Document:

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                                                                   EXHIBIT 10.26

NOTE AND SECURITY AGREEMENT

Hickory, North Carolina

Date April 29, 2002                                                  $500,000.00

FOR VALUE RECEIVED, Prime/Home Impressions, LLC, limited liability company
organized and existing under the laws of the State of North Carolina and whose
chief executive office is located at 420 3rd Avenue NW, Hickory, North Carolina
28601 (hereinafter the "Borrower"), hereby promises to pay to the order of
Wachovia Bank, N.A. (hereinafter the "Lender") at its office where borrowed, or
at such other place as Lender hereafter may direct from time to time in writing,
in immediately available fiends of lawful money of the United States, the sum of
Five Hundred Thousand and 00/100 Dollars together with any unpaid interest
hereon from date of advance, in accordance with the terms contained in this Note
and Security Agreement (hereinafter referred to as the "Note"). The optional
provisions applicable to this Note are checked below.

REPAYMENT:

[ ] One payment in full of principal and unpaid interest due ____________

[ ] One demand _______________________________

[X] 36 payments of $13,888.89 beginning August 29, 2002 and thereafter Monthly
    until July 29, 2005,

    When the entire principal amount then outstanding and all accrued but unpaid
    interest shall be paid in full.

[ ] On demand the principal amount set forth above or the unpaid principal
    amount of all advances which the Lender actually makes hereunder to the
    Borrower, whichever amount is less. The Borrower may borrow, repay and
    reborrow sums up to the principal amount set forth above. This Note shall be
    used to evidence the outstanding principal balance advanced hereunder until
    it is surrendered to the Borrower by the Lender, and it shall continue to be
    used even though there may be periods prior to such surrender when no amount
    of principal or interest is owing hereunder. If advances of the principal
    amount hereof are to be made by Lender to the Borrower after the date of
    this Note, Lender, at its sole discretion, is hereby authorized to make such
    advances under this Note upon telephonic or written communication of a
    borrowing request from any Person representing himself or herself to be the
    Borrower or, in the event the Borrower is an organization, a duly authorized
    officer or representative of Borrower.

INTEREST:
Payable: [X] in arrears; [ ]  in advance
         [X] in addition to the payments described above;
         [ ] included in the payments described above.

Payable at the rate per annum of [ ] Prime Rate plus ________%; [ ] ________% of
Prime Rate; [ ] ___________ % Fixed;

    [ ]  Those rates which may be offered from time to time by the Lender and
         agreed to by the Borrower and so noted by the Lender on an attachment
         hereto. In the event of a good faith dispute among the parties to this
         Note as to rate under this rate option, the rate shall be the Prime
         Rate, adjusted for any changes in the Prime Rate as of the day such
         Rime Rate changes;

    |X|  The rate(s) set forth in Schedule 1 attached to this Note and
         incorporated herein by reference;

    [ ]  Those rates which have been offered by the Lender to the Borrower in
         the Lo an Agreement or Commitment Letter checked below, the provisions
         of which shall determine such rates, the procedure for the selection of
         such rates and the time periods for which such rates shall apply.

In no case shall interest exceed the maximum rate permitted by applicable law.

If the interest is based upon the Prime Rate, such interest rate will be
adjusted on: [ ] The day the Prime Rate changes [ ] Other _______________

Due: [X]  On principal payment dates   Other [ ] ______________________________

Interest will be calculated on the basis of [X] A year of 360 days and paid for
the actual number of days elapsed [ ] Other _______________________

After demand or maturity (whether by acceleration or otherwise), as applicable,
interest on any unpaid balance hereof shall be payable on demand at a rate per
annum-equal to the greater of 150 % of the Prime Rate, or 2 % above the rate
applicable prior to demand or maturity, adjusted for any changes in the Prime
Rate as of the day such Prime Rate changes, not to exceed the maximum rate
permitted by applicable law.

To the extent not prohibited by law, a late charge of four percent (4%) or the
applicable statutory maximum, whichever is greater, shall be assessed on any
payment remaining past due for fifteen (15) days or more unless interest on this
Note is payable in advance, in which case such period shall instead be thirty
(30) days or more; provided, however, that if any applicable statute allows, a
shorter minimum time period for the imposition of a late charge, such shorter
time period shall prevail.

As used herein, "Prime Rate" refers to that interest rate so denominated and set
by the Lender from time to time as an interest rate basis for borrowings. The
Prime Rate is one of several interest rate bases used by the Lender. The Lender
lends at interest rates above and below the Prime Rate.

All payments on this Note shall be applied, in accordance with the then current
billing statement applicable to this Note, first to accrued interest, then to
fees, then to principal due and then to late charges. Any remaining funds shall
be applied to the further reduction of principal. Notwithstanding the foregoing,
upon the occurrence of a default hereunder, payments shall be applied as
determined by Lender in its sole discretion.

[ ]   The terms and conditions in a Loan Agreement dated ___________________
      between the parties hereto, as the same may be amended from time to time,
      shall be considered a part hereof to the same extent as if written herein.

[ ]   The terms and conditions in a Commitment Letter dated ___________________
      from the Lender to the Borrower, as the same may be amended, extended or
      replaced from time to time, shall be considered a part hereof to the same
      extent as if written herein.

In addition to any other collateral specified herein and in other agreements, to
secure the indebtedness evidenced by this Note, together with any extensions,
modifications, or renewals thereof, in whole or in part, as well as all other
indebtedness, obligations and liabilities of the Borrower to the Lender, now
existing or hereafter incurred or arising, including, without limitation, all
sums arising under any ISDA Master Agreement now or hereafter executed between
Borrower and Lender and any related schedules and confirmations thereto
(hereinafter sometimes referred to as the "Obligations"), except for other
indebtedness, obligations and liabilities owing to Lender that constitute (a)
consumer credit as defined in Federal Reserve Board Regulation Z and either
subject to the disclosure requirements of Federal Reserve Board Regulation Z or
state consumer protection laws or (b) non-consumer credit if under applicable
state law the maximum interest rate for such credit is reduced when secured
(herein collectively referred to as "Restricted Debt"), the Borrower does hereby
grant to the Lender a security interest in, and does hereby assign, pledge,
transfer and convey to Leader the following described property:

Collateral more particularly described in Security Agreement-Commercial dated
April 29, 2002 between Borrower and Lender.

whether now owned or hereafter acquired, together with any and all additions and
accessions thereto or replacements thereof, returned or unearned premiums from
any insurance written in connection with this Note and any products and/or
proceeds of any of the foregoing. In no event, however, shall the Lender have a
security interest in any goods acquired by the Borrower for personal, family or
household purposes more than 10 days after the date of this Note, unless such
goods are added to or attached to the collateral (as hereinafter defined). In
addition, to the extent not prohibited by law, the Borrower hereby grants to the
Lender a security interest in, and does hereby assign, pledge, transfer and
convey to Lender, (i) all other property of the Borrower now or hereafter in the
possession or control of the Lender (exclusive of any such property in the
possession or control of the Lender as a fiduciary other than as agent),
including, without limitation, all cash, stock or other dividends and all
proceeds

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thereof, and all rights to subscribe for securities incident thereto and any
substitutions or replacements for, or other rights in connection with, any of
the Collateral and (ii) any of Borrower's deposit accounts (as such term is
defined in the Uniform Commercial Code of the State of North Carolina, as the
same may be amended from time to time (the "Code")), whether such accounts be
general or special, or individual or multiple party, held by Lender and upon all
drafts, notes, or other items deposited for collection or presented for payment
by the Borrower with the Lender, and the Lender may at any time, without demand
or notice, appropriate and apply any of such to the payment of any of the
Obligations (except for Restricted Debt), whether or not due. All property
described in this paragraph, in which the Borrower has granted to the Lender a
security interest or security title hereunder, is herein collectively referred
to as the "Collateral." If, with respect to any Collateral in the form of
investment securities, a stock dividend is declared or any stock split-up made
or right to subscribe issued, all the certificates for the shares representing
such stock dividend or spilt-up or right to subscribe will be immediately
delivered, duly endorsed, to the Lender as additional Collateral. The Lender
shall be deemed to have possession, control and custody of any Collateral
actually in transit to it or to any of its officers or agents.

If at any time the Collateral pledged as security for any of the Obligations
shall be or become unsatisfactory to the Lender or should the Lender deem itself
insecure, the Borrower will immediately furnish such further property to be held
by the Lender as if originally pledged as Collateral hereunder or make such
payment on account as will be satisfactory to the Leader.

The Lender shall have, but shall not be limited to, the following rights, each
of which may be exercised at any time or from time to time:( i) to transfer this
Note and the Collateral, and any transferee shall have all the rights of the
Lender hereunder and the Lender shall be thereafter relieved from any liability
with respect to any Collateral so transferred; (ii) to transfer the whole or any
part of the Collateral in the name of itself or its nominees; (iii) to vote any
investment securities forming a part of the Collateral; (iv) to notify the
obligors on any Obligation to make payment to the Lender of any amounts due
thereon; (v) to execute at any time in the name of any party hereto and to file
one or more financing statements describing the Collateral, which financing
statements may contain a generic collateral description that is broader than the
Collateral and which may describe any agricultural liens or other statutory
liens held by Lender; (vi) to receive or take control of any income or other
proceeds of any of the Collateral; and (vii) to request and receive current
financial information from any party liable for all or any part of the
Obligations.

Borrower will at Lender's request maintain insurance on the Collateral in
amounts at least equal to the fair market value of the Collateral and against
casualty, public liability and property damage risks and such other risks as
Lender may request; provided, however, if the Collateral described above is a
vehicle(s), Borrower agrees to obtain and maintain liability insurance as
required by law and collision and comprehensive insurance with a deductible not
exceeding $500.00. All insurance shall be with companies with a Best Insurance
Report Rating of B+ or better, and Borrower will pay all premiums for insurance
when due. Unless and until requested by Lender, Borrower shall not be required
to name Lender as additional insured in such policy or to provide Lender a copy
of the policy for or certificate evidencing such insurance, but when and if
requested by Lender, the Borrower shall immediately (but no later than five (5)
calendar days) (i) cause all policies of such insurance to specify that Lender
is an additional insured as its interests may appear and to provide that such
insurance shall not be cancellable by Borrower or the insurer without at least
30 days advance written notice to Lender and that proceeds are payable to Lender
regardless of any act or omission of Borrower which would otherwise result in a
denial of a claim; and (ii) deliver all policies or certificates thereof (with
copies of such policies) to Lender. In the event any or all of such insurance is
cancelled, any returned premium thereon may be collected by Lender and applied
by Lender to any part of the Obligations, either matured or unmatured. Lender is
authorized to receive the proceeds of any insurance loss and at the option of
Lender shall apply such proceeds toward either the repair or replacement of the
Collateral or the payment of the Obligations secured hereby. The undersigned
will also pay all taxes and other impositions on the Collateral as well as the
cost of repairs or maintenance to the Collateral. If the undersigned fails to
maintain such insurance or fails to pay any and all amounts for taxes, repairs,
maintenance and other costs, Lender may, at its option, but shall not be
required to, purchase such insurance or pay any premium owing with respect to
such insurance or pay such amounts for taxes, repairs, maintenance and other
costs, and any such sum paid by Lender shall be payable by the Borrower on
demand by Lender or at its option may be added to the Obligations and secured
hereby. The loss, injury or destruction of the Collateral, with or without the
fault of Borrower, shall not release the Borrower from any liability hereunder
or in any way affect Borrower's liability hereunder.

The occurrence of any one or more of the following conditions or events shall
constitute an "Event of Default" hereunder: (i) any failure of any Obligor
(which term shall include the Borrower and each endorser, surety or guarantor of
this Note) to pay any of the Obligations when due or to observe or perform any
agreement, covenant or promise hereunder or in any other agreement, note,
instrument or certificate of any Obligor to the Lender, now existing or
hereafter executed in connection with any of the Obligations, including, but not
limited to, a loan agreement, if applicable, and any agreement guaranteeing
payment of any of the Obligations; (ii) any default of any Obligor in the
payment or performance of any other liabilities, indebtedness or obligations to
Lender or any other creditor or to allow or permit any other liabilities,
indebtedness or obligations to Leader or any other creditor to be accelerated;
(iii) any failure of any Obligor to furnish Lender current financial information
upon request; (iv) any failure of any Obligor or any pledgor of any security
interest in the Collateral (the "Pledgor") to observe or perform any agreement,
covenant or promise contained in any agreement, instrument or certificate
executed in connection with the granting of a security interest in property to
secure the Obligations or any guaranty securing the Obligations; (v) any
warranty, representation or statement made or furnished to the Lender by or on
behalf of any Obligor or Pledgor in connection with the extension of credit
evidenced by this Note proving to have been false in any material respect when
made or furnished, (vi) any loss, theft, substantial damage, destruction, sale,
foreclosure of or encumbrance to any of the Collateral, or the making of any
levy, seizure or attachment thereof or thereon or the rendering of any judgment
or lien or garnishment or attachment against any Obligor or Pledgor or his
property, or threatened; (vii) the dissolution, change in control, change of
status to an organization, change of type of organization, termination of
existence, insolvency, business failure, or appointment of a receiver of any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding under any bankruptcy or insolvency laws, state or
federal, by or against, the Borrower or any other Obligor or Pledgor; (viii) if
Borrower, any Pledgor or any Obligor shall change its name, change its principal
residence, change its chief executive office, change its status to an
organization, change its state of organization, change its type of organization,
or change its organizational identification number, as applicable, without
giving Secured Party at least thirty (30) days' written notice, (ix) any
discontinuance or termination of any guaranty of any of the Obligations by a
guarantor; or (x) the Lender determining that some event has occurred, failed to
occur or is threatened, or some objective condition exists or is threatened,
which significantly impairs the prospects that any of the Obligations will be
paid when due or which significantly affects the financial or business condition
of any Obligor in an adverse manner, or the Collateral or any other property
securing the Obligations or any substantial portion thereof is in danger of
misuse, misappropriation or confiscation.

Upon the occurrence of an Event of Default (and the expiration of any applicable
notice and/or grace periods), to the extent permitted by law, the Lender at its
option may terminate any obligation to extend any additional credit or make any
other financial accommodation to the Borrower and/or may declare all of the
Obligations to be immediately due and payable, all without notice or demand, and
shall have in addition to and independent of the right to declare the
Obligations to be due and payable and any other rights of the Lender under this
Note or any other agreement with any Obligor or any Pledgor, the remedies of a
secured party under the Code, including, without limitation thereto, the right
to take possession of the Collateral, or the proceeds thereof and to sell or
otherwise dispose thereof, and for this purpose, to sign in the name of any
Obligor or Pledgor any transfer, conveyance or instrument necessary or
appropriate in order for the Lender to sell or dispose of any of the Collateral,
and the Lender may, so far as the Borrower can give authority therefor, enter
upon the premises on which the Collateral or any part thereof may be situated
and remove the same therefrom, without being liable in any way to any Obligor on
account of entering any premises. The Lender may require the Borrower to
assemble the Collateral and make the Collateral available to the Lender at a
place to be designated by the Lender which is reasonably convenient to both
parties. Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, the Lender shall
give the Borrower written notice of the time and place of any public sale
thereof or of the time after which any private sale or other intended
disposition thereof is to be made. The requirement of sending reasonable notice
shall be met if such notice is mailed; postage prepaid, or otherwise given, to
the Borrower or Pledgor at the last address shown on the Lender's records at
least ten (10) days before such disposition. Lender may (i) comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral, (ii) sell the Collateral without giving any warranties as to the
Collateral, and (iii) specifically disclaim any warranties of title or the like
and in so doing any of the foregoing will not be considered adversely to affect
the commercial reasonableness of any sale of the Collateral. If any Obligation
(including but not limited to the Note) is a demand instrument, the statement of
a maturity date, the requirement for the payment of periodic interest or the
recitation of defaults and the right of Lender to declare any Obligation due and
payable shall not constitute an election by Lender to waive its right to demand
payment under a demand at any time and in any event as Lender in its sole
discretion may deem appropriate.

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The rights of the Lender specified herein shall be in addition to, and not in
limitation of the Lender's rights under the Code, or any other statute or rules
of law conferring rights similar to those conferred by the Code, and under the
provisions of any other instrument or agreement executed by the Borrower, any
other Obligor or any Pledgor to the Lender. All prior agreements to the extent
inconsistent with the terms of this Note shall be construed in accordance with
the provisions hereof. Any rights or remedies of the Lender may be exercised or
taken in any order or sequence whatsoever, at the sole option of the Lender.
This agreement shall bind and inure to the benefit of the heirs, legatees,
executors, administrators and assigns of Lender and shall bind all persons who
become bound as a debtor to this security agreement.

