except to the extent that any such short sale is fully covered by shares of
BioSante's common stock other than the units, or such sale is otherwise exempt
from registration under the Securities Act;

                  (j) The undersigned recognizes that no governmental agency has
passed upon the issuance of the units or made any finding or determination as to
the fairness of this offering;

                  (k) If the undersigned is purchasing the units subscribed for
hereby in a representative or fiduciary capacity, the representations and
warranties contained herein shall be deemed to have been made on behalf of the
person or persons for whom such units are being purchased;

                  (l) The undersigned has not entered into any agreement to pay
commissions to any persons with respect to the purchase or sale of the units,
except commissions for which the undersigned will be responsible;

                  (m) The undersigned acknowledges that BioSante will pay to
Sunrise Securities Corp. a commission with respect to the sale of the units by
BioSante to the undersigned of (i) 7.0% of the gross sales price of the units
sold by BioSante in this offering to investors introduced to BioSante by
Sunrise, payable at the option of Sunrise in cash or in units valued at the unit
sales prices less the cash commission, and (ii) a five-year warrant to purchase
units covering a number of units equal to 7.0% of the total number of units sold
by BioSante in this offering to investors introduced to BioSante by Sunrise,
inclusive of the commission units, if any, issued to Sunrise at an exercise
price of $.625 and the cash commission and five-year warrant will also be
payable with respect to (x) all securities subscribed to by bona fide
"Accredited Investors" introduced to BioSante by Sunrise who are ready willing
and able to close but whose subscriptions are rejected by BioSante other than
due to over-subscription, and (y) any purchase of BioSante securities by any
investor introduced by Sunrise to BioSante taking place at any time within 12
months, as long as such introduction occurred before the closing of this
offering;

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                  (n) The undersigned acknowledges and understands that the
units, the shares of BioSante common stock and warrants underlying the units and
the shares of BioSante common stock issuable upon exercise of the warrants may
not be resold or otherwise transferred except in a transaction registered under
the Securities Act or unless an exemption from such registration is available.
The undersigned understands that the certificate(s) evidencing the units, the
shares of BioSante common stock and warrants underlying the units and the shares
of BioSante common stock issuable upon exercise of the warrants will be
imprinted with a legend that prohibits the transfer of such shares unless (i)
they are registered or such registration is not required, and (ii) if the
transfer is pursuant to an exemption from registration other than Rule 144 under
the Securities Act and, if BioSante shall so request in writing, an opinion of
counsel reasonably satisfactory to BioSante is obtained to the effect that the
transaction is so exempt; and

                  (o) The undersigned is an "accredited investor" within the
meaning of Section 501(a) of Regulation D promulgated under the Securities Act.
Specifically the undersigned is (check appropriate item(s)):

                   / /     a bank as defined in Section 3(a)(2) of the
                           Securities Act, or a savings and loan association or
                           other institution as defined in Section 3(a)(5)(A) of
                           the Securities Act whether acting in its individual
                           or fiduciary capacity; a broker or dealer registered
                           pursuant to Section 15 of the Exchange Act; an
                           insurance company as defined in Section 2(13) of the
                           Securities Act; an investment company registered
                           under the Investment Company Act of 1940 or a
                           business development company as defined in Section
                           2(a)(48) of that Securities Act; a Small Business
                           Investment Company licensed by the U.S. Small
                           Business Administration under Section 301(c) of (d)
                           of the Small Business Investment Act of 1958; a plan
                           established and maintained by a state, its political
                           subdivisions, for the benefit of its employees, if
                           such plan has total assets in excess of $5,000,000;
                           any employee benefit plan within the meaning of the
                           Employment Retirement Income Security Act of 1974, if
                           the investment decision is made by a plan fiduciary,
                           as defined in Section 3(21) of such Act, which is
                           either a bank, savings and loan association,
                           insurance company, or registered investment advisor,
                           or if the employee benefit plan has total assets in
                           excess of $5,000,000, or if a self-directed plan,
                           with investment decisions made solely by persons that
                           are Accredited Investors;

                   / /     a private  business  development  company as defined
                           in Section  202(a)(22)  of the Investment Advisers
                           Act of 1940;

                   / /     an organization described in Section 501(c)(3) of the
                           Internal Revenue Code of 1986, as amended,
                           corporation, Massachusetts or similar business trust,
                           or partnership, not formed for the specific purpose
                           of acquiring Shares, with total assets in excess of
                           $5,000,000;

                   / /     a director or executive officer of BioSante;

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                   / /     a natural person whose individual net worth, or joint
                           net worth with that person's spouse, at the time of
                           his or her purchase exceeds $1,000,000;

                   / /     a natural person who had an individual income (not
                           including his or her spouse's income) in excess of
                           $200,000 in 1999 and 2000 or joint income with his or
                           her spouse in excess of $300,000 in each of those
                           years and has a reasonable expectation of reaching
                           such income level in 2001;

                   / /     a trust, with total assets in excess of $5,000,000,
                           not formed for the specific purpose of acquiring
                           Shares, whose purchase is directed by a person having
                           such knowledge and experience in financial and
                           business matters that he or she is capable of
                           evaluating the merits and risks entailed in the
                           purchase of units; or

                   / /     an entity in which all of the equity owners are
                           accredited investors, within the meaning of Rule 501
                           under Regulation D of the Securities Act. (If this
                           alternative is checked, the undersigned must identify
                           each equity owner and provide statements signed by
                           each demonstrating how each is qualified as an
                           accredited investor.)

         6.       REGISTRATION OF SHARES UNDER THE SECURITIES ACT.

                  (a) By its acceptance hereof, BioSante agrees that it shall,
at its expense, (i) not later than 90 days after the final closing of this
offering file a registration statement to register under the Securities Act the
resale by the undersigned of the shares of BioSante common stock underlying the
units and the shares of BioSante common stock issuable upon exercise of the
warrants, (ii) use its reasonable best efforts to cause the resale registration
statement to become effective under the Securities Act as promptly as
practicable, (iii) after the resale registration statement is declared effective
under the Securities Act, furnish the undersigned with such number of copies of
the final prospectus included in the resale registration statement as the
undersigned may reasonably request to facilitate the resale of the shares of
BioSante common stock underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants, and (iv) use its reasonable best
efforts to cause such registration statement to remain effective until the
earlier of: (a) the sale of all the shares of BioSante common stock covered by
the resale registration statement; or (b) such time as the selling shareholders
named in the registration statement become eligible to resell the shares of
BioSante common stock underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants pursuant to Rule 144(k) under the
Securities Act.

                  (b) BioSante will prepare and file with the SEC such
amendments and Prospectus supplements, including post-effective amendments to
the resale registration statement, as BioSante determines may be necessary or
appropriate, and use its reasonable best efforts to have such post-effective
amendments declared effective as promptly as practicable; cause the prospectus
to be supplemented by any prospectus supplement, and as so supplemented, to be
filed with the SEC; and promptly notify the undersigned when a prospectus, and
any prospectus supplement or post-effective amendment must be filed or has been
filed (including

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any filing in response to a sale notice) and, with respect to any post-effective
amendment, when the same has become effective.

                  (c) In connection with the resale registration statement, the
undersigned shall furnish BioSante such information regarding the distribution
of the shares of BioSante common stock covered by the registration statement as
BioSante may, from time to time, reasonably request in writing and BioSante may
exclude from such registration the shares of BioSante common stock of any
investor if such investor unreasonably fails to furnish such information in
writing within a reasonable time after receiving such request. The undersigned
agrees promptly to furnish to BioSante all information required to be disclosed
in the registration statement in order to make the information previously
furnished to BioSante by the undersigned not misleading. The undersigned
understands, acknowledges and agrees that the undersigned will be entitled to
liquidated damages pursuant to SECTION 6(d) hereof unless and until the
undersigned shall have provided all such information. Any sale of any shares of
BioSante common stock under the registration statement by the undersigned will
constitute a representation and warranty by the undersigned that the required
information relating to the undersigned and its plan of distribution is as set
forth in the prospectus delivered by the undersigned in connection with such
disposition, that such prospectus does not as of the time of such sale contain
any untrue statement of a material fact relating to the undersigned or its plan
of distribution and that such prospectus does not as of the time of such sale
omit to state any material fact relating to the undersigned or its plan of
distribution necessary to make the statements in such prospectus, in the light
of the circumstances under which they were made, not misleading.

                  (d) BioSante acknowledges that the undersigned and other
purchasers of units will suffer damages if BioSante fails to fulfill its
obligation to cause the resale registration statement to become effective under
the Securities Act in a timely fashion, and that it would not be feasible to
ascertain the extent of such damages. Accordingly, in the event that BioSante
fails to cause the resale registration statement to be declared effective within
90 days of the filing of the resale registration statement, other than as a
result of events beyond BioSante's control, BioSante will issue to the
undersigned, as compensation therefor, shares of BioSante common stock equal to
1% of the shares of BioSante common stock underlying the units purchased by the
undersigned for each 30 days or part thereof effectiveness is delayed.

                  (e) At any time BioSante may refuse to permit the undersigned
to resell any units pursuant to the resale registration statement; PROVIDED,
HOWEVER, that in order to exercise this right, BioSante must deliver a
certificate in writing to the undersigned to the effect that a sale pursuant to
the resale registration statement in its then-current form could constitute a
violation of the federal securities laws or would result in a material adverse
effect on BioSante (i.e., pending corporate developments such as negotiation of
a material transaction which BioSante in its sole discretion after consultation
with legal counsel, determines it would be obligated to disclose in the
registration statement, which disclosure BioSante believes would be premature or
otherwise inadvisable at such time). In such an event, BioSante will use its
reasonable best efforts to amend the resale registration statement if necessary
and take all other actions reasonably necessary to allow such sale under the
federal securities laws, and will notify the undersigned promptly after it has
determined that such sale has become permissible under the federal securities
laws. In any calendar year, BioSante may exercise this right no more than two
times, for not more than 30 days in each instance. The undersigned hereby
covenants and agrees

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that it will not sell any shares of BioSante common stock pursuant to the resale
registration statement during the periods the resale registration statement is
unable to be used by the undersigned as set forth in this SECTION 6(e).

         7. MARKET FOR REGISTRABLE COMMON STOCK. BioSante will use commercially
reasonable efforts to list its common stock on the American Stock Exchange,
Nasdaq Small Market System or other comparable exchange or quotation system,
including without limitation effecting a reverse split of its common stock, if
necessary.

         8.       INDEMNIFICATION.

                  (a) The undersigned understands the meaning and legal
consequences of the representations and warranties made by the undersigned in
this subscription agreement, and agrees to indemnify and hold harmless BioSante
and each of BioSante's directors, officers, shareholders, employees, counsel,
agents, successors and assignees from and against any and all loss, damage,
liability or expenses (including, without limitation, reasonable and documented
attorneys' fees), as and when incurred, due to or arising out of (in such case
in whole or in part) any breach of any representation or warranty made by the
undersigned set forth herein or in any other agreement or other document
furnished by the undersigned to any of the foregoing in connection with this
offering, any failure by the undersigned to fulfill any of its covenants or
agreements set forth herein, or arising out of the resale or distribution by the
undersigned of the units, the shares of BioSante common stock and warrants
underlying the units and the shares of BioSante common stock issuable upon
exercise of the warrants or any portion thereof in violation of the Securities
Act or any applicable foreign or state securities or "blue sky" law.

                  (b) BioSante understands the meaning and legal consequences of
the representations and warranties made by it in this subscription agreement,
and agrees to indemnify and hold harmless the undersigned and each of the
undersigned's directors, officers, stockholders, employees, counsel, agents,
successors and assigns from and against any and all loss, damage, liability or
expense (including, without limitation, reasonable and documented attorneys'
fees), as and when incurred, due to or arising out of (in each case in whole or
in part) any breach of any representation or warranty made by BioSante set forth
herein, or any failure by BioSante to fulfill any of its covenants or agreements
set forth herein.

                  (c) To the extent permitted by law, BioSante will indemnify
and hold harmless each selling shareholder named in the resale registration
statement, the directors, if any, of such holder, the officers, if any, of such
holder, and each person, if any, who controls such holder within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages,
expenses or liabilities to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violation: (i) any untrue statement or
alleged untrue statement of a material fact contained in the resale registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or (iii) any violation or alleged

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violation by BioSante of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and BioSante will reimburse the
holders and each such controlling person, promptly as such expenses are
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding.

                  (d) To the extent permitted by law, each holder, severally and
not jointly, will indemnify and hold harmless, to the same extent and in the
same manner set forth in SECTION 8(c), BioSante, each of its directors and
officers who have signed the resale registration statement, and each person, if
any, who controls BioSante within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened in respect thereof) arise out of or
are based upon any violation, in each case to the extent (and only to the
extent) that such violation occurs in reliance upon and in conformity with
written information furnished by such holder expressly for use in connection
with the resale registration statement; and such holder will reimburse such
persons for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action.

                  (e) With respect to the indemnification set forth in SECTIONS
8(c) or (d) above, to the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under said SECTIONS 8(c) or (d) to the extent permitted by law; PROVIDED that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in said
SECTIONS 8(c) or (d), and (ii) no party guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the Securities Act) shall be entitled to
contribution from any party who was not guilty of such fraudulent
misrepresentation.

         9. FURTHER DOCUMENTS. The undersigned agrees that it will execute such
other documents as may be necessary or desirable in connection with the
transactions contemplated hereby.

         10. MODIFICATION. Neither this subscription agreement nor any
provisions hereof shall be waived, modified, discharged or terminated except by
an instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.

         11. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service and delivered against receipt to the party
to whom it is to be given, (i) if to BioSante, at the address set forth on the
first page hereof, (ii) if to the undersigned, at its address set forth on the
signature page hereto, or (iii) in either case, to such other address as the
party shall have furnished in writing in accordance with the provisions of this
SECTION 11. Notice to the estate of any party shall be sufficient if addressed
to the party as provided in SECTION 11. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,

                                       10
<PAGE>

except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
SECTION 11 shall be deemed given at the time of receipt thereof.

         12. COUNTERPARTS. This subscription agreement may be executed through
the execution of separate signature pages or in any number of counterparts, and
each such counterpart shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the same
counterpart.

         13. ENTIRE AGREEMENT. This subscription agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there are
no representations, covenants or other agreements except as stated or referred
to herein.

         14. SEVERABILITY. Each provision of this subscription agreement is
intended to be severable from every other provision, and the invalidity or
illegality of any portion hereof shall not affect the validity or legality of
the remainder hereof.

         15. ASSIGNABILITY. This subscription agreement is not transferable or
assignable by the undersigned.

         16. APPLICABLE LAW. This subscription agreement has been negotiated and
consummated in the State of Illinois and shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to
conflict of laws.

         17. CHOICE OF JURISDICTION. Any action or proceeding arising directly,
indirectly or otherwise, in connection with, out of or from this subscription
agreement, any breach hereof or any transaction covered hereby shall be resolved
in Chicago, Illinois. Accordingly, the parties consent and submit to the
jurisdiction of the United States federal and state courts located in Chicago,
Illinois.

         18. TAXPAYER IDENTIFICATION NUMBER. The undersigned verifies under
penalties of perjury that any taxpayer identification number or social security
number shown on the signature page hereto is true, correct and complete.

         19. PRONOUNS. Any personal pronoun shall be considered to mean the
corresponding masculine, feminine or neuter personal pronoun, as the context
requires.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11

 <PAGE>

         IN WITNESS WHEREOF, the undersigned has executed this subscription
agreement this ____ day of ________________, 2001.

Number of units subscribed for: __________________ units.

INDIVIDUAL SUBSCRIBER:                      ENTITY SUBSCRIBER:

------------------------                    -------------------------
(Signature of Subscriber)                   (Print Name of Subscriber)

                                            By:
------------------------                    -------------------------
(Typed or Printed Name)
                                            Name:
                                            -------------------------
                                            Title:
                                            -------------------------

------------------------                    -------------------------
(Residence Address)                         (Address)

------------------------                    -------------------------
(City, State and Zip Code)                  (City, State and Zip Code)

------------------------                    -------------------------
(Telephone Number)                          (Telephone Number)

------------------------                    -------------------------
(Telecopier Number)                         (Telecopier Number)

------------------------                    -------------------------
(Social Security Number)                    (Tax I.D. or Social Security Number)

ACCEPTED:
<TABLE>
<CAPTION>

<S>                                                <C>
BIOSANTE PHARMACEUTICALS, INC.                     FOR ENTITIES DESIRING THAT CERTIFICATES
                                                   FOR UNITS BE DELIVERED TO AN ADDRESS
By:                                                OTHER THAN THAT SET FORTH ABOVE, SET
   ----------------------------------------------  FOR THE DELIVERY ADDRESS:
Name:      Stephen M. Simes
Title:     President and Chief Executive Officer
Dated:     ________________, 2001
                                                   ----------------------------------------
                                                   (Address)

                                                   ----------------------------------------
                                                   (City, State and Zip Code)

</TABLE>

                                       12
<PAGE>

                                                                       ANNEX A

                                 FORM OF WARRANT

                            Warrant to Purchase Up To
                    ______________ Shares Of Common Stock of
                         BioSante Pharmaceuticals, Inc.

         THIS CERTIFIES that, for value received, ________________ ("Investor")
or any transferee of Investor (Investor or such transferee being hereinafter
referred to as the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, to purchase from BioSante Pharmaceuticals,
Inc., a Wyoming corporation (the "Company"), that number of fully paid and
nonassessable shares of common stock, no par value (the "Warrant Shares") of the
Company (the "Common Stock") at the purchase price per share as set forth in
Section 1 below (the "Exercise Price"). The number of Warrant Shares purchasable
and Exercise Price are subject to adjustment as provided in Section 10 hereof.

         1. NUMBER OF WARRANT SHARES; EXERCISE PRICE; TERM.

                  (a) Subject to adjustments as provided herein, the Holder of
         this Warrant may, at the Holder's option, exercise this Warrant in
         whole at any time or in part from time to time for
         _____________________________ (__________) Warrant Shares at an
         Exercise Price of $0.625 per Warrant Share.

                  (b) Subject to the terms and conditions set forth herein, this
         Warrant and all rights and options hereunder shall expire at 5:00 p.m.
         central standard time on __________________, 2006. This Warrant and all
         options and rights hereunder shall be wholly void to the extent this
         Warrant is not exercised before it expires.

         2. TRANSFERABILITY OF WARRANT. The Warrant and all rights hereunder are
not transferable, in whole or in part.

         3. EXERCISE OF WARRANT. The Warrant is exercisable by the Holder, in
whole or in part, at any time, or from time to time, during the term hereof as
described in Section l above, by the surrender of the Warrant and the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder
hereof, at the office of the Company in Lincolnshire, Illinois (or such other
office or agency of the Company as it may designate by notice in writing to the
Holder hereof at the address of the Holder appearing on the books of the
Company), and subject to Section 4 hereof, upon payment of the Exercise Price in
cash or check, whereupon the Holder of the Warrant shall be entitled to receive
shares of Common Stock of the Company for the number of Warrant Shares so
purchased and, if the Warrant is exercised for fewer than all of the Warrant
Shares, a new Warrant representing the right to acquire the number of Warrant
Shares in respect of which this Warrant shall not have been exercised.
Notwithstanding the foregoing, payment of the Exercise Price may also be made by
(a) delivering shares of Common Stock already owned by the Holder having a total
Fair Market Value (as defined in Section 4) on the date of delivery equal to the
aggregate Exercise Price; (b) authorizing the Company to return Warrant Shares
which would otherwise be issuable upon exercise of this Warrant having a total
Fair Market Value on the date of exercise equal to the aggregate Exercise Price;
or (c) any

                                      13
<PAGE>

combination of the foregoing. The Company agrees that, upon exercise
of the Warrant in accordance with the terms hereof, the Warrant Shares so
purchased shall be deemed to be issued to the Holder as the record owner of such
Warrant Shares as of the close of business on the date on which the Warrant
shall have been exercised.

         Certificates for Warrant Shares purchased hereunder and, on exercise of
fewer than all of the Warrant Shares purchasable hereunder, a new Warrant
representing the right to acquire Warrant Shares not so purchased shall be
delivered to the Holder hereof as promptly as practicable after the date on
which the Warrant shall have been exercised.

         The Company covenants that all Warrant Shares which may be issued upon
the exercise of the Warrant shall, upon exercise of the Warrant and payment of
the Exercise Price, be fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously or otherwise specified herein).

         4. NO FRACTIONAL WARRANT SHARES OR SCRIP. No fractional Warrant Shares
or scrip representing fractional shares shall be issued upon the exercise of the
Warrant. In lieu of any fractional Warrant Share to which the Holder would
otherwise be entitled, such Holder shall be entitled, at its option, to receive
either (a) a cash payment equal to the excess of Fair Market Value (as defined
herein) for such fractional Warrant Share above the Exercise Price for such
fractional share or (b) a whole share if the Holder tenders the Exercise Price
for one whole Warrant Share. For purposes hereof, the term "Fair Market Value"
shall mean an amount determined as follows: (A) if the Common Stock is listed on
a national or regional securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the Nasdaq National Market
System or the Nasdaq Small Cap Market (collectively, "Nasdaq"), the Fair Market
Value on a particular day shall be the last reported sale price of a share of
Common Stock on such exchange or on Nasdaq, on the last business day prior to
such day or, if no such sale is made on such business day, the business day
before such business day, or (B) if the Common Stock is not listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq, the fair market
value on a particular day shall be the mean of the last reported bid and asked
prices reported by the National Quotation Bureau, Inc., or the National
Association of Securities Dealers, Inc. OTC Bulletin Board on the last business
day prior to such day, or (C) if the Common Stock is not so listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq and bid and asked
prices are not so reported, the Fair Market Value on a particular day shall be
an amount determined in such reasonable manner as may be prescribed by the board
of directors of the Company.

         5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares upon the exercise of the Warrant shall be made without charge to the
Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of the Warrant or in such name or names as may be directed by the
Holder of the Warrant; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder of
the Warrant, the Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the Holder and the Notice
of Exercise duly completed and executed and stating in whose name the

                                       14
<PAGE>

certificates are to be issued; and provided further, that such assignment shall
be subject to applicable laws and regulations.

         6. NO RIGHTS AS WARRANT SHAREHOLDERS. The Warrant does not entitle the
Holder hereof to any voting rights, dividend rights or other rights as a
shareholder of the Company prior to the exercise thereof.

         7. EXCHANGE AND REGISTRY OF WARRANT. The Company shall maintain a
registry showing the name and address of the Holder of the Warrant. The Warrant
may be surrendered for exchange, transfer or exercise, in accordance with the
terms hereof, at the office of the Company, and the Company shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.

         8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of the Warrant.

         9. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.

         10. ADJUSTMENTS. The above provisions are, however, subject to the
following:

                  (a) The Exercise Price shall be subject to adjustment from
         time to time as hereinafter provided. Upon each adjustment of the
         Exercise Price, the Holder shall thereafter be entitled to purchase, at
         the Exercise Price resulting from such adjustment, the number of shares
         obtained by multiplying the Exercise Price in effect immediately prior
         to such adjustment by the number of shares purchasable pursuant to this
         Warrant immediately prior to such adjustment and dividing the product
         thereof by the Exercise Price resulting from such adjustment.

                  (b) Except for (i) shares of capital stock of the Company
         issued to employees, directors, advisors and consultants of the
         Company, vendors and other similar persons to whom the Company owes
         money, (ii) options and warrants granted to employees, directors,
         advisors and consultants of the Company, (iii) shares of Common Stock
         of the Company issuable upon the exercise of options and warrants
         granted to employees, directors, advisors and consultants, (iv) shares
         of Common Stock issuable upon the exercise of all currently outstanding
         warrants and other convertible securities and (v) shares of capital
         stock issuable upon the conversion of all currently outstanding shares
         of preferred stock of the Company, if the Company shall issue or sell
         any shares of Common Stock during the next twelve months for a
         consideration per share less than $0.50, then, forthwith upon such
         issue or sale, the Exercise Price shall be reduced to the price
         (calculated to the nearest cent) determined by dividing (A) an amount
         equal to the

                                       15
<PAGE>

         sum of (1) the number of shares of Common Stock outstanding immediately
         prior to such issue or sale multiplied by the then existing Exercise
         Price, and (2) the consideration, if any, received by the Company upon
         such issue or sale by (B) an amount equal to the sum of (1) the number
         of shares of Common Stock outstanding immediately prior to such issue
         or sale and (2) the number of shares of Common Stock thus issued or
         sold.

                  (c) For the purposes of paragraph (b), the following
         provisions (i) to (vi), inclusive, shall also be applicable:

                           (i) In case at any time the Company shall grant
                  (whether directly or by assumption in a merger or otherwise)
                  any rights to subscribe for or to purchase, or any options for
                  the purchase of, Common Stock or any obligations, stock or
                  securities convertible into or exchangeable for Common Stock
                  (such convertible or exchangeable stock or securities being
                  herein called "Convertible Securities") whether or not such
                  rights or options or the right to convert or exchange any such
                  Convertible Securities are immediately exercisable, and the
                  price per share at which shares of Common Stock are issuable
                  upon the exercise of such rights or options or upon conversion
                  or exchange of such Convertible Securities (determined by
                  dividing (A) the total amount, if any, received or receivable
                  by the Company as consideration for the granting of such
                  rights or options, plus the minimum aggregate amount of
                  additional consideration payable to the Company upon the
                  exercise of such rights or options, plus, in the case of such
                  rights or options which relate to Convertible Securities, the
                  minimum aggregate amount of additional consideration, if any,
                  payable upon the issue or sale of such Convertible Securities
                  and upon the conversion or exchange thereof, by (B) the total
                  maximum number of shares of Common Stock issuable upon the
                  exercise of such rights or options or upon the conversion or
                  exchange of all such Convertible Securities issuable upon the
                  exercise of such rights or options) shall be less than the
                  Exercise Price in effect immediately prior to the time of the
                  granting of such rights or options, then the total maximum
                  number of shares of Common Stock issuable upon the exercise of
                  rights or options or upon conversion or exchange of the total
                  maximum amount of such Convertible Securities issuable upon
                  the exercise of such rights or options shall (as of the date
                  of granting of such rights or options) be deemed to have been
                  issued for such price per share. Except as provided in
                  paragraph (f) below, no further adjustments of the Exercise
                  Price shall be made upon the actual issue of such Common Stock
                  or of such Convertible Securities upon exercise of such rights
                  or options or upon the actual issue of such Common Stock upon
                  conversion or exchange of such Convertible Securities.

                           (ii) In case the Company shall issue or sell (whether
                  directly or by assumption in a merger or otherwise) any
                  Convertible Securities, whether or not the rights to exchange
                  or convert thereunder are immediately exercisable, and the
                  price per share for which Common Stock is issuable upon such
                  conversion or exchange (determined by dividing (A) the total
                  amount received or receivable by the Company as consideration
                  for the issue or sale of such Convertible Securities, plus the
                  minimum aggregate amount of additional consideration, if any,
                  payable to the Company upon the conversion or exchange
                  thereof, by (B) the total

                                       16
<PAGE>

                  maximum number of shares of Common Stock issuable upon the
                  conversion or exchange of all such Convertible Securities)
                  shall be less than the Exercise Price in effect immediately
                  prior to the time of such issue or sale, then the total
                  maximum number of shares of Common Stock issuable upon
                  conversion or exchange of all such Convertible Securities
                  shall (as of the date of the issue or sale of such Convertible
                  Securities) be deemed to be outstanding and to have been
                  issued for such price per share, provided that (x) except as
                  provided in paragraph (f) below, no further adjustments of the
                  Exercise Price shall be made upon the actual issue of such
                  shares of Common Stock upon conversion or exchange of such
                  Convertible Securities, and (y) if any such issue or sale of
                  such Convertible Securities is made upon exercise of any
                  rights to subscribe for or to purchase or any option to
                  purchase any such Convertible Securities for which adjustments
                  of the Exercise Price have been or are to be made pursuant to
                  other provisions of this paragraph (c), no further adjustment
                  of the Exercise Price shall be made by reason of such issue or
                  sale.

                           (iii) In case the Company shall declare a dividend or
                  make any other distribution upon any stock of the Company
                  payable in Common Stock or Convertible Securities, or in any
                  rights or options to purchase any Common Stock or Convertible
                  Securities, any Common Stock or Convertible Securities, or any
                  such rights or options, as the case may be, issuable in
                  payment of such dividend or distribution shall be deemed to
                  have been issued or sold without consideration.

                           (iv) In case any shares of Common Stock or
                  Convertible Securities or any rights or options to purchase
                  any shares of Common Stock or Convertible Securities shall be
                  issued or sold for cash, the consideration received therefor
                  shall be deemed to be the amount received by the Company
                  therefor, without deduction therefrom of any expenses incurred
                  or any underwriting commissions, discounts or concessions paid
                  or allowed by the Company in connection therewith. In case any
                  shares of Common Stock or Convertible Securities or any rights
                  or options to purchase any shares of Common Stock or
                  Convertible Securities shall be issued or sold for a
                  consideration other than cash, the amount of the consideration
                  other than cash received by the Company shall be deemed to be
                  the fair value of such consideration as determined by the
                  Board of Directors of the Company, without deduction of any
                  expenses incurred or any underwriting commissions, discounts
                  or concessions paid or allowed by the Company in connection
                  therewith. In case any shares of Common Stock or Convertible
                  Securities or any rights or options to purchase shares of
                  Common Stock or Convertible Securities shall be issued in
                  connection with any merger or consolidation in which the
                  Company is the surviving corporation, the amount of
                  consideration therefor shall be deemed to be the fair value as
                  determined by the Board of Directors of the Company of such
                  portion of the assets and business of the non-surviving
                  corporation or corporations as such Board shall have
                  determined to be attributable to such shares of Common Stock,
                  Convertible Securities, rights or options, as the case may be.
                  In the event of any consolidation or merger of the Company in
                  which the Company is not the surviving corporation or in the
                  event of any sale of all or substantially all of the assets of
                  the Company

                                       17
<PAGE>

                  for stock or other securities of any other corporation, the
                  Company shall be deemed to have issued a number of shares of
                  its Common Stock for stock or securities of the other
                  corporation computed on the basis of the actual exchange ratio
                  on which the transaction was predicated and for a
                  consideration equal to the fair market value on the date of
                  such transaction of such stock or securities of the other
                  corporation, and if any such calculation results in adjustment
                  of the Exercise Price, the determination of the number of
                  shares of Common Stock issuable upon exercise immediately
                  prior to such merger, consolidation or sale, for purposes of
                  paragraph (f) below, shall be made after giving effect to such
                  adjustment of the Exercise Price.

