Document:

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                                                                    EXHIBIT 4(d)

                            PCI-PR PROFIT SHARING AND
                             RETIREMENT SAVINGS PLAN

                          Effective as of July 1, 1998

                                                                          (6/99)

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                                TABLE OF CONTENTS

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ARTICLE I.....................................................................2

   DEFINITIONS................................................................2
     Section 1.01.   Account..................................................2
     Section 1.02.   Accounting Date..........................................2
     Section 1.03.   Beneficiary..............................................2
     Section 1.04.   Board....................................................2
     Section 1.05.   Code.....................................................2
     Section 1.06.   Committee................................................2
     Section 1.07.   Company..................................................2
     Section 1.08.   Compensation.............................................3
     Section 1.09.   Disability...............................................4
     Section 1.10.   Effective Date...........................................4
     Section 1.11.   Eligible Employee........................................4
     Section 1.12.   Employee.................................................4
     Section 1.13.   Employer.................................................4
     Section 1.14.   Entry Date...............................................5
     Section 1.15.   ERISA....................................................5
     Section 1.16.   Former Participant.......................................5
     Section 1.17.   Income...................................................5
     Section 1.18.   Investment Manager.......................................5
     Section 1.19.   Leased Employee..........................................5
     Section 1.20.   Nonforfeitable...........................................6
     Section 1.21.   Nonforfeitable Account Balance...........................6
     Section 1.22.   Normal Retirement Age....................................6
     Section 1.23.   Participant..............................................6
     Section 1.24.   Part-time Employee.......................................6
     Section 1.25.   Plan.....................................................6
     Section 1.26.   Plan Administrator.......................................6
     Section 1.27.   Plan Year................................................7
     Section 1.28.   Profit Sharing Account...................................7
     Section 1.29.   Related Employers........................................7
     Section 1.30.   Rollover Account.........................................7
     Section 1.31.   Service and Break in Service Definitions.................7
     Section 1.32.   Transfer Account........................................13
     Section 1.33.   Treasury Regulations....................................13
     Section 1.34.   Trust...................................................13
     Section 1.35.   Trust Fund..............................................13
     Section 1.36.   Trustee.................................................13
     Section 1.37.   Valuation Date..........................................13
     Section 1.38.   Terms Defined Elsewhere.................................13

ARTICLE II...................................................................15

   ELIGIBILITY AND PARTICIPATION.............................................15
     Section 2.01.   Eligibility.............................................15
     Section 2.02.   Participation upon Re-employment........................15
     Section 2.03.   Enrollment..............................................15
     Section 2.04.   Transfer Between Classes of Employees...................15

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ARTICLE III..................................................................17

   CONTRIBUTIONS.............................................................17
     Section 3.01.   Individual Accounts.....................................17
     Section 3.02.   Profit Sharing Contributions............................17
     Section 3.03.   Profit Sharing Contribution Allocation and
                     Accrual of Benefit......................................17
     Section 3.04.   Voluntary Employee Nondeductible Contributions..........18
     Section 3.05.   Time of Payment of Contribution.........................18
     Section 3.06.   Allocation of Forfeitures...............................18
     Section 3.07.   Rollover and Transfer Contributions.....................18
     Section 3.08.   Return of Contributions.................................19

ARTICLE IV...................................................................21

   TERMINATION OF SERVICE; PARTICIPANT VESTING...............................21
     Section 4.01.   Vesting.................................................21
     Section 4.02.   Included Years of Service - Vesting.....................21
     Section 4.03.   Forfeiture Occurs.......................................21
     Section 4.04.   Cash-out Distributions to Partially-vested
                     Participants............................................22
     Section 4.05.   Restoration of Forfeited Portion of Account.............23
     Section 4.06.   Transfer Between Classes of Employees...................24

ARTICLE V....................................................................26

   TIME AND METHOD OF PAYMENT OF BENEFITS....................................26
     Section 5.01.   Retirement..............................................26
     Section 5.02.   Distribution upon Separation from Service
                     Prior to Normal Retirement Age..........................26
     Section 5.03.   Method of Payment of Benefits upon Normal
                     Retirement or Separation from Service (Other
                     than Due to Death) - Annuity Distributions to
                     Certain Participants....................................29
     Section 5.04.   Waiver Election - Qualified Joint and Survivor
                     Annuity.................................................29
     Section 5.05.   Optional Forms of Benefit Payments......................31
     Section 5.06.   Distributions upon Death................................31
     Section 5.07.   Designation of Beneficiary..............................35
     Section 5.08.   Failure of Beneficiary Designation......................36
     Section 5.09.   Special Rules for Transfer Accounts.....................36
     Section 5.10.   Distributions under Domestic Relations Orders...........36
     Section 5.11.   Re-employment of Participants Receiving Payments........38
     Section 5.12.   Form of Payments........................................38
     Section 5.13.   Lost Participant or Beneficiary.........................38
     Section 5.14.   Facility of Payment.....................................38
     Section 5.15.   Distribution of Assets Transferred from Money
                     Purchase Pension Plan...................................39
     Section 5.16.   Written Instruction Not Required........................39

ARTICLE VI...................................................................40

   WITHDRAWALS...............................................................40
     Section 6.01.   Special Withdrawal Rules Applicable to Transfer
                     Accounts................................................40
     Section 6.02.   Withdrawals upon Attainment of Age 59 1/2...............40

ARTICLE VII..................................................................41

   EMPLOYER ADMINISTRATIVE PROVISIONS........................................41
     Section 7.01.   Establishment of Trust..................................41
     Section 7.02.   Information to Committee................................41
     Section 7.03.   No Liability............................................41

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     Section 7.04.   Indemnity of Committee..................................41
     Section 7.05.   Investment Funds........................................42

ARTICLE VIII.................................................................43

   PARTICIPANT ADMINISTRATIVE PROVISIONS.....................................43
     Section 8.01.   Personal Data to Committee..............................43
     Section 8.02.   Address for Notification................................43
     Section 8.03.   Assignment or Alienation................................43
     Section 8.04.   Notice of Change in Terms...............................43
     Section 8.05.   Participant Direction of Investment.....................43
     Section 8.06.   Change of Investment Designations.......................44
     Section 8.07.   Litigation Against the Trust............................45
     Section 8.08.   Information Available...................................45
     Section 8.09.   Appeal Procedure for Denial of Benefits.................45

ARTICLE IX...................................................................47

   ADMINISTRATION OF THE PLAN................................................47
     Section 9.01.   Allocation of Responsibility among Fiduciaries for
                     Plan and Trust Administration...........................47
     Section 9.02.   Appointment of Committee................................47
     Section 9.03.   Committee Procedures....................................48
     Section 9.04.   Records and Reports.....................................48
     Section 9.05.   Other Committee Powers and Duties.......................48
     Section 9.07.   Application and Forms for Benefits......................49
     Section 9.08.   Authorization of Benefit Payments.......................49
     Section 9.09.   Funding Policy..........................................49
     Section 9.10.   Fiduciary Duties........................................50
     Section 9.11.   Allocation or Delegation of Duties and
                     Responsibilities........................................50
     Section 9.12.   Procedure for the Allocation or Delegation of
                     Fiduciary Duties........................................51
     Section 9.13.   Separate Accounting.....................................51
     Section 9.14.   Value of Participant's Account..........................52
     Section 9.15.   Individual Statement....................................52
     Section 9.16.   Fees and Expenses from Fund.............................52

ARTICLE X....................................................................53

   MISCELLANEOUS.............................................................53
     Section 10.01.  Evidence................................................53
     Section 10.02.  No Responsibility for Employer Action...................53
     Section 10.03.  Fiduciaries Not Insurers................................53
     Section 10.04.  Waiver of Notice........................................53
     Section 10.05.  Successors..............................................53
     Section 10.06.  Word Usage..............................................54
     Section 10.07.  Headings................................................54
     Section 10.08.  State Law...............................................54
     Section 10.09.  Employment Not Guaranteed...............................54

ARTICLE XI...................................................................55

   EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION.................................55
     Section 11.01.  Exclusive Benefit.......................................55
     Section 11.02.  Amendment by Employer...................................55

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     Section 11.03.  Amendment to Vesting Provisions.........................56
     Section 11.04.  Discontinuance..........................................56
     Section 11.05.  Full Vesting on Termination.............................57
     Section 11.06.  Merger, Direct Transfer and Elective Transfer...........57
     Section 11.07.  Termination.............................................58

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                PCI-PR PROFIT SHARING AND RETIREMENT SAVINGS PLAN

         Packaging Coordinators, Inc. hereby establishes, effective as of July
1, 1998, the PCI-PR Profit Sharing and Retirement Savings Plan (the "Plan") for
the purpose of helping its eligible employees, and those of its subsidiaries and
affiliated companies that adopt the Plan, to provide additional security for
their retirement by providing employer contributions as an incentive to enhance
their individual performance and the performance of Packaging Coordinators, Inc.

         The Plan is a profit sharing plan intended to qualify under Sections
1165(a) of the Puerto Rico Internal Revenue Code of 1994 (the "Code") and the
trust forming a part thereof is intended to be exempt from taxation under Code
Section 1165(a) and Section 501(a) of the United States Internal Revenue Code of
1986, as amended.

         Following the establishment of the Plan, employees of Packaging
Coordinators Incorporated, Caribe and Tri-Line Co., Inc. who were participating
in the Packaging Coordinators, Inc. Money Purchase Pension Plan and the
Packaging Coordinators, Inc. Profit Sharing Plan will have their accounts in
such plans transferred to the Plan. To the extent the accounts of employees who
were participating in the Packaging Coordinators, Inc. Money Purchase Pension
Plan and the Packaging Coordinators, Inc. Profit Sharing Plan are transferred to
or merged into the Plan, any beneficiary designation or any other applicable
agreement, elections or consents that participants, spouses, or beneficiaries
validly executed under such plans shall be honored by this Plan, to the extent
not inconsistent with this Plan and unless otherwise required by law. An
Employee whose employment with the Employer terminates prior to the Effective
Date shall be entitled to a benefit, if any, as determined under the provisions
of the Packaging Coordinators, Inc. Money Purchase Pension Plan and/or the
Packaging Coordinators, Inc. Profit Sharing Plan, as applicable, in effect on
the date his employment terminated.

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                                    ARTICLE I
         DEFINITIONS

         Each word and phrase defined in this Article I shall have the following
meaning whenever such word or phrase is capitalized and used herein unless a
different meaning is clearly required by the context of this agreement.

         Section 1.01. ACCOUNT . The separate bookkeeping account that the
Committee or the Trustee shall maintain for a Participant pursuant to Section
9.13 of this Plan.

         Section 1.02. ACCOUNTING DATE . The last day of the Plan Year. Except
as otherwise provided herein, the Committee shall make allocations of Profit
Sharing Contributions for a particular Plan Year as of the Accounting Date of
that Plan Year.

         Section 1.03. BENEFICIARY . A person, including any individual, legal
representative, estate or other entity, designated by a Participant who is or
may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan shall remain a Beneficiary under the Plan
until the Trustee has fully distributed his benefit to him. A Beneficiary's
right to (and the Plan Administrator's, the Committee's, or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan shall not
arise until he first becomes entitled to receive a benefit under the Plan.

         Section 1.04. BOARD . The board of directors of Packaging Coordinators,
Inc. or a committee thereof acting on its behalf.

         Section 1.05. CODE . The Puerto Rico Internal Revenue Code of 1994, as
it may be amended from time to time.

         Section 1.06. COMMITTEE . The person or persons appointed pursuant to
Article IX as the PCI-PR Profit Sharing and Retirement Savings Plan Committee,
as from time to time constituted, to assist the Employer in the administration
of the Plan in accordance with said Article.

         Section 1.07. COMPANY . Packaging Coordinators, Inc., a Pennsylvania
corporation.

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         Section 1.08. COMPENSATION . The Participant's wages, salaries, fees
for professional service and other amounts received for personal services
actually rendered in the course of employment with the Employer maintaining the
Plan (including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses). Compensation also includes "ELECTIVE CONTRIBUTIONS"
made by the Employer on the Employee's behalf. Elective Contributions are
amounts excludible from the Employee's gross income under Code Section 1165(e).
The term "Compensation" does not include:

                  (i)      Employer contributions (other than Elective
                           Contributions) to a plan of deferred compensation to
                           the extent the contributions are not included in the
                           gross income of the Employee for the taxable year in
                           which contributed, and any distributions from a plan
                           of deferred compensation, regardless of whether such
                           amounts are includible in the gross income of the
                           Employee when distributed.

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

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

                  (iv)     Moving allowances, automobile allowances, tuition
                           reimbursement, financial/tax planning reimbursement,
                           other extraordinary compensation, including tax
                           "gross-up" payments, and imputed income from other
                           employer-provided benefits.

                  (v)      Other amounts that receive special tax benefits, such
                           as premiums for group term life insurance or
                           contributions made by an Employer (whether or not
                           under a salary reduction agreement) towards the
                           purchase of an annuity contract (whether or not the
                           contributions are excludible from the gross income of
                           the Employee), other than Elective Contributions.

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                  Any reference in this Plan to Compensation is a reference to
         the definition in this Section 1.08, unless the Plan reference
         specifies a modification to this definition. The Committee will take
         into account only Compensation actually paid for the relevant period.

         Section 1.09. DISABILITY . Means that the Employee has applied and
qualifies for disability under the Social Security Act, as amended.

         Section 1.10. EFFECTIVE DATE . July 1, 1998, the date on which the
provisions of this Plan become effective, except as otherwise provided herein.

         Section 1.11. ELIGIBLE EMPLOYEE . Any Employee other than an Employee
who may be excluded from participation pursuant to Code Section
1165(a)(3)(C)(ii) as a nonresident alien or as an Employee covered by a
collective bargaining agreement recognized as such under applicable Puerto Rico
law and which does not expressly provide for participation in this Plan by
Employees covered thereunder, or an Employee who is a nonresident of Puerto
Rico. An Eligible Employee may become a Participant in the Plan pursuant to the
requirements of Article II.

         Section 1.12. EMPLOYEE . Any person who, on or after the Effective
Date, is receiving remuneration for personal services rendered to the Employer
as a common law employee (or who would be receiving such remuneration except for
an authorized leave of absence). The term shall not include any consultant,
independent contractor or any Leased Employee deemed to be an employee of the
Employer, nor any person employed by the Employer solely as a Director. Any
individual excluded from participation by reason of independent contractor or
Leased Employee status, if determined by the Company or in accordance with law
to be a common law employee, shall be recharacterized as an Employee under the
Plan as of the date of such determination, unless an earlier date is necessary
to preserve the tax qualified status of the Plan. Notwithstanding such general
recharacterization, such person shall not be considered an Eligible Employee for
purposes of Plan participation, except and to the extent necessary to preserve
the tax qualified status of the Plan.

         Section 1.13. EMPLOYER . The Company and any Related Employer which
shall ratify and adopt this Plan in a manner satisfactory to, and with the
consent of, Packaging Coordinators, Inc., and which have adopted this Plan as
listed on the attached Appendix A. Whenever the terms of this Plan authorize the
Employer or the Company to take any action, such action shall be considered
properly authorized if taken by the Board, the Chairman of the Board, any
committee

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of the Board, or by the Committee for the Plan in accordance with its procedures
under Section 9.03 hereof.

         Section 1.14. ENTRY DATE . The date as of which an Eligible Employee
satisfies the eligibility requirements of Article II. In the case of an eligible
Part-time Employee, the Entry Date occurs as of the last day of the Eligibility
Computation Period in which such Part-time Employee completes the required 1,000
Hours of Service.

         Section 1.15. ERISA . The Employee Retirement Income Security Act of
1974, as amended, or as it may be amended from time to time.

         Section 1.16. FORMER PARTICIPANT . A Participant who has transferred to
a classification of Employees ineligible to participate in the Plan, or a
Participant whose employment with the Employer has terminated but who has a
vested Account balance under the Plan that has not been paid in full and,
therefore, is continuing to participate in the allocation of Trust Fund Income.

         Section 1.17. INCOME . The net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities, other investment transactions and
expenses paid from the Trust Fund. In determining the Income of the Trust Fund
as of any date, assets shall be valued on the basis of their then fair market
value.

         Section 1.18. INVESTMENT MANAGER . A person or organization who is
appointed under Section 9.05 to direct the investment of all or part of the
Trust Fund, and who is either (a) registered in good standing as an Investment
Adviser under the Investment Advisers Act of 1940, (b) a bank, as defined in
that Act, or (c) an insurance company qualified to perform investment management
services under the laws of more than one state of the United States, and who has
acknowledged in writing that he is a fiduciary with respect to the Plan.

         Section 1.19. LEASED EMPLOYEE . Any person (other than an Employee of
the Employer) who, pursuant to an agreement between the Employer and any other
person ("LEASING ORGANIZATION"), has performed services for the Employer (or for
the Employer and related persons) on a substantially full time basis for a
period of at least one year, which services are performed under the primary
direction or control of the Employer. Contributions or benefits provided to a
Leased Employee by the Leasing Organization that are attributable to services
performed for the Employer shall be treated as provided by the Employer. If
applicable,

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Compensation under Section 1.08 includes compensation from the Leasing
Organization which is attributable to services performed for the Employer.

         A Leased Employee shall not be considered an Employee of the Employer
if: (a) such employee is covered by a money purchase pension plan providing: (i)
a nonintegrated employer contribution rate of at least ten percent of
compensation, (ii) immediate participation, and (iii) full and immediate
vesting; and (b) leased employees do not constitute more than 20% of the
Employer's nonhighly compensated workforce.

         Section 1.20. NONFORFEITABLE . A Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to all or a portion
of the Participant's Account.
         Section 1.21. NONFORFEITABLE ACCOUNT BALANCE . The aggregate value of
the Participant's vested Account balances whether vested before or upon death.

         Section 1.22. NORMAL RETIREMENT AGE . The later of 65 years of age or
the attained age of the Participant on the fifth anniversary of the date the
Participant commenced participation in the Plan. "NORMAL RETIREMENT" means a
Participant's Separation from Service following his attainment of Normal
Retirement Age.

         Section 1.23. PARTICIPANT . An Employee who is eligible to be and
becomes a Participant in accordance with the provisions of Section 2.01. An
Employee who becomes a Participant shall remain a Participant or Former
Participant under the Plan until the Trustee has fully distributed the vested
amount standing in his Account to him.

         Section 1.24. PART-TIME EMPLOYEE . An Eligible Employee who is
regularly scheduled to work fewer than 20 Hours of Service per week.

         Section 1.25. PLAN . The plan designated as the PCI-PR Profit Sharing
and Retirement Savings Plan as set forth herein or in any amendments hereto.

         Section 1.26. PLAN ADMINISTRATOR . Cardinal Health, Inc., or the
person(s) or entity appointed by Packaging Coordinators, Inc. to serve as Plan
Administrator.

         Section 1.27. PLAN YEAR . The fiscal year of the Plan, a 12 consecutive
month period commencing on July 1 and ending on June 30.

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         Section 1.28. PROFIT SHARING ACCOUNT . That portion of a Participant's
Account credited with Profit Sharing Contributions under Sections 3.02 and 3.03,
and adjustments relating thereto.

         Section 1.29. RELATED EMPLOYERS . A controlled group of corporations
(as defined in ERISA Section 210(c)), trades or business (whether or not
incorporated) which are under common control (as defined in ERISA Section
210(d)), or an affiliated service group. If the Employer is a member of a group
of Related Employers, the term "Employer" includes the Related Employers for
purposes of crediting Hours of Service, determining Years of Service and Breaks
in Service under Article IV, the definitions of Employee, Compensation, Leased
Employee, and Service contained in this Article I, and for any other purpose as
required by the Code or by the Plan. However, only an Employer described in
Section 1.14 may contribute to the Plan, and only an Employee employed by an
Employer described in Section 1.14 is eligible to participate in this Plan.

         Section 1.30. ROLLOVER ACCOUNT . That portion of a Participant's
Account credited with Rollover Contributions under Section 3.07, and adjustments
relating thereto.

         Section 1.31.     SERVICE AND BREAK IN SERVICE DEFINITIONS .

         A.       ABSENCE FROM SERVICE. A severance or absence from service for
                  any reason other than a quit, discharge, retirement or death,
                  such as vacation, holiday, sickness, or layoff.
                  Notwithstanding the foregoing, an absence due to an
                  "AUTHORIZED LEAVE OF ABSENCE," or qualified military service
                  in accordance with Puerto Rico and federal law shall not
                  constitute an Absence from Service.

         B.       AUTHORIZED LEAVE OF ABSENCE. An Authorized Leave of Absence
                  shall mean:

                  (i)      a leave of absence, with or without pay, granted by
                           the Employer in writing under a uniform,
                           nondiscriminatory policy applicable to all Employees;
                           however, such absence shall constitute an Authorized
                           Leave of Absence only to the extent that applicable
                           Puerto Rico and federal laws and regulations permit
                           service credit to be given for such leave of absence;

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                  (ii)     a leave of absence due to service in the Armed Forces
                           of the United States to the extent required by
                           applicable Puerto Rico and/or federal laws; or

                  (iii)    a leave of absence authorized under the Family and
                           Medical Leave Act, but only to the extent that such
                           Act requires that service credit be given for such
                           period.

         C.       BREAK IN SERVICE. Each 12 consecutive months in the period (i)
                  commencing on the earlier of (a) the date on which the
                  Employee quits, is discharged, retires or dies, or (b) the
                  first anniversary of the first day of any Absence from
                  Service, and (ii) ending on the date the Employee is again
                  credited with an Hour of Service for the performance of duties
                  for the Employer. If an Employee is on maternity or paternity
                  leave, and the absence continues beyond the first anniversary
                  of such absence, the Employee's Break in Service will commence
                  no earlier than the second anniversary of such absence. The
                  period between the first and second anniversaries of the first
                  date of a maternity or paternity leave is not part of either a
                  Period of Service or a Break in Service. The Committee shall
                  consider an Employee on maternity or paternity leave if the
                  Employee's absence is due to the Employee's pregnancy, the
                  birth of the Employee's child, the placement with the Employee
                  of an adopted child, or the care of the Employee's child
                  immediately following the child's birth or placement.
                  Notwithstanding the foregoing, if such maternity or paternity
                  leave constitutes an Authorized Leave of Absence, such leave
                  shall not be considered part of a Break in Service.

                  In the case of a Part-time Employee, however, a Break in
                  Service shall mean a Plan Year during which such Part-time
                  Employee completed fewer than 501 Hours of Service.

         D.       ELIGIBILITY COMPUTATION PERIOD. With respect to those Eligible
                  Employees who are Part-time Employees, the 12 consecutive
                  month period used to measure Hours of Service for purposes of
                  eligibility to begin and maintain participation in the Plan.

                           (i) "INITIAL ELIGIBILITY COMPUTATION PERIOD" shall
                           mean, for any such Employee, the Plan Year that
                           begins on or within the Initial Eligibility
                           Computation Period and succeeding Plan Years.

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                           (ii) "SUBSEQUENT ELIGIBILITY COMPUTATION PERIOD"
                           shall mean, for any such Employee, the Plan Year that
                           begins on or within the Initial Eligibility
                           Computation Period, and succeeding Plan Years.

         E.       EMPLOYMENT COMMENCEMENT DATE. The date upon which an Employee
                  first performs an Hour of Service for the Employer.

         F.       HOUR OF SERVICE.  Hour of Service shall mean:

                  (i)      Each Hour of Service for which the Employer, either
                           directly or indirectly, pays an Employee, or for
                           which the Employee is entitled to payment, for the
                           performance of duties during the Plan Year. The
                           Committee shall credit Hours of Service under this
                           subparagraph (i) to the Employee for the Plan Year in
                           which the Employee performs the duties, irrespective
                           of when paid;

                  (ii)     Each Hour of Service for back pay, irrespective of
                           mitigation of damages, to which the Employer has
                           agreed or for which the Employee has received an
                           award. The Committee shall credit Hours of Service
                           under this subparagraph (ii) to the Employee for the
                           Plan Year(s) to which the award or the agreement
                           pertains rather than for the Plan Year in which the
                           award, agreement or payment is made; and

                  (iii)    Each Hour of Service for which the Employer, either
                           directly or indirectly, pays an Employee, or for
                           which the Employee is entitled to payment
                           (irrespective of whether the employment relationship
                           is terminated), for reasons other than for the
                           performance of duties during a Plan Year, such as
                           leave of absence, vacation, holiday, sick leave,
                           illness, incapacity (including disability), layoff,
                           jury duty or military duty. The Committee shall not
                           credit more than 501 Hours of Service under this
                           subparagraph (iii) to an Employee on account of any
                           single continuous period during which the Employee
                           does not perform any duties (whether or not such
                           period occurs during a single Plan Year). The
                           Committee shall credit Hours of Service under this
                           subparagraph (iii) in accordance with the rules

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                                                                            PAGE

                           of paragraphs (b) and (c) of Labor Reg. Section
                           2530.200b-2, which the Plan by this reference
                           specifically incorporates in full within this
                           subparagraph (iii).

                  The Committee shall not credit an Hour of Service under more
                  than one of the subparagraphs. Furthermore, if the Committee
                  is to credit Hours of Service to an Employee for the 12-month
                  period beginning with the Employee's Employment Commencement
                  Date or with an anniversary of such date, then the 12-month
                  period shall be substituted for the term "Plan Year" wherever
                  the latter term appears in this section. The Committee shall
                  resolve any ambiguity with respect to the crediting of an Hour
                  of Service in favor of the Employee.

                  The Committee shall credit Part-time Employees with Hours of
                  Service on the basis of the "actual" method. For purposes of
                  the Plan, "actual" method means the determination of Hours of
                  Service from records of hours worked and hours for which the
                  Employer makes payment or for which payment is due from the
                  Employer.

                  Hours of Service will be credited for employment with other
                  members of an affiliated service group (under ERISA Section
                  210(c)), a controlled group of corporations (under ERISA
                  Section 210(c)), or a group of trades or businesses under
                  common control (under ERISA Section 210(d)) of which the
                  adopting Employer is a member.

                  Solely for purposes of determining whether a Part-time
                  Employee incurs a Break in Service under any provision of this
                  Plan, the Committee shall credit Hours of Service during an
                  Employee's unpaid absence period due to maternity or paternity
                  leave. The Committee shall consider an Employee on maternity
                  or paternity leave if the Employee's absence is due to the
                  Employee's pregnancy, the birth of the Employee's child, the
                  placement with the Employee of an adopted child, or the care
                  of the Employee's child immediately following the child's
                  birth or placement. The Committee shall credit Hours of
                  Service that the Part-time Employee would receive if he were
                  paid during the absence period, or if the Committee cannot
                  determine the number of Hours of Service the Part-time
                  Employee would receive, on the basis of eight hours per day
                  during the absence period. The Committee

                                       10
<PAGE>   16

                                                                            PAGE

                  shall credit only the number of Hours of Service (up to 501
                  Hours of Service) necessary to prevent a Part-time Employee's
                  Break in Service. The Committee shall credit all Hours of
                  Service described in this paragraph to the computation period
                  in which the absence period begins or, if the Part-time
                  Employee does not need these Hours of Service to prevent a
                  Break in Service in the computation period in which his or her
                  absence period begins, the Committee shall credit these Hours
                  of Service to the immediately following computation period.

         G.       PERIOD OF SERVICE. The period of Service commencing on an
                  Employee's Employment Commencement Date or Re-employment
                  Commencement Date, whichever is applicable, and ending on the
                  Employee's Severance from Service Date. Notwithstanding
                  anything else to the contrary, a Period of Service will
                  include (a) any Period of Severance resulting from a quit,
                  discharge, or retirement if within 12 months of his Severance
                  from Service Date, the Employee is credited with an Hour of
                  Service for the performance of duties for the Employer, and
                  (b) any Period of Severance if the Employee quits, is
                  discharged, or retires during an Absence from Service of less
                  than 12 months and is then credited with an Hour of Service
                  within 12 months of the date on which the Absence from Service
                  began, and any other period of Service as defined in
                  subsection K below.

         H.       PERIOD OF SEVERANCE. The period commencing on any Severance
                  from Service Date and ending on the date an Employee is again
                  credited with an Hour of Service for the performance of duties
                  for the Employer.

         I.       RE-EMPLOYMENT COMMENCEMENT DATE. The date upon which an
                  Employee first performs an Hour of Service for the Employer
                  following a Break in Service.

         J.       SEPARATION FROM SERVICE. A separation from Service with the
                  Employer maintaining this Plan and any Related Employers such
                  that the Employee no longer has an employment relationship
                  with the Employer or Related Employers.

         K.       SERVICE. Any period of time the Employee is in the employ of
                  the Employer, whether before or after adoption of the Plan,
                  determined in accordance with reasonable and uniform standards
                  and policies adopted by the Plan Administrator, which
                  standards and policies shall be consistently observed. For
                  purposes of

                                       11
<PAGE>   17

                                                                            PAGE

                  counting an Employee's Service, the Plan shall treat an
                  Employee's Service with employers who are part of a group of
                  Related Employers of which the Employer is a member as Service
                  with the Employer for the period during which the employers
                  are Related Employers. Service for purposes of determining
                  eligibility to participate and vesting may also be granted for
                  an Employee's Period of Service prior to the date his employer
                  became a Related Employer if such Service is granted in
                  accordance with the Code and applicable regulations. For all
                  Plan purposes, the Plan shall treat the following periods as
                  Service:

                  (i)      any Authorized Leave of Absence, subject to the
                           service crediting limitations set forth in Section
                           1.30B;

                  (ii)     any qualified military service in accordance with
                           Puerto Rico and federal law; and

                  (iii)    any other absence during which the Participant
                           continues to receive his regular Compensation.

         L.       SEVERANCE FROM SERVICE DATE. The earlier of (i) the date on
                  which an Employee quits, is discharged, retires, or dies, or
                  (ii) the first anniversary of the first date of any Absence
                  from Service.

         M.       YEAR OF SERVICE. Each one-year Period of Service. Unless
                  otherwise provided in this Plan, Periods of Service which are
                  less than a year shall be aggregated on the basis that 12
                  months (30 days are deemed to be a month in the case of
                  aggregation of fractional months) or 365 days equal a whole
                  year. Notwithstanding the foregoing, a Participant (other than
                  a Part-time Employee) who has incurred a Separation from
                  Service and who has completed five or more months of Service
                  following the most recent anniversary of his Employment
                  Commencement Date (or Reemployment Commencement Date, as
                  applicable) shall, as of such termination of employment,
                  receive credit for a full Year of Service for vesting purposes
                  for such Period of Service.

                                       12
<PAGE>   18

                                                                            PAGE

                  In the case of Part-time Employees, a Year of Service means a
                  12-month computation period during which the Part-time
                  Employee completes 1,000 or more Hours of Service.

         Section 1.32. TRANSFER ACCOUNT . That portion of a Participant's
Account credited with Rollover and/or Transfer Contributions under Section 3.07,
and adjustments relating thereto.

         Section 1.33. TREASURY REGULATIONS . Regulations promulgated under the
Puerto Rico Internal Revenue Code by the Secretary of the Treasury.

         Section 1.34. TRUST . The Trust known as the PCI-PR Profit Sharing and
Retirement Savings Plan Trust and maintained in accordance with the terms of the
trust agreement, as from time to time amended, between Packaging Coordinators,
Inc. and the Trustee.

         Section 1.35. TRUST FUND . All property of every kind held or acquired
by the Trustee under the Trust agreement other than incidental benefit insurance
contracts.

         Section 1.36. TRUSTEE . Banco Santander Puerto Rico, or such other
entity or person(s) that subsequently may be appointed by Packaging
Coordinators, Inc.