The security agreement set forth herein and the security interest in the
Collateral created hereby shall terminate only when all of the Obligations have
been indefeasibly paid in full and such payments are no longer subject to
rescission, recovery or repayment upon the bankruptcy, insolvency,
reorganization, moratorium, receivership or similar proceeding affecting the
Borrower or any other person. No waiver by the Lender of any default shall be
effective unless in writing nor operate as a waiver of any other default or of
the same default on a future occasion. All rights of the Lender hereunder shall
inure to the benefit of its successors and assigns, and all obligations of the
Borrower shall bind the heirs, legal representatives, successors and assigns of
the Borrower. The Borrower and each endorser, surety or guarantor of this Note,
whether bound by this or by separate instrument or agreement, shall be jointly
and severally liable for the indebtedness evidenced by this Note and hereby
severally ( i) waive presentiment for payment, demand, protest, notice of
nonpayment or dishonor and of protest and any and all other notices and demands
whatsoever; to the fullest extent permitted by applicable law; (ii) consent that
at any time, or from time to time, payment of any sum payable under this Note
may be extended without notice whether for a definite or indefinite time; and
(iii) agree to remain liable until all of the Obligations are paid in full
notwithstanding any impairment, substitution, release or transfer of Collateral
or any one or more Borrower or Obligor by the Lender, with or without
consideration, or of any extension, modification or renewal. No conduct of the
holder shall be deemed a waiver or release of such liability, unless the holder
expressly releases such party in writing. The Borrower shall pay to the holder
on demand all expenses, including reasonable attorneys' fees and expenses of
legal counsel, incurred by the holder in any way arising from or relating to the
enforcement or attempted enforcement of the Note and any related guaranty,
collateral document or other document and the collection or attempted
collection, whether by litigation or otherwise, of the Note. Time is of the
essence.

If Lowe's Companies, Inc., its successor or assigns, stops purchasing the
ceiling medallion product line from Prime/Home Impressions, LLC or if in
subsequent years Lowe's Companies, Inc. reduces by 50% or more the amount of
ceiling medallions purchased during the first year, then Prime/Home Impressions,
LLC will immediately notify Bank and Bank, at Bank's option, may accelerate the
sums due under the note and demand immediate payment.

Borrower acknowledges that Lender may reproduce (by electronic means or
otherwise) any of the documents evidencing and/or securing the Obligations and
thereafter may destroy the original documents. Borrower does hereby agree that
any document so reproduced shall be and remain the binding obligation of
Borrower, enforceable and admissible in evidence against it to the same extent
as if the original documents had not been destroyed.

This Note, and the rights and obligations of the parties hereunder, shall be
governed and construed in accordance with the laws of the State of North
Carolina, except to the extent that the Code provides for the application of
other law with respect to the Collateral.

IN WITNESS WHEREOF, the Borrower has executed this Note under seal the day and
year set forth above.

                                      Borrower:

Attest:                               Prime/Home Impressions, LLC

                                      By:     /s/ Robert W. Lackey        (SEAL)
-----------------------------            ---------------------------------------
                                              Robert W. Lackey, Sr.
Title:                                Title:  Group A. Manager
      -----------------------

                                      By:     /s/ Neall W. Humphrey       (SEAL)
-----------------------------            ---------------------------------------
                                              Neall W. Humphrey
Title:                                Title:  Group B Manager
      -----------------------

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                                   SCHEDULE 1

This Schedule is referenced on the Note and Security Agreement dated April 29,
2002 in the stated amount of $500,000.00 between Prime/Home Impressions, LLC as
Borrower and Wachovia Bank, N.A. as Lender and shall be considered a part
thereof to the same extent as if written therein.

The Note shall bear interest from the date hereof at a rate per annum equal to
the Monthly LIBOR Index plus Two Hundred Fifty (250) basis points.

     As used herein, the "Monthly LIBOR Index" shall mean a rate per annum equal
to LIBOR (determined, in accordance with the paragraph below), adjusted for all
applicable Costs (as hereinafter defined). The Monthly LIBOR index shall be
adjusted on the first day of each calendar month and shall be further adjusted
on and as of the effective date of changes in the Lender's Costs. As used
herein, "Costs" shall mean any charges, fees or costs incurred by the Lender as
the result of any changes in the laws, rules, regulations, or governmental
requirements pertaining to LIBOR loans.

     As used herein, "LIBOR" shall mean the rate per annum (rounded upward to
the next higher of 1/10,000 of 1%) for deposits of United States dollars with
maturities of one month, that appears on the display designated as page "3750"
of the Telerate Service (or such other page as may replace 3750 of that service
or such other service or services as may be designated by the British Bankers'
Association for the purpose of displaying London Interbank Offered Rate for U.
S. Dollar deposits), determined as of 11:00 a.m. London time, two (2) Business
Days prior to the first day of each calendar month.

     As used herein, "Business Day" shall mean a day on which dealings in United
States dollar deposits are being carried out in the London interbank eurodollar
market.

     Notwithstanding any provisions herein to the contrary, if the Lender should
at anytime be unable to determine LIBOR, then the Monthly LIBOR Index shall be
based on an interest rate selected by the Lender in good faith that approximates
one month LIBOR taking into account rates in relevant markets. Such rate shall
be in effect until the first day of the next calendar month on which LIBOR is
determinable.

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SECURITY AGREEMENT - COMMERCIAL

THIS SECURITY AGREEMENT - COMMERCIAL (this "Agreement") is made the 29th day of
April, 2002 between Prime/Home Impressions, LLC, a North Carolina limited
liability company having a principal address of 420 3rd Avenue NW, Hickory,
North Carolina 28601 ("Debtor"), and WACHOVIA BATIK, N.A., a national bank
having an address of 100 North Main Street, Winston-Salem, North Carolina 27150
("Secured Party").

This Agreement is entered into in conjunction with certain financial
accommodations provided by Secured Party to Debtor or to another party which are
or will be to the direct interest and advantage of Debtor, the receipt and
sufficiency of such value are hereby acknowledged, and with respect to all of
the following personal property of Debtor, wherever located, and now owned or
hereafter acquired, as defined, checked and filled in below (hereinafter
referred to as the "Collateral"):

check all boxes) that apply:

[X] ACCOUNTS. Each and every account, chattel paper, general intangible and
instrument, as those terms are defined in the UCC (as defined below), and all
other rights of Debtor to the payment of money of every nature, type and
description, whether now owing to Debtor or hereafter arising, and all monies
and other proceeds (cash or non-cash), including, without limitation, the
following: all accounts, accounts receivable, book debts, securities,
instruments and chattel paper, books of account and records of Debtor, deposit
account balances, notes, drafts, acceptances, rents, guest room receipts,
payments under leases or sales of Equipment or Inventory (as defined below) and
other forms of obligations now or hereafter received by or belonging or owing to
Debtor for goods sold or leased and/or services rendered by it, and all of
Debtor's rights in, to and under all purchase orders, instruments and other
documents now or hereafter received by it evidencing obligations for and
representing payment for goods sold or leased and/or services rendered, and all
monies due or to become due to Debtor under all contracts for the sale or lease
of goods and/or the performance of services by it, now in existence or hereafter
arising, including, without limitation, the right to receive the proceeds of
said purchase orders and contracts; all contracts, leases, instruments,
undertakings, documents or other agreements in or under which Debtor may now or
hereafter have any right, title or interest; all customer lists, tax refunds due
Debtor from any governmental agency; and any and all proceeds of any of the
above;

[X] INVENTORY. All "inventory," as such term is defined in the UCC, now owned or
hereafter acquired by Debtor, of every nature, type and description, wherever
located, including, without limitation, all of Debtor's goods or personal
property held for lease or sale or being processed for lease or sale, all raw
materials, work in progress, finished goods, packaging materials, goods held for
display or demonstration, goods on lease or consignment, returned and
repossessed goods and all other materials or supplies used or consumed or to be
used or consumed in Debtor's business or in the processing, packaging or
shipping of the same, excluding any toxic, hazardous or radioactive material or
any other material which may be disposed of lawfully only pursuant to a special
permit or at a government approved facility, all documents including, without
limitation, documents of title, warehouse receipts and bills of lading covering
all or any portion of such inventory, and all customer lists; and any and all
proceeds and products of any of the above;

[X] EQUIPMENT. All "equipment," as such term is defined in the UCC, now owned or
hereafter acquired or leased by Debtor, including, without limitation, any
equipment described on a schedule attached hereto, all tools and items of
machinery and equipment of any kind, nature and description whether affixed to
real property or not, as well as trucks and vehicles of every description,
trailers, handling and delivery equipment, furnishings, leasehold improvements,
fixtures and office furniture and all other tangible personal property of Debtor
of every nature, type and description, and any and all additions to,
substitutions for and replacements of or accessions to and property similar to
any of the foregoing, wherever located, together with all attachments,
components, parts (including spare parts), equipment and accessories installed
thereon or affixed thereto and all fuel for any thereof; and any and all
proceeds of any of the above;

<PAGE>

[X] GENERAL INTANGIBLES. All "general intangibles," as such term is defined in
the UCC, now owned or hereafter acquired by Debtor or in which Debtor now has or
hereafter acquires any right, title or interest, including, without limitation,
(a) all of Debtor's choses in action, suits, actions, causes of action and
claims of every kind and nature, whether at law or in equity, (b) all
condemnation awards and insurance proceeds, (c) all tax refunds, rights and
claims thereto and other payments from any local, state or federal government
authority or agency, (d) all contract rights, licenses, permits, zoning
approvals, rights, agreements and all other private or governmental documents of
every kind or character whatsoever and (e) all customer lists, servicing rights,
patents and patent rights (whether or not registered), licenses, permits,
certificated and uncertificated securities, investment property, trade marks,
service marks, trade names, logos, copyrights, computer programs and software,
goodwill; and any and all proceeds of any of the above;

[X]  INSTRUMENTS           [X]  DOCUMENTS          [X]  LETTER-OF-CREDIT RIGHTS

[X]  DEPOSIT ACCOUNTS      [X]  CHATTEL PAPER      [X]  INVESTMENT PROPERTY

[ ]  OTHER

and, to the extent not listed above as original collateral, proceeds and
products of all of the foregoing.

Any term used in the Uniform Commercial Code of the State of North Carolina (the
"UCC") and not defined in this Agreement has the meaning given such term as
defined in the UCC in effect on the date hereof or as it may be amended from
time to time.

1. OBLIGATIONS SECURED.

         The security interest hereby granted is to secure the payment to
Secured Party and the performance of all indebtedness, liabilities and
obligations of Debtor to Secured Party whatsoever, whether direct, indirect,
absolute or contingent, joint or several, as maker, endorser, guarantor, surety,
account party, swap counterparty or otherwise, including (i) all of Debtor's
present or future obligations to Secured Party, (ii) all amounts now or in the
future owed by Debtor to Secured Party, (iii) the repayment of (a) any amounts
that Secured Party may advance or spend for the maintenance or preservation of
the Collateral and (b) any other expenditures that Secured Party may make under
the provisions of this Agreement or for the benefit of Debtor, (iv) all amounts
owed under any modifications, extensions or renewals of any of the foregoing
obligations, (v) all sums arising under any ISDA Master Agreement now or
hereafter executed between Debtor and Secured Party and any related schedules
and confirmations thereto, and (vi) all costs, expenses and reasonable
attorneys' fees incurred by Secured Party in connection with the collection of
any of the foregoing or in the protection or enforcement of Secured Party's
rights or remedies hereunder (hereinafter collectively referred to as the
"Obligations"), provided, however, that the security interest hereby granted
shall not include (a) consumer credit as defined in Federal Reserve Board
Regulation Z and either subject to the disclosure requirements of Federal
Reserve Board Regulation Z or state consumer protection laws or (b) non-consumer
credit if under applicable state law the maximum interest rate for such credit
is reduced when secured.

2. GRANT OF SECURITY INTEREST.

         Debtor hereby grants a security interest in the Collateral to Secured
Party to secure the payment and performance of the Obligations.

3. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Secured
Party (which representations and warranties shall be deemed to be renewed as of
the date of each renewal or extension of credit under any Obligation) as
follows:

<PAGE>

(a) Debtor now owns and possesses (or will use the proceeds of the loan advances
secured hereby to become the owner and take possession of) the Collateral,
except where expressly otherwise provided by this Agreement or where Secured
Party chooses to perfect its security interest by possession in addition to the
filing of a financing statement. Where Collateral is in the possession of a
third party, Debtor will join with Secured Party in notifying the third party of
Secured Party's security interest and obtaining an acknowledgment from the third
party that it is holding the Collateral for the benefit of Secured Party.

(b) Debtor has rights in or the power to transfer the Collateral and its title
to the Collateral is free of all adverse claims, liens, security interests and
restrictions on transfer or pledge, except as created by this Agreement.

(c) Debtor will cooperate with Secured Party in obtaining control of Collateral
consisting of Deposit Accounts, Investment Property and Letter-of-credit rights.

(d) If Debtor is an individual, Debtor's (i) principal residence is located in
_______ and (ii) exact legal name is as set forth in the first paragraph of this
Agreement. If Debtor is an organization, Debtor's (i) chief executive office is
located in the the State of North Carolina; (ii) state of organization is the
the State of North Carolina; and (iii) exact legal name is as set forth in the
first paragraph of this Agreement.

(e) The following is a list of any and all names used by Debtor during all or
any part of the five year period preceding the date of this Agreement:_________.

(f) The following is a list of all business addresses used by Debtor during all
or part of any of the five (5) year period preceding the date of this
Agreement:__________________.

(g) The records relating to the Collateral will be located at the address set
forth in the first paragraph of this Agreement unless a different address is
hereby specified:____________.

(h) The Collateral will be located at the address set forth in the
first paragraph of this Agreement unless a different address is hereby
specified:________________-.

(i) All or a part of the Collateral is or will be attached to real estate
described as ____________ and its record owner is ____________ (if more than one
record owner, all must be shown). Notwithstanding the above, and regardless of
the manner of the affixation, the Collateral shall remain personal property and
will not become part of the real estate.

(j) No financing statement covering the Collateral or any proceeds thereof is on
file in any public office except those in favor of Secured Party.

(k) The Accounts hereby assigned are bona fide and correct in amount, and there
are no set-offs, counterclaims or defenses of any kind thereto, except as may
have been disclosed to Secured Party in writing.

(1) The Collateral is not and shall not be used for personal, family, household
or farming use.

(m) Debtor has delivered or will deliver to Secured Party all documents of title
evidencing Inventory, including, but not limited to, bills of lading, dock
warrants, dock receipts and warehouse receipts.

4. COVENANTS. Until the Obligations are paid and/or performed in full and
Secured Party is no longer obligated to extend additional extensions of credit
or financial accommodations on the Obligations, Debtor agrees:

(a) To promptly pay, without offset or deduction, any amount due under any
Obligation, whether principal, interest, late charges or otherwise, even if the
Collateral is lost, damaged, or destroyed. To the extent Debtor uses the
proceeds of any credit secured hereby to purchase Collateral, Debtor's repayment
of the Obligations shall apply on a "first-in-first-out" basis so that the
portion of the Obligations used to purchase a particular item of Collateral
shall be paid in the chronological order the Debtor purchased the Collateral.

(b) To pay when due all taxes, licenses, repair bills and other assessments and
public or private charges and to forward to Secured Party upon request evidence
of such payments.

(c) To maintain insurance on the Collateral in amounts at
least equal to the fair market value of the Collateral and against casualty,
public liability and property damage risks and such other risks as Secured Party
may request. All insurance shall be with reputable companies with a Best
Insurance Report Rating of B+ or better, and Debtor or will pay all premiums for
insurance when due. Unless and until requested by Secured Party, Debtor shall
not be required to name Secured Party as additional insured in such policy or to
provide Secured Party a copy of the policy for or certificate evidencing such
insurance, but when and if requested by Secured Party, Debtor shall immediately
(but no later than five (5) calendar days) (i) cause all policies of such
insurance to specify that Secured Party is an additional insured as its
interests may appear and to provide that such insurance shall not be cancellable
by Debtor or the insurer without at least thirty (30) days' advance written
notice to Secured Party and

<PAGE>

that proceeds are payable to Secured Party regardless of any act or omission of
Debtor which would otherwise result in a denial of a claim; and (ii) deliver all
policies or certificates thereof (with copies of such policies) to Secured
Party. In the event any or all insurance hereinbefore provided for is cancelled,
any returned premium thereon may be collected by Secured Party and applied by
Secured Party to any part of the Obligations, whether matured or unmatured.

(d) To keep and maintain, at Debtor's own expense, satisfactory, complete and
current records of the Collateral, including, but not limited to, a record of
all shipments received, deliveries made, payments received, credits granted
thereon and other dealings therewith; and to furnish such reports on Debtor and
the Collateral to Secured Party as Secured Party may request from time to time.

(e) To keep the Collateral in good order and repair, at Debtor's expense. Debtor
will not violate any federal, state or local law or regulation, including,
without limitation, environmental laws and regulations, in the use, operation,
manufacture or storage of the Collateral.

(f) To execute and deliver on demand such further assurances and to take such
steps as may be necessary to perfect and maintain Secured Party's security
interest in the Collateral (including, but not limited to, obtaining
certificates of title showing Secured Party's lien and executing assignments and
financing and continuation statements) and to preserve the priority of Secured
Party's security interest and lien on the Collateral. Debtor will reimburse
Secured Party for all expenses incurred in the filing of financing statements,
obtaining such documents and perfecting its security interest in the Collateral.

(g) To pay promptly upon demand Secured Party's costs and expenses, including
reasonable attorneys' fees, in connection with any litigation, claim, action or
proceeding that may arise in connection with the collection, enforcement or
protection of the Obligations or the Collateral.

(h) Not to: (i) make any sales or leases of the any of the Collateral, (ii)
license any of the Collateral, (iii) grant any other security interest in any of
the Collateral, (iv) permit any liens or security interests to attach to any of
the Collateral except those created by this Agreement, (v) permit any of the
Collateral to be levied upon or seized under any legal process, (vi) do or
permit anything to be done that may impair the security intended to be afforded
by this Agreement.

(i) Not to change the location of the Collateral or cause such Collateral to be
moved, maintained or stored in any other location without giving Secured Party
at least thirty (30) days' prior written notice, and Debtor will not move the
Collateral from the state without prior written consent of Secured Party.