                           (v) In case the Company shall take a record of the
                  holders of its Common Stock for the purpose of entitling them
                  (A) to receive a dividend or other distribution payable in
                  shares of Common Stock or in Convertible Securities, or in any
                  rights or options to purchase any shares of Common Stock or
                  Convertible Securities, or (B) to subscribe for or purchase
                  shares of Common Stock or Convertible Securities, then such
                  record date shall be deemed to be the date of the issue or
                  sale of the shares of Common Stock deemed to have been issued
                  or sold upon the declaration of such dividend or the making of
                  such other distribution or the date of the granting of such
                  rights of subscription or purchase, as the case may be.

                           (vi) The number of shares of Common Stock outstanding
                  at any given time shall not include shares owned or held by or
                  for the account of the Company, and the disposition of any
                  such shares shall be considered an issue or sale of Common
                  Stock for the purposes of this paragraph (c).

                  (d) In case the Company shall at any time subdivide its
         outstanding shares of Common Stock into a greater number of shares, the
         Exercise Price in effect immediately prior to such subdivision shall be
         proportionately reduced, and conversely, in case the outstanding shares
         of Common Stock of the Company shall be combined into a smaller number
         of shares, the Exercise Price in effect immediately prior to such
         combination shall be proportionately increased.

                  (e) Upon the happening of any of the following events, namely,
         if the purchase price provided for in any rights or options referred to
         in clause (i) of paragraph (c), the additional consideration, if any,
         payable upon the conversion or exchange of Convertible Securities
         referred to in clause (i) or clause (ii) of paragraph (c), or the rate
         at which any Convertible Securities referred to in clause (i) or clause
         (ii) of paragraph (c) are convertible into or exchangeable for Common
         Stock shall change (other than under or by reason of provisions
         designed to protect against dilution), the Exercise Price in effect at
         the time of such event shall forthwith be increased or decreased to the
         Exercise Price which would have obtained had the adjustments made upon
         the issuance of such rights, options or Convertible Securities been
         made upon the basis of (i) the issuance of the number of shares of
         Common Stock theretofore actually delivered upon the exercise of such
         options or rights or upon the conversion or exchange of such
         Convertible Securities, and the total consideration received therefor,
         and (ii) the issuance at the time of such

                                       18
<PAGE>

         change of any such options, rights or Convertible Securities then still
         outstanding for the consideration, if any, received by the Company
         therefor and to be received on the basis of such changed price; and on
         the expiration of any such option or right or the termination of any
         such right to convert or exchange such Convertible Securities, the
         Exercise Price then in effect hereunder shall forthwith be increased to
         the Exercise Price which would have obtained had the adjustments made
         upon the issuance of such rights or options or Convertible Securities
         been made upon the basis of the issuance of the shares of Common Stock
         theretofore actually delivered (and the total consideration received
         therefor) upon the exercise of such rights or options or upon the
         conversion or exchange of such Convertible Securities. If the purchase
         price provided for in any such right or option referred to in clause
         (i) of paragraph (c) or the rate at which any Convertible Securities
         referred to in clause (i) or clause (ii) of paragraph (c) are
         convertible into or exchangeable for Common Stock shall decrease at any
         time under or by reason of provisions with respect thereto designed to
         protect against dilution, then in case of the delivery of Common Stock
         upon the exercise of any such right or option or upon conversion or
         exchange of any such Convertible Securities, the Exercise Price then in
         effect hereunder shall forthwith be decreased to such Exercise Price as
         would have obtained had the adjustments made upon the issuance of such
         right, option or Convertible Securities been made upon the basis of the
         issuance of (and the total consideration received for) the shares of
         Common Stock delivered as aforesaid.

                  (f) If any capital reorganization or reclassification of the
         capital stock of the Company, or consolidation or merger of the Company
         with another corporation, or the sale of all or substantially all of
         its assets to another corporation shall be effected in such a way that
         holders of Common Stock shall be entitled to receive stock, securities
         or assets with respect to or in exchange for shares of Common Stock
         (such stock, securities or assets being hereinafter referred to as
         "substituted property"), then, as a condition of such reorganization,
         reclassification, consolidation, merger or sale, lawful and adequate
         provision shall be made whereby the holder of this Warrant shall
         thereafter have the right to purchase and receive upon the basis and
         upon the terms and conditions specified herein and in lieu of the
         shares of the Common Stock of the Company immediately theretofore
         purchasable and receivable upon the exercise of this Warrant, such
         substituted property as may be issued or payable with respect to or in
         exchange for a number of outstanding shares of such Common Stock equal
         to the number of shares of such stock immediately theretofore
         purchasable and receivable upon the exercise of this Warrant had such
         reorganization, reclassification, consolidation, merger or sale not
         taken place, and in any such case appropriate provision shall be made
         with respect to the rights and interests of the holder of this Warrant
         to the end that the provisions hereof (including without limitation
         provisions for adjustments of the Exercise Price and of the number of
         shares purchasable upon the exercise of this Warrant) shall thereafter
         be applicable, as nearly as may be, in relation to any substituted
         property thereafter purchasable and receivable upon the exercise of
         this Warrant. The Company shall not effect any such consolidation,
         merger or sale, unless prior to the consummation thereof the successor
         corporation (if other than the Company) resulting from such
         consolidation or merger or the corporation purchasing such assets shall
         assume by written instrument executed and mailed to the holder of this
         Warrant at the last address of such holder appearing on the books of
         the Company, the obligation to deliver to such holder such substituted
         property as, in

                                       19
<PAGE>

         accordance with the foregoing provisions, such holder may be entitled
         to purchase and receive.

                  (g) If the Company takes any other action, or if any other
         event occurs, which does not come within the scope of the provisions of
         Paragraphs (a) through (f) of this Section 10 but which should result
         in adjustment in the Exercise Price and/or the number of shares subject
         to the Warrant in order to fairly protect the purchase rights of the
         holder of this Warrant, an appropriate adjustment of such Exercise
         Price shall be made by the Company.

                  (h) Upon any adjustment of the Exercise Price, then and in
         each such case, the Company shall give written notice thereof, by
         first-class mail, postage prepaid, addressed to the holder of this
         Warrant at the address of such holder as shown on the books of the
         Company, which notice shall state the Exercise Price resulting from
         such adjustment and the increase or decrease, if any, in the number of
         shares purchasable at such price upon the exercise of this Warrant,
         setting forth in reasonable detail the method of calculation and the
         facts upon which such calculation is based.

                  (i)      In case any time:

                           (i) the Company shall pay any dividend payable in
                  stock upon its Common Stock or make any distribution (other
                  than regular cash dividends) to the holders of its Common
                  Stock;

                           (ii) the Company shall offer for subscription pro
                  rata to the holders of its Common Stock any additional shares
                  of stock of any class or other rights;

                           (iii) there shall be any capital reorganization,
                  reclassification of the capital stock of the Company, or
                  consolidation or merger of the Company with, or sale of all or
                  substantially all of its assets to, another corporation; or

                           (iv) there shall be a voluntary or involuntary
                  dissolution, liquidation or winding up of the Company;

         then, in any one or more of said cases, the Company shall give written
         notice, by first-class mail, postage prepaid, addressed to the holder
         of this Warrant at the address of such holder as shown on the books of
         the Company, of the date on which (A) the books of the Company shall
         close or a record shall be taken for such dividend, distribution or
         subscription rights, or (B) such reorganization, reclassification
         consolidation, merger, sale, dissolution, liquidation or winding up
         shall take place, as the case may be. Such notice shall also specify
         the date as of which the holders of Common Stock of record shall
         participate in such dividend distribution or subscription rights, or
         shall be entitled to exchange their Common Stock for securities or
         other property deliverable upon such reorganization, reclassification,
         consolidation, merger, sale, dissolution, liquidation or winding up, as
         the case may be. Such written notice shall be at least 20 days prior to
         the action in question and not less than 20 days prior to the record
         date or the date on which the Company's transfer books are closed in
         respect thereto.

                                       20
<PAGE>

                  (j) Notwithstanding anything in this Warrant to the contrary,
         no adjustment will be made to the Exercise Price as a result of the
         issuance of securities by the Company after twelve months after the
         date of this Warrant.

         11.      MISCELLANEOUS.

                  (a) GOVERNING LAW. The Warrant shall be binding upon any
         successors or assigns of the Company. The Warrant shall constitute a
         contract under the laws of Illinois and for all purposes shall be
         construed in accordance with and governed by the laws of said state,
         without giving effect to the conflict of laws principles.

                  (b) RESTRICTIONS. THIS WARRANT AND THE COMMON STOCK TO BE SOLD
         UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THEY MAY NOT
         BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF
         AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
         THEREFROM.

                  (c) AMENDMENTS. The Warrant may be amended and the observance
         of any term of the Warrant may be waived with the written consent of
         the Company and the Holder.

                  (d) SECTION HEADINGS. The section headings used herein are
         for convenience of reference only, are not part of this Warrant and
         are not to affect construction of or be taken into consideration in
         interpreting this Warrant.

                  (e) NOTICES. Any notice required or permitted hereunder shall
         be deemed effectively given upon personal delivery to the party to be
         notified upon deposit with the United States Post Office, by certified
         mail, postage prepaid and addressed to the party to be notified at the
         address: with respect to the Company, at its principal address in
         Lincolnshire, Illinois (or such other office or agency of the Company
         as it may designate by notice in writing to the Holder); and with
         respect to the Holder, at the address of the Holder appearing on the
         books of the Company.

                                     * * * *

THIS WARRANT AND THE COMMON STOCK TO BE SOLD UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN EXEMPTION THEREFROM.

                                       21
<PAGE>

         IN WITNESS WHEREOF, BioSante Pharmaceuticals, Inc. has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated:  _______________________, 2001

                      BIOSANTE PHARMACEUTICALS, INC.

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

                                       22
<PAGE>

                               NOTICE OF EXERCISE

To:      BioSante Pharmaceuticals, Inc.

         1. The undersigned hereby elects to exercise the right to purchase
represented by the attached Warrant for, and to purchase thereunder, _______
shares of common stock, no par value (the "Warrant Shares") of BioSante
Pharmaceuticals, Inc. (the "Company") and tenders herewith payment of the
purchase price and any transfer taxes payable pursuant to the terms of the
Warrant.

         2. The Warrant Shares to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Warrant Shares. The undersigned believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Warrant Shares.

         3. Please issue a certificate or certificates representing said Warrant
Shares in the name set forth below:

                                              ---------------------------------
                                              [Name]

         4. If said number of Warrant Shares are not all the Warrant Shares
purchasable under the Warrant, please issue a new Warrant for the balance of
such Warrant Shares in the name set forth below:

                                              ---------------------------------
                                              [Name]

Executed on __________________________ (date).

--------------------------------------------------------------
[NAME OF HOLDER]

By:
   -----------------------------------------------------------
Printed Name:
             -------------------------------------------------
Title (if applicable):
                      ----------------------------------------

                                       23
<PAGE>
                                                                      ANNEX B

                         BIOSANTE PHARMACEUTICALS, INC.

                                 2001 FINANCING

                     SUMMARY OF PRINCIPAL TERMS OF OFFERING

The following is a summary of the basic terms and conditions of the private
placement of up to 15,000,000 units, each unit consisting of one share of common
stock of BioSante Pharmaceuticals, Inc. and a warrant to purchase 0.25 shares of
BioSante common stock. This summary is intended as an outline and does not
purport to include all of the terms and conditions which will be contained in a
definitive securities purchase agreement. This summary is provided for
discussion purposes only and is not intended as an offer or commitment to
purchase, or an offer or commitment to sell, the securities described herein.
The terms are not intended to be binding on any of the parties unless and until
definitive documents for the transaction are executed.

ISSUER:                                   BioSante Pharmaceuticals, Inc.
                                          ("BioSante" or the "Company")

INVESTORS:                                Certain accredited investors within
                                          the meaning of Rule 501 under
                                          Regulation D of the Securities Act of
                                          1933 and existing investors in
                                          BioSante (the "Investors")

SECURITIES OFFERED:                       Up to 15,000,000 units (the
                                          "Units"), each unit consisting of one
                                          share of BioSante common stock (the
                                          "Investor Shares") and a five-year
                                          warrant to purchase 0.25 shares of
                                          BioSante common stock (the "Investor
                                          Warrants").

                                          The Investor Warrants will have an
                                          exercise price of $0.625 per full
                                          share. The exercise price of the
                                          Investor Warrants will be subject to
                                          proportional adjustment for stock
                                          splits and stock dividends and will be
                                          adjusted on a weighted average basis
                                          in the event of the sale of BioSante
                                          securities within 12 months at a price
                                          less than $0.50 per share, other than
                                          as a result of the issuance of shares
                                          of BioSante common stock to employees,
                                          consultants and directors and upon the
                                          exercise of stock options and
                                          outstanding warrants and other
                                          customary exceptions. In no event will
                                          the number of shares subject to an
                                          Investors Warrant be increased as a
                                          result of the anti-dilution protection
                                          for issuance of BioSante securities at
                                          a price less than $0.50 per share.

                                      24
<PAGE>

PURCHASE PRICE:                           $0.50 per Unit, up to an aggregate of
                                          $7,500,000

MINIMUM SUBSCRIPTION:                     100,000 Units, or $50,000, unless
                                          BioSante in its sole discretion agrees
                                          to a lesser amount

MINIMUM AGGREGATE                         In the event BioSante does
                                          not receive subscriptions for the
                                          minimum OFFERING AMOUNT: placement of
                                          $2,000,000, which may include a
                                          minimum of $500,000 from investors
                                          identified by Sunrise Securities
                                          Corp., BioSante will return the
                                          purchase price to the Investors,
                                          without any interest thereon.

INFORMATION ABOUT BIOSANTE:               Enclosed with this term sheet is a
                                          copy of BioSante's Annual Report on
                                          Form 10-KSB for the year ended
                                          December 31, 1999, Quarterly Reports
                                          on Form 10-QSB for the quarters ended
                                          March 31, June 30 and September 30,
                                          2000, a Current Report on Form 8-K
                                          dated June 13, 2000 and recent press
                                          releases issued by BioSante.

USE OF PROCEEDS:                          The proceeds of the Units will be used
                                          to fund clinical development, acquire
                                          or license technology or products, and
                                          for working capital and other general
                                          corporate purposes.

PRO FORMA CAPITALIZATION:                 The  following  sets forth the fully
                                          diluted  capitalization  of BioSante
                                          currently and pro forma after giving
                                          effect to the issuance of the Units:
<TABLE>
<CAPTION>

                                                 10 Million    15 Million
                                                Units Issued  Units Issued
                               Pre-Issuance      Pro-Forma      Pro-Forma
                               ------------      ----------     ---------
           <S>                   <C>            <C>             <C>
           Co mmon Stock*        52,952,943     62,952,943      67,952,943
           Class C Stock**        4,687,684      4,687,684       4,687,684
           Warrants              11,822,500     14,847,500      16,447,500
           Options                6,025,125      6,025,125       6,025,125
                                -----------    -----------     -----------
           Total Equivalents     75,488,252     88,513,252      95,113,252
                                 ==========     ==========      ==========
</TABLE>

                                          * Does not include shares of common
                                          stock issuable to Paladin pursuant to
                                          that certain sub-license agreement
                                          dated September 1, 2000.

                                          ** Class C shares are convertible to
                                          common stock on the basis of one Class
                                          C share and $0.25. These shares,
                                          similar to common shares, carry one
                                          vote per share, but are not entitled
                                          to a dividend.

ANTICIPATED CLOSING DATE:                 February 28, 2001

TERMINATION DATE:                         April 9, 2001,  unless  extended by
                                          the mutual  agreement of BioSante and
                                          Sunrise Securities Corp.

                                      25
<PAGE>

              PRINCIPAL TERMS OF THE SECURITIES PURCHASE AGREEMENT

REPRESENTATIONS
AND WARRANTIES OF BIOSANTE:         Customary for transactions of this type,
                                    including:

                                    o        Due organization, good standing,
                                             corporate power and authority

                                    o        Valid issuance of Units

                                    o        Exchange Act reports do not contain
                                             any material misstatements or
                                             omissions

                                    o        BioSante has complied with all blue
                                             sky laws in connection with the
                                             issuance of the Units

                                    o        Sale of the Units will not require
                                             compliance with the prospectus
                                             delivery or registration
                                             requirements of the Securities Act

REGISTRATION RIGHTS:                BioSante will covenant to use its reasonable
                                    best efforts to:

                                    o        promptly file after the closing of
                                             the offering a registration
                                             statement (the "Registration
                                             Statement") with the Securities and
                                             Exchange Commission, but in no
                                             event later than a date 90 days
                                             after the final closing of the
                                             Offering, to register under the
                                             Securities Act the resale of the
                                             Shares and the shares of BioSante
                                             common stock underlying the
                                             Investor Warrants;

                                    o        use its reasonable best efforts to
                                             cause the Registration Statement to
                                             be declared effective under the
                                             Securities Act as promptly as
                                             reasonably practicable;

                                    o        after the Registration Statement
                                             is declared effective under the
                                             Securities Act, furnish holders
                                             with such number of copies of the
                                             prospectus included in the
                                             Registration Statement as the
                                             holders may reasonably request to
                                             facilitate the resale of shares;
                                             and

                                     o        use its reasonable best efforts to
                                              cause such Registration Statement
                                              to remain effective until the
                                              earlier of: (a) the sale of all
                                              the shares of BioSante common
                                              stock covered by the Registration
                                              Statement; or (b) such time as the
                                              holders become eligible to resell
                                              the shares pursuant to Rule
                                              144(k).

                                     In the event that BioSante fails to cause
                                     the Registration Statement to be declared
                                     effective within 90 days of the filing

                                      26
<PAGE>

                                     of the Registration Statement, BioSante
                                     will issue to the Investors shares of
                                     BioSante common stock equal to 1% of the
                                     Shares for each 30 days or part thereof
                                     effectiveness is delayed.

OTHER COVENANTS OF THE               BioSante will covenant that it will use
COMPANY:                             commercially reasonable efforts to list of
                                     its common stock on the American Stock
                                     Exchange, Nasdaq or other comparable stock
                                     exchange or quotation system, and will take
                                     such steps necessary to meet the
                                     requirements for such listing.

PLACEMENT AGENT:                     Sunrise Securities Corp.

AGENT COMMISSION:                    BioSante will pay a commission to Sunrise
                                     of 7.0% of the gross sales price of the
                                     Units sold by BioSante in the offering to
                                     investors introduced to BioSante by Sunrise
                                     (the "Cash Commission"), which Cash
                                     Commission may be paid, at Sunrise's
                                     option, in Units valued at the Unit sales
                                     price less the Cash Commission. In
                                     addition, BioSante will sell to Sunrise
                                     (or its designees) a five-year warrant to
                                     purchase Units (the "Agent's Warrants")
                                     covering a number of Units equal to 7.0% of
                                     the total number of Units sold by BioSante
                                     in the offering to investors introduced to
                                     BioSante by Sunrise, inclusive of the
                                     Commission Units, if any, issued to
                                     Sunrise.

                                     The Cash Commission and Agent's Warrants
                                     will also be payable with respect to (i)
                                     all securities subscribed to by bona fide
                                     accredited investors introduced to BioSante
                                     by Sunrise who are ready willing and able
                                     to close but whose subscriptions are
                                     rejected by BioSante other than due to
                                     over-subscription and (ii) any purchase of
                                     BioSante securities by any investor
                                     introduced by Sunrise to BioSante taking
                                     place at any time within 12 months, as
                                     long as such introduction occurred before
                                     the closing of the offering.

EXPENSES:                            BioSante will bear all reasonable and
                                     documented out-of-pocket expenses incurred
                                     by Sunrise in connection with the offering
                                     including fees of Sunrise's counsel,
                                     printing, postage, overnight delivery,
                                     escrow agent fees and pre-approved travel,
                                     up to a maximum of $20,000.

DRAFTING:                           The transaction documents will be drafted by
                                    counsel for BioSante.

                                      27
<PAGE>

                                                                   ANNEX C

                                  RISK FACTORS

         AN INVESTMENT IN BIOSANTE'S UNITS INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE THE RISK FACTORS IN BIOSANTE'S ANNUAL REPORT ON FORM 10-KSB FOR THE
YEAR ENDED DECEMBER 31, 1999 AND QUARTERLY REPORTS ON FORM 10-QSB FOR THE
QUARTERS ENDED MARCH 31, JUNE 30 AND SEPTEMBER 30, 2000.

         YOU SHOULD ALSO CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE INVESTING
IN THE UNITS.

RISKS RELATING TO OUR COMMON STOCK

BECAUSE OUR COMMON STOCK IS TRADED ON THE OVER-THE-COUNTER BULLETIN BOARD AND
THE CANADIAN VENTURE EXCHANGE, YOUR ABILITY TO SELL YOUR SHARES IN THE SECONDARY
TRADING MARKET MAY BE LIMITED.

         Our common stock is currently traded on the Over-the-Counter Bulletin
Board and the Canadian Venture Exchange. Consequently, the liquidity of our
common stock is impaired, not only in the number of shares that are bought and
sold, but also through delays in the timing of transactions, and coverage by
security analysts and the news media, if any, of our company. As a result,
prices for shares of our common stock may be lower than might otherwise prevail
if our common stock was traded on Nasdaq or a national securities exchange
(i.e., the American Stock Exchange)

BECAUSE OUR SHARES ARE "PENNY STOCKS," YOU MAY HAVE DIFFICULTY SELLING THEM IN
THE SECONDARY TRADING MARKET.

         Federal regulations under the Securities Exchange Act of 1934 regulate
the trading of so-called "penny stocks," which are generally defined as any
security not listed on a national securities exchange or Nasdaq, priced at less
than $5.00 per share and offered by an issuer with limited net tangible assets
and revenues. Since our common stock currently trades on the OTC Bulletin Board
at less than $5.00 per share, our shares are "penny stocks" and may not be
traded unless a disclosure schedule explaining the penny stock market and the
risks associated therewith is delivered to a potential purchaser prior to any
trade.

         In addition, because our common stock is not listed on Nasdaq or any
national securities exchange and currently trades at less than $5.00 per share,
trading in our common stock is subject to Rule 15g-9 under the Exchange Act.
Under this rule, broker-dealers must take certain steps prior to selling a
"penny stock," which steps include:

         o    obtaining financial and investment information from the investor;

         o    obtaining a written suitability questionnaire and purchase
              agreement signed by the investor; and

         o    providing the investor a written identification of the shares
              being offered and the quantity of the shares.

                                      28
<PAGE>

         If these penny stock rules are not followed by the broker-dealer, the
investor has no obligation to purchase the shares. The application of these
comprehensive rules will make it more difficult for broker-dealers to sell our
common stock and our shareholders, therefore, may have difficulty in selling
their shares in the secondary trading market.

OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN OUR COMMON STOCK COULD
SUFFER A DECLINE IN VALUE.

         Our common stock is listed on the Over-the-Counter Bulletin Board in
the United States and on the Canadian Venture Exchange in Canada. The market
price of our common stock may fluctuate significantly in response to a number of
factors, some of which are beyond our control. These factors include:

         o    progress of our products through the regulatory process;

         o    results of preclinical studies and clinical trials;

         o    announcements of technological innovations or new products by us
              or our competitors;

         o    government  regulatory  action  affecting our products or our
              competitors'  products in both the United States and foreign
              countries;

         o    developments or disputes concerning patent or proprietary rights;

         o    general market conditions for emerging growth and pharmaceutical
              companies;

         o    economic conditions in the United States or abroad;

         o    actual or anticipated fluctuations in our operating results;

         o    broad market fluctuations; and

         o    changes in financial estimates by securities analysts.

         In addition, the value of our common stock may fluctuate because it is
listed on both the OTC Bulletin Board and the Canadian Venture Exchange. We do
not know what effect, if any, the dual listing will have on the price of our
common stock in either market. Listing on both the Canadian Venture Exchange and
the OTC Bulletin Board may increase our stock price volatility due to:

         o    trading in different time zones;

         o    different ability to buy or sell our stock; and

         o    different trading volume.

                                      29
<PAGE>

WE MAY INCUR SIGNIFICANT COSTS FROM CLASS ACTION LITIGATION DUE TO OUR EXPECTED
STOCK VOLATILITY.

         In the past, following periods of large price declines in the public
market price of a company's stock, holders of that stock have occasionally
instituted securities class action litigation against the company that issued
the stock. If any of our shareholders were to bring this type of lawsuit against
us, even if the lawsuit is without merit, we could incur substantial costs
defending the lawsuit. The lawsuit could also divert the time and attention of
our management, which would hurt our business. Any adverse determination in
litigation could also subject us to significant liabilities.

PROVISIONS IN OUR CORPORATE DOCUMENTS AND WYOMING LAW COULD DISCOURAGE OR
PREVENT A TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR
SHAREHOLDERS.

         Provisions of our articles of incorporation and bylaws, as well as
provisions of Wyoming law, could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our shareholders. These
provisions include:

         o    authorizing the issuance of "blank check" preferred that could be
              issued by our board of directors to increase the number of
              outstanding shares and thwart a takeover attempt; and

         o    prohibiting cumulative voting in the election of directors, which
              would otherwise allow less than a majority of shareholders to
              elect director candidates.

         In addition, the laws of the State of Wyoming, our state of
incorporation, contain certain provisions that could have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of our company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of our common stock. These provisions could also make it more difficult
for shareholders to change the management of our company or to effect certain
transactions.

OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUFFICIENT NUMBER OF SHARES OF OUR
COMMON STOCK TO CONTROL OUR COMPANY, WHICH COULD DISCOURAGE OR PREVENT A
TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR SHAREHOLDERS.

         Our directors and executive officers own or control approximately 50.5%
of our outstanding voting power. Accordingly, these shareholders, individually
and as a group, may be able to influence the outcome of shareholder votes,
involving votes concerning the election of directors, the adoption or amendment
of provisions in our articles of incorporation and bylaws and the approval of
certain mergers or other similar transactions, such as sales of substantially
all of our assets. Such control by existing shareholders could have the effect
of delaying, deferring or preventing a change in control of our company. In
addition, under a shareholders agreement entered into in connection with our May
1999 private placement, several of our shareholders entered into a voting
agreement with respect to the election of directors.

                                      30
<PAGE>

WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS IN THE FORESEEABLE FUTURE AND,
THEREFORE, ANY RETURN ON YOUR INVESTMENT IN OUR CAPITAL STOCK MUST COME FROM
INCREASES IN THE FAIR MARKET VALUE AND TRADING PRICE OF THE CAPITAL STOCK.

         We do not intend to pay any cash dividends in the foreseeable future
and, therefore, any return on your investment in our capital stock must come
from increases in the fair market value and trading price of the capital stock.

WE WILL LIKELY ISSUE ADDITIONAL EQUITY SECURITIES THAT WILL DILUTE YOUR SHARE
OWNERSHIP.

         We will likely issue additional equity securities to raise capital and
through the exercise of options and warrants that are outstanding or may be
outstanding. These additional issuances will dilute your share ownership.

                                      31
<PAGE>

                    AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT

         This Amendment No. 1 (this "Amendment") amends the attached
Subscription Agreement (the "Subscription Agreement") between the undersigned
and BioSante Pharmaceuticals, Inc. ("BioSante"), relating to the offer and sale
of up to 15,000,000 units to certain "accredited investors" (within the meaning
of Rule 501 under Regulation D of the Securities Act of 1933, as amended) and
existing accredited investors in BioSante. Except as otherwise provided herein,
all capitalized terms used herein are as defined in the attached Subscription
Agreement.

         WHEREAS, BioSante has agreed to change the terms of the units being
sold under the Subscription Agreement as provided herein, and the undersigned
agrees to such changes.

         NOW, THEREFORE, in consideration of the forgoing premises and the
mutual covenants and agreements contained herein, the parties hereby amend the
Subscription Agreement as follows:

         1.       AMENDMENT.  The  first  sentence  of  paragraph  1 of the
Subscription  Agreement  is hereby amended in its entirety to state as follows:

                  1. SUBSCRIPTION. The undersigned is hereby purchasing from
BioSante Pharmaceuticals, Inc., a Wyoming corporation, ______ units (must be at
least 100,000 units, unless BioSante in its sole discretion otherwise agrees)
for a purchase price of $0.40 per unit, or an aggregate or total purchase price
of $_____________. Each unit consists of (i) one share of BioSante's common
stock, no par value, and (ii) a warrant to purchase .50 shares of BioSante's
common stock at an exercise price of $0.50 per full share, in substantially the
form of warrant attached as ANNEX A hereto.

         2.       AMENDMENT.  The first  sentence of  paragraph  3(g) of the
Subscription  Agreement is hereby amended in its entirety to state as follows:

                  (g) SEC FILINGS. BioSante has furnished the undersigned true
and complete copies of the latest draft of BioSante's Annual Report on Form
10-KSB for the fiscal year ended December 31, 2000 (which the undersigned
understands and acknowledges will be filed by BioSante with the SEC on or before
April 2, 2001), BioSante's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999, Quarterly Reports on Form 10-QSB for the quarters ended
March 31, June 30 and September 30, 2000, and a Current Report on Form 8-K dated
June 13, 2000 and all subsequent filings, if any, made by BioSante with the SEC.

         3.       AMENDMENT.  A new  paragraph 20 of the  Subscription
Agreement is hereby added and states in its entirety as follows:

                  20. The undersigned agrees not to disclose any of the
material, non-public information contained in the latest draft of BioSante's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 until
such time as such Annual Report has been filed with the SEC.

         4.       CONTINUING EFFECT OF SUBSCRIPTION AGREEMENT.   Except as
modified hereunder, the Subscription Agreement continues in full force and
effect.

         BioSante and the undersigned have caused this Amendment No. 1 to be
duly executed on their behalf by their respective duly authorized
representatives as of the date first written above.