         Section 1.37. VALUATION DATE . Each day on which the New York Stock
Exchange is open for trading.

         Section 1.38.     TERMS DEFINED ELSEWHERE .

Annuity Starting Date      Sections 5.02 (B) and 5.04
Cash-out Distribution      Sections 4.04 and 5.02(A)
Claimant Section 8.09
Forfeiture Break in Service         Section 4.04
Investment Funds  Section 7.05
Preretirement Survivor Annuity      Section 5.08(C)
Profit Sharing Contributions        Section 3.02
Qualified Joint and Survivor Annuity        Section 5.04
Rollover Contributions     Section 3.07
Transfer Contributions     Section 3.07
Vesting Computation Period Section 4.03

                                       13
<PAGE>   19

                                                                            PAGE

                                   ARTICLE II
                          ELIGIBILITY AND PARTICIPATION

         Section 2.01. ELIGIBILITY . Each Eligible Employee shall be eligible to
become a Participant in the Plan. Each Eligible Employee who was a Participant
in the Packaging Coordinators, Inc. Profit Sharing Plan and/or in the Packaging
Coordinators, Inc. Money Purchase Pension Plan on the day before the Effective
Date of this Plan shall continue as a Participant in this Plan. Any other
Eligible Employee who is employed by the Employer shall become a Participant
upon completion of six months of Service. Notwithstanding the foregoing, with
respect to any Eligible Employee who is a Part-time Employee, such eligible
Part-time Employee must complete a Year of Service within a single Eligibility
Computation Period in order to participate in the Plan. Each Eligible Employee
shall become a Participant in the Plan as of the Entry Date coincident with his
satisfaction of these requirements.

         Section 2.02. PARTICIPATION UPON RE-EMPLOYMENT . An Eligible Employee
who had met all the requirements of Section 2.01, but terminated employment
prior to his Entry Date, shall become a Participant on the date he is
re-employed by the Employer, or his original Entry Date, if later. An Eligible
Employee who was a Participant shall again become a Participant on the date he
is re-employed by the Employer. Any Eligible Employee who terminates employment
with the Employer prior to satisfying the eligibility conditions of Section 2.01
must, upon becoming re-employed, satisfy the eligibility conditions of Section
2.01.

         Section 2.03. ENROLLMENT . Prior to each Entry Date, the Committee
shall notify each Employee who is eligible to participate in the Plan and shall
explain the rights, privileges and duties of a Participant in the Plan. Each
Eligible Employee must complete a Beneficiary Designation Form on the forms
provided by the Committee prior to the applicable Entry Date, or by following
such other reasonable procedures as the Committee may implement.

         Section 2.04. TRANSFER BETWEEN CLASSES OF EMPLOYEES . For purposes of
eligibility, in the case of an Eligible Employee who transfers from a Part-time
Employee classification to a class of Employees whose Service is determined on
an elapsed time basis, the Eligible Employee shall receive credit for a Period
of Service computed from his Employment or Re-employment Commencement Date, as
applicable.

                                       14
<PAGE>   20

                                                                            PAGE

         In the case of an Eligible Employee who transfers from a class of
Employees whose Service is determined on an elapsed time basis to a Part-time
Employee classification, the Eligible Employee shall receive credit for
eligibility purposes, as of the date of transfer, for a number of Hours of
Service determined by applying the equivalency set forth in Labor Reg. Section
2530.200b-3(e)(1)(i) (which credits ten Hours of Service for each day on which
the Eligible Employee would be required to be credited with one Hour of Service)
to any fractional part of a year credited to the Eligible Employee under this
Section as of the date of the transfer. Such equivalency shall apply to all
similarly situated Employees.

                                       15
<PAGE>   21

                                                                            PAGE

                                   ARTICLE III
                                  CONTRIBUTIONS

         Section 3.01. INDIVIDUAL ACCOUNTS . The Committee, or, if the Committee
so determines, the Trustee, shall maintain an Account for each Participant and
Former Participant having an amount to his credit in the Trust Fund. Each
Account shall be divided into separate subaccounts for "Profit Sharing
Contributions," "Rollover Contributions," if any, and "Transfer Contributions,"
if any, as defined below. If a Participant re-enters the Plan subsequent to
having a "Forfeiture Break in Service" (as defined in Section 4.02), the
Committee, or the Trustee, shall maintain a separate Account for the
Participant's pre-Forfeiture Break in Service Account and a separate Account for
his post-Forfeiture Break in Service Account, unless the Participant's entire
Account under the Plan is 100% Nonforfeitable. The Committee will make its
allocations, or request the Trustee to make its allocations, to the Accounts of
the Participants in accordance with the provisions of Section 9.13. The
Committee may direct the Trustee to maintain a temporary segregated investment
Account in the name of a Participant to prevent a distortion of income, gain, or
loss allocations under Section 9.13. The Committee shall maintain records of its
activities.

         Section 3.02. PROFIT SHARING CONTRIBUTIONS . For each Plan Year, the
Employer may contribute to the Trust an amount determined by the Board from time
to time in its discretion. Such contributions will be in the form of "PROFIT
SHARING CONTRIBUTIONS." The Employer shall not make a contribution to the Trust
for any Plan Year to the extent the contribution would exceed the maximum
deduction limitations under Code Section 1023(n) and/or United States Internal
Revenue Code Section 404. All contributions are conditioned on their
deductibility under the Code.

         Section 3.03. PROFIT SHARING CONTRIBUTION ALLOCATION AND ACCRUAL OF
BENEFIT .

         A.       METHOD OF ALLOCATION. Subject to any restoration allocation
                  required under Section 4.05, the Committee shall allocate and
                  credit to the Account of each Participant who satisfies the
                  conditions of Section 3.03B that percentage of each annual
                  Employer Profit Sharing Contribution made pursuant to Section
                  3.02 that is in the same proportion that each Participant's
                  Compensation for the Plan Year for which the Employer makes
                  the contribution bears to the total Compensation of all
                  Participants for the Plan Year.

                                       16
<PAGE>   22

                                                                            PAGE

         B.       ACCRUAL OF BENEFIT. The Committee shall determine the accrual
                  of a Participant's benefit on the basis of the Plan Year.
                  While contributions may be made at other times (and therefore
                  credited to Accounts at such other times), the Participant's
                  status as of the end of the Plan Year for which the
                  contribution is made shall determine his entitlement to share
                  in an allocation of such contribution, regardless of when
                  credited to his Account. In allocating a Profit Sharing
                  Contribution to a Participant's Account, the Committee, shall
                  take into account only Compensation paid to the Employee
                  during the portion of the Plan Year during which the Employee
                  was a Participant. However, the Committee shall not allocate
                  any portion of a Profit Sharing Contribution for a Plan Year
                  to the Account of any Participant, if such Participant is not
                  employed by the Employer on the last day of that Plan Year
                  (for a reason other than retirement, Disability, or death).
                  The Plan shall suspend the accrual requirement described
                  herein, if the Plan fails to satisfy the requirements of Code
                  Section 1165(a)(3).

         Section 3.04. VOLUNTARY EMPLOYEE NONDEDUCTIBLE CONTRIBUTIONS .
Participants shall not be permitted to make voluntary employee nondeductible
contributions.

         Section 3.05. TIME OF PAYMENT OF CONTRIBUTION . The Employer may pay
its contribution for each Plan Year in one or more installments of cash, without
interest. The Employer must make the contribution, if any, to the Trustee within
the time prescribed (including extensions) for filing its tax return for the
taxable year for which it claims a deduction for its contribution, in accordance
with Code Section 1023(n) and/or United States Internal Revenue Code Section
404(a)(6).

         Section 3.06. ALLOCATION OF FORFEITURES . Subject to any restoration
allocation required under Section 4.05, the Committee shall allocate and use the
amount of a Participant's benefit forfeited under the Plan to reduce its Profit
Sharing Contributions for the Plan Year in which the forfeiture occurs. The
Committee shall continue to hold the undistributed, nonvested portion of a
terminated Participant's benefit in his Account solely for his benefit until a
forfeiture occurs at the time specified in Section 4.03.

         Section 3.07. ROLLOVER AND TRANSFER CONTRIBUTIONS . The Trustee is
authorized to accept on behalf of an Employee, and hold as part of the Trust
Fund, assets from another plan qualified

                                       17
<PAGE>   23

                                                                            PAGE

under Code Section 1165(a), provided that such transfer satisfies any procedures
or other requirements established by the Committee. The Trustee shall also
accept and hold as part of the Trust Fund assets transferred from any other plan
qualified under Code Section 1165(a) in connection with a merger or
consolidation of such plan with or into the Plan pursuant to Section 11.06
hereof and as may be approved by the Committee. In addition, the Trustee shall
also accept "rollover" amounts contributed directly by or on behalf of an
Employee in accordance with the procedures and rules established by the
Committee in respect of a distribution made to, or on behalf of, such Employee
from another plan qualified under Code Section 1165(a) pursuant to Section 11.06
hereof. All amounts so transferred to the Trust Fund shall be held in segregated
subaccounts and shall be referred to as "TRANSFER CONTRIBUTIONS" if such amounts
are subject to the special distribution rules described in Section 5.11 and as
"ROLLOVER CONTRIBUTIONS" if not subject to such rules.

         Rollover Contributions must conform to rules and procedures established
by the Committee, including rules designed to assure the Committee that the
funds so transferred qualify as a Rollover Contribution under the Code. An
Employee, prior to satisfying the Plan's eligibility conditions, may make a
Rollover Contribution to the Trust to the same extent and in the same manner as
a Participant. If an Employee makes a Rollover Contribution to the Trust prior
to satisfying the Plan's eligibility conditions, the Committee and Trustee must
treat the Employee as a Participant for all purposes of the Plan, except that
the Employee is not a Participant for purposes of sharing in Employer
contributions or Participant forfeitures under the Plan until he actually
becomes a Participant in the Plan. If the Employee has a Separation from Service
prior to becoming a Participant, the Trustee will distribute his Rollover
Contribution Account to him as if it were an Employer contribution Account.
         Section 3.08. RETURN OF CONTRIBUTIONS . All contributions to the Plan
are conditioned upon their deductibility under the Code. The Trustee, upon
written request from the Employer, shall return to the Employer the amount of
the Employer's contribution made by the Employer by mistake of fact or the
amount of the Employer's contribution disallowed as a deduction under Code
Section 1023(n) and/or United States Internal Revenue Code Section 404. The
Trustee shall not return any portion of the Employer's contribution under this
provision more than one year after:

         A.       The Employer made the contribution by mistake of fact;

                                       18
<PAGE>   24

         B.       Initial qualification of the Plan is denied, but only if the
                  application for qualification is made within the time
                  prescribed by law for filing the Employer's tax return for the
                  taxable year in which the Plan is adopted, or such later date
                  as the Secretary of the Treasury may prescribe; or

         C.       The disallowance of the contribution as a deduction, and then,
                  only to the extent of the disallowance.

The Trustee shall not increase the amount of the Employer contribution
returnable under this Section 3.08 for any earnings attributable to the
contribution, but the Trustee shall decrease the Employer contribution
returnable for any losses attributable to it. The Trustee may require the
Employer to furnish it whatever evidence the Trustee deems necessary to enable
the Trustee to confirm the amount the Employer has requested be returned is
properly returnable under ERISA.

                                       19
<PAGE>   25

                                                                            PAGE

                                   ARTICLE IV
                   TERMINATION OF SERVICE; PARTICIPANT VESTING

         Section 4.01.     VESTING .

         A.       VESTING - IN GENERAL. A Participant's interest in his Rollover
                  Account and Transfer Account, if any, shall at all times be
                  fully vested and Nonforfeitable. A Participant's interest in
                  his Profit Sharing Account shall be fully vested and
                  Nonforfeitable upon and after his attaining Normal Retirement
                  Age (if employed by the Employer on or after that date), or if
                  his employment terminates as a result of death or Disability.
                  If a Participant's employment terminates prior to Normal
                  Retirement Age for any reason other than death or Disability,
                  then for each Year of Service, he shall receive a
                  Nonforfeitable percentage of his Profit Sharing Account
                  (forfeiting the balance) equal to the following:

                                                          Profit Sharing Account
                  Years of Service                        Percent Nonforfeitable
                  ----------------                        ----------------------

                  Less than three (3)                                   0%
                  At least three (3) but less than four (4)            20%
                  At least four (4) but less than five (5)     40%
                  At least five (5) but less than six (6)              60%
                  At least six (6) but less than seven (7)             80%
                  At least seven (7) or more                          100%

         Section 4.02. INCLUDED YEARS OF SERVICE - VESTING . For purposes of
determining Years of Service under Section 4.01, the Plan shall take into
account all Years of Service an Employee completes except any Year of Service
after the Participant first incurs a "FORFEITURE BREAK IN SERVICE." The
Participant incurs a Forfeiture Break in Service when he incurs five consecutive
Breaks in Service. This exception excluding Years of Service after a Forfeiture
Break in Service shall apply for the sole purpose of determining the
Nonforfeitable percentage of a Participant's Profit Sharing Account which
accrued for his benefit prior to the Forfeiture Break in Service. For Part-time
Employees, a Year of Service for vesting purposes shall be earned for each Plan
Year during which such Part-time Employee earns a Year of Service.

         Section 4.03. FORFEITURE OCCURS . A Participant's forfeiture, if any,
of his Profit Sharing Account shall occur under the Plan:

                                       20
<PAGE>   26

                                                                            PAGE

         A.       As of the Accounting Date of the Plan Year in which the
                  Participant first incurs a Forfeiture Break in Service, or, if
                  earlier and if applicable,

         B.       On the date the Participant receives (or is deemed to receive)
                  a "Cash-out Distribution," as defined in Section 4.04, of the
                  Nonforfeitable percentage of his Profit Sharing Account as a
                  result of his termination of participation in the Plan in
                  accordance with Section 4.04 below.

         The Committee shall determine the percentage of a Participant's Profit
Sharing Account forfeiture, if any, under this Section 4.03 solely by reference
to the vesting schedule of Section 4.01. A Participant shall not forfeit any
portion of his Profit Sharing Account for any other reason or cause except as
expressly provided by this Section 4.03.

         Section 4.04. CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS .
If, pursuant to Article V, a partially-vested Participant receives a "CASH-OUT
DISTRIBUTION" before he incurs a Forfeiture Break in Service, the Cash-out
Distribution will result in an immediate forfeiture of the nonvested portion of
the Participant's Account Balance derived from Employer contributions. A
partially-vested Participant is a Participant whose Nonforfeitable Percentage
determined under Section 4.01 is less than 100%. A Cash-out Distribution is a
distribution of the entire present value of the Participant's Nonforfeitable
Account Balance.

         A "deemed" Cash-out Distribution rule applies to a 0% vested
Participant. A 0% vested Participant is a Participant whose Account Balance
derived from Employer contributions is entirely forfeitable at the time of his
Separation from Service. If the Participant's Account is not entitled to an
allocation of Employer contributions or Participant forfeitures for the Plan
Year in which he has a Separation from Service, the Committee will apply the
deemed Cash-out Distribution rules as if the 0% vested Participant received a
Cash-out Distribution on the date of the Participant's Separation from Service.
If the Participant's Account is entitled to an allocation of Employer
contributions or Participant forfeitures for the Plan Year in which he has a
Separation from Service, the Committee will apply the deemed Cash-out
Distribution rule as if the 0% vested Participant received a Cash-out
Distribution on the first day of the first Plan Year beginning after his
Separation from Service. For purposes of applying the restoration provisions of
Section 4.05, the Committee will treat the 0% vested Participant as repaying his
Cash-out Distribution on the first date of his re-employment with the Employer.

                                       21
<PAGE>   27

                                                                            PAGE

         Section 4.05. RESTORATION OF FORFEITED PORTION OF ACCOUNT . A
Participant who is reemployed after receiving a Cash-out Distribution (or deemed
Cash-out Distribution) of the Nonforfeitable percentage of his Account shall
have the right to repay the Trustee in cash the entire amount of the Cash-out
Distribution he received, if the Committee must restore his Account under the
requirements of this Section 4.05.

         A.       RESTORATION AND CONDITIONS UPON RESTORATION. Subject to the
                  conditions of this paragraph, if the Participant makes the
                  Cash-out Distribution repayment, the Committee shall restore
                  his Account attributable to Employer contributions to the same
                  dollar amount as the dollar amount of such portion of his
                  Account on the Accounting Date, or other Valuation Date,
                  immediately preceding the date of the Cash-out Distribution
                  (or deemed Cash-out Distribution), unadjusted for any gains or
                  losses occurring subsequent to that Accounting Date, or other
                  Valuation Date. Notwithstanding such repayment, the Committee
                  shall not restore a re-employed Participant's Account under
                  the immediately preceding sentence if:

                  (i)      The Participant's Account was 100% Nonforfeitable at
                           the time of the Cash-out Distribution; or

                  (ii)     The Participant incurred a Forfeiture Break in
                           Service. This condition shall apply only if repayment
                           is not made before the earlier of five years after
                           the first date on which the Participant is
                           re-employed by the Employer, or the close of the
                           first period of five consecutive Breaks in Service
                           commencing after the Cash-out Distribution.

         B.       TIME AND METHOD OF RESTORATION. If neither of the two
                  conditions preventing restoration of the Participant's Account
                  applies, the Committee shall restore the Participant's Account
                  as of the Plan Year Accounting Date coincident with or
                  immediately following the repayment. To restore the
                  Participant's Account, the Committee, to the extent necessary,
                  shall allocate to the Participant's Account:

                  (i)      First, the amount, if any, of Participant forfeitures
                           the Committee would otherwise allocate under Section
                           3.06; and

                                       22
<PAGE>   28

                                                                            PAGE

                  (ii)     Second, the Employer contribution for the Plan Year
                           to the extent made under a discretionary formula.

                  To the extent the amount(s) available for restoration for a
                  particular Plan Year are insufficient to enable the Committee
                  to make the required restoration, the Employer shall
                  contribute, without regard to any requirement or condition of
                  Section 3.03, such additional amount as is necessary to enable
                  the Committee to make the required restoration. If, for a
                  particular Plan Year, the Committee must restore the Account
                  of more than one re-employed Participant, then the Committee
                  shall make the restoration allocation(s) to each such
                  Participant's Account in the same proportion that a
                  Participant's restored amount for the Plan Year bears to the
                  restored amount for the Plan Year of all re-employed
                  Participants.

         C.       SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Committee
                  restores the Participant's Account, the Trustee shall, at the
                  direction of the Company or the Committee, invest the amount
                  the Participant has repaid in a segregated Account maintained
                  solely for that Participant. The Trustee shall invest the
                  amount in the Participant's segregated Account in federally
                  insured interest-bearing savings account(s), time deposit(s),
                  or similar investments, including a money market or similar
                  fund currently offered as an investment option under the
                  Trust. Until commingled with the balance of the Trust Fund on
                  the date the Committee restores the Participant's Account, the
                  Participant's segregated Account shall remain a part of the
                  Trust, but it alone shall share in any income it earns and it
                  alone shall bear any expense or loss it incurs. The Company or
                  the Committee shall direct the Trustee to repay to the
                  Participant as soon as is administratively practicable the
                  full amount of the Participant's segregated Account if the
                  Committee determines one or more of the conditions of
                  subparagraph A of this Section 4.05 prevents restoration as of
                  the applicable Accounting Date, notwithstanding the
                  Participant's repayment.

         Section 4.06. TRANSFER BETWEEN CLASSES OF EMPLOYEES . For purposes of
vesting, in the case of an Employee who transfers from a Part-time Employee
classification to a class of Employees whose Service is determined on an elapsed
time basis, the Employee shall receive credit for a Period of Service consisting
of (a) a number of years equal to the number of Years of

                                       23
<PAGE>   29

                                                                           PAGE

Service credited to the Employee before the Plan Year during which the transfer
occurs, and (b) the greater of (i) the Period of Service that would be credited
to the Employee under the elapsed time method for his Service during the entire
Plan Year in which the transfer occurs or (ii) the Service taken into account
under the hours counting method as of the date of the transfer. In addition, the
Employee shall receive credit for Service subsequent to the transfer commencing
on the day after the last day of the Plan Year in which the transfer occurs.

                                       24
<PAGE>   30

                                                                            PAGE

                                    ARTICLE V
                     TIME AND METHOD OF PAYMENT OF BENEFITS

         Section 5.01. RETIREMENT . Upon termination of a Participant's
employment for any reason after attaining Normal Retirement Age, the Company or
the Committee shall direct the Trustee to commence payment of the Participant's
Account to him (or to his Beneficiary if the Participant is deceased), in
accordance with the provisions of this Article V, as soon as administratively
practicable but not later than 60 days after the close of the Plan Year in which
the Participant's employment terminates. The form of payment shall be the same
as for other Separation from Service distributions, as set forth in Section 5.02
and Sections 5.03, 5.04 and 5.05. A Participant who remains in the employ of the
Employer after attaining Normal Retirement Age shall continue to participate in
Employer contributions.

         Section 5.02. DISTRIBUTION UPON SEPARATION FROM SERVICE PRIOR TO NORMAL
RETIREMENT AGE . Upon a Participant's Separation from Service prior to attaining
Normal Retirement Age (for any reason other than death), the Committee, subject
to the requirements of this Section 5.02, shall direct the Trustee to commence
payment to the Participant of the value of his Nonforfeitable Account Balance as
provided in this Section 5.02. The following rules and definitions shall apply
to any such distribution:

         A.       "CASH-OUT DISTRIBUTION." A Cash-out Distribution is a lump sum
                  distribution of the Participant's Nonforfeitable Account
                  Balance.

         B.       CONSENT. The Participant must consent in writing to the
                  Committee's direction to the Trustee to make a distribution to
                  the Participant and to the form of the distribution if: (i)
                  the Participant's Nonforfeitable Account Balance on the date
                  the distribution commences exceeds $5,000, and (ii) the
                  Committee directs the Trustee to make a distribution to the
                  Participant prior to his attaining the later of Normal
                  Retirement Age or age 62. Furthermore, the Participant's
                  spouse must consent in writing to the distribution if: (i) the
                  Committee must obtain the Participant's consent; and (ii) the
                  qualified joint and survivor annuity provisions of ERISA
                  Section 205 apply to the distribution.

                  The consent of the Participant, and the Participant's spouse,
                  if applicable, shall be obtained in writing within the 90-day
                  period ending on the "ANNUITY STARTING

                                       25
<PAGE>   31

                                                                            PAGE

                  DATE." The Annuity Starting Date is the first day of the first
                  period for which an amount is paid as an annuity or in any
                  other form. The Plan Administrator shall notify the
                  Participant and the Participant's spouse of the right to defer
                  any distribution until the Participant's Nonforfeitable
                  Account Balance is no longer immediately distributable. Such
                  notification shall include a general description of the
                  material features, and an explanation of the relative values
                  of, the optional forms of benefit available under the Plan in
                  a manner that would satisfy the notice requirements of ERISA
                  Section 205(c), and shall be provided no less than 30 days and
                  no more than 90 days prior to the Annuity Starting Date.
                  However, if the Participant, after having received this
                  notice, affirmatively elects a distribution, such distribution
                  may commence less than 30 days after the notice was provided.

                  Notwithstanding the foregoing, only the Participant need
                  consent to the commencement of a distribution in the form of a
                  qualified joint and survivor annuity while the Account balance
                  is immediately distributable. (Furthermore, if payment in the
                  form of a qualified joint and survivor annuity is not required
                  with respect to the Participant pursuant to ERISA Section 205,
                  only the Participant need consent to the distribution of an
                  Account balance that is immediately distributable.) An Account
                  balance is immediately distributable if any part of the
                  Account balance could be distributed to the Participant (or
                  the surviving spouse) before the Participant attains, or would
                  have attained if not deceased, the later of Normal Retirement
                  Age or age 62.

         C.       TIME OF DISTRIBUTION OF ACCOUNT BALANCE. Upon Separation from
                  Service, other than for death, before Normal Retirement Age,
                  the Trustee shall, subject to the foregoing consent
                  requirements, distribute the Participant's Account balance as
                  follows:

                  (i)      If the Participant's Nonforfeitable Account Balance
                           on the date the distribution commences is $5,000 or
                           less, the Trustee shall pay such Nonforfeitable
                           Account Balance to the Participant in the form of a
                           single, lump sum Cash-out Distribution as soon as
                           administratively practicable after the Participant's
                           Separation from Service.

                                       26
<PAGE>   32

                                                                            PAGE

                  (ii)     If the Participant's Nonforfeitable Account Balance
                           on the date the distribution commences is greater
                           than $5,000, the Trustee shall pay such
                           Nonforfeitable Account Balance in the form of a
                           qualified joint and survivor annuity in accordance
                           with Section 5.03, unless the Participant makes a
                           valid waiver election under Section 5.04 and elects
                           an alternative form of distribution. The distribution
                           shall be made as soon as administratively practicable
                           after the close of the Plan Year within which the
                           Participant's Separation from Service occurred,
                           unless the Participant (and his spouse, if
                           applicable) do not consent to such immediate
                           distribution. Notwithstanding the foregoing,
                           distributions in the form of a qualified joint and
                           survivor annuity shall not apply to any Employee who
                           becomes a Participant on or after July 1, 1998.
                           Distributions in the form of a qualified joint and
                           survivor annuity will only apply to those
                           Participants who previously participated in the
                           Packaging Coordinators, Inc. Money Purchase Pension
                           Plan or the Packaging Coordinators, Inc. Profit
                           Sharing Plan, and whose Account under such plan was
                           merged into the Plan effective July 1, 1998.

         D.       DEFERRAL OF DISTRIBUTION OF ACCOUNT BALANCE UNTIL NORMAL
                  RETIREMENT AGE. If the Participant (and, if applicable, the
                  Participant's spouse) does not file his written consent (if
                  required) with the Trustee within the reasonable period of
                  time stated in the consent form, the Trustee shall continue to
                  hold the Participant's Account in trust until the close of the
                  Plan Year in which the Participant attains Normal Retirement
                  Age. At that time, the Trustee shall commence payment of the
                  Participant's Nonforfeitable value of his Account in
                  accordance with the provisions of this Article V; provided,
                  however, if the Participant dies after terminating employment
                  but prior to attaining Normal Retirement Age, the Committee,
                  upon notice of the death, shall direct the Trustee to commence
                  payment of the Participant's Nonforfeitable value of his
                  Account to his Beneficiary in accordance with the provisions
                  of Section 5.06.

                  A Participant who has elected to delay receiving a
                  distribution of his Account may elect to receive a
                  distribution of his Nonforfeitable Account Balance as soon as
                  administratively practicable following any subsequent
                  Valuation Date by properly completing the appropriate
                  distribution forms or procedures. If no such election is

                                       27
<PAGE>   33

                                                                            PAGE

                  made, the Participant's Nonforfeitable Account Balance shall
                  be paid as provided in Section 5.01.

         Section 5.03. METHOD OF PAYMENT OF BENEFITS UPON NORMAL RETIREMENT OR
SEPARATION FROM SERVICE (OTHER THAN DUE TO DEATH) - ANNUITY DISTRIBUTIONS TO
CERTAIN PARTICIPANTS . The provisions of this Section and Section 5.04 shall
apply only to those Employees who participated in the Packaging Coordinators,
Inc. Money Purchase Pension Plan or the Packaging Coordinators, Inc. Profit
Sharing Plan prior to July 1, 1998, the Company or the Committee shall direct
the Trustee to distribute the Nonforfeitable Account Balance of a Participant to
whom this Section applies in the form of a "QUALIFIED JOINT AND SURVIVOR
ANNUITY," unless the Participant makes a valid waiver election (described in
Section 5.04) within the 90-day period ending on the "ANNUITY STARTING DATE."
The Annuity Starting Date means the first day of the first period for which an
amount is payable as an annuity or, in the case of a benefit not payable in the
form of an annuity, the first day on which all events have occurred that entitle
the Participant to such benefit. A Qualified Joint and Survivor Annuity is an
immediate annuity that is purchasable from a commercial insurer with the
Participant's Nonforfeitable Account Balance and which is payable for the life
of the Participant with, if the Participant is married on the Annuity Starting
Date, a survivor annuity for the life of the Participant's surviving spouse
equal to 50% of the amount of the annuity payable during the joint lives of the
Participant and his spouse. The Company or the Committee shall direct the
Trustee to pay the Participant's Nonforfeitable Account Balance in a lump sum,
in lieu of a Qualified Joint and Survivor Annuity, if the Participant's
Nonforfeitable Account Balance at the time the distribution commences is not
greater than $5,000.

         If the Participant has in effect a valid waiver election regarding the
Qualified Joint and Survivor Annuity, the Company or the Committee shall direct
the Trustee to distribute the Participant's Nonforfeitable Account Balance in
accordance with Section 5.05. For purposes of applying this Article V, the
Committee shall treat a former spouse as the Participant's spouse or surviving
spouse to the extent provided under a qualified domestic relations order (as
defined in ERISA Section 206(d)).

         Section 5.04. WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY .
With respect only to those Employees subject to Section 5.03, the Committee
shall, no less than 30 days (or seven days, if the 30-day period is waived by
the Participant and the Participant's spouse, if applicable), nor more than 90
days before the Participant's Annuity Starting Date, provide the Participant a
written explanation of the terms and conditions of the Qualified Joint and
Survivor Annuity, the

                                       28
<PAGE>   34

                                                                            PAGE

Participant's right to make, and the effect of, an election to waive the
Qualified Joint and Survivor Annuity form of benefit, the rights of the
Participant's spouse regarding the waiver election, and the Participant's right
to make, and the effect of, a revocation of a waiver election.

         A married Participant's waiver election is not valid unless:

         A.       The Participant's spouse (to whom the survivor annuity is
                  payable under the Qualified Joint and Survivor Annuity) has
                  consented in writing to the waiver election, the spouse's
                  consent acknowledges the effect of the election, and a notary
                  public or a member of the Committee (or its representative)
                  witnesses the spouse's consent; and

         B.       If the spouse is not the Participant's sole primary
                  Beneficiary, the spouse consents to the Participant's
                  Beneficiary designation or to any change in the Participant's
                  Beneficiary designation, or the spouse expressly permits
                  designations by the Participant without any further spousal
                  consent.

         A Participant's waiver of the Qualified Joint and Survivor Annuity form
of benefit shall not be effective unless the election designates a form of
benefit payment that may not be changed without spousal consent (or the spouse
expressly permits designations by the Participant without any further spousal
consent). Any consent by a spouse obtained under this provision or establishment
that the consent of a spouse may not be obtained shall be effective only with
respect to such spouse. A consent that permits designations by the Participant
without any requirement of further consent by such spouse must acknowledge that
the spouse has the right to limit consent to a specific beneficiary, and a
specific form of benefit where applicable, and that the spouse voluntarily
elects to relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the spouse at any
time before the commencement of benefits. The number of revocations shall not be
limited. No consent obtained under this provision shall be valid unless the
Participant has received notice as provided in this Section 5.04. The spouse's
consent to a waiver of the Qualified Joint and Survivor Annuity is irrevocable
unless the Participant revokes the waiver election.

         The Committee may accept as valid a waiver election that does not
satisfy the spousal consent requirements if the Committee establishes the
Participant does not have a spouse, the

                                       29
<PAGE>   35

                                                                            PAGE

Committee is not able to locate the Participant's spouse, or other circumstances
exist under ERISA which will excuse the consent requirement.

         Section 5.05. OPTIONAL FORMS OF BENEFIT PAYMENTS . Subject to Sections
5.03 and 5.04, if applicable, a Participant may elect to receive payment of the
Participant's Nonforfeitable Account Balance under one of the following methods:

         A.       By payment in a single lump sum in cash based upon the value
                  of the Account on the Valuation Date coinciding with or
                  immediately preceding the date the distribution is requested.