(j) To obtain, upon Secured Party's request, a waiver or disclaimer in favor of
Secured Party and in a form satisfactory to Secured Party, signed by all persons
owning or having an interest in real estate upon which all or part of the
Collateral is or will be attached or used.

(k) To furnish Secured Party from time to time, upon request, with Debtor's then
current financial statement in form and detail satisfactory to Secured Party, as
well as such other financial information as Secured Party may request from time
to time.

(l) To maintain its existence in good standing as may be from time to time
required by applicable law. Debtor will not merge, consolidate or chance
control, without prior written approval of Secured Party. Debtor shall not
change its name, change its principal residence, change its chief executive
office, change its status to an organization, change its state of organization,
change its type of organization, or change its organizational identification
number, as applicable, without giving Secured Party at least thirty (30) days'
written notice. At the request of Secured Party, Debtor will qualify to do
business and obtain all requisite licenses and permits in each state in which
such qualification may be necessary in order to maintain any action to collect
any Account.

(m) To permit Secured Party or its agent to enter upon Debtor's premises at any
time and without hindrance or delay to inspect the Collateral and to inspect,
audit, copy and make extracts from the books, records, journals, orders,
receipts, correspondence, computer storage media or data related or pertaining
thereto; and for the further security of Secured Party, it is agreed that
Secured Party has a special property interest in all books and records of Debtor
pertaining to Accounts. Secured Party shall also have the right at any time to
make direct verification with any account debtors as concerns the Collateral.
Debtor shall, at its own expense and cost, deliver any such books, account
ledgers and records to Secured Party or any designated agent of Secured Party at
any time upon request.

(n) To notify Secured Party immediately in the event that any Inventory
purchased by or to be delivered to Debtor shall be evidenced by a bill of
lading, dock warrant, dock receipt, warehouse receipt or other document of
title, and to deliver such document to Secured Party upon request. Debtor also
agrees to deliver to Secured Party on demand

<PAGE>

all Collateral of which Secured Party is required to take possession in order to
perfect its security interest therein, promptly upon the acquisition by Debtor
of any interest in such Collateral after the date hereof.

(o) Not to compromise, modify or discount any Account, except for ordinary trade
discounts or allowances for prompt payment, without the prior written consent of
Secured Party.

(p) If any of the Accounts are or should become evidenced by promissory notes,
trade acceptances or other instruments, to immediately notify Secured Party and
upon request by Secured Party to deliver the same to Secured Party appropriately
endorsed or assigned with recourse to Secured Party's order, and regardless of
the form of such endorsement or assignment, Debtor hereby waives presentment,
demand, notice of dishonor, protest and notice of protest and all other notices
with respect thereto.

(q) Secured Party hereby authorizes Debtor to collect the Accounts, but
Secured Party may, without cause or notice, curtail or terminate this authority
at any time. Upon notice by Secured Party to Debtor, Debtor shall forthwith,
upon receipt of all checks, drafts, cash and other remittances in payment of or
on account of the Accounts, deposit the same in one or more special accounts
maintained with Secured Party, over which Secured Party alone shall have the
power of withdrawal. The remittance of the proceeds of such Accounts shall not,
however, constitute payment or liquidation of such Accounts until Secured Party
shall receive good funds for such proceeds. Funds placed in such special
accounts shall be held by Secured Party as security for the Obligations. These
proceeds shall be deposited in precisely the form received, except for the
endorsement of Debtor where necessary to permit collection of items, which
endorsement Debtor agrees to make, and which endorsement Secured Party is also
hereby authorized to make on behalf of Debtor. In the event Secured Party has
notified Debtor to make deposits to a special account, pending such deposit,
Debtor agrees that it will not commingle any such checks, drafts, cash or other
remittances with any funds or other property of Debtor but will hold them
separate and apart therefrom, and upon an express trust for Secured Party until
deposit thereof is made in the special account. Secured Party will from time to
time apply the whole or any part of collateral funds on deposit in this special
account against such Obligations secured hereby as Secured Party may in its
discretion elect. At the sole election of Secured Party, any portion of said
funds on deposit in the special account which Secured Party shall elect not to
apply to such Obligations, shall be paid over by Secured Party to Debtor.
Secured Party, or its agents, shall have the right at any time, whether or not
an Event of Default (as defined below) shall have occurred (i) to notify any and
all account debtors to make payment directly to Secured Party and otherwise to
notify the account debtors of this assignment, (ii) to ask for, demand, collect,
institute and maintain suits for, receive, compound, compromise and give
acquittances for any and all sums owing, which are now or may hereafter become
due upon said Accounts, and to enforce payment thereof either in its own name or
in Debtor's name, (iii) to endorse the name of Debtor on checks, drafts or other
items tendered or received in payment of said Accounts and (iv) to enter upon
the premises of Debtor at any time for the purpose of reducing to possession the
Collateral (including chattel paper) and all cash or non-cash proceeds thereof.

(r) Secured Party shall have the right at any time to apply the net proceeds of
the Accounts whether or not an Event of Default shall have occurred under this
Agreement, and the net proceeds of the sale or other disposition of any other
Collateral upon the occurrence of an Event of Default under this Agreement, and
any other proceeds arising under this Agreement, first, to any Obligation owed
Secured Party under this Agreement and then the balance, if any, to other
indebtedness of Debtor owed to Secured Party.

(s) If Debtor fails to perform any of Debtor's duties and obligations under this
Agreement, Secured Party may, at its option, but without obligation, perform
such duty or obligation and any cost, fees and expenses incurred by Secured
Party in connection therewith shall be payable by Debtor on Secured Party's
demand for same and until paid shall bear interest at the highest rate permitted
by law. In connection therewith, Debtor hereby irrevocably designates, appoints
and empowers Secured Party, at Debtor's cost and expense, to do in the name of
Debtor any and all actions which Secured Party may deem necessary or advisable
to carry out the terms hereof upon the failure, refusal or inability of Debtor
to do so and Debtor hereby agrees to indemnify and hold Secured Party harmless
from any cost, damage, expense or liability arising against or incurred by
Secured Party in connection therewith.

5. EVENTS OF DEFAULT. Any one of the following events will constitute an "Event
of Default" under this Agreement:

<PAGE>

(a) If any payment on any Obligation or hereunder is not paid when due, or if
any payment of any other present or future debt, liability or obligation of
Debtor, or any endorser, surety or guarantor of any Obligation (Debtor, or any
endorser, surety or guarantor of any Obligation may be referred to generally as
a "Party") to Secured Party is not paid when due.

(b) If any Party defaults under or breaches any covenant or provision of an
Obligation or defaults under or breaches any covenant or provision of this
Agreement or any other instrument or agreement delivered to Secured Party in
connection with this Agreement or any other transaction or agreement with
Secured Party; or if any Party makes a materially false or misleading statement
to Secured Party.

(c) If any Collateral is lost, stolen, abandoned, destroyed, severely damaged,
involved in a legal proceeding, sold, encumbered or transferred except as
permitted by prior agreement with Secured Party.

(d) If any Party dissolves, merges, consolidates, changes control or ceases to
be a going concern, or changes its name or state of organization or chief
executive office or type or organization (if an organization), or its place of
residence (if an individual), or changes from an individual to an organization
without giving Secured Party at least thirty (30) days' written notice.

(e) If a petition or complaint in bankruptcy, for arrangement or reorganization
or for relief under any insolvency law is fled by or against any Party, or if
any Party admits an inability to pay such Party's debts as they mature.

(f) If any property of any Party is seized, attached or levied on, or if a
receiver or custodian is appointed for any Party.

(g) If Secured Party in good faith believes that (i) the prospect of payment or
performance is impaired, (ii) any Collateral is insecure or (iii) a material
adverse change has occurred in any Party's financial condition.

(h) If any guaranty obtained in connection with an Obligation is terminated.

(i) If there shall occur a default under any lien or security interest affecting
the Collateral, either superior or inferior to the security interests created by
this Agreement.

6. REMEDIES. Upon the occurrence of an Event of Default, and in addition to any
other rights or remedies provided by law or by contract or accorded to a secured
party under the UCC, Secured Party may, without prior notice (unless otherwise
provided below), exercise any of the following rights or remedies:

(a) Secured Party may refuse any further request for advances to Debtor and/or
may declare all sums due under any of the Obligations immediately due and
payable. If a note constituting any of the Obligations shall be a demand
instrument, however, the recitation of the right of Secured Party to declare any
and all of the Obligations to be immediately due and payable or the recitation
of Events of Default shall not constitute an election by Secured Party to waive
its right to demand payment under a demand at any time and in any event as
Secured Party in its sole discretion may deem appropriate.

(b) Upon the occurrence of any Event of Default, Secured Party may take
possession of the Collateral and exercise its rights hereunder without giving
Debtor any opportunity for hearing to be held before Secured Party (whether
through judicial process or otherwise) seizes, liquidates or disposes of the
Collateral. DEBTOR DOES HEREBY EXPRESSLY AND VOLUNTARILY WAIVE ALL RIGHTS THAT
DEBTOR HAS OR MAY HAVE AS TO A NOTICE AND TO A JUDICIAL HEARING PRIOR TO SEIZURE
OF THE COLLATERAL BY SECURED PARTY. Secured Party may require and Debtor agrees
upon demand to assemble the Collateral and make it available to Secured Party at
a place to be designated by Secured Party that is reasonably convenient to both
parties, and/or Secured Party may enter any premises and take possession of the
Collateral or any part thereof. Unless the Collateral is perishable or threatens
to decline speedily in value or is of type customarily sold on a recognized
market, Secured Party will give Debtor reasonable notice of time and place of
any public sale thereof or the time after which any private sale or any other
intended disposition thereof is to be made. The requirement of reasonable notice
shall be met if notice is mailed, postage prepaid to Debtor at its above
mentioned address, at least ten (10) days before the time of sale or disposition
of the Collateral. Secured Party may apply cash proceeds from a sale or
disposition first to the expenses of such sale or disposition or other
enforcement measures, including reasonable attorneys' fees and legal expenses,
and then to the Obligations in such order as to principal or interest as Secured
Party may desire. Debtor will remain liable for and will pay to Secured Party
any deficiency remaining after such application of proceeds. Secured Party may
(i) comply with any applicable state or federal law requirements in connection
with a disposition of the Collateral, (ii) sell the Collateral without giving
any warranties as to the Collateral, and (iii) specifically disclaim any
warranties of title or the like and in so doing any

<PAGE>

of the foregoing will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral.

(c) Secured Party may appropriate, set off and apply for the payment of any or
all of the Obligations, any and all balances, sums, property, claims, credits,
deposits, accounts, reserves, collections, drafts, notes or other items or
proceeds of the Collateral in or coming into the possession of Secured Party or
its agents and belonging or owing to Debtor, without notice to Debtor and in
such manner as Secured Party may in its discretion determine.

(d) All payments received by Debtor under or in connection with any of the
Collateral shall be segregated from other funds of Debtor, held in trust for
Secured Party and promptly upon receipt turned over to Secured Party, duly
endorsed to Secured Party, if required. Secured Party shall hold such payments
as collateral security and apply them to the Obligations in such order as
Secured Party may elect. Any balance of such payments remaining after payment in
full of the Obligations shall be paid to Debtor or to whomever is lawfully
entitled to receive such payments.

(e) Debtor shall pay to Secured Party, on demand, any and all costs and
expenses, including all reasonable attorneys' fees, incurred or paid by Secured
Party in protecting or enforcing its rights, powers and remedies hereunder or
under any other agreement with any Party or any Obligation secured hereby or
thereby or in any way connected with any proceeding or action, judicial or
otherwise, by whomsoever initiated concerning the protection or enforcement
thereof.

(f) All rights and remedies of Secured Party under any law, under this Agreement
or under any agreement given in connection with this Agreement shall be
cumulative and not exclusive and may be exercised successively or concurrently.

7. MISCELLANEOUS.

(a) Debtor agrees to execute and/or authorizes Secured Party to file one or more
financing statements describing the Collateral. The financing statements may
contain a generic collateral description that is broader that the Collateral.
Debtor further authorizes Secured Party to file one or more financing statements
describing any agricultural liens or other statutory liens held by Secured
Party.

(b) No lawful act of commission or omission upon the part of Secured Party, or
any delay in exercising its rights hereunder, shall in any way or at any time
affect, impair or waive the rights of Secured Party to enforce any right, power
or benefit hereunder. The provisions of this Agreement may be amended only by
the written agreement of Secured Party and Debtor.

(c) Debtor hereby waives presentment, notice of dishonor and protest of all
instruments relating to the Obligations or the Collateral and any notices and
demands (except as expressly provided herein) whether or not relating to such
instruments.

(d) Any notice or demand given hereunder shall be deemed to have been
sufficiently given or served for all purposes by being deposited in the mail,
postage prepaid, or transmitted by any other usual means of communication with
postage or cost of transmission provided for, to Debtor and/or Secured Party at
the addresses for each as mentioned above, but nothing herein shall be construed
to invalidate any other form of communication actually received by the party to
whom the same is directed.

(e) Upon the payment in full of all Obligations, Secured Party shall have no
duty to release the Collateral nor to release Debtor from any duty or obligation
hereunder unless a period of 95 days, beginning with the date of the last
payment made by any Party who shall be so obligated or shall elect to pay, as
the case may be, shall elapse during which period no petition in bankruptcy
shall be filed by or against any Party. In the event any Obligation secured
hereby is paid by Debtor, or any maker, endorser or guarantor of the Obligations
and because of bankruptcy or other law relating to creditor's rights, such
payment is deemed to constitute a preference, Debtor agrees to remain liable
hereunder if Secured Party is compelled to repay any such Obligation or any part
thereof to any trustee, receiver, custodian or otherwise.

(f) This Agreement shall bind and inure to the benefit of the heirs, legatees,
executors, administrators and assigns of Secured Party and shall bind all
persons who become bound as a debtor to this security agreement. Nothing herein
shall authorize Debtor to assign this Agreement or its rights in and to the
Collateral.

(g) Debtor shall protect, indemnify and save harmless Secured Party from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable

<PAGE>

attorneys' fees and expenses) imposed upon, incurred by, or asserted against,
Secured Party on account of (i) any failure or alleged failure of Debtor to
comply with any of the terms or representations in this Agreement, (ii) any
claim or loss or damage to the Collateral or any injury or claim of injury to,
or death of, any person or property that may be occasioned by any cause
whatsoever pertaining to the Collateral or the use, occupancy or operation
thereof or (iii) any failure or alleged failure of Debtor to comply with any
law, rule or regulation regarding the use, occupancy or operation of the
Collateral, provided that such indemnity shall be effective only to the extent
of any loss, cost or damage that may be sustained by Secured Party in excess of
any net proceeds received by it from any insurance (other than self insurance)
carried with respect to such loss. Nothing contained herein shall require Debtor
to indemnify Secured Party for any claim or liability resulting from its gross
negligence or its willful and wrongful acts. The covenants in this Paragraph
shall survive payment of the Obligations. The indemnity provided for herein
shall extend to the officers, directors, employees and duly authorized agents of
Secured Party.

(h) Nothing in this Agreement shall be construed to impose any obligation upon
Secured Party to expend funds or to extend or continue any credit whatsoever to
Debtor or Obligor or to take any other discretionary act herein permitted,
except to the extent that Secured Party may from time to time obligate itself to
do so in writing, and Secured Party shall have no liability or obligation for
any delay or failure to take any discretionary act.

(i) If any Obligation secured hereby concerns a guarantor or other indirect or
contingent obligation related to another party, Debtor represents to Secured
Party that Secured Party will have no duty or obligation to investigate such
party's financial affairs for the benefit of Debtor or to advise Debtor of any
fact respecting, or of any change in, such other party's financial condition or
affairs which might come to Secured Party's attention.

(j) The rights, powers, and remedies of Secured Party under this Agreement shall
be in addition to all rights, powers and remedies given to Secured Party by
virtue of statute, rule of law, any documents executed in conjunction with any
agreement or instrument evidencing or securing the Obligations or any other
agreement, all of which rights, powers and remedies shall be cumulative and may
be exercised successively or concurrently without impairing Secured Party's
security interest in the Collateral. (k) This Agreement shall be governed by the
laws of the State of North Carolina except to the extent that the UCC provides
for the application of other law with respect to the Collateral.

IN WITNESS WHEREOF, Debtor has caused this Agreement to be signed under seal as
of the day and year first above written.