BIOSANTE PHARMACEUTICALS, INC.              SUBSCRIBER
By:
-----------------------------               -----------------------------
                                            [Print Name]
Its:
-----------------------------

                                      32<PAGE>

EXHIBIT 4.1

                        PANERA BREAD COMPANY SAVINGS PLAN
<PAGE>

                                              TABLE OF CONTENTS

<TABLE>
<S>                        <C>                                                                                   <C>
INTRODUCTION
ARTICLE I                  FORMAT AND DEFINITIONS.................................................................1
   SECTION 1.01            FORMAT.................................................................................1
   SECTION 1.02            DEFINITIONS............................................................................1
ARTICLE II                 PARTICIPATION.........................................................................16
   SECTION 2.01            ACTIVE PARTICIPANT....................................................................16
   SECTION 2.02            INACTIVE PARTICIPANT..................................................................17
   SECTION 2.03            CESSATION OF PARTICIPATION............................................................17
ARTICLE III                CONTRIBUTIONS.........................................................................17
   SECTION 3.01            EMPLOYER CONTRIBUTIONS................................................................17
   SECTION 3.01A           ROLLOVER CONTRIBUTIONS................................................................19
   SECTION 3.02            FORFEITURES...........................................................................20
   SECTION 3.03            ALLOCATION............................................................................22
   SECTION 3.04            CONTRIBUTION LIMITATION...............................................................22
   SECTION 3.05            EXCESS AMOUNTS........................................................................28
ARTICLE IV                 INVESTMENT OF CONTRIBUTIONS...........................................................39
   SECTION 4.01            INVESTMENT AND TIMING OF CONTRIBUTIONS................................................39
   SECTION 4.01A           INVESTMENT IN QUALIFYING EMPLOYER SECURITIES..........................................40
ARTICLE V                  BENEFITS..............................................................................42
   SECTION 5.01            RETIREMENT BENEFITS...................................................................42
   SECTION 5.02            DEATH BENEFITS........................................................................42
   SECTION 5.03            VESTED BENEFITS.......................................................................42
   SECTION 5.04            WHEN BENEFITS START...................................................................42
   SECTION 5.05            WITHDRAWAL BENEFITS...................................................................43
   SECTION 5.06            LOANS TO PARTICIPANTS.................................................................44
ARTICLE VI                 DISTRIBUTION OF BENEFITS..............................................................48
   SECTION 6.01            AUTOMATIC FORMS OF DISTRIBUTION.......................................................48
   SECTION 6.02            OPTIONAL FORMS OF DISTRIBUTION........................................................49
   SECTION 6.03            ELECTION PROCEDURES...................................................................50
   SECTION 6.04            NOTICE REQUIREMENTS...................................................................53
ARTICLE VII                DISTRIBUTION REQUIREMENTS.............................................................55
   SECTION 7.01            APPLICATION...........................................................................55
   SECTION 7.02            DEFINITIONS...........................................................................55
   SECTION 7.03            DISTRIBUTION REQUIREMENTS.............................................................57
ARTICLE VIII               TERMINATION OF THE PLAN...............................................................60
ARTICLE IX                 ADMINISTRATION OF THE PLAN............................................................61
   SECTION 9.01            ADMINISTRATION........................................................................61
   SECTION 9.02            EXPENSES..............................................................................62
   SECTION 9.03            RECORDS...............................................................................62
   SECTION 9.04            INFORMATION AVAILABLE.................................................................62
   SECTION 9.05            CLAIM AND APPEAL PROCEDURES...........................................................63
   SECTION 9.06            DELEGATION OF AUTHORITY...............................................................63
   SECTION 9.07            EXERCISE OF DISCRETIONARY AUTHORITY...................................................63
   SECTION 9.08            VOTING AND TENDER OF QUALIFYING EMPLOYER SECURITIES...................................64

                                       i
<PAGE>

                                                 TABLE OF CONTENTS

ARTICLE X                  GENERAL PROVISIONS....................................................................65
   SECTION 10.01           AMENDMENTS............................................................................65
   SECTION 10.02           DIRECT ROLLOVERS......................................................................66
   SECTION 10.03           MERGERS AND DIRECT TRANSFERS..........................................................67
   SECTION 10.04           PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES..................................68
   SECTION 10.05           EMPLOYMENT STATUS.....................................................................68
   SECTION 10.06           RIGHTS TO PLAN ASSETS.................................................................68
   SECTION 10.07           BENEFICIARY...........................................................................69
   SECTION 10.08           NONALIENATION OF BENEFITS.............................................................69
   SECTION 10.09           CONSTRUCTION..........................................................................69
   SECTION 10.10           LEGAL ACTIONS.........................................................................70
   SECTION 10.11           SMALL AMOUNTS.........................................................................70
   SECTION 10.12           WORD USAGE............................................................................70
   SECTION 10.13           CHANGE IN SERVICE METHOD..............................................................71
   SECTION 10.14           MILITARY SERVICE......................................................................72
   SECTION 10.15           QUALIFICATION OF PLAN.................................................................72
ARTICLE XI                 TOP-HEAVY PLAN REQUIREMENTS...........................................................73
   SECTION 11.01           APPLICATION...........................................................................73
   SECTION 11.02           DEFINITIONS...........................................................................73
   SECTION 11.03           MODIFICATION OF VESTING REQUIREMENTS..................................................76
   SECTION 11.04           MODIFICATION OF CONTRIBUTIONS.........................................................77
   SECTION 11.05           MODIFICATION OF CONTRIBUTION LIMITATION...............................................78
PLAN EXECUTION
</TABLE>

                                       ii
<PAGE>

                                  INTRODUCTION

         The Primary Employer previously established a savings plan on May 15,
1999.

         The Primary Employer is of the opinion that the plan should be changed.
It believes that the best means to accomplish these changes is to completely
restate the plan's terms, provisions and conditions. The restatement, effective
May 15, 1999, is set forth in this document and is substituted in lieu of the
prior document.

         It is intended that the restated savings plan qualify as a profit
sharing plan under the Internal Revenue Code of 1986, including any later
amendments to the Code. The Employer agrees to operate the plan according to the
terms, provisions and conditions set forth in this document.

         This restatement is made retroactively to reflect the law changes made
through the Internal Revenue Service Restructuring and Reform Act of 1998. The
provisions of this Plan apply as of the effective date of the restatement except
as provided in the attached addendums which reflect the operation of the Plan
between the effective date of the restatement and the date this restatement is
adopted and identify those provisions which are not amended retroactively.

                                   ARTICLE I

                             FORMAT AND DEFINITIONS

SECTION 1.01      FORMAT.

         Words and phrases defined in the DEFINITIONS SECTION of Article I shall
have that defined meaning when used in this Plan, unless the context clearly
indicates otherwise.

         These words and phrases have an initial capital letter to aid in
identifying them as defined terms.

SECTION 1.02      DEFINITIONS.

ACCOUNT means, for a Participant, his share of the Plan Fund. Separate
accounting records are kept for those parts of his Account that result from:

         (a)      Elective Deferral Contributions

         (b)      Matching Contributions

         (c)      Rollover Contributions

         If the Participant's Vesting Percentage is less than 100% as to any of
the Employer Contributions, a separate accounting record will be kept for any
part of his Account resulting from such Employer Contributions and, if there has
been a prior Forfeiture Date, from such Contributions made before a prior
Forfeiture Date.
<PAGE>

A Participant's Account shall be reduced by any distribution of his Vested
Account and by any Forfeitures. A Participant's Account shall participate in the
earnings credited, expenses charged, and any appreciation or depreciation of the
Investment Fund. His Account is subject to any minimum guarantees applicable
under the Annuity Contract or other investment arrangement and to any expenses
associated therewith.

ACP TEST means the nondiscrimination test described in Code Section 401 (m)(2)
as provided for in subparagraph (d) of the EXCESS AMOUNTS SECTION of Article
III.

ACTIVE PARTICIPANT means an Eligible Employee who is actively participating in
the Plan according to the provisions in the ACTIVE PARTICIPANT SECTION of
Article II.

ADP TEST means the nondiscrimination test described in Code Section 401 (k)(3)
as provided for in subparagraph (c) of the EXCESS AMOUNTS SECTION of Article
Ill.

AFFILIATED SERVICE GROUP means any group of corporations, partnerships or other
organizations of which the Employer is a part and which is affiliated within the
meaning of Code Section 414(m) and regulations thereunder. Such a group includes
at least two organizations one of which is either a service organization (that
is, an organization the principal business of which is performing services), or
an organization the principal business of which is performing management
functions on a regular and continuing basis. Such service is of a type
historically performed by employees. In the case of a management organization,
the Affiliated Service Group shall include organizations related, within the
meaning of Code Section 144(a)(3), to either the management organization or the
organization for which it performs management functions. The term Controlled
Group, as it is used in this Plan, shall include the term Affiliated Service
Group.

ANNUITY CONTRACT means the annuity contract or contracts into which the Trustee
enters with the Insurer for guaranteed benefits, for the investment of
Contributions in separate accounts, and for the payment of benefits under this
Plan. The term Annuity Contract as it is used in this Plan shall include the
plural unless the context clearly indicates the singular is meant.

ANNUITY STARTING DATE means, for a Participant, the first day of the first
period for which an amount is payable as an annuity or any other form.

BENEFICIARY means the person or persons named by a Participant to receive any
benefits under the Plan when the Participant dies. See the BENEFICIARY SECTION
of Article X.

CLAIMANT means any person who makes a claim for benefits under this Plan. See
the CLAIM AND APPEAL PROCEDURES SECTION of Article IX.

CODE means the Internal Revenue Code of 1986, as amended.

COMPENSATION means, except for purposes of the CONTRIBUTION LIMITATION SECTION
of Article Ill and Article XI, the total earnings, except as modified in this
definition, paid or made available to an Employee by the Employer or a
Predecessor Employer which did not maintain this Plan during any specified
period. Earnings include earnings while a partner or proprietor of such
Predecessor Employer.

                                       2
<PAGE>

"Earnings" in this definition means wages within the meaning of Code Section
3401(a) and all other payments of compensation to an Employee by the Employer
(in the course of the Employer's trade or business) for which the Employer is
required to furnish the Employee a written statement under Code Sections
6041(d), 6O51(a)(3), and 6052. Earnings must be determined without regard to any
rules under Code Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Code Section 3401 (a)(2)). The
amount reported in the "Wages, Tips and Other Compensation" box on Form W-2
satisfies this definition.

For any Self-employed Individual, Compensation means Earned Income.

Compensation shall exclude reimbursements or other expense allowances, fringe
benefits (cash and noncash), moving expenses, deferred compensation (other than
elective contributions), and welfare benefits.

For purposes of determining the allocation or amount of

         Elective Deferral Contributions
         Matching Contributions

Compensation shall exclude the following:

         Award/Exercise of Stock Option and Auto Allowance

Compensation shall also include elective contributions. For this purpose,
elective contributions are amounts contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Employee under Code Section 125, 132(f)(4), 402(e)(3), 402(h)(1) (B), or
403(b). Elective contributions also include compensation deferred under a Code
Section 457 plan maintained by the Employer and employee contributions "picked
up" by a governmental entity and, pursuant to Code Section 414(h)(2), treated as
Employer contributions.

For purposes of the EXCESS AMOUNTS SECTION of Article Ill, the Employer may
elect to use an alternative nondiscriminatory definition of Compensation in
accordance with the regulations under Code Section 414(s).

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

If a determination period consists of fewer than 12 months, the annual limit is
an amount equal to the otherwise applicable annual limit multiplied by a
fraction. The numerator of the fraction is the number of months in the short
determination period, and the denominator of the fraction is 12.

                                       3
<PAGE>

If Compensation for any prior determination period is taken into account in
determining a Participant's contributions or benefits for the current Plan Year,
the Compensation for such prior determination period is subject to the
applicable annual compensation limit in effect for that determination period.
For this purpose, in determining contributions or benefits in Plan Years
beginning on or after January 1, 1994, the annual compensation limit in effect
for determination periods beginning before that date is $150,000.

Compensation means, for a Leased Employee, Compensation for the services the
Leased Employee performs for the Employer, determined in the same manner as the
Compensation of Employees who are not Leased Employees, regardless of whether
such Compensation is received directly from the Employer or from the leasing
organization.

CONTINGENT ANNUITANT means an individual named by the Participant to receive a
lifetime benefit after the Participant's death in accordance with a survivorship
life annuity.

CONTRIBUTIONS means

         Elective Deferral Contributions
         Matching Contributions
         Rollover Contributions

as set out in Article Ill, unless the context clearly indicates only specific
contributions are meant.

CONTROLLED GROUP means any group of corporations, trades, or businesses of which
the Employer is a part that are under common control. A Controlled Group
includes any group of corporations, trades, or businesses, whether or not
incorporated, which is either a parent-subsidiary group, a brother-sister group,
or a combined group within the meaning of Code Section 414(b), Code Section
414(c) and regulations thereunder and, for purposes of determining contribution
limitations under the CONTRIBUTION LIMITATION SECTION of Article III, as
modified by Code Section 415(h) and, for the purpose of identifying Leased
Employees, as modified by Code Section 144(a)(3). The term Controlled Group, as
it is used in this Plan, shall include the term Affiliated Service Group and any
other employer required to be aggregated with the Employer under Code Section
414(o) and the regulations thereunder.

DIRECT ROLLOVER means a payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.

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

EARNED INCOME means, for a Self-employed Individual, net earnings from
self-employment in the trade or business for which this Plan is established if
such Self-employed Individual's personal services are a material income
producing factor for that trade or business. Net earnings shall be determined
without regard to items not included in gross income and the deductions properly
allocable to or chargeable against such items. Net earnings shall be reduced for
the

                                       4
<PAGE>

employer contributions to the Employer's qualified retirement plan(s) to the
extent deductible under Code Section 404.

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

ELECTIVE DEFERRAL CONTRIBUTIONS means contributions made by the Employer to fund
this Plan in accordance with elective deferral agreements between Eligible
Employees and the Employer.

Elective deferral agreements shall be made, changed, or terminated according to
the provisions of the EMPLOYER CONTRIBUTIONS SECTION of Article Ill.

Elective Deferral Contributions shall be 100% vested and subject to the
distribution restrictions of Code Section 401(k) when made. See the WHEN
BENEFITS START SECTION of Article V.

ELIGIBILITY BREAK IN SERVICE means an Eligibility Computation Period in which an
Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs an
Eligibility Break in Service on the last day of an Eligibility Computation
Period in which he has an Eligibility Break in Service.

ELIGIBILITY COMPUTATION PERIOD means a consecutive 12-month period. The first
Eligibility Computation Period begins on an Employee's Employment Commencement
Date. Later Eligibility Computation Periods shall be consecutive 12-month
periods ending on the last day of each Plan Year that begins after his
Employment Commencement Date.

To determine an Eligibility Computation Period after an Eligibility Break in
Service, the Plan shall use the consecutive 12-month period beginning on an
Employee's Reemployment Commencement Date as if his Reemployment Commencement
Date were his Employment Commencement Date.

ELIGIBILITY SERVICE means one year of service for each Eligibility Computation
Period that has ended and in which an Employee is credited with at least 1,000
Hours-of-Service.

However, Eligibility Service is modified as follows:

Service with a Predecessor Employer which did not maintain this Plan included:

An Employee's service with a Predecessor Employer which did not maintain this
Plan shall be included as service with the Employer. This service includes
service performed while a proprietor or partner.

Period of Military Duty included:

A Period of Military Duty shall be included as service with the Employer to the
extent it has not already been credited. For purposes of crediting
Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be
credited (without regard to the 501 Hour-of-Service

                                       5
<PAGE>

limitation) for each hour an Employee would normally have been scheduled to work
for the Employer during such period.

Controlled Group service included:

An Employee's service with a member firm of a Controlled Group while both that
firm and the Employer were members of the Controlled Group shall be included as
service with the Employer.

ELIGIBLE EMPLOYEE means any Employee of the Employer who meets the following
requirement; His employment classification with the Employer is the following:

         Nonbargaining class. Not represented for collective bargaining purposes
         by any collective bargaining agreement between the Employer and
         employee representatives, if retirement benefits were the subject of
         good faith and if two percent or less of the Employees who are covered
         pursuant to that agreement are professionals as defined in section
         1.410(b)-9 of the regulations. For this purpose, the term "employee
         representatives" does not include any organization more than half of
         whose members are Employees who are owners, officers, or executives of
         the Employer.

ELIGIBLE RETIREMENT PLAN means an individual retirement account described in
Code Section 408(a), an individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section 403(a) or a qualified trust
described in Code Section 401(a), that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.

ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any portion of
the balance to the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: (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 Code Section
401(a)(9); (iii) any hardship distribution described in Code Section
401(k)(2)(B)(i)(IV) received after December 31, 1998; (iv) the portion of any
other distribution(s) that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities); and (v) any other distribution(s) that is reasonably expected to
total less than $200 during a year.

EMPLOYEE means an individual who is employed by the Employer or any other
employer required to be aggregated with the Employer under Code Sections 414(b),
(c), (m), or (o). A Controlled Group member is required to be aggregated with
the Employer.

The term Employee shall include any Self-employed Individual treated as an
employee of any employer described in the preceding paragraph as provided in
Code Section 401(c)(1). The term Employee shall also include any Leased Employee
deemed to be an employee of any employer described in the preceding paragraph as
provided in Code Section 414(n) or (0).

                                       6
<PAGE>

EMPLOYER means, except for purposes of the CONTRIBUTION LIMITATION SECTION of
Article III, the Primary Employer. This will also include any successor
corporation or firm of the Employer which shall, by written agreement, assume
the obligations of this Plan or any Predecessor Employer which maintained this
Plan.

EMPLOYER CONTRIBUTIONS means

         Elective Deferral Contributions
         Matching Contributions

as set out in Article III and contributions made by the Employer to fund this
Plan in accordance with the provisions of the MODIFICATION OF CONTRIBUTIONS
SECTION of Article Xl, unless the context clearly indicates only specific
contributions are meant.

EMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service.

ENTRY DATE means the date an Employee first enters the Plan as an Active
Participant. See the ACTIVE PARTICIPANT SECTION of Article II.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

FISCAL YEAR means the Primary Employer's taxable year. The last day of the
Fiscal Year is the last Saturday of December.

FORFEITURE means the part, if any, of a Participant's Account that is forfeited.
See the FORFEITURES SECTION of Article III.

FORFEITURE DATE means, as to a Participant, the date the Participant incurs five
consecutive Vesting Breaks in Service.

HIGHLY COMPENSATED EMPLOYEE means any Employee who:

         (a)      was a 5-percent owner at any time during the year or the
                  preceding year, or

         (b)      for the preceding year had compensation from the Employer in
                  excess of $80,000 and, if the Employer so elects, was in the
                  top-paid group for the preceding year. The $80,000 amount is
                  adjusted at the same time and in the same manner as under Code
                  Section 415(d), except that the base period is the calendar
                  quarter ending September 30, 1996.

For this purpose the applicable year of the plan for which a determination is
being made is called a determination year and the preceding 12-month period is
called a look-back year. If the Employer makes a calendar year data election,
the look-back year shall be the calendar year beginning with or within the
look-back year. The Plan may not use such election to determine whether
Employees are Highly Compensated Employees on account of being a 5-percent
owner.

                                       7
<PAGE>

In determining who is a Highly Compensated Employee the Employer does not make a
top-paid group election. In determining who is a Highly Compensated Employee the
Employer does not make a calendar year data election.

Calendar year data elections and top-paid group elections, once made, apply for
all subsequent years unless changed by the Employer. If the Employer makes one
election, the Employer is not required to make the other. If both elections are
made, the look-back year in determining the top-paid group must be the calendar
year beginning with or within the look-back year. These elections must apply
consistently to the determination years of all plans maintained by the Employer
which reference the highly compensated employee definition in Code Section
414(q), except as provided in Internal Revenue Service Notice 97-45 (or
superseding guidance). The consistency requirement will not apply to
determination years beginning with or within the 1997 calendar year, and for
determination years beginning on or after January 1, 1998 and before January 1,
2000, satisfaction of the consistency requirement is determined without regard
to any nonretirement plans of the Employer.

The determination of who is a highly compensated former Employee is based on the
rules applicable to determining Highly Compensated Employee status as in effect
for that determination year, in accordance with section 1.414(q)-iT, A-4 of the
temporary Income Tax Regulations and Internal Revenue Service Notice 97-45.

In determining whether an Employee is a Highly Compensated Employee for years
beginning in 1997, the amendments to Code Section 414(q) stated above are
treated as having been in effect for years beginning in 1996.

The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group,
the compensation that is considered, and the identity of the 5-percent owners,
shall be made in accordance with Code Section 414(q) and the regulations
thereunder.

HOUR-OF-SERVICE means the following:

         (a)      Each hour for which an Employee is paid, or entitled to
                  payment, for performing duties for the Employer during the
                  applicable computation period.

         (b)      Each hour for which an Employee is paid, or entitled to
                  payment, by the Employer because of a period of time in which
                  no duties are performed (irrespective of whether the
                  employment relationship has terminated) due to vacation,
                  holiday, illness, incapacity (including disability), layoff,
                  jury duty, military duty or leave of absence. Notwithstanding
                  the preceding provisions of this subparagraph (b), no credit
                  will be given to the Employee:

                  (1)      for more than 501 Hours-of-Service under this
                           subparagraph (b) because of any single continuous
                           period in which the Employee performs no duties
                           (whether or not such period occurs in a single
                           computation period); or

                  (2)      for an Hour-of-Service for which the Employee is
                           directly or indirectly paid, or entitled to payment,
                           because of a period in which no duties are

                                       8
<PAGE>

                           performed if such payment is made or due under a plan
                           maintained solely for the purpose of complying with
                           applicable worker's or workmen's compensation, or
                           unemployment compensation, or disability insurance
                           laws; or

                  (3)      for an Hour-of-Service for a payment which solely
                           reimburses the Employee for medical or medically
                           related expenses incurred by him.

                  For purposes of this subparagraph (b), a payment shall be
                  deemed to be made by, or due from the Employer, regardless of
                  whether such payment is made by, or due from the Employer,
                  directly or indirectly through, among others, a trust fund or
                  insurer, to which the Employer contributes or pays premiums
                  and regardless of whether contributions made or due to the
                  trust fund, insurer or other entity are for the benefit of
                  particular employees or are on behalf of a group of employees
                  in the aggregate.

         (c)      Each hour for which back pay, irrespective of mitigation of
                  damages, is either awarded or agreed to by the Employer. The
                  same Hours-of-Service shall not be credited both under
                  subparagraph (a) or subparagraph (b) above (as the case may
                  be) and under this subparagraph (c). Crediting of
                  Hours-of-Service for back pay awarded or agreed to with
                  respect to periods described in subparagraph (b) above will be
                  subject to the limitations set forth in that subparagraph.

         The crediting of Hours-of-Service above shall be applied under the
rules of paragraphs (b) and (c) of the Department of Labor Regulation
2530.200b-2 (including any interpretations or opinions implementing such rules);
which rules, by this reference, are specifically incorporated in full within
this Plan. The reference to paragraph (b) applies to the special rule for
determining hours of service for reasons other than the performance of duties
such as payments calculated (or not calculated) on the basis of units of time
and the rule against double credit. The reference to paragraph (c) applies to
the crediting of hours of service to computation periods.

         Hours-of-Service shall be credited for employment with any other
employer required to be aggregated with the Employer under Code Sections 414(b),
(c), (m), or (o) and the regulations thereunder for purposes of eligibility and
vesting. Hours-of-Service shall also be credited for any individual who is
considered an employee for purposes of this Plan pursuant to Code Section 414(n)
or (o) and the regulations thereunder.

         Solely for purposes of determining whether a one-year break in service
has occurred for eligibility or vesting purposes, during a Parental Absence an
Employee shall be credited with the Hours-of-Service which otherwise would
normally have been credited to the Employee but for such absence, or in any case
in which such hours cannot be determined, eight Hours-of-Service per day of such
absence. The Hours-of-Service credited under this paragraph shall be credited in
the computation period in which the absence begins if the crediting is necessary
to prevent a break in service in that period; or in all other cases, in the
following computation period.

INACTIVE PARTICIPANT means a former Active Participant who has an Account. See
the INACTIVE PARTICIPANT SECTION of Article II.

                                       9
<PAGE>

INSURER means Principal Life Insurance Company and any other insurance company
or companies named by the Trustee or Primary Employer.

INVESTMENT FUND means the total of Plan assets, excluding the guaranteed benefit
policy portion of any Annuity Contract. All or a portion of these assets may be
held under the Trust Agreement.

The Investment Fund shall be valued at current fair market value as of the
Valuation Date. The valuation shall take into consideration investment earnings
credited, expenses charged, payments made, and changes in the values of the
assets held in the Investment Fund.

The Investment Fund shall be allocated at all times to Participants, except as
otherwise expressly provided in the Plan. The Account of a Participant shall be
credited with its share of the gains and losses of the Investment Fund. That
part of a Participant's Account invested in a funding arrangement which
establishes one or more accounts or investment vehicles for such Participant
thereunder shall be credited with the gain or loss from such accounts or
investment vehicles. The part of a Participant's Account which is invested in
other funding arrangements shall be credited with a proportionate share of the
gain or loss of such investments. The share shall be determined by multiplying
the gain or loss of the investment by the ratio of the part of the Participant's
Account invested in such funding arrangement to the total of the Investment Fund
invested in such funding arrangement.

INVESTMENT MANAGER means any fiduciary (other than a trustee or Named Fiduciary)

         (a)      who has the power to manage, acquire, or dispose of any assets
                  of the Plan;

         (b)      who (i) is registered as an investment adviser under the
                  Investment Advisers Act of 1940; (ii) is not registered as an
                  investment adviser under such Act by reason of paragraph (1)
                  of section 203A(a) of such Act, is registered as an investment
                  adviser under the laws of the state (referred to in such
                  paragraph (1)) in which it maintains its principal office and
                  place of business, and, at the time it last filed the
                  registration form most recently filed by it with such state in
                  order to maintain its registration under the laws of such
                  state, also filed a copy of such form with the Secretary of
                  Labor, (iii) is a bank, as defined in that Act; or (iv) is an
                  insurance company qualified to perform services described in
                  subparagraph (a) above under the laws of more than one state;
                  and

         (c)      who has acknowledged in writing being a fiduciary with respect
                  to the Plan.

LATE RETIREMENT DATE means the first day of any month which is after a
Participant's Normal Retirement Date and on which retirement benefits begin. If
a Participant continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest first day of the month on
or after the date he ceases to be an Employee. An earlier or a later Retirement
Date may apply if the Participant so elects. An earlier Retirement Date may
apply if the Participant is age 70 1/2. See the WHEN BENEFITS START SECTION of
Article V.

LEASED EMPLOYEE means any person (other than an employee of the recipient) who,
pursuant to an agreement between the recipient and any other person ("leasing
organization"), has performed

                                       10
<PAGE>

services for the recipient (or for the recipient and related persons determined
in accordance with Code Section 414(n)(6)) on a substantially full time basis
for a period of at least one year, and such services are performed under primary
direction or control by the recipient. Contributions or benefits provided by the
leasing organization to a Leased Employee, which are attributable to service
performed for the recipient employer, shall be treated as provided by the
recipient employer.

A Leased Employee shall not be considered an employee of the recipient if:

         (a)      such employee is covered by a money purchase pension plan
                  providing (i) a nonintegrated employer contribution rate of at
                  least 10 percent of compensation, as defined in Code Section
                  415(c)(3), but including amounts contributed pursuant to a
                  salary reduction agreement which are excludible from the
                  employee's gross income under Code Sections 125, 402(e)(3),
                  402(h)(1)(B), or 403(b), (ii) immediate participation, and
                  (iii) full and immediate vesting, and

         (b)      Leased Employees do not constitute more than 20 percent of the
                  recipient's nonhighly compensated work force. LOAN
                  ADMINISTRATOR means the person(s) or position(s) authorized to
                  administer the Participant loan program.

The Loan Administrator is DIR.  COMPENSATION AND BENEFITS.

MATCHING CONTRIBUTIONS means contributions made by the Employer to fund this
Plan which are contingent on a Participant's Elective Deferral Contributions.
See the EMPLOYER CONTRIBUTIONS SECTION of Article III.

MONTHLY DATE means each Yearly Date and the same day of each following month
during the Plan Year beginning on such Yearly Date.

NAMED FIDUCIARY means the person or persons who have authority to control and
manage the operation and administration of the Plan.

The Named Fiduciary is the Employer.

NONHIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer who is not a
Highly Compensated Employee.

NONVESTED ACCOUNT means the excess, if any, of a Participant's Account over his
Vested Account.

NORMAL FORM means a single life annuity with installment refund.

NORMAL RETIREMENT AGE means the age at which the Participant's normal retirement
benefit becomes nonforfeitable if he is an Employee. A Participant's Normal
Retirement Age is 65.

                                       11
<PAGE>

NORMAL RETIREMENT DATE means the earliest first day of the month on or after the
date the Participant reaches his Normal Retirement Age. Unless otherwise
provided in this Plan, a Participant's retirement benefits shall begin on a
Participant's Normal Retirement Date if he has ceased to be an Employee on such
date and has a Vested Account. Even if the Participant is an Employee on his
Normal Retirement Date, he may choose to have his retirement benefit begin on
such date. See the WHEN BENEFITS START SECTION of Article V.

OWNER-EMPLOYEE means a Self-employed Individual who, in the case of a sole
proprietorship, owns the entire interest in the unincorporated trade or business
for which this Plan is established. If this Plan is established for a
partnership, an Owner-employee means a Self-employed Individual who owns more
than 10 percent of either the capital interest or profits interest in such
partnership.

PARENTAL ABSENCE means an Employee's absence from work:

         (a)      by reason of pregnancy of the Employee,

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

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

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

PARTICIPANT means either an Active Participant or an Inactive Participant.

PERIOD OF MILITARY DUTY means, for an Employee

         (a)      who served as a member of the armed forces of the United
                  States, and

         (b)      who was reemployed by the Employer at a time when the Employee
                  had a right to reemployment in accordance with seniority
                  rights as protected under Chapter 43 of Title 38 of the U. S.
                  Code,

         the period of time from the date the Employee was first absent from
         active work for the Employer because of such military duty to the date
         the Employee was reemployed.

PLAN means the savings plan of the Employer set forth in this document,
including any later amendments to it.

PLAN ADMINISTRATOR means the person or persons who administer the Plan. The Plan
Administrator is the Employer.

PLAN FUND means the total of the Investment Fund and the guaranteed benefit
policy portion of any Annuity Contract. The Investment Fund shall be valued as
stated in its definition. The guaranteed benefit policy portion of any Annuity
Contract shall be determined in accordance with the terms of the Annuity
Contract and, to the extent that such Annuity Contract allocates

                                       12
<PAGE>

contract values to Participants, allocated to Participants in accordance with
its terms. The total value of all amounts held under the Plan Fund shall equal
the value of the aggregate Participants' Accounts under the Plan.

PLAN YEAR means a period beginning on a Yearly Date and ending on the day before
the next Yearly Date.

PREDECESSOR EMPLOYER means a firm of which the Employer was once a part (e.g.,
due to a spinoff or change of corporate status) or a firm absorbed by the
Employer because of a merger or acquisition (stock or asset, including a
division or an operation of such company).

PRIMARY EMPLOYER means PANERA BREAD COMPANY.