         B.       By payment in substantially equal monthly or quarterly
                  installments over a fixed reasonable period of time, not
                  exceeding (i) the life expectancy of the Participant, or (ii)
                  the joint life and last survivor expectancy of the Participant
                  and an individual the Participant designates as his
                  Beneficiary.

         To facilitate installment payments under this Section 5.05, the
Committee, in its sole discretion, may direct the Trustee to segregate all or
any part of the Participant's Account in a separate account. A segregated
account shall remain a part of the Trust, but it alone shall share in any income
it earns, and it alone shall bear any expense or loss it incurs.

         Section 5.06. DISTRIBUTIONS UPON DEATH . Upon the death of the
Participant, the Company or the Committee shall direct the Trustee to pay the
Participant's Nonforfeitable Account Balance in accordance with this Section
5.06.

         A.       DISTRIBUTION BEGINNING BEFORE DEATH. If the Participant's
                  death occurs after the Trustee has commenced payment of the
                  Participant's Nonforfeitable Account Balance, the Company or
                  the Committee shall direct the Trustee to complete payment
                  over a period that does not exceed the payment period that had
                  commenced.

         B.       DISTRIBUTION BEGINNING AFTER DEATH OF EMPLOYEES WHO BECOME
                  PARTICIPANTS ON OR AFTER JULY 1, 1998. With respect to those
                  Employees who begin participating in the Plan on or after July
                  1, 1998, if the Participant's death occurs prior to his
                  Annuity Starting Date, the distribution of the Participant's
                  entire Nonforfeitable

                                       30
<PAGE>   36

                                                                            PAGE

                  Account Balance shall be made to the Participant's Beneficiary
                  in a single lump sum payment or in installments over no more
                  than five years, as elected by the Beneficiary.

                  The Company or the Committee shall direct the Trustee to
                  distribute the Participant's Nonforfeitable Account Balance to
                  the Participant's Beneficiary as soon as practicable after
                  notification of the Participant's death. However, if the
                  Participant's Nonforfeitable Account Balance at the time of
                  distribution exceeds $5,000, neither the Company nor the
                  Committee shall direct the Trustee to distribute the Account
                  to the Participant's Beneficiary prior to the date the
                  Participant would have attained the later of Normal Retirement
                  Age or age 62, without written consent of the Beneficiary if
                  the Beneficiary is the Participant's surviving spouse. If the
                  Beneficiary is not the Participant's surviving spouse, the
                  Beneficiary must elect to have distribution of the entire
                  amount payable completed on or before the last day of the
                  calendar year which contains the fifth anniversary of the date
                  of the Participant's death.

         C.       DISTRIBUTION BEGINNING AFTER DEATH OF CERTAIN EMPLOYEES
                  PARTICIPATING IN THE PACKAGING COORDINATORS, INC. MONEY
                  PURCHASE PENSION AND PROFIT SHARING PLANS PRIOR TO JULY 1,
                  1998. This subsection C and the following subsections D, E and
                  F, shall apply only to those Employees who participated in the
                  Packaging Coordinators, Inc. Money Purchase Pension Plan or
                  the Packaging Coordinators, Inc. Profit Sharing Plan prior to
                  July 1, 1998. If a married Participant dies prior to his
                  Annuity Starting Date, the Company or the Committee shall
                  direct the Trustee to distribute the married Participant's
                  Nonforfeitable Account Balance to the Participant's surviving
                  spouse as a "PRERETIREMENT SURVIVOR ANNUITY," unless the
                  Participant has made a valid waiver election pursuant to
                  subsection D. An unmarried Participant's Nonforfeitable
                  Account Balance shall be payable to his designated
                  Beneficiary.

                  The Preretirement Survivor Annuity is an annuity payable to
                  the Participant's surviving spouse for life. The Participant's
                  Nonforfeitable Account Balance shall be applied to the
                  purchase of an annuity for the surviving spouse's life. The
                  surviving spouse may elect to have such annuity distributed
                  within a reasonable period after the Participant's death.

                                       31
<PAGE>   37

                                                                            PAGE

                  Notwithstanding the foregoing, if the Participant's
                  Nonforfeitable Account Balance at the time the distribution
                  commences is not greater than $5,000, the Participant's
                  Nonforfeitable Account Balance shall be paid in a single lump
                  sum to the Participant's surviving spouse or other Beneficiary
                  in lieu of a Preretirement Survivor Annuity as soon as
                  administratively practicable after his death.

                  If the Participant is unmarried or has waived the
                  Preretirement Survivor Annuity in accordance with subsection
                  D, and dies before distribution of his Nonforfeitable Account
                  Balance begins, distribution of the Participant's entire
                  Nonforfeitable Account Balance shall be made in a single lump
                  sum payment in cash or in equal or nearly equal quarterly
                  installments over a fixed period not exceeding (i) if the
                  Beneficiary is the deceased Participant's surviving spouse,
                  the Beneficiary's remaining life expectancy at the time
                  installment payments begin, or (ii) if the Beneficiary is
                  other than the deceased Participant's surviving spouse, five
                  years from the Participant's death.

                  If the designated Beneficiary is the Participant's surviving
                  spouse, the date distributions are required to begin shall not
                  be earlier than December 31 of the calendar year immediately
                  following the calendar year in which the Participant died. If
                  the Beneficiary is not the Participant's surviving spouse,
                  distribution of the entire amount payable must be completed on
                  or before the last day of the calendar year which contains the
                  fifth anniversary of the date of the Participant's death.

                  A Participant also may elect the form and timing of payment of
                  his Nonforfeitable Account Balance to his Beneficiaries. If
                  the Participant has not made an election concerning the manner
                  of payment to his Beneficiary by the time of his death, the
                  Participant's surviving spouse or designated Beneficiary must
                  elect the method of distribution no later than the time when
                  distributions would be required to begin under this subsection
                  C. If the Participant has no surviving spouse or designated
                  Beneficiary, or if the designated Beneficiary does not elect a
                  method of distribution, distribution of the Participant's
                  entire Nonforfeitable Account Balance must be completed by
                  December 31 of the calendar year containing the fifth
                  anniversary of the Participant's death.

                                       32
<PAGE>   38

                                                                            PAGE

         D.       WAIVER ELECTION FOR MARRIED PARTICIPANTS. The Committee shall
                  provide a written explanation of the Preretirement Survivor
                  Annuity to each married Participant to whom this subsection
                  applies, within whichever of the following periods ends last:
                  (i) the period beginning on the first day of the Plan Year in
                  which the Participant attains age 32 and ending on the last
                  day of the Plan Year in which the Participant attains age 34;
                  (ii) a reasonable period after an Employee becomes a
                  Participant; (iii) a reasonable period after the joint and
                  survivor rules become applicable to the Participant; or (iv) a
                  reasonable period after a fully subsidized Preretirement
                  Survivor Annuity no longer satisfies the requirements for a
                  fully subsidized benefit. A reasonable period described in
                  clauses (ii), (iii) and (iv) is the period beginning one year
                  before and ending one year after the applicable event. If the
                  Participant separates from Service before attaining age 35,
                  clauses (i), (ii), (iii) and (iv) do not apply and the
                  Committee shall provide the written explanation within the
                  period beginning one year before and ending one year after the
                  Separation from Service. The written explanation shall
                  describe, in a manner consistent with Treasury Regulations,
                  the terms and conditions of the Preretirement Survivor Annuity
                  in a manner which is comparable to the explanation of the
                  Qualified Joint and Survivor Annuity required under Section
                  5.04. The Plan does not limit the number of times the
                  Participant may revoke a waiver of the Preretirement Survivor
                  Annuity or make a new waiver during the election period.

                  A Participant's waiver election of the Preretirement Survivor
                  Annuity is not valid unless (a) the Participant makes the
                  waiver election no earlier than the first day of the Plan Year
                  in which he attains age 35, and (b) the Participant's spouse
                  (to whom the Preretirement Survivor Annuity is payable)
                  satisfies the consent requirements described in this Article
                  V, except the spouse need not consent to the form of benefit
                  payable to the designated Beneficiary. The spouse's consent to
                  the waiver of the Preretirement Survivor Annuity is
                  irrevocable, unless the Participant revokes the waiver
                  election.

                  Notwithstanding the time of election requirement of clause (a)
                  above, a Participant who will not yet attain age 35 as of the
                  end of any current Plan Year may make a special qualified
                  election to waive the Preretirement Survivor Annuity for the
                  period beginning on the date of such election and ending on
                  the first day of the Plan Year in which the Participant will
                  attain age 35. Such election will not be

                                       33
<PAGE>   39

                                                                            PAGE

                  valid unless the Participant receives a written explanation of
                  the Preretirement Survivor Annuity in a manner which is
                  comparable to the explanation required under Section 5.04.
                  Preretirement Survivor Annuity coverage will be automatically
                  reinstated as of the first day of the Plan Year in which the
                  Participant attains age 35. Any new waiver on or after such
                  date shall be subject to the full requirements of this Section
                  5.06.

         E.       For purposes of this Section 5.06, any amount paid to a child
                  of the Participant will be treated as if it had been paid to
                  the surviving spouse if the amount becomes payable to the
                  surviving spouse when the child reaches the age of majority.

         F.       The Committee shall use the life expectancy multiples under
                  United States Internal Revenue Code Regulation Section 1.72-9
                  for purposes of applying this Section. The Committee may
                  recalculate the life expectancy of the Participant's surviving
                  spouse not more frequently than annually, but may not
                  recalculate the life expectancy of a nonspouse designated
                  Beneficiary after the Trustee commences payment to the
                  designated Beneficiary.

         Section 5.07. DESIGNATION OF BENEFICIARY . A Participant may from time
to time designate, in writing, a Beneficiary or Beneficiaries, contingently or
successively, to whom the Trustee shall pay his Account in the event of his
death. A Participant's Beneficiary designation shall not be valid unless the
Participant's spouse consents (in accordance with the requirements of ERISA
Section 205) to the Beneficiary designation. A Participant's Beneficiary
designation does not require spousal consent if the Participant's spouse is the
Participant's designated Beneficiary. The Committee shall prescribe the form for
the written designation of Beneficiary and, upon the Participant's filing the
form with the Committee, the Participant shall effectively revoke all
designations filed prior to that date by the same Participant.

         Section 5.08. FAILURE OF BENEFICIARY DESIGNATION . If a Participant
fails to name a Beneficiary in accordance with Section 5.07, or if the
Beneficiary named by a Participant predeceases him, then the Trustee shall pay
the Participant's Account in a single lump sum to the Participant's surviving
spouse, if any, and if there is no surviving spouse, to the Participant's
estate.

                                       34
<PAGE>   40

                                                                            PAGE

         If the Beneficiary survives the Participant but dies before complete
distribution of the Participant's Account, the remaining portion of the
Participant's Account shall be paid in a lump sum to any contingent
Beneficiaries named by the Participant or, if there are none, to the legal
representative of the estate of such deceased Beneficiary. The Company or the
Committee shall direct the Trustee as to the method and to whom the Trustee
shall make payment under this Section 5.08.

         Section 5.09. SPECIAL RULES FOR TRANSFER ACCOUNTS . Notwithstanding any
provision of this Article V to the contrary, with respect to any Participant who
has one or more Transfer Accounts consisting in whole or in part of Transfer
Contributions which, by operation of relevant law and regulation (including, but
not limited to, ERISA and the Code), must be distributed or made available under
the same terms and conditions under which amounts held thereunder were
previously held (prior to their becoming Transfer Contributions), the Committee
shall, upon the written request of the Participant (in the case of optional
forms of benefit), cause the Trustee to distribute or make available such
Transfer Contributions at such times and in such manner as may be so required.

         Section 5.10. DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS . Nothing
contained in this Plan shall prevent the Trustee, in accordance with the
direction of the Committee, from complying with the provisions of a qualified
domestic relations order (as defined in ERISA Section 206(d)). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order at any time, irrespective of whether the Participant
has attained his earliest retirement age (as defined under ERISA Section 206(d))
under the Plan. A distribution to an alternate payee prior to the Participant's
attainment of the earliest retirement age is available only if the order
specifies distribution at that time or permits an agreement between the Plan and
the alternate payee to authorize such an earlier distribution. In addition, if
the present value of the alternate payee's benefits under the Plan exceeds
$5,000, and the order requires, the alternate payee must consent to any
distribution occurring prior to the Participant's attainment of the earliest
retirement age. Nothing in this Section 5.10 gives a Participant the right to
receive a distribution at a time not permitted under the Plan, nor does this
Section 5.10 give the alternate payee the right to receive a form of payment not
permitted under the Plan.

         The Committee shall establish reasonable procedures to determine the
qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Committee promptly shall notify the Participant and any
alternate payee named in the order, in writing, of the receipt of

                                       35
<PAGE>   41

                                                                            PAGE

the order and the Plan's procedures for determining the qualified status of the
order. Within a reasonable period of time after receiving the domestic relations
order, the Committee shall determine the qualified status of the order and shall
notify the Participant and each alternate payee, in writing, of its
determination. The Committee shall provide notice under this paragraph by
mailing to the individual's address specified in the domestic relations order,
or in a manner consistent with Labor Regulations.

         If any portion of the Participant's Nonforfeitable Account Balance is
payable during the period the Committee is making its determination of the
qualified status of the domestic relations order, the Company or the Committee
shall direct the Trustee to segregate the amounts payable in a separate account
and to invest the segregated account solely in fixed income investments or to
maintain a separate bookkeeping account of said amounts. If the Committee
determines the order is a qualified domestic relations order within 18 months of
the first date on which payments were due under the terms of the order, the
Company or the Committee shall direct the Trustee to distribute the separate
account in accordance with the order. If the Committee does not make its
determination of the qualified status of the order within the above-described
18-month period, the Company or the Committee shall direct the Trustee to
distribute the segregated account in the manner the Plan would distribute it if
the order did not exist, and shall apply the order prospectively if the
Committee later determines the order is a qualified domestic relations order.

         To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Committee may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate account and
to invest the account in the money market investment option, or in other fixed
income investments. A segregated subaccount shall remain a part of the Trust,
but it alone shall share in any income it earns, and it alone shall bear any
expense or loss it incurs.

         The Trustee shall make any payment or distributions required under this
Section 5.10 by separate benefit checks or other separate distribution to the
alternate payee(s).

         Section 5.11. RE-EMPLOYMENT OF PARTICIPANTS RECEIVING PAYMENTS . In the
event that a Participant who is receiving installment payments is re-employed by
the Company, such Participant shall continue to receive payments from his
Account in accordance with the method of payment in effect prior to his
re-employment unless such method is changed. Payments shall be drawn from his
entire Account, including any contributions allocated to his Account after his
re-employment.

                                       36
<PAGE>   42

                                                                            PAGE

         Section 5.12. FORM OF PAYMENTS . Lump-sum and installment payments will
be made in cash. If a Participant or Beneficiary elects an annuity form of
distribution, a nontransferable annuity contract shall be purchased from a
commercial insurer with the Participant's Nonforfeitable Account Balance and
distributed to the Participant or Beneficiary.

         Section 5.13. LOST PARTICIPANT OR BENEFICIARY . The Account of a
Participant shall be forfeited if the Committee, after reasonable effort, is
unable to locate the Participant or his Beneficiary to whom payment is due. The
amount of the forfeiture shall reduce the Employer's Profit Sharing
Contributions under Section 3.02. However, any such forfeited Account will be
reinstated and become payable if a claim is made by the Participant or
Beneficiary for such Account. The Committee shall prescribe uniform and
non-discriminatory rules for carrying out this provision.

         Section 5.14. FACILITY OF PAYMENT . If the Committee deems any person
entitled to receive any amount under the provisions of this Plan incapable of
receiving or disbursing the same by reason of minority, illness or infirmity,
mental incompetency, or incapacity of any kind, the Committee may, in its
discretion, direct the Trustee to take any one or more of the following actions:

         A.       To apply such amount directly for the comfort, support and
                  maintenance of such person;

         B.       To reimburse any person for any such support theretofore
                  supplied to the person entitled to receive any such payment;

         C.       To pay such amount to any person selected by the Committee to
                  disburse it for such comfort, support and maintenance,
                  including without limitation, any relative who has undertaken,
                  wholly or partially, the expense of such person's comfort,
                  care and maintenance, or any institution in whose care or
                  custody the person entitled to the amount may be. The
                  Committee may, in its discretion, deposit any amount due to a
                  minor to his credit in any savings or commercial bank of the
                  Committee's choice.

                                       37
<PAGE>   43

                                                                            PAGE

         Section 5.15. DISTRIBUTION OF ASSETS TRANSFERRED FROM MONEY PURCHASE
PENSION PLAN . Notwithstanding any provision of the Plan to the contrary, to the
extent that 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 to this
Plan from a money purchase pension plan qualified under Section 1165(a) of the
Code (other than any portion of those assets and liabilities attributable to
voluntary employee contributions). The conversion of a plan from a money
purchase plan to a profit sharing plan shall be treated as a transfer for the
purpose of this Section.
         Section 5.16. WRITTEN INSTRUCTION NOT REQUIRED . Any elections made or
distributions processed under this Article V may be accomplished through
telephonic or similar instructions in accordance with the rules and procedures
established by the Committee, to the extent they are consistent with the
requirements of the Code and ERISA. Notwithstanding the foregoing, however,
spousal consents and waivers, to the extent required, may only be granted in
writing.

                                       38
<PAGE>   44

                                                                            PAGE

                                   ARTICLE VI
         WITHDRAWALS

         Section 6.01. SPECIAL WITHDRAWAL RULES APPLICABLE TO TRANSFER ACCOUNTS.
Notwithstanding any other Plan provision to the contrary, if the Puerto Rico
Treasury Department requires distribution to be made (or offered) with respect
to any or all amounts held on behalf of a Participant with respect to a
predecessor or transferor plan, as a condition of preserving the tax-qualified
status of this Plan or of said predecessor or transferor plan, or if a court of
competent jurisdiction issues an order or decree in respect of the Plan or its
fiduciaries which is determined under relevant Puerto Rico and/or federal law to
be enforceable, and which compels the distribution of a Participant's Plan
interest, the Committee will be entitled to direct the prompt distribution (or
offer of distribution) of such amounts.

         Section 6.02. WITHDRAWALS UPON ATTAINMENT OF AGE 59 1/2 . Subject to
the consent requirements of Article V, if applicable, a Participant who has
attained age 59 1/2 may elect to make withdrawals from the Nonforfeitable
portion of his Account in the Plan that is not subject to the restrictions set
forth in Section 5.15. Any election to begin, change or cease withdrawals shall
be made in accordance with procedures established by the Committee or in such
other manner as permitted by the Committee. Payment of amounts so requested
shall be made within an administratively reasonable time after the withdrawal
has been requested. The Committee may establish other rules of uniform
applicability regarding the timing of and procedures for such withdrawals.

                                       39
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                                                                            PAGE

                                   ARTICLE VII
                       EMPLOYER ADMINISTRATIVE PROVISIONS

         Section 7.01. ESTABLISHMENT OF TRUST . The Company shall execute a
Trust Agreement with one or more persons or parties who shall serve as the
Trustee. The Trustee so selected shall serve as the Trustee until otherwise
replaced or said Trust Agreement is terminated. The Company may from time to
time enter into such further agreements with the Trustee or other parties and
make such amendments to said Trust Agreement as it may deem necessary or
desirable to carry out this Plan. Any and all rights or benefits which may
accrue to a person under this Plan shall be subject to all the terms and
provisions of the Trust Agreement.

         Section 7.02. INFORMATION TO COMMITTEE . Each Employer shall supply
current information to the Committee as to the name, date of birth, date of
employment, annual compensation, leaves of absence, Years of Service, and date
of termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information that
the Committee considers necessary. The Employer's records as to the current
information the Employer furnishes to the Committee shall be conclusive as to
all persons.

         Section 7.03. NO LIABILITY . The Employer assumes no obligation or
responsibility to any of its Employees, Participants or Beneficiaries for any
act of, or failure to act, on the part of its Committee or the Trustee.

         Section 7.04. INDEMNITY OF COMMITTEE . Each Employer indemnifies and
saves harmless the members of the Committee, and each of them, from and against
any and all loss (including reasonable attorneys' fees and costs of defense)
resulting from liability to which the Committee, or the members of the
Committee, may be subjected by reason of any act or conduct (except willful
misconduct or gross negligence) in their official capacities in the
administration of the Trust or this Plan or both, including all expenses
reasonably incurred in their defense, in case the Employer fails to provide such
defense. The indemnification provisions of this Section 7.04 shall not relieve
any Committee member from any liability he may have under ERISA for breach of a
fiduciary duty to the extent such indemnification is prohibited by ERISA.
Furthermore, the Committee members and the Employer may execute a letter
agreement further delineating the indemnification agreement of this Section
7.04, provided the letter agreement must be consistent with and shall not
violate ERISA.

                                       40
<PAGE>   46

                                                                            PAGE

         Section 7.05. INVESTMENT FUNDS . The Committee and the Trustee shall
establish certain investment funds (the "INVESTMENT FUNDS"), rules governing the
administration of the Investment Funds, and procedures for directing the
investment of Participant Accounts among the Investment Funds. The Trustee shall
invest and reinvest the principal and income of each Account in the Trust Fund
as required by ERISA and as directed by Participants. The Committee and the
Employer reserve the right to change the investment options available under the
Plan and the rules governing investment designations at any time and from time
to time.

         Each Investment Fund shall be established by the Trustee at the
direction or with the concurrence of the Committee. Investment Funds may, as so
determined, consist of preferred and common stocks, bonds, debentures,
negotiable instruments and evidences of indebtedness of every kind and form, or
in securities and units of participation issued by companies registered under
the Investment Companies Act of 1940, master limited partnerships or real estate
investment trusts, or in any common or collective fund established or maintained
for the collective investment and reinvestment of assets of pension and profit
sharing trusts which are exempt from federal income taxation under the Code, or
any combination of the foregoing. The Trustee shall hold, manage, administer,
invest, reinvest, account for and otherwise deal with the Trust Fund and each
separate Investment Fund as provided in the Trust Agreement.

                                       41
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                                                                            PAGE

                                  ARTICLE VIII
                      PARTICIPANT ADMINISTRATIVE PROVISIONS

         Section 8.01. PERSONAL DATA TO COMMITTEE . Each Participant and each
Beneficiary of a deceased Participant must furnish to the Committee such
evidence, data or information as the Committee considers necessary or desirable
for the purpose of administering the Plan. The provisions of this Plan are
effective for the benefit of each Participant upon the condition precedent that
each Participant will furnish promptly full, true and complete evidence, data
and information when requested by the Committee, provided the Committee shall
advise each Participant of the effect of his failure to comply with its request.

         Section 8.02. ADDRESS FOR NOTIFICATION . Each Participant and each
Beneficiary of a deceased Participant shall file with the Committee from time to
time in writing, or otherwise notify the Committee (in accordance with its rules
and procedures) of, his post office address and any change of post office
address. Any communication, statement or notice addressed to a Participant, or
Beneficiary, at his last post office address filed with the Committee, or as
shown on the records of the Employer, shall bind the Participant, or
Beneficiary, for all purposes of this Plan.

         Section 8.03. ASSIGNMENT OR ALIENATION . Subject to ERISA Section
206(d) relating to qualified domestic relations orders, neither a Participant
nor a Beneficiary shall anticipate, assign or alienate (either at law or in
equity) any benefit provided under the Plan, and the Trustee shall not recognize
any such anticipation, assignment or alienation. Furthermore, a benefit under
the Plan is not subject to attachment, garnishment, levy, execution or other
legal or equitable process.

         Section 8.04. NOTICE OF CHANGE IN TERMS . The Employer, within the time
prescribed by ERISA and the applicable regulations, shall furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.

         Section 8.05. PARTICIPANT DIRECTION OF INVESTMENT . The Committee and
the Trustee shall establish rules governing the administration of Investment
Funds and procedures for Participant direction of investment, including rules
governing the timing, frequency and manner of making investment elections. The
Committee and the Employer reserve the right to change the investment options
available under the Plan and rules governing investment designations from

                                       42
<PAGE>   48

                                                                            PAGE

time to time. Nothing in this or any provision of the Plan shall require the
Trustee, the Employer, or the Committee to implement Participant investment
directions or changes in such directions, or to establish any procedures other
than on an administratively practicable basis, as determined by the Employer in
its discretion.

         Each Participant shall, in accordance with procedures established by
the Committee and the Trustee, direct that his Account and contributions thereto
be invested and reinvested in any one or more of the Investment Funds. The
investment of any such monies shall be subject to such restrictions as the
Committee may determine, in its sole discretion, to be advisable or necessary
under the circumstances. Moreover, in accordance with procedures established by
the Trustee and agreed to by the Plan Administrator, Participants may, when
administratively practicable, be permitted to change their current and
prospective investment designations through telephone, "on-line" or similar
instructions to the Trustee or its authorized agent on a frequency established
under such procedures, as in effect from time to time.

         The exercise of investment direction by a Participant will not cause
the Participant to be a fiduciary solely by reason of such exercise, and neither
the Trustee nor any other fiduciary of this Plan will be liable for any loss or
any breach that results from the exercise of investment direction by the
Participant. The investment designation procedures established under the Plan
shall be and are intended to be in compliance with the requirements of ERISA
Section 404(c) and the regulations thereunder.

         Section 8.06. CHANGE OF INVESTMENT DESIGNATIONS . Each Participant who
is entitled to direct the investment of additional contributions to be allocated
to his Account in accordance with Section 8.05 hereof may select how such
additional contributions are to be invested. Such investment directions shall be
made in accordance with applicable rules or procedures established by the
Trustee and the Plan Administrator.

         Each Participant may prospectively re-elect how those amounts then held
in his Account are to be reinvested in the various Investment Funds until
otherwise changed or modified. Such investment directions shall be made in
accordance with applicable rules or procedures established by the Trustee and
the Plan Administrator.

         Notwithstanding the foregoing to the contrary, the Committee may, in
its sole discretion and where the terms of any relevant investment contracts,
regulated investment companies or

                                       43
<PAGE>   49

                                                                            PAGE

pooled or group trusts so require, impose special terms, conditions and
restrictions upon a Participant's right to direct the investment in, or transfer
into or out of, such contracts, companies or trusts.

         Section 8.07. LITIGATION AGAINST THE TRUST . If any legal action filed
against the Trustee, the Employer as Plan Administrator, or the Committee, or
against any member or members of the Committee, by or on behalf of any
Participant or Beneficiary, results adversely to the Participant or to the
Beneficiary, the Trustee shall reimburse itself, the Employer or the Committee,
or any member or members of the Committee, all costs and fees expended by it or
them by surcharging all costs and fees against the sums payable under the Plan
to the Participant or to the Beneficiary, but only to the extent a court of
competent jurisdiction specifically authorizes and directs any such surcharges
and only to the extent ERISA Section 206(d) does not prohibit any such
surcharges.

         Section 8.08. INFORMATION AVAILABLE . Any Participant in the Plan or
any Beneficiary may examine copies of the Plan, the Trust, the Plan description,
the latest annual report, any bargaining agreement, contract or any other
instrument under which the Plan was established or is operated. The Company will
maintain all of the items listed in this Section 8.08 in its offices, or in such
other place or places as it may designate from time to time in order to comply
with the regulations issued under ERISA, for examination during reasonable
business hours. Upon the written request of a Participant or Beneficiary, the
Employer shall furnish him with a copy of any item listed in this Section 8.08.
The Employer may make a reasonable charge to the requesting person for the copy
so furnished.

         Section 8.09. APPEAL PROCEDURE FOR DENIAL OF BENEFITS . The Employer
shall provide adequate notice in writing to any Participant or to any
Beneficiary (the "Claimant") whose claim for benefits under the Plan the
Committee has denied. The Employer's notice to the Claimant shall set forth:

         A.       The specific reason for the denial;

         B.       Specific references to pertinent Plan provisions on which the
                  Committee based its denial;

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<PAGE>   50

                                                                            PAGE

         C.       A description of any additional material and information
                  needed for the Claimant to perfect his claim and an
                  explanation of why the material or information is needed; and

         D.       That any appeal the Claimant wishes to make of the adverse
                  determination must be in writing to the Committee within 90
                  days after receipt of the Employer's notice of denial of
                  benefits. The Employer's notice must further advise the
                  Claimant that his failure to appeal the action to the
                  Committee in writing within the 90-day period will render the
                  Committee's determination final, binding and conclusive.

         If the Claimant should appeal to the Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and comments
he, or his duly authorized representative, feels are pertinent. The Claimant, or
his duly authorized representative, may review pertinent Plan documents. The
Committee shall re-examine all facts related to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances. The Committee shall advise the Claimant of its decision within 60
days of the Claimant's written request for review, unless special circumstances
(such as a hearing) would make the rendering of a decision within the 60-day
limit unfeasible, but in no event shall the Committee render a decision
respecting a denial for a claim for benefits later than 120 days after its
receipt of a request for review.

         The Employer's notice of denial of benefits shall identify the name of
each member of the Committee and the name and address of the Committee member to
whom the Claimant may forward his appeal.

                                       45
<PAGE>   51

                                                                            PAGE

                                   ARTICLE IX
                           ADMINISTRATION OF THE PLAN

         Section 9.01. ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN
AND TRUST ADMINISTRATION . The fiduciaries shall have only those powers, duties,
responsibilities and obligations as are specifically given them under this Plan
and the Trust. The Employer shall have the sole responsibility for making the
contributions provided for under Article III. The Company shall have the sole
authority to appoint and remove the Trustee and members of the Committee, and to
amend or terminate, in whole or in part, the Plan or the Trust. The Company
shall have the final responsibility for administration of the Plan, which
responsibility is specifically described in this Plan and the Trust, and shall
be the "Plan Administrator" and the named fiduciary. The Committee shall have
the specific delegated powers and duties described in the further provisions of
this Article IX and such further powers and duties as hereinafter may be
delegated to it by the Employer. The Trustee shall have the sole responsibility
for the administration of the Trust and the management of the assets held under
the Trust, all as specifically provided in the Trust. Each fiduciary warrants
that any directions given, information furnished, or action taken by it shall be
in accordance with the provisions of this Plan and the Trust, authorizing or
providing for such direction, information or action. Furthermore, each fiduciary
may rely upon any such direction, information or action of another fiduciary as
being proper under this Plan and the Trust, and is not required under this Plan
or the Trust to inquire into the propriety of any such direction, information or
action. It is intended under this Plan and the Trust that each fiduciary shall
be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under this Plan and the Trust and shall not be
responsible for any act or failure to act of another fiduciary. No fiduciary
guarantees the Trust Fund in any manner against investment loss or depreciation
in asset value.

         Section 9.02. APPOINTMENT OF COMMITTEE . A Committee consisting of
three or more persons shall be appointed by and serve at the pleasure of the
Board to assist in the administration of the Plan. In the event of any vacancies
on the Committee, the remaining Committee member(s) then in office shall
constitute the Committee and shall have full power to act and exercise all
powers of the Committee as described in this Article IX. All usual and
reasonable expenses of the Committee may be paid in whole or in part by the
Employer, and any expenses not paid by the Employer shall be paid by the Trustee
out of the principal or income of the Trust Fund. Any members of the Committee
who are Employees shall not receive compensation with respect to their services
for the Committee.