                                    Prime/Home Impressions, LLC

                                           /s/ Robert W. Lackey, Sr.      (SEAL)
                                    --------------------------------------
                                    By:    Robert W. Lackey, Sr.
                                    Title: Group A Manager

                                           /s/ Neall W. Humphrey          (SEAL)
                                    --------------------------------------
                                    By:    Neall W. Humphrey
                                    Title: Group B Manager

<PAGE>
GUARANTY AGREEMENT

WHEREAS. the undersigned has requested Wachovia Bank, N.A. (herein the "Lender")
to extend credit or make certain financial accommodations to Prime/Home
Impressions. LLC (herein called the "Borrower") or to renew or extend, in whole
or in part, existing indebtedness or financial accommodations of the Borrower to
the Lender, and the Lender has extended credit or extended or renewed existing
indebtedness or made financial accommodations and/or may in the future extend
credit or extend or renew existing indebtedness or make certain financial
accommodations by reason of such request and in reliance upon this guaranty;

NOW, THEREFORE, in consideration of such credit extended or renewed and/or to be
extended or renewed or such financial accommodations made or to be made in its
discretion by the Lender to the Borrower (whether to the same, greater or lesser
extent than any limit, if applicable, of this guaranty), in consideration of One
Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the undersigned hereby unconditionally
guarantees to the Lender and its successors, endorsees, transferees and assigns,
the punctual payment when due, whether by acceleration or otherwise, and at all
times thereafter of (a) all debts, liabilities and obligations whatsoever of the
Borrower to the Lender, now existing or hereafter coming into existence, whether
joint or several, whether created directly or acquired by endorsement,
assignment or otherwise, whether absolute or contingent, secured or unsecured,
due or not due, including but not being limited to notes, checks, drafts,
credits, advances, obligations to reimburse draws against letters of credit, and
all sums arising under any ISDA Master Agreement now or hereafter executed
between the Borrower and the Lender and any related schedules and confirmations
thereto; (b) accrued but unpaid interest on such debts, liabilities and
obligations, whether accruing before or after any maturity(ies) thereof; and (c)
all expenses, including reasonable attorneys' fees and expenses of legal counsel
incurred by Lender if any such debts, liabilities or obligations of the Borrower
are collected, or the liability of the undersigned hereunder enforced, by or
through any attorney at law (all of (a), (b) and (c) being hereinafter referred
to as the "Obligations"). References herein to Borrower shall be deemed to
include any successor corporations to Borrower, if Borrower is a corporation, or
any reconstituted partnerships of Borrower, if Borrower is a partnership.

The undersigned consents that, at any time, and from time to time, either with
or without consideration, the whole or any part of any security now or hereafter
held for any Obligations may be substituted, exchanged, compromised, impaired,
released, or surrendered with or without consideration; the time or place of
payment of any Obligations or of any security thereof may be changed or
extended, in whole or in part, to a time certain or otherwise, and may be
renewed or accelerated, in whole or in part; the Borrower may be granted
indulgences generally; any of the provisions of any note or other instrument
evidencing any Obligations or any security therefor may be modified or waived;
any party liable for the payment thereof (including but not being limited to any
co-guarantor) may be granted indulgences or released; neither the death,
termination of existence, bankruptcy, incapacity, lack of authority nor
disability of the Borrower or any one or more of the guarantors, including any
of the undersigned, shall affect the continuing obligation of any other
guarantor, including any of the undersigned, and that no claim need be asserted
against the personal representative, guardian,

                                       1

<PAGE>

custodian, trustee or debtor in bankruptcy or receiver of any deceased,
incompetent, bankrupt or insolvent guarantor; any deposit balance to the credit
of the Borrower or any other party liable for the payment of the Obligations or
liable upon any security therefor may be released, in whole or in part, at,
before and/or after the stated, extended or accelerated maturity of any
Obligations; and the Lender may release, discharge, compromise or enter into any
accord and satisfaction with respect to any collateral for the Obligations, or
the liability of the Borrower or any of the undersigned, or any liability of any
other person primarily or secondarily liable on any of the Obligations, all
without notice to or further assent by the undersigned, who shall remain bound
hereon, notwithstanding any such exchange, compromise, surrender, extension,
renewal, acceleration, modification, indulgence, release, discharge or accord
and satisfaction.

Without limiting any of the foregoing, in the event of incompetency, or
dissolution of the Borrower, or should the Borrower become insolvent (as defined
by the Uniform Commercial Code (as the same may be amended from time to time,
(the "Code")) in effect for the State of North Carolina (hereinafter referred to
as the "Governing Jurisdiction"), or if a petition in bankruptcy be filed by or
against the Borrower, or if a receiver be appointed for any part of the property
or assets of the Borrower, or if any final judgment for money damages be entered
against the Borrower in a court of competent jurisdiction and remain unsatisfied
for a period of thirty (30) days or more, or if the Lender shall deem itself
insecure with respect to the Obligations and whether or not such event occurs at
a time when any of such Obligations are otherwise due and payable, the
undersigned agrees to pay to the Lender upon demand the full amount which would
be payable hereunder by the undersigned if all such Obligations were then due
and payable.

The undersigned expressly waives: (a) notice of acceptance of this guaranty and
of all extensions or renewals of credit or other financial accommodations to the
Borrower; (b) presentment and demand for payment of any of the Obligations; (c)
protest and notice of dishonor or of default to the undersigned or to any other
party with respect to any of the Obligations or with respect to any security
therefor; (d) any invalidity or disability in whole or in part at the time of
the acceptance of, or at any time with respect to, any security for the
Obligations or with respect to any party primarily or secondarily liable for the
payment of the Obligations to the Lender; (e) the fact that any security for the
Obligations may at any time or from time to time be in default or be
inaccurately estimated or may deteriorate in value for any cause whatsoever; (f)
any diligence in the creation or perfection of a security interest or collection
or protection of or realization upon the Obligations or any security therefor,
any liability hereunder, or any party primarily or secondarily liable for the
Obligations or any lack of commercial reasonableness in dealing with any
security for the Obligations; (g) any duty or obligation on the part of the
Lender to ascertain the extent or nature of any security for the Obligations, or
any insurance or other rights respecting such security, or the liability of any
party primarily or secondarily liable for the Obligations, or to take any steps
or action to safeguard, protect, handle, obtain or convey information
respecting, or otherwise follow in any manner, any such security, insurance or
other rights; (h) any duty or obligation on the Lender to proceed to collect the
Obligations from, or to commence an action against, the Borrower, any other
guarantor, or any other person, or to resort to any security or to any balance
of any deposit account or credit on the books of the Lender in favor of the
Borrower or any other person, despite any notice or request of the undersigned
to do so; (i) to the fullest extent not

                                       2

<PAGE>

prohibited by law, the right to receive notification of disposition of any
collateral granted by Borrower, the undersigned, or any other person as security
for any of the Obligations; (j) to the extent not prohibited by law, the right
to assert any of the. benefits under any statute providing appraisal or other
rights which may reduce or prohibit any deficiency judgments in any foreclosure
or other action; (k) all other notices to which the undersigned might otherwise
be entitled; (l) demand for payment under this guaranty; (m) any rights of the
undersigned pursuant to North Carolina General Statutes Section 26-7 or any
similar or subsequent law.

This is a guaranty of payment and not of collection. The liability of the
undersigned on this guaranty shall be continuing, direct and immediate and not
conditional or contingent upon either the pursuit of any remedies against the
Borrower or any other person or foreclosure of any security interests or liens
available to the Lender, its successors, endorsees or assigns. The Lender may
accept any payment(s), plan for adjustment of debts, plan for reorganization or
liquidation, or plan of composition or extension proposed by, or on behalf of,
the Borrower or any other guarantor without in any way affecting or discharging
the liability of the undersigned hereunder. If the Obligations are partially
paid, the undersigned shall remain liable for any balance of such Obligations.
This guaranty shall be revived and reinstated in the event that any payment
received by Lender on any Obligation is required to be repaid or rescinded under
present or future federal or state law or regulation relating to bankruptcy,
insolvency or other relief of debtors. The undersigned agrees to furnish
promptly to the Lender annual financial statements and such other current
financial information as the Lender may reasonably request from time to time.

The undersigned expressly represents and acknowledges that loans and other
financial accommodations by the Lender to the Borrower are and will be to the
direct interest and advantage of the undersigned.

The Lender may, without notice of any kind, sell, assign or transfer all or any
of the Obligations, and in such event each and every immediate and successive
assignee, transferee, or holder of all or any of the Obligations shall have the
right to enforce this guaranty, by suit or otherwise, for the benefit of such
assignee, transferee or holder, as fully as if such assignee, transferee or
holder were herein by name specifically given such rights, powers and benefits,
but the Lender shall have an unimpaired right, prior and superior to that of any
such assignee, transferee or holder, to enforce this guaranty for the benefit of
the Lender, as to so much of the Obligations as it has not sold, assigned or
transferred.

No delay or failure on the part of the Lender in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Lender of any right or remedy shall preclude other or further exercise of
any other right or remedy.

For the purpose of this guaranty, the Obligations shall include all debts,
liabilities and obligations of the Borrower to the Lender, notwithstanding any
right or power of the Borrower or anyone else to assert any claim or defense as
to the invalidity or unenforceability thereof, and no such claim or defense
shall impair or affect the obligations and liabilities of the undersigned
hereunder. Without limiting the generality of the foregoing, if the Borrower is
a corporation, partnership, joint venture, trust or other form of business
organization, this

                                       3

<PAGE>

guaranty covers all Obligations purporting to be made in behalf of such
organization by any officer or agent of the same, without regard to the actual
authority of such officer or agent. The term "corporation" shall include
associations of all kinds and all purported corporations, whether or not
correctly and legally chartered and organized.

To the extent not prohibited by law, the undersigned hereby grants to the Lender
a security interest in and security title to and hereby assigns, pledges,
transfers and conveys to Lender (i) all property of the undersigned now or
hereafter in the possession or control of the Lender (exclusive of any such
property in the possession or control of the Lender as a fiduciary other than as
agent), including, without limitation, all cash, stock or other dividends and
all proceeds thereof, and all rights to subscribe for securities incident
thereto and any substitutions or replacements therefor and (ii) any of the
undersigned's deposit accounts (as such term is defined in the Uniform
Commercial Code of the State of North Carolina, as the same may be amended from
time to time) held by Lender, whether such accounts be general or special, or
individual or multiple party, and upon all drafts, notes, or other items
deposited for collection or presented for payment by the undersigned with the
Lender, exclusive of any such property in the possession or control of the
Lender as a fiduciary other than as agent, and the Lender may at any time,
without demand or notice, appropriate and apply any of such to the payment of
any of the Obligations, whether or not due, except for other indebtedness,
obligations and liabilities owing to Lender that constitute (a) consumer credit
as defined in Federal Reserve Board Regulation Z and is either subject to the
disclosure requirements of Federal Reserve Board Regulation Z or state consumer
protection laws or (b) non-consumer credit if under applicable state law the
maximum interest rate for such credit is reduced when secured.

Any amount received by the Lender from whatever source and applied by it toward
the payment of the Obligations shall be applied in such order of application as
the Lender may from time to time elect.

This guaranty shall bind and inure to the benefit of the Lender, its successors
and assigns, and likewise shall bind and inure to the benefit of the
undersigned, their heirs, executors, administrators, successors and assigns. If
more than one person shall execute this guaranty or a similar, contemporaneous
guaranty, the term "undersigned," shall mean, as used herein, all parties
executing this guaranty and such similar guaranties and all such parties shall
be liable, jointly and severally, one with the other and with the Borrower, for
each of the undertakings, agreements, obligations, covenants and liabilities
provided for herein with respect to the undersigned. This guaranty contains the
entire agreement and there is no understanding that any other person shall
execute this or a similar guaranty. Furthermore, no course of dealing between
the parties, no usage of trade, and no parol or extrinsic evidence shall be used
to supplement or modify any terms of this guaranty; nor are there any conditions
to the complete effectiveness of this guaranty.

This guaranty shall be deemed accepted by Lender in the Governing Jurisdiction.
The parties agree that this guaranty shall be deemed, made, delivered, performed
and accepted by Lender in the Governing Jurisdiction and shall be governed by
the laws of the Governing Jurisdiction. Wherever possible each provision of this
guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provisions of this guaranty shall be

                                       4

<PAGE>

prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this guaranty.

The undersigned (a) submits to personal jurisdiction in the Governing
Jurisdiction, the courts thereof and any United States District Court sitting
therein, for the enforcement of this guaranty, (b) waives any and all personal
rights under the law of any jurisdiction to object on any basis (including,
without limitation, inconvenience of forum) to jurisdiction or venue within the
Governing Jurisdiction, for the purpose of litigation to enforce this guaranty,
and (c) agrees that service of process may be made upon the undersigned by first
class postage prepaid mail, addressed to the undersigned at the latest address
of the undersigned known to the Lender (or at such other address as the
undersigned may specify for the purpose by notice to the Lender). Nothing herein
contained, however, shall prevent the Lender from bringing any action or
exercising any rights against any security and against the Borrower personally,
and against any assets of the Borrower, within any other state or jurisdiction.

Guarantor acknowledges that Lender may reproduce (by electronic means or
otherwise) any of the documents evidencing and/or securing the Obligations and
thereafter may destroy the original documents. Guarantor does hereby agree that
any document so reproduced shall be and remain the binding obligation of
Guarantor, enforceable and admissible in evidence against it to the same extent
as if the original documents had not been destroyed.

This guaranty shall remain in full force and effect as to each of the
undersigned unless and until terminated as to one or more of the undersigned by
notice to that effect actually received by the Lender, by registered mail,
addressed to Lender at 100 North Main Street, Winston-Salem, North Carolina
27101, but no such notice shall affect or impair the liabilities hereunder of
such of the undersigned who gives or on whose behalf is given any such notice
for the Obligations existing at the date of receipt by the Lender of such
notice, any renewals, modifications, or extensions thereof (whether made before
or after such notice is received), any interest thereon, or any costs or
expenses, including without limitation, attorneys' fees incurred in the
collection thereof or any future advances made by Lender to Borrower as required
or permitted pursuant to the terms of the instruments, documents or agreements
evidencing or providing for the Obligations. Any such notice of termination by
or on behalf of any of the undersigned shall affect only that person and shall
not affect or impair the liabilities and obligations hereunder of any other
person.

The undersigned hereby expressly waives, for Lender's benefit and the benefit of
the Borrower and any other guarantor, maker or endorser of the Obligations, any
and all claims or actions against the Borrower, any other guarantor, maker or
endorser of the Obligations and any and all rights of recourse against any
property or assets of the Borrower, any other guarantor, maker or endorser of
the Obligations (including without limitation any security for the Obligations)
arising out of or related to any payment made by the undersigned under this
guaranty, including, without limitation, any claim of the undersigned for
subrogation, reimbursement, exoneration, contribution or indemnity that the
undersigned may have against the Borrower, any other guarantor, maker or
endorser of the Obligations and any benefit of, and any other right to
participate in, any security for the Obligations or any guaranty of the

                                       5

<PAGE>

Obligations now or hereafter held by Lender. The waiver contained in this
paragraph shall continue and survive after the termination of this guaranty and
the payment of the Obligations.

The terms and provisions of any addendum attached hereto are incorporated herein
by reference and made a part hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this guaranty under
seal this 29th day of April, 2002.

                                      TRADE SOURCE INTERNATIONAL, INC.

                                           /s/ James R. Ridings
                                      ------------------------------------------
                                      By:      James R. Ridings
                                      Title:   President

                                       6<PAGE>

                                                                   EXHIBIT 10.01

                              CERIDIAN CORPORATION
                           DEFERRED COMPENSATION PLAN
                                 (2002 REVISION)

<PAGE>

                              CERIDIAN CORPORATION
                           DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                                Page
                                                                                                                ----
<S>    <C>    <C>                                                                                              <C>
ARTICLE 1. NAME, PURPOSE, BACKGROUND..............................................................................1
       1.1.   Plan Name...........................................................................................1
       1.2.   Plan Purposes.......................................................................................1
       1.3.   Plan Type...........................................................................................1
       1.4.   Plan Background.....................................................................................1
       1.5.   Applicability.......................................................................................2

ARTICLE 2. PARTICIPATION..........................................................................................3
       2.1.   Eligibility for Participant Deferral Credits........................................................3
       2.2.   Loss of Eligibility For Participant Deferral Credits................................................3
       2.3.   Transfer Among Participating Employers..............................................................4
       2.4.   Multiple Employment.................................................................................4
       2.5.   Eligibility for Restoration Matching Credit.........................................................4
       2.6.   Eligibility for Supplemental Matching Credit........................................................5
       2.7.   Conditions of Participation.........................................................................5
       2.8.   Termination of Participation........................................................................5

ARTICLE 3. BENEFITS...............................................................................................6
       3.1.   Participant Accounts................................................................................6
       3.2.   Participant Deferral Credits........................................................................7
       3.3.   Discretionary Credits...............................................................................8
       3.4.   Restoration Matching Credits........................................................................9
       3.5.   Supplemental Matching Credits.......................................................................9
       3.6.   Earnings Credits....................................................................................9
       3.7.   Vesting............................................................................................13

ARTICLE 4. DISTRIBUTION..........................................................................................14
       4.1.   Distribution to Participant Before Severance or Disability.........................................14
       4.2.   Distribution to Participant After Severance or Disability..........................................15
       4.3.   Distribution to Beneficiary........................................................................19
       4.4.   Nondeductibility...................................................................................21
       4.5.   Payment in Event of Incapacity.....................................................................21
       4.6.   Suspension.........................................................................................21

ARTICLE 5. SOURCE OF PAYMENTS; NATURE OF INTEREST................................................................22
       5.1.   Establishment of Trust.............................................................................22
       5.2.   Source of Payments.................................................................................22
       5.3.   Status of Plan.....................................................................................22
       5.4.   Non-assignability of Benefits......................................................................22

ARTICLE 6. ADOPTION, AMENDMENT, TERMINATION......................................................................23
       6.1.   Adoption...........................................................................................23
       6.2.   Amendment..........................................................................................23
</Table>

                                       i
<PAGE>

                              CERIDIAN CORPORATION
                           DEFERRED COMPENSATION PLAN

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                                Page
                                                                                                                ----
<S>    <C>    <C>                                                                                              <C>
       6.3.   Termination of Participation.......................................................................23
       6.4.   Termination........................................................................................24

ARTICLE 7. CONSTRUCTION, INTERPRETATION AND DEFINITIONS..........................................................25
       7.1.   Cross Reference....................................................................................25
       7.2.   Governing Law......................................................................................25
       7.3.   Headings...........................................................................................25
       7.4.   Number and Gender..................................................................................25
       7.5.   Definitions........................................................................................25

ARTICLE 8. ADMINISTRATION........................................................................................35
       8.1.   Administrator......................................................................................35
       8.2.   Plan Rules.........................................................................................35
       8.3.   Administrator's Discretion.........................................................................35
       8.4.   Specialist's Assistance............................................................................35
       8.5.   Indemnification....................................................................................35
       8.6.   Benefit Claim Procedure............................................................................35
       8.7.   Disputes...........................................................................................36

ARTICLE 9. MISCELLANEOUS.........................................................................................37
       9.1.   Withholdings and Offsets...........................................................................37
       9.2.   Other Benefits.....................................................................................37
       9.3.   No Warranties Regarding Tax Treatment..............................................................37
       9.4.   No Rights to Continued Service Created.............................................................37
       9.5.   Special Provisions.................................................................................37
       9.6.   Successors.........................................................................................37
       9.7.   Arbitron Executive Investment Plan.................................................................37
</Table>

                                       ii
<PAGE>

                              CERIDIAN CORPORATION
                           DEFERRED COMPENSATION PLAN

                                   ARTICLE 1.
                            NAME, PURPOSE, BACKGROUND

1.1.     PLAN NAME. The name of the Plan is the "Ceridian Corporation Deferred
         Compensation Plan."

1.2.     PLAN PURPOSES. The purposes of the Plan are to

         (a)      assist the Participating Employers in attracting and retaining
                  key executives,

         (b)      provide an employer-sponsored tax-deferred capital
                  accumulation vehicle for key executives and members of the
                  Company's board of directors,

         (c)      encourage additional retirement savings by eligible executives
                  and directors, and

         (d)      provide supplemental retirement income to certain highly
                  compensated and key employees of the Participating Employers
                  in amounts that cannot be provided under the qualified
                  retirement plans maintained by the Participating Employers.