QUALIFIED JOINT AND SURVIVOR ANNUITY means, for a Participant who has a spouse,
an immediate survivorship life annuity with installment refund, where the
survivorship percentage is 50% and the Contingent Annuitant is the Participant's
spouse. A former spouse will be treated as the spouse to the extent provided
under a qualified domestic relations order as described in Code Section 414(p).

The amount of benefit payable under the Qualified Joint and Survivor Annuity
shall be the amount of benefit which may be provided by the Participant's Vested
Account.

QUALIFIED PRERETIREMENT SURVIVOR ANNUITY means a single life annuity with
installment refund payable to the surviving spouse of a Participant who dies
before his Annuity Starting Date. A former spouse will be treated as the
surviving spouse to the extent provided under a qualified domestic relations
order as described in Code Section 414(p).

QUALIFYING EMPLOYER SECURITIES means any security which is issued by the
Employer or any Controlled Group member and which meets the requirements of Code
Section 409(I) and ERISA Section 407(d)(5). This shall also include any
securities that satisfied the requirements of the definition when these
securities were assigned to the Plan.

QUALIFYING EMPLOYER SECURITIES FUND means that part of the assets of the Trust
Fund that are designated to be held primarily or exclusively in Qualifying
Employer Securities for the purpose of providing benefits for Participants.

QUARTERLY DATE means each Yearly Date and the third, sixth, and ninth Monthly
Date after each Yearly Date which is within the same Plan Year.

REEMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service following an Eligibility Break in Service.

REENTRY DATE means the date a former Active Participant reenters the Plan. See
the ACTIVE PARTICIPANT SECTION of Article II.

RETIREMENT DATE means the date a retirement benefit will begin and is a
Participant's Normal or Late Retirement Date, as the case may be.

                                       13
<PAGE>

ROLLOVER CONTRIBUTIONS means the Rollover Contributions which are made by an
Eligible Employee or an Inactive Participant according to the provisions of the
ROLLOVER CONTRIBUTIONS SECTION of Article Ill.

SELF-EMPLOYED INDIVIDUAL means, with respect to any Fiscal Year, an individual
who has Earned Income for the Fiscal Year (or who would have Earned Income but
for the fact the trade or business for which this Plan is established did not
have net profits for such Fiscal Year).

TOTALLY AND PERMANENTLY DISABLED means that a Participant is disabled, as a
result of sickness or injury, to the extent that he is prevented from engaging
in any substantial gainful activity, and is eligible for and receives a
disability benefit under Title II of the Federal Social Security Act.

TRUST AGREEMENT means an agreement of trust between the Primary Employer and
Trustee established for the purpose of holding and distributing the Trust Fund
under the provisions of the Plan. The Trust Agreement may provide for the
investment of all or any portion of the Trust Fund in the Annuity Contract.

TRUST FUND means the total funds held under the Trust Agreement.

TRUSTEE means the party or parties named in the Trust Agreement. The term
Trustee as it is used in this Plan is deemed to include the plural unless the
context clearly indicates the singular is meant.

VALUATION DATE means the date on which the value of the assets of the Investment
Fund is determined. The value of each Account which is maintained under this
Plan shall be determined on the Valuation Date. In each Plan Year, the Valuation
Date shall be the last day of the Plan Year. At the discretion of the Plan
Administrator, Trustee, or Insurer (whichever applies), assets of the Investment
Fund may be valued more frequently. These dates shall also be Valuation Dates.

VESTED ACCOUNT means the vested part of a Participant's Account. The
Participant's Vested Account is determined as follows.

         If the Participant's Vesting Percentage is 100%, his Vested Account
equals his Account.

         If the Participant's Vesting Percentage is less than 100%, his Vested
Account equals the sum of (a) and (b) below:

         (a)      The part of the Participant's Account that results from
                  Employer Contributions made before a prior Forfeiture Date and
                  all other Contributions which were 100% vested when made.

         (b)      The balance of the Participant's Account in excess of the
                  amount in (a) above multiplied by his Vesting Percentage.

         The Participant's Vested Account is nonforfeitable.

                                       14
<PAGE>

VESTING BREAK IN SERVICE means a Vesting Computation Period in which an Employee
is credited with 500 or fewer Hours-of-Service. An Employee incurs a Vesting
Break in Service on the last day of a Vesting Computation Period in which he has
a Vesting Break in Service.

VESTING COMPUTATION PERIOD means a consecutive 12-month period ending on the
last day of each Plan Year, including corresponding consecutive 12-month periods
before May 15, 1999.

VESTING PERCENTAGE means the percentage used to determine the nonforfeitable
portion of a Participant's Account attributable to Employer Contributions which
were not 100% vested when made.

         A Participant's Vesting Percentage is shown in the following schedule
opposite the number of whole years of his Vesting Service.

                    VESTING SERVICE                        VESTING
                     (whole years)                       PERCENTAGE
                      Less than 2                             0
                             2                               25
                             3                               50
                             4                               75
                       5 or more                             100

         The Vesting Percentage for a Participant who is an Employee on or after
the date he reaches Normal Retirement Age shall be 100%. The Vesting Percentage
for a Participant who is an Employee on the date he becomes Totally and
Permanently Disabled or dies shall be 100%.

         If the schedule used to determine a Participant's Vesting Percentage is
changed, the new schedule shall not apply to a Participant unless he is credited
with an Hour-of-Service on or after the date of the change and the Participant's
nonforfeitable percentage on the day before the date of the change is not
reduced under this Plan. The amendment provisions of the AMENDMENTS SECTION of
Article X regarding changes in the computation of the Vesting Percentage shall
apply.

VESTING SERVICE means one year of service for each Vesting Computation Period in
which an Employee is credited with at least 1,000 Hours-of-Service.

         However, Vesting Service is modified as follows:

         Service with a Predecessor Employer which did not maintain this Plan
included:

                  An Employee's service with a Predecessor Employer which did
                  not maintain this Plan shall be included as service with the
                  Employer. This service includes service performed while a
                  proprietor or partner.

         Period of Military Duty included:

                  A Period of Military Duty shall be included as service with
                  the Employer to the extent it has not already been credited.
                  For purposes of crediting Hours-of-

                                       15
<PAGE>

                  Service during the Period of Military Duty, an Hour-of-Service
                  shall be credited (without regard to the 501 Hour-of-Service
                  limitation) for each hour an Employee would normally have been
                  scheduled to work for the Employer during such period.

         Controlled Group service included:

                  An Employee's service with a member firm of a Controlled Group
                  while both that firm and the Employer were members of the
                  Controlled Group shall be included as service with the
                  Employer.

YEARLY DATE means May 15, 1999, and each following January 1.

YEARS OF SERVICE means an Employee's Vesting Service disregarding any
modifications which exclude service.

                                   ARTICLE II

                                  PARTICIPATION

SECTION 2.01      ACTIVE PARTICIPANT.

         (a)      An Employee shall first become an Active Participant (begin
                  active participation in the Plan) on the earliest Quarterly
                  Date on which he is an Eligible Employee and has met both of
                  the eligibility requirements set forth below. This date is his
                  Entry Date.

                  (1)      He has completed one year of Eligibility Service
                           before his Entry Date.

                  (2)      He is age 21 or older.

                  If service with a Predecessor Employer is counted for purposes
                  of Eligibility Service, an Employee shall be credited with
                  such service on the date he becomes an Employee and shall
                  become an Active Participant on the earliest Quarterly Date on
                  which he is an Eligible Employee and has met all of the
                  eligibility requirements above. This date is his Entry Date.

                  If a person has been an Eligible Employee who has met all of
                  the eligibility requirements above, but is not an Eligible
                  Employee on the date which would have been his Entry Date, he
                  shall become an Active Participant on the date he again
                  becomes an Eligible Employee. This date is his Entry Date.

                  In the event an Employee who is not an Eligible Employee
                  becomes an Eligible Employee, such Eligible Employee shall
                  become an Active Participant immediately if such Eligible
                  Employee has satisfied the eligibility requirements

                                       16
<PAGE>

                  above and would have otherwise previously become an Active
                  Participant had he met the definition of Eligible Employee.
                  This date is his Entry Date.

         (b)      An Inactive Participant shall again become an Active
                  Participant (resume active participation in the Plan) on the
                  date he again performs an Hour-of-Service as an Eligible
                  Employee. This date is his Reentry Date.

                  Upon again becoming an Active Participant, he shall cease to
                  be an Inactive Participant.

         (c)      A former Participant shall again become an Active Participant
                  (resume active participation in the Plan) on the date he again
                  performs an Hour-of-Service as an Eligible Employee. This date
                  is his Reentry Date.

         There shall be no duplication of benefits for a Participant under this
Plan because of more than one period as an Active Participant.

SECTION 2.02      INACTIVE PARTICIPANT.

         An Active Participant shall become an Inactive Participant (stop
accruing benefits under the Plan) on the earlier of the following:

         (a)      the date the Participant ceases to be an Eligible Employee, or

         (b)      the effective date of complete termination of the Plan under
                  Article VIII.

SECTION 2.03      CESSATION OF PARTICIPATION.

         A Participant shall cease to be a Participant on the date he is no
longer an Eligible Employee and his Account is zero.

                                  ARTICLE III

                                  CONTRIBUTIONS

SECTION 3.01      EMPLOYER CONTRIBUTIONS.

         Employer Contributions are conditioned on initial qualification of the
Plan. If the Plan is denied initial qualification, the provisions of the
QUALIFICATION OF PLAN SECTION of Article X shall apply.

         Employer Contributions shall be made without regard to current or
accumulated net income, earnings or profits of the Employer. Notwithstanding the
foregoing, the Plan shall continue to be designed to qualify as a profit sharing
plan for purposes of Code Sections 401(a), 402, 412, and 417. Such Contributions
shall be equal to the Employer Contributions as described below:

                                       17
<PAGE>

         (a)      The amount of each Elective Deferral Contribution for a
                  Participant shall be equal to a portion of Compensation as
                  specified in the elective deferral agreement. An Employee who
                  is eligible to participate in the Plan may file an elective
                  deferral agreement with the Employer. The Participant shall
                  modify or terminate the elective deferral agreement by filing
                  a new elective deferral agreement. The elective deferral
                  agreement may not be made retroactively and shall remain in
                  effect until modified or terminated.

                  The elective deferral agreement to start or modify Elective
                  Deferral Contributions shall be effective on the first day of
                  the first pay period following the pay period in which the
                  Participant's Entry Date (Reentry Date, if applicable) or any
                  following Quarterly Date occurs. The elective deferral
                  agreement must be entered into on or before the date it is
                  effective.

                  The elective deferral agreement to stop Elective Deferral
                  Contributions may be entered into on any date. Such elective
                  deferral agreement shall be effective on the first day of the
                  pay period following the pay period in which the elective
                  deferral agreement is entered into.

                  Elective Deferral Contributions cannot be more than 15% of
                  Compensation.

                  Elective Deferral Contributions are fully (100%) vested and
                  nonforfeitable.

         (b)      Matching Contributions.

                  (1)      The Employer shall make Matching Contributions in an
                           amount equal to 50% of Elective Deferral
                           Contributions. Elective Deferral Contributions which
                           are over 3% of Compensation won't be matched.

                           Matching Contributions are calculated based on
                           Elective Deferral Contributions and Compensation for
                           the pay period. Matching Contributions shall be made
                           for all persons who were Active Participants at any
                           time during that pay period.

                  (2)      The Employer may make additional Matching
                           Contributions if the total Matching Contributions
                           determined below are greater than the amount of
                           Matching Contributions determined in (1) above for
                           the Plan Year. Additional Matching Contributions, if
                           any, shall be made for all persons who meet the
                           allocation requirements of the ALLOCATION SECTION of
                           this article.

                           Total Matching Contributions for the Plan Year shall
                           be a percentage of Elective Deferral Contributions
                           and shall be calculated based on Elective Deferral
                           Contributions and Compensation for the Plan Year. The
                           percentage shall be determined by the Employer. The
                           percentage must be equal to or greater than the
                           percentage specified in (1) above.

                                       18
<PAGE>

                           Elective Deferral Contributions which are over a
                           percentage of Compensation won't be matched. The
                           percentage is the percentage specified in (1) above
                           or a greater percentage determined by the Employer.

                           The amount of additional Matching Contributions, if
                           any, shall be determined by subtracting the Matching
                           Contributions determined in (1) above for the Plan
                           Year from total Matching Contributions for the Plan
                           Year.

                  Matching Contributions are subject to the Vesting Percentage.

         No Participant shall be permitted to have Elective Deferral
Contributions, as defined in the EXCESS AMOUNTS SECTION of this article, made
under this Plan, or any other qualified plan maintained by the Employer, during
any taxable year, in excess of the dollar limitation contained in Code Section
402(g) in effect at the beginning of such taxable year.

         An elective deferral agreement (or change thereto) must be made in such
manner and in accordance with such rules as the Employer may prescribe
(including by means of voice response or other electronic system under
circumstances the Employer permits) and may not be made retroactively.

         Employer Contributions are allocated according to the provisions of the
ALLOCATION SECTION of this article.

         The Employer may make all or any portion of the Matching Contributions,
which are to be invested in Qualifying Employer Securities, to the Trustee in
the form of Qualifying Employer Securities.

         A portion of the Plan assets resulting from Employer Contributions (but
not more than the original amount of those Contributions) may be returned if the
Employer Contributions are made because of a mistake of fact or are more than
the amount deductible under Code Section 404 (excluding any amount which is not
deductible because the Plan is disqualified). The amount involved must be
returned to the Employer within one year after the date the Employer
Contributions are made by mistake of fact or the date the deduction is
disallowed, whichever applies. Except as provided under this paragraph and
Articles VIII and X, the assets of the Plan shall never be used for the benefit
of the Employer and are held for the exclusive purpose of providing benefits to
Participants and their Beneficiaries and for defraying reasonable expenses of
administering the Plan.

SECTION 3.01A     ROLLOVER CONTRIBUTIONS.

         A Rollover Contribution may be made by an Eligible Employee or an
Inactive Participant if the following conditions are met:

         (a)      The Contribution is of amounts distributed from a plan that
                  satisfies the requirements of Code Section 401(a) or from a
                  "conduit" individual retirement account described in Code
                  Section 408(d)(3)(A). In the case of an Inactive Participant,
                  the Contribution must be of an amount distributed from another
                  plan

                                       19
<PAGE>

                  of the Employer, or a plan of a Controlled Group member, that
                  satisfies the requirements of Code Section 401(a).

         (b)      The Contribution is of amounts that the Code permits to be
                  transferred to a plan that meets the requirements of Code
                  Section 401(a).

         (c)      The Contribution is made in the form of a direct rollover
                  under Code Section 401 (a)(31) or is a rollover made under
                  402(c) or 408(d)(3)(A) within 60 days after the Eligible
                  Employee or Inactive Participant receives the distribution.

         (d)      The Eligible Employee or Inactive Participant furnishes
                  evidence satisfactory to the Plan Administrator that the
                  proposed rollover meets conditions (a), (b), and (c) above.

         A Rollover Contribution shall be allowed in cash only and must be made
according to procedures set up by the Plan Administrator.

         If the Eligible Employee is not an Active Participant when the Rollover
Contribution is made, he shall be deemed to be an Active Participant only for
the purpose of investment and distribution of the Rollover Contribution.
Employer Contributions shall not be made for or allocated to the Eligible
Employee until the time he meets all of the requirements to become an Active
Participant.

         Rollover Contributions made by an Eligible Employee or an Inactive
Participant shall be credited to his Account. The part of the Participant's
Account resulting from Rollover Contributions is fully (100%) vested and
nonforfeitable at all times. A separate accounting record shall be maintained
for that part of his Rollover Contributions consisting of voluntary
contributions which were deducted from the Participant's gross income for
Federal income tax purposes.

SECTION 3.02      FORFEITURES.

         The Nonvested Account of a Participant shall be forfeited as of the
earlier of the following:

         (a)      the date the Participant dies (if prior to such date he had
                  ceased to be an Employee), or

         (b)      the Participant's Forfeiture Date.

         All or a portion of a Participant's Nonvested Account shall be
forfeited before such earlier date if, after he ceases to be an Employee, he
receives, or is deemed to receive, a distribution of his entire Vested Account
or a distribution of his Vested Account derived from Employer Contributions
which were not 100% vested when made, under the RETIREMENT BENEFITS SECTION of
Article V, the VESTED BENEFITS SECTION of Article V, or the SMALL AMOUNTS
SECTION of Article X. The forfeiture shall occur as of the date the Participant
receives, or is deemed to receive, the distribution. If a Participant receives,
or is deemed to receive, his entire Vested Account, his entire Nonvested Account
shall be forfeited. If

                                       20
<PAGE>

a Participant receives a distribution of his Vested Account from Employer
Contributions which were not 100% vested when made, but less than his entire
Vested Account from such Contributions, the amount to be forfeited shall be
determined by multiplying his Nonvested Account from such Contributions by a
fraction. The numerator of the fraction is the amount of the distribution
derived from Employer Contributions which were not 100% vested when made and the
denominator of the fraction is his entire Vested Account derived from such
Contributions on the date of distribution.

         A Forfeiture shall also occur as provided in the EXCESS AMOUNTS SECTION
of this article.

         Forfeitures shall be determined at least once during each Plan Year.
Forfeitures may first be used to pay administrative expenses. Forfeitures of
Matching Contributions which relate to excess amounts as provided in the EXCESS
AMOUNTS SECTION of this article, which have not been used to pay administrative
expenses, shall be applied to reduce the earliest Employer Contributions made
after the Forfeitures are determined. Any other Forfeitures which have not been
used to pay administrative expenses shall be applied to reduce the earliest
Employer Contributions made after the Forfeitures are determined. Upon their
application to reduce Employer Contributions, Forfeitures shall be deemed to be
Employer Contributions.

         If a Participant again becomes an Eligible Employee after receiving a
distribution which caused all or a portion of his Vested Account to be
forfeited, he shall have the right to repay to the Plan the entire amount of the
distribution he received (excluding any amount of such distribution resulting
from Contributions which were 100% vested when made). The repayment must be made
in a single sum (repayment in installments is not permitted) before the earlier
of the date five years after the date he again becomes an Eligible Employee or
the end of the first period of five consecutive Vesting Breaks in Service which
begin after the date of the distribution.

         If the Participant makes the repayment above, the Plan Administrator
shall restore to his Account an amount equal to his Nonvested Account which was
forfeited on the date of distribution, unadjusted for any investment gains or
losses. If no amount is to be repaid because the Participant was deemed to have
received a distribution, or only received a distribution of Contributions which
were 100% vested when made, and he again performs an Hour-of-Service as an
Eligible Employee within the repayment period, the Plan Administrator shall
restore the Participant's Account as if he had made a required repayment on the
date he performed such Hour-of-Service. Restoration of the Participant's Account
shall include restoration of all Code Section 411 (d)(6) protected benefits with
respect to that restored Account, according to applicable Treasury regulations.
Provided, however, the Plan Administrator shall not restore the Nonvested
Account if (i) a Forfeiture Date has occurred after the date of the distribution
and on or before the date of repayment and (ii) that Forfeiture Date would
result in a complete forfeiture of the amount the Plan Administrator would
otherwise restore.

         The Plan Administrator shall restore the Participant's Account by the
close of the Plan Year following the Plan Year in which repayment is made.
Permissible sources for the restoration of the Participant's Account are
Forfeitures or special Employer Contributions. Such special Employer
Contributions shall be made without regard to profits. The repaid and restored

                                       21
<PAGE>

amounts are not included in the Participant's Annual Additions, as defined in
the CONTRIBUTION LIMITATION SECTION of this article.

SECTION 3.03      ALLOCATION.

         A person meets the allocation requirements of this section if he is an
Active Participant on the last day of the Plan Year.

         Elective Deferral Contributions shall be allocated to Participants for
whom such Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of
this article. Such Contributions shall be allocated when made and credited to
the Participant's Account.

         Matching Contributions shall be allocated to the persons for whom such
Contributions are made under the EMPLOYER CONTRIBUTIONS SECTION of this article.
Such Contributions calculated based on Elective Deferral Contributions and
Compensation for the pay period shall be allocated when made and credited to the
person's Account. Such Contributions calculated based on Elective Deferral
Contributions and Compensation for the Plan Year shall be allocated as of the
last day of the Plan Year and shall be credited to the person's Account.

         If Leased Employees are Eligible Employees, in determining the amount
of Employer Contributions allocated to a person who is a Leased Employee,
contributions provided by the leasing organization which are attributable to
services such Leased Employee performs for the Employer shall be treated as
provided by the Employer. Those contributions shall not be duplicated under this
Plan.

SECTION 3.04      CONTRIBUTION LIMITATION.

         (a)      Definitions. For the purpose of determining the contribution
limitation set forth in this section, the following terms are defined.

         ANNUAL ADDITIONS means the sum of the following amounts credited to a
Participant's account for the Limitation Year:

                  (1)      employer contributions;

                  (2)      employee contributions; and

                  (3)      forfeitures.

                  Annual Additions to a defined contribution plan shall also
include the following:

                  (4)      amounts allocated, after March 31, 1984, to an
                           individual medical account, as defined in Code
                           Section 415(I)(2), which are part of a pension or
                           annuity plan maintained by the Employer,

                  (5)      amounts derived from contributions paid or accrued
                           after December 31, 1985, in taxable years ending
                           after such date, which are attributable to
                           post-retirement medical benefits, allocated to the
                           separate account of a key

                                       22
<PAGE>

                           employee, as defined in Code Section 41 9A(d)(3),
                           under a welfare benefit fund, as defined in Code
                           Section 419(e), maintained by the Employer; and

                  (6)      allocations under a simplified employee pension.

                  For this purpose, any Excess Amount applied under (e) and (k)
                  below in the Limitation Year to reduce Employer Contributions
                  shall be considered Annual Additions for such Limitation Year.

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

         For any Self-employed Individual, Compensation shall mean Earned
         Income.

         For purposes of applying the limitations of-this section, Compensation
         for a Limitation Year is the Compensation actually paid or made
         available in gross income during such Limitation Year.

         For Limitation Years beginning after December 31, 1997, for purposes of
         applying the limitations of this section, Compensation paid or made
         available during such Limitation Year shall include any elective
         deferral (as defined in Code Section 402(g)(3)), and any amount which
         is contributed or deferred by the Employer at the election of the
         Employee and which is not includible in the gross income of the
         Employee by reason of Code Section 125, 132(f)(4), or 457.

         DEFINED BENEFIT PLAN FRACTION means a fraction, the numerator of which
         is the sum of the Participant's Projected Annual Benefits under all the
         defined benefit plans (whether or not terminated) maintained by the
         Employer, and the denominator of which is the lesser of (i) 125 percent
         of the dollar limitation determined for the Limitation Year under Code
         Sections 415(b)(1)(A) and (d) or (ii) 140 percent of the Highest
         Average Compensation, including any adjustments under Code Section
         415(b)(5).

         Notwithstanding the above, if the Participant was a participant as of
         the first day of the first Limitation Year beginning after December 31,
         1986, in one or more defined benefit plans maintained by the Employer
         which were in existence on May 6, 1986, the denominator of this
         fraction will not be less than 125 percent of the sum of the annual
         benefits under such plans which the Participant had accrued as of the
         close of the last Limitation Year beginning before January 1, 1987,
         disregarding any changes in the terms and conditions of the plan after
         May 5, 1986. The preceding sentence applies only if the defined benefit
         plans individually and in the aggregate satisfied the requirements of
         Code Section 415 for all Limitation Years beginning before January 1,
         1987.

                                       23
<PAGE>

         DEFINED CONTRIBUTION DOLLAR LIMITATION means, for Limitation Years
         beginning after December 31, 1994, $30,000, as adjusted under Code
         Section 415(d).

         DEFINED CONTRIBUTION PLAN FRACTION means a fraction, the numerator of
         which is the sum of the Annual Additions to the Participant's account
         under all the defined contribution plans (whether or not terminated)
         maintained by the Employer for the current and all prior Limitation
         Years (including the Annual Additions attributable to the Participant's
         nondeductible employee contributions to all defined benefit plans,
         whether or not terminated, maintained by the Employer, and the Annual
         Additions attributable to all welfare benefit funds, individual medical
         accounts, and simplified employee pensions, maintained by the
         Employer), and the denominator of which is the sum of the maximum
         aggregated amounts for the current and all prior Limitation Years of
         service with the Employer (regardless of whether a defined contribution
         plan was maintained by the Employer). The maximum aggregate amount in
         any Limitation Year is the lesser of (i) 1 25 percent of the dollar
         limitation under Code Section 415(c)(1)(A) after adjustment under Code
         Section 415(d) or (ii) 35 percent of the Participant's Compensation for
         such year.

         If the Employee was a participant as of the end of the first day of the
         first Limitation Year beginning after December 31, 1986, in one or more
         defined contribution plans maintained by the Employer which were in
         existence on May 6, 1986, the numerator of this fraction will be
         adjusted if the sum of this fraction and the Defined Benefit Fraction
         would otherwise exceed 1.0 under the terms of this Plan. Under the
         adjustment, an amount equal to the product of (i) the excess of the sum
         of the fractions over 1.0 times (ii) the denominator of this fraction,
         will be permanently subtracted from the numerator of this fraction. The
         adjustment is calculated using the fractions as they would be computed
         as of the end of the last Limitation Year beginning before January 1,
         1987, and disregarding any changes in the terms and conditions of the
         plan made after May 5, 1986, but using the Code Section 415 limitation
         applicable to the first Limitation Year beginning on or after January
         1, 1987.

         The Annual Addition for any Limitation Year beginning before January 1,
         1987, shall not be recomputed to treat all employee contributions as
         Annual Additions.

         EMPLOYER means the employer that adopts this Plan, and all members of a
         controlled group of corporations (as defined in Code Section 414(b) as
         modified by Code Section 415(h)), all commonly controlled trades or
         businesses (as defined in Code Section 415(c) as modified by Code
         Section 415(h)) or affiliated service groups (as defined in Code
         Section 414(m)) of which the adopting employer is a part, and any other
         entity required to be aggregated with the employer pursuant to
         regulations under Code Section 414(o).

         EXCESS AMOUNT means the excess of the Participant's Annual Additions
         for the Limitation Year over the Maximum Permissible Amount.

         HIGHEST AVERAGE COMPENSATION means the average Compensation for the
         three consecutive Limitation Years while he was an Employee (actual
         consecutive Limitation

                                       24
<PAGE>

         Years while he was an Employee, if employed less than three years) that
         produces the highest average.

         LIMITATION YEAR means the consecutive 12-month period ending on each
         December 31. If the Limitation Year is other than the calendar year,
         execution of this Plan (or any amendment to this Plan changing the
         Limitation Year) constitutes the Employer's adoption of a written
         resolution electing the Limitation Year. If the Limitation Year is
         amended to a different consecutive 12-month period, the new Limitation
         Year must begin on a date within the Limitation Year in which the
         amendment is made.

         MAXIMUM PERMISSIBLE AMOUNT means the maximum Annual Addition that may
         be contributed or allocated to a Participant's Account under the Plan
         for any Limitation Year. This amount shall not exceed the lesser of:

         (1)      The Defined Contribution Dollar Limitation, or

         (2)      25 percent of the Participant's Compensation for the
                  Limitation Year.

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

         If a short Limitation Year is created because of an amendment changing
         the Limitation Year to a different consecutive 12-month period, the
         Maximum Permissible Amount will not exceed the Defined Contribution
         Dollar Limitation multiplied by the following fraction:

                  Number of Months in the Short Limitation Year
                  ---------------------------------------------
                                       12

         PROJECTED ANNUAL BENEFIT means the annual retirement benefit (adjusted
         to an actuarially equivalent straight life annuity if such benefit is
         expressed in a form other than a straight life annuity or qualified
         joint and survivor annuity) to which the Participant would be entitled
         under the terms of the plan assuming:

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

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

         (b) If the Participant does not participate in, and has never
participated in, another qualified plan maintained by the Employer or a welfare
benefit fund, as defined in Code Section 419(e), maintained by the Employer, or
an individual medical account, as defined in Code Section 415(I)(2), maintained
by the Employer, or a simplified employee pension, as defined in Code Section
408(k), maintained by the Employer, which provides an Annual Addition, the
amount of Annual Additions which may be credited to the Participant's Account
for any

                                       25
<PAGE>

Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or
any other limitation contained in this Plan. If the Employer Contribution that
would otherwise be contributed or allocated to the Participant's Account would
cause the Annual Additions for the Limitation Year to exceed the Maximum
Permissible Amount, the amount contributed or allocated shall be reduced so that
the Annual Additions for the Limitation Year will equal the Maximum Permissible
Amount.

         (c) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant's
Compensation for the Limitation Year, uniformly determined for all Participants
similarly situated.

         (d) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.

         (e) If a reasonable error in estimating a Participant's Compensation
for the Limitation Year, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3)) that may be
made with respect to any individual under the limits of Code

         Section 415, or under other facts and circumstances allowed by the
Internal Revenue Service, there is an Excess Amount, the excess will be disposed
of as follows:

                  (1)      Any Elective Deferral Contributions that are not the
                           basis for Matching Contributions (plus attributable
                           earnings), to the extent they would reduce the Excess
                           Amount, will be distributed to the Participant.

                  (2)      If after the application of (1) above an Excess
                           Amount still exists, any Elective Deferral
                           Contributions that are the basis for Matching
                           Contributions (plus attributable earnings), to the
                           extent they would reduce the Excess Amount, will be
                           distributed to the Participant. Concurrently with the
                           distribution of such Elective Deferral Contributions,
                           any Matching Contributions which relate to any
                           Elective Deferral Contributions distributed in the
                           preceding sentence, to the extent such application
                           would reduce the Excess Amount, will be applied as
                           provided in (3) or (4) below:

                  (3)      If after the application of (2) above an Excess
                           Amount still exists, and the Participant is covered
                           by the Plan at the end of the Limitation Year, the
                           Excess Amount in the Participant's Account will be
                           used to reduce Employer Contributions for such
                           Participant in the next Limitation Year, and each
                           succeeding Limitation Year if necessary.

                  (4)      If after the application of (2) above an Excess
                           Amount still exists, and the Participant is not
                           covered by the Plan at the end of the Limitation
                           Year, the Excess Amount will be held unallocated in a
                           suspense account. The suspense account will be
                           applied to reduce future Employer Contributions

                                       26
<PAGE>

                           for all remaining Participants in the next Limitation
                           Year, and each succeeding Limitation Year if
                           necessary.

                  (5)      If a suspense account is in existence at any time
                           during a Limitation Year pursuant to this (e), it
                           will participate in the allocation of investment
                           gains or losses. If a suspense account is in
                           existence at any time during a particular Limitation
                           Year, all amounts in the suspense account must be
                           allocated and reallocated to Participant's Accounts
                           before any Employer Contributions may be made to the
                           Plan for that Limitation Year. Excess Amounts held in
                           a suspense account may not be distributed to
                           Participants or former Participants.