                                       46
<PAGE>   52

                                                                            PAGE

         Section 9.03. COMMITTEE PROCEDURES . The Committee may act at a meeting
or in writing without a meeting. The Committee may elect one of its members as
chairperson, appoint a secretary, who may or may not be a Committee member, and
advise the Trustee of all relevant actions. The secretary shall keep a record of
all meetings and forward all necessary communications to the Employer, or the
Trustee, as appropriate. The Committee may adopt such bylaws and regulations as
it deems desirable for the conduct of its affairs. All decisions of the
Committee shall be made by the vote of the majority then in office, including
actions in writing taken without a meeting. A dissenting Committee member who,
within a reasonable time after he has knowledge of any action or failure to act
by the majority, registers his dissent in writing delivered to the other
Committee members, the Employer and the Trustee, shall not be responsible for
any such action or failure to act.

         Section 9.04. RECORDS AND REPORTS . The Employer (or the Committee if
so designated by the Employer) shall exercise such authority and responsibility
as it deems appropriate in order to comply with ERISA and governmental
regulations issued thereunder relating to records of Participant's Service,
Account balances and the percentage of such Account balances that are
Nonforfeitable under the Plan; notifications to Participants; annual filings
with the Puerto Rico Treasury Department; and annual reports to the Department
of Labor.

         Section 9.05. OTHER COMMITTEE POWERS AND DUTIES . The Committee shall
have the following powers and duties:

         A.       To determine the rights of eligibility of an Employee to
                  participate in the Plan, the value of a Participant's Account,
                  and the Nonforfeitable percentage of each Participant's
                  Account;

         B.       To adopt rules of procedure and regulations necessary for the
                  proper and efficient administration of the Plan, provided the
                  rules are not inconsistent with the terms of this Plan and the
                  Trust;

         C.       To construe and enforce the terms of the Plan and the rules
                  and regulations it adopts, including the discretionary
                  authority to interpret the Plan documents and documents
                  related to the Plan's operation;

                                       47
<PAGE>   53

                                                                            PAGE

         D.       To direct the Trustee with respect to the crediting and
                  distribution of the Trust;

         E.       To review and render decisions respecting a claim for (or
                  denial of a claim for) a benefit under the Plan;

         F.       To furnish the Employer with information that the Employer may
                  require for tax or other purposes;

         G.       To engage the service of agents whom it may deem advisable to
                  assist it with the performance of its duties; and

         H.       To engage the services of an Investment Manager or Investment
                  Managers (as defined in ERISA Section 3(38)), each of whom
                  shall have full power and authority to manage, acquire or
                  dispose (or direct the Trustee with respect to acquisition or
                  disposition) of any Plan asset under its control.

         Section 9.06. RULES AND DECISIONS. The Committee may adopt such rules
as it deems necessary, desirable or appropriate. All rules and decisions of the
Committee shall be uniformly and consistently applied to all Participants in
similar circumstances. When making a determination or calculation, the Committee
shall be entitled to rely upon information furnished by a Participant or
Beneficiary, the Employer, the legal counsel of the Employer, or the Trustee.

         Section 9.07. APPLICATION AND FORMS FOR BENEFITS . The Committee may
require a Participant or Beneficiary to complete and file with the Committee an
application for a benefit and all other forms approved by the Committee, and to
furnish all pertinent information requested by the Committee. The Committee may
rely upon all such information so furnished to it, including the Participant's
or Beneficiary's current mailing address.

         Section 9.08. AUTHORIZATION OF BENEFIT PAYMENTS . The Committee shall
issue directions to the Trustee concerning all benefits that are to be paid from
the Trust Fund pursuant to the provisions of the Plan, or establish other
procedures on which the Trustee may act, and warrants that all such directions
are in accordance with this Plan.

         Section 9.09. FUNDING POLICY . The Committee shall from time to time
review all pertinent Employee information and Plan data in order to establish
the funding policy of the Plan

                                       48
<PAGE>   54

                                                                            PAGE

and to determine the appropriate methods of carrying out the Plan's objectives.
The Committee shall communicate periodically, as it deems appropriate, to the
Trustee and to any Plan Investment Manager, the Plan's short-term and long-term
financial needs so that investment policy can be coordinated with Plan financial
requirements.

         Section 9.10. FIDUCIARY DUTIES . In performing their duties, all
fiduciaries with respect to the Plan shall act solely in the interest of the
Participants and their Beneficiaries, and:

         A.       For the exclusive purpose of providing benefits to the
                  Participants and their Beneficiaries;

         B.       With the care, skill, prudence and diligence under the
                  circumstances then prevailing that a prudent man acting in
                  like capacity and familiar with such matters would use in the
                  conduct of an enterprise of like character and with like aims;

         C.       To the extent a fiduciary possesses and exercises investment
                  responsibilities, by diversifying the investments of the Trust
                  Fund so as to minimize the risk of large losses, unless under
                  the circumstances it is clearly prudent not to do so; and

         D.       In accordance with the documents and instruments governing the
                  Plan insofar as such documents and instruments are consistent
                  with the provisions of Title I of ERISA.

         Section 9.11. ALLOCATION OR DELEGATION OF DUTIES AND RESPONSIBILITIES .
In furtherance of their duties and responsibilities under the Plan, the
Committee and the Board may, subject always to the requirements of Section 9.10:

         A.       Employ agents to carry out nonfiduciary responsibilities;

         B.       Employ agents to carry out fiduciary responsibilities (other
                  than trustee responsibilities as defined in Section 405(c)(3)
                  of ERISA);

         C.       Consult with counsel, who may be of counsel to the Company;
                  and

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<PAGE>   55

                                                                            PAGE

         D.       Provide for the allocation of fiduciary responsibilities
                  (other than trustee responsibilities as defined in Section
                  405(c)(3) of ERISA) between the members of the Board, in the
                  case of the Board, and among the members of the Committee, in
                  the case of the Committee.

         Section 9.12. PROCEDURE FOR THE ALLOCATION OR DELEGATION OF FIDUCIARY
DUTIES . Any action described in subsections B or D of Section 9.11 may be taken
by the Committee or the Board only in accordance with the following procedure:

         A.       Such action shall be taken by a majority of the Committee or
                  by the Board, as the case may be, in a resolution approved by
                  a majority of such Committee or by a majority of the Board.
         B.       The vote cast by each member of the Committee or the Board for
                  or against the adoption of such resolution shall be recorded
                  and made a part of the written record of the Committee's or
                  the Board proceedings.

         C.       Any delegation of fiduciary responsibilities or any allocation
                  of fiduciary responsibilities among members of the Committee
                  or the Board may be modified or rescinded by the Committee or
                  the Board according to the procedure set forth in subsections
                  A and B of this Section 9.12.

         Section 9.13. SEPARATE ACCOUNTING . The amounts in a Participant's
Profit Sharing Account, Rollover Account and Transfer Account(s), if any, shall
be separately accounted for. Amounts credited to such subaccounts shall be
allocated among the Participant's designated investments on a reasonable pro
rata basis, in accordance with the valuation procedures of the Trustee and the
Investment Funds. The Trustee and the Committee shall also establish uniform
procedures which they may change from time to time, for the purpose of adjusting
the subaccounts of a Participant's Account for withdrawals, distributions and
contributions. Gains, losses, withdrawals, distributions, forfeitures and other
credits or charges may be separately allocated among such subaccounts on a
reasonable and consistent basis in accordance with such procedures.

                                       50
<PAGE>   56

                                                                            PAGE

         Section 9.14. VALUE OF PARTICIPANT'S ACCOUNT . The value of each
Participant's Account shall be based on its fair market value on the appropriate
Valuation Date. A valuation shall occur at least once every Plan Year, and
otherwise in accordance with the terms of the Trust and administratively
practicable procedures approved by the Committee. Periodically, on a frequency
determined by the Committee and the Trustee, the Participant will receive a
statement showing the transaction activity and value of his Account as of a date
set forth in the statement.

         Section 9.15. INDIVIDUAL STATEMENT . As soon as practicable after the
Accounting Date of each Plan Year, but within the time prescribed by ERISA and
the regulations under ERISA, and at such other times as determined by the
Committee in its discretion, the Committee will deliver to each Participant (and
to each Beneficiary of a deceased Participant) a statement reflecting the
condition of his Account in the Trust as of that date and such other information
ERISA requires be furnished the Participant or Beneficiary. No Participant,
except a member of the Committee and its designees, shall have the right to
inspect the records reflecting the Account of any other Participant.

         Section 9.16. FEES AND EXPENSES FROM FUND . The Trustee shall receive
reasonable annual compensation as may be agreed upon from time to time between
the Employer and the Trustee. The Trustee shall pay all expenses reasonably
incurred by it or by the Employer, the Committee, or other professional advisers
or administrators in the administration of the Plan from the Trust Fund unless
the Employer pays the expenses. The Committee shall not treat any fee or expense
paid, directly or indirectly, by the Employer as an Employer contribution. No
person who is receiving full pay from the Employer shall receive compensation
for services from the Trust Fund. Brokerage commissions, transfer taxes, and
other charges and expenses in connection with the purchase and sale of
securities shall be charged to each Investment Fund and/or Participant's
Account, as applicable. Fees related to investments subject to Participant
direction, and other fees resulting from or attributable to expenses incurred in
relation to a Participant or Beneficiary or his Account may be charged to his
Account to the extent permitted under the Code and ERISA.

                                       51
<PAGE>   57

                                                                            PAGE

                                    ARTICLE X
                                  MISCELLANEOUS

         Section 10.01. EVIDENCE . Anyone required to give evidence under the
terms of the Plan may do so by certificate, affidavit, document or other
information that the person to act in reliance may consider pertinent, reliable
and genuine, and to have been signed, made or presented by the proper party or
parties. Both the Committee and the Trustee shall be fully protected in acting
and relying upon any evidence described under the immediately preceding
sentence.

         Section 10.02. NO RESPONSIBILITY FOR EMPLOYER ACTION . Neither the
Trustee nor the Committee shall have any obligation or responsibility with
respect to any action required by the Plan to be taken by the Employer, any
Participant or eligible Employee, nor for the failure of any of the above
persons to act or make any payment or contribution, or to otherwise provide any
benefit contemplated under this Plan, nor shall the Trustee or the Committee be
required to collect any contribution required under the Plan, or determine the
correctness of the amount of any Employer contribution. Neither the Trustee nor
the Committee need inquire into or be responsible for any action or failure to
act on the part of the others. Any action required of a corporate Employer shall
be by its Board or its designee.

         Section 10.03. FIDUCIARIES NOT INSURERS . The Trustee, the Committee,
the Plan Administrator and the Employer in no way guarantee the Trust Fund from
loss or depreciation. The Employer does not guarantee the payment of any money
that may be or becomes due to any person from the Trust Fund. The liability of
the Committee and the Trustee to make any payment from the Trust Fund at any
time and all times is limited to the then available assets of the Trust.

         Section 10.04. WAIVER OF NOTICE . Any person entitled to notice under
the Plan may waive the notice, unless the Code or Treasury Regulations require
the notice, or ERISA specifically or impliedly prohibits such a waiver.

         Section 10.05. SUCCESSORS . The Plan shall be binding upon all persons
entitled to benefits under the Plan, their respective heirs and legal
representatives, upon the Employer, its successors and assigns, and upon the
Trustee, the Committee, the Plan Administrator and their successors.

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                                                                            PAGE

         Section 10.06. WORD USAGE . Words used in the masculine shall apply to
the feminine where applicable, and wherever the context of the Plan dictates,
the plural shall be read as singular and the singular as the plural.

         Section 10.07. HEADINGS . The headings are for reference only. In the
event of a conflict between a heading and the content of a section, the content
of the section shall control.

         Section 10.08. STATE LAW . Ohio law shall determine all questions
arising with respect to the provisions of this agreement, except to the extent a
federal statute supersedes Ohio law.

         Section 10.09. EMPLOYMENT NOT GUARANTEED . Nothing contained in this
Plan, and nothing with respect to the establishment of the Trust, any
modification or amendment to the Plan or the Trust, the creation of any Account,
or the payment of any benefit, shall give any Employee, Employee-Participant or
Beneficiary any right to continue employment, or any legal or equitable right
against the Employer, or an Employee of the Employer, the Trustee or its agents
or employees, or the Plan Administrator. Nothing in the Plan shall be deemed or
construed to impair or affect in any manner the right of the Employer, in its
discretion, to hire Employees and, with or without cause, to discharge or
terminate the service of Employees.

                                       53
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                                                                            PAGE

                                   ARTICLE XI
                    EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION

         Section 11.01. EXCLUSIVE BENEFIT . Except as provided under Article
III, the Employer shall have no beneficial interest in any asset of the Trust
and no part of any asset in the Trust shall ever revert to or be repaid to the
Employer, either directly or indirectly; nor prior to the satisfaction of all
liabilities with respect to the Participants and their Beneficiaries under the
Plan, shall any part of the corpus or income of the Trust Fund, or any asset of
the Trust, be (at any time) used for, or diverted to, purposes other than the
exclusive benefit of the Participants or their Beneficiaries.

         Section 11.02. AMENDMENT BY EMPLOYER . The Company shall have the right
at any time and from time to time:

         A.       To amend this agreement in any manner it deems necessary or
                  advisable in order to qualify (or maintain qualification of)
                  this Plan and the Trust created under it under the appropriate
                  provisions of the Code; and

         B.       To amend this agreement in any other manner.

                  However, no amendment shall authorize or permit any part of
the Trust Fund (other than the part required to pay taxes and administration
expenses) to be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries or estates. No amendment
shall cause or permit any portion of the Trust Fund to revert to or become a
property of the Employer; and the Company shall not make any amendment that
affects the rights, duties or responsibilities of the Plan Administrator or the
Committee without the written consent of the affected Plan Administrator or the
affected member of the Committee. Furthermore, no amendment shall decrease a
Participant's Account balance or accrued benefit or reduce or eliminate any
benefits protected under United States Internal Revenue Code Section 411(d)(6),
including an optional form of distribution, with respect to a Participant with
an Account balance or accrued benefit at the date of the amendment, except to
the extent otherwise permitted by applicable law.
         The Company shall make all amendments in writing. Amendments shall be
considered properly authorized by the Company, if approved or ratified by the
Board, any committee of the Board, or by the Committee unless the subject of the
amendment has been reserved to the Board.

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                                                                            PAGE

Each amendment shall state the date to which it is either retroactively or
prospectively effective, and may be executed by any authorized officer of the
Company.

         Section 11.03. AMENDMENT TO VESTING PROVISIONS . Although the Company
reserves the right to amend the vesting provisions at any time, the Committee
shall not apply an amended vesting schedule to reduce the Nonforfeitable
percentage of any Participant's Account derived from Employer contributions
(determined as of the later of the date the Company adopts the amendment, or the
date the amendment becomes effective) to a percentage less than the
Nonforfeitable percentage computed under the Plan without regard to the
amendment. An amended vesting schedule will apply to a Participant only if the
Participant receives credit for at least one Hour of Service after the new
schedule becomes effective.

         If the Company makes a permissible amendment to the vesting provisions,
each Participant having at least three Years of Service for vesting purposes
with the Employer may elect to have the percentage of his Nonforfeitable Account
Balance computed under the Plan without regard to the amendment. The Participant
must file his election with the Employer within 60 days of the latest of (a) the
Company's adoption of the amendment; (b) the effective date of the amendment; or
(c) his receipt of a copy of the amendment. The Committee, as soon as
practicable, shall forward a true copy of any amendment to the vesting schedule
to each affected Participant, together with an explanation of the effect of the
amendment, the appropriate form upon which the Participant may make an election
to remain under the vesting schedule provided under the Plan prior to the
amendment and notice of the time within which the Participant must make an
election to remain under the prior vesting schedule. The election described in
this Section 11.03 does not apply to a Participant if the amended vesting
schedule provides for vesting that is at least as rapid at all times as the
vesting schedule in effect prior to the amendment. For purposes of this Section
11.03, an amendment to the vesting schedule includes any amendment that directly
or indirectly affects the computation of the Nonforfeitable percentage of an
Employee's rights to his Employer-derived Account.

         Section 11.04. DISCONTINUANCE . The Employer shall have the right, at
any time, to suspend or discontinue its contributions under the Plan, and the
Company shall have the right to terminate, at any time, this Plan and the Trust
created under this agreement. The Plan shall terminate upon the first to occur
of the following:

         A.       The date terminated by action of the Company.

                                       55
<PAGE>   61

                                                                            PAGE

         B.       The date the Employer shall be judicially declared bankrupt or
                  insolvent.

         C.       The dissolution, merger, consolidation or reorganization of
                  the Employer or the sale by the Employer of all or
                  substantially all of its assets, unless the successor or
                  purchaser makes provision to continue the Plan, in which event
                  the successor or purchaser shall substitute itself as the
                  Employer under this Plan.

         Section 11.05. FULL VESTING ON TERMINATION . Notwithstanding any other
provision of this Plan to the contrary, upon either full or partial termination
of the Plan, or, if applicable, upon the date of complete discontinuance of
contributions to the Plan, an affected Participant's right to his Account shall
be 100% Nonforfeitable.

         Section 11.06. MERGER, DIRECT TRANSFER AND ELECTIVE TRANSFER . The
Trustee shall not consent to, or be a party to, any merger or consolidation with
another plan, or to a transfer of assets or liabilities to another plan, unless
immediately after the merger, consolidation or transfer, the surviving plan
provides each Participant a benefit equal to or greater than the benefit each
Participant would have received had the Plan terminated immediately before the
merger or consolidation or transfer. The Trustee possesses the specific
authority to enter into merger agreements or direct transfer of assets
agreements with the trustees of other retirement plans described in Code Section
1165(a) and to accept the direct transfer of plan assets, or to transfer plan
assets, as a party to any such agreement, only upon the consent or direction of
the Employer or the Committee.

         If permitted by the Employer or the Committee in its discretion, the
Trustee may accept a direct transfer of plan assets on behalf of an Employee
prior to the date the Employee satisfies the Plan's eligibility condition(s). If
the Trustee accepts such a direct transfer of plan assets, the Committee and the
Trustee shall treat the Employee as a Participant for all purposes of the Plan
except that the Employee shall not share in Employer contributions or
Participant forfeitures under the Plan until he actually becomes a Participant
in the Plan. The Trustee shall hold, administer and distribute the transferred
assets as a part of the Trust Fund, and the Trustee shall maintain a separate
Transfer Account for the benefit of the Employee on whose behalf the Trustee
accepted the transfer in order to reflect the value of the transferred assets.

                                       56
<PAGE>   62

                                                                            PAGE

         The Trustee may not consent to, or be a party to, a merger,
consolidation or transfer of assets with a defined benefit plan, except with
respect to an elective transfer, unless the Committee consents and so directs,
and the transfer is consistent with the Code and with ERISA. The Trustee will
hold, administer and distribute the transferred assets as a part of the Trust
Fund and the Trustee shall maintain a separate Transfer Account for the benefit
of the Employee on whose behalf the Trustee accepted the transfer in order to
reflect the value of the transferred assets. Unless a transfer of assets to this
Plan is an elective transfer, the Plan will preserve all United States Internal
Revenue Code Section 411(d)(6) protected benefits with respect to those
transferred assets, in the manner described in Section 11.02.

         A transfer is an elective transfer if: (a) the transfer satisfies the
first paragraph of this Section 11.06; (b) the transfer is voluntary, under a
fully informed election by the Participant; (c) the Participant has an
alternative that retains his United States Internal Revenue Code Section
411(d)(6) protected benefits (including an option to leave his benefit in the
transferor plan, if that plan is not terminating); (d) the transfer satisfies
the applicable spousal consent requirements of the Code; (e) the transferor plan
satisfies the joint and survivor notice requirements of the Code, if the
Participant's transferred benefit is subject to those requirements; (f) the
Participant has a right to immediate distribution from the transferor plan, in
lieu of the elective transfer; (g) the transferred benefit is at least the
greater of the single sum distribution provided by the transferor plan for which
the Participant is eligible or the present value of the Participant's accrued
benefit under the transferor plan payable at that plan's normal retirement age;
(h) the Participant has a 100% Nonforfeitable interest in the transferred
benefit; and (i) the transfer otherwise satisfies applicable Treasury
Regulations. An elective transfer may occur between qualified plans of any type.

         If the Plan receives a direct transfer (by merger or otherwise) of
elective contributions (or amounts treated as elective contributions) under a
plan with a Code Section 1165(e) arrangement, the distribution restrictions of
Code Section 1165(e)(2) continue to apply to those transferred elective
contributions.

         Section 11.07. TERMINATION . Upon termination of the Plan, the
distribution provisions of Article IV and Article V shall remain operative,
except that:

         A.       If the present value of the Participant's Nonforfeitable
                  Account does not exceed $5,000, the Committee will direct the
                  Trustee to distribute the Participant's

                                       57
<PAGE>   63

                                                                            PAGE

                  Nonforfeitable Account to him in a lump sum as soon as
                  administratively practicable after the Plan terminates; and

         B.       If the present value of the Participant's Nonforfeitable
                  Account exceeds $5,000, the Participant or the Beneficiary, in
                  addition to the distribution events permitted under Articles
                  IV and V, may elect to have the Trustee commence distribution
                  of his Nonforfeitable Account as soon as administratively
                  practicable after the Plan terminates.

         The Trust shall continue until the Trustee, after written direction
from the Committee, has distributed all of the benefits under the Plan. To
liquidate the Trust, the Committee will, to the extent required, purchase a
deferred annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable Account
exceeds $5,000 and the Participant does not elect an immediate distribution
pursuant to this Section 11.07.

         The Employer has executed this Plan in Dublin, Ohio on the date set
forth below.

                                                   PACKAGING COORDINATORS, INC.

                                                   BY: /s/ CAROLE TOMKO
                                                       -------------------------

                                                   ITS: CORPORATE VICE PRESIDENT
                                                        ------------------------

                                                   DATE: JUNE 30, 1999
                                                         -----------------------

                                       58
<PAGE>   64

                                                                            PAGE

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

                             PARTICIPATING EMPLOYERS

                          Packaging Coordinators, Inc.

                   Packaging Coordinators Incorporated, Caribe

                               Tri-Line Co., Inc.

                                       59
<PAGE>   65

                                 FIRST AMENDMENT
                                     TO THE
                      PCI-PR PROFIT SHARING AND RETIREMENT
                                  SAVINGS PLAN
                         (EFFECTIVE AS OF JULY 1, 1998)

                             BACKGROUND INFORMATION

A.       The Corporation maintains a profit sharing plan known as the PCI-PR
         Profit Sharing Retirement Savings Plan (the "Plan") for the benefit of
         its employees and their beneficiaries.

B.       Pursuant to Section 11.02 of the Plan, the Corporation may amend the
         Plan at any time.

C.       The Corporation desires to amend the Plan to revise the eligibility
         requirements for employees of the Corporation who are hired on and
         after July 1, 1999.

D.       The sole director of the Corporation has authorized this amendment to
         the Plan pursuant to an Action in Writing by the Sole Director of
         Packaging Coordinators, Inc.

                              AMENDMENT TO THE PLAN

         1.       Effective as of July 1, 1999, Section 2.01 of the Plan shall
                  be amended in its entirety to read as follows:

                  Section 2.01. ELIGIBILITY. Each Eligible Employee shall be
                  eligible to become a Participant in the Plan. Each Eligible
                  Employee who was a Participant in the Packaging Coordinators,
                  Inc. Profit Sharing Plan and/or in the Packaging Coordinators,
                  Inc. Money Purchase Pension Plan on the day before the
                  Effective Date of this Plan shall continue as a Participant in
                  this Plan. Any other Eligible Employee who is employed by the
                  Employer on and after July 1, 1999, shall become a Participant
                  upon completion of 180 days of Service; provided, however,
                  that an Eligible Employee who is employed by the Employer
                  prior to July 1, 1999, shall become a Participant upon
                  completion of six months of Service. Notwithstanding the
                  foregoing, with respect to any Eligible Employee who is
                  Part-time Employee, such eligible Part-time Employee must
                  complete a Year of Service within a single Eligibility
                  Computation Period in order to participate in the Plan. Each
                  Eligible Employee shall become a Participant in the Plan as of
                  the entry date coinciding with his satisfaction of these
                  requirements.

         2.       All other provisions of the Plan shall remain in full force
                  and effect.

<PAGE>   66

                                SECOND AMENDMENT
                                     TO THE
                PCI-PR PROFIT SHARING AND RETIREMENT SAVINGS PLAN
                         (EFFECTIVE AS OF JULY 1, 1998)

                             BACKGROUND INFORMATION

A.       Packaging Coordinators, Inc. (the "Company") maintains a profit sharing
         plan known as the PCI-PR Profit Sharing and Retirement Savings Plan
         (the "Plan") for the benefit of its employees and their beneficiaries
         who are residents of Puerto Rico.

B.       Pursuant to Section 11.02 of the Plan, the Company may amend the Plan
         at any time.

C.       The Company desires to amend the Plan to add a cash or deferred
         arrangement to the Plan in accordance with Section 1165(e) of the
         Puerto Rico Internal Revenue Code of 1994, as amended, (the "Code") and
         a provision for discretionary matching contributions.

D.       The Company desires to change the name of the Plan to reflect the
         coverage of employees at additional Puerto Rican entities and include
         Allegiance PRO Inc. as a Participating Employer in the Plan.

E.       The sole director of the Company has authorized this amendment to the
         Plan pursuant to an Action in Writing by the Sole Director of Packaging
         Coordinators, Inc.

F.       All provisions in this Second Amendment shall be effective as of
         January 1, 2000, unless another date is specified herein.

                              AMENDMENT TO THE PLAN

1.       The name of the Plan shall be changed to "Cardinal Health, Inc. Profit
         Sharing & Retirement Savings Plan for Employees of Puerto Rico."

2.       A new Section is hereby added to Article I of the Plan immediately
         following the definition of "Compensation" and immediately preceding
         the definition of "Disability," with all sections thereafter
         sequentially renumbered, to read as follows:

         Section 1.09. COMPENSATION DEFERRAL ACCOUNT. The portion of a
Participant's Account credited with Compensation Deferral Contributions under
Section 3.09 of the Plan, and adjustments relating thereto.

<PAGE>   67

3.       A new Section is hereby added to Article I of the Plan immediately
         following the definition of "Former Participant" and immediately
         preceding the definition of "Income," with all section thereafter
         sequentially renumbered, to read as follows:

         Section 1.18. HIGHLY COMPENSATED EMPLOYEE. For purpose of the
limitations on Compensation Deferral Contributions set forth in Section 3.14 of
the Plan, an Employee who is more highly compensated than two-thirds (2/3rds) of
all Employees eligible to make Compensation Deferral Contributions under the
Plan.

4.       A new Section is hereby added to Article I of the Plan immediately
         following the definition of "Leased Employee" and immediately preceding
         the definition of "Nonforfeitable," to read as follows:

         Section 1.22. MATCHING ACCOUNT. The portion of a Participant's Account
credited with Matching Contributions pursuant to Section 3.11, and adjustments
relating thereto.

5.       A new Section is hereby added to Article I of the Plan immediately
         following the definition of "Nonforfeitable Account Balance" and
         immediately preceding the definition of "Normal Retirement Age," to
         read as follows:

         Section 1.25. NON-HIGHLY COMPENSATED EMPLOYEE. Any Eligible Employee
who has reached his Entry Date and who is not a Highly Compensated Employee.

6.       Section 1.38 of the Plan entitled "Terms Defined Elsewhere" is hereby
         amended by the addition of the following terms and corresponding Plan
         sections inserted in their proper alphabetical order:

         Actual Deferral Percentage              Section 3.14A
         Compensation Deferral Contribution      Section 3.09

7.       Section 2.01 of the Plan is hereby amended in its entirety to read as
         follows:

         Section 2.01. ELIGIBILITY. Each Eligible Employee shall be eligible to
become a Participant in the Plan. Each Eligible Employee who was a Participant
in the Packaging Coordinators, Inc. Profit Sharing Plan and/or in the Packaging
Coordinators, Inc. Money Purchase Pension Plan on the day before the Effective
Date of this Plan shall continue as a Participant in this Plan. Eligible
Employees of a Participating Employer identified in Appendix A shall become
Participants in the Plan as of the date of participation specified therein, or,
if no date is specified, in accordance with the general provisions of this
Section. Any other Eligible Employee who is employed by the Employer on and
after July 1, 1999, shall become a Participant upon completion of 180 days of
Service; provided, however, that an Eligible Employee who is employed by the
Employer prior to July 1, 1999, shall become a Participant upon completion of
six months of Service. Notwithstanding the foregoing, with respect to any
Eligible Employee who is Part-time Employee, such eligible Part-time Employee
must complete a Year of Service within a single Eligibility Computation Period
in order to participate in the

                                      -2-
<PAGE>   68

Plan. Each Eligible Employee shall become a Participant in the Plan as of the
entry date coinciding with his satisfaction of these requirements.

8.       Section 2.03 of the Plan is hereby amended in its entirety to read as
         follows:

         Section 2.03. ENROLLMENT. Prior to each Entry Date, the Committee shall
notify each Employee who is eligible to open a Compensation Deferral Account and
shall explain the rights, privileges and duties of a Participant in the Plan.
Each Eligible Employee may enroll as a Participant in the Compensation Deferral
portion of the Plan at any time on or after his Entry Date, by properly
completing the enrollment procedures established at the time by the Committee,
or by following such other reasonable procedures as the Committee may implement.
The Committee may establish rules and procedures governing the time and manner
in which enrollments shall be processed. Eligible Employees shall participate in
the profit sharing portion of the Plan upon their eligibility to share in Profit
Sharing Contributions or Special Contributions in accordance with reasonable
enrollment procedures established by the Committee. Each Eligible Employee must
complete a Beneficiary Designation Form on the forms provided by the Committee
prior to the applicable Entry Date, or by following such other reasonable
procedures as the Committee may implement.

9.       Section 3.02 is hereby amended in its entirety to read as follows:

         Section 3.02. PROFIT SHARING CONTRIBUTIONS. For each Plan Year, the
Employer may contribute to the Trust an amount determined by the Board from time
to time in its discretion. Such contributions will be in the form of "PROFIT
SHARING CONTRIBUTIONS." The amount contributed in any year may vary, in the
Employer's discretion, among the Participating Employers, and the discretionary
amounts so contributed shall be allocated only among the eligible Participants
of the Participating Employer for which the contribution was made. Whenever the
Employer elects to contribute different amounts for a Plan Year on behalf of
different Participating Employers, the Committee shall notify the Trustee, in
writing, of the amount of the contribution allocable to each group for
allocation to the eligible Participants employed within each group.

10.      The first sentence of Section 3.06 of the Plan is hereby deleted in its
         entirety and replaced with the following:

         Subject to any restoration allocation required under Section 4.05, the
Committee shall allocate and use the amount of a Participant's benefit forfeited
under the Plan to reduce its Profit Sharing Contribution and/or Matching
Contribution for the Plan Year in which the forfeiture occurs.

11.      The first two sentences of Section 3.01 of the Plan are hereby deleted
         in their entirety and replaced with the following:

         The Committee, or, if the Committee so determines, the Trustee, shall
maintain an Account for each Participant and Former Participant having an amount
to his credit in the Trust Fund. Each Account shall be divided into separate
subaccounts for "Compensation Deferral

                                      -3-
<PAGE>   69

Contributions," "Matching Contributions" and "Profit Sharing Contributions," as
defined below. If a Participant has made a "Rollover Contribution" or "Transfer
Contribution," as defined below, separate subaccounts shall be established for
such contributions as well.