1.3.     PLAN TYPE. The Plan is an unfunded plan maintained primarily for the
         purpose of providing deferred compensation for Qualified Directors and
         a select group of management or highly compensated employees. It is
         intended that, with respect to participation by Qualified Directors,
         ERISA will not apply to the Plan and that, with respect to
         participation by Qualified Employees, the Plan is exempt from the
         provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA by
         operation of sections 201(2), 301(a)(3) and 401(a)(4) thereof,
         respectively, and from the provisions of Title IV of ERISA, to the
         extent otherwise applicable, by operation of section 4021(b)(6)
         thereof. The Plan is also intended to be unfunded for tax purposes. The
         Plan will be construed and administered in a manner that is consistent
         with and gives effect to the foregoing.

1.4.     PLAN BACKGROUND.

         (a)      The Company adopted the Plan effective as of January 1, 1995.

         (b)      Effective as of January 1, 1999, the Plan was restated and the
                  name of the Plan was changed from the Ceridian Corporation
                  Deferred Compensation Plan to the Ceridian Corporation
                  Executive Investment Plan. Effective August 1, 2001 the Plan
                  was renamed the Ceridian Corporation Deferred Compensation
                  Plan.

         (c)      In connection with the spin-off by Ceridian Corporation of all
                  of the outstanding common stock of New Ceridian Corporation
                  ("New Ceridian"), a Delaware corporation and wholly owned
                  subsidiary of Ceridian Corporation (the "New Ceridian
                  Spin-off"), the Plan was amended, effective as of March 27,
                  2001, to effect the transfer of sponsorship of the Plan from
                  Ceridian Corporation to New

                                       1
<PAGE>

                  Ceridian Corporation. Following the New Ceridian Spin-off,
                  Ceridian Corporation was renamed Arbitron Inc. and New
                  Ceridian was renamed Ceridian Corporation.

         (d)      Effective January 1, 2003, the Plan was amended and restated
                  to provide Restoration Matching Credits and Supplemental
                  Matching Credits for certain Qualified Employees.

1.5.     APPLICABILITY.

         (a)      The terms of the Plan as restated effective as of January 1,
                  1999 apply only to a Participant who

                  (i)      experiences a Severance or Disability after December
                           31, 1998 and

                  (ii)     elects deferrals pursuant to Section 3.2 for a Plan
                           Year beginning after December 31, 1998 or makes an
                           election pursuant to Section 3.6(i)(iii) to have the
                           entire portion of his or her Participant Deferral
                           Account attributable to deferral credits for Plan
                           Years ending before January 1, 1999 credited with
                           earnings in accordance with Section 3.6 without
                           regard to Section 3.6 (i).

                  By making an election described in clause (ii), a Participant
                  consents to the application of all of the terms of the Plan as
                  restated effective as of January 1, 1999 to his or her entire
                  Account, including the entire portion attributable to deferral
                  credits for Plan Years ending before January 1, 1999.

         (b)      If a credit is made to the Discretionary Account of a
                  Participant to whom the terms of the Plan, as restated
                  effective as of January 1, 1999, are not otherwise applicable,
                  the terms of the Plan as restated effective as of January 1,
                  1999 will apply to the Participant but only with respect to
                  his or her Discretionary Account.

         (c)      Section 3.4, relating to Restoration Matching Credits, is
                  effective January 1, 2003. Section 3.5, relating to
                  Supplemental Matching Credits, is effective January 1, 2003.

                                       2
<PAGE>

                                   ARTICLE 2.
                                  PARTICIPATION

2.1.     ELIGIBILITY FOR PARTICIPANT DEFERRAL CREDITS.

         (a)      First Day of Plan Year.

                  (i)      Qualified Employee. An individual who is a Qualified
                           Employee on the first day of a Plan Year is eligible
                           to defer Base Compensation pursuant to Section 3.2(a)
                           and Annual Bonus pursuant to Section 3.2(b) with
                           respect to the Plan Year.

                  (ii)     Qualified Director. An individual who is a Qualified
                           Director on the first day of a Plan Year is eligible
                           to defer Base Compensation pursuant to Section 3.2(a)
                           with respect to the Plan Year.

         (b)      During Plan Year.

                  (i)      Qualified Employee. An individual who becomes a
                           Qualified Employee after the first day of a Plan Year
                           is eligible to defer Base Compensation pursuant to
                           Section 3.2(a) and Annual Bonus pursuant to Section
                           3.2(b) with respect to the remainder of the Plan
                           Year.

                  (ii)     Qualified Director. An individual who becomes a
                           Qualified Director after the first day of a Plan Year
                           is eligible to defer Base Compensation pursuant to
                           Section 3.2(a) with respect to the remainder of the
                           Plan Year.

2.2.     LOSS OF ELIGIBILITY FOR PARTICIPANT DEFERRAL CREDITS.

         (a)      Reasons.

                  (i)      Ceasing to be Qualified Employee. An Employee
                           Participant will cease to be eligible to defer Base
                           Compensation and Annual Bonus as of the date on which
                           he or she ceases to be a Qualified Employee.

                  (ii)     Ceasing to be a Qualified Director. A Director
                           Participant will cease to be eligible to defer Base
                           Compensation as of the date on which he or she ceases
                           to be a Qualified Director.

                  (iii)    Unforeseeable Emergency. A Participant who, pursuant
                           to Section 3.2(a)(iii) or Section 3.2(b)(iii), has
                           revoked a deferral election in connection with an
                           Unforeseeable Emergency, or pursuant to Section
                           4.1(b), has received a distribution due to an
                           Unforeseeable Emergency, is not eligible to defer
                           Base Compensation or Annual Bonus with respect to the
                           remainder of the Plan Year during which the
                           revocation occurs or the distribution is received, as
                           the case may be, and the immediately following Plan
                           Year.

                                       3
<PAGE>

                  (iv)     Accelerated Distribution. A Participant who, pursuant
                           to Section 4.1(c), has received an accelerated
                           distribution, is not eligible to defer Base
                           Compensation or Annual Bonus with respect to the
                           remainder of the Plan Year during which the
                           distribution is received and the immediately
                           following Plan Year.

                  (v)      401(k) Hardship Withdrawal. A Qualified Employee who
                           receives a hardship withdrawal from a 401(k) plan
                           maintained by a Participating Employer, or by any
                           other employer required to be aggregated with the
                           Participating Employer under Code section 414(b),
                           (c), (m) or (o), is not eligible to defer Base
                           Compensation or Annual Bonus under the Plan to the
                           extent required to comply with the terms of the
                           401(k) Plan.

         (b)      Affect on Deferral Elections. An Active Participant who,
                  pursuant to Subsection (a), loses his or her eligibility to
                  defer for a Plan Year is not eligible for further deferral
                  credits relating to deferral elections made pursuant to
                  Section 3.2 for the Plan Year other than credits relating to
                  Base Compensation with respect to the period before the loss
                  of eligibility, and any other Base Compensation or Annual
                  Bonus that would have otherwise been deferred in connection
                  with a deferral election made pursuant to Section 3.2 for the
                  Plan Year will be paid to the Participant as if he or she had
                  not made the deferral election.

2.3.     TRANSFER AMONG PARTICIPATING EMPLOYERS. An Employee Participant who
         transfers employment from one Participating Employer to another
         Participating Employer and who continues to be a Qualified Employee
         after the transfer will, for the duration of the Plan Year during which
         the transfer occurs, continue to participate in Participant Deferral
         Credits pursuant to Section 3.2 of the Plan, in accordance with the
         deferral election in effect for the portion of the Plan Year before the
         transfer, as a Qualified Employee of such other Participating Employer.

2.4.     MULTIPLE EMPLOYMENT. An Employee Participant who is simultaneously
         employed as a Qualified Employee with more than one Participating
         Employer will participate in the Plan as a Qualified Employee of all
         such Participating Employers on the basis of a single deferral election
         pursuant to Section 3.2 applied ratably to his or her Base Compensation
         from each Participating Employer and applied ratably to his or her
         Annual Bonus from each Participating Employer if the Annual Bonus
         deferral election was made in a dollar amount or applied separately to
         his or her Annual Bonus from each Participating Employer if the
         election was made in a percentage.

2.5.     ELIGIBILITY FOR RESTORATION MATCHING CREDIT. Each Qualified Employee
         who, for the Plan Year, elected to contribute, and had contributed on
         his or her behalf to the Qualified 401(k) Plan the maximum pre-tax
         elective deferral amount permitted under such plan (but not including
         catch-up contributions permitted under Code section 414(v)), is
         eligible to receive a Restoration Matching Credit. A Qualified Employee
         is not entitled to receive a Restoration Matching Credit for a Plan
         Year if he or she has a Severance, other than on account of death or
         Disability, on or before the last day of the Plan Year.

                                       4
<PAGE>

2.6.     ELIGIBILITY FOR SUPPLEMENTAL MATCHING CREDIT. A Qualified Employee is
         eligible to receive a Supplemental Matching Credit for a Plan Year
         pursuant to Section 3.5 if he or she

         (a)      is eligible to receive a Restoration Matching Credit for the
                  Plan Year;

         (b)      is an executive officer of the Company or an Affiliate; and

         (c)      has been designated by the Compensation and Human Resources
                  Committee of the Board of Directors of the Company as eligible
                  to receive a Supplemental Matching Credit.

2.7.     CONDITIONS OF PARTICIPATION. Each Qualified Employee and Qualified
         Director, as a condition of participation in the Plan, is bound by all
         the terms and conditions of the Plan and the Plan Rules, and must
         furnish to the Administrator such pertinent information and execute
         such election forms and other instruments as the Administrator or Plan
         Rules may require by such dates as the Administrator or Plan Rules may
         establish. All elections, directions, designations and similar actions
         required in connection with the Plan must be made in accordance with
         and are subject to the terms of the Plan and Plan Rules.

2.8.     TERMINATION OF PARTICIPATION. A Participant will cease to be a
         Participant as of the date on which he or she is not then eligible to
         make deferrals or to receive a Restoration Matching Credit and his or
         her entire Account balance has been distributed.

                                       5
<PAGE>

                                   ARTICLE 3.
                                    BENEFITS

3.1.     PARTICIPANT ACCOUNTS.

         (a)      Participant Deferral Account. For each Participant who elects
                  deferrals pursuant to Section 3.2, the Administrator will
                  establish and maintain a Participant Deferral Account.

         (b)      Discretionary Account. For each Participant for whom a
                  Participating Employer elects to make a discretionary credit
                  pursuant to Section 3.3, the Administrator will establish and
                  maintain a Discretionary Account.

         (c)      Restoration Matching Account. For each Participant who is
                  eligible to receive a Restoration Matching credit pursuant to
                  Section 3.4, the Administrator will establish and maintain a
                  Restoration Matching Account.

         (d)      Supplemental Matching Account. For each Participant who is
                  eligible to receive a Supplemental Matching Credit pursuant to
                  Section 3.5, the Administrator will establish and maintain a
                  Supplemental Matching Account.

         (e)      Subaccounts.

                  (i)      Multiple Participating Employers. If an Employee
                           Participant makes deferrals with respect to Base
                           Compensation or Annual Bonus from more than one
                           Participating Employer, or receives discretionary
                           credits attributable to service with more than one
                           Participating Employer, amounts attributable to each
                           Participating Employer will be credited to separate
                           subaccounts within the appropriate Account.

                  (ii)     Prime Rate Earnings Method. The portion of a
                           Participant's Participant Deferral Account balance
                           with respect to which earnings credits are made
                           pursuant to Section 3.6(i) will be credited to a
                           separate subaccount within the Account if deferrals
                           are credited to the Account pursuant to Section 3.2
                           for any Plan Year beginning after December 31, 1998.

                  (iii)    Multiple Vesting Schedules. If a Participating
                           Employer specifies different vesting schedules
                           applicable to discretionary credits made pursuant to
                           Section 3.3, or has different vesting schedules for
                           supplemental matching credits under Section 3.7(c),
                           the Administrator will maintain separate subaccounts
                           within the Participant's Discretionary Account and
                           Supplemental Matching Account, each of which will
                           evidence amounts credited to the Account pursuant to
                           Section 3.3 or 3.5 with respect to which the
                           applicable vesting schedule or vested interest is
                           identical.

                  (iv)     Grandfathered Distribution Elections. If a
                           Participant made distribution elections under the
                           provisions of the Plan in effect prior to January 1,
                           1999

                                       6
<PAGE>

                           pursuant to which distributions are scheduled to be
                           made or to begin before January 1, 2001, the
                           Administrator will maintain separate subaccounts
                           within the Participant's Participant Deferral Account
                           each of which will evidence amounts credited to the
                           Account pursuant to any such election with respect to
                           which the Participant has elected an identical form
                           and timing of distribution.

3.2.     PARTICIPANT DEFERRAL CREDITS.

         (a)      Base Compensation. Base Compensation deferrals will be made in
                  accordance with the following rules:

                  (i)      An Active Participant may elect to defer all or any
                           portion of his or her Base Compensation for a Plan
                           Year. Unless the Participant revokes the election
                           pursuant to clause (iii), the election will remain in
                           effect through the end of the last pay period that
                           ends during the Plan Year. Plan Rules may specify
                           minimum and maximum deferral amounts for a Plan Year,
                           payroll periods or both.

                  (ii)     An election made pursuant to this subsection will be
                           effective at the time and in the manner specified in
                           Plan Rules after the Administrator receives a
                           complete and accurate election provided receipt is
                           prior to the first day of the Plan Year to which the
                           election relates or, in the case of an individual who
                           becomes a Qualified Employee or a Qualified Director
                           after the first day of a Plan Year, within 30 days
                           after he or she becomes a Qualified Employee or
                           Qualified Director.

                  (iii)    An Active Participant may revoke a deferral election
                           made pursuant to this subsection after the election
                           becomes effective if, and only if, the Participant
                           submits a request to the Administrator in the manner
                           specified in Plan Rules and the Administrator
                           determines that the Participant has experienced an
                           Unforeseeable Emergency. The revocation will be
                           effective as soon as administratively practicable
                           after the Administrator's determination that the
                           Participant has experienced an Unforeseeable
                           Emergency.

                  (iv)     Any election or revocation pursuant to this
                           subsection applies only to Base Compensation relating
                           to services performed after the effective date of the
                           election or revocation.

         (b)      Annual Bonus. Annual Bonus deferrals by an Employee
                  Participant will be made in accordance with the following
                  rules:

                  (i)      An Employee Participant may elect to defer all or any
                           portion of his or her Annual Bonus for the Plan Year
                           from a minimum percentage or dollar amount to a
                           maximum percentage or dollar amount, as specified in
                           Plan Rules.

                                       7
<PAGE>

                  (ii)     An election made by an Employee Participant pursuant
                           to this subsection will be effective at the time and
                           in the manner specified in Plan Rules after the
                           Administrator receives a complete and accurate
                           election provided receipt is prior to the last day of
                           the Plan Year immediately preceding the Plan Year in
                           which the Annual Bonus is earned or, in the case of
                           an individual who becomes a Qualified Employee after
                           the first day of a Plan Year, within 30 days after he
                           or she becomes a Qualified Employee.

                  (iii)    An Active Participant may revoke a deferral election
                           made pursuant to this subsection after the election
                           becomes effective if, and only if, the Participant
                           submits a request to the Administrator at the time
                           and in the manner specified in Plan Rules and the
                           Administrator determines that the Participant has
                           experienced an Unforeseeable Emergency. The
                           revocation will be effective as soon as
                           administratively practicable after the
                           Administrator's determination that the Participant
                           has experienced an Unforeseeable Emergency.