         (f) This (f) applies if, in addition to this Plan, the Participant is
covered under another qualified defined contribution plan maintained by the
Employer, a welfare benefit fund maintained by the Employer, an individual
medical account maintained by the Employer, or a simplified employee pension
maintained by the Employer which provides an Annual Addition during any
Limitation Year. The Annual Additions which may be credited to a Participant's
Account under this Plan for any such Limitation Year will not exceed the Maximum
Permissible Amount, reduced by the Annual Additions credited to a Participant's
account under the other qualified defined contribution plans, welfare benefit
funds, individual medical accounts, and simplified employee pensions for the
same Limitation Year. If the Annual Additions with respect to the Participant
under other qualified defined contribution plans, welfare benefit funds,
individual medical accounts, and simplified employee pensions maintained by the
Employer are less than the Maximum Permissible Amount, and the Employer
Contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other qualified defined
contribution plans, welfare benefit funds, individual medical accounts, and
simplified employee pensions in the aggregate are equal to or greater than the
Maximum Permissible Amount, no amount will be contributed or allocated to the
Participant's Account under this Plan for the Limitation Year.

         (g) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Member in the manner described in (c) above.

         (h) As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.

         (i) If pursuant to (h) above or as a result of the allocation of
forfeitures or as a result of a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3)) that may be
made with respect to any individual under the limits of Code Section 415, a
Participant's Annual Additions under this Plan and such other plans would result
in an Excess Amount for a Limitation Year, the Excess Amount will be deemed to
consist of the Annual Additions last allocated, except that Annual Additions
attributable to a simplified

                                       27
<PAGE>

employee pension will be deemed to have been allocated first, followed by Annual
Additions to a welfare benefit fund or individual medical account, regardless of
the actual allocation date.

         (j) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan, the
Excess Amount attributed to this Plan will be the product of:

                  (1)      the total Excess Amount allocated as of such date,
                           times

                  (2)      the ratio of (i) the Annual Addition allocated to the
                           Participant for the Limitation Year as of such date
                           under this Plan to (ii) the total Annual Additions
                           allocated to the Participant for the Limitation Year
                           as of such date under this and all other qualified
                           defined contribution plans.

         (k)      Any Excess Amount attributed to this Plan will be disposed of
in the manner described in (e) above.

(I) If the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this Plan, the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not
exceed 1.0 in any Limitation Year. The Projected Annual Benefit shall be limited
first. If the Participant's annual benefit(s) equal his Projected Annual
Benefit, as limited, then Annual Additions to the defined contribution plan(s)
shall be limited to the extent needed to reduce the sum to 1.0 in the same
manner in which the Annual Additions are limited to meet the Maximum Permissible
Amount. This subparagraph shall cease to apply effective as of the first
Limitation Year beginning on or after January 1, 2000.

SECTION 3.05      EXCESS AMOUNTS.

         (a)      DEFINITIONS.  For the purposes of this section, the following
terms are defined:

                  ACP means the average (expressed as a percentage) of the
                  Contribution Percentages of the Eligible Participants in a
                  group.

                  ADP means the average (expressed as a percentage) of the
                  Deferral Percentages of the Eligible Participants in a group.

                  AGGREGATE LIMIT means the greater of:

                  (1)      The sum of:

                           (i)      125 percent of the greater of the ADP of the
                                    Nonhighly Compensated Employees for the
                                    prior Plan Year or the ACP of the Nonhighly
                                    Compensated Employees under the plan subject
                                    to Code Section 401(m) for the Plan Year
                                    beginning with or within the prior Plan Year
                                    of the cash or deferred arrangement, and

                                       28
<PAGE>

                           (ii)     the lesser of 200 percent or 2 percent plus
                                    the lesser of such ADP or ACP.

                  (2)      The sum of:

                           (i)      125 percent of the lesser of the ADP of the
                                    Nonhighly Compensated Employees for the
                                    prior Plan Year or the ACP of the Nonhighly
                                    Compensated Employees under the plan subject
                                    to Code Section 401(m) for the Plan Year
                                    beginning with or within the prior Plan Year
                                    of the cash or deferred arrangement, and

                           (ii)     the lesser of 200 percent or 2 percent plus
                                    the greater of such ADP or ACP.

                  If the Employer has elected to use the current testing method,
                  then, in calculating the Aggregate Limit for a particular Plan
                  Year, the Nonhighly Compensated Employees' ADP and ACP for
                  that Plan Year, instead of the prior Plan Year, is used.

                  CONTRIBUTION PERCENTAGE means the ratio (expressed as a
                  percentage) of the Eligible Participant's Contribution
                  Percentage Amounts to the Eligible Participant's Compensation
                  for the Plan Year (whether or not the Eligible Participant was
                  an Eligible Participant for the entire Plan Year). In
                  modification of the foregoing, Compensation shall be limited
                  to the Compensation received while an Eligible Participant.
                  For an Eligible Participant for whom such Contribution
                  Percentage Amounts for the Plan Year are zero, the percentage
                  is zero.

                  CONTRIBUTION PERCENTAGE AMOUNTS means the sum of the
                  Participant Contributions and Matching Contributions (that are
                  not Qualified Matching Contributions taken into account for
                  purposes of the ADP Test) made under the Plan on behalf of the
                  Eligible Participant for the Plan Year. Such Contribution
                  Percentage Amounts shall not include Matching Contributions
                  that are forfeited either to correct Excess Aggregate
                  Contributions or because the Contributions to which they
                  relate are Excess Elective Deferrals, Excess Contributions, or
                  Excess Aggregate Contributions. Under such rules as the
                  Secretary of the Treasury shall prescribe, in determining the
                  Contribution Percentage the Employer may elect to include
                  Qualified Nonelective Contributions under this Plan which were
                  not used in computing the Deferral Percentage. The Employer
                  may also elect to use Elective Deferral Contributions in
                  computing the Contribution Percentage so long as the ADP Test
                  is met before the Elective Deferral Contributions are used in
                  the ACP Test and continues to be met following the exclusion
                  of those Elective Deferral Contributions that are used to meet
                  the ACP Test.

                  DEFERRAL PERCENTAGE means the ratio (expressed as a
                  percentage) of Elective Deferral Contributions under this Plan
                  on behalf of the Eligible Participant for the Plan Year to the
                  Eligible Participant's Compensation for the Plan Year (whether

                                       29
<PAGE>

                  or not the Eligible Participant was an Eligible Participant
                  for the entire Plan Year). In modification of the foregoing,
                  Compensation shall be limited to the Compensation received
                  while an Eligible Participant. The Elective Deferral
                  Contributions used to determine the Deferral Percentage shall
                  include Excess Elective Deferrals (other than Excess Elective
                  Deferrals of Nonhighly Compensated Employees that arise solely
                  from Elective Deferral Contributions made under this Plan or
                  any other plans of the Employer or a Controlled Group member),
                  but shall exclude Elective Deferral Contributions that are
                  used in computing the Contribution Percentage (provided the
                  ADP Test is satisfied both with and without exclusion of these
                  Elective Deferral Contributions). Under such rules as the
                  Secretary of the Treasury shall prescribe, the Employer may
                  elect to include Qualified Nonelective Contributions and
                  Qualified Matching Contributions under this Plan in computing
                  the Deferral Percentage. For an Eligible Participant for whom
                  such contributions on his behalf for the Plan Year are zero,
                  the percentage is zero.

                  ELECTIVE DEFERRAL CONTRIBUTIONS means any employer
                  contributions made to a plan at the election of a participant,
                  in lieu of cash compensation, and shall include contributions
                  made pursuant to a salary reduction agreement or other
                  deferral mechanism. With respect to any taxable year, a
                  participant's Elective Deferral Contributions are the sum of
                  all employer contributions made on behalf of such participant
                  pursuant to an election to defer under any qualified cash or
                  deferred arrangement described in Code Section 401(k), any
                  salary reduction simplified employee pension plan described in
                  Code Section 408(k)(6), any SIMPLE IRA plan described in Code
                  Section 408(p), any eligible deferred compensation plan under
                  Code Section 457, any plan described under Code Section
                  501(c)(18), and any employer contributions made on behalf of a
                  participant for the purchase of an annuity contract under Code
                  Section 403(b) pursuant to a salary reduction agreement.
                  Elective Deferral Contributions shall not include any
                  deferrals properly distributed as excess annual additions.

                  ELIGIBLE PARTICIPANT means, for purposes of determining the
                  Deferral Percentage, any Employee who is otherwise entitled to
                  make Elective Deferral Contributions under the terms of the
                  Plan for the Plan Year. Eligible Participant means, for
                  purposes of determining the Contribution Percentage, any
                  Employee who is eligible (i) to make a Participant
                  Contribution or an Elective Deferral Contribution (if the
                  Employer takes such contributions into account in the
                  calculation of the Contribution Percentage), or (ii) to
                  receive a Matching Contribution (including forfeitures) or a
                  Qualified Matching Contribution. If a Participant Contribution
                  is required as a condition of participation in the Plan, any
                  Employee who would be a Participant in the Plan if such
                  Employee made such a contribution shall be treated as an
                  Eligible Participant on behalf of whom no Participant
                  Contributions are made.

                  EXCESS AGGREGATE CONTRIBUTIONS means, with respect to any Plan
                  Year, the excess of:

                                       30
<PAGE>

                  (1)      The aggregate Contribution Percentage Amounts taken
                           into account in computing the numerator of the
                           Contribution Percentage actually made on behalf of
                           Highly Compensated Employees for such Plan Year, over

                  (2)      The maximum Contribution Percentage Amounts permitted
                           by the ACP Test (determined by hypothetically
                           reducing contributions made on behalf of Highly
                           Compensated Employees in order of their Contribution
                           Percentages beginning with the highest of such
                           percentages).

                  Such determination shall be made after first determining
                  Excess Elective Deferrals and then determining Excess
                  Contributions.

                  EXCESS CONTRIBUTIONS means, with respect to any Plan Year, the
                  excess of:

                  (1)      The aggregate amount of employer contributions
                           actually taken into account in computing the Deferral
                           Percentage of Highly Compensated Employees for such
                           Plan Year, over

                  (2)      The maximum amount of such contributions permitted by
                           the ADP Test (determined by hypothetically reducing
                           contributions made on behalf of Highly Compensated
                           Employees in the order of the Deferral Percentages,
                           beginning with the highest of such percentages).

                  Such determination shall be made after first determining
                  Excess Elective Deferrals.

                  EXCESS ELECTIVE DEFERRALS means those Elective Deferral
                  Contributions that are includible in a Participant's gross
                  income under Code Section 402(g) to the extent such
                  Participant's Elective Deferral Contributions for a taxable
                  year exceed the dollar limitation under such Code section.
                  Excess Elective Deferrals shall be treated as Annual
                  Additions, as defined in the CONTRIBUTION LIMITATION SECTION
                  of this article, under the Plan, unless such amounts are
                  distributed no later than the first April 15 following the
                  close of the Participant's taxable year.

                  MATCHING CONTRIBUTIONS means employer contributions made to
                  this or any other defined contribution plan, or to a contract
                  described in Code Section 403(b), on behalf of a participant
                  on account of a Participant Contribution made by such
                  participant, or on account of a participant's Elective
                  Deferral Contributions, under a plan maintained by the
                  Employer or a Controlled Group member.

                  PARTICIPANT CONTRIBUTIONS means contributions made to the plan
                  by or on behalf of a participant that are included in the
                  participant's gross income in the year in which made and that
                  are maintained under a separate account to which the earnings
                  and losses are allocated.

                  QUALIFIED MATCHING CONTRIBUTIONS means Matching Contributions
                  which are subject to the distribution and nonforfeitability
                  requirements under Code Section 401(k) when made.

                                       31
<PAGE>

                  QUALIFIED NONELECTIVE CONTRIBUTIONS means any employer
                  contributions (other than Matching Contributions) which an
                  employee may not elect to have paid to him in cash instead of
                  being contributed to the plan and which are subject to the
                  distribution and nonforfeitability requirements under Code
                  Section 401(k) when made.

         (b) EXCESS ELECTIVE DEFERRALS. A Participant may assign to this Plan
any Excess Elective Deferrals made during a taxable year of the Participant by
notifying the Plan Administrator in writing on or before the first following
March 1 of the amount of the Excess Elective Deferrals to be assigned to the
Plan. A Participant is deemed to notify the Plan Administrator of any Excess
Elective Deferrals that arise by taking into account only those Elective
Deferral Contributions made to this Plan and any other plan of the Employer or a
Controlled Group member. The Participant's claim for Excess Elective Deferrals
shall be accompanied by the Participant's written statement that if such amounts
are not distributed, such Excess Elective Deferrals will exceed the limit
imposed on the Participant by Code Section 402(g) for the year in which the
deferral occurred. The Excess Elective Deferrals assigned to this Plan cannot
exceed the Elective Deferral Contributions allocated under this Plan for such
taxable year.

Notwithstanding any other provisions of the Plan, Elective Deferral
Contributions in an amount equal to the Excess Elective Deferrals assigned to
this Plan, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose Account Excess
Elective Deferrals were assigned for the preceding year and who claims Excess
Elective Deferrals for such taxable year.

The Excess Elective Deferrals shall be adjusted for income or loss. The income
or loss allocable to such Excess Elective Deferrals shall be equal to the income
or loss allocable to the Participant's Elective Deferral Contributions for the
taxable year in which the excess occurred multiplied by a fraction. The
numerator of the fraction is the Excess Elective Deferrals. The denominator of
the fraction is the closing balance without regard to any income or loss
occurring during such taxable year (as of the end of such taxable year) of the
Participant's Account resulting from Elective Deferral Contributions.

Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Elective Deferrals, plus any
income and minus any loss allocable thereto, shall be forfeited.

         (c) ADP TEST. As of the end of each Plan Year after Excess Elective
Deferrals have been determined, the Plan must satisfy the ADP Test. The ADP Test
shall be satisfied using the prior year testing method, unless the Employer has
elected to use the current year testing method.

         (1)      PRIOR YEAR TESTING METHOD. The ADP for a Plan Year for
                  Eligible Participants who are Highly Compensated Employees for
                  each Plan Year and the prior year's ADP for Eligible
                  Participants who were Nonhighly Compensated Employees for the
                  prior Plan Year must satisfy one of the following tests:

                                       32
<PAGE>

                  (i)      The ADP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year
                           shall not exceed the prior year's ADP for Eligible
                           Participants who were Nonhighly Compensated Employees
                           for the prior Plan Year multiplied by 1.25; or

                  (ii)     The ADP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year:

                           A.       shall not exceed the prior year's ADP for
                                    Eligible Participants who were Nonhighly
                                    Compensated Employees for the prior Plan
                                    Year multiplied by 2, and

                           B.       the difference between such ADPs is not more
                                    than 2.

                                    If this is not a successor plan, for
                                    the first Plan Year the Plan permits any
                                    Participant to make Elective Deferral
                                    Contributions, for purposes of the foregoing
                                    tests, the prior year's Nonhighly
                                    Compensated Employees' ADP shall be 3
                                    percent, unless the Employer has elected to
                                    use the Plan Year's ADP for these Eligible
                                    Participants.

         (2)      CURRENT YEAR TESTING METHOD. The ADP for a Plan Year for
                  Eligible Participants who are Highly Compensated Employees for
                  each Plan Year and the ADP for Eligible Participants who are
                  Nonhighly Compensated Employees for the Plan Year must satisfy
                  one of the following tests:

                  (i)      The ADP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year
                           shall not exceed the ADP for Eligible Participants
                           who are Nonhighly Compensated Employees for the Plan
                           Year multiplied by 1.25; or

                  (ii)     The ADP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year:

                           A.       shall not exceed the ADP for Eligible
                                    Participants who are Nonhighly Compensated
                                    Employees for the Plan Year multiplied by 2,
                                    and

                           B.       the difference between such ADP's is not
                                    more than 2.

                           If the Employer has elected to use the current year
                           testing method, that election cannot be changed
                           unless (i) the Plan has been using the current year
                           testing method for the preceding five Plan Years, or
                           if less, the number of Plan Years the Plan has been
                           in existence; or (ii) the Plan otherwise meets one of
                           the conditions specified in Internal Revenue Service
                           Notice 98-1 (or superseding guidance) for changing
                           from the current year testing method.

                                       33
<PAGE>

                  A Participant is a Highly Compensated Employee for a
                  particular Plan Year if he meets the definition of a Highly
                  Compensated Employee in effect for that Plan Year. Similarly,
                  a Participant is a Nonhighly Compensated Employee for a
                  particular Plan Year if he does not meet the definition of a
                  Highly Compensated Employee in effect for that Plan Year.

                  The Deferral Percentage for any Eligible Participant who is a
                  Highly Compensated Employee for the Plan Year and who is
                  eligible to have Elective Deferral Contributions (and
                  Qualified Nonelective Contributions or Qualified Matching
                  Contributions, or both, if treated as Elective Deferral
                  Contributions for purposes of the ADP Test) allocated to his
                  account under two or more arrangements described in Code
                  Section 401(k) that are maintained by the Employer or a
                  Controlled Group member shall be determined as if such
                  Elective Deferral Contributions (and, if applicable, such
                  Qualified Nonelective Contributions or Qualified Matching
                  Contributions, or both) were made under a single arrangement.
                  If a Highly Compensated Employee participates in two or more
                  cash or deferred arrangements that have different plan years,
                  all cash or deferred arrangements ending with or within the
                  same calendar year shall be treated as a single arrangement.
                  The foregoing notwithstanding, certain plans shall be treated
                  as separate if mandatorily disaggregated under the regulations
                  of Code Section 401(k). If the Employer elects to apply Code
                  Section 410(b)(4)(B) to satisfy the requirements of Code
                  Section 410(b), the Employer may elect to do a single ADP Test
                  for the mandatorily disaggregated plans for Plan Years
                  beginning after December 31, 1998 in accordance with Code
                  Section 401(k) and the regulations thereunder.

                  In the event this Plan satisfies the requirements of Code
                  Section 401(k), 401 (a)(4), or 410(b) only if aggregated with
                  one or more other plans, or if one or more other plans satisfy
                  the requirements of such Code sections only if aggregated with
                  this Plan, then this section shall be applied by determining
                  the Deferral Percentage of Employees as if all such plans were
                  a single plan. Any adjustments to the Nonhighly Compensated
                  Employee ADP for the prior year shall be made in accordance
                  with Internal Revenue Service Notice 98-1 (or superseding
                  guidance), unless the Employer has elected to use the current
                  year testing method. Plans may be aggregated in order to
                  satisfy Code Section 401(k) only if they have the same plan
                  year and use the same testing method for the ADP Test.

                  For purposes of the ADP Test, Elective Deferral Contributions,
                  Qualified Nonelective Contributions, and Qualified Matching
                  Contributions must be made before the end of the 12-month
                  period immediately following the Plan Year to which the
                  contributions relate.

                  The Employer shall maintain records sufficient to demonstrate
                  satisfaction of the ADP Test and the amount of Qualified
                  Nonelective Contributions or Qualified Matching Contributions,
                  or both, used in such test.

                                       34
<PAGE>

                  If the Plan Administrator should determine during the Plan
                  Year that the ADP Test is not being met, the Plan
                  Administrator may limit the amount of future Elective Deferral
                  Contributions of the Highly Compensated Employees.

                  Notwithstanding any other provisions of this Plan, Excess
                  Contributions, plus any income and minus any loss allocable
                  thereto, shall be distributed no later than the last day of
                  each Plan Year to Participants to whose Accounts such Excess
                  Contributions were allocated for the preceding Plan Year.
                  Excess Contributions are allocated to the Highly Compensated
                  Employees with the largest amounts of employer contributions
                  taken into account in calculating the ADP Test for the year in
                  which the excess arose, beginning with the Highly Compensated
                  Employee with the largest amount of such employer
                  contributions and continuing in descending order until all of
                  the Excess Contributions have been allocated. For purposes of
                  the preceding sentence, the "largest amount" is determined
                  after distribution of any Excess Contributions. If such excess
                  amounts are distributed more than 2 1/2 months after the last
                  day of the Plan Year in which such excess amounts arose, a 10
                  percent excise tax shall be imposed on the employer
                  maintaining the plan with respect to such amounts.

                  Excess Contributions shall be treated as Annual Additions, as
                  defined in the CONTRIBUTION LIMITATION SECTION of this
                  article.

                  The Excess Contributions shall be adjusted for income or loss.
                  The income or loss allocable to such Excess Contributions
                  allocated to each Participant shall be equal to the income or
                  loss allocable to the Participant's Elective Deferral
                  Contributions (and, if applicable, Qualified Nonelective
                  Contributions or Qualified Matching Contributions, or both)
                  for the Plan Year in which the excess occurred multiplied by a
                  fraction. The numerator of the fraction is the Excess
                  Contributions. The denominator of the fraction is the closing
                  balance without regard to any income or loss occurring during
                  such Plan Year (as of the end of such Plan Year) of the
                  Participant's Account resulting from Elective Deferral
                  Contributions (and Qualified Nonelective Contributions or
                  Qualified Matching Contributions, or both, if such
                  contributions are included in the ADP Test).

                  Excess Contributions allocated to a Participant shall be
                  distributed from the Participant's Account resulting from
                  Elective Deferral Contributions. If such Excess Contributions
                  exceed the balance in the Participant's Account resulting from
                  Elective Deferral Contributions, the balance shall be
                  distributed from the Participant's Account resulting from
                  Qualified Matching Contributions (if applicable) and Qualified
                  Nonelective Contributions, respectively.

                  Any Matching Contributions which were based on the Elective
                  Deferral Contributions which are distributed as Excess
                  Contributions, plus any income and minus any loss allocable
                  thereto, shall be forfeited.

                                       35
<PAGE>

         (d) ACP TEST. As of the end of each Plan Year, the Plan must satisfy
the ACP Test. The ACP Test shall be satisfied using the prior year testing
method, unless the Employer has elected to use the current year testing method.

         (1)      PRIOR YEAR TESTING METHOD. The ACP for a Plan Year for
                  Eligible Participants who are Highly Compensated Employees for
                  each Plan Year and the prior year's ACP for Eligible
                  Participants who were Nonhighly Compensated Employees for the
                  prior Plan Year must satisfy one of the following tests:

                  (i)      The ACP for the Plan Year for Eligible Participants
                           who are Highly Compensated Employees for the Plan
                           Year shall not exceed the prior year's ACP for
                           Eligible Participants who were Nonhighly Compensated
                           Employees for the prior Plan Year multiplied by 1.25;
                           or

                  (ii)     The ACP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year:

                           A.       shall not exceed the prior year's ACP for
                                    Eligible Participants who were Nonhighly
                                    Compensated Employees for the prior Plan
                                    Year multiplied by 2, and

                           B.       the difference between such ACPs is not more
                                    than 2.

                                    If this is not a successor plan, for the
                                    first Plan Year the Plan permits any
                                    Participant to make Participant
                                    Contributions, provides for Matching
                                    Contributions, or both, for purposes of the
                                    foregoing tests, the prior year's Nonhighly
                                    Compensated Employees' ACP shall be 3
                                    percent, unless the Employer has elected to
                                    use the Plan Year's ACP for these Eligible
                                    Participants.

         (2)      CURRENT YEAR TESTING METHOD. The ACP for a Plan Year for
                  Eligible Participants who are Highly Compensated Employees for
                  each Plan Year and the ACP for Eligible Participants who are
                  Nonhighly Compensated Employees for the Plan Year must satisfy
                  one of the following tests:

                  (i)      The ACP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year
                           shall not exceed the ACP for Eligible Participants
                           who are Nonhighly Compensated Employees for the Plan
                           Year multiplied by 1.25; or

                  (ii)     The ACP for a Plan Year for Eligible Participants who
                           are Highly Compensated Employees for the Plan Year:

                           A.       shall not exceed the ACP for Eligible
                                    Participants who are Nonhighly Compensated
                                    Employees for the Plan Year multiplied by 2,
                                    and

                           B.       the difference between such ACPs is not more
                                    than 2.

                                       36
<PAGE>

                  If the Employer has elected to use the current year testing
                  method, that election cannot be changed unless (i) the Plan
                  has been using the current year testing method for the
                  preceding five Plan Years, or if less, the number of Plan
                  Years the Plan has been in existence; or (ii) the Plan
                  otherwise meets one of the conditions specified in Internal
                  Revenue Service Notice 98-1 (or superseding guidance) for
                  changing from the current year testing method.

A Participant is a Highly Compensated Employee for a particular Plan Year if he
meets the definition of a Highly Compensated Employee in effect for that Plan
Year. Similarly, a Participant is a Nonhighly Compensated Employee for a
particular Plan Year if he does not meet the definition of a Highly Compensated
Employee in effect for that Plan Year.

         MULTIPLE USE. If one or more Highly Compensated Employees participate
in both a cash or deferred arrangement and a plan subject to the ACP Test
maintained by the Employer or a Controlled Group member, and the sum of the ADP
and ACP of those Highly Compensated Employees subject to either or both tests
exceeds the Aggregate Limit, then the Contribution Percentage of those Highly
Compensated Employees who also participate in a cash or deferred arrangement
will be reduced in the manner described below for allocating Excess Aggregate
Contributions so that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage is reduced shall be treated as an
Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated
Employees are determined after any corrections required to meet the ADP Test and
ACP Test and are deemed to be the maximum permitted under such tests for the
Plan Year. Multiple use does not occur if either the ADP or ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP,
respectively, of the Nonhighly Compensated Employees.

The Contribution Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Contribution
Percentage Amounts allocated to his account under two or more plans described in
Code Section 401(a) or arrangements described in Code Section 401(k) that are
maintained by the Employer or a Controlled Group member shall be determined as
if the total of such Contribution Percentage Amounts was made under each plan.

If a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement. The foregoing notwithstanding, certain plans shall be treated as
separate if mandatorily disaggregated under the regulations of Code Section
401(m). If the Employer elects to apply Code Section 410(b)(4)(B) to satisfy the
requirements of Code Section 410(b), the Employer may elect to do a single ACP
Test for the mandatorily disaggregated plans for Plan Years beginning after
December 31, 1998 in accordance with Code Section 401(m) and the regulations
thereunder.

In the event this Plan satisfies the requirements of Code Section 401(m),
401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one
or more other plans satisfy the requirements of such Code sections only if
aggregated with this Plan, then this section shall be applied by determining the
Contribution Percentage of Employees as if all such plans were a single plan.
Any adjustments to the Nonhighly Compensated Employee ACP for the prior year

                                       37
<PAGE>

shall be made in accordance with Internal Revenue Service Notice 98-1 (or
superseding guidance), unless the Employer has elected to use the current year
testing method. Plans may be aggregated in order to satisfy Code Section 401(m)
only if they have the same plan year and use the same testing method for the ACP
Test.

For purposes of the ACP Test, Participant Contributions are considered to have
been made in the Plan Year in which contributed to the Plan. Matching
Contributions and Qualified Nonelective Contributions will be considered to have
been made for a Plan Year if made no later than the end of the 1 2-month period
beginning on the day after the close of the Plan Year.

The Employer shall maintain records sufficient to demonstrate satisfaction of
the ACP Test and the amount of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.

Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if not vested, or distributed, if vested, no later than the last day
of each Plan Year to Participants to whose Accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. Excess Aggregate
Contributions are allocated to the Highly Compensated Employees with the largest
Contribution Percentage Amounts taken into account in calculating the ACP Test
for the year in which the excess arose, beginning with the Highly Compensated
Employee with the largest amount of such Contribution Percentage Amounts and
continuing in descending order until all of the Excess Aggregate Contributions
have been allocated. For purposes of the preceding sentence, the "largest
amount" is determined after distribution of any Excess Aggregate Contributions.
If such Excess Aggregate Contributions are distributed more than 2 1/2 months
after the last day of the Plan Year in which such excess amounts arose, a 10
percent excise tax shall be imposed on the employer maintaining the plan with
respect to such amounts.

Excess Aggregate Contributions shall be treated as Annual Additions, as defined
in the CONTRIBUTION LIMITATION SECTION of this article.

The Excess Aggregate Contributions shall be adjusted for income or loss. The
income or loss allocable to such Excess Aggregate Contributions allocated to
each Participant shall be equal to the income or loss allocable to the
Participant's Contribution Percentage Amounts for the Plan Year in which the
excess occurred multiplied by a fraction. The numerator of the fraction is the
Excess Aggregate Contributions. The denominator of the fraction is the closing
balance without regard to any income or loss occurring during such Plan Year (as
of the end of such Plan Year) of the Participant's Account resulting from
Contribution Percentage Amounts.

Excess Aggregate Contributions allocated to a Participant shall be distributed
from the Participant's Account resulting from Participant Contributions that are
not required as a condition of employment or participation or for obtaining
additional benefits from Employer Contributions. If such Excess Aggregate
Contributions exceed the balance in the Participant's Account resulting from
such Participant's Contributions, the balance shall be forfeited, if not vested,
or distributed, if vested, on a pro-rata basis from the Participant's Account
resulting from Contribution Percentage Amounts.

                                       38
<PAGE>

         (e) EMPLOYER ELECTIONS. The Employer has not made an election to use
the current year testing method.

                                   ARTICLE IV

                           INVESTMENT OF CONTRIBUTIONS

SECTION 4.01      INVESTMENT AND TIMING OF CONTRIBUTIONS.

         The handling of Contributions is governed by the provisions of the
Trust Agreement, the Annuity Contract, and any other funding arrangement in
which the Plan Fund is or may be held or invested. To the extent permitted by
the Trust Agreement, Annuity Contract, or other funding arrangement, the parties
named below shall direct the Contributions to the guaranteed benefit policy
portion of the Annuity Contract, any of the investment options available under
the Annuity Contract, or any of the investment vehicles available under the
Trust Agreement and may request the transfer of amounts resulting from those
Contributions between such investment options and investment vehicles or the
transfer of amounts between the guaranteed benefit policy portion of the Annuity
Contract and such investment options and investment vehicles. A Participant may
not direct the Trustee or Insurer to invest the Participant's Account in
collectibles. Collectibles mean any work of art, rug or antique, metal or gem,
stamp or coin, alcoholic beverage, or other tangible personal property specified
by the Secretary of the Treasury. However, for tax years beginning after
December 31, 1997, certain coins and bullion as provided in Code Section
408(m)(3) shall not be considered collectibles. To the extent that a Participant
who has investment direction fails to give timely direction, the Primary
Employer shall direct the investment of his Account. If the Primary Employer has
investment direction, such Account shall be invested ratably in the guaranteed
benefit policy portion of the Annuity Contract, the investment options available
under the Annuity Contract, or the investment vehicles available under the Trust
Agreement in the same manner as the Accounts of all other Participants who do
not direct their investments. The Primary Employer shall have investment
direction for amounts which have not been allocated to Participants. To the
extent an investment is no longer available, the Primary Employer may require
that amounts currently held in such investment be reinvested in other
investments.