12.      A new Section 3.09 is hereby added to the end of Article III of the
         Plan immediately following Section 3.08 to read as follows:

         Section 3.09. COMPENSATION DEFERRAL CONTRIBUTIONS. For any Plan Year,
each Participant may elect to have allocated to his Account an amount of his
Compensation for such Plan Year, which amount shall be a whole percentage,
rounded to the nearest dollar, of not less than one percent but not more than
the lesser of $8,000 or 10% of his Compensation for such Plan Year. Such amount
shall be known as the Participant's "COMPENSATION DEFERRAL CONTRIBUTION." A
Participant's Compensation for the Plan Year shall be reduced by the amount of
the allocation he elects for such Plan Year. All elections shall be made at the
time, in the manner, and subject to the conditions specified by the Committee,
which shall prescribe uniform and nondiscriminatory rules for such elections,
and shall become effective as of the first pay period as is administratively
practicable after the election is properly made.

13.      A new Section 3.10 is hereby added to the end of Article III of the
         Plan immediately following the new Section 3.09, above, to read as
         follows:

         Section 3.10. CHANGES AND SUSPENSIONS OF COMPENSATION DEFERRAL
CONTRIBUTIONS. A Participant may change the rate of Compensation Deferral
Contributions to his Account at any time during the Plan Year, effective for the
first payroll period for which it is administratively feasible to change the
rate of such Participant's Compensation Deferral Contributions, by communicating
such rate of change in accordance with uniform rules and procedures established
by the Committee regarding the timing and manner of making such elections. In
addition, a Participant may at any time elect to suspend all contributions to
his Account by giving advance notice in any manner specified by the Committee in
accordance with its uniform rules and procedures. An election to recommence
contributions shall be effective for the first payroll period in which it is
administratively feasible to begin deferral withholdings. All suspensions and
recommencements of Compensation Deferral Contributions shall be made in the
manner and at the times specified in uniform rules and procedures established by
the Committee, which rules and procedures may be changed from time to time.

14.      A new Section 3.11 is hereby added to the end of Article III of the
         Plan immediately following the new Section 3.10, above, to read as
         follows:

         Section 3.11 MATCHING CONTRIBUTIONS. For each Plan Year, the Employer
may contribute to each eligible Participant's Account a "Matching Contribution"
in an amount determined by the Employer from time to time in its discretion. The
amount or rate of the Matching Contribution shall be announced to Participants
and other Eligible Employees, and suspended or changed on a prospective basis
only. The discretionary Matching Contribution amounts or rates of contribution
to be allocated to among eligible Participants of each Participating Employer
may vary.

                                      -4-
<PAGE>   70

         If the Employer so elects, the Employer may also make Matching
Contributions to the Plan which are "QUALIFIED MATCHING CONTRIBUTIONS."
Qualified Matching Contributions shall mean Matching Contributions that are at
all times Nonforfeitable and subject to the distribution requirement imposed on
Compensation Deferral Contributions when made to the Plan. Additional
contributions subject to these rules may be made by the Employer, or some of all
of the existing Matching Contributions may be designated as fully vested and
subject to the distribution restrictions, in order to satisfy the
nondiscrimination provisions of the Plan.

15.      A new Section 3.12 is hereby added to the end of Article III of the
         Plan immediately following the new Section 3.11, above, to read as
         follows:

         Section 3.12 MATCHING CONTRIBUTION ALLOCATION AND ACCRUAL OF BENEFIT.
Only Participants who have made Compensation Deferral Contributions during the
Plan Year shall be eligible to share in the allocation of the Matching
Contribution as set forth in Section 3.11. The allocation of Matching
Contributions shall be based on the amount or rate established in advance for
such contributions relative to the Compensation Deferral Contributions being
matched. No Matching Contributions shall be made, however, with respect to
"Excess Compensation Deferrals" as defined in Section 3.14A(ii) of the Plan.

         Matching Contributions shall become Nonforfeitable in accordance with
Section 4.01 of the Plan. In any event, Matching Contributions shall be fully
vested and Nonforfeitable at Normal Retirement Age, upon the complete or partial
termination of the Plan, or upon the complete discontinuance of Employer
contributions. Forfeitures of Matching Contributions shall be made in accordance
with Section 4.03 of the Plan.

16.      A new Section 3.13 is hereby added to the end of Article III of the
         Plan immediately following the new Section 3.12, above, to read as
         follows:

         Section 3.13. QUALIFIED NON-ELECTIVE CONTRIBUTIONS. If the Employer so
elects, the Employer may make "Qualified Non-elective Contributions" under the
Plan on behalf of all Participants or all Participants who are Non-highly
Compensated Employees in order to satisfy the Actual Deferral Percentage test.
For purposes of this Article III, Qualified Non-elective Contributions shall
mean contributions (other than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participants' Accounts that
the Participant may not elect to receive in cash until distributed from the
Plan; that are Nonforfeitable when made; and that are distributable only in
accordance with the distributions provisions that are applicable to Compensation
Deferral Contributions and Qualified Matching Contributions. Qualified
Non-elective Contributions shall be allocated to Participants' Accounts in the
same proportion that each Participant's Compensation for the Plan Year for which
the Employer makes the contribution bears to the total Compensation for all
Participants for the Plan Year (or of all Non-highly Compensated Employees, as
applicable).

                                      -5-
<PAGE>   71

17.      A new Section 3.14 is hereby added to the end of Article III of the
         Plan immediately following new Section 3.13, above, to read as follows:

         Section 3.14 LIMITATIONS APPLICABLE TO COMPENSATION DEFERRAL
         CONTRIBUTIONS.

         A.       DEFINITIONS. For purposes of this Section 3.14, the following
                  definitions shall apply:

                  (i)      "ACTUAL DEFERRAL PERCENTAGE," for each Plan Year,
                           means the average of the ratios (calculated
                           separately for each Participant in the specified
                           group) of:

                           a.       the amount of Compensation Deferral
                                    Contributions actually paid over to the
                                    Trust Fund on behalf of each such
                                    Participant for such Plan Year, including
                                    Excess Compensation Deferrals, to

                           b.       the Participant's Compensation for such Plan
                                    Year for the period during which he was a
                                    Participant in the Plan.

                  (ii)     "EXCESS COMPENSATION DEFERRALS," with respect to any
                           Plan Year, means the excess of:

                           a.       The aggregate amount of Employer
                                    contributions actually taken into account in
                                    computing the Actual Deferral Percentage of
                                    Highly Compensated Employees for such Plan
                                    Year, over

                           b.       The maximum amount of such contributions
                                    permitted by the Actual Deferral Percentage
                                    test (determined by reducing contributions
                                    made on behalf of Highly Compensated
                                    Employees in the order of their Actual
                                    Deferral Percentages, beginning with the
                                    highest of such percentages and continuing
                                    until the Actual Deferral Percentage test is
                                    satisfied).

         B.       ACTUAL DEFERRAL PERCENTAGE TEST. In any Plan Year in which the
                  Actual Deferral Percentage for the group of Highly Compensated
                  Employees, taking into account Employee elections, would be
                  more than the greater of:

                  (i)      the Actual Deferral Percentage for the group of
                           Non-highly Compensated Employees for the current Plan
                           Year, multiplied by 1.25, or

                  (ii)     the lesser of two percent plus the Actual Deferral
                           Percentage for the group of Non-highly Compensated
                           Employees for the current Plan Year or the Actual
                           Deferral Percentage for the group of Non-highly
                           Compensated Employees for the current Plan Year
                           multiplied by two,

                                      -6-
<PAGE>   72

                  the deferral elections of the Highly Compensated Employees
                  shall be reduced to the extent necessary so that the Actual
                  Deferral Percentage for the group of Highly Compensated
                  Employees is not more than the greater of subparagraphs (i) or
                  (ii) of this subsection B. Alternatively, or in addition to
                  the reduction calculated above, if the Employer has made any
                  Qualified Matching or Qualified Non-elective Contributions for
                  the Plan Year in question, the Committee may elect to treat
                  all or any part of any such contributions as Compensation
                  Deferral Contributions to the extent necessary to satisfy the
                  Actual Deferral Percentage test of this section.

         C.       CORRECTION OF EXCESS COMPENSATION DEFERRALS. The amount of
                  Excess Compensation Deferrals to be distributed to a Highly
                  Compensated Employee (as described in Section 3.15) are
                  determined in accordance with the leveling method. Under the
                  leveling method, the actual deferral percentages of individual
                  Highly Compensated Employees are reduced, with the highest
                  actual deferral percentage being reduced until either the
                  Actual Deferral Percentage test is satisfied or it equals the
                  next highest actual deferral percentage. These actual deferral
                  percentages are then reduced until either the Actual Deferral
                  Percentage test is satisfied or the next highest level of
                  actual deferral percentages is reached. These reductions shall
                  continue until the Actual Deferral Percentage test is
                  satisfied.

18.      A new Section 3.15 is hereby added to the end of Article III of the
         Plan immediately following the new Section 3.14, above, to read as
         follows:

         Section 3.15. DISTRIBUTION OF EXCESS COMPENSATION DEFERRALS.
Notwithstanding any other provision of this Plan, Excess Compensation Deferrals,
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 Compensation Deferrals were allocated for the preceding Plan Year. Such
distributions shall be made to Highly Compensated Employees on the basis of the
respective portions of the Excess Compensation Deferrals attributable to each of
such Employees under the leveling methodology described in Section 3.14C.

         Excess Compensation Deferrals shall be adjusted for any Income or loss.
The Plan Administrator shall determine whether such adjustments shall include
the period from the end of the Plan Year in which the excess arose up to the
date of corrective distribution (the "GAP PERIOD"). The income or loss allocable
to Excess Compensation Deferrals is the sum of: (i) income or loss allocable to
the Participant's Compensation Deferral Account (and, if applicable, the
Qualified Non-elective Contribution Account or the Qualified Matching
Contribution Account or both) for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Compensation Deferrals for the
year and the denominator of which is the Participant's Account balance
attributable to Compensation Deferrals (and Qualified Non-Elective Contributions
or Qualified Matching Contributions, or both, if any of such contributions are
included in the Actual Deferral Percentage test) without regard to any income or
loss occurring during such Plan Year; and (ii) if the corrective distribution is
to be adjusted for income or loss during the Gap Period, ten percent of the
amount determined under (i) multiplied

                                      -7-
<PAGE>   73

by the number of whole calendar months between the end of the Plan Year and the
date of distribution, counting the month of distribution if distribution occurs
after the 15th day of such month. Alternatively, the Committee may determine the
income or loss allocable to Excess Compensation Deferrals under any reasonable
method which does not violate the general nondiscrimination rules, is used
consistently for all Participants and for all such corrective distributions
under the Plan for the Plan Year, and is used by the Plan for allocating income
to Participants' Accounts.

19.      Section 4.01.A. of the Plan is hereby amended in its entirety to read
         as follows:

         A.       VESTING - IN GENERAL. A Participant's interest in his
                  Compensation Deferral Account, Rollover Account and Transfer
                  Account, if any, shall at all times be fully vested and
                  Nonforfeitable. A Participant's interest in his Profit Sharing
                  Account and Matching Contributions Account shall be fully
                  vested and Nonforfeitable upon and after his attaining Normal
                  Retirement Age (if employed by the Employer on or after that
                  date), or if his employment terminates as a result of death or
                  Disability. Notwithstanding any provision in an applicable
                  Appendix to the Plan, if a Participant's employment terminates
                  prior to Normal Retirement Age for any reason other than death
                  or Disability, then for each Year of Service, he shall receive
                  a Nonforfeitable percentage of his Profit Sharing Account and
                  Matching Contributions Account (forfeiting the balance) equal
                  to the following:

<TABLE>
<CAPTION>
                  Years of Service                                     Nonforfeitable Percentage
                  ----------------                                     -------------------------
<S>                                                                              <C>
                  Less than three (3)                                            0%
                  At least three (3) but less than four (4)                      20%
                  At least four (4) but less than five (5)                       40%
                  At least five (5) but less than six (6)                        60%
                  At least six (6) but less than seven (7)                       80%
                  At least seven (7) or more                                    100%
</TABLE>

         If an Appendix to the Plan provides for an alternate vesting schedule
applicable to certain Participating Employers, such alternate vesting schedule
will control.

20.      A new Section 5.17 shall be added to the end of Article V of the Plan
         to read as follows:

         5.17. NO DISTRIBUTION PRIOR TO SEPARATION FROM SERVICE, DEATH OR
DISABILITY. Except as provided below, Compensation Deferrals, Qualified
Non-elective Contributions, and Qualified Matching Contributions, and income
allocable to each, are not distributable to a Participant or his Beneficiary or
Beneficiaries, in accordance with such Participant's or Beneficiary's election,
earlier than upon Separation from Service, death or Disability.

                                      -8-
<PAGE>   74

         Such amounts may also be distributed upon:

         A.       Termination of the Plan without the establishment of a
                  successor plan.

         B.       The disposition by a corporation to an unrelated corporation
                  of substantially all of the assets used by such corporation in
                  its trade or business with respect to Employees who continue
                  employment with the corporation acquiring such assets.

         C.       The disposition by a corporation to an unrelated entity of
                  such corporation's interest in a subsidiary with respect to
                  Employees who continue employment with such subsidiary.

         D.       The attainment by the Participant of age 59 1/2, as described
                  in Section 6.02 herein.

21.      Appendix A to the Plan is hereby amended and replaced by the Appendix A
         attached hereto.

22.      A new Appendix B is hereby added to the Plan in the form attached
         hereto.

23.      All other provisions of the Plan shall remain in full force and effect.

                                      -9-
<PAGE>   75

                                   APPENDIX A

                             PARTICIPATING EMPLOYERS

                          Packaging Coordinators, Inc.

                          Packaging Coordinators Incorporated, Caribe

                          Tri-Line Co., Inc.

                          Allegiance PRO Inc. (Effective as of January 1, 2000)

<PAGE>   76

                                   APPENDIX B

                  SPECIAL RULES REGARDING ELIGIBLE EMPLOYEES OF
                               ALLEGIANCE PRO INC.

Effective January 1, 2000, Eligible Employees of Allegiance PRO Inc. shall be
eligible to participate in the Plan. All provisions of the Plan shall be
effective with respect to such Eligible Employees; provided, however, that the
provisions of this Appendix B shall replace the general provisions of the Plan,
as indicated.

1.       The vesting schedule set forth in Section 4.01.A. shall be replaced
         with the following:

         Years of Service                          Nonforfeitable Percentage
         ----------------                          -------------------------

         Less than one (1)                                   0%
         At least one (1) but less than two (2)              20%
         At least two (2) but less than three (3)            40%
         At least three (3) but less than four (4)           60%
         At least four (4) but less than five (5)            80%
         At least five (5) or more                          100%

                                      -11-
<PAGE>   77
                                 THIRD AMENDMENT
                                     TO THE
                              CARDINAL HEALTH, INC.
                    PROFIT SHARING & RETIREMENT SAVINGS PLAN
                          FOR EMPLOYEES OF PUERTO RICO
                         (EFFECTIVE AS OF JULY 1, 1998)

                             BACKGROUND INFORMATION

A.       Packaging Coordinators, Inc. (the "Company") maintains a profit sharing
         plan known as the Cardinal Health, Inc. Profit Sharing & Retirement
         Savings Plan for Employees of Puerto Rico (the "Plan") for the benefit
         of its employees and their beneficiaries who are residents of Puerto
         Rico.

B.       Pursuant to Section 11.02 of the Plan, the Company may amend the Plan
         at any time.

C.       The Company desires to amend the Plan to permit the use of forfeitures
         to offset some or all of the reasonable expenses of the Plan.

D.       The sole director of the Company has authorized this amendment to the
         Plan pursuant to an Action in Writing by the Sole Director of Packaging
         Coordinators, Inc.

E.       All provisions in this Third Amendment shall be effective as of July 1,
         1999, unless another date is specified herein.

                              AMENDMENT TO THE PLAN

1.       Section 3.06 of the Plan is amended in its entirety to read as follows:

         Section 3.06. ALLOCATION OF FORFEITURES. Subject to any restoration
         allocation required under Section 4.05, the Committee shall allocate
         and use all or a portion of the amount of a Participant's benefit
         forfeited under the Plan to either pay reasonable expenses of the Plan
         (to the extent not paid by the Employer) or reduce its Profit Sharing
         Contributions and/or Matching Contribution, as determined by the
         Committee, for the Plan Year in which the forfeiture occurs. The
         Committee shall continue to hold the undistributed, nonvested portion
         of a terminated Participant's benefit in his Account solely for his
         benefit until a forfeiture occurs at the time specified in Section
         4.03.

2.       All other provisions of the Plan shall remain in full force and effect.

<PAGE>   78

                                                                       EXHIBIT 1

                                 THIRD AMENDMENT
                                     TO THE
                              CARDINAL HEALTH, INC.
                    PROFIT SHARING & RETIREMENT SAVINGS PLAN
                          FOR EMPLOYEES OF PUERTO RICO
                         (EFFECTIVE AS OF JULY 1, 1998)

                             BACKGROUND INFORMATION

A.       Packaging Coordinators, Inc. (the "Company") maintains a profit sharing
         plan known as the Cardinal Health, Inc. Profit Sharing & Retirement
         Savings Plan for Employees of Puerto Rico (the "Plan") for the benefit
         of its employees and their beneficiaries who are residents of Puerto
         Rico.

B.       Pursuant to Section 11.02 of the Plan, the Company may amend the Plan
         at any time.

C.       The Company desires to amend the Plan to permit the use of forfeitures
         to offset some or all of the reasonable expenses of the Plan.

D.       The sole director of the Company has authorized this amendment to the
         Plan pursuant to an Action in Writing by the Sole Director of Packaging
         Coordinators, Inc.

E.       All provisions in this Third Amendment shall be effective as of July 1,
         1999, unless another date is specified herein.

                              AMENDMENT TO THE PLAN

1.       Section 3.06 of the Plan is amended in its entirety to read as follows:

         Section 3.06. ALLOCATION OF FORFEITURES. Subject to any restoration
         allocation required under Section 4.05, the Committee shall allocate
         and use all or a portion of the amount of a Participant's benefit
         forfeited under the Plan to either pay reasonable expenses of the Plan
         (to the extent not paid by the Employer) or reduce its Profit Sharing
         Contributions and/or Matching Contribution, as determined by the
         Committee, for the Plan Year in which the forfeiture occurs. The
         Committee shall continue to hold the undistributed, nonvested portion
         of a terminated Participant's benefit in his Account solely for his
         benefit until a forfeiture occurs at the time specified in Section
         4.03.

2.       All other provisions of the Plan shall remain in full force and effect.Exhibit 4-1

                               PROGRAM AGREEMENT

                                in respect of a

                         EURO MEDIUM TERM NOTE PROGRAM

THIS AGREEMENT is made on 16th June, 2000 BETWEEN:

(1)  CIBA SPECIALTY CHEMICALS CORPORATION of 560 White Plains Road, Tarrytown,
     New York 10591-9005, United States ("CSC US");

(2)  CIBA SPECIALTY CHEMICALS PLC of Hulley Road, Macclesfield, Cheshire SK10
     2NX, England ("CSC UK");

(3)  CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH of Chemiestrasse,
     D-68623 Lampertheim, Germany ("CSC Germany");

(4)  CIBA SPECIALTY CHEMICALS HOLDING INC. of Klybeckstrasse 141, CH-4002
     Basle, Switzerland (the "Guarantor");

(5)  CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED of One Cabot Square, London
     E14 4QJ;

(6)  DEUTSCHE BANK AG LONDON of Winchester House, 1 Great Winchester Street,
     EC2N 2DB;

(7)  GOLDMAN SACHS INTERNATIONAL of Peterborough Court, 133 Fleet Street,
     London EC4A 2BB;

(8)  J.P. MORGAN SECURITIES LTD. of 60 Victoria Embankment, London EC4Y 0JP;
     and

(9)  UBS AG, acting through its financial services group UBS Warburg ("UBS
     Warburg") of 1 Finsbury Avenue, London EC2M 2PP.

IT IS HEREBY AGREED as follows:

WHEREAS:

(A)  CSC US, CSC UK, CSC Germany, Ciba Specialty Chemicals Investment Ltd.,
     the Guarantor and the Dealers entered into an amended and restated
     program agreement dated 9th July, 1999 (the "Principal Program
     Agreement") in respect of a U.S.$2,000,000,000 Euro Medium Term Note
     Program of CSC US, CSC UK, CSC Germany and Ciba Specialty Chemicals
     Investment Ltd. unconditionally and irrevocably guaranteed by the
     Guarantor.

<PAGE>
                                       2

(B)  This Agreement amends and restates the Principal Program Agreement. Any
     Notes issued under the Program on or after the date hereof shall be
     issued pursuant to this Agreement. This does not affect any Notes issued
     under the Program prior to the date of this Agreement.

1.   Definitions and Interpretation

(1)  For the purposes of this Agreement, except where the context requires
     otherwise:

     "Agency Agreement" means the amended and restated agreement of even date
     herewith between the Issuers, the Guarantor, the Agent and the other
     paying agents referred to therein under which the Agent is appointed as
     issuing agent, principal paying agent and agent bank for the purposes of
     the Program;

     "Agent" means The Chase Manhattan Bank as Agent under the Agency
     Agreement and any successor agent appointed by the Issuers and the
     Guarantor in accordance with the Agency Agreement;

     "Agreement Date" means, in respect of any Note, the date on which
     agreement is reached for the issue of such Note as contemplated in Clause
     2 which, in the case of Notes issued on a syndicated basis or otherwise
     in relation to which a Subscription Agreement is entered into, shall be
     the date upon which the relevant Subscription Agreement is signed by or
     on behalf of all the parties;

     "Arranger" means each of UBS Warburg and any company appointed to the
     position of arranger for the Program or in respect of a particular issue
     of Notes under the Program and references in this Agreement to the
     "Arrangers " shall be references to the relevant Arranger;

     "Clearstream, Luxembourg" means Clearstream Banking, societe anonyme;

     "Confirmation Letter" means:

     (a)  in respect of the appointment of a third party as a Dealer for the
          duration of the Program, the Confirmation Letter substantially in
          the form set out in Part II of Appendix C hereto; and

     (b)  in respect of the appointment of a third party as a Dealer for a
          particular issue of Notes under the Program, the Confirmation Letter
          substantially in the form set out in Part IV of Appendix C hereto;

     "Dealer" means each of Credit Suisse First Boston (Europe) Limited,
     Deutsche Bank AG London, Goldman Sachs International, J.P. Morgan
     Securities Ltd., UBS Warburg, and any New Dealer and excludes any entity
     whose appointment has been terminated pursuant to Clause 10 and notice of
     termination of whose appointment has been given to the Agent by the
     Issuers and the Guarantor, and references in this Agreement to the
     "relevant Dealer" shall, in relation to any Note, be references to the
     Dealer or Dealers with whom the relevant Issuer has agreed the issue and
     purchase of such Note;

<PAGE>
                                       3

     "Dealer Accession Letter" means:

     (a)  in respect of the appointment of a third party as a Dealer for the
          duration of the Program, the Dealer Accession Letter substantially
          in the form of Part I of Appendix C hereto; and

     (b)  in respect of the appointment of a third party as a Dealer for one
          or more particular issue(s) of Notes under the Program, the Dealer
          Accession Letter substantially in the form set out in Part III of
          Appendix C hereto;

     "Deed of Covenant" means the deed poll of even date herewith,
     substantially in the form set out in Appendix F hereto, executed as a
     deed by each Issuer in favour of certain accountholders with relevant
     clearing systems;

     "Deed of Guarantee" means the deed of guarantee of even date herewith
     executed by the Guarantor under which the Guarantor irrevocably
     guarantees the obligations of the Issuers in relation to the Program;

     "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
     office, as operator of the Euroclear System, or any successor to the
     business thereof;

     "FSA" means the Financial Services Act 1986;

     "Indemnified Person" means each Dealer or, for the purposes of Clause
     8(3) each Issuer and the Guarantor, together with each of its directors,
     officers, employees and agents and each person who controls such Dealer,
     Issuer or Guarantor, as the case may be (within the meaning of section 15
     of the Securities Act);

     "Initial Documentation List" means the list of documents set out in
     Appendix A to this Agreement;

     "Issuer" means any of CSC US, CSC UK or CSC Germany in its capacity as an
     issuer of Notes, and references in this Agreement to the "relevant
     Issuer" shall, in relation to any issue of Notes, be references to the
     Issuer which is, or is intended to be, the issuer of such Notes;

     "Lead Manager" means, in relation to any Tranche of Notes, the person
     defined as the Lead Manager in the applicable Subscription Agreement or,
     when only one Dealer signs such Subscription Agreement, such Dealer;

     "Listing Agent" means, in relation to Notes which are, or are to be:

     (a)  listed on the Luxembourg Stock Exchange, Banque Internationale a
          Luxembourg S.A. or such other listing agent as the Issuers and the
          Guarantor may from time to time appoint for the purposes of liaising
          with the Luxembourg Stock Exchange; and

<PAGE>
                                       4

     (b)  listed on a Stock Exchange other than the Luxembourg Stock Exchange,
          such listing agent as the Issuers and the Guarantor may from time to
          time appoint for the purposes of liaising with such Stock Exchange;

     "Listing Rules" means, in the case of Notes which are, or are to be,
     listed on a Stock Exchange (including the Luxembourg Stock Exchange), the
     listing rules and regulations for the time being in force for such Stock
     Exchange;

     "Moody's" means Moody's Investors Service, Inc., or any successor to the
     rating agency business thereof;

     "New Dealer" means any entity appointed as an additional Dealer for the
     duration of the Program or for a particular issue of Notes in accordance
     with Clause 11;

     "Note" means a note issued or to be issued by an Issuer pursuant to this
     Agreement, which Note may be represented by a Global Note or be in
     definitive form;

     "Offering Circular" means, subject to Clause 5(2), the Offering Circular
     relating to the Program as revised, supplemented, amended or updated from
     time to time, including in relation to each Tranche of Notes, the Pricing
     Supplement relating to such Tranche and such other documents as are from
     time to time incorporated therein by reference except that for the
     purpose of clause 4(2) in respect of the Agreement Date and the Issue
     Date, the Offering Circular means the Offering Circular as at the
     Agreement Date but not including any subsequent revision, supplement or
     amendment thereto;

     "Pricing Supplement" means the pricing supplement issued in relation to
     each Tranche of Notes (substantially in the form of Annexe C to the
     Procedures Memorandum) as a supplement to the Offering Circular and
     giving details of that Tranche;

     "Procedures Memorandum" means the Operating and Administrative Procedures
     Memorandum as amended or varied from time to time (in respect of any
     Tranche) by agreement between the relevant Issuer, the Guarantor and the
     relevant Dealer with the approval in writing of the Agent;

     "Program" means the Euro Medium Term Note Program established by this
     Agreement; "Securities Act" means the Securities Act of 1933, as amended,
     of the United States of America;

     "Standard & Poor's" means Standard & Poor's Ratings Service, a division
     of the McGraw-Hill Companies Inc., or any successor to the rating agency
     business thereof;

     "Stock Exchange" means the Luxembourg Stock Exchange or any other or
     further stock exchange(s) on which any Notes may from time to time be
     listed, and references in this Agreement to the "relevant Stock Exchange"
     shall, in relation to any Notes, be references to the Stock Exchange on
     which such Notes are from time to time, or are intended to be, listed;
     and

<PAGE>
                                       5

     "Subscription Agreement" means an agreement (by whatever name called) in
     or subsequently in the form set out in Appendix E hereto or in such other
     form as may be agreed in writing between the relevant Issuer, the
     Guarantor and the Lead Manager which agreement shall be supplemental to
     this Agreement.

(2)  Terms and expressions defined in the Agency Agreement, the Conditions and
     the Pricing Supplement applicable to any Notes and not otherwise defined
     in this Agreement shall have the same meanings in this Agreement, except
     where the context otherwise requires.

(3)  In this Agreement, clause headings are inserted for convenience and ease
     of reference only and shall not affect the interpretation of this
     Agreement.

(4)  All references in this Agreement to the provisions of any statute shall
     be deemed to be references to that statute as from time to time modified,
     extended, amended or re-enacted.

(5)  All references in this Agreement to an agreement, instrument or other
     document (including this Agreement, the Agency Agreement, the Deed of
     Covenant, the Deed of Guarantee, any Series of Notes and any Conditions
     appertaining thereto) shall be construed as a reference to that
     agreement, instrument or document as the same may be amended, modified,
     varied, supplemented or novated from time to time including, but without
     prejudice to the generality of the foregoing, this Agreement as
     supplemented by any Subscription Agreement.

(6)  Words denoting the singular number only shall include the plural number
     also and vice versa; words denoting the masculine gender only shall
     include the feminine gender also; and words denoting persons only shall
     include firms and corporations and vice versa.

(7)  Any reference herein to Euroclear and/or Clearstream, Luxembourg shall,
     wherever the context so permits, be deemed to include reference to any
     additional or alternative clearance system approved by the relevant
     Issuer, the Guarantor and the Agent.

2.   Agreements to Issue and Purchase Notes

(1)  Subject to the terms and conditions of this Agreement, any Issuer and the
     Guarantor may from time to time agree with any Dealer to issue, and any
     Dealer may agree to purchase, Notes.

(2)  On each occasion upon which an Issuer, the Guarantor and any Dealer agree
     on the terms of the issue and purchase of one or more Notes by such
     Dealer:

     (a)  the relevant Issuer shall cause such Notes (which shall be initially
          represented by a Temporary Global Note) to be issued and delivered
          to a common depositary for Euroclear and Clearstream, Luxembourg so
          that the securities account(s) of such Dealer with Euroclear and/or
          with Clearstream, Luxembourg (as specified by such Dealer) is/are
          credited with such Notes on the agreed Issue Date, as described in
          the Procedures Memorandum; and

     (b)  the relevant Dealer shall, subject to such Notes being so credited,
          cause the net purchase moneys for such Notes to be paid in the
          relevant currency by transfer of funds to the relevant cash
          account(s) of the Agent with Euroclear and/or Clearstream,
          Luxembourg or (in the case of syndicated issues) the relevant
          account of the Issuer so

<PAGE>
                                       6

          that such payment is credited to such account(s) for value on the
          agreed Issue Date, as described in the Procedures Memorandum.

(3)  Unless otherwise agreed, the procedures which the parties must apply for
     the purposes of subclause (2) are set out in the Procedures Memorandum.
     Unless otherwise agreed between the relevant Issuer and the relevant
     Dealers, where more than one Dealer has agreed with the relevant Issuer
     to purchase a particular issue of Notes pursuant to this Clause, the
     obligations of such Dealers so to purchase the Notes shall be joint and
     several.

(4)  Where the relevant Issuer and the Guarantor agree with two or more
     Dealers to issue, and such Dealers agree to purchase, Notes on a
     syndicated basis, the relevant Issuer and the Guarantor shall enter into
     a Subscription Agreement with such Dealers.

(5)  Each issue of Notes denominated in a currency in respect of which
     particular laws, guidelines, regulations, restrictions or reporting
     requirements apply will only be issued in circumstances which comply with
     such laws, guidelines, regulations, restrictions or reporting
     requirements.

3.   Conditions of Issue; Updating

(1)  First issue

     The Arrangers shall circulate to each Dealer all of the documents and
     confirmations described in the Initial Documentation List immediately
     after those documents and confirmations have been given to the Arrangers
     by each Issuer and the Guarantor. Before any Issuer and the Guarantor
     reach their first agreement with any Dealer for the issue and purchase of
     Notes, that Dealer shall have received, and found satisfactory, in its
     reasonable opinion, all of the documents and confirmations described in
     the Initial Documentation List.