                  (iv)     Any election pursuant to this subsection for a Plan
                           Year by an Employee Participant who becomes a
                           Qualified Employee after the first day of the Plan
                           Year applies only to the portion of the Annual Bonus
                           relating to services performed after the effective
                           date of the election, as determined by the
                           Administrator.

         (c)      Administrative Reduction. The Administrator may reduce the
                  amount of any deferral that would otherwise be made pursuant
                  to this section to the extent determined by the Administrator
                  to be necessary to effect any required payroll withholding,
                  contributions or deferrals pursuant to any other plan
                  maintained by any Affiliate or any other deductions.

         (d)      Timing of Credits. Deferrals of an Active Participant's Base
                  Compensation and Annual Bonus pursuant to this section will be
                  credited to his or her Participant Deferral Account not later
                  than the last day of the calendar month first following the
                  date on which the Participant would have otherwise received
                  the Base Compensation or Annual Bonus but for his or her
                  deferral election pursuant to this section.

3.3.     DISCRETIONARY CREDITS. A Participating Employer may from time to time
         credit the Discretionary Account of any Participant with an amount
         determined by the Participating Employer. If a Participating Employer
         chooses to make such a credit, the Administrator will in accordance
         with Plan Rules provide the Participant with a notice that specifies
         the amount of the credit, the timing of the credit, any conditions that
         the Participant must satisfy to be entitled to the credit and how the
         Participant will become vested in the portion of his or her
         Discretionary Account attributable to the credit. Credits pursuant to
         this section will be made, if at all, on a Participant-by-Participant
         basis. If a Participating Employer chooses to credit the Discretionary
         Account of a Participant, the Participating Employer is not, as a
         result, required to make any credit to the Discretionary Account of any
         other Participant, whether or not he or she is otherwise similarly
         situated.

                                       8
<PAGE>

3.4.     RESTORATION MATCHING CREDITS. As of the last day of the Plan Year, the
         Administrator shall credit to the Restoration Matching Account of each
         Employee Participant who satisfies the eligibility requirements of
         Section 2.5 an amount equal to the Participant's Matching Percentage
         multiplied by the amount of the Participant's Earnings which is in
         excess of the Code section 401(a)(17) limit in effect on the first day
         of the Plan Year.

3.5.     SUPPLEMENTAL MATCHING CREDITS.

         (a)      As of the last day of the Plan Year, the Administrator shall
                  credit to the Supplemental Matching Account of each Employee
                  Participant who satisfies the eligibility requirements of
                  Section 2.6, an amount equal to two (2) times the
                  Participant's Matching Percentage multiplied by the
                  Participant's Total Compensation.

         (b)      Supplemental Matching Credits are subject to the vesting
                  provisions of Section 3.7(c).

3.6.     EARNINGS CREDITS.

         (a)      Designation of Investment Funds. The Administrator will
                  designate two or more investment funds which will serve as the
                  basis for determining adjustments pursuant to this section.
                  The Administrator may, from time to time, designate additional
                  investment funds or eliminate any previously designated
                  investment funds. The designation or elimination of a fund
                  pursuant to this subsection is not a Plan amendment. The
                  Administrator will not be responsible in any manner to any
                  Participant or other person for any damages, losses,
                  liabilities, costs or expenses of any kind arising in
                  connection with any designation or elimination of an
                  investment fund.

         (b)      Participant Direction. A Participant must direct the manner in
                  which amounts credited to his or her Account pursuant to
                  Section 3.2, 3.3, 3.4 or 3.5 will be deemed to be invested
                  among the investment funds designated pursuant to Subsection
                  (a). Amounts will be deemed to be invested in accordance with
                  the Participant's direction on or as soon as administratively
                  practicable after the date as of which the amounts are
                  credited to the Participant's Account. Amounts credited under
                  Sections 3.3, 3.4 and 3.5 to the Discretionary Account, the
                  Restoration Matching Account and the Supplemental Matching
                  Account, respectively, may not be directed into the Company
                  Stock Fund. If a Participant fails to direct the manner in
                  which amounts credited to his or her Account will be deemed to
                  be invested, then the Administrator will treat the Account as
                  invested in the default investment fund(s) as determined in
                  accordance with Plan Rules.

         (c)      Change in Direction for Future Credits. A Participant may
                  direct a change in the manner in which future credits to his
                  or her Account pursuant to Section 3.2, 3.3, 3.4 or 3.5 will
                  be deemed to be invested among the investment funds designated
                  pursuant to Subsection (a). The direction will be effective
                  for amounts credited to the Participant's Account pursuant to
                  Section 3.2, 3.3, 3.4 or 3.5 at the time and in

                                       9
<PAGE>

                  the manner specified in Plan Rules after the date on which the
                  Administrator receives the direction from the Participant.

         (d)      Change in Direction for Existing Account Balance. A
                  Participant may direct a change in the manner in which his or
                  her existing Account balance is deemed to be invested among
                  the investment funds designated pursuant to Subsection (a).
                  The direction will be effective at the time and in the manner
                  specified in Plan Rules after the date on which the
                  Administrator receives the direction from the Participant.

         (e)      Account Adjustment. The Administrator will cause Participants'
                  Accounts to be separately adjusted as of each Valuation Date,
                  in a manner determined by the Administrator to be uniform and
                  equitable, to reflect the income, expense, gains, losses, fees
                  and the like that would have resulted since the last Valuation
                  Date had the Participant's investment directions pursuant to
                  this section actually been implemented. To the extent
                  determined by the Administrator to be necessary in conjunction
                  with any distribution pursuant to the Plan, the Administrator
                  will cause the Account from which the distribution is to be
                  made to be adjusted to reflect a good faith estimate by the
                  Administrator of any fees and other expenditures payable after
                  the date of the distribution in connection with deemed
                  investment activity in the Account through and including the
                  date of the distribution. Any such estimate is binding on the
                  Participating Employer and the person to whom the distribution
                  is made.

         (f)      Administrator's Obligations and Responsibilities. The sole
                  obligation of the Administrator with respect to the
                  designation or elimination of any investment fund designated
                  pursuant to Subsection (a) is to act in accordance with the
                  express terms of Subsection (a). By way of example and without
                  limiting the previous sentence, the Administrator is not
                  required, and no course of conduct will cause it to be
                  required, to investigate or monitor any designated fund to any
                  extent or for any purpose or to take or refrain from taking
                  any action with respect to a fund because of any aspect of the
                  performance of the fund. The designation of a limited number
                  of investment funds is solely for administrative convenience
                  and in no way reflects any endorsement of any such funds by
                  the Administrator.

         (g)      Deemed Investment. Trust assets are not required to be
                  invested in accordance with a Participant's directions and the
                  balance of all Accounts pursuant to the Plan will be
                  determined pursuant to this section and other applicable
                  sections of the Plan without regard to the actual amount of
                  Trust assets.

         (h)      Participant Responsibilities. Each Participant is solely
                  responsible for any and all consequences of his or her
                  investment directions made pursuant to this section. Neither
                  any Participating Employer, any of its directors, officers or
                  employees nor the Administrator has any responsibility to any
                  Participant or other person for any damages, losses,
                  liabilities, costs or expenses of any kind arising in
                  connection with any investment direction made by the
                  Participant pursuant to this section.

                                       10
<PAGE>

         (i)      Prime Rate Method.

                  (i)      General. The entire portion of a Participant's
                           Participant Deferral Account attributable to deferral
                           credits for Plan Years ending before January 1, 1999
                           will be credited with earnings in accordance with
                           clause (ii) unless the Participant elects not to have
                           this subsection apply in accordance with clause
                           (iii).

                  (ii)     Method. As of the last day of each calendar month,
                           the Administrator will, in accordance with Plan
                           Rules, credit the Participant Deferral Account of
                           each Participant to whom this clause applies with
                           earnings in an amount equal to the "applicable
                           percentage" of the average daily balance of the
                           Account for the month. The applicable percentage for
                           a given month is the monthly equivalent of the annual
                           prime rate of interest in effect on the first banking
                           day of the month as reported in The Wall Street
                           Journal or other national financial publication
                           selected by the Administrator.

                  (iii)    Election. A Participant who is an Active Participant
                           on January 1, 1999 may make a one time irrevocable
                           election to have the entire portion of his or her
                           Participant Deferral Account attributable to deferral
                           credits for Plan Years ending before January 1, 1999
                           credited with earnings in accordance with the other
                           provisions of this section without regard to this
                           subsection. The election must be made on a form
                           provided by the Administrator, must specify the
                           investment funds or funds in which his or her
                           Participant Deferral Account will be deemed to be
                           invested as of the effective date of the direction
                           and must be received by the Administrator on a date
                           specified in Plan Rules which is not later than
                           December 31, 1998. The election will be effective on
                           or as soon as administratively practicable after
                           January 1, 1999. If a Participant fails to make an
                           election pursuant to this clause, the Participant
                           will not have any other opportunity to change the
                           method for crediting earnings to the portion of his
                           or her Participant Deferral Account attributable to
                           deferral credits for Plan Years ending before January
                           1, 1999.

         (j)      Company Stock Fund. Effective as of August 1, 2001, the
                  Company Stock Fund will be one of the designated investment
                  funds under Subsection (a); provided, however, it is not a
                  designated investment fund for amounts credited under the
                  Discretionary Account, the Restoration Matching Account or the
                  Supplemental Matching Account. This subsection contains
                  special rules applicable to the Company Stock Fund. Unless
                  otherwise expressly provided in this subsection, the Company
                  Stock Fund is subject to all of the provisions of the Plan
                  applicable to other designated investment funds including,
                  without limitation, the other subsections of this section.

                  (i)      Description. The Company Stock Fund will be deemed to
                           be invested in Company Stock.

                                       11
<PAGE>

                  (ii)     Eligibility. To be eligible to direct to have his or
                           her Account deemed to be invested in the Company
                           Stock Fund, a Participant must be an Employee
                           Participant who is either covered by the Company's
                           executive stock ownership guidelines or selected by
                           the Compensation and Human Resources Committee of the
                           Company's Board. A Participant who is selected by the
                           Compensation and Human Resources Committee of the
                           Company's Board will be eligible to direct to have
                           his or her Account deemed to be invested in the
                           Company Stock Fund effective as of a date specified
                           in a written notice provided to the Participant by
                           the Administrator.

                  (iii)    Deemed Investments. All deemed investments in the
                           Company Stock Fund, whether pursuant to Subsection
                           (b), (c) or (d), will be effective as of the last day
                           of the calendar month that first follows by at least
                           10 days (or such shorter period as Plan Rules may
                           allow) the date on which (1) the Administrator
                           receives the direction from the Participant or (2) in
                           the case of such a direction pursuant to Subsection
                           (b) relating to amounts credited to the Participant's
                           Account after the effective date of the direction
                           pursuant to Subsection (b) and before the effective
                           date of a change in the direction pursuant to
                           Subsection (c), the date as of which the amounts are
                           credited to the Participant's Account. Deemed
                           investments in the Company Stock Fund will be
                           reflected in full and fractional shares of Company
                           Stock. The conversion of dollar denominated credits
                           into shares in connection with any deemed investment
                           in the Company Stock Fund will be made by dividing
                           the dollar amount of the deemed investment by the
                           Price per Share on the effective date of the deemed
                           investment.

                  (iv)     Company Stock Premium. A Participant who makes a
                           deemed investment in the Company Stock Fund is
                           entitled to an additional credit in an amount equal
                           to 15 percent of the dollar value of the
                           Participant's deemed investment (the "Company Stock
                           Premium"). The dollar value of the Company Stock
                           Premium will be converted into full and fractional
                           shares of Company Stock in accordance with clause
                           (iii) and the shares will be credited to the
                           Participant's Account within the Company Stock Fund
                           as of the effective date of the deemed investment to
                           which the Company Stock Premium relates.

                  (v)      Vesting of Company Stock Premium. A Participant will
                           acquire a fully vested nonforfeitable right to any
                           Company Stock Premium credited to his or her Account
                           as of the first Vesting Date within a Plan Year,
                           provided that the Participant remains continuously
                           employed with the Company and its Affiliates from the
                           date as of which the Company Stock Premium is
                           credited to his or her Account through the Vesting
                           Date.

                           If a Participant's Severance occurs prior to the
                           Vesting Date with respect to any Company Stock
                           Premium, the Company Stock Premium (and any
                           additional shares credited to the Participant's
                           Account in accordance with

                                       12

<PAGE>

                           clause (vii) reflecting dividends attributable to the
                           Company Stock Premium) will be permanently and
                           completely forfeited as of his or her Severance date
                           and the Participant will have no right to the
                           forfeited amounts.

                  (vi)     Transfer Restrictions. A Participant may not direct a
                           transfer out of the Company Stock Fund pursuant to
                           Subsection (d) at any time.

                  (vii)    Dividends. If the Company pays dividends on Company
                           Stock, Accounts that are deemed to be invested in the
                           Company Stock Fund will be adjusted to reflect the
                           dividend in accordance with Plan Rules.

3.7.     VESTING.

         (a)      Subject to the rules of Section 3.6(j)(v) regarding vesting of
                  the Company Stock Premium, each Participant always has a fully
                  vested nonforfeitable interest in his or her Participant
                  Deferral Account and his or her Matching Restoration Account.

         (b)      Each Participant will acquire a vested nonforfeitable interest
                  in the portion of his or her Discretionary Account
                  attributable to a credit made pursuant to Section 3.3 to the
                  extent specified by the Administrator in the notice provided
                  in connection with the credit in accordance with Section 3.3.

         (c)      With respect to any amount credited to the Participant's
                  Supplemental Matching Account (and related earnings credits)
                  as of a date within a given Plan Year, the Participant shall
                  vest one-third each Plan Year and only as of the last day of
                  each such Plan Year over the three year period that starts on
                  the first day of the Plan Year for which the supplemental
                  matching credit is credited to the Participant's Account.
                  Notwithstanding the foregoing, each Participant will acquire a
                  vested nonforfeitable interest in credits to his or her
                  Supplemental Matching Account (and related earnings credits)
                  as of (i) the effective date of a Change of Control, (ii) the
                  date of the Participant's death, (iii) the effective date of
                  the Participant's Disability, (iv) attainment of age 65, or
                  (v) attainment of age 55 and completion of at least 10 years
                  of Vesting Service. If a Participant's Severance occurs prior
                  to the date on which a credit under the Supplemental Matching
                  Account becomes vested, such amount will be immediately,
                  permanently and completely forfeited as of his or her
                  Severance Date and the Participant will have no right to the
                  forfeited amounts.

                                       13
<PAGE>

                                   ARTICLE 4.
                                  DISTRIBUTION

4.1.     DISTRIBUTION TO PARTICIPANT BEFORE SEVERANCE OR DISABILITY.

         (a)      In-Service Distributions.

                  (i)      Each Participant will be provided with one
                           opportunity to elect to receive a distribution of all
                           or any portion of his or her Participant Deferral
                           Account as of a specified date or dates prior to his
                           or her Severance date or Disability. The election
                           must be made in conjunction with the first deferral
                           election that the Participant makes pursuant to
                           Section 3.2 that relates to a Plan Year beginning
                           after December 31, 1998. The Participant will not
                           have any other opportunity to make an election
                           pursuant to this subsection.

                  (ii)     The first distribution date specified in an election
                           made pursuant to clause (i) may not be before the
                           first day of the second Plan Year after the Plan Year
                           to which the deferral election relates. A Participant
                           may not specify more than one distribution date per
                           Plan Year.

                  (iii)    A Participant will be provided with one opportunity
                           to elect to either delay or cancel each date
                           specified in an election made pursuant to clause (i).
                           An election pursuant to this clause will not be valid
                           and will not have any effect unless it is made on a
                           properly completed form received by the Administrator
                           before the first day of the Plan Year immediately
                           preceding the Plan Year that includes the
                           distribution date originally specified.

                  (iv)     If the Participant experiences a Severance or
                           Disability before a specified date, the Participant's
                           election pursuant to this subsection will become
                           ineffective on his or her Severance date or
                           Disability and distribution of his or her remaining
                           Account balance will be made pursuant to Section 4.2
                           or 4.3, as the case may be.

                  (v)      Any distribution pursuant to this subsection will be
                           made in a lump sum cash payment on or as soon as
                           administratively practicable after the date specified
                           by the Participant. If the Participant elected a
                           specific dollar amount, the amount of the
                           distribution will be the specified amount or the
                           balance of the Participant's Participant Deferral
                           Account as of the Valuation Date coinciding with or
                           immediately preceding the date on which the payment
                           is made (reduced by the amount of any other
                           distribution from the Account after that Valuation
                           Date), whichever is less. If the Participant elected
                           a specific percentage of the Participant Deferral
                           Account, the amount of the distribution will be the
                           specified percentage of the Participant's Participant
                           Deferral Account as of the Valuation Date coinciding
                           with or immediately preceding the date on which the
                           payment

                                       14
<PAGE>

                           is made (reduced by the amount of any other
                           distribution from the Account after that Valuation
                           Date).

         (b)      Withdrawals Due to Unforeseeable Emergency. Prior to a
                  Participant's Severance date or Disability, a distribution
                  will be made to a Participant from his or her Participant
                  Deferral Account if the Participant submits a written
                  distribution request to the Administrator and the
                  Administrator determines that the Participant has experienced
                  an Unforeseeable Emergency. The amount of the distribution may
                  not exceed the lesser of (a) the amount necessary to satisfy
                  the emergency, as determined by the Administrator, and (b) the
                  balance of the Participant Deferral Account as of the
                  Valuation Date coinciding with or immediately preceding the
                  date of the distribution (reduced by the amount of any other
                  distribution from the Account after that Valuation Date). The
                  distribution will be made in the form of a lump sum cash
                  payment as soon as administratively practicable after the
                  Administrator's determination that the Participant has
                  experienced an Unforeseeable Emergency.