         At least annually, the Named Fiduciary shall review all pertinent
Employee information and Plan data in order to establish the funding policy of
the Plan and to determine appropriate methods of carrying out the Plan's
objectives. The Named Fiduciary shall inform the Trustee and any Investment
Manager of the Plan's short-term and long-term financial needs so the investment
policy can be coordinated with the Plan's financial requirements.

         (a) Employer Contributions other than Elective Deferral Contributions:
The Participant shall direct the investment of such Employer Contributions and
transfer of amounts resulting from those Contributions.

         (b) Elective Deferral Contributions: The Participant shall direct the
investment of Elective Deferral Contributions and transfer of amounts resulting
from those Contributions.

                                       39
<PAGE>

         (c) Rollover Contributions: The Participant shall direct the investment
of Rollover Contributions and transfer of amounts resulting from those
Contributions.

         However, the Named Fiduciary may delegate to the Investment Manager
investment discretion for Contributions and amounts which are not subject to
Participant direction.

         The Employer shall pay to the Insurer or Trustee, as applicable, the
Elective Deferral Contributions for each Plan Year not later than the end of the
12-month period immediately following the Plan Year for which they are deemed to
be paid.

         All Contributions are forwarded by the Employer to the Trustee to be
deposited in the Trust Fund or to the Insurer to be deposited under the Annuity
Contract, as applicable. Contributions that are accumulated through payroll
deduction shall be paid to the Trustee or Insurer, as applicable, by the earlier
of (i) the date the Contributions can reasonably be segregated from the
Employer's assets, or (ii) the 15th business day of the month following the
month in which the Contributions would otherwise have been paid in cash to the
Participant.

SECTION 4.01A--INVESTMENT IN QUALIFYING EMPLOYER SECURITIES.

         All or some portion of the Participant's Account may be invested in
Qualifying Employer Securities. If the Participant has investment control, once
an investment in the Qualifying Employer Securities Fund is made available to
Participants, it shall continue to be available unless the Plan is amended to
disallow such available investment. In the absence of an election to invest in
Qualifying Employer Securities, Participants shall be deemed to have elected to
have their Accounts invested wholly in other investment options of the
Investment Fund. Once an election is made, it shall be considered to continue
until a new election is made.

         For purposes of determining the annual valuation of the Plan, and for
reporting to Participants and regulatory authorities, the assets of the Plan
shall be valued at least annually on the Valuation Date which corresponds to the
last day of the Plan Year. The fair market value of Qualifying Employer
Securities shall be determined on such Valuation Date. The prices of Qualifying
Employer Securities as of the date of the transaction shall apply for purposes
of valuing distributions and other transactions of the Plan to the extent such
value is representative of the fair market value of such securities in the
opinion of the Plan Administrator. The value of a Participant's Account held in
the Qualifying Employer Securities Fund may be expressed in units.

         If the Qualifying Employer Securities are not publicly traded, or if an
extremely thin market exists for such securities so that reasonable valuation
may not be obtained from the market place, then such securities must be valued
at least annually by an independent appraiser who is not associated with the
Employer, the Plan Administrator, the Trustee, or any person related to any
fiduciary under the Plan. The independent appraiser may be associated with a
person who is merely a contract administrator with respect to the Plan, but who
exercises no discretionary authority and is not a plan fiduciary.

         If there is a public market for Qualifying Employer Securities of the
type held by the Plan, then the Plan Administrator may use as the value of the
securities the price at which such securities trade in such market. If the
Qualifying Employer Securities do not trade on the

                                       40
<PAGE>

relevant date, or if the market is very thin on such date, then the Plan
Administrator may use for the valuation the next preceding trading day on which
the trading prices are representative of the fair market value of such
securities in the opinion of the Plan Administrator.

         Cash dividends payable on the Qualifying Employer Securities shall be
reinvested in additional shares of such securities. In the event of any cash or
stock dividend or any stock split, such dividend or split shall be credited to
the Accounts based on the number of shares of Qualifying Employer Securities
credited to each Account as of the payable date of such dividend or split.

         All purchases of Qualifying Employer Securities shall be made at a
price, or prices, which, in the judgment of the Plan Administrator, do not
exceed the fair market value of such securities.

         In the event that the Trustee acquires Qualifying Employer Securities
by purchase from a "disqualified person" as defined in Code Section 4975(e)(2)
or from a "party-in-interest" as defined in ERISA Section 3(14), the terms of
such purchase shall contain the provision that in the event there is a final
determination by the Internal Revenue Service, the Department of Labor, or court
of competent jurisdiction that the fair market value of such securities as of
the date of purchase was less than the purchase price paid by the Trustee, then
the seller shall pay or transfer, as the case may be, to the Trustee an amount
of cash or shares of Qualifying Employer Securities equal in value to the
difference between the purchase price and such fair market value for all such
shares. In the event that cash or shares of Qualifying Employer Securities are
paid or transferred to the Trustee under this provision, such securities shall
be valued at their fair market value as of the date of such purchase, and
interest at a reasonable rate from the date of purchase to the date of payment
or transfer shall be paid by the seller on the amount of cash paid.

         The Plan Administrator may direct the Trustee to sell, resell, or
otherwise dispose of Qualifying Employer Securities to any person, including the
Employer, provided that any such sales to any disqualified person or
party-in-interest, including the Employer, will be made at not less than the
fair market value and no commission will be charged. Any such sale shall be made
in conformance with ERISA Section 408(e).

         The Employer is responsible for compliance with any applicable Federal
or state securities law with respect to all aspects of the Plan. If the
Qualifying Employer Securities or interest in this Plan are required to be
registered in order to permit investment in the Qualifying Employer Securities
Fund as provided in this section, then such investment will not be effective
until the later of the effective date of the Plan or the date such registration
or qualification is effective. The Employer, at its own expense, will take or
cause to be taken any and all such actions as may be necessary or appropriate to
effect such registration or qualification. Further, if the Trustee is directed
to dispose of any Qualifying Employer Securities held under the Plan under
circumstances which require registration or qualification of the securities
under applicable Federal or state securities laws, then the Employer will, at
its own expense, take or cause to be taken any and all such action as may be
necessary or appropriate to effect such registration or qualification. The
Employer is responsible for all compliance requirements under Section 16 of the
Securities Act.

                                       41
<PAGE>

                                   ARTICLE V

                                    BENEFITS

SECTION 5.01      RETIREMENT BENEFITS.

         On a Participant's Retirement Date, his Vested Account shall be
distributed to him according to the distribution of benefits provisions of
Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.

SECTION 5.02      DEATH BENEFITS.

         If a Participant dies before his Annuity Starting Date, his Vested
Account shall be distributed according to the distribution of benefits
provisions of Article VI and the provisions of the SMALL AMOUNTS SECTION of
Article X.

SECTION 5.03      VESTED BENEFITS.

         If an Inactive Participant's Vested Account is not payable under the
SMALL AMOUNTS SECTION of Article X, he may elect, but is not required, to
receive a distribution of his Vested Account after he ceases to be an Employee.
The Participant's election shall be subject to his spouse's consent as provided
in the ELECTION PROCEDURES SECTION of Article VI. A distribution under this
paragraph shall be a retirement benefit and shall be distributed to the
Participant according to the distribution of benefits provisions of Article VI.

         A Participant may not elect to receive a distribution under the
provisions of this section after he again becomes an Employee until he
subsequently ceases to be an Employee and meets the requirements of this
section.

         If an Inactive Participant does not receive an earlier distribution,
upon his Retirement Date or death, his Vested Account shall be distributed
according to the provisions of the RETIREMENT BENEFITS SECTION or the DEATH
BENEFITS SECTION of Article V.

         The Nonvested Account of an Inactive Participant who has ceased to be
an Employee shall remain a part of his Account until it becomes a Forfeiture.
However, if he again becomes an Employee so that his Vesting Percentage can
increase, the Nonvested Account may become a part of his Vested Account.

SECTION 5.04      WHEN BENEFITS START.

         (a) Unless otherwise elected, benefits shall begin before the 60th day
following the close of the Plan Year in which the latest date below occurs:

         (1)      The date the Participant attains age 65 (or Normal Retirement
                  Age, if earlier).

         (2)      The 10th anniversary of the Participant's Entry Date.

         (3)      The date the Participant ceases to be an Employee.

                                       42
<PAGE>

         Notwithstanding the foregoing, the failure of a Participant and spouse
to consent to a distribution while a benefit is immediately distributable,
within the meaning of the ELECTION PROCEDURES SECTION of Article VI, shall be
deemed to be an election to defer the start of benefits sufficient to satisfy
this section.

The Participant may elect to have his benefits begin after the latest date for
beginning benefits described above, subject to the following provisions of this
section. The Participant shall make the election in writing. Such election must
be made before his Normal Retirement Date or the date he ceases to be an
Employee, if later. The election must describe the form of distribution and the
date benefits will begin. The Participant shall not elect a date for beginning
benefits or a form of distribution that would result in a benefit payable when
he dies which would be more than incidental within the meaning of governmental
regulations.

Benefits shall begin on an earlier date if otherwise provided in the Plan. For
example, the Participant's Retirement Date or Required Beginning Date, as
defined in the DEFINITIONS SECTION of Article VII.

         (b) The Participant's Vested Account which results from Elective
Deferral Contributions may not be distributed to a Participant or to his
Beneficiary (or Beneficiaries) in accordance with the Participant's or
Beneficiary's (or Beneficiaries') election, earlier than separation from
service, death, or disability. Such amount may also be distributed upon:

         (1)      Termination of the Plan, as permitted in Article VIII.

         (2)      The disposition by the Employer, if the Employer is a
                  corporation, to an unrelated corporation of substantially all
                  of the assets, within the meaning of Code Section 409(d)(2),
                  used in a trade or business of the Employer if the Employer
                  continues to maintain the Plan after the disposition, but only
                  with respect to Employees who continue employment with the
                  corporation acquiring such assets.

         (3)      The disposition by the Employer, if the Employer is a
                  corporation, to an unrelated entity of the Employer's interest
                  in a subsidiary, within the meaning of Code Section 409(d)(3),
                  if the Employer continues to maintain the Plan, but only with
                  respect to Employees who continue employment with such
                  subsidiary.

         (4)      The hardship of the Participant as permitted in the WITHDRAWAL
                  BENEFITS SECTION of this article.

         All distributions that may be made pursuant to one or more of the
foregoing distributable events will be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefit
provisions of Article VI. In addition, distributions that are triggered by (1),
(2) and (3) above must be made in a lump sum. A lump sum shall include a
distribution of an annuity contract.

SECTION 5.05      WITHDRAWAL BENEFITS.

         A Participant may withdraw any part of his Vested Account which results
from the following Contributions:

                                       43
<PAGE>

         Elective Deferral Contributions

in the event of hardship due to an immediate and heavy financial need.
Withdrawals from the Participant's Account resulting from Elective Deferral
Contributions shall be limited to the amount of the Participant's Elective
Deferral Contributions. Immediate and heavy financial need shall be limited to:
(i) expenses incurred or necessary for medical care, described in Code Section
213(d), of the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage
payments) of a principal residence for the Participant; (iii) payment of
tuition, related educational fees, and room and board expenses, for the next 12
months of post-secondary education for the Participant, his spouse, children, or
dependents; (iv) the need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the Participant's
principal residence; or (v) any other distribution which is deemed by the
Commissioner of Internal Revenue to be made on account of immediate and heavy
financial need as provided in Treasury regulations.

         No withdrawal shall be allowed which is not necessary to satisfy such
immediate and heavy financial need. Such withdrawal shall be deemed necessary
only if all of the following requirements are met: (i) the distribution is not
in excess of the amount of the immediate and heavy financial need (including
amounts necessary to pay any Federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution); (ii) the Participant
has obtained all distributions, other than hardship distributions, and all
nontaxable loans currently available under all plans maintained by the Employer;
(iii) the Plan, and all other plans maintained by the Employer, provide that the
Participant's elective contributions and participant contributions will be
suspended for at least 12 months after receipt of the hardship distribution; and
(iv) the Plan, and all other plans maintained by the Employer, provide that the
Participant may not make elective contributions for the Participant's taxable
year immediately following the taxable year of the hardship distribution in
excess of the applicable limit under Code Section 402(g) for such next taxable
year less the amount of such Participant's elective contributions for the
taxable year of the hardship distribution. The Plan will suspend elective
contributions and participant contributions for 12 months and limit elective
deferrals as provided in the preceding sentence. A Participant shall not cease
to be an Eligible Participant, as defined in the EXCESS AMOUNTS SECTION of
Article III, merely because his elective contributions or participant
contributions are suspended.

         A request for withdrawal shall be made in such manner and in accordance
with such rules as the Employer will prescribe for this purpose (including by
means of voice response or other electronic means under circumstances the
Employer permits). Withdrawals shall be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefits
provisions of Article VI. A forfeiture shall not occur solely as a result of a
withdrawal.

SECTION 5.06      LOANS TO PARTICIPANTS.

         Loans shall be made available to all Participants on a reasonably
equivalent basis. For purposes of this section, and unless otherwise specified,
Participant means any Participant or Beneficiary who is a party-in-interest as
defined in ERISA. Loans shall not be made to Highly Compensated Employees in an
amount greater than the amount made available to other Participants.

                                       44
<PAGE>

         No loans will be made to any shareholder-employee or Owner-employee.
For purposes of this requirement, a shareholder-employee means an employee or
officer of an electing small business (Subchapter 5) corporation who owns (or is
considered as owning within the meaning of Code Section 318(a)(1)), on any day
during the taxable year of such corporation, more than 5 percent of the
outstanding stock of the corporation.

         A loan to a Participant shall be a Participant-directed investment of
his Account. The portion of the Participant's Account held in the Qualifying
Employer Securities Fund may be redeemed for purposes of a loan only after the
amount held in other investment options has been depleted. The loan is a Trust
Fund investment but no Account other than the borrowing Participant's Account
shall share in the interest paid on the loan or bear any expense or loss
incurred because of the loan.

         The number of outstanding loans shall be limited to one. No more than
one loan shall be approved for any Participant in any 12-month period. The
minimum amount of any loan shall be $1,000.

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

         The amount of the loan shall not exceed the maximum amount that may be
treated as a loan under Code Section 72(p) (rather than a distribution) to the
Participant and shall be equal to the lesser of (a) or (b) below:

         (a)      $50,000, reduced by the highest outstanding loan balance of
                  loans during the one-year period ending on the day before
                  the new loan is made.

         (b)      The greater of (1) or (2), reduced by (3) below:

         (1)      One-half of the Participant's Vested Account.

         (2)      $10,000.

         (3)      Any outstanding loan balance on the date the new loan is made.

         For purposes of this maximum, a Participant's Vested Account does not
include any accumulated deductible employee contributions, as defined in Code
Section 72(o)(5)(B), and all qualified employer plans, as defined in Code
Section 72(p)(4), of the Employer and any Controlled Group member shall be
treated as one plan.

         The foregoing notwithstanding, the amount of such loan shall not exceed
50 percent of the amount of the Participant's Vested Account. For purposes of
this maximum, a Participant's Vested Account does not include any accumulated
deductible employee contributions, as defined in Code Section 72(o)(5)(B). No
collateral other than a portion of the Participant's Vested Account (as limited
above) shall be accepted. The Loan Administrator shall determine if the
collateral is adequate for the amount of the loan requested.

         A Participant must obtain the consent of his spouse, if any, to the use
of the Vested Account as security for the loan. Spousal consent shall be
obtained no earlier than the beginning

                                       45
<PAGE>

of the 90-day period that ends on the date on which the loan to be so secured is
made. The consent must be in writing, must acknowledge the effect of the loan,
and must be witnessed by a plan representative or a notary public. Such consent
shall thereafter be binding with respect to the consenting spouse or any
subsequent spouse with respect to that loan. A new consent shall be required if
the Vested Account is used for collateral upon renegotiation, extension,
renewal, or other revision of the loan. No consent shall be required if
subparagraph (d) of the ELECTION PROCEDURES SECTION of Article VI applies.

         If a valid spousal consent has been obtained in accordance with the
above, or spousal consent is not required, then, notwithstanding any other
provision of this Plan, the portion of the Participant's Vested Account used as
a security interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the amount
of the Vested Account payable at the time of the death or distribution, but only
if the reduction is used as repayment of the loan. If spousal consent is
required and less than 100 percent of the Participant's Vested Account
(determined without regard to the preceding sentence) is payable to the
surviving spouse, then the Vested Account shall be adjusted by first reducing
the Vested Account by the amount of the security used as repayment of the loan,
and then determining the benefit payable to the surviving spouse.

         Each loan shall bear a reasonable fixed rate of interest to be
determined by the Loan Administrator. In determining the interest rate, the Loan
Administrator shall take into consideration fixed interest rates currently being
charged by commercial lenders for loans of comparable risk on similar terms and
for similar durations, so that the interest will provide for a return
commensurate with rates currently charged by commercial lenders for loans made
under similar circumstances. The Loan Administrator shall not discriminate among
Participants in the matter of interest rates; but loans granted at different
times may bear different interest rates in accordance with the current
appropriate standards.

         The loan shall by its terms require that repayment (principal and
interest) be amortized in level payments, not less frequently than quarterly,
over a period not extending beyond five years from the date of the loan. The
period of repayment for any loan shall be arrived at by mutual agreement between
the Loan Administrator and the Participant.

         The Participant shall make an application for a loan in such manner and
in accordance with such rules as the Employer shall prescribe for this purpose
(including by means of voice response or other electronic means under
circumstances the Employer permits). The application must specify the amount and
duration requested.

         Information contained in the application for the loan concerning the
income, liabilities, and assets of the Participant will be evaluated to
determine whether there is a reasonable expectation that the Participant will be
able to satisfy payments on the loan as due. Additionally, the Loan
Administrator will pursue any appropriate further investigations concerning the
creditworthiness and credit history of the Participant to determine whether a
loan should be approved.

         Each loan shall be fully documented in the form of a promissory note
signed by the Participant for the face amount of the loan, together with
interest determined as specified above.

                                       46
<PAGE>

         There will be an assignment of collateral to the Plan executed at the
time the loan is made.

         In those cases where repayment through payroll deduction is available,
installments are so payable, and a payroll deduction agreement shall be executed
by the Participant at the time the loan is made. Loan repayments that are
accumulated through payroll deduction shall be paid to the Trustee by the
earlier of (i) the date the loan repayments can reasonably be segregated from
the Employer's assets, or (ii) the 15th business day of the month following the
month in which such amounts would otherwise have been paid in cash to the
Participant.

         Where payroll deduction is not available, payments in cash are to be
timely made. Any payment that is not by payroll deduction shall be made payable
to the Employer or the Trustee, as specified in the promissory note, and
delivered to the Loan Administrator, including prepayments, service fees and
penalties, if any, and other amounts due under the note. The Loan Administrator
shall deposit such amounts into the Plan as soon as administratively practicable
after they are received, but in no event later than the 15th business day of the
month after they are received.

         The promissory note may provide for reasonable late payment penalties
and service fees. Any penalties or service fees shall be applied to all
Participants in a nondiscriminatory manner. If the promissory note so provides,
such amounts may be assessed and collected from the Account of the Participant
as part of the loan balance.

         Each loan may be paid prior to maturity, in part or in full, without
penalty or service fee, except as may be set out in the promissory note.

         The Plan shall suspend loan payments for a period not exceeding one
year during which an approved unpaid leave of absence occurs other than a
military leave of absence. The Loan Administrator shall provide the Participant
a written explanation of the effect of the suspension of payments upon his loan.

         If a Participant separates from service (or takes a leave of absence)
from the Employer because of service in the military and does not receive a
distribution of his Vested Account, the Plan shall suspend loan payments until
the Participant's completion of military service or until the Participant's
fifth anniversary of commencement of military service, if earlier, as permitted
under Code Section 414(u). The Loan Administrator shall provide the Participant
a written explanation of the effect of his military service upon his loan.

         If any payment of principal and interest, or any portion thereof,
remains unpaid for more than 90 days after due, the loan shall be in default.
For purposes of Code Section 72(p), the Participant shall then be treated as
having received a deemed distribution regardless of whether or not a
distributable event has occurred.

         Upon default, the Plan has the right to pursue any remedy available by
law to satisfy the amount due, along with accrued interest, including the right
to enforce its claim against the security pledged and execute upon the
collateral as allowed by law. The entire principal balance whether or not
otherwise then due, along with accrued interest, shall become immediately due
and payable without demand or notice, and subject to collection or satisfaction
by any lawful

                                       47
<PAGE>

means, including specifically, but not limited to, the right to enforce the
claim against the security pledged and to execute upon the collateral as allowed
by law.

         In the event of default, foreclosure on the note and attachment of
security or use of amounts pledged to satisfy the amount then due shall not
occur until a distributable event occurs in accordance with the Plan, and shall
not occur to an extent greater than the amount then available upon any
distributable event which has occurred under the Plan.

         All reasonable costs and expenses, including but not limited to
attorney's fees, incurred by the Plan in connection with any default or in any
proceeding to enforce any provision of a promissory note or instrument by which
a promissory note for a Participant loan is secured, shall be assessed and
collected from the Account of the Participant as part of the loan balance.

         If payroll deduction is being utilized, in the event that a
Participant's available payroll deduction amounts in any given month are
insufficient to satisfy the total amount due, there will be an increase in the
amount taken subsequently, sufficient to make up the amount that is then due. If
any amount remains past due more than 90 days, the entire principal amount,
whether or not otherwise then due, along with interest then accrued, shall
become due and payable, as above.

         If no distributable event has occurred under the Plan at the time that
the Participant's Vested Account would otherwise be used under this provision to
pay any amount due under the outstanding loan, this will not occur until the
time, or in excess of the extent to which, a distributable event occurs under
the Plan. An outstanding loan will become due and payable in full 60 days after
a Participant ceases to be an Employee and a party-in-interest as defined in
ERISA or after complete termination of the Plan.

                                   ARTICLE VI

                            DISTRIBUTION OF BENEFITS

SECTION 6.01      AUTOMATIC FORMS OF DISTRIBUTION.

         Unless an optional form of benefit is selected pursuant to a qualified
election within the election period (see the ELECTION PROCEDURES SECTION of this
article), the automatic form of benefit payable to or on behalf of a Participant
is determined as follows:

         (a)      RETIREMENT BENEFITS. The automatic form of retirement benefit
for a Participant who does not die before his Annuity Starting Date shall be:

         (1)      The Qualified Joint and Survivor Annuity for a Participant who
                  has a spouse.

         (2)      The Normal Form for a Participant who does not have a spouse.

         (b)      DEATH BENEFITS.  The automatic form of death benefit for a
Participant who dies before his Annuity Starting Date shall be:

                                       48
<PAGE>

         (1)      A Qualified Preretirement Survivor Annuity for a Participant
                  who has a spouse to whom he has been continuously married
                  throughout the one-year period ending on the date of his
                  death. The spouse may elect to start receiving the death
                  benefit on any first day of the month on or after the
                  Participant dies and by the date the Participant would have
                  been age 70 1/2. If the spouse dies before benefits start, the
                  Participant's Vested Account, determined as of the date of the
                  spouse's death, shall be paid to the spouse's Beneficiary.

         (2)      A single-sum payment to the Participant's Beneficiary for a
                  Participant who does not have a spouse who is entitled to a
                  Qualified Preretirement Survivor Annuity.

         Before a death benefit will be paid on account of the death of a
         Participant who does not have a spouse who is entitled to a Qualified
         Preretirement Survivor Annuity, it must be established to the
         satisfaction of a plan representative that the Participant does not
         have such a spouse.

SECTION 6.02      OPTIONAL FORMS OF DISTRIBUTION.

         (a) RETIREMENT BENEFITS. The optional forms of retirement benefit shall
be the following: (i) a straight life annuity; (ii) single life annuities with
certain periods of 5, 10 or 1 5 years; (iii) a single life annuity with
installment refund; (iv) survivorship life annuities with installment refund and
survivorship percentages of 50%, 66 2/3% or 100%; (v) fixed period annuities for
any period of whole months which is not less than 60 and does not exceed the
Life Expectancy, as defined in Article VII, of the Participant where the Life
Expectancy is not recalculated; and (vi) a full flexibility option. A single sum
payment is also available. That portion of a Participant's Account which is held
in the Qualifying Employer Securities Fund may be distributed in kind.

         The full flexibility option is an optional form of benefit under which
the Participant receives a distribution each calendar year, beginning with the
calendar year in which his Annuity Starting Date occurs. The Participant may
elect the amount to be distributed each year (not less than $1,000). The amount
payable in his first Distribution Calendar Year, as defined in Article VII, must
satisfy the minimum distribution requirements of Article VII for such year.
Distributions for later Distribution Calendar Years, as defined in Article VII,
must satisfy the minimum distribution requirements of Article VII for such
years. If the Participant's Annuity Starting Date does not occur until his
second Distribution Calendar Year, as defined in Article VII, the amount payable
for such year must satisfy the minimum distribution requirements of Article VII
for both the first and second Distribution Calendar Years, as defined in Article
VII.

         If the Plan is amended to eliminate or restrict an optional form of
distribution and the Plan provides a single sum distribution form that is
otherwise identical to the optional form of distribution eliminated or
restricted, the amendment shall not apply to any distribution with an Annuity
Starting Date earlier than the first day of the second Plan Year following the
Plan Year in which the amendment is adopted.

                                       49
<PAGE>

         Election of an optional form is subject to the qualified election
provisions of the ELECTION PROCEDURES SECTION of this article and the
distribution requirements of Article VII.

         Any annuity contract distributed shall be nontransferable. The terms of
any annuity contract purchased and distributed by the Plan to a Participant or
spouse shall comply with the requirements of this Plan.

         (b) DEATH BENEFITS. The optional forms of death benefit are a
single-sum payment and any annuity that is an optional form of retirement
benefit. However, the full flexibility option shall not be available if the
Beneficiary is not the spouse of the deceased Participant.

         Election of an optional form is subject to the qualified election
provisions of the ELECTION PROCEDURES SECTION of this article and the
distribution requirements of Article VII.

SECTION 6.03      ELECTION PROCEDURES.

         The Participant, Beneficiary, or spouse shall make any election under
this section in writing. The Plan Administrator may require such individual to
complete and sign any necessary documents as to the provisions to be made. Any
election permitted under (a) and (b) below shall be subject to the qualified
election provisions of (c) below.

         (a) RETIREMENT BENEFITS. A Participant may elect his Beneficiary or
Contingent Annuitant and may elect to have retirement benefits distributed under
any of the optional forms of retirement benefit available in the OPTIONAL FORMS
OF DISTRIBUTION SECTION of this article.

         (b) DEATH BENEFITS. A Participant may elect his Beneficiary and may
elect to have death benefits distributed under any of the optional forms of
death benefit available in the OPTIONAL FORMS OF DISTRIBUTION SECTION of this
article.

         If the Participant has not elected an optional form of distribution for
the death benefit payable to his Beneficiary, the Beneficiary may, for his own
benefit, elect the form of distribution, in like manner as a Participant.

         The Participant may waive the Qualified Preretirement Survivor Annuity
by naming someone other than his spouse as Beneficiary.

         In lieu of the Qualified Preretirement Survivor Annuity described in
the AUTOMATIC FORMS OF DISTRIBUTION SECTION of this article, the spouse may, for
his own benefit, waive the Qualified Preretirement Survivor Annuity by electing
to have the benefit distributed under any of the optional forms of death benefit
available in the OPTIONAL FORMS OF DISTRIBUTION SECTION of this article.

         (c) QUALIFIED ELECTION. The Participant, Beneficiary or spouse may make
an election at any time during the election period. The Participant,
Beneficiary, or spouse may revoke the

                                       50
<PAGE>

election made (or make a new election) at any time and any number of times
during the election period. An election is effective only if it meets the
consent requirements below.

         (1)      ELECTION PERIOD FOR RETIREMENT BENEFITS. The election period
                  as to retirement benefits is the 90-day period ending on the
                  Annuity Starting Date. An election to waive the Qualified
                  Joint and Survivor Annuity may not be made before the date the
                  Participant is provided with the notice of the ability to
                  waive the Qualified Joint and Survivor Annuity. If the
                  Participant elects a full flexibility option, he may revoke
                  his election at any time before his first Distribution
                  Calendar Year, as defined in Article VII. When he elects to
                  have benefits begin again, he shall have a new Annuity
                  Starting Date. His election period for this election is the
                  90-day period ending on the Annuity Starting Date for the
                  optional form of retirement benefit elected.

         (2)      ELECTION PERIOD FOR DEATH BENEFITS. A Participant may make an
                  election as to death benefits at any time before he dies. The
                  spouse's election period begins on the date the Participant
                  dies and ends on the date benefits begin. The Beneficiary's
                  election period begins on the date the Participant dies and
                  ends on the date benefits begin.

                  An election to waive the Qualified Preretirement Survivor
                  Annuity may not be made by the Participant before the date he
                  is provided with the notice of the ability to waive the
                  Qualified Preretirement Survivor Annuity. A Participant's
                  election to waive the Qualified Preretirement Survivor Annuity
                  which is made before the first day of the Plan Year in which
                  he reaches age 35 shall become invalid on such date. An
                  election made by a Participant after he ceases to be an
                  Employee will not become invalid on the first day of the Plan
                  Year in which he reaches age 35 with respect to death benefits
                  from that part of his Account resulting from Contributions
                  made before he ceased to be an Employee.

         (3)      CONSENT TO ELECTION. If the Participant's Vested Account
                  exceeds $5,000, any benefit which is (i) immediately
                  distributable or (ii) payable in a form other than a Qualified
                  Joint and Survivor Annuity or a Qualified Preretirement
                  Survivor Annuity, requires the consent of the Participant and
                  the Participant's spouse (or where either the Participant or
                  the spouse has died, the survivor). Such consent shall also be
                  required if the Participant's Vested Account at the time of
                  any prior distribution exceeded $5,000. The rule in the
                  preceding sentence shall not apply effective October 17, 2000.
                  However, consent will still be required if the Participant had
                  previously had an Annuity Starting Date with respect to any
                  portion of such Vested Account.

                  The consent of the Participant or spouse to a benefit which is
                  immediately distributable must not be made before the date the
                  Participant or spouse is provided with the notice of the
                  ability to defer the distribution. Such consent shall be made
                  in writing.