(2)  Each issue

     The obligations of a Dealer under any agreement for the issue and
     purchase of Notes made pursuant to Clause 2 are conditional upon:

     (a)  there having been, as at the proposed Issue Date, no adverse change
          in the condition (financial or otherwise) of the relevant Issuer and
          the Guarantor (as the case may be) which is material in the context
          of the issue and offering of the Notes from that set forth in the
          Offering Circular on the relevant Agreement Date, nor the occurrence
          of any event making untrue or incorrect to an extent which is
          material as aforesaid any of the warranties contained in Clause 4;

     (b)  there being no outstanding breach of any of the obligations of
          either the relevant Issuer or (as the case may be) the Guarantor
          under this Agreement, the Notes, the Agency Agreement, the Deed of
          Covenant or the Deed of Guarantee which has not been waived by the
          relevant Dealer on or prior to the proposed Issue Date;

     (c)  subject to Clause 12, the aggregate nominal amount of the Notes to
          be issued, when added to the aggregate nominal amount of all Notes
          outstanding (as defined in the Agency Agreement) on the proposed
          Issue Date, not exceeding U.S.$2,000,000,000 or its equivalent in
          other currencies as determined pursuant to subclause (5);

<PAGE>
                                       7

     (d)  in the case of Notes which are intended to be listed, the relevant
          Stock Exchange having agreed to list such Notes;

     (e)  no meeting of the holders of Notes (or any of them) issued by the
          relevant Issuer (to consider matters which might in the reasonable
          opinion of the relevant Dealer be considered to have a material
          adverse effect on the issue of the Notes) having been duly convened
          but not yet held or, if held but adjourned, the adjourned meeting
          having not been held and neither the relevant Issuer nor the
          Guarantor being aware of any circumstances which are likely to lead
          to the convening of such a meeting;

     (f)  there having been, between the Agreement Date and the Issue Date for
          such Notes, no such change in national or international financial,
          political or economic conditions or currency exchange rates or
          exchange controls as would, in the opinion of the relevant Dealer
          (after consultation with the relevant Issuer and the Guarantor if
          practicable), be likely to prejudice materially the success of the
          offer, sale or distribution by such Dealer of the Notes proposed to
          be issued;

     (g)  the forms of the Pricing Supplement, the Temporary Global Note, the
          Permanent Global Note and/or the Definitive Notes in relation to the
          relevant Tranche and the relevant settlement procedures, having been
          agreed by the relevant Issuer, the Guarantor, the relevant Dealer
          and the Agent;

     (h)  the relevant currency being generally accepted for settlement by
          Euroclear and Clearstream, Luxembourg; and

     (i)  any calculations or determinations which are required by the
          relevant Conditions prior to the Issue Date having been duly made.

(3)  Waiver

     Any Dealer, on behalf of itself only (or, in relation to a syndicated
     issue, the Lead Manager on behalf of itself and the other Managers) may
     by notice in writing to the relevant Issuer and the Guarantor waive any
     of the conditions precedent contained in subclauses (1) and (2) (save for
     the condition precedent contained in subclause (2)(c)) in so far as they
     relate to an issue of Notes to that Dealer.

<PAGE>
                                       8

(4)  Updating of legal opinions

     Before the first issue of Notes occurring after the end of each annual
     period commencing on the date hereof and on such other occasions as a
     Dealer so requests in relation either to any Issuer or the Guarantor or
     both (on the basis of reasonable grounds), the Issuers and/or the
     Guarantor will procure that a further legal opinion in such form and with
     such content as the Dealers may reasonably require is delivered, at the
     expense of the Issuers (as to which each of the Issuers shall have joint
     and several responsibility as between itself and the Guarantor to the
     Dealers). If at, or prior to, the time of any agreement to issue and
     purchase Notes under Clause 2 such request is given in writing with
     respect to the Notes to be issued, the receipt of such opinion in a form
     satisfactory to the relevant Dealer shall be a further condition
     precedent to the issue of those Notes to the relevant Dealer.

(5)  Determination of amounts outstanding

     For the purposes of subclause (2)(c):

     (a) the U.S. dollar equivalent of Notes denominated in a currency other
     than U.S. dollars shall be determined, at the discretion of the Issuer,
     either as of the Agreement Date for such Notes or on the preceding day on
     which commercial banks and foreign exchange markets are open for general
     business in London, in each case on the basis of the spot rate for the
     sale of U.S. dollars against the purchase of the relevant currency in the
     London foreign exchange market quoted by any leading bank selected by the
     relevant Issuer or the Guarantor on the relevant day of calculation;

     (b) the U.S. dollar equivalent of Dual Currency Notes and Indexed Notes
     shall be calculated in the manner specified above by reference to the
     original nominal amount of such Notes;

     (c) the U.S. dollar equivalent of Zero Coupon Notes and other Notes
     issued at a discount or premium shall be calculated in the manner
     specified above by reference to the net proceeds received by the relevant
     Issuer for the particular issue; and

     (d) the U.S. dollar equivalent of Partly Paid Notes shall be the nominal
     amount regardless of the amount of purchase moneys paid.

4.   Representations and Warranties

(1)  As at the date of this Agreement each of the Issuers and the Guarantor
     (each Issuer severally as to itself and the Guarantor jointly and
     severally with the relevant Issuer as to the relevant Issuer and
     severally as to itself) warrant to and agree with the Dealers and each of
     them as follows:

     (a)  that the Offering Circular contains all information with regard to
          the Issuers, the Guarantor and the Notes which is material in the
          context of the Program and the issue and offering of Notes
          thereunder, that the information contained in the Offering Circular
          with respect to the Issuers, the Guarantor and the Notes is true and
          accurate in all material respects and is not misleading in any
          material respect, that the opinions and intentions expressed therein
          with respect to the Issuers, the Guarantor and the

<PAGE>
                                       9

          Notes are honestly held, that there are no other facts with respect
          to the Issuers, the Guarantor and the Notes the omission of which
          would make the Offering Circular as a whole or any of such
          information or the expression of any such opinions or intentions
          misleading in any material respect and that each of the Issuers and
          the Guarantor have made all reasonable enquiries to ascertain all
          facts material for the purposes aforesaid, provided that the
          warranty and agreement in this paragraph (a) shall not extend to
          information in the Offering Circular under the heading "Subscription
          and Sale";

     (b)  that, except as otherwise indicated in the Offering Circular, there
          has been no adverse change in the financial position or results of
          operations of the Guarantor and its consolidated subsidiaries taken
          as a whole which is material in the context of the issue and
          offering of any Notes to be issued under the Program since the date
          as at which the last published audited consolidated accounts of the
          Guarantor were prepared;

     (c)  that each of the Issuers and the Guarantor is duly incorporated and
          validly existing under the laws of its jurisdiction of incorporation
          and that the creation of Notes under the Program, their offering on
          the terms and subject to the conditions contained herein, the
          execution and issue by the relevant Issuer of, and compliance by the
          relevant Issuer with the terms of, the Notes, the Receipts and the
          Coupons and the execution and delivery by or on behalf of each
          Issuer of, and compliance by each Issuer with the terms of, this
          Agreement, the Deed of Covenant and the Agency Agreement and the
          execution and delivery by or on behalf of the Guarantor, and
          compliance by the Guarantor with the terms of, the Deed of
          Guarantee:

          (i)  are in accordance with the provisions of the laws of the
               jurisdiction of the relevant company and with the
               constitutional documents of the relevant company;

          (ii) do not infringe the terms of, or constitute a default under,
               any trust deed, agreement or other instrument or obligation to
               which any of the Issuers or the Guarantor is a party or by
               which it is bound; and

          (iii) have been duly authorised by each of the Issuers and/or the
               Guarantor (as the case may be),

          so that Notes issued under the Program, the Receipts, the Coupons
          and the aforesaid agreements constitute, or upon due authentication
          and issue or delivery will constitute, valid and legally binding
          obligations of the relevant Issuer and/or the Guarantor (as the case
          may be) in accordance with their respective terms (subject to
          applicable bankruptcy, reorganisation, insolvency, fraudulent
          transfer, moratorium and other similar laws affecting creditors'
          rights generally from time to time in effect, and to general
          principles of equity, regardless of whether considered in a
          proceeding in law or at equity);

     (d)  that no condition, omission, event or act has occurred which would
          (or, with the giving of notice and/or the lapse of time would)
          constitute an Event of Default;

<PAGE>
                                       10

     (e)  that, except as disclosed in the Offering Circular, none of the
          Issuers or the Guarantor is engaged (whether as defendant or
          otherwise) in, nor has any of the Issuers or the Guarantor knowledge
          of the existence of, or any threat of, any legal, arbitration,
          administrative or other proceedings the result of which might have a
          material adverse effect on the financial position or operations of
          any of the Issuers or the Guarantor in the context of the issue of
          Notes under the Program;

     (f)  that all consents, approvals, authorisations, orders and clearances
          of all regulatory authorities required by the Issuers or the
          Guarantor under the laws of Germany, the United States of America,
          Switzerland, the Grand Duchy of Luxembourg and the United Kingdom
          (as the case may be) for or in connection with the creation and
          offering of Notes under the Program, the execution and issue of, and
          compliance by each Issuer and the Guarantor with the terms of, Notes
          issued under the Program (including any Global Note), the Receipts
          and the Coupons and the execution and delivery of, and compliance
          with the terms of, this Agreement, the Agency Agreement, the Deed of
          Covenant and the Deed of Guarantee have been obtained and are in
          full force and effect and that the Issuers and the Guarantor have
          complied with all legal and other requirements necessary to ensure
          that, upon due authentication and issue in the manner aforesaid,
          Notes issued under the Program, the Receipts and the Coupons will
          represent valid and legally binding obligations of the relevant
          Issuer and the Guarantor, payable (as regards the Notes, any Global
          Note, the Receipts and the Coupons) in accordance with their terms,
          that this Agreement, the Agency Agreement, the Deed of Covenant and
          the Deed of Guarantee constitute valid and legally binding
          obligations of the Issuers and/or the Guarantor (as the case may be)
          in accordance with their respective terms (subject to applicable
          bankruptcy, reorganisation, insolvency, fraudulent transfer,
          moratorium and other similar laws affecting creditors' rights
          generally from time to time in effect, and to general principles of
          equity, regardless of whether considered in a proceeding in law or
          at equity) and that on issuance, due payment of the principal and
          interest (including any additional amounts payable under the
          Conditions of the Notes) in respect of Notes issued under the
          Program and compliance by the Issuers and/or the Guarantor with
          their terms and with the terms of this Agreement, the Agency
          Agreement, the Deed of Covenant and the Deed of Guarantee will not
          infringe any existing such laws or the terms of any such consent,
          approval, authorisation, order or clearance;

     (g)  that the net proceeds from the issue of the Notes will be used
          outside Switzerland; and

     (h)  that none of the Issuers, the Guarantor nor any affiliate (as
          defined in Rule 405 under the Securities Act) nor any persons (other
          than the Dealers, any of their respective affiliates or any person
          acting on behalf of any of the foregoing) acting on behalf of any of
          them has engaged or will engage in any directed selling efforts (as
          defined in Regulation S under the Securities Act) with respect to
          the Notes, and the Issuers, the Guarantor and any affiliate and all
          persons (other than the Dealers, any of their respective affiliates
          or any person acting on behalf of any of the foregoing) acting on
          behalf of any of them with respect to the Notes have complied and
          will comply with the offering restrictions requirements of
          Regulation S under the Securities Act with respect thereto.

<PAGE>
                                       11

(2)  With regard to each issue of Notes under the Program, the relevant Issuer
     and the Guarantor shall be deemed to repeat the warranties and agreements
     contained in subclause (1) as at the Agreement Date for such Notes (any
     agreement on such Agreement Date being deemed to have been made on the
     basis of, and in reliance on, such warranties and agreements) and as at
     the Issue Date of such Notes.

(3)  The Issuers and the Guarantor shall be deemed to repeat the
     representations and warranties contained in subclause (1)(a) on each date
     on which the Offering Circular is revised, supplemented or amended. The
     Issuers and the Guarantor shall be deemed to repeat the representations
     and warranties contained in subclause (1) on each date on which the
     aggregate nominal amount of the Program is increased in accordance with
     Clause 12. (4) The warranties and agreements contained in this Clause 4
     shall continue in full force and effect notwithstanding any investigation
     by or on behalf of the Dealers or completion of the subscription and
     issue of any Notes.

5.   Undertakings of the Issuers and the Guarantor

(1)  Notification of material developments

     Each Issuer and the Guarantor shall, prior to the time of an agreement
     under Clause 2 (or, if such party becomes aware of the occurrence thereof
     after such time but prior to the completion of the distribution by the
     Dealers of the relevant Notes, promptly upon becoming aware of the
     occurrence thereof), notify each Dealer of:

     (a)  any Event of Default or any condition, event or act in relation to
          itself of which it is aware which, with the giving of notice and/or
          the lapse of time (after the issue of any Notes) would constitute an
          Event of Default or any breach of the representations and warranties
          or undertakings contained in this Agreement, the Agency Agreement,
          the Deed of Covenant, the Deed of Guarantee or any of them; and

     (b)  any development affecting such Issuer or the Guarantor or their
          respective businesses of which it is aware which, in the reasonable
          opinion of such Issuer or the Guarantor (as the case may be), is
          material in the context of the Program or any issue of Notes
          thereunder.

     If, following the time of an agreement under Clause 2 and before the
     issue of the relevant Notes, the relevant Issuer or the Guarantor becomes
     aware that the conditions specified in Clause 3(2) will not be satisfied
     in relation to that issue, the relevant Issuer or the Guarantor (if
     applicable), as the case may be, shall forthwith notify the relevant
     Dealer to that effect giving full details thereof. In such circumstances,
     the relevant Dealer shall be entitled (but not bound) by written notice
     to the relevant Issuer and the Guarantor to be released and discharged
     from its obligations under the agreement reached under Clause 2. Without
     prejudice to the generality of the foregoing, each Issuer and the
     Guarantor shall from time to time promptly furnish to each Dealer such
     information relating to such Issuer and/or the Guarantor (as the case may
     be) as such Dealer may reasonably request, provided that such information
     is relevant in the context of the Program or an issue of Notes
     thereunder.

(2)  Updating of Offering Circular

<PAGE>
                                       12

     Following the publication of the Guarantor's audited financial
     information for the year ended 31st December, 2000, and at the end of
     each annual period thereafter and in the event of a change in the
     condition of any or all of the Issuers or the Guarantor which is material
     in the context of the Program or the issue of the Notes thereunder, the
     Issuers and the Guarantor shall update or amend the Offering Circular
     (following consultation with the Arrangers on behalf of the Dealers) by
     the publication of a supplement thereto, in a form approved by the
     Dealers, in the light of such change in condition. The Offering Circular
     shall, as specified therein, be deemed to incorporate by reference
     therein the most recently published annual accounts (if any) of each
     Issuer and the Guarantor and the most recently published annual report of
     the Guarantor from time to time. Upon any new financial statements being
     incorporated in the Offering Circular as aforesaid or upon the
     publication of a revised Offering Circular or a supplement to the
     Offering Circular, the Issuers or the Guarantor (as the case may be)
     shall promptly supply to each Dealer and the Agent such number of copies
     of such financial statements, revised Offering Circular or supplement as
     each Dealer or the Agent (as the case may be) may reasonably request.
     Until a Dealer receives such financial statements, revised Offering
     Circular or supplement, the definition of "Offering Circular" in Clause
     1(1) shall, in relation to such Dealer, mean the Offering Circular prior
     to the publication of such financial statements, revised Offering
     Circular or supplement.

(3)  Listing

     The Issuers and the Guarantor shall cause an initial application to be
     made for Notes issued under the Program to be listed on the Luxembourg
     Stock Exchange or on such other Stock Exchange as the Issuers, the
     Guarantor and the Arrangers may agree. In connection with such
     application in respect of any Series of Notes which is intended to be so
     listed, the relevant Issuer and the Guarantor (if applicable) shall
     endeavour to obtain the listing as promptly as reasonably practicable and
     the relevant Issuer and the Guarantor (if applicable) shall make
     reasonable endeavours to furnish any and all documents, instruments,
     information and undertakings that may be necessary or advisable in order
     to obtain and maintain the listing. If, after the preparation of the
     Offering Circular for submission to the relevant Stock Exchange and
     before whichever is the later of the Issue Date of any Notes and the date
     on which listing becomes effective:

     (a)  there is a significant change which is material in the context of
          the Notes affecting any matter contained in the Offering Circular
          whose inclusion was required by the relevant Stock Exchange; or

     (b)  a significant new matter arises which is material in the context of
          the Notes and the inclusion of information in respect of which would
          have been so required if it had arisen when the Offering Circular
          was prepared,

     the relevant Issuer and the Guarantor shall give to the Listing Agent and
     to each Dealer full information about the change or matter and shall
     publish such supplementary listing particulars (in a form approved by the
     Listing Agent) as may be required by the relevant Stock Exchange, and
     shall otherwise comply with the Listing Rules in that regard.

     Each Issuer and the Guarantor shall comply with any undertakings given by
     it from time to time to the relevant Stock Exchange(s) in connection with
     any Notes listed on such Stock

<PAGE>
                                       13

     Exchange(s) or the listing thereof and, without prejudice to the
     generality of the foregoing, shall furnish or procure to be furnished to
     the relevant Stock Exchange(s) all such information as the relevant Stock
     Exchange(s) may require in connection with the listing on such Stock
     Exchange(s) of any Notes.

     If any Notes cease to be listed on the relevant Stock Exchange, the
     relevant Issuer and the Guarantor shall endeavour promptly to list such
     Notes on a stock exchange to be agreed between the Issuers, the Guarantor
     and the relevant Dealers.

(4)  Agency Agreement, Deed of Covenant and Deed of Guarantee

     Each Issuer and the Guarantor undertakes that it will not:

     (a)  without prior consultation with the Dealers terminate the Agency
          Agreement, the Deed of Covenant or the Deed of Guarantee or effect
          or permit to become effective any amendment to the Agency Agreement,
          the Deed of Covenant or the Deed of Guarantee which, in the case of
          an amendment, would or might adversely affect the interests of any
          Dealer or of any holder of Notes issued before the date of such
          amendment; or

     (b)  without prior consultation with the Dealers appoint a different
          Agent or paying agent(s) under the Agency Agreement,

     and each Issuer and the Guarantor will promptly notify each of the
     Dealers of any termination of, or amendment to, the Agency Agreement, the
     Deed of Covenant or the Deed of Guarantee and of any change in the Agent
     or paying agent(s) under the Agency Agreement.

(5)  Lawful compliance

     Each Issuer and the Guarantor will at all times ensure that all necessary
     action is taken and all necessary conditions are fulfilled (including,
     without limitation, the obtaining of all necessary consents) so that it
     may lawfully comply with its obligations under the Notes, this Agreement,
     the Agency Agreement, the Deed of Covenant and the Deed of Guarantee and,
     further, so that it may comply with any applicable laws, regulations and
     guidance from time to time promulgated by any governmental and regulatory
     authorities relevant in the context of the issue of Notes under the
     Program.

(6)  Authorised representative

     Each Issuer and the Guarantor will notify the Dealers immediately in
     writing if any of the persons named in the list referred to in paragraph
     3 of the Initial Documentation List ceases to be authorised to take
     action on behalf of such Issuer and the Guarantor or if any additional
     person becomes so authorised together, in the case of an additional
     authorised person, with evidence satisfactory to the Dealers that such
     person has been so authorised.

(7)  Auditors' comfort letters

     Each Issuer and the Guarantor will at the time of the preparation of the
     initial Offering Circular and thereafter upon each occasion when the same
     may be amended or updated,

<PAGE>
                                       14

     whether by means of information incorporated by reference or otherwise
     (insofar as such amendment or up-dating concerns or contains financial
     information about any of the Issuers or the Guarantor), at the expense of
     the Issuers and the Guarantor (as to which each of the Issuers will have
     joint and several responsibility as between itself and the Guarantor) and
     at other times whenever so requested by the Dealers or any of them (on
     the basis of reasonable grounds) deliver to the relevant Dealer a comfort
     letter or comfort letters from independent auditors of the Issuers (or
     any of them) and the Guarantor in such form and with such content as the
     relevant Dealer may reasonably request.

(8)  No other issues

     During the period commencing on an Agreement Date in respect of any Notes
     and ending on the Issue Date with respect to those Notes, none of the
     Issuers or the Guarantor will, without prior consultation with the
     relevant Dealer, issue or agree to issue any other listed notes, bonds or
     other securities of whatsoever nature (other than Notes to be issued
     under the Program) where such notes, bonds or other securities would have
     the same maturity and currency as the Notes to be issued on the relevant
     Issue Date.

(9) Information on Noteholders' meetings

     Each Issuer or the Guarantor will, at the same time as it is despatched,
     furnish the Dealers with a copy of every notice of a meeting of the
     holders of the Notes (or any of them) which is despatched at the
     instigation of the relevant Issuer or the Guarantor (as the case may be)
     and will notify the Dealers immediately after it becomes aware that a
     meeting of the holders of the Notes (or any of them) has been convened by
     holders of the Notes.

(10) Rating

     Each Issuer (failing whom the Guarantor) undertakes promptly to notify
     the Dealers of any change in the rating given by Standard & Poor's,
     Moody's or such other rating agency as notified to the Dealers for any of
     the Notes to be issued under the Program by it, or upon it becoming aware
     that such rating is listed on 'Creditwatch' or other similar publication
     of formal review by the relevant rating agency.

6.   Indemnity

(1)  Without prejudice to the other rights or remedies of the Dealers, each of
     the Issuers (severally as to itself) and the Guarantor (jointly and
     severally with the relevant Issuer and severally as to itself),
     undertakes with the Dealers and each of them that it will hold each
     Indemnified Person indemnified against any losses, liabilities, claims,
     charges, actions or demands, and any reasonable out of pocket costs and
     expenses, which they may incur or which may be against them as a result
     of or in relation to:

     (a)  any failure by the relevant Issuer to issue on the agreed Issue Date
          any Notes which a Dealer has agreed to purchase (unless such failure
          is as a result of the failure by the relevant Dealer to pay the
          aggregate purchase price for such Notes); or

     (b)  any actual or alleged breach of the representations and warranties
          and undertakings by such Issuer and/or, as applicable, the Guarantor
          contained in, or made or deemed to

<PAGE>
                                       15

          be made pursuant to, this Agreement (any such allegation being made
          by a person other than an Indemnified Person); or

     (c)  any untrue or misleading (or allegedly untrue or misleading)
          statement, which is material (or allegedly material) in the context
          of the Program and the issue and offering of Notes by such Issuer
          thereunder, in, or material omission (or alleged omission) from, the
          Offering Circular or any part thereof (any such allegation being
          made by a person other than an Indemnified Person).

(2)  If any action, proceeding, claim or demand shall be brought or asserted
     against any Indemnified Person in respect of which an indemnity is to be
     sought against another party under Clause 6(1) (the "Indemnifying
     Person"), the Indemnified Person shall promptly notify the Indemnifying
     Person in writing, and the Indemnifying Person shall have the option in
     the name of the Indemnified Person to assume the defence thereof,
     including the employment of legal advisers approved by the Indemnified
     Person (which approval shall not be unreasonably withheld or delayed)
     subject to the payment by the Indemnifying Person of all fees and
     expenses relating thereto provided that such legal advisers shall not,
     save with the consent of the Indemnified Person (which consent shall not
     be unreasonably withheld or delayed), also be legal advisers to the
     Indemnifying Person and provided further that if the defendants in any
     such action, proceeding, claim or demand include the Indemnified Person
     and the Indemnified Person shall have reasonably concluded that there may
     be legal defences available to the Indemnified Person which are different
     from or additional to those available to the Indemnifying Person and in
     the event that the Indemnifying Person does not wish to assume, or is
     prevented from assuming, such different or additional legal defences on
     behalf of the Indemnified Person, the Indemnified Person shall have the
     right, at the expense of the Indemnifying Person, to select separate
     legal advisers to assume such legal defences and otherwise to participate
     in the defence of such action, proceeding, claim or demand on behalf of
     the Indemnified Person.

     Upon receipt of notice from the Indemnifying Person of its election so to
     assume the defence of any such action, proceeding, claim or demand and
     approval by the Indemnified Person as aforesaid of legal advisers, the
     Indemnifying Person will not be liable to any Indemnified Person for any
     fees or expenses subsequently incurred by such Indemnified Person in
     connection with the defence thereof unless:

     (i)  the Indemnified Person shall have employed legal advisers in
          connection with the assumption of legal defences in accordance with
          the proviso to the preceding paragraph; or

     (ii) the Indemnifying Person shall not have employed legal advisers, or
          taken other measures, approved by or on behalf of the Indemnified
          Person to represent such Indemnified Person within a reasonable time
          after notice has been received by the Indemnifying Person of
          commencement of the action or proceedings or the making of any claim
          or demand; or

     (iii) the Indemnifying Person has authorised the employment of separate
          legal advisers by the Indemnifying Person,

<PAGE>
                                       16

          in which case the Indemnifying Person will reimburse the relevant
          Indemnified Person all such reasonable fees and expenses.

          Each Indemnified Person undertakes not to compromise or settle any
          such action, proceedings, claim or demand effected without the
          written consent of the Indemnifying Person. Each Indemnifying Person
          undertakes not to compromise or settle any such action, proceedings,
          claims or demands effected without the written consent of the
          Indemnified Person (consent is not to be unreasonably withheld or
          delayed). If any such action, proceeding, claim or demand shall be
          settled with the authority and written consent of the Indemnifying
          Person or if there be a final judgment for the plaintiff in relation
          thereto in respect of which the Indemnified Person is entitled to
          indemnification hereunder, the Indemnifying Person agrees to
          indemnify and hold harmless the Indemnified Person from and against
          any loss or liability by reason of such settlement or judgment
          (other than any fees and expenses incurred in circumstances where
          the Indemnifying Person is not to be liable therefor under the
          preceding paragraph).

7.   Authority to Distribute Documents

     Subject to Clause 8 below, each Issuer and the Guarantor hereby
     authorises each of the Dealers on behalf of each Issuer and the Guarantor
     to provide copies of the Offering Circular and such additional written
     information as the relevant Issuer or the Guarantor shall, in writing,
     provide to and authorise the Dealers so to use to actual and potential
     purchasers of Notes.

8.   Dealers' Undertakings

(1)  Each Dealer agrees to comply with the restrictions and agreements set out
     in Appendix B hereto.

(2)  Each Dealer acknowledges that:

     (i)  none of the Issuers nor the Guarantor has authorised it to give any
          information or make any representation in connection with any
          offering, issue, subscription or sale of any Notes other than those
          contained in the Offering Circular or the information approved in
          writing and provided by such Issuer or the Guarantor pursuant to
          Clause 7;

     (ii) it will not circulate any version of the Offering Circular other
          than the latest version of the Offering Circular published by such
          Issuer and made available to such Dealer from time to time; and

     (iii) it shall promptly cease use or distribution of the Offering
          Circular or any additional written information provided for in
          Clause 7 upon receipt of notice from any Issuer or the Guarantor
          that the Offering Circular or such information requires updating or
          correction.

(3)  Each Dealer undertakes with each of the Issuers, the Guarantor and the
     other Dealers to indemnify, defend and hold harmless the Indemnified
     Person against any losses, liabilities, claims, charges, actions and
     demands, and any reasonable out-of-pocket costs and expenses which the
     Indemnified Person may incur or which may be made against the Indemnified
     Person arising out of, or in connection with:

<PAGE>
                                       17

     (a)  the making by such Dealer of any unauthorised representation or the
          giving by it of any information which is not contained in the
          Offering Circular or otherwise authorised in accordance with Clause
          7; or

     (b)  any failure by such Dealer to observe any of the restrictions or
          agreements contained in Appendix B hereto.

(4)  If any claim, demand or action is brought against any such Indemnified
     Person in respect of which indemnity may be sought from a Dealer pursuant
     to Clause 8(3), the provisions of Clause 6(2) shall apply, mutatis
     mutandis, in relation thereto.

9.   Fees, Expenses and Stamp Duties

(1)  The Issuers and the Guarantor jointly and severally undertake that they
     shall:

     (a)  pay to each Dealer all commissions from time to time agreed in
          connection with the sale of any Notes to that Dealer (and any value
          added or other similar tax thereon); and

     (b)  pay (together with any value added tax or other similar tax
          thereon):

          (i)  the fees and expenses of their legal advisers and auditors; and

          (ii) the cost of listing and maintaining the listing of any Notes to
               be issued under the Program which are to be listed on a Stock
               Exchange;

(2)  The Issuers and the Guarantor jointly and severally undertake that they
     shall:

     (a)  pay (together with any value added tax or other similar tax
          thereon):

          (i)  the fees and expenses payable to the Agent and any paying
               agents;

          (ii) all expenses (other than those of the Agent, any paying agent
               or the Dealers) in connection with the issue, authentication,
               packaging and initial delivery of Notes and the preparation of
               Global Notes, this Agreement, the Agency Agreement, the Deed of
               Guarantee and the preparation and printing of Notes, the
               Offering Circular and any amendments or supplements thereto
               (including the updating of any legal opinions issued pursuant
               to Clause 3(4) and of any auditors' comfort letters issued
               pursuant to Clause 5(7)); and

          (iii) the cost of any publicity agreed in writing by any Issuer or
               the Guarantor in connection with the Program or any issue of
               any Notes;

     (b)  pay to UBS Warburg such amount as is separately agreed in relation
          to the fees and disbursements of the legal advisers appointed to
          represent the Dealers (including any value added tax or other
          similar tax thereon) in connection with the negotiation,
          preparation, execution and delivery of this Agreement, the Agency
          Agreement, the Deed of Covenant, the Deed of Guarantee and any
          documents referred to in any of

<PAGE>
                                       18

          them and any other documents required in connection with the
          creation of the Program; and

     (c)  pay promptly, and in any event before any penalty becomes payable,
          any stamp, documentary, registration or similar duty or tax
          (including any stamp duty reserve tax) payable in Germany, the
          United States of America, the United Kingdom, Switzerland or the
          Grand Duchy of Luxembourg in connection with the entry into,
          performance, enforcement or admissibility in evidence of this
          Agreement, any communication pursuant hereto, the Agency Agreement,
          the Deed of Covenant, the Deed of Guarantee or any Note and shall
          indemnify each Dealer against any liability with respect to or
          resulting from any delay in paying or omission to pay any such duty
          or tax.

10.  Termination of Appointment of Dealers

     The Issuers, the Guarantor or (as to itself) a Dealer may terminate the
     arrangements described in this Agreement by giving not less than 30 days'
     written notice to the other parties hereto. The Issuers or the Guarantor
     may terminate the appointment of a Dealer or Dealers by giving not less
     than 30 days' written notice to such Dealer or Dealers (with a copy
     promptly thereafter to all the other Dealers and the Agent). Termination
     shall not affect any rights or obligations (including but not limited to
     those arising under Clause 6, 8 or 9) which have accrued at the time of
     termination or which accrue thereafter in relation to any act or omission
     or alleged act or omission which occurred prior to such time.

11.  Appointment of New Dealers

(1)  Nothing in this Agreement shall prevent the Issuers or the Guarantor from
     appointing one or more New Dealers for the duration of the Program or,
     with regard to a particular issue of Notes, the relevant Issuer and the
     Guarantor (if applicable) from appointing one or more New Dealers for the
     purposes of that issue, in either case upon the terms of this Agreement
     and provided that, unless such appointment is effected pursuant to a
     Subscription Agreement:

     (a)  any New Dealer shall have first delivered to the Issuers and the
          Guarantor a Dealer Accession Letter; and

     (b)  the Issuers and the Guarantor shall have delivered to such New
          Dealer a Confirmation Letter.