         (c)      Accelerated Distribution. Prior to a Participant's Severance
                  date or Disability, the Participant may elect to receive a
                  distribution in an amount equal to 90 percent of his or her
                  Participant Deferral Account balance as of the Valuation Date
                  coinciding with or immediately preceding the date on which the
                  payment is made (reduced by the amount of any other
                  distribution from the Account after that Valuation Date), and
                  the remaining 10 percent balance of the Participant Deferral
                  Account will be permanently forfeited as of that Valuation
                  Date. The distribution will be made in the form of a lump sum
                  cash payment as soon as administratively practicable after the
                  Participant's properly completed written election is filed
                  with the Administrator.

         (d)      Reduction of Account Balance. The balance of the Participant's
                  Participant Deferral Account will be reduced (but not below
                  zero) by the amount of the distribution as of the beginning of
                  the next day after the Valuation Date coinciding with or last
                  preceding the date of the distribution.

         (e)      No Distributions From Company Stock Fund. A Participant is not
                  entitled to receive a distribution pursuant to this section of
                  any portion of his or her Account that is deemed to be
                  invested in the Company Stock Fund pursuant to Section 3.4(j).
                  Accordingly, in connection with any distribution made to a
                  Participant pursuant to this section, the portion of the
                  Participant's Account that is deemed to be invested in the
                  Company Stock Fund will be disregarded.

4.2.     DISTRIBUTION TO PARTICIPANT AFTER SEVERANCE OR DISABILITY.

         (a)      Time. Distribution to a Participant will be made or commence
                  on or as soon as administratively practicable after the date
                  of the Participant's Disability, Retirement, or other
                  Severance.

         (b)      Form.

                                       15
<PAGE>

                  (i)      Severance Before Retirement or Disability. Upon a
                           Participant's Severance before his or her Retirement
                           or Disability, distribution to the Participant will
                           be made in the form of a lump sum cash payment.

                  (ii)     Retirement or Disability. Upon a Participant's
                           Retirement or Disability, distribution to the
                           Participant will be made in the form of a lump sum
                           cash payment unless (1) the Participant made a
                           written election, on a form provided by the
                           Administrator, to receive his or her distribution in
                           the form of five, 10 or 15 annual installment cash
                           payments and (2) his or her properly completed
                           election form is filed with the Administrator before
                           the first day of the Plan Year immediately preceding
                           the Plan Year that includes his or her Retirement or
                           Disability. Not more than once during any 12-month
                           period, a Participant may change an election made
                           pursuant to this subsection, but the change will not
                           be valid and will not have any effect unless it is
                           made on a properly completed form received by the
                           Administrator before the first day of the Plan Year
                           immediately preceding the Plan Year that includes the
                           Participant's Retirement or Disability. Until an
                           election becomes effective, it will have no effect on
                           any prior election whether or not such prior election
                           became effective before or after the Administrator
                           received the later election. When an election becomes
                           effective, it will automatically supersede any prior
                           election then in effect.

                  (iii)    Company Stock. To the extent that a Participant's
                           Account is deemed to be invested in whole shares of
                           Company Stock, at the time of a distribution to the
                           Participant pursuant to this section, the
                           distribution will be made to the Participant in whole
                           shares of Company Stock. Any fractional share will be
                           valued based on the Price per Share on the date of
                           the distribution and the value of the fractional
                           share will be distributed to the Participant in cash.

         (c)      Amount.

                  (i)      Lump Sum. The amount of a lump sum payment from a
                           Participant's Account will be equal to the vested
                           balance of the Account as of the Valuation Date
                           coinciding with or immediately preceding the date on
                           which the payment is made (reduced by the amount of
                           any other distribution from the Account after that
                           Valuation Date).

                  (ii)     Installments. The amount of an installment payment
                           from a Participant's Account will be determined by
                           dividing the vested balance of the Account as of the
                           Valuation Date coinciding with or immediately
                           preceding the date on which the payment is made
                           (reduced by the amount of any other distribution from
                           the Account after that Valuation Date) by the total
                           number of remaining payments (including the current
                           payment). The undistributed portion of an Account
                           distributed in the form of installment payments will
                           continue to be credited with earnings in accordance
                           with Section 3.6.

                                       16
<PAGE>

         (d)      Special Rules. The provisions of this subsection apply
                  notwithstanding Subsection (a), (b) or (c) or any election by
                  a Participant to the contrary.

                  (i)      Divestitures.

                           (1)      If some or all of the assets of a
                                    Participating Employer are sold or otherwise
                                    disposed of to an unrelated third party, the
                                    Administrator may, but is not required to,
                                    cause to be distributed the Account of any
                                    Employee Participant whose employment with
                                    all Affiliates is terminated in connection
                                    with the sale or disposition unless the
                                    acquirer adopts a successor plan which is
                                    substantially similar to the Plan in all
                                    material respects and expressly assumes the
                                    Participating Employer's obligation to
                                    provide benefits to the Participant, in
                                    which case the Participating Employer will
                                    cease to have any obligation to provide
                                    benefits to the Participant pursuant to the
                                    Plan as of the effective date of the
                                    assumption. Any such distribution will be
                                    made in the form of a lump sum cash payment
                                    as soon as administratively practicable
                                    after the date of the sale or disposition.
                                    The amount of the payment will be determined
                                    in accordance with Subsection (c).

                           (2)      If a Participating Employer ceases to be an
                                    Affiliate, unless otherwise provided in an
                                    agreement between an Affiliate and the
                                    Participating Employer or an Affiliate and
                                    an unrelated third-party acquirer:

                                    (A)      a Participant who is employed with
                                             the Participating Employer or

                                    (B)      a Participant who is not employed
                                             with the Participating Employer but
                                             has an Account balance attributable
                                             to service with the Participating
                                             Employer as a Qualified Employee

                                    will not become entitled to his or her
                                    Account balance attributable to service with
                                    the Participating Employer as a Qualified
                                    Employee solely as a result of the cessation
                                    and the Participating Employer will, after
                                    the date on which it ceases to be an
                                    Affiliate, continue to be solely responsible
                                    to provide benefits to the Participant at
                                    least equal to the balance of the Account as
                                    of the effective date of the cessation and
                                    as thereafter increased by deferral credits
                                    relating to the period before the effective
                                    date and earnings credits pursuant to
                                    Section 3.6.

                  (ii)     Withdrawals Due to Unforeseeable Emergency. If a
                           Participant is receiving installment payments, a
                           distribution will be made to a Participant from his
                           or her Participant Deferral Account if the
                           Participant

                                       17
<PAGE>

                           submits a written distribution request to the
                           Administrator and the Administrator determines that
                           the Participant has experienced an Unforeseeable
                           Emergency. The amount of the distribution may not
                           exceed the lesser of (a) the amount necessary to
                           satisfy the emergency, as determined by the
                           Administrator, and (b) the balance of the Participant
                           Deferral Account as of the Valuation Date coinciding
                           with or immediately preceding the date of the
                           distribution (reduced by the amount of any other
                           distribution from the Account after that Valuation
                           Date). The distribution will be made in the form of a
                           lump sum cash payment as soon as administratively
                           practicable after the Administrator's determination
                           that the Participant has experienced an Unforeseeable
                           Emergency.

                  (iii)    Accelerated Distribution. If a Participant is
                           receiving installment payments, the Participant may
                           elect to receive a distribution in an amount equal to
                           90 percent of his or her Participant Deferral Account
                           balance as of the Valuation Date coinciding with or
                           immediately preceding the date on which the payment
                           is made (reduced by the amount of any other
                           distribution from the Account after that Valuation
                           Date), and the remaining 10 percent balance of the
                           Participant Deferral Account will be permanently
                           forfeited as of that Valuation Date. The distribution
                           will be made in the form of a lump sum cash payment
                           as soon as administratively practicable after the
                           Participant's properly completed written election is
                           filed with the Administrator.

         (e)      Reduction of Account Balance. The balance of the Account from
                  which a distribution is made will be reduced (but not below
                  zero) by the amount of the distribution as of the beginning of
                  the next day after the Valuation Date coinciding with or last
                  preceding the date of the distribution.

         (f)      Transition Rules.

                  (i)      Severance or Disability Before 1999. Any distribution
                           to a Participant who experienced a Severance or
                           Disability before January 1, 1999 will be made in its
                           entirety in the form elected by the Participant under
                           the provisions of the Plan in effect prior to January
                           1, 1999.

                  (ii)     Active Participants on January 1, 1999. Subject to
                           Section 1.5, in the case of a Participant who is an
                           Active Participant on January 1, 1999:

                           (1)      Any distribution scheduled to be made or to
                                    commence after December 31, 1998 and before
                                    January 1, 2001 pursuant to the terms of an
                                    election made under the provisions of the
                                    Plan in effect before January 1, 1999 will
                                    be made in its entirety in the form elected
                                    by the Participant under the provisions of
                                    the Plan in effect prior to January 1, 1999;
                                    and

                                       18
<PAGE>

                           (2)      Any distribution made or commencing after
                                    December 31, 2000 will be made in accordance
                                    with the provisions of the Plan in effect
                                    after December 31, 1998 without regard to
                                    this subsection and any election made by the
                                    Participant pursuant to the provisions of
                                    the Plan in effect prior to January 1, 1999
                                    to receive or begin receiving a distribution
                                    after December 31, 2000 is null and void as
                                    of January 1, 1999.

4.3.     DISTRIBUTION TO BENEFICIARY.

         (a)      Time. Distribution to a Beneficiary will be made as soon as
                  administratively practicable after the date on which the
                  Administrator receives notice of the Participant's death and
                  determines that the Beneficiary is entitled to receive the
                  distribution.

         (b)      Form. Distribution to the Participant's Beneficiary will be
                  made in the form of a lump sum payment whether or not payments
                  had commenced to the Participant in the form of installments
                  prior to his or her death. The distribution will be made in
                  the form of cash except that to the extent that the
                  Participant's Account is deemed to be invested in whole shares
                  of Company Stock, as defined in Section 3.6(j)(i), at the time
                  of the distribution, the distribution will be made to the
                  Beneficiary in whole shares of Company Stock. Any fractional
                  share will be valued based on the Price per Share on the date
                  of the distribution and the value of the fractional share will
                  be distributed to the Beneficiary in cash.

         (c)      Amount. The amount of a lump sum payment will be equal to the
                  vested balance of the Participant's Account as of the
                  Valuation Date coinciding with or immediately preceding the
                  date on which the payment is made (reduced by the amount of
                  any other distribution from the Account after that Valuation
                  Date). In addition, if the Participant dies before his or her
                  Severance date or Disability and the Administrator determines
                  that the death is not attributable to the Participant's
                  suicide committed during the first Plan Year beginning after
                  December 31, 1998 for which deferrals are credited to the
                  Participant's Participant Deferral Account or the next
                  following Plan Year, the Beneficiary will also receive an
                  amount equal to twice the Participant's total deferrals
                  pursuant to the Plan for all Plan Years (exclusive of earnings
                  on the deferrals, discretionary credits by a Participating
                  Employer and earnings on discretionary credits). If there are
                  multiple Beneficiaries, the total amount distributed will be
                  divided among the Beneficiaries as directed by the Participant
                  in the Beneficiary designation.

         (d)      Reduction of Account Balance. The balance of the Account from
                  which a distribution is made will be reduced (but not below
                  zero) by the amount of the distribution as of the beginning of
                  the next day after the Valuation Date coinciding with or
                  immediately preceding the date of the distribution.

         (e)      Beneficiary Designation.

                                       19
<PAGE>

                  (i)      Each Participant may designate, on a form furnished
                           by the Administrator, one or more primary
                           Beneficiaries or alternative Beneficiaries to receive
                           all or a specified part of his or her Account, and
                           the additional amount described in Subsection (c),
                           after his or her death, and the Participant may
                           change or revoke any such designation from time to
                           time. No such designation, change or revocation is
                           effective unless executed by the Participant and
                           received by the Administrator during the
                           Participant's lifetime. No designation of a
                           Beneficiary other than the Participant's spouse is
                           effective unless the spouse consents to the
                           designation or the Administrator determines that
                           spousal consent cannot be obtained because the spouse
                           cannot reasonably be located or is legally incapable
                           of consenting. The consent must be in writing, must
                           acknowledge the effect of the election and must be
                           witnessed by a notary public. The consent is
                           effective only with respect to the Beneficiary or
                           class of Beneficiaries so designated and only with
                           respect to the spouse who so consented.

                  (ii)     If a Participant

                           (1)      fails to designate a Beneficiary, or

                           (2)      revokes a Beneficiary designation without
                                    naming another Beneficiary, or

                           (3)      designates one or more Beneficiaries, none
                                    of whom survives the Participant or exists
                                    at the time in question,

                           for all or any portion of his or her Account, such
                           Account or portion will be paid to the Participant's
                           surviving spouse or, if the Participant is not
                           survived by a spouse, to the representative of the
                           Participant's estate.

                  (iii)    The automatic Beneficiaries specified above and,
                           unless the designation otherwise specifies, the
                           Beneficiaries designated by the Participant, become
                           fixed as of the Participant's death so that, if a
                           Beneficiary survives the Participant but dies before
                           the receipt of the payment due such Beneficiary, the
                           payment will be made to the representative of such
                           Beneficiary's estate. Any designation of a
                           Beneficiary by name that is accompanied by a
                           description of relationship or only by statement of
                           relationship to the Participant is effective only to
                           designate the person or persons standing in such
                           relationship to the Participant at the Participant's
                           death.

         (f)      Transition Rules.

                  (i)      Death Before 1999. Distribution to the Beneficiary of
                           a Participant who dies before January 1, 1999 will be
                           made in accordance with the provisions of the Plan in
                           effect prior to January 1, 1999.

                                       20
<PAGE>

                  (ii)     Death After 1998. Distribution to the Beneficiary of
                           a Participant who dies after December 31, 1998 will
                           be made in accordance with the provisions of this
                           section unless, pursuant to Section 1.5, the terms of
                           the Plan as restated effective as of January 1, 1999
                           were not applicable to the Participant, in which case
                           distribution to the Beneficiary will be made in
                           accordance with the provisions of the Plan in effect
                           prior to January 1, 1999.

4.4.     NONDEDUCTIBILITY. If the Company determines in good faith that there is
         a reasonable likelihood that any compensation paid to a Participant by
         an Affiliate for a taxable year of the Affiliate would not be
         deductible by the Affiliate solely by reason of the limitation under
         Code section 162(m), to the extent deemed necessary by the Company to
         ensure that the entire amount of any distribution to the Participant
         pursuant to the Plan is deductible, notwithstanding any other provision
         of the Plan or any election by the Participant to the contrary, all or
         any portion of the distribution may be deferred. Any amounts deferred
         pursuant to this section will continue to be credited with earnings in
         accordance with Section 3.6. The deferred amounts and earnings thereon
         will be distributed to the Participant, or to his or her Beneficiary in
         the case of the Participant's death, at the earliest possible date, as
         determined by the Company in good faith, on which the deductibility of
         compensation paid or payable to the Participant for the taxable year of
         the Affiliate during which the distribution is made will not be limited
         by Code section 162(m).

4.5.     PAYMENT IN EVENT OF INCAPACITY. If any individual entitled to receive
         any payment under the Plan is, in the judgment of the Administrator,
         physically, mentally or legally incapable of receiving or acknowledging
         receipt of the payment, and no legal representative has been appointed
         for the individual, the Administrator may (but is not required to)
         cause the payment to be made to any one or more of the following as may
         be chosen by the Administrator: the Beneficiary (in the case of the
         incapacity of a Participant); the institution maintaining the
         individual; a custodian for the individual under the Uniform Transfers
         to Minors Act of any state; or the individual's spouse, children,
         parents, or other relatives by blood or marriage. The Administrator is
         not required to see to the proper application of any such payment and
         the payment completely discharges all claims under the Plan against the
         Participating Employer, the Plan and Trust to the extent of the
         payment.

4.6.     SUSPENSION. If a Participant who is receiving installment payments
         again becomes a Qualified Employee or Qualified Director, the
         installment payments will stop. The remaining balance of the
         Participant's Account will be distributed upon the Participant's
         subsequent Severance or Disability in accordance with Article 4 without
         regard to any election made pursuant to Section 4.2(b)(ii) prior to the
         Participant's last preceding Retirement or Disability.

                                       21
<PAGE>

                                   ARTICLE 5.
                     SOURCE OF PAYMENTS; NATURE OF INTEREST

5.1.     ESTABLISHMENT OF TRUST. A Participating Employer may establish a Trust,
         or may be covered by a Trust established by another Participating
         Employer, with an independent corporate trustee. The Trust must (a) be
         a grantor trust with respect to which the Participating Employer is
         treated as the grantor for purposes of Code section 677, (b) not cause
         the Plan to be funded for purposes of Title I of ERISA and (c) provide
         that the Trust assets will, upon the insolvency of a Participating
         Employer, be used to satisfy claims of the Participating Employer's
         general creditors. The Participating Employers may from time to time
         transfer to the Trust cash, marketable securities or other property
         acceptable to the Trustee in accordance with the terms of the Trust.