                                       51
<PAGE>

                  The consent shall not be made more than 90 days before the
                  Annuity Starting Date. Spousal consent is not required for a
                  benefit which is immediately distributable in a Qualified
                  Joint and Survivor Annuity. Furthermore, if spousal consent is
                  not required because the Participant is electing an optional
                  form of retirement benefit that is not a life annuity pursuant
                  to (d) below, only the Participant need consent to the
                  distribution of a benefit payable in a form that is not a life
                  annuity and which is immediately distributable. Neither the
                  consent of the Participant nor the Participant's spouse shall
                  be required to the extent that a distribution is required to
                  satisfy Code Section 401(a)(9) or Code Section 415.

                  In addition, upon termination of this Plan, if the Plan does
                  not offer an annuity option (purchased from a commercial
                  provider), and if the Employer (or any entity within the same
                  Controlled Group) does not maintain another defined
                  contribution plan (other than an employee stock ownership plan
                  as defined in Code Section 4975(e)(7)), the Participant's
                  Account balance will, without the Participant's consent, be
                  distributed to the Participant. However, if any entity within
                  the same Controlled Group maintains another defined
                  contribution plan (other than an employee stock ownership plan
                  as defined in Code Section 4975(e)(7)) then the Participant's
                  Account will be transferred, without the Participant's
                  consent, to the other plan if the Participant does not consent
                  to an immediate distribution.

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

                  If the Qualified Joint and Survivor Annuity is waived, the
                  spouse has the right to limit consent only to a specific
                  Beneficiary or a specific form of benefit. The spouse can
                  relinquish one or both such rights. Such consent shall be made
                  in writing. The consent shall not be made more than 90 days
                  before the Annuity Starting Date.

                  If the Qualified Preretirement Survivor Annuity is waived, the
                  spouse has the right to limit consent only to a specific
                  Beneficiary. Such consent shall be in writing. The spouse's
                  consent shall be witnessed by a plan representative or notary
                  public. The spouse's consent must acknowledge the effect of
                  the election, including that the spouse had the right to limit
                  consent only to a specific Beneficiary or a specific form of
                  benefit, if applicable, and that the relinquishment of one or
                  both such rights was voluntary. Unless the consent of the
                  spouse expressly permits designations by the Participant
                  without a requirement of further consent by the spouse, the
                  spouse's consent must be limited to the form of benefit, if
                  applicable, and the Beneficiary (including any Contingent
                  Annuitant), class of Beneficiaries, or contingent Beneficiary
                  named in the election.

                  Spousal consent is not required, however, if the Participant
                  establishes to the satisfaction of the plan representative
                  that the consent of the spouse cannot be

                                       52
<PAGE>

                  obtained because there is no spouse or the spouse cannot be
                  located. A spouse's consent under this paragraph shall not be
                  valid with respect to any other spouse. A Participant may
                  revoke a prior election without the consent of the spouse. Any
                  new election will require a new spousal consent, unless the
                  consent of the spouse expressly permits such election by the
                  Participant without further consent by the spouse. A spouse's
                  consent may be revoked at any time within the Participant's
                  election period.

         (d) Special Rule for Profit Sharing Plans. This subparagraph (d)
applies if the Plan is not a direct or indirect transferee after December 31,
1984, of a defined benefit plan, money purchase plan, target benefit plan, stock
bonus plan, or profit sharing plan which is subject to the survivor annuity
requirements of Code Sections 401(a)(11) and 417. If the above condition is met,
spousal consent is not required for electing an optional form of retirement
benefit that is not a life annuity. If such condition is not met, such consent
requirements shall be operative.

SECTION 6.04      NOTICE REQUIREMENTS.

         (a) OPTIONAL FORMS OF RETIREMENT BENEFIT AND RIGHT TO DEFER. The Plan
Administrator shall furnish to the Participant and the Participant's spouse a
written explanation of the optional forms of retirement benefit in the OPTIONAL
FORMS OF DISTRIBUTION SECTION of this article, including the material features
and relative values of these options, in a manner that would satisfy the notice
requirements of Code Section 417(a)(3) and the right of the Participant and the
Participant's spouse to defer distribution until the benefit is no longer
immediately distributable.

         The Plan Administrator shall furnish the written explanation by a
method reasonably calculated to reach the attention of the Participant and the
Participant's spouse no less than 30 days, and no more than 90 days, before the
Annuity Starting Date.

         The Participant (and spouse, if applicable) may waive the 30-day
election period if the distribution of the elected form of retirement benefit
begins more than 7 days after the Plan Administrator provides the Participant
(and spouse, if applicable) the written explanation provided that: (i) the
Participant has been provided with information that clearly indicates that the
Participant has at least 30 days to consider the decision of whether or not to
elect a distribution and a particular distribution option, (ii) the Participant
is permitted to revoke any affirmative distribution election at least until the
Annuity Starting Date or, if later, at any time prior to the expiration of the
7-day period that begins the day after the explanation is provided to the
Participant, and (iii) the Annuity Starting Date is a date after the date that
the written explanation was provided to the Participant.

         (b) QUALIFIED JOINT AND SURVIVOR ANNUITY. The Plan Administrator shall
furnish to the Participant a written explanation of the following: the terms and
conditions of the Qualified Joint and Survivor Annuity; the Participant's right
to make, and the effect of, an election to waive the Qualified Joint and
Survivor Annuity; the rights of the Participant's spouse; and the right to
revoke an election and the effect of such a revocation.

                                       53
<PAGE>

         The Plan Administrator shall furnish the written explanation by a
method reasonably calculated to reach the attention of the Participant no less
than 30 days, and no more than 90 days, before the Annuity Starting Date.

         The Participant (and spouse, if applicable) may waive the 30-day
election period if the distribution of the elected form of retirement benefit
begins more than 7 days after the Plan Administrator provides the Participant
(and spouse, if applicable) the written explanation provided that: (i) the
Participant has been provided with information that clearly indicates that the
Participant has at least 30 days to consider whether to waive the Qualified
Joint and Survivor Annuity and elect (with spousal consent, if applicable) a
form of distribution other than a Qualified Joint and Survivor Annuity, (ii) the
Participant is permitted to revoke any affirmative distribution election at
least until the Annuity Starting Date or, if later, at any time prior to the
expiration of the 7-day period that begins the day after the explanation of the
Qualified Joint and Survivor Annuity is provided to the Participant, and (iii)
the Annuity Starting Date is a date after the date that the written explanation
was provided to the Participant.

         After the written explanation is given, a Participant or spouse may
make a written request for additional information. The written explanation must
be personally delivered or mailed (first class mail, postage prepaid) to the
Participant or spouse within 30 days from the date of the written request. The
Plan Administrator does not need to comply with more than one such request by a
Participant or spouse.

         The Plan Administrator's explanation shall be written in nontechnical
language and will explain the terms and conditions of the Qualified Joint and
Survivor Annuity and the financial effect upon the Participant's benefit (in
terms of dollars per benefit payment) of electing not to have benefits
distributed in accordance with the Qualified Joint and Survivor Annuity.

         (c) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. The Plan Administrator
shall furnish to the Participant a written explanation of the following: the
terms and conditions of the Qualified Preretirement Survivor Annuity; the
Participant's right to make, and the effect of, an election to waive the
Qualified Preretirement Survivor Annuity; the rights of the Participant's
spouse; and the right to revoke an election and the effect of such a revocation.

         The Plan Administrator shall furnish the written explanation by a
method reasonably calculated to reach the attention of the Participant within
the applicable period. The applicable period for a Participant is whichever of
the following periods ends last:

         (1)      the period beginning one year before the date the individual
                  becomes a Participant and ending one year after such date; or

         (2)      the period beginning one year before the date the
                  Participant's spouse is first entitled to a Qualified
                  Preretirement Survivor Annuity and ending one year after such
                  date.

         If such notice is given before the period beginning with the first day
of the Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the Participant attains
age 35, an additional notice shall be given within such

                                       54
<PAGE>

period. If a Participant ceases to be an Employee before attaining age 35, an
additional notice shall be given within the period beginning one year before the
date he ceases to be an Employee and ending one year after such date.

After the written explanation is given, a Participant or spouse may make a
written request for additional information. The written explanation must be
personally delivered or mailed (first class mail, postage prepaid) to the
Participant or spouse within 30 days from the date of the written request. The
Plan Administrator does not need to comply with more than one such request by a
Participant or spouse.

The Plan Administrator's explanation shall be written in nontechnical language
and will explain the terms and conditions of the Qualified Preretirement
Survivor Annuity and the financial effect upon the spouse's benefit (in terms of
dollars per benefit payment) of electing not to have benefits distributed in
accordance with the Qualified Preretirement Survivor Annuity.

                                  ARTICLE VII

                            DISTRIBUTION REQUIREMENTS

SECTION 7.01      APPLICATION.

         The optional forms of distribution are only those provided in Article
VI. An optional form of distribution shall not be permitted unless it meets the
requirements of this article. The timing of any distribution must meet the
requirements of this article.

SECTION 7.02      DEFINITIONS.

         For purposes of this article, the following terms are defined:

APPLICABLE LIFE EXPECTANCY means Life Expectancy (or Joint and Last Survivor
Expectancy) calculated using the attained age of the Participant (or Designated
Beneficiary) as of the Participant's (or Designated Beneficiary's) birthday in
the applicable calendar year reduced by one for each calendar year which has
elapsed since the date Life Expectancy was first calculated. If Life Expectancy
is being recalculated, the Applicable Life Expectancy shall be the Life
Expectancy so recalculated. The applicable calendar year shall be the first
Distribution Calendar Year, and if Life Expectancy is being recalculated, such
succeeding calendar year.

DESIGNATED BENEFICIARY means the individual who is designated as the beneficiary
under the Plan in accordance with Code Section 401(a)(9) and the regulations
thereunder.

DISTRIBUTION CALENDAR YEAR means a calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first Distribution Calendar Year is the calendar year immediately
preceding the calendar year which contains the Participant's Required Beginning
Date. For distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which distributions are
required to begin pursuant to (e) of the DISTRIBUTION REQUIREMENTS SECTION of
this article.

                                       55
<PAGE>

5-PERCENT OWNER means a 5-percent owner as defined in Code Section 416. A
Participant is treated as a 5-percent Owner for purposes of this article if such
Participant is a 5-percent Owner at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 70 1/2.

In addition, a Participant is treated as a 5-percent Owner for purposes of this
article if such Participant becomes a 5-percent Owner in a later Plan Year. Such
Participant's Required Beginning Date shall not be later than the April 1 of the
calendar year following the calendar year in which such later Plan Year ends.

Once distributions have begun to a 5-percent Owner under this article, they must
continue to be distributed, even if the Participant ceases to be a 5-percent
Owner in a subsequent year.

JOINT AND LAST SURVIVOR EXPECTANCY means joint and last survivor expectancy
computed using the expected return multiples in Table VI of section 1.72-9 of
the Income Tax Regulations.

Unless otherwise elected by the Participant by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant and shall apply to all
subsequent years. The life expectancy of a nonspouse Beneficiary may not be
recalculated.

LIFE EXPECTANCY means life expectancy computed using the expected return
multiples in Table V of section 1.72-9 of the Income Tax Regulations.

Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in (e)(2)(ii) of the DISTRIBUTION REQUIREMENTS SECTION
of this article) by the time distributions are required to begin, life
expectancy shall be recalculated annually. Such election shall be irrevocable as
to the Participant (or spouse) and shall apply to all subsequent years. The life
expectancy of a nonspouse Beneficiary may not be recalculated.

PARTICIPANT'S BENEFIT means:

         (a) The Account balance as of the last Valuation Date in the calendar
year immediately preceding the Distribution Calendar Year (valuation calendar
year) increased by the amount of any contributions or forfeitures allocated to
the Account balance as of the dates in the valuation calendar year after the
Valuation Date and decreased by distributions made in the valuation calendar
year after the Valuation Date.

         (b) EXCEPTION FOR SECOND DISTRIBUTION CALENDAR YEAR. For purposes of
(a) above, if any portion of the minimum distribution for the first Distribution
Calendar Year is made in the second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second Distribution Calendar Year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.

         REQUIRED BEGINNING DATE means, for a Participant who is a 5-percent
Owner, the April 1 of the calendar year following the calendar year in which he
attains age 70 1/2.

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<PAGE>

         REQUIRED BEGINNING DATE means, for any Participant who is not a
5-percent Owner, the April 1 of the calendar year following the later of the
calendar year in which he attains age 70 1/2 or the calendar year in which he
retires.

         The preretirement age 70 1/2 distribution option is only eliminated
with respect to Participants who reach age 70 1/2 in or after a calendar year
that begins after the later of December 31, 1998, or the adoption date of the
amendment which eliminated such option. The preretirement age 70 1/2
distribution is an optional form of benefit under which benefits payable in a
particular distribution form (including any modifications that may be elected
after benefits begin) begin at a time during the period that begins on or after
January 1 of the calendar year in which the Participant attains age 70 1/2 and
ends April 1 of the immediately following calendar year.

         The options available for Participants who are not 5-percent Owners and
attained age 70 1/2 in calendar years before the calendar year that begins after
the later of December 31, 1998, or the adoption date of the amendment which
eliminated the preretirement age 70 1/2 distribution shall be the following. Any
such Participant attaining age 70 1/2 in years after 1995 may elect by April 1
of the calendar year following the calendar year in which he attained age 70 1/2
(or by December 31, 1997 in the case of a Participant attaining age 70 1/2 in
1996) to defer distributions until the calendar year following the calendar year
in which he retires. Any such Participant attaining age 70 1/2 in years prior to
1997 may elect to stop distributions which are not purchased annuities and
recommence by the April 1 of the calendar year following the year in which he
retires. There shall be a new Annuity Starting Date upon recommencement.

SECTION 7.03      DISTRIBUTION REQUIREMENTS.

         (a)      GENERAL RULES.

         (1)      Subject to the AUTOMATIC FORMS OF DISTRIBUTION SECTION of
                  Article VI, joint and survivor annuity requirements, the
                  requirements of this article shall apply to any distribution
                  of a Participant's interest and shall take precedence over any
                  inconsistent provisions of this Plan. Unless otherwise
                  specified, the provisions of this article apply to calendar
                  years beginning after December 31, 1984.

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

         (3)      With respect to distributions under the Plan made for calendar
                  years beginning on or after January 1, 2001, the Plan will
                  apply the minimum distribution requirements of Code Section
                  401(a)(9) in accordance with the regulations under Code
                  Section 401(a)(9) that were proposed on January 17, 2001,
                  notwithstanding any provision of the Plan to the contrary.
                  These provisions shall continue in effect until the end of the
                  last calendar year beginning before the effective date of

                                       57
<PAGE>

                  final regulations under Code Section 401(a)(9) or such other
                  date as may be specified in guidance published by the Internal
                  Revenue Service.

         (b)      REQUIRED BEGINNING DATE.  The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
Required Beginning Date.

         (c)      LIMITS ON DISTRIBUTION PERIODS.  As of the first Distribution
Calendar Year, distributions, if not made in a single sum, may only be made over
one of the following periods (or combination thereof):

         (1)      the life of the Participant,

         (2)      the life of the Participant and a Designated Beneficiary,

         (3)      a period certain not extending beyond the Life Expectancy of
                  the Participant, or

         (4)      a period certain not extending beyond the Joint and Last
                  Survivor Expectancy of the Participant and a Designated
                  Beneficiary.

         (d)      DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR. If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the Required
Beginning Date:

         (1)      Individual Account.

                  (i)      If a Participant's Benefit is to be distributed over

                           A.       a period not extending beyond the Life
                                    Expectancy of the Participant or the Joint
                                    Life and Last Survivor Expectancy of the
                                    Participant and the Participant's Designated
                                    Beneficiary, or

                           B.       a period not extending beyond the Life
                                    Expectancy of the Designated Beneficiary,

                           the amount required to be distributed for each
                           calendar year beginning with the distributions for
                           the first Distribution Calendar Year, must be at
                           least equal to the quotient obtained by dividing the
                           Participant's Benefit by the Applicable Life
                           Expectancy.

                  (ii)     For calendar years beginning before January 1, 1989,
                           if the Participant's spouse is not the Designated
                           Beneficiary, the method of distribution selected must
                           assure that at least 50 percent of the present value
                           of the amount available for distribution is paid
                           within the Life Expectancy of the Participant.

                  (iii)    For calendar years beginning after December 31, 1988,
                           the amount to be distributed each year, beginning
                           with distributions for the first Distribution

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<PAGE>

                           Calendar Year shall not be less than the quotient
                           obtained by dividing the Participant's Benefit by the
                           lesser of:

                           A.       the Applicable Life Expectancy, or

                           B.       if the Participant's spouse is not the
                                    Designated Beneficiary, the applicable
                                    divisor determined from the table set forth
                                    in Q&A-4 of section 1.401 (a)(9)-2 of the
                                    proposed regulations.

                           Distributions after the death of the Participant
                           shall be distributed using the Applicable Life
                           Expectancy in (1)(i) above as the relevant divisor
                           without regard to section 1.401 (a)(9)-2 of the
                           proposed regulations.

                  (iv)     The minimum distribution required for the
                           Participant's first Distribution Calendar Year must
                           be made on or before the Participant's Required
                           Beginning Date. The minimum distribution for other
                           calendar years, including the minimum distribution
                           for the Distribution Calendar Year in which the
                           Participant's Required Beginning Date occurs, must be
                           made on or before December 31 of that Distribution
                           Calendar Year.

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

         (e)      Death Distribution Provisions.

         (1)      DISTRIBUTION BEGINNING BEFORE DEATH. If the Participant dies
                  after distribution of his interest has begun, the remaining
                  portion of such interest will continue to be distributed at
                  least as rapidly as under the method of distribution being
                  used prior to the Participant's death.

         (2)      DISTRIBUTION BEGINNING AFTER DEATH.

                  (i)      If the Participant dies before distribution of his
                           interest begins, distribution of the Participant's
                           entire interest shall be completed by December 31 of
                           the calendar year containing the fifth anniversary of
                           the Participant's death except to the extent that an
                           election is made to receive distributions in
                           accordance with A or B below:

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

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<PAGE>

                           B.       if the Designated Beneficiary is the
                                    Participant's surviving spouse, the date
                                    distributions are required to begin in
                                    accordance with A above shall not be earlier
                                    than the later of:

         1.       December 31 of the calendar year immediately following the
                  calendar year in which the Participant died, or

         2.       December 31 of the calendar year in which the Participant
                  would have attained age 70 1/2.

                           (ii)     If the Participant has not made an election
                                    pursuant to this (e)(2) by the time of his
                                    death, the Participant's Designated
                                    Beneficiary must elect the method of
                                    distribution no later than the earlier of:

                           A.       December 31 of the calendar year in which
                                    distributions would be required to begin
                                    under this subparagraph, or

                           B.       December 31 of the calendar year which
                                    contains the fifth anniversary of the date
                                    of death of the Participant.

                           (iii)    If the Participant has no Designated
                                    Beneficiary, or if the Designated
                                    Beneficiary does not elect a method of
                                    distribution, distribution of the
                                    Participant's entire interest must be
                                    completed by December 31 of the calendar
                                    year containing the fifth anniversary of the
                                    Participant's death.

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

         (4)      For purposes of this (e), distribution of a Participant's
                  interest is considered to begin on the Participant's Required
                  Beginning Date (or if (e)(3) above is applicable, the date
                  distribution is required to begin to the surviving spouse
                  pursuant to (e)(2) above). If distribution in the form of an
                  annuity irrevocably begins to the Participant before the
                  Required Beginning Date, the date distribution is considered
                  to begin is the date distribution actually begins.

                                  ARTICLE VIII

                             TERMINATION OF THE PLAN

         The Employer expects to continue the Plan indefinitely but reserves the
right to terminate the Plan in whole or in part at any time upon giving written
notice to all parties concerned. Complete discontinuance of Contributions
constitutes complete termination of the Plan.

         The Account of each Participant shall be fully (100%) vested and
nonforfeitable as of the effective date of complete termination of the Plan. The
Account of each Participant who is

                                       60
<PAGE>

included in the group of Participants deemed to be affected by the partial
termination of the Plan shall be fully (100%) vested and nonforfeitable as of
the effective date of the partial termination of the Plan. The Participant's
Account shall continue to participate in the earnings credited, expenses
charged, and any appreciation or depreciation of the Investment Fund until his
Vested Account is distributed.

         A Participant's Account which does not result from the Contributions
listed below may be distributed to the Participant after the effective date of
the complete termination of the Plan:

         Elective Deferral Contributions

         A Participant's Account resulting from such Contributions may be
distributed upon complete termination of the Plan, but only if neither the
Employer nor any Controlled Group member maintain or establish a successor
defined contribution plan (other than an employer stock ownership plan as
defined in Code Section 4975(e)(7), a simplified employee pension plan as
defined in Code Section 408(k) or a SIMPLE IRA plan as defined in Code Section
408(p)) and such distribution is made in a lump sum. A distribution under this
article shall be a retirement benefit and shall be distributed to the
Participant according to the provisions of Article VI.

         The Participant's entire Vested Account shall be paid in a single sum
to the Participant as of the effective date of complete termination of the Plan
if (i) the requirements for distribution of Elective Deferral Contributions in
the above paragraph are met and (ii) consent of the Participant is not required
in the ELECTION PROCEDURES SECTION of Article VI to distribute a benefit which
is immediately distributable. This is a small amounts payment. The small amounts
payment is in full settlement of all benefits otherwise payable.

         Upon complete termination of the Plan, no more Employees shall become
Participants and no more Contributions shall be made.

         The assets of this Plan shall not be paid to the Employer at any time,
except that, after the satisfaction of all liabilities under the Plan, any
assets remaining may be paid to the Employer. The payment may not be made if it
would contravene any provision of law.

                                   ARTICLE IX

                           ADMINISTRATION OF THE PLAN

SECTION 9.01      ADMINISTRATION.

         Subject to the provisions of this article, the Plan Administrator has
complete control of the administration of the Plan. The Plan Administrator has
all the powers necessary for it to properly carry out its administrative duties.
Not in limitation, but in amplification of the foregoing, the Plan Administrator
has complete discretion to construe or interpret the provisions of the Plan,
including ambiguous provisions, if any, and to determine all questions that may
arise under the Plan, including all questions relating to the eligibility of
Employees to participate in the Plan and the amount of benefit to which any
Participant, Beneficiary, spouse or Contingent

                                       61
<PAGE>

Annuitant may become entitled. The Plan Administrator's decisions upon all
matters within the scope of its authority shall be final.

         Unless otherwise set out in the Plan or Annuity Contract, the Plan
Administrator may delegate recordkeeping and other duties which are necessary
for the administration of the Plan to any person or firm which agrees to accept
such duties. The Plan Administrator shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the consultant or actuary
appointed by the Plan Administrator and upon all opinions given by any counsel
selected or approved by the Plan Administrator.

         The Plan Administrator shall receive all claims for benefits by
Participants, former Participants, Beneficiaries, spouses, and Contingent
Annuitants. The Plan Administrator shall determine all facts necessary to
establish the right of any Claimant to benefits and the amount of those benefits
under the provisions of the Plan. The Plan Administrator may establish rules and
procedures to be followed by Claimants in filing claims for benefits, in
furnishing and verifying proofs necessary to determine age, and in any other
matters required to administer the Plan.

SECTION 9.02      EXPENSES.

         Expenses of the Plan, to the extent that the Employer does not pay such
expenses, may be paid out of the assets of the Plan provided that such payment
is consistent with ERISA. Such expenses include, but are not limited to,
expenses for bonding required by ERISA; expenses for recordkeeping and other
administrative services; fees and expenses of the Trustee or Annuity Contract;
expenses for investment education service; and direct costs that the Employer
incurs with respect to the Plan.

SECTION 9.03      RECORDS.

         All acts and determinations of the Plan Administrator shall be duly
recorded. All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator's
custody.

         Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording, or other
forms of data compilation shall be acceptable means of keeping records.

SECTION 9.04      INFORMATION AVAILABLE.

         Any Participant in the Plan or any Beneficiary may examine copies of
the Plan description, latest annual report, any bargaining agreement, this Plan,
the Annuity Contract or any other instrument under which the Plan was
established or is operated. The Plan Administrator shall maintain all of the
items listed in this section in its office, or in such other place or places as
it may designate in order to comply with governmental regulations. These items
may be examined during reasonable business hours. Upon the written request of a
Participant or Beneficiary receiving benefits under the Plan, the Plan
Administrator shall furnish him with a copy of any of these items. The Plan
Administrator may make a reasonable charge to the requesting person for the
copy.

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<PAGE>

SECTION 9.05      CLAIM AND APPEAL PROCEDURES.

         A Claimant must submit any required forms and pertinent information
when making a claim for benefits under the Plan.

         If a claim for benefits under the Plan is denied, the Plan
Administrator shall provide adequate written notice to the Claimant whose claim
for benefits under the Plan has been denied. The notice must be furnished within
90 days of the date that the claim is received by the Plan Administrator. The
Claimant shall be notified in writing within this initial 90-day period if
special circumstances require an extension of time needed to process the claim
and the date by which the Plan Administrator's decision is expected to be
rendered. The written notice shall be furnished no later than 180 days after the
date the claim was received by the Plan Administrator.

         The Plan Administrator's notice to the Claimant shall specify the
reason for the denial; specify references to pertinent Plan provisions on which
denial is based; describe any additional material and information needed for the
Claimant to perfect his claim for benefits; explain why the material and
information is needed; inform the Claimant that any appeal he wishes to make
must be in writing to the Plan Administrator within 60 days after receipt of the
Plan Administrator's notice of denial of benefits and that failure to make the
written appeal within such 60-day period renders the Plan Administrator's
determination of such denial final, binding and conclusive.

         If the Claimant appeals to the Plan Administrator, the Claimant (or his
authorized representative) may submit in writing whatever issues and comments
the Claimant (or his authorized representative) feels are pertinent. The
Claimant (or his authorized representative) may review pertinent Plan documents.
The Plan Administrator shall reexamine all facts related to the appeal and make
a final determination as to whether the denial of benefits is justified under
the circumstances. The Plan Administrator shall advise the Claimant of its
decision within 60 days of his written request for review, unless special
circumstances (such as a hearing) would make rendering a decision within the
60-day limit unfeasible. The Claimant must be notified within the 60-day limit
if an extension is necessary. The Plan Administrator shall render a decision on
a claim for benefits no later than 120 days after the request for review is
received.

SECTION 9.06      DELEGATION OF AUTHORITY.

         All or any part of the administrative duties and responsibilities under
this article may be delegated by the Plan Administrator to a retirement
committee. The duties and responsibilities of the retirement committee shall be
set out in a separate written agreement.

SECTION 9.07      EXERCISE OF DISCRETIONARY AUTHORITY.

         The Employer, Plan Administrator, and any other person or entity who
has authority with respect to the management, administration, or investment of
the Plan may exercise that authority in its/his full discretion, subject only to
the duties imposed under ERISA. This discretionary authority includes, but is
not limited to, the authority to make any and all factual determinations and
interpret all terms and provisions of the Plan documents relevant to the issue
under consideration. The exercise of authority will be binding upon all persons;
will be given

                                       63
<PAGE>

deference in all courts of law; and will not be overturned or set aside by any
court of law unless found to be arbitrary and capricious or made in bad faith.

SECTION 9.08      VOTING AND TENDER OF QUALIFYING EMPLOYER SECURITIES.

         Voting rights with respect to Qualifying Employer Securities will be
passed through to Participants. Participants will be allowed to direct the
voting rights of Qualifying Employer Securities for any matter put to the vote
of shareholders. Before each meeting of shareholders, the Employer shall cause
to be sent to each person with power to control such voting rights a copy of any
notice and any other information provided to shareholders and, if applicable, a
form for instructing the Trustee how to vote at such meeting (or any adjournment
thereof) the number of full and fractional shares subject to such person's
voting control. The Trustee may establish a deadline in advance of the meeting
by which such forms must be received in order to be effective.

         Each Participant shall be entitled to one vote for each share credited
to his Account.

         If some or all of the Participants have not directed or have not timely
directed the Trustee on how to vote, then the Trustee shall vote such Qualifying
Employer Securities in the same proportion as those shares of Qualifying
Employer Securities for which the Trustee has received proper direction for such
matter.

         Tender rights or exchange offers for Qualifying Employer Securities
will be passed through to Participants. As soon as practicable after the
commencement of a tender or exchange offer for Qualifying Employer Securities,
the Employer shall cause each person with power to control the response to such
tender or exchange offer to be advised in writing the terms of the offer and, if
applicable, to be provided with a form for instructing the Trustee, or for
revoking such instruction, to tender or exchange shares of Qualifying Employer
Securities, to the extent permitted under the terms of such offer. In advising
such persons of the terms of the offer, the Employer may include statements from
the board of directors setting forth its position with respect to the offer.

         If some or all of the Participants have not directed or have not timely
directed the Trustee on how to tender, then the Trustee shall tender such
Qualifying Employer Securities in the same proportion as those shares of
Qualifying Employer Securities for which the Trustee has received proper
direction for such matter.

         If the tender or exchange offer is limited so that all of the shares
that the Trustee has been directed to tender or exchange cannot be sold or
exchanged, the shares that each Participant directed to be tendered or exchanged
shall be deemed to have been sold or exchanged in the same ratio that the number
of shares actually sold or exchanged bears to the total number of shares that
the Trustee was directed to tender or exchange.

         The Trustee shall hold the Participant's individual directions with
respect to voting rights or tender decisions in confidence and, except as
required by law, shall not divulge or release such individual directions to
anyone associated with the Employer. The Employer may require verification of
the Trustee's compliance with the directions received from Participants by any

                                       64
<PAGE>

independent auditor selected by the Employer, provided that such auditor agrees
to maintain the confidentiality of such individual directions.

         The Employer may develop procedures to facilitate the exercise of votes
or tender rights, such as the use of facsimile transmissions for the
Participants located in physically remote areas.

                                   ARTICLE X

                               GENERAL PROVISIONS

SECTION 10.01     AMENDMENTS.

         The Employer may amend this Plan at any time, including any remedial
retroactive changes (within the time specified by Internal Revenue Service
regulations), to comply with any law or regulation issued by any governmental
agency to which the Plan is subject.

         An amendment may not diminish or adversely affect any accrued interest
or benefit of Participants or their Beneficiaries nor allow reversion or
diversion of Plan assets to the Employer at any time, except as may be required
to comply with any law or regulation issued by any governmental agency to which
the Plan is subject.