     Upon receipt of the relevant Confirmation Letter or execution of the
     relevant Subscription Agreement, as the case may be, each such New Dealer
     shall, subject to the terms of the relevant Dealer Accession Letter and
     the relevant Confirmation Letter or the relevant Subscription Agreement,
     as the case may be, become a party to this Agreement, vested with all
     authority, rights, powers, duties and obligations of a Dealer as if
     originally named as a Dealer hereunder provided that, except in the case
     of the appointment of a New Dealer for the duration of the Program,
     following the issue of the Notes of the relevant Tranche, the relevant
     New Dealer shall have no further such authority, rights, powers, duties
     or obligations except such as may have accrued or been incurred prior to
     or in connection with the issue of such Notes.

<PAGE>
                                       19

(2)  The Issuers and/or the Guarantor shall promptly notify the Agent and the
     other Dealers of any appointment of a New Dealer for the duration of the
     Program by supplying to such parties a copy of any Dealer Accession
     Letter and Confirmation Letter. No such notice shall be required to be
     given in the case of an appointment of a New Dealer for a particular
     issue of Notes.

12.  Increase in the Aggregate Nominal Amount of the Program

(1)  From time to time the Issuers and the Guarantor may wish to increase the
     aggregate nominal amount of the Notes that may be issued under the
     Program. In such circumstances, the Issuers and the Guarantor may request
     such an increase (subject as set out in subclause (2)) by delivering to
     the Listing Agent and the Dealers the letter substantially in the form
     set out in Appendix D hereto. Unless notice to the contrary is received
     by the Issuers or the Guarantor no later than 10 days after notice was
     given to the Dealers and the Listing Agent, each such Dealer and the
     Listing Agent will be deemed to have given its consent to the increase in
     the nominal amount of the Program, whereupon all references in this
     Agreement and the Procedures Memorandum to a Euro Medium Term Note
     Program of a certain nominal amount, shall be and shall be deemed to be
     references to a Euro Medium Term Note Program of the increased nominal
     amount.

(2)  Notwithstanding subclause (1), the right of the Issuers and the Guarantor
     to increase the aggregate nominal amount of the Program shall be subject
     to each Dealer having received and found satisfactory all the documents
     and confirmations described in the Initial Documentation List (with such
     changes as may be relevant, with reference to the circumstances at the
     time of the proposed increase as are agreed between the Issuers, the
     Guarantor and the Dealers), and the delivery of any further conditions
     precedent that any of the Dealers may reasonably require, including,
     without limitation, the production of a supplementary Offering Circular
     by the Issuers and the Guarantor and any further or other documents
     required by the relevant Stock Exchange(s) for the purpose of listing the
     Notes to be issued under the Program on the relevant Stock Exchange(s).
     The Arrangers shall circulate to the Dealers all the documents and
     confirmations described in the Initial Documentation List and any further
     conditions precedent so required. Any Dealer must notify the Arrangers,
     the Issuers and the Guarantor within 10 business days of receipt if it
     considers, in its reasonable opinion, such documents, confirmations and,
     if applicable, such further conditions precedent to be unsatisfactory.

13.  Status of the Arrangers

(1)  Each of the Dealers agrees that each Arranger has only acted in an
     administrative capacity to facilitate the establishment and/or
     maintenance of the Program and has no responsibility to it for (a) the
     adequacy, accuracy, completeness or reasonableness of any representation,
     warranty, undertaking, agreement, statement or information in the
     Offering Circular, any Pricing Supplement, this Agreement or any
     information provided in connection with the Program or (b) the nature and
     suitability of it of all legal, tax and accounting matters and all
     documentation in connection with the Program or any Tranche.

(2)  The Arrangers shall have only those duties, obligations and
     responsibilities expressly specified in this Agreement.

<PAGE>
                                       20

14.  Counterparts

     This Agreement may be signed in any number of counterparts, all of which
     taken together shall constitute one and the same instrument.

15.  Communications

(1)  All communications shall be by fax or letter delivered by hand or (but
     only where specifically provided in the Procedures Memorandum) by
     telephone. Each communication shall be made to the relevant party at the
     fax number or address or telephone number and, in the case of a
     communication by fax or letter, marked for the attention of, or (in the
     case of a communication by telephone) made to, the person(s) from time to
     time specified in writing by that party to the other for the purpose. The
     initial telephone number, fax number and address of, and person(s) so
     specified by, each party are set out on the signature pages hereof.

(2)  A communication shall be deemed received (if by fax) when an
     acknowledgement of receipt is received, (if by telephone) when made or
     (if by letter) when delivered, in each case in the manner required by
     this clause. Every communication shall be irrevocable save in respect of
     any manifest error therein.

16.  Benefit of Agreement

(1)  This Agreement shall be binding upon and shall inure for the benefit of
     each Issuer, the Guarantor and each Dealer and their respective
     successors and permitted assigns.

(2)  The Dealers may assign or transfer their rights or obligations under this
     Agreement with the prior written consent of the Issuers and the
     Guarantor. If the Dealers assign their rights or transfer their
     obligations as provided in this clause, the relevant assignee or
     transferee shall be treated as if it were a party to this Agreement with
     effect from the date on which such assignment or transfer takes effect;
     provided that any transfer shall only become effective when the Issuers
     and the Guarantor have received an undertaking from the transferee to be
     bound by this Agreement and to perform the obligations transferred to it
     (in form and substance reasonably satisfactory to the Issuers and the
     Guarantor).

17.  Currency Indemnity

     If, under any applicable law and whether pursuant to a judgment being
     made or registered against any Issuer and/or (as the case may be) the
     Guarantor or in the liquidation, insolvency or analogous process of the
     relevant Issuer and/or (as the case may be) the Guarantor or for any
     other reason, any payment under or in connection with this Agreement is
     made or falls to be satisfied in a currency (the "other currency") other
     than that in which the relevant payment is expressed to be due (the
     "required currency") under this Agreement, then, to the extent that the
     payment (when converted into the required currency at the rate of
     exchange on the date of payment or, if it is not practicable for the
     relevant Dealer to purchase the required currency with the other currency
     on the date of payment, at the rate of exchange as soon thereafter as it
     is practicable for it to do so) actually received by the relevant Dealer
     falls short of the amount each due under the terms of this Agreement, the
     relevant Issuer and the Guarantor each undertakes that it shall, as a
     separate and independent obligation, indemnify and hold harmless each
     Dealer against the amount of such shortfall. For the purpose of this

<PAGE>
                                       21

     clause "rate of exchange" means the rate at which the relevant Dealer is
     able on the London foreign exchange market on the relevant date to
     purchase the required currency with the other currency and shall take
     into account any premium and other reasonable costs of exchange. The
     Dealers understand and agree that in the event that the required currency
     is replaced by the Euro after the date hereof, the Euro will not be
     considered an "other currency" for the purposes of this Clause 17.

18.  Calculation Agent

(1)  In the case of any Series of Notes which require the appointment of a
     Calculation Agent the Agent shall act as Calculation Agent, unless (a)
     the relevant Issuer or the Guarantor appoints another person as
     Calculation Agent with the approval of the relevant Dealer or (in the
     case of a syndicated issue) the Lead Manager or (b) the relevant Dealer
     or (in the case of a syndicated issue) the Lead Manager requests the
     relevant Issuer to appoint such Dealer or Lead Manager, or a person
     nominated by such Dealer or Lead Manager (a "Nominee"), as Calculation
     Agent.

(2)  Should such an appointment be made by the relevant Issuer or Guarantor
     (with such approval) or such a request be made to the relevant Issuer and
     agreed to by the relevant Issuer and the Guarantor, the appointment of
     that other person, Dealer, Lead Manager or Nominee shall be automatic
     upon the issue of the relevant Series of Notes, and shall, except as
     agreed, be on the terms set out in the Calculation Agency Agreement
     attached as Appendix A to the Agency Agreement, and no further action
     shall be required to effect the appointment of such Dealer, other person,
     Lead Manager or Nominee as Calculation Agent in relation to that Series
     of Notes. The name of the other person, Dealer, Lead Manager or Nominee
     so appointed will be entered in the relevant Pricing Supplement.

19.  Stabilisation

     In connection with the distribution of any Tranche of Notes, the Dealer
     (if any) designated as stabilising manager in the applicable Pricing
     Supplement may over-allot or effect transactions which stabilise or
     maintain the market price of Notes of the Series of which such Tranche
     forms a part at a level which might not otherwise prevail, but in doing
     so such Dealer shall act as principal and not as agent of the relevant
     Issuer. Such stabilising, if commenced, may be discontinued at any time.
     Any loss resulting from over-allotment and stabilisation shall be borne,
     and any net profit arising therefrom shall be retained, by the
     stabilising manager for its own account. Such stabilising shall be done
     in accordance with the applicable laws.

20.  Governing Law and Jurisdiction

(1)  This Agreement and every agreement for the issue and purchase of Notes as
     referred to in Clause 2 shall be governed by, and construed in accordance
     with, the laws of England.

(2)  This Agreement does not create any right under the Contracts (Rights of
     Third Parties) Act 1999 which is enforceable by any person who is not a
     party to this Agreement.

(3) Each party to this Agreement hereby irrevocably agrees for
     the exclusive benefit of the other parties to this Agreement that the
     courts of England are to have jurisdiction to settle any disputes which
     may arise out of or in connection with this Agreement and that
     accordingly any

<PAGE>
                                       22

     suit, action or proceedings (together referred to as "Proceedings")
     arising out of or in connection with this Agreement may be brought in
     such courts. Each party to this Agreement hereby irrevocably waives any
     objection which it may have to the laying of the venue of any Proceedings
     in any such courts and any claim that any such Proceedings have been
     brought in an inconvenient forum and hereby further irrevocably agrees
     that a judgment in any Proceedings brought in the English courts shall be
     conclusive and binding upon such party and may be enforced in the courts
     of any other jurisdiction (subject to the laws of the jurisdiction in
     which enforcement is sought). Nothing contained herein shall limit any
     right to take Proceedings against any party to this Agreement in any
     other court of competent jurisdiction (outside the Contracting States as
     defined in Section 1(3) of the Civil Jurisdiction and Judgments Act
     1982), nor shall the taking of Proceedings in one or more jurisdictions
     preclude the taking of Proceedings in any other jurisdiction, whether
     concurrently or not (subject to the laws of the relevant jurisdictions).
     Each of CSC US, CSC Germany and the Guarantor hereby appoints CSC UK as
     its agent for service of process and agrees that, in the event of ceasing
     so to act or ceasing to be registered in England, it will appoint another
     person as its agent for service of process in England in respect of any
     Proceedings.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.

<PAGE>
                                       23

                                  APPENDIX A

                          INITIAL DOCUMENTATION LIST

1.   A certified copy of:

     (a)  the Certificate of Incorporation of CSC US;

     (b)  the Memorandum and Articles of Association of CSC UK;

     (c)  the Articles of Association of CSC Germany; and

     (d)  the Articles of Incorporation of the Guarantor,

     unless these have not changed since the date they were last provided to
     the Dealers.

2.   A certified copy of all resolutions and other authorisations required to
     be passed or given, and evidence of any other action required to be
     taken, on behalf of each Issuer and the Guarantor, as applicable:

     (a)  to approve this Agreement, the Agency Agreement, the Deed of
          Covenant, the creation of the Program, the issue of Notes under the
          Program and the execution of the Deed of Guarantee by the Guarantor;

     (b)  to authorise appropriate persons to execute each of this Agreement,
          the Agency Agreement, the Deed of Covenant, the Deed of Guarantee
          and Notes issued under the Program and to take any other action in
          connection therewith; and

     (c)  to authorise appropriate persons to enter into agreements with any
          Dealer on behalf of each Issuer and the Guarantor to issue Notes in
          accordance with Clause 2 of this Agreement.

3.   A certified list of the names, titles and specimen signatures of the
     persons authorised on behalf of each Issuer and the Guarantor in
     accordance with paragraph 2(c) above unless these have not changed since
     the date they were last provided to the Dealers.

4.   Certified copies of any other governmental or other consents (including,
     but not limited to, confirmation that the Bank of England has been
     notified of the establishment of the Program) required for each Issuer
     and the Guarantor to issue Notes under the Program, for the Guarantor to
     guarantee Notes issued under the Program, for each Issuer and the
     Guarantor (as the case may be) to execute and deliver this Agreement, the
     Deed of Covenant and the Agency Agreement and for each Issuer and the
     Guarantor to fulfil its respective obligations under this Agreement, the
     Agency Agreement, the Deed of Covenant and the Notes.

5.   Confirmation that master Global Notes (from which copies may be made for
     each Tranche), duly executed by a person or persons authorised to take
     action on behalf of the relevant Issuer as specified in paragraph (2)(b)
     above, have been delivered to the Agent.

<PAGE>
                                       24

6.   Legal opinions addressed to each of the Dealers dated on or after the
     date of this Agreement, in such form and with such content as the Dealers
     may reasonably require, from:

     (a)  Bruckhaus Westrick Heller Lober, legal advisers to CSC Germany as to
          German law;

     (b)  Cravath, Swaine & Moore, legal advisers to CSC US as to U.S. law;

     (c)  Homburger Rechtsanwalte, legal advisers to the Guarantor as to Swiss
          law; and

     (d)  Allen & Overy, legal advisers to the Dealers as to English law.

7.   A conformed copy of the Agency Agreement and the Deed of Guarantee and
     confirmation that an executed copy of each such document has been
     delivered to the Paying Agents and the Common Depositary for Euroclear
     and Clearstream, Luxembourg.

8.   A conformed copy of the Deed of Covenant and confirmation that an
     executed copy of such deed has been delivered to the Agent and the Common
     Depositary for Euroclear and Clearstream, Luxembourg.

9.   A printed final version of the Offering Circular.

10.  Confirmation from the Listing Agent that the Luxembourg Stock Exchange
     will list Notes to be issued under the Program.

11.  A comfort letter from the independent auditors of each Issuer and the
     Guarantor, in such form and with such content as the Dealers may
     reasonably request.

12.  Confirmation that the Program has been rated A+ by Standard & Poor's and
     A2 by Moody's.

<PAGE>
                                       25

                                  APPENDIX B

                             SELLING RESTRICTIONS

1.   United States

(1)  The Notes have not been and will not be registered under the Securities
     Act of 1933, as amended (the "Securities Act"), and may not be offered or
     sold within the United States or to, or for the account or benefit of,
     U.S. persons except in accordance with Regulation S under the Securities
     Act or pursuant to an exemption from the registration requirements of the
     Securities Act. Each Dealer represents and agrees that it and any of its
     affiliates and any person acting on its or their behalf have offered and
     sold any Notes, and will offer and sell any Notes (i) as part of their
     distribution at any time and (ii) otherwise until 40 days after the
     completion of the distribution of all Notes of the Tranche of which such
     Notes are a part, as determined and notified by the Agent to such Dealer,
     as provided below, only in accordance with Rule 903 of Regulation S under
     the Securities Act. Accordingly, each Dealer, its affiliates and any
     persons acting on its or their behalf have not engaged and will not
     engage in any directed selling efforts with respect to the Notes, and
     have complied and will comply with the offering restrictions requirement
     of Regulation S. Each Dealer who has purchased Notes of a Tranche
     hereunder (or in the case of a sale of a Tranche of Notes issued to or
     through more than one Dealer, each of such Dealers as to the Notes of
     such Tranche purchased by or through it) shall determine and certify to
     the Agent the completion of the distribution of the Notes of such
     Tranche. On the basis of such certification or certifications, the Agent
     agrees to notify such Dealer or Dealers of the end of the distribution
     compliance period with respect to such Tranche. Each Dealer also agrees
     that, at or prior to confirmation of sale of Notes, it will have sent to
     each distributor, dealer or person receiving a selling concession, fee or
     other remuneration that purchases Notes from it or any of its affiliates
     or any person acting on its or their behalf during the distribution
     compliance period a confirmation or notice to substantially the following
     effect:

          "The Securities covered hereby have not been registered under the
          U.S. Securities Act of 1933 (the "Securities Act") and may not be
          offered or sold within the United States or to, or for the account
          or benefit of, U.S. persons (i) as part of their distribution at any
          time or (ii) otherwise until 40 days after the completion of the
          distribution of the Securities as determined and notified by the
          Agent for the Securities to [name of Dealer(s)], except in either
          case in accordance with Regulation S under the Securities Act. Terms
          used above have the meanings given to them by Regulation S."

     Terms used in this sub-clause 1(1) have the meanings given to them by
     Regulation S.

(2)  In addition:

     (1)  except to the extent permitted under U.S. Treas. Reg. Section
          1.163-5(c)(2)(i)(D) (the "D Rules"), each Dealer (a) represents that
          it has not offered or sold, and agrees that during the restricted
          period it will not offer or sell, Notes in bearer form to a person
          who is within the United States or its possessions or to a United
          States person, and (b) represents that it has not delivered and
          agrees that it will not deliver within the

<PAGE>
                                       26

          United States or its possessions definitive Notes in bearer form
          that are sold during the restricted period;

     (2)  each Dealer represents that it has and agrees that throughout the
          restricted period it will have in effect procedures reasonably
          designed to ensure that its employees or agents who are directly
          engaged in selling Notes in bearer form are aware that such Notes
          may not be offered or sold during the restricted period to a person
          who is within the United States or its possessions or to a United
          States person, except as permitted by the D Rules;

     (3)  if it is a United States person, each Dealer represents that it is
          acquiring the Notes for purposes of resale in connection with their
          original issuance and if it retains Notes in bearer form for its own
          account, it will only do so in accordance with the requirements of
          U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D)(6); and

     (4)  with respect to each affiliate that acquires Notes from a Dealer for
          the purpose of offering or selling such Notes during the restricted
          period, such Dealer repeats and confirms the representations and
          agreements contained in sub-clauses (1), (2) and (3) on such
          affiliate's behalf.

     Terms used in this sub-clause 1(2) have the meanings given to them by the
     U.S. Internal Revenue Code and regulations thereunder, including the D
     Rules.

(3)  Each Dealer represents that it has not entered and agrees that it will
     not enter into any contractual arrangement with respect to the
     distribution or delivery of Notes, so as to cause any person to become a
     "distributor" within the meaning of Regulation S or the D Rules except
     with their affiliates or with the prior written consent of the relevant
     Issuer and the Guarantor (in which case such Dealer will obtain for the
     benefit of the Issuer and the Guarantor the agreement of such person to
     the representations and agreements contained in Clauses 1(1) and 1(2)
     above).

(4)  Each issue of Indexed Notes and Dual Currency Notes shall be subject to
     such additional U.S. selling restrictions as the relevant Issuer and the
     relevant Dealer or Dealers shall agree as a term of the issue and
     purchase of such Notes, which additional selling restrictions shall be
     set out in the Pricing Supplement. Each Dealer agrees that it shall
     offer, sell and deliver such Notes only in compliance with such
     additional U.S. selling restrictions.

2.   United Kingdom

     Each Dealer represents and agrees that:

     (i)  in relation to Notes which have a maturity of one year or more, it
          has not offered or sold and, prior to the expiry of the period of
          six months from the Issue Date of such Notes, will not offer or sell
          any such Notes to persons in the United Kingdom except to persons
          whose ordinary activities involve them in acquiring, holding,
          managing or disposing of investments (as principal or agent) for the
          purposes of their businesses or otherwise in circumstances which
          have not resulted and will not result in an offer to the public in
          the United Kingdom within the meaning of the Public Offers of
          Securities Regulations 1995 (as amended);

<PAGE>
                                       27

     (ii) it has only issued or passed on and will only issue or pass on in
          the United Kingdom any document received by it in connection with
          the issue of any Notes to a person who is of a kind described in
          Article 11(3) of the Financial Services Act 1986 (Investment
          Advertisements) (Exemptions) Order 1996 (as amended) or is a person
          to whom such document may otherwise lawfully be issued or passed on;
          and

     (iii) it has complied and will comply with all applicable provisions of
          the FSA with respect to anything done by it in relation to any Notes
          in, from or otherwise involving the United Kingdom.

3.   Japan

     The Notes have not been and will not be registered under the Securities
     and Exchange Law of Japan (the "Securities and Exchange Law") and each
     Dealer agrees that it will not offer or sell any Notes, directly or
     indirectly, in Japan or to, or for the benefit of, any resident of Japan
     (which term as used herein means any person resident in Japan, including
     any corporation or other entity organised under the laws of Japan), or to
     others for re-offering or resale, directly or indirectly, in Japan or to
     a resident of Japan except in compliance with the Securities and Exchange
     Law and any other applicable laws or regulations of Japan.

4.   Germany

     In connection with the initial placement of any Notes in Germany, each
     Dealer agrees that (i) unless otherwise provided in the relevant
     Subscription Agreement or Pricing Supplement, Notes will be offered and
     sold only in compliance with an exemption from the prospectus requirement
     of the German Securities Selling Prospectus Act
     (Wertpapier-Verkaufsprospektgesetz) of 13th December, 1990, as amended,
     and (ii) in any event Notes will be offered and sold in Germany only in
     accordance with the requirements of such Act.

5.   General

     Each Dealer will (to the best of its knowledge and belief) comply with
     all applicable laws and regulations in force in any jurisdiction in which
     it purchases, offers, sells or delivers Notes or possesses or distributes
     the Offering Circular and will obtain any consent, approval or permission
     required by it for the purchase, offer, sale or delivery by it of Notes
     under the laws and regulations in force in any jurisdiction to which it
     is subject or in which it makes such purchases, offers, sales or
     deliveries and none of the Issuers, the Guarantor nor any other Dealer
     shall have responsibility therefor.

     None of the Issuers, the Guarantor nor any of the Dealers represents that
     Notes may at any time lawfully be sold in compliance with any applicable
     registration or other requirements in any jurisdiction, or pursuant to
     any exemption available thereunder, or assumes any responsibility for
     facilitating such sale.

     With regard to each Tranche, the relevant Dealer will be required to
     comply with such other additional restrictions as the relevant Issuer,
     the Guarantor and the relevant Dealer shall agree and as shall be set out
     in the applicable Pricing Supplement.

<PAGE>
                                       28

                                  APPENDIX C

                                    PART I

                  FORM OF DEALER ACCESSION LETTER - PROGRAM

[Date]

To:  CIBA SPECIALTY CHEMICALS CORPORATION
     CIBA SPECIALTY CHEMICALS PLC
     CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
     (the "Issuers")

and: CIBA SPECIALTY CHEMICALS HOLDING INC.
     (the "Guarantor")

Attention:

Dear Sirs,

                     CIBA SPECIALTY CHEMICALS CORPORATION
                         CIBA SPECIALTY CHEMICALS PLC
              CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
               U.S.$2,000,000,000 Euro Medium Term Note Program

We refer to the amended and restated Program agreement dated 16th June, 2000
entered into in respect of the above Euro Medium Term Note Program (the
"Program") and made between the Issuers, the Guarantor and the Dealers party
thereto (which agreement, as amended from time to time, is herein referred to
as the "Program Agreement").

Conditions Precedent

We confirm that we are in receipt of the documents referenced below:

(i)  a copy of the Program Agreement;

(ii) a copy of the current version all documents referred to in Appendix A of
     the Program Agreement;

and have found them to our satisfaction or (in the case of documents referred
to in (ii) above) have waived production of such documents.

For the purposes of the Program Agreement our Notice Details are as follows:

<PAGE>
                                       29

(insert name, address, telephone, telex (+ answerback) and attention).

In consideration of appointment by the Issuers and the Guarantor of us as a
Dealer under the Program Agreement we hereby undertake, for the benefit of
each of the Issuers, the Guarantor and the other Dealers, that we will perform
and comply with all the duties and obligations expressed to be assumed by a
Dealer under the Program Agreement.

This letter is governed by, and shall be construed in accordance with, English
law.

Yours faithfully,

[Name of New Dealer]

cc:  The Chase Manhattan Bank (Agent)
     [names of Dealers at the date of accession]

<PAGE>
                                       30

                                   PART II

                    FORM OF CONFIRMATION LETTER - PROGRAM

[Date]

To:  [Name and address of new Dealer]

Dear Sirs,

                     CIBA SPECIALTY CHEMICALS CORPORATION
                         CIBA SPECIALTY CHEMICALS PLC
              CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
               U.S.$2,000,000,000 Euro Medium Term Note Program

We refer to the amended and restated Program Agreement dated 16th June, 2000
(such agreement, as amended from time to time, the "Program Agreement")
entered into in respect to the above Euro Medium Term Note Program and hereby
acknowledge receipt of your Dealer Accession Letter to us dated [ ].

We hereby confirm that, with effect from the date hereof, you shall become a
party to the Program Agreement in accordance with Clause 11 of the Program
Agreement.

Yours faithfully,

For and on behalf of
CIBA SPECIALTY CHEMICALS CORPORATION

By:

For and on behalf of
CIBA SPECIALTY CHEMICALS PLC

By:

For and on behalf of
CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH

By:

<PAGE>
                                       31

For and on behalf of
CIBA SPECIALTY CHEMICALS HOLDING INC.

By:                             By:

cc:  The Chase Manhattan Bank (Agent)
     [names of other Dealers at the date of accession]

<PAGE>
                                       32

                                   PART III

                 FORM OF DEALER ACCESSION LETTER - NOTE ISSUE

[DATE]

To:  CIBA SPECIALTY CHEMICALS CORPORATION
     CIBA SPECIALTY CHEMICALS PLC
     CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH

     (the "Issuers ")

and: CIBA SPECIALTY CHEMICALS HOLDING INC.
     (the "Guarantor")

Attention:

Dear Sirs,

                     CIBA SPECIALTY CHEMICALS CORPORATION
                         CIBA SPECIALTY CHEMICALS PLC
              CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
               U.S.$2,000,000,000 Euro Medium Term Note Program

We refer to the amended and restated Program Agreement dated 16th June, 2000
entered into in respect of the above Euro Medium Term Note Program (the
"Program") and made between the Issuers, the Guarantor and the Dealers party
thereto (which agreement, as amended from time to time, is herein referred to
as the "Program Agreement").

Conditions Precedent

We confirm that we are in receipt of the documents referenced below:

(i)  a copy of the Program Agreement;

(ii) a copy of current versions of all documents referred to in Appendix A of
     the Program Agreement;

and have found them to our satisfaction or (in the case of documents referred
to in (ii) above) have waived production of such documents.

For the purposes of the Program Agreement our Notice Details are as follows:

(insert name, address, telephone, telex (+ answerback) and attention).

<PAGE>

                                       33

In consideration of appointment by the Issuers and the Guarantor of us as a
Dealer in respect of the issue of [ ] Notes due [ ] (the "Issue ") under the
Program Agreement we hereby undertake, for the benefit of each of the Issuers,
the Guarantor and each of the other Dealers that in relation to the Issue we
will perform and comply with all the duties and obligations expressed to be
assumed by a Dealer under the Program Agreement.

This letter is governed by, and shall be construed in accordance with, English
law.

Yours faithfully,

[Name of New Dealer]

By:

cc:  The Chase Manhattan Bank (Agent)
     [names of Dealers at the date of accession]

<PAGE>
                                       34

                                   PART IV

                   FORM OF CONFIRMATION LETTER - NOTE ISSUE

[Date]

To: [Name and address of new Dealer]

Dear Sirs,

                     CIBA SPECIALTY CHEMICALS CORPORATION
                         CIBA SPECIALTY CHEMICALS PLC
              CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
               U.S.$2,000,000,000 Euro Medium Term Note Program

We refer to the amended and restated Program Agreement dated 16th June, 2000
(such Agreement, as amended from time to time, the "Program Agreement")
entered into in respect to the above Euro Medium Term Note Program and hereby
acknowledge receipt of your Dealer Accession Letter to us dated [ ].

We hereby confirm that, with effect from the date hereof in respect of the
issue of [ ] Notes due [ ] (the "Issue "), you shall become a party to the
Program Agreement in accordance with Clause 11 of the Program Agreement.

Yours faithfully,

CIBA SPECIALTY CHEMICALS CORPORATION

By:

CIBA SPECIALTY CHEMICALS PLC

By:

CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH

By:

<PAGE>
                                       35

CIBA SPECIALTY CHEMICALS HOLDING INC.

By:                              By:

cc:  The Chase Manhattan Bank (Agent)
     [names of Dealers at the date of accession]

<PAGE>
                                       36

                                  APPENDIX D

               LETTER REGARDING INCREASE IN THE NOMINAL AMOUNT
                                OF THE PROGRAM

[Date]

     To:  The Dealers and the Listing Agent
          (as those expressions are defined
          in the amended and restated Program
          Agreement dated 16th June, 2000 as
          amended from time to time, (the
          "Program Agreement"))

Dear Sirs,

                     CIBA SPECIALTY CHEMICALS CORPORATION
                         CIBA SPECIALTY CHEMICALS PLC
              CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
               U.S.$2,000,000,000 Euro Medium Term Note Program

We hereby request, pursuant to Clause 12 of the Program Agreement, that the
aggregate nominal amount of the above Program be increased to U.S.$[ ] on and
from [insert date]. We would like to draw your attention to such Clause 12,
under which, should you fail to object in accordance with the provisions set
out in that clause, this increase shall (subject as set out below) take effect
on and from [insert date], whereupon all references in the Program Agreement,
the Agency Agreement, the Deed of Covenant and the Deed of Guarantee will be
deemed amended accordingly. We understand that this increase is subject to the
satisfaction of the conditions set out in Clause 12 of the Program Agreement.

Terms used in this letter have the meanings given to them in the Program
Agreement.

Yours faithfully,

For and on behalf of
CIBA SPECIALTY CHEMICALS CORPORATION

By:

CIBA SPECIALTY CHEMICALS PLC

By:

<PAGE>
                                       37

For and on behalf of
CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH

By:

For and on behalf of
CIBA SPECIALTY CHEMICALS HOLDING INC.

By:                             By:

cc:  UBS Warburg
(for distribution to the existing Dealers).

The Chase Manhattan Bank (Agent)

<PAGE>
                                       38

                                  APPENDIX E

                        FORM OF SUBSCRIPTION AGREEMENT

                            [CURRENCY AND AMOUNT]
                    [CIBA SPECIALTY CHEMICALS CORPORATION]
                        [CIBA SPECIALTY CHEMICALS PLC]
             [CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH]

                            [DESCRIPTION OF NOTES]

                unconditionally and irrevocably guaranteed by
                    CIBA SPECIALTY CHEMICALS HOLDING INC.

[DATE]

To:  [              ]

     (the "Managers")

c/o  [              ]

     (the "Lead Manager")

Dear Sirs,

[CIBA SPECIALTY CHEMICALS CORPORATION] [CIBA SPECIALTY CHEMICALS PLC] [CIBA
SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH] (the "Issuer") proposes to issue
[CURRENCY AND AMOUNT] [DESCRIPTION OF NOTES] (the "Notes") unconditionally and
irrevocably guaranteed by CIBA SPECIALTY CHEMICALS HOLDING INC. (the
"Guarantor") pursuant to its U.S.$2,000,000,000 Euro Medium Term Note Program.
The terms of the issue shall be as set out in the form of Pricing Supplement
attached to this Agreement as Annexe A.

This Agreement is supplemental to the amended and restated Program Agreement
(the "Program Agreement") dated 16th June, 2000 made between CIBA SPECIALTY
CHEMICALS CORPORATION, CIBA SPECIALTY CHEMICALS PLC and CIBA
SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH (together the "Issuers "), the
Guarantor and the Dealers party thereto. All terms with initial capitals used
herein without definition have the meanings given to them in the Program
Agreement.