5.2.     SOURCE OF PAYMENTS.

         (a)      Each Participating Employer will pay, from its general assets,
                  the portion of any benefit pursuant to Article 4 or Section
                  6.3 or 6.4 attributable to a Participant's Account with
                  respect to that Participating Employer, and all costs, charges
                  and expenses relating thereto.

         (b)      The Trustee will make distributions to Participants and
                  Beneficiaries from the Trust in satisfaction of a
                  Participating Employer's obligations under the Plan in
                  accordance with the terms of the Trust. The Participating
                  Employer is responsible for paying any benefits attributable
                  to a Participant's Account with respect to that Participating
                  Employer that are not paid by the Trust.

5.3.     STATUS OF PLAN. Nothing contained in the Plan or Trust is to be
         construed as providing for assets to be held for the benefit of any
         Participant or any other person or persons to whom benefits are to be
         paid pursuant to the terms of the Plan, the Participant's or other
         person's only interest under the Plan being the right to receive
         benefits in accordance with the terms of the Plan. The Trust is
         established only for the convenience of the Participating Employers and
         the Participants, and no Participant has any interest in the assets of
         the Trust. To the extent the Participant or any other person acquires a
         right to receive benefits under the Plan or the Trust, such right is no
         greater than the right of any unsecured general creditor of the
         Participating Employer.

5.4.     NON-ASSIGNABILITY OF BENEFITS. The benefits payable under the Plan and
         the right to receive future benefits under the Plan may not be
         anticipated, alienated, sold, transferred, assigned, pledged,
         encumbered or subjected to any charge or legal process.

                                       22
<PAGE>

                                   ARTICLE 6.
                        ADOPTION, AMENDMENT, TERMINATION

6.1.     ADOPTION. With the prior approval of the Administrator, an Affiliate
         may adopt the Plan and become a Participating Employer by furnishing to
         the Administrator a certified copy of a resolution of its Board
         adopting the Plan.

6.2.     AMENDMENT.

         (a)      Right. The Company reserves the right to amend the Plan at any
                  time to any extent that it may deem advisable.

         (b)      Method. To be effective, an amendment must be stated in a
                  written instrument approved in advance or ratified by the
                  Company's Board and executed in the name of the Company by its
                  President or a Vice President and attested by the Secretary,
                  the Deputy Secretary or an Assistant Secretary.

         (c)      Binding Effect. An amendment adopted in accordance with
                  Subsection (b) is binding on all interested parties as of the
                  effective date stated in the amendment; provided, however,
                  that no amendment may retroactively deprive any Participant,
                  or the Beneficiary of a deceased Participant, of any benefit
                  to which he or she is entitled under the terms of the Plan in
                  effect immediately prior to the effective date of the
                  amendment or the date on which the amendment is adopted,
                  whichever is later.

         (d)      Prime Rate Investment Fund. An amendment which changes the
                  method of crediting earnings described in Section 3.6(i)(ii)
                  will be effective only if the Company's Board determines in
                  good faith that on the date on which the amendment is approved
                  by the Board, it is reasonably likely that, in the long run,
                  the new method will not result in materially lower earnings
                  credits than the method described in Section 3.6(i)(ii).

         (e)      Applicability to Participants Who Have Experienced a Severance
                  or Disability. The provisions of the Plan in effect on a
                  Participant's Severance date or Disability will, except as
                  otherwise expressly provided by a subsequent amendment,
                  continue to apply to such Participant.

         (f)      Change of Control. Notwithstanding anything in the Plan to the
                  contrary, from and after the occurrence of a Change of
                  Control, no amendment may be made to the Plan that would
                  adversely affect the terms and conditions associated with the
                  Account balance of any Participant as of the date of the
                  Change of Control.

6.3.     TERMINATION OF PARTICIPATION. Notwithstanding any other provision of
         the Plan to the contrary, if determined by the Administrator to be
         necessary to ensure that the Plan is exempt from ERISA to the extent
         contemplated by Section 1.3, or upon the Administrator's determination
         that a Participant's interest in the Plan has been or is likely to be
         includable in the Participant's gross income for federal income tax
         purposes prior to the actual payment of benefits pursuant to the Plan,
         the Administrator may take any or all

                                       23
<PAGE>

         of the following steps:

         (a)      terminate the Participant's future participation in the Plan;

         (b)      cause the Participant's entire interest in the Plan to be
                  distributed to the Participant in the form of an immediate
                  lump sum cash payment in an amount determined in accordance
                  with Section 4.2(c); and/or

         (c)      transfer the benefits that would otherwise be payable pursuant
                  to the Plan for all or any of the Participants to a new plan
                  that is similar in all material respects (other than those
                  which require the action in question to be taken.)

6.4.     TERMINATION. The Company reserves the right to terminate the Plan in
         its entirety at any time. Each Participating Employer reserves the
         right to cease its participation in the Plan at any time. The Plan will
         terminate in its entirety or with respect to a particular Participating
         Employer as of the date specified by the Company or such Participating
         Employer in a written instrument adopted in the same manner as an
         amendment. Upon the termination of the Plan in its entirety or with
         respect to any Participating Employer, the Company or Participating
         Employer, as the case may be, will either cause (a) any benefits to
         which Participants have become entitled prior to the effective date of
         the termination to continue to be paid in accordance with the
         provisions of Article 4 or (b) the entire interest in the Plan of any
         or all Participants, or the Beneficiaries of any or all deceased
         Participants, to be distributed in the form of an immediate lump sum
         cash payment in an amount determined in accordance with Section 4.2(c).

                                       24
<PAGE>

                                   ARTICLE 7.
                  CONSTRUCTION, INTERPRETATION AND DEFINITIONS

7.1.     CROSS REFERENCE. References within a section of the Plan to a
         particular subsection refer to that subsection within the same section
         and references within a section or subsection to a particular clause
         refer to that clause within the same section or subsection, as the case
         may be.

7.2.     GOVERNING LAW. To the extent that state law is not preempted by the
         provisions of ERISA, or any other laws of the United States, all
         questions pertaining to the construction, validity, effect and
         enforcement of the Plan will be determined in accordance with the
         internal, substantive laws of the State of Minnesota without regard to
         the conflict of law rules of the State of Minnesota or any other
         jurisdiction.

7.3.     HEADINGS. The headings of articles and sections are included solely for
         convenience of reference; if there exists any conflict between such
         headings and the text of the Plan, the text will control.

7.4.     NUMBER AND GENDER. Wherever appropriate, the singular may be read as
         the plural, the plural may be read as the singular and one gender may
         be read as the other gender.

7.5.     DEFINITIONS. The definitions set forth in this Section apply in
         constructing this instrument unless the context otherwise indicates.

         Account. "Account" means the bookkeeping account or accounts maintained
         with respect to a Participant pursuant to Section 3.1.

         Active Participant. "Active Participant" means a Director Participant
         or an Employee Participant.

         Administrator. "Administrator" means the Company or the person to whom
         administrative duties are delegated pursuant to the provisions of
         Section 8.1, as the context requires.

         Affiliate. "Affiliate" means the Company and any corporation at least a
         majority of whose outstanding securities ordinarily having the right to
         vote at elections of directors is owned, directly or indirectly, by the
         Company.

         Annual Bonus. "Annual Bonus" for a Plan Year means the annual bonus
         earned by an Employee Participant during the Plan Year for his or her
         services during the Plan Year as a Qualified Employee and paid in cash
         from a United States payroll to the Employee Participant by a
         Participating Employer during the calendar quarter first following the
         Plan Year, net of any contributions and deductions specified in Plan
         Rules.

         Applicable Vesting Period. The "Applicable Vesting Period" with respect
         to any Company Stock Premium credited to a Participant's Account as of
         a date within a given Plan Year is the period that starts on the first
         day of the Plan Year during which the Company Stock Premium is credited
         to the Participant's Account and ends on the last day

                                       25
<PAGE>

         of the second following Plan Year. For example, the Applicable Vesting
         Period for a Company Stock Premium credited to a Participant's Account
         as of a date during the 2002 Plan Year begins on January 1, 2002 and
         ends on December 31, 2004.

         Base Compensation. "Base Compensation" for a Plan Year means:

         (a)      the base salary payable in cash from a United States payroll
                  to an Employee Participant by a Participating Employer for the
                  Employee Participant's services during the Plan Year as a
                  Qualified Employee, including any elective deferrals that
                  would have been paid in cash but for the Qualified Employee's
                  election to defer, net of any contributions and deductions
                  specified in Plan Rules; or

         (b)      the compensation payable in cash to a Director Participant by
                  the Company for the Director Participant's services during the
                  Plan Year as a Qualified Director, including any elective
                  deferrals that would have been paid in cash but for the
                  Qualified Director's election to defer, including, without
                  limitation, committee chair fees, but excluding travel expense
                  allowances and expense reimbursements.

         Board. "Board" means the board of directors of the Affiliate in
         question. When the Plan provides for an action to be taken by the
         Board, the action may be taken by any committee or individual
         authorized to take such action pursuant to a proper delegation by the
         board of directors in question.

         Beneficiary. "Beneficiary" with respect to a Participant is the person
         designated or otherwise determined under the provisions of Section
         4.3(e) as the distributee of benefits payable after the Participant's
         death. A person designated or otherwise determined to be a Beneficiary
         under the terms of the Plan has no interest in or right under the Plan
         until the Participant in question has died. A Beneficiary will cease to
         be such on the day on which all benefits to which he, she or it is
         entitled under the Plan have been distributed.

         Change of Control. "Change of Control" shall mean the first of the
         following events to occur:

         (a)      there is consummated a merger or consolidation to which the
                  Company or any direct or indirect subsidiary of the Company is
                  a party if the merger or consolidation would result in the
                  voting securities of the Company outstanding immediately prior
                  to such merger or consolidation continuing to represent
                  (either by remaining outstanding or by being converted into
                  voting securities of the surviving entity or any parent
                  thereof) less than 60% of the combined voting power of the
                  securities of the Company or such surviving entity or any
                  parent thereof outstanding immediately after such merger or
                  consolidation; or

         (b)      the direct or indirect beneficial ownership (as defined in
                  Rule 13d-3 under the Securities Exchange Act of 1934) in the
                  aggregate of securities of the Company representing (20%) or
                  more of the total combined voting power of Company's then
                  issued and outstanding securities is acquired by any person or
                  entity or group of associated persons or entities acting in
                  concert; provided, however, that for purposes hereof, the
                  following acquisitions shall not constitute a Change of

                                       26
<PAGE>

                  Control: (I) any acquisition by the Company or any of its
                  subsidiaries, (II) any acquisition directly from the Company
                  or any of its subsidiaries, (III) any acquisition by any
                  employee benefit plan (or related trust or fiduciary)
                  sponsored or maintained by the Company or any corporation
                  controlled by the Company, (IV) any acquisition by an
                  underwriter temporarily holding securities pursuant to an
                  offering of such securities, (V) any acquisition by a
                  corporation owned, directly or indirectly, by the stockholders
                  of the Company in substantially the same proportions as their
                  ownership of stock of the Company (VI) any acquisition in
                  connection with which, pursuant to Rule 13d-1 promulgated
                  pursuant to the Exchange Act, the individual, entity or group
                  is permitted to, and actually does, report its beneficial
                  ownership on Schedule 13-G (or any successor Schedule);
                  provided that, if any such individual, entity or group
                  subsequently becomes required to or does report its beneficial
                  ownership on Schedule 13D (or any successor Schedule), then,
                  for purposes of this paragraph, such individual, entity or
                  group shall be deemed to have first acquired, on the first
                  date on which such individual, entity or group becomes
                  required to or does so report, beneficial ownership of all of
                  the voting securities of the Company beneficially owned by it
                  on such date, and (VII) any acquisition in connection with a
                  merger or consolidation which, pursuant to paragraph (a)
                  above, does not constitute a Change of Control; or

         (c)      there is consummated a transaction contemplated by an
                  agreement for the sale or disposition by the Company of all or
                  substantially all of the Company's assets, other than a sale
                  or disposition by the Company of all or substantially all of
                  the Company's assets to an entity, at least 60% of the
                  combined voting power of the voting securities of which are
                  owned by stockholders of the Company in substantially the same
                  proportions as their ownership of the Company immediately
                  prior to such sale; or

         (d)      the stockholders of the Company approve any plan or proposal
                  for the liquidation of the Company; or

         (e)      a change in the composition of the Board such that the
                  "Continuity Directors" cease for any reason to constitute at
                  least a majority of the Board. For purposes of this clause,
                  "Continuity Directors" means those members of the Board who
                  either (I) were directors on January 29, 2002, or (II) were
                  elected by, or on the nomination or recommendation of, at
                  least a two-thirds (2/3) majority of the then-existing Board
                  (other than a director whose initial assumption of office was
                  in connection with an actual or threatened election contest,
                  including but not limited to a consent solicitation, relating
                  to the election of directors of the Company); or

         (f)      such other event or transaction as the Board shall determine
                  constitutes a Change of Control.

         Code. "Code" means the Internal Revenue Code of 1986, as amended. Any
         reference to a specific provision of the Code includes a reference to
         that provision as it may be

                                       27
<PAGE>

         amended from time to time, to any successor provision, to any
         regulations promulgated thereunder and to any binding pronouncements
         relating thereto.

         Company. "Company" means New Ceridian Corporation, renamed Ceridian
         Corporation after the New Ceridian spin-off.

         Company Stock. "Company Stock" means shares of common stock issued by
         the Company.

         Director Participant. "Director Participant" means a Participant who is
         a Qualified Director.

         Disability. "Disability" means a disability for which a Participant is
         receiving disability benefits pursuant to a long-term disability plan
         maintained by an Affiliate or as a result of which the Participant is
         certified as being disabled by the Social Security Administration and
         is receiving disability benefits under the disability provisions of the
         Social Security Act. The Participant must provide the Administrator
         with proof of his or her Disability that is satisfactory to the
         Administrator. For purposes of the Plan, a Disability occurs on the
         date following the Administrator's receipt of such proof on which the
         Administrator determines that the Participant has experienced a
         Disability.

         Discretionary Account. "Discretionary Account" means the account
         maintained for a Participant pursuant to Section 3.1(b).

         Earnings. "Earnings" means the eligible earnings determined under the
         Qualified 401(k) but without regard to the limit under Code section
         401(a)(17) and including any reduction in earnings made under Section
         3.2.

         Employee Participant. "Employee Participant" means a Participant who is
         a Qualified Employee.

         ERISA. "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended. Any reference to a specific provision of ERISA
         includes a reference to that provision as it may be amended from time
         to time and to any successor provision.

         Hour of Service. The term " Hour of Service" with respect to an
         Employee Participant, includes and is limited to:

                  (a) Each hour for which he or she is paid, or entitled to
         payment, for the performance of duties for an Affiliate while it is an
         Affiliate.

                  (b) Subject to the rules set forth in items (1) through (6) of
         this clause (b), each hour for which he or she is paid, or entitled to
         payment, by an Affiliate while it is an Affiliate on account of a
         period of time during which no duties are performed (irrespective of
         whether the employment relationship has terminated) due to severance,
         personal days off, holiday, illness (including disability), layoff,
         jury duty, military duty or leave of absence.

                                       28
<PAGE>

                           (1) Except to the extent the Employer's policies
                  specify in writing a greater number of hours for certain types
                  of paid absences, no more than 501 hours will be credited to
                  the Employee Participant on account of any single continuous
                  period during which he or she performs no duties (whether or
                  not such period occurs in a single Plan Year).

                           (2) No more than the number of hours regularly
                  scheduled for the performance of duties for the period during
                  which no duties are performed will be credited to the Employee
                  Participant for such period.

                           (3) The Employee Participant will not be credited
                  with hours for which payments are made or due under a plan
                  maintained solely for the purpose of complying with workers'
                  compensation, unemployment compensation or disability
                  insurance laws, or for which payments are made solely to
                  reimburse the Employee for medical or medically related
                  expenses.

                           (4) A payment will be deemed to be made by or due
                  from an Affiliate while it is an Affiliate, regardless of
                  whether such payment is made by or due from the Affiliate
                  directly or indirectly through a trust fund or insurer to
                  which the Affiliate contributes or pays premiums.

                           (5) If the payment made or due is calculated on the
                  basis of units of time, the number of Hours of Service to be
                  credited will be the number of regularly scheduled working
                  hours included in the units of time on the basis of which the
                  payment is calculated.

                           (6) If the payment made or due is not calculated on
                  the basis of units of time, the number of Hours of Service to
                  be credited will be equal to the amount of the payment,
                  divided by the Employee Participant's most recent hourly rate
                  of compensation before the period during which no duties are
                  performed.

                  (c) Each hour during which he or she was absent without pay
                  due to:

                           (1) Military or jury service which is required by
                  applicable law to be treated as an authorized leave, or any
                  other absence required by applicable law or contractual
                  undertaking to be treated as an authorized leave;

                           (2) A leave of absence authorized for medical
                  reasons, public service, social service or educational
                  purposes, which is granted under rules applied uniformly to
                  all Qualified Employees;

                           (3) Any other leave of absence authorized by an
                  Affiliate, while it is an Affiliate, which is granted under
                  rules applied uniformly to all Employees, but only to the
                  extent that it does not exceed 12 months duration;

                           (4) A layoff, but only to the extent that it does not
                  exceed six months' duration; or

                                       29
<PAGE>

                           (5) A leave of absence granted under the terms of the
                  Company's Time Off Without Pay Program, but only to the extent
                  that it does not exceed 12 months' duration;

         in which case the number of hours for which an Employee Participant
         receives credit will equal that number of Hours