         No amendment to this Plan shall be effective to the extent that it has
the effect of decreasing a Participant's accrued benefit. However, a
Participant's Account may be reduced to the extent permitted under Code Section
41 2(c)(8). For purposes of this paragraph, a Plan amendment which has the
effect of decreasing a Participant's Account with respect to benefits
attributable to service before the amendment shall be treated as reducing an
accrued benefit. Furthermore, if the vesting schedule of the Plan is amended, in
the case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's right to his
employer-derived accrued benefit shall not be less than his percentage computed
under the Plan without regard to such amendment.

         No amendment to the Plan shall be effective to eliminate or restrict an
optional form of benefit with respect to benefits attributable to service before
the amendment except as provided in the MERGERS AND DIRECT TRANSFERS SECTION of
this article and below:

         (a) The Plan is amended to eliminate or restrict the ability of a
Participant to receive payment of his Account balance under a particular
optional form of benefit and the amendment satisfies the condition in (1) and
the Plan satisfies the condition in (2) below:

         (1)      The amendment provides a single sum distribution form that is
                  otherwise identical to the optional form of benefit eliminated
                  or restricted. For purposes of this condition (1), a single
                  sum distribution form is otherwise identical only if it is
                  identical in all respects to the eliminated or restricted
                  optional form of benefit (or would be identical except that it
                  provides greater rights to the Participant) except with
                  respect to the timing of payments after commencement.

                                       65
<PAGE>

         (2)      The Plan provides that the amendment shall not apply to any
                  distribution with an Annuity Starting Date earlier than the
                  earlier of:

                  (i)      the 90th day after the date the Participant receiving
                           the distribution has been furnished a summary that
                           reflects the amendment and that satisfies the ERISA
                           requirements at 29 CFR 2520.104b-3 relating to a
                           summary of material modifications, or

                  (ii)     the first day of the second Plan Year following the
                           Plan Year in which the amendment is adopted.

         (b) The Plan is amended to eliminate or restrict in-kind distributions
and the conditions in Q&A 2(b)(2)(iii) in section 1.411(d)-4 of the regulations
are met.

         If, as a result of an amendment, an Employer Contribution is removed
that is not 100% immediately vested when made, the applicable vesting schedule
shall remain in effect after the date of such amendment. The Participant shall
not become immediately 100% vested in such Contributions as a result of the
elimination of such Contribution except as otherwise specifically provided in
the Plan.

         An amendment shall not decrease a Participant's vested interest in the
Plan. If an amendment to the Plan, or a deemed amendment in the case of a change
in top-heavy status of the Plan as provided in the MODIFICATION OF VESTING
REQUIREMENTS SECTION of Article XI, changes the computation of the percentage
used to determine that portion of a Participant's Account attributable to
Employer Contributions which is nonforfeitable (whether directly or indirectly),
each Participant or former Participant

         (c) who has completed at least three Years of Service on the date the
election period described below ends (five Years of Service if the Participant
does not have at least one Hour-of-Service in a Plan Year beginning after
December 31, 1988) and

         (d) whose nonforfeitable percentage will be determined on any date
after the date of the change may elect, during the election period, to have the
nonforfeitable percentage of his Account that results from Employer
Contributions determined without regard to the amendment. This election may not
be revoked. If after the Plan is changed, the Participant's nonforfeitable
percentage will at all times be as great as it would have been if the change had
not been made, no election needs to be provided. The election period shall begin
no later than the date the Plan amendment is adopted, or deemed adopted in the
case of a change in the top-heavy status of the Plan, and end no earlier than
the 60th day after the latest of the date the amendment is adopted (deemed
adopted) or becomes effective, or the date the Participant is issued written
notice of the amendment (deemed amendment) by the Employer or the Plan
Administrator.

SECTION 10.02     DIRECT ROLLOVERS.

         Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this section, a Distributee may
elect, at the time and in the manner prescribed by the Plan Administrator, to
have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover.

                                       66
<PAGE>

         Any distributions made under the SMALL AMOUNTS SECTION of this article
(or which are small amounts payments made under Article VIII at complete
termination of the Plan) which are Eligible Rollover Distributions and for which
the Distributee has not elected to either have such distribution paid to him or
to an Eligible Retirement Plan shall be paid to the Distributee.

SECTION 10.03     MERGERS AND DIRECT TRANSFERS.

         The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Participant
in the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit the Participant would have been entitled to receive immediately
before the merger, consolidation, or transfer (if this Plan had then
terminated). The Employer may enter into merger agreements or direct transfer of
assets agreements with the employers under other retirement plans which are
qualifiable under Code Section 401(a), including an elective transfer, and may
accept the direct transfer of plan assets, or may transfer plan assets, as a
party to any such agreement. The Employer shall not consent to, or be a party to
a merger, consolidation, or transfer of assets with a defined benefit plan if
such action would result in a defined benefit feature being maintained under
this Plan.

         Notwithstanding any provision of the Plan to the contrary, to the
extent any optional form of benefit under the Plan permits a distribution prior
to the Employee's retirement, death, disability, or severance from employment,
and prior to plan termination, the optional form of benefit is not available
with respect to benefits attributable to assets (including the post-transfer
earnings thereon) and liabilities that are transferred, within the meaning of
Code Section 414(l), to this Plan from a money purchase pension plan qualified
under Code Section 401 (a) (other than any portion of those assets and
liabilities attributable to voluntary employee contributions).

         The Plan may accept a direct transfer of plan assets on behalf of an
Eligible Employee. If the Eligible Employee is not an Active Participant when
the transfer is made, the Eligible Employee shall be deemed to be an Active
Participant only for the purpose of investment and distribution of the
transferred assets. Employer Contributions shall not be made for or allocated to
the Eligible Employee, until the time he meets all of the requirements to become
an Active Participant.

         The Plan shall hold, administer, and distribute the transferred assets
as a part of the Plan. The Plan shall maintain a separate account for the
benefit of the Employee on whose behalf the Plan accepted the transfer in order
to reflect the value of the transferred assets.

         Unless a transfer of assets to the Plan is an elective transfer as
described below, the Plan shall apply the optional forms of benefit protections
described in the AMENDMENTS SECTION of this article to all transferred assets.

         A Participant's protected benefits may be eliminated upon transfer
between qualified defined contribution plans if the conditions in Q&A 3(b)(1) in
section 1.411(d)-4 of the regulations are met. The transfer must meet all of the
other applicable qualification requirements.

                                       67
<PAGE>

         A Participant's protected benefits may be eliminated upon transfer
between qualified plans (both defined benefit and defined contribution) if the
conditions in Q&A 3(c)(1) in section 1.41 1(d)-4 of the regulations are met.
Beginning January 1, 2002, if the Participant is eligible to receive an
immediate distribution of his entire nonforfeitable accrued benefit in a single
sum distribution that would consist entirely of an eligible rollover
distribution under Code Section 401(a)(31), such transfer will be accomplished
as a direct rollover under Code Section 401 (a)(31). The rules applicable to
distributions under the plan would apply to the transfer, but the transfer would
not be treated as a distribution for purposes of the minimum distribution
requirements of Code Section 401 (a)(9).

SECTION 10.04     PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.

         The obligations of an Insurer shall be governed solely by the
provisions of the Annuity Contract. The Insurer shall not be required to perform
any act not provided in or contrary to the provisions of the Annuity Contract.
Each Annuity Contract when purchased shall comply with the Plan. See the
CONSTRUCTION SECTION of this article.

         Any issuer or distributor of investment contracts or securities is
governed solely by the terms of its policies, written investment contract,
prospectuses, security instruments, and any other written agreements entered
into with the Trustee with regard to such investment contracts or securities.

         Such Insurer, issuer or distributor is not a party to the Plan, nor
bound in any way by the Plan provisions. Such parties shall not be required to
look to the terms of this Plan, nor to determine whether the Employer, the Plan
Administrator, the Trustee, or the Named Fiduciary have the authority to act in
any particular manner or to make any contract or agreement.

         Until notice of any amendment or termination of this Plan or a change
in Trustee has been received by the Insurer at its home office or an issuer or
distributor at their principal address, they are and shall be fully protected in
assuming that the Plan has not been amended or terminated and in dealing with
any party acting as Trustee according to the latest information which they have
received at their home office or principal address.

SECTION 10.05     EMPLOYMENT STATUS.

         Nothing contained in this Plan gives an Employee the right to be
retained in the Employer's employ or to interfere with the Employer's right to
discharge any Employee.

SECTION 10.06     RIGHTS TO PLAN ASSETS.

         An Employee shall not have any right to or interest in any assets of
the Plan upon termination of employment or otherwise except as specifically
provided under this Plan, and then only to the extent of the benefits payable to
such Employee according to the Plan provisions.

         Any final payment or distribution to a Participant or his legal
representative or to any Beneficiaries, spouse or Contingent Annuitant of such
Participant under the Plan provisions shall

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<PAGE>

be in full satisfaction of all claims against the Plan, the Named Fiduciary, the
Plan Administrator, the Insurer, the Trustee, and the Employer arising under or
by virtue of the Plan.

SECTION 10.07     BENEFICIARY.

         Each Participant may name a Beneficiary to receive any death benefit
(other than any income payable to a Contingent Annuitant) that may arise out of
his participation in the Plan. The Participant may change his Beneficiary from
time to time. Unless a qualified election has been made, for purposes of
distributing any death benefits before the Participant's Retirement Date, the
Beneficiary of a Participant who has a spouse who is entitled to a Qualified
Preretirement Survivor Annuity shall be the Participant's spouse. The
Participant's Beneficiary designation and any change of Beneficiary shall be
subject to the provisions of the ELECTION PROCEDURES SECTION of Article VI. It
is the responsibility of the Participant to give written notice to the Insurer
of the name of the Beneficiary on a form furnished for that purpose.

         With the Employer's consent, the Plan Administrator may maintain
records of Beneficiary designations for Participants before their Retirement
Dates. In that event, the written designations made by Participants shall be
filed with the Plan Administrator. If a Participant dies before his Retirement
Date, the Plan Administrator shall certify to the Insurer the Beneficiary
designation on its records for the Participant.

         If there is no Beneficiary named or surviving when a Participant dies,
the Participant's Beneficiary shall be the Participant's surviving spouse, or
where there is no surviving spouse, the executor or administrator of the
Participant's estate.

SECTION 10.08     NONALIENATION OF BENEFITS.

         Benefits payable under the Plan are not subject to the claims of any
creditor of any Participant, Beneficiary, spouse or Contingent Annuitant. A
Participant, Beneficiary, spouse or Contingent Annuitant does not have any
rights to alienate, anticipate, commute, pledge, encumber, or assign any of such
benefits, except in the case of a loan as provided in the LOANS TO PARTICIPANTS
SECTION of Article V. The preceding sentences shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with respect to a
Participant according to a domestic relations order, unless such order is
determined by the Plan Administrator to be a qualified domestic relations order,
as defined in Code Section 414(p), or any domestic relations order entered
before January 1, 1985. The preceding sentences shall not apply to any offset of
a Participant's benefits provided under the Plan against an amount the
Participant is required to pay the Plan with respect to a judgment, order, or
decree issued, or a settlement entered into, on or after August 5, 1997, which
meets the requirements of Code Sections 401(a)(13)(C) or (D).

SECTION 10.09     CONSTRUCTION.

         The validity of the Plan or any of its provisions is determined under
and construed according to Federal law and, to the extent permissible, according
to the laws of the state in which the Employer has its principal office. In case
any provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan,

                                       69
<PAGE>

and the Plan shall be construed and enforced as if the illegal or invalid
provision had never been included.

         In the event of any conflict between the provisions of the Plan and the
terms of any Annuity Contract issued hereunder, the provisions of the Plan
control.

SECTION 10.10     LEGAL ACTIONS.

         No person employed by the Employer, no Participant, former Participant,
or their Beneficiaries, or any other person having or claiming to have an
interest in the Plan is entitled to any notice of process. A final judgment
entered in any such action or proceeding shall be binding and conclusive on all
persons having or claiming to have an interest in the Plan.

SECTION 10.11     SMALL AMOUNTS.

         If consent of the Participant is not required for a benefit which is
immediately distributable in the ELECTION PROCEDURES SECTION of Article VI, a
Participant's entire Vested Account shall be paid in a single sum as of the
earliest of his Retirement Date, the date he dies, or the date he ceases to be
an Employee for any other reason. For purposes of this section, if the
Participant's Vested Account is zero, the Participant shall be deemed to have
received a distribution of such Vested Account. If a Participant would have
received a distribution under the first sentence of this paragraph but for the
fact that the Participant's consent was needed to distribute a benefit which is
immediately distributable, and if at a later time consent would not be needed to
distribute a benefit which is immediately distributable and such Participant has
not again become an Employee, such Vested Account shall be paid in a single sum.
This is a small amounts payment.

         If a small amounts payment is made as of the date the Participant dies,
the small amounts payment shall be made to the Participant's Beneficiary (spouse
if the death benefit is payable to the spouse). If a small amounts payment is
made while the Participant is living, the small amounts payment shall be made to
the Participant. The small amounts payment is in full settlement of benefits
otherwise payable.

         No other small amounts payments shall be made.

SECTION 10.12     WORD USAGE.

         The masculine gender, where used in this Plan, shall include the
feminine gender and the singular words, as used in this Plan, may include the
plural, unless the context indicates otherwise.

         The words in writing and written, where used in this Plan, shall
include any other forms, such as voice response or other electronic system, as
permitted by any governmental agency to which the Plan is subject.

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<PAGE>

SECTION 10.13     CHANGE IN SERVICE METHOD.

         (a) Change of Service Method Under This Plan. If this Plan is amended
to change the method of crediting service from the elapsed time method to the
hours method for any purpose under this Plan, the Employee's service shall be
equal to the sum of (1), (2), and (3) below:

         (1)      The number of whole years of service credited to the Employee
                  under the Plan as of the date the change is effective.

         (2)      One year of service for the applicable computation period in
                  which the change is effective if he is credited with the
                  required number of Hours-of-Service. If the Employer does not
                  have sufficient records to determine the Employee's actual
                  Hours-of-Service in that part of the service period before the
                  effective date of the change, the Hours-of-Service shall be
                  determined using an equivalency. For any month in which he
                  would be required to be credited with one Hour-of-Service, the
                  Employee shall be deemed for purposes of this section to be
                  credited with 190 Hours-of-Service.

         (3)      The Employee's service determined under this Plan using the
                  hours method after the end of the computation period in which
                  the change in service method was effective.

         If this Plan is amended to change the method of crediting service from
         the hours method to the elapsed time method for any purpose under this
         Plan, the Employee's service shall be equal to the sum of (4), (5), and
         (6) below:

         (4)      The number of whole years of service credited to the Employee
                  under the Plan as of the beginning of the computation period
                  in which the change in service method is effective.

         (5)      the greater of (i) the service that would be credited to the
                  Employee for that entire computation period using the elapsed
                  time method or (ii) the service credited to him under the Plan
                  as of the date the change is effective.

         (6)      The Employee's service determined under this Plan using the
                  elapsed time method after the end of the applicable
                  computation period in which the change in service method was
                  effective.

         (b) Transfers Between Plans with Different Service Methods. If an
Employee has been a participant in another plan of the Employer which credited
service under the elapsed time method for any purpose which under this Plan is
determined using the hours method, then the Employee's service shall be equal to
the sum of (1), (2), and (3) below:

         (1)      The number of whole years of service credited to the Employee
                  under the plan as of the date he became an Eligible Employee
                  under this Plan.

         (2)      One year of service for the applicable computation period in
                  which he became an Eligible Employee if he is credited with
                  the required number of Hours-of-Service. If the Employer does
                  not have sufficient records to determine the Employee's

                                       71
<PAGE>

                  actual Hours-of-Service in that part of the service period
                  before the date he became an Eligible Employee, the
                  Hours-of-Service shall be determined using an equivalency. For
                  any month in which he would be required to be credited with
                  one Hour-of-Service, the Employee shall be deemed for purposes
                  of this section to be credited with 190 Hours-of-Service.

         (3)      The Employee's service determined under this Plan using the
                  hours method after the end of the computation period in which
                  he became an Eligible Employee.

         If an Employee has been a participant in another plan of the Employer
         which credited service under the hours method for any purpose which
         under this Plan is determined using the elapsed time method, then the
         Employee's service shall be equal to the sum of (4), (5), and (6)
         below:

         (4)      The number of whole years of service credited to the Employee
                  under the other plan as of the beginning of the computation
                  period under that plan in which he became an Eligible Employee
                  under this Plan.

         (5)      The greater of (i) the service that would be credited to the
                  Employee for that entire computation period using the elapsed
                  time method or (ii) the service credited to him under the
                  other plan as of the date he became an Eligible Employee under
                  this Plan.

         (6)      The Employee's service determined under this Plan using the
                  elapsed time method after the end of the applicable
                  computation period under the other plan in which he became an
                  Eligible Employee.

         If an Employee has been a participant in a Controlled Group member's
         plan which credited service under a different method than is used in
         this Plan, in order to determine entry and vesting, the provisions in
         (b) above shall apply as though the Controlled Group member's plan were
         a plan of the Employer.

         Any modification of service contained in this Plan shall be applicable
to the service determined pursuant to this section.

SECTION 10.14     MILITARY SERVICE.

         Notwithstanding any provision of this Plan to the contrary, the Plan
shall provide contributions, benefits, and service credit with respect to
qualified military service in accordance with Code Section 414(u). Loan
repayments shall be suspended under this Plan as permitted under Code Section
414(u).

SECTION 10.15     QUALIFICATION OF PLAN.

         If the Plan is denied initial qualification upon filing timely
application, it will be treated as void from the beginning. It will be
terminated and all amounts contributed to the Plan, less expenses paid, shall be
returned to the Employer within one year from the date of denial. If amounts
have been contributed by Employees, the Employer shall refund to each Employee
the

                                       72
<PAGE>

amount made by him or, if less, the amount then in his Account resulting from
such amounts. The Insurer and Trustee shall be discharged from all further
obligations.

                                   ARTICLE XI

                           TOP-HEAVY PLAN REQUIREMENTS

SECTION 11.01     APPLICATION.

         The provisions of this article shall supersede all other provisions in
the Plan to the contrary.

         For the purpose of applying the Top-heavy Plan requirements of this
article, all members of the Controlled Group shall be treated as one Employer.
The term Employer, as used in this article, shall be deemed to include all
members of the Controlled Group, unless the term as used clearly indicates only
the Employer is meant.

         The accrued benefit or account of a participant which results from
deductible employee contributions shall not be included for any purpose under
this article.

         The minimum vesting and contribution provisions of the MODIFICATION OF
VESTING REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of this article
shall not apply to any Employee who is included in a group of Employees covered
by a collective bargaining agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers, including the Employer, if there is evidence that retirement benefits
were the subject of good faith bargaining between such representatives. For this
purpose, the term "employee representatives" does not include any organization
more than half of whose members are employees who are owners, officers, or
executives.

SECTION 11.02     DEFINITIONS.

         For purposes of this article the following terms are defined:

         Aggregation Group means:

         (a) each of the Employer's qualified plans in which a Key Employee is a
participant during the Plan Year containing the Determination Date (regardless
of whether the plan was terminated) or one of the four preceding Plan Years,

         (b) each of the Employer's other qualified plans which allows the
plan(s) described in (a) above to meet the nondiscrimination requirement of Code
Section 401 (a)(4) or the minimum coverage requirement of Code Section 410, and

         (c) any of the Employer's other qualified plans not included in (a) or
(b) above which the Employer desires to include as part of the Aggregation
Group. Such a qualified plan shall be included only if the Aggregation Group
would continue to satisfy the requirements of Code Section 401 (a)(4) and Code
Section 410.

                                       73
<PAGE>

         The plans in (a) and (b) above constitute the "required" Aggregation
Group. The plans in (a), (b), and (c) above constitute the "permissive"
Aggregation Group.

         Compensation means compensation as defined in the CONTRIBUTION
LIMITATION SECTION of Article III. For purposes of determining who is a Key
Employee in years beginning before January 1, 1998, Compensation shall include,
in addition to compensation as defined in the CONTRIBUTION LIMITATION SECTION of
Article Ill, elective contributions. Elective contributions are amounts
excludible from the gross income of the Employee under Code Sections 125,
402(e)(3), 402(h)(1)(B), or 403(b), and contributed by the Employer, at the
Employee's election, to a Code Section 401(k) arrangement, a simplified employee
pension, cafeteria plan, or tax-sheltered annuity. Elective contributions also
include amounts deferred under a Code Section 457 plan maintained by the
Employer.

         Determination Date means as to any plan, for any plan year subsequent
to the first plan year, the last day of the preceding plan year. For the first
plan year of the plan, the last day of that year.

         Key Employee means any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was:

         (a) an officer of the Employer if such individual's annual Compensation
exceeds 50 percent of the dollar limitation under Code Section 415(b)(1)(A).

         (b) an owner (or considered an owner under Code Section 318) of one of
the ten largest interests in the Employer if such individual's annual
Compensation exceeds 100 percent of the dollar limitation under Code Section
415(c)(1)(A).

         (c) a 5-percent owner of the Employer, or

         (d) a 1-percent owner of the Employer who has annual Compensation of
more than $150,000.

         The determination period is the Plan Year containing the Determination
Date and the four preceding Plan Years.

         The determination of who is a Key Employee shall be made according to
Code Section 416(i)(1) and the regulations thereunder.

         Non-key Employee means any Employee who is not a Key Employee.

         Present Value means the present value of a participant's accrued
benefit under a defined benefit plan. For purposes of establishing Present Value
to compute the Top-heavy Ratio, any benefit shall be discounted only for 7.5%
interest and mortality according to the 1971 Group Annuity Table (Male) without
the 7% margin but with projection by Scale E from 1971 to the later of (a) 1974,
or (b) the year determined by adding the age to 1920, and wherein for females
the male age six years younger is used.

                                       74
<PAGE>

         Top-heavy Plan means a plan which is top-heavy for any plan year
beginning after December 31, 1983. This Plan shall be top-heavy if any of the
following conditions exist:

         (a) The Top-heavy Ratio for this Plan exceeds 60 percent and this Plan
is not part of any required Aggregation Group or permissive Aggregation Group.

         (b) This Plan is a part of a required Aggregation Group, but not part
of a permissive Aggregation Group, and the Top-heavy Ratio for the required
Aggregation Group exceeds 60 percent.

         (c) This Plan is a part of a required Aggregation Group and part of a
permissive Aggregation Group and the Top-heavy Ratio for the permissive
Aggregation Group exceeds 60 percent.

         Top-heavy Ratio means:

         (a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer has not
maintained any defined benefit plan which during the five-year period ending on
the Determination Date(s) has or has had accrued benefits, the Top-heavy Ratio
for this Plan alone or for the required or permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the five-year period ending on the
Determination Date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed in the five-year
period ending on the Distribution Date(s)), both computed in accordance with
Code Section 416 and the regulations thereunder. Both the numerator and
denominator of the Top-heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be taken
into account on that date under Code Section 416 and the regulations thereunder.

         (b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which during the five-year
period ending on the Determination Date(s) has or has had accrued benefits, the
Top-heavy Ratio for any required or permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances under the aggregated defined contribution plan or plans of all Key
Employees determined in accordance with (a) above, and the Present Value of
accrued benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Determination Date(s), and the denominator of which is the
sum of the account balances under the aggregated defined contribution plan or
plans for all participants, determined in accordance with (a) above, and the
Present Value of accrued benefits under the defined benefit plan or plans for
all participants as of the Determination Date(s), all determined in accordance
with Code Section 416 and the regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and denominator of the Top-heavy
Ratio are increased for any distribution of an accrued benefit made in the
five-year period ending on the Determination Date.

                                       75
<PAGE>

         (c) For purposes of (a) and (b) above, the value of account balances
and the Present Value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the 12-month period ending
on the ,Determination Date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined benefit
plan. The account balances and accrued benefits of a participant (i) who is not
a Key Employee but who was a Key Employee in a prior year or (ii) who has not
been credited with at least an hour of service with any employer maintaining the
plan at any time during the five-year period ending on the Determination Date
will be disregarded. The calculation of the Top-heavy Ratio and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations thereunder.
Deductible employee contributions will not be taken into account for purposes of
computing the Top-heavy Ratio. When aggregating plans, the value of account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.

         The accrued benefit of a participant other than a Key Employee shall be
determined under (i) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Employer, 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 of Code Section
411(b)(1)(C).

SECTION 11.03     MODIFICATION OF VESTING REQUIREMENTS.

         If a Participant's Vesting Percentage determined under Article I is not
at least as great as his Vesting Percentage would be if it were determined under
a schedule permitted in Code Section 416, the following shall apply. During any
Plan Year in which the Plan is a Top-heavy Plan, the Participant's Vesting
Percentage shall be the greater of the Vesting Percentage determined under
Article I or the schedule below.

                    VESTING SERVICE                    NONFORFEITABLE
                     (whole years)                       PERCENTAGE

                      Less than 2                             0
                             2                               20
                             3                               40
                             4                               60
                             5                               80
                       6 or more                             100

         The schedule above shall not apply to Participants who are not credited
with an Hour-of-Service after the Plan first becomes a Top-heavy Plan. The
Vesting Percentage determined above applies to the portion of the Participant's
Account which is multiplied by a Vesting Percentage to determine his Vested
Account, including benefits accrued before the effective date of Code Section
416 and benefits accrued before this Plan became a Top-heavy Plan.

         If, in a later Plan Year, this Plan is not a Top-heavy Plan, a
         Participant's Vesting Percentage shall be determined under Article I. A
         Participant's Vesting Percentage

                                       76
<PAGE>

         determined under either Article I or the schedule above shall never be
         reduced and the election procedures of the AMENDMENTS SECTION of
         Article X shall apply when changing to or from the schedule as though
         the automatic change were the result of an amendment.

         The part of the Participant's Vested Account resulting from the minimum
contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of
this article (to the extent required to be nonforfeitabte under Code Section
416(b)) may not be forfeited under Code Section 411(a)(3)(B) or (D).

SECTION 11.04     MODIFICATION OF CONTRIBUTIONS.

         During any Plan Year in which this Plan is a Top-heavy Plan, the
Employer shall make a minimum contribution as of the last day of the Plan Year
for each Non-key Employee who is an Employee on the last day of the Plan Year
and who was an Active Participant at any time during the Plan Year. A Non-key
Employee is not required to have a minimum number of Hours-of-Service or minimum
amount of Compensation in order to be entitled to this minimum. A Non-key
Employee who fails to be an Active Participant merely because his Compensation
is less than a stated amount or merely because of a failure to make mandatory
participant contributions or, in the case of a cash or deferred arrangement,
elective contributions shall be treated as if he were an Active Participant. The
minimum is the lesser of (a) or (b) below:

         (a) 3 percent of such person's Compensation for such Plan Year.

         (b) The "highest percentage" of Compensation for such Plan Year at
which the Employer's contributions are made for or allocated to any Key
Employee. The highest percentage shall be determined by dividing the Employer
Contributions made for or allocated to each Key Employee during the Plan Year by
the amount of his Compensation for such Plan Year, and selecting the greatest
quotient (expressed as a percentage). To determine the highest percentage, all
of the Employer's defined contribution plans within the Aggregation Group shall
be treated as one plan. The minimum shall be the amount in (a) above if this
Plan and a defined benefit plan of the Employer are required to be included in
the Aggregation Group and this Plan enables the defined benefit plan to meet the
requirements of Code Section 401(a)(4) or 410.

         For purposes of (a) and (b) above, Compensation shall be limited by
Code Section 401 (a)(17).

         If the Employer's contributions and allocations otherwise required
under the defined contribution plan(s) are at least equal to the minimum above,
no additional contribution shall be required. If the Employer's total
contributions and allocations are less than the minimum above, the Employer
shall contribute the difference for the Plan Year.

         The minimum contribution applies to all of the Employer's defined
contribution plans in the aggregate which are Top-heavy Plans. A minimum
contribution under a profit sharing plan shall be made without regard to whether
or not the Employer has profits.

         If a person who is otherwise entitled to a minimum contribution above
is also covered under another defined contribution plan of the Employer's which
is a Top-heavy Plan during that

                                       77
<PAGE>

same Plan Year, any additional contribution required to meet the minimum above
shall be provided in this Plan.

         If a person who is otherwise entitled to a minimum contribution above
is also covered under a defined benefit plan of the Employer's which is a
Top-heavy Plan during that same Plan Year, the minimum benefits for him shall
not be duplicated. The defined benefit plan shall provide an annual benefit for
him on, or adjusted to, a straight life basis equal to the lesser of:

         (c)      2 percent of his average compensation multiplied by his years
                  of service, or

         (d)      20 percent of his average compensation.

         Average compensation and years of service shall have the meaning set
forth in such defined benefit plan for this purpose.

         For purposes of this section, any employer contribution made according
to a salary reduction or similar arrangement and employer contributions which
are matching contributions, as defined in Code Section 401(m), shall not apply
in determining if the minimum contribution requirement has been met, but shall
apply in determining the minimum contribution required.

         The requirements of this section shall be met without regard to any
Social Security contribution.

SECTION 11.05     MODIFICATION OF CONTRIBUTION LIMITATION.

         If the provisions of subparagraph (I) of the CONTRIBUTION LIMITATION
SECTION of Article Ill are applicable for any Limitation Year during which this
Plan is a Top-heavy Plan, the contribution limitations shall be modified. The
definitions of Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction in the CONTRIBUTION LIMITATION SECTION of Article III shall be modified
by substituting "100 percent" in lieu of "125 percent." In addition, an
adjustment shall be made to the numerator of the Defined Contribution Plan
Fraction. The adjustment is a reduction of that numerator similar to the
modification of the Defined Contribution Plan Fraction described in the
CONTRIBUTION LIMITATION SECTION of Article Ill, and shall be made with respect
to the last Plan Year beginning before January 1, 1984.

         The modifications in the paragraph above shall not apply with respect
to a Participant so long as employer contributions, forfeitures, or
nondeductible employee contributions are not credited to his account under this
or any of the Employer's other defined contribution plans and benefits do not
accrue for such Participant under the Employer's defined benefit plan(s), until
the sum of his Defined Contribution and Defined Benefit Plan Fractions is less
than 1.0.

         This section shall cease to apply effective as of the first Limitation
Year beginning on or after January 1, 2000.

         By executing this Plan, the Primary Employer acknowledges having
counseled to the extent necessary with selected legal and tax advisors regarding
the Plan's legal and tax implications.

                                       78
<PAGE>

         Executed this 28th day of June, 2001

                                   PANERA BREAD COMPANY

                                   By: /S/  WILLIAM MORETON

                                   Title: SENIOR VICE PRESIDENT AND CHIEF
                                          FINANCIAL OFFICER

                                          Defined Contribution Plan 8.0

                                       79

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