We wish to record the arrangements agreed between us in relation to the issue:

<PAGE>
                                       39

*[1. Conditions Precedent

     This Agreement appoints each Manager which is not a party to the Program
     Agreement (each a "New Dealer") as a Dealer under the Program Agreement
     for the purposes of the issue of the Notes. The Lead Manager confirms
     that it is in receipt of the documents referenced below:

     (i)  a copy of the Program Agreement;

     (ii) a copy of all documents referred to in Appendix A of the Program
          Agreement; and

     (iii) a copy of the Agency Agreement;

     and has confirmed with (each of) the New Dealer(s) that it/they has/have
     found them to be satisfactory or (in the case of the documents referred
     to in (ii)) has/have waived such production.

     For the purposes of the Program Agreement the details of the Lead Manager
     for service of notices are as follows:

     (insert name, address, telephone, telex (# answerback) and attention).

     In consideration of the Issuer and the Guarantor appointing the New
     Dealer(s) as (a) Dealer(s) in respect of the Notes under the Program
     Agreement, each/the New Dealer hereby undertakes, for the benefit of each
     of the Issuers, the Guarantor and the other Dealers, that, in relation to
     the issue of the Notes, it will perform and comply with all the duties
     and obligations expressed to be assumed by a Dealer under the Program
     Agreement, a copy of which it acknowledges it has received from the Lead
     Manager.]

     The Issuer hereby confirms that [each] [the] New Dealer shall be vested
     with all authority, rights, powers, duties and obligations of a Dealer in
     relation to the issue of Notes as if originally named as a Dealer under
     the Program Agreement provided that following the issue of the Temporary
     Global Note in respect of the Notes [each] [the] New Dealer shall have no
     further such authority, rights, powers, duties and obligations except
     such as may have accrued or been incurred prior to, or in connection
     with, the issue of such Temporary Global Note and the Notes represented
     thereby.

2.   Subject to the terms and conditions of the Program Agreement and this
     Agreement the Issuer hereby agrees to issue the Notes, the Guarantor
     hereby agrees to guarantee the Notes and the Managers jointly and
     severally agree to purchase the Notes at a subscription price of [ ] per
     cent. of the principal amount of the Notes (the "Subscription Price"),
     being the issue price of [ ] per cent. less a selling commission of [ ]
     per cent. of such principal amount and a management and underwriting fee
     of [ ] per cent. of such principal amount.

3.   The net purchase money in respect of the Notes, namely the sum of [ ]
     (representing the Subscription Price, less the amount payable in respect
     of the Managers' expenses specified in Clause 4 hereof) will be paid by
     the Lead Manager on behalf of the Managers to the Issuer

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

* Delete this paragraph for a Dealer-only syndicate.

<PAGE>
                                       40

     at [ ] hours (London time) on [ ], or at such other time and/or date as
     the Issuer and the Lead Manager on behalf of the Managers may agree (the
     "Closing Date") against delivery to a common depositary for Clearstream,
     Luxembourg and Morgan Guaranty Trust Company of New York, Brussels
     Office, as operator of the Euroclear System, or any successor to the
     business thereof of a temporary global note representing the Notes, in
     the manner contemplated in the Program Agreement.

4.   The Issuer or, failing the Issuer, the Guarantor shall bear and pay all
     costs and expenses incurred in or in connection with the printing of the
     Notes, this Agreement and the Pricing Supplement prepared in connection
     with the issue of the Notes, the listing of the Notes on the [ ] Stock
     Exchange and making initial delivery of the Notes. In addition, the
     Issuer or, failing the Issuer, the Guarantor agrees to pay to the Lead
     Manager [ ] in respect of reasonable legal, travelling, telex, facsimile,
     telephone, postage and costs of any publicity agreed in writing by the
     Issuer or the Guarantor incurred and to be incurred by the Managers in
     connection with the preparation and management of the issue and
     distribution of the Notes which sum may be deducted from the Subscription
     Price as provided in Clause 3 hereof.

5.   The obligation of the Managers to purchase the Notes is conditional upon:

     (i)  the conditions set out in Clause 3(2) (other than that set out in
          Clause 3(2)(f)) of the Program Agreement being satisfied as of the
          Closing Date and without prejudice to the aforesaid, the Offering
          Circular dated [ ] [, as supplemented by [ ],] containing all
          material information relating to the assets and liabilities,
          financial position and profits and losses of the Issuer [and the
          Guarantor/Parent] and nothing having happened or being expected to
          happen which would require the Offering Circular [, as so
          supplemented,] to be [further] supplemented or updated; and

     (ii) the delivery to the Lead Manager on the Closing Date of:

          (A)  legal opinions addressed to the Managers dated the Closing Date
               in such form and with such contents as the Lead Manager, on
               behalf of the Managers, may reasonably require [from Bruckhaus
               Westrick Heller Lober/Cravath, Swaine & Moore], the legal
               advisers to the Issuer as to [German/United States law,] from
               Homburger Rechtsanwalte, the legal advisers to the Guarantor as
               to Swiss law, and from Allen & Overy, the legal advisers to the
               Managers as to English law;

          (B)  a certificate dated the Closing Date signed by a duly
               authorised officer of each of the Issuer and the Guarantor to
               the effect stated in paragraph (i) of this Clause;

          (C)  a comfort letter dated the Closing Date from the independent
               auditors of each of the Issuer and the Guarantor, in such form
               and with such content as the Managers may reasonably request;
               and

          (D)  [list such other conditions precedent as may be agreed].

     If any of the foregoing conditions is not satisfied on or before the
     Closing Date, this Agreement shall terminate on such date and the parties
     hereto shall be under no further

<PAGE>
                                       41

     liability arising out of this Agreement (except for the liability of the
     Issuer and the Guarantor in relation to expenses as provided in Clause 4
     and except for any liability arising before or in relation to such
     termination), provided that the Lead Manager, on behalf of the Managers,
     may in its discretion waive any of the aforesaid conditions (other than
     the conditions precedent contained in Clause 3(2)(c) of the Program
     Agreement) or any part of them.

6.   In connection with the distribution of the Notes, the Lead Manager may
     over-allot or effect transactions in the open market or otherwise with a
     view to stabilising or maintaining the market price of the Notes at
     levels other than those which might otherwise prevail in the open market,
     but in doing so the Lead Manager shall act as principal and not as agent
     of the Issuer. Such stabilising if commenced, may be discontinued at any
     time. Any loss resulting from over-allotment and stabilisation shall be
     borne, and any net profit arising therefrom shall be retained, by the
     Lead Manager for its own account. Such stabilisation shall be done in
     compliance with all applicable laws.

7.   (a)  The Lead Manager, on behalf of the Managers, may, after consultation
          with the Issuer and the Guarantor if practicable and by notice to
          the Issuer and the Guarantor, terminate this Agreement at any time
          prior to payment of the net purchase money to the Issuer if in the
          opinion of the Lead Manager there shall have been such a change in
          national or international financial, political or economic
          conditions or currency exchange rates or exchange controls as would
          in the view of the Lead Manager be likely to prejudice materially
          the success of the offering and distribution of the Notes (whether
          in the primary market or in respect of dealings in the Notes in the
          secondary market).

     (b)  Upon such notice being given, this Agreement shall terminate and no
          party shall be under any liability to any other in respect thereof
          except for the liability of the Issuer and the Guarantor for the
          payment of costs and expenses as provided in Clause 4 of this
          Agreement, the obligations of the Managers under Clause 8 of the
          Program Agreement and the respective obligations of the parties
          under Clause 6 of the Program Agreement.

8.   (1)  This Agreement shall be governed by, and construed in accordance
          with, the laws of England.

     (2)  This Agreement does not create any right under the Contracts (Rights
          of Third Parties Act 1999 which is enforceable by any person who is
          not a party to this Agreement)

     (3)  Each party to this Agreement hereby irrevocably agrees for the
          exclusive benefit of the other parties to this Agreement that the
          courts of England are to have jurisdiction to settle any disputes
          which may arise out of or in connection with this Agreement and that
          accordingly any suit, action or proceedings (together referred to as
          "Proceedings") arising out of or in connection with this Agreement
          may be brought in such courts. Each party to this Agreement hereby
          irrevocably waives any objection which it may have to the laying of
          the venue of any Proceedings in any such courts and any claim that
          any such Proceedings have been brought in an inconvenient forum and
          hereby further irrevocably agrees that a judgment in any Proceedings
          brought in the English courts shall be conclusive and binding upon
          such party and may be enforced in the courts of any other
          jurisdiction (subject to the laws of the jurisdiction in

<PAGE>
                                       42

          which enforcement is sought). Nothing contained herein shall limit
          any right to take Proceedings against the Issuer and/or the
          Guarantor in any other court of competent jurisdiction (outside the
          Contracting States, as defined in Section 1(3) of the Civil
          Jurisdiction and Judgments Act 1982), nor shall the taking of
          Proceedings in one or more jurisdictions preclude the taking of
          Proceedings in any other jurisdiction, whether concurrently or not
          (subject to the laws of the relevant jurisdiction). The [Issuer and
          the] Guarantor hereby appoints [the Issuer/Ciba Specialty Chemicals
          PLC] as its agent for service of process and agrees that, in the
          event of ceasing so to act or ceasing to be registered in England,
          it will appoint another person as its agent for service of process
          in England in respect of any Proceedings.

9.   This Agreement may be signed in any number of counterparts, all of which,
     taken together, shall constitute one and the same agreement and any party
     may enter into this Agreement by executing a counterpart.

Please confirm that this letter correctly sets out the arrangements agreed
between us.

Yours faithfully,

For: [Issuer]

By:

For: CIBA SPECIALTY CHEMICALS HOLDING INC.

By:                              By:

We agree to the foregoing.

For: [

                      ]

By:

                                   Annexe A

                         [Form of Pricing Supplement]

<PAGE>
                                       43

                                  APPENDIX F

                           FORM OF DEED OF COVENANT

THIS DEED OF COVENANT is made on 16th June, 2000 by each of Ciba Specialty
Chemicals Corporation, Ciba Specialty Chemicals PLC and Ciba
Spezialitatenchemie Holding Deutschland GmbH (each an "Issuer") in favour of
the account holders of Clearstream Banking, societe anonyme ("Clearstream,
Luxembourg") and Morgan Guaranty Trust Company of New York, Brussels Office,
as operator of the Euroclear System, or any successor to the business thereof
or any other additional clearing system or systems as are specified in the
Pricing Supplement relating to any Note (as defined below) (each a "Clearing
System").

WHEREAS:

(A)  Each Issuer has entered into an amended and restated Program Agreement
     (the "Program Agreement", which expression includes the same as it may be
     amended or supplemented from time to time) dated 16th June, 2000 with
     Ciba Specialty Chemicals Holding Inc. (the "Guarantor") and the Dealers
     named therein under which the relevant Issuer proposes from time to time
     to issue Euro Medium Term Notes (the "Notes"), which amends and restates
     the amended and restated program agreement dated 9th July, 1999 with Ciba
     Specialty Chemicals Corporation, Ciba Specialty Chemicals PLC, Ciba
     Spezialitatenchemie Holdings Deutschland GmbH, Ciba Specialty Chemicals
     Investment Ltd., the Guarantor and the Dealers named therein (the
     "Principal Program Agreement").

(B)  The Notes will initially be represented by, and comprised in, Temporary
     Global Notes (the "Temporary Global Notes") and thereafter may be
     represented by, and comprised in, Permanent Global Notes (the "Permanent
     Global Notes" and together with the Temporary Global Notes, the "Global
     Notes"), such Global Notes representing a certain number of underlying
     Notes (the "Underlying Notes").

(C)  Each Global Note will, after issue, be deposited with a common depository
     for one or more Clearing Systems (each such Clearing System or all such
     Clearing Systems together, the "Relevant Clearing System"). Upon such
     deposit of a Global Note the Underlying Notes represented by such Global
     Note will be credited to a securities account or securities accounts with
     the Relevant Clearing System. Any account holder with the Relevant
     Clearing System which has Underlying Notes credited to its securities
     account from time to time (each a "Relevant Account Holder") will,
     subject to and in accordance with the terms and conditions and operating
     procedures or management regulations of the Relevant Clearing System, be
     entitled to transfer such Underlying Notes and (subject to and upon
     payment being made by the relevant Issuer to the bearer in accordance
     with the terms of the relevant Global Note) will be entitled to receive
     payments from the Relevant Clearing System calculated by reference to the
     Underlying Notes credited to its securities account.

(D)  In certain circumstances specified in each Global Note, a Global Note
     will become void. The time at which a Global Note becomes void is
     hereinafter referred to as the "Relevant Time". In such circumstances
     each Relevant Account Holder will, subject to and in accordance with the
     terms of this Deed, acquire against the relevant Issuer all those rights
     which such Relevant Account Holder would have had if, prior to the Global
     Note becoming void, duly executed and

<PAGE>
                                       44

     authenticated Definitive Note(s) (as defined in the Agency Agreement)
     and, if the Notes are repayable in instalments, receipts in respect
     thereof (the "Receipts") and interest coupons (the "Coupons")
     appertaining to the Definitive Note(s) (if appropriate) had been issued
     in respect of its Underlying Note(s) and such Definitive Notes(s),
     Receipts (if appropriate) and Coupons (if appropriate) were held and
     beneficially owned by such Relevant Account Holder.

(E)  The obligations of each Issuer under this Deed have been guaranteed by
     the Guarantor pursuant to the amended and restated Deed of Guarantee (the
     "Guarantee") executed by the Guarantor on 16th June, 2000 and an executed
     copy of the Guarantee has been deposited with and shall be held by The
     Chase Manhattan Bank as agent (the "Agent") for the time being for the
     Notes. A copy of the Guarantee shall be available for inspection at the
     office of the Agent for the time being (being at the date hereof at
     Trinity Tower, 9 Thomas More Street, London E1 9YT).

(F)  This Deed of Covenant amends and restates the amended and restated Deed
     of Covenant entered into by Ciba Specialty Chemicals Corporation, Ciba
     Specialty Chemicals PLC, Ciba Spezialitatenchemie Holding Deutschland
     GmbH and Ciba Specialty Chemicals Investment Ltd. dated 9th July, 1999.
     This Deed of Covenant does not affect any Notes issued pursuant to the
     Original Program Agreement prior to the date hereof.

NOW THIS DEED WITNESSES AS FOLLOWS:

1.   If any Global Note becomes void in accordance with the terms thereof the
     relevant Issuer hereby undertakes and covenants with each Relevant
     Account Holder (other than when any Relevant Clearing System is an
     account holder of any other Relevant Clearing System) that each Relevant
     Account Holder shall automatically acquire at the Relevant Time, without
     the need for any further action on behalf of any person, against the
     relevant Issuer all those rights which such Relevant Account Holder would
     have had if at the Relevant Time it held and beneficially owned duly
     executed and authenticated Definitive Note(s), Receipts (if appropriate)
     and Coupons (if appropriate) in respect of each Underlying Note
     represented by such Global Note which such Relevant Account Holder has
     credited to its securities account with the Relevant Clearing System at
     the Relevant Time. The relevant Issuer's obligation pursuant to this
     clause shall be a separate and independent obligation by reference to
     each Underlying Note which a Relevant Account Holder has credited to its
     securities account with the Relevant Clearing System and the relevant
     Issuer agrees that a Relevant Account Holder may assign its rights
     hereunder in whole or in part.

2.   The records of the Relevant Clearing System shall be conclusive evidence
     of the identity of the Relevant Account Holders and the number of
     Underlying Notes credited to the securities account of each Relevant
     Account Holder. For the purposes hereof a statement issued by the
     Relevant Clearing System stating:

     (i)  the name of the Relevant Account Holder to which such statement is
          issued; and

     (ii) the aggregate nominal amount of Underlying Notes credited to the
          securities account of such Relevant Account Holder as at the opening
          of business on the first day following the Relevant Time on which
          the Relevant Clearing System is open for business,

<PAGE>
                                       45

          shall be conclusive evidence of the records of the Relevant Clearing
          System at the Relevant Time.

3.   In the event of a dispute, the determination of the Relevant Time by the
     Relevant Clearing System shall be final and conclusive for all purposes
     in connection with the Relevant Account Holders with securities accounts
     with the Relevant Clearing System.

4.(a) Where the Issuer is Ciba Specialty Chemicals Corporation:

     The Issuer will, subject to the exceptions and limitations set forth
     below, pay as additional interest on an Underlying Note such additional
     amounts as are necessary in order that the net amounts receivable
     pursuant to the terms of the Underlying Note by each Relevant Account
     Holder who is a United States Alien (as such term is defined below),
     after deduction for any present or future tax, assessment or governmental
     charge of the United States (as such term is defined below), or a
     political subdivision or authority thereof or therein, imposed by
     withholding with respect to the payment, will not be less than the
     amounts provided for in such Underlying Note to be then due and payable;
     provided, however, that the foregoing obligation to pay additional
     amounts shall not apply to:

     (i)  any tax, assessment or governmental charge that would not have been
          so imposed but for the existence of any present or former connection
          between such Relevant Account Holder (or between a fiduciary,
          settlor, beneficiary, member or shareholder of, or holder of power
          over, such holder, if such Relevant Account Holder is an estate,
          trust, partnership or corporation) and the United States, including,
          without limitation, such Relevant Account Holder (or fiduciary,
          settlor, beneficiary, member, shareholder or holder of a power)
          being considered as:

          (A)  being or having been present or engaged in a trade or business
               in the United States or having or having had a permanent
               establishment therein;

          (B)  having a current or former relationship with the United States,
               including a relationship as a citizen or resident or being
               treated as a resident thereof;

          (C)  being or having been a personal holding company, a controlled
               foreign corporation, a passive foreign investment company, a
               foreign personal holding company with respect to the United
               States, a corporation that has accumulated earnings to avoid
               United States Federal income tax or a private foundation or
               other tax-exempt organisation; or

          (D)  an actual or a constructive "10-per cent shareholder" of the
               Issuer as defined in Section 871(h)(3) of the United States
               Internal Revenue Code of 1986, as amended (the "Code");

     (ii) any Relevant Account Holder who is a fiduciary or partnership or
          other than the sole beneficial owner of the Underlying Note, but
          only to the extent that a beneficiary or settlor with respect to
          such fiduciary or member of such partnership or a beneficial owner
          of the Underlying Note would not have been entitled to the payment
          of an additional amount had such beneficiary, settlor, member or
          beneficial owner been the Relevant Account Holder of such Underlying
          Note;

<PAGE>
                                       46

     (iii) any tax, assessment or governmental charge that would not have been
          imposed or withheld but for the failure of the Relevant Account
          Holder, if required, to comply with certification, identification or
          information reporting requirements under United States income tax
          laws, without regard to any tax treaty, with respect to the payment,
          concerning the nationality, residence, identity or connection with
          the United States of the Relevant Account Holder or a beneficial
          owner of such Underlying Note, if such compliance is required by
          United States income tax laws, without regard to any tax treaty, as
          a precondition to relief or exemption from such tax, assessment or
          governmental charge;

     (iv) any estate, inheritance, gift, sales, transfer, excise, wealth or
          personal property tax or any similar tax, assessment or governmental
          charge;

     (v)  any tax, assessment or governmental charge that is payable otherwise
          than by withholding from the payment of the amounts receivable in
          respect of such Underlying Note;

     (vi) any tax, assessment or governmental charge required to be withheld
          by any paying agent from such payment of amounts receivable in
          respect of any Underlying Note, if such payment can be made without
          such withholding by any other paying agent; or

     (vii) any combination of items (i), (ii), (iii), (iv), (v) or (vi).

     As used in this Clause, "United States" means the United States of
     America, the Commonwealth of Puerto Rico and each possession of the
     United States of America and place subject to its jurisdiction and
     "United States Alien" means any corporation, partnership, individual or
     fiduciary that, as to the United States, is for United States Federal
     income tax purposes (A) a foreign corporation, (B) a foreign partnership
     one or more of the members of which is, for United States Federal income
     tax purposes, a foreign corporation, a non-resident alien individual or a
     non-resident alien fiduciary of a foreign estate or trust, (C) a
     non-resident alien individual or (D) a non-resident alien fiduciary of a
     foreign estate or trust.

(b)  Where the Issuer is Ciba Spezialitatenchemie Holding Deutschland GmbH:

     All payments in respect of the Underlying Note by the Issuer will be made
     without withholding or deduction for or on account of any present or
     future taxes or duties of whatever nature imposed or levied by or on
     behalf of Germany or any state (Bundesland), municipality or other
     political subdivision or any authority thereof or therein having power to
     tax, unless such withholding or deduction is required by law. In such
     event, the Issuer will pay such additional amounts as shall be necessary
     in order that the net amounts received by the Relevant Account Holders
     after such withholding or deduction shall equal the amounts which would
     otherwise have been receivable in respect of the Underlying Note in the
     absence of such withholding or deduction; except that no such additional
     amounts shall be payable with respect to any Underlying Note to or to the
     order of a Relevant Account Holder who is liable for such taxes or duties
     in respect of such Underlying Note by reason of his having some
     connection with Germany other than the mere holding of such Underlying
     Note or with respect to any Underlying Note presented for payment to a
     paying agent which is required to deduct or withhold an amount for or on
     account of such taxes or duties if such amount can be paid

<PAGE>
                                       47

     without any deduction or withholding for or on account of any taxes or
     duties by any other paying agent. Any advance income tax
     (Zinsabschlagsteuer) levied in Germany since 1993 as well as the
     solidarity surcharge (Solidaritatszuschlag) imposed thereon since 1995 do
     not constitute a withholding or deduction within the meaning of this
     Clause 4(b).

(c)  Where the Issuer is Ciba Specialty Chemicals PLC:

     All payments by the Issuer in respect of the Underlying Notes shall be
     made without withholding or deduction for or on account of any present or
     future tax, duty or charge of whatever nature imposed or levied by or on
     behalf of the United Kingdom, or any authority thereof or therein having
     power to tax unless the withholding or deduction is required by law. In
     that event, the Issuer shall pay such additional amounts as will result
     (after such withholding or deduction) in the receipt by the Relevant
     Account Holders of the sums which would have been receivable (in the
     absence of such withholding or deduction) from the Issuer in respect of
     their Underlying Notes; except that no such additional amounts shall be
     payable with respect to any Underlying Note to or to the order of a
     person liable to such tax, duty or charge in respect of such Underlying
     Note by reason of his having some connection with the United Kingdom
     other than the mere holding or ownership of such Underlying Note or with
     respect to any Underlying Note presented for payment to a paying agent
     which is required to deduct or withhold an amount for or on account of
     such tax, duty or charge if such amount can be paid without any deduction
     or withholding for or on account of any tax, duty or charge by any other
     paying agent.

5.   Each Issuer hereby warrants, represents and covenants with each Relevant
     Account Holder that it has all corporate power, and has taken all
     necessary corporate or other steps, to enable it to execute, deliver and
     perform this Deed, and that this Deed constitutes a legal, valid and
     binding obligation of the relevant Issuer enforceable in accordance with
     its terms subject to the laws of bankruptcy and other laws affecting the
     rights of creditors generally.

6.   This Deed shall take effect as a Deed Poll for the benefit of the
     Relevant Account Holders from time to time and for the time being. This
     Deed shall be deposited with and held by a depository for Clearstream,
     Luxembourg and Morgan Guaranty Trust Company of New York, Brussels
     office, as operator of the Euroclear System, or any successor to the
     business thereof and for the time being (being at the date hereof The
     Chase Manhattan Bank at Trinity Tower, 9 Thomas More Street, London E1
     9YT) until all the obligations of each Issuer hereunder have been
     discharged in full.

7.   Each Issuer hereby acknowledges the right of every Relevant Account
     Holder to the production of, and the right of every Relevant Account
     Holder to obtain (upon payment of a reasonable charge) a copy of, this
     Deed, and further acknowledges and covenants that the obligations binding
     upon it contained herein are owed to, and shall be for the account of,
     each and every Relevant Account Holder, and that each Relevant Account
     Holder shall be entitled severally to enforce the said obligations
     against the relevant Issuer.

8.   This Deed is governed by, and shall be construed in accordance with, the
     laws of England.

     Each Issuer hereby irrevocably agrees, for the exclusive benefit of the
     Relevant Account Holders, that the courts of England are to have
     jurisdiction to settle any dispute which may

<PAGE>
                                       48

     arise out of, or in connection with, this Deed and that accordingly any
     suit, action or proceedings (together referred to as "Proceedings")
     arising out of, or in connection with, this Deed may be brought in such
     courts. Each Issuer irrevocably waives any objection which it may have
     now or hereafter to the laying of the venue of any Proceedings in any
     such court and any claim that any such Proceedings have been brought in
     an inconvenient forum and further irrevocably agrees that a judgment in
     any Proceedings brought in the English courts shall be conclusive and
     binding upon the relevant Issuer and may be enforced in the courts of any
     other jurisdiction (subject to the laws of the jurisdiction in which
     enforcement is sought). Nothing contained in this Clause shall limit any
     right to take Proceedings against any Issuer in any other court of
     competent jurisdiction, nor shall the taking of Proceedings in one or
     more jurisdictions preclude the taking of Proceedings in any other
     jurisdiction, whether concurrently or not (subject to the laws of the
     relevant jurisdictions). Ciba Specialty Chemicals Corporation and Ciba
     Spezialitatenchemie Holding Deutschland GmbH each hereby appoints Ciba
     Specialty Chemicals PLC at its registered office for the time being to
     accept service of process on its behalf. If Ciba Specialty Chemicals PLC
     shall cease to be registered under the laws of England and Wales, the
     relevant Issuer shall appoint another person with an office in London to
     accept such service. Nothing herein shall affect the right to serve
     process in any other manner permitted by law.

9.   This Deed may be executed by any one or more of the parties hereto in any
     number of counterparts, each of which shall be deemed to be an original,
     but all such counterparts shall together constitute one and the same
     instrument.

IN WITNESS whereof each Issuer has caused this Deed to be duly executed the
day and year first above mentioned.

<PAGE>
                                       49

EXECUTED as a Deed under         )
Seal by CIBA SPECIALTY CHEMICALS )
CORPORATION                      )
and SIGNED and                   )
DELIVERED as a deed on its       )
behalf by                        )
in the presence of:              )

Witness's
Signature __________________________________

Name      __________________________________

Address   __________________________________

          __________________________________

EXECUTED as a Deed under         )
Seal by CIBA SPECIALTY CHEMICALS )
PLC and SIGNED and DELIVERED as  )
a deed on its behalf by          )
in the presence of:              )

Witness's
Signature __________________________________

Name      __________________________________

Address   __________________________________

          __________________________________

<PAGE>
                                       50

EXECUTED as a Deed under         )
Seal by CIBA SPEZIALITATENCHEMIE )
HOLDING DEUTSCHLAND GMBH         )
and SIGNED and DELIVERED as      )
a deed on its behalf by          )
                                 )
in the presence of:              )

Witness's
Signature __________________________________

Name      __________________________________

Address   __________________________________

          __________________________________

<PAGE>
                                       51

                                 SIGNATORIES

The Issuers

CIBA SPECIALTY CHEMICALS CORPORATION
560 White Plains Road
Tarrytown
New York
10591-9005

Telephone:      001 914 785 2000
Telefax:        001 914 785 2183
Attention:      Treasurer

By:

CIBA SPECIALTY CHEMICALS PLC
Hulley Road
Macclesfield
Cheshire
SK10 2NX

Telephone:     44 1 625 421 933
Telefax:       44 1 625 619 637
Attention:     Treasurer

By:

CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH
Chemiestrasse
D-68623 Lampertheim
Germany

Telephone:     00 49 620 6150
Telefax:       00 49 620 6151368
Attention:     Treasurer

By:

<PAGE>
                                       52

The Guarantor

CIBA SPECIALTY CHEMICALS HOLDING INC.
Klybeckstrasse 141
CH-4002 Basle
Switzerland

Telephone:    00 41 61 636 2794
Telefax:      00 41 61 636 6828
Attention:    Head of Capital Markets

By:

The Dealers

CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
One Cabot Square
London E14 4QJ

Telephone:   020 7888 4021
Telex:       892131 CSFB G
Telefax      020 7888 3719
Attention:   MTN Trading

DEUTSCHE BANK AG LONDON
Winchester House
1 Great Winchester Street
London EC2N 2DB

Telephone:   020 7545 8000
Telefax:     020 7541 2761
Attention:   MTN Desk

GOLDMAN SACHS INTERNATIONAL
Peterborough Court
133 Fleet Street
London EC4A 2BB

Telephone:   020 7774 2295
Telex:       94012165 GSHH G
Telefax:     020 7774 5711
Attention:   Euro Medium Term Note Desk

<PAGE>
                                       53

J.P. MORGAN SECURITIES LTD.
60 Victoria Embankment
London EC4Y 0JP

Telephone:   020 7779 3469
Telex:       8954804 MGLTD G
Telefax:     020 7325 8225
Attention:   Euro Medium Term Note Desk

Each by its duly authorised signatory:

UBS AG, acting through its financial services group UBS Warburg
1 Finsbury Avenue
London EC2M 2PP

Telephone:   44 20 7567 2479
Telex:       887434 WDR G
Telefax:     44 20 7567 3778
Attention:   MTNs and Private Placements

By:                 By:

<PAGE>

                               16th June, 2000

                         CIBA SPECIALTY CHEMICALS PLC
                     CIBA SPECIALTY CHEMICALS CORPORATION
              CIBA SPEZIALITATENCHEMIE HOLDING DEUTSCHLAND GMBH

                                  as Issuers

                                   - and -

                    CIBA SPECIALTY CHEMICALS HOLDING INC.
                                 as Guarantor

                                   - and -

                 CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
                           DEUTSCHE BANK AG LONDON
                         GOLDMAN SACHS INTERNATIONAL
                         J.P. MORGAN SECURITIES LTD.
       UBS AG, acting through its financial services group UBS Warburg
                                  as Dealers

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

                              PROGRAM AGREEMENT
                      in respect of a U.S.$2,000,000,000
                        EURO MEDIUM TERM NOTE PROGRAM
                            (Amended and Restated)

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

                                ALLEN & OVERY
                                    London

<PAGE>

                                   CONTENTS

Clause                                                                    Page

1.  Definitions and Interpretation........................................ 2
2.  Agreements to Issue and Purchase Notes................................ 5
3.  Conditions of Issue; Updating ........................................ 6
4.  Representations and Warranties........................................ 8
5.  Undertakings of the Issuers and the Guarantor.........................11
6.  Indemnity.............................................................14
7.  Authority to Distribute Documents ....................................16
8.  Dealers' Undertakings ................................................16
9.  Fees, Expenses and Stamp Duties.......................................17
10. Termination of Appointment of Dealers.................................18
11. Appointment of New Dealers ...........................................18
12. Increase in the Aggregate Nominal Amount of the Program...............19
13. Status of the Arrangers ..............................................19
14. Counterparts..........................................................20
15. Communications .......................................................20
16. Benefit of Agreement .................................................20
17. Currency Indemnity ...................................................20
18. Calculation Agent ....................................................21
19. Stabilisation.........................................................21
20. Governing Law and Jurisdiction .......................................21

Appendices

A.  Initial Documentation List...........................................23
B.  Selling Restrictions ................................................25
C.  Part I - Form of Dealer Accession Letter - Program...................28
    Part II - Form of Confirmation Letter - Program................ .....30
    Part III - Form of Dealer Accession Letter - Note Issue .............32
    Part IV - Form of Confirmation Letter - Note Issue ..................34
D.  Letter Regarding Increase in the Nominal Amount of the Program.......36
E.  Form of Subscription Agreement.......................................38
F.  Form of Deed of Covenant.............................................44

Signatories..............................................................52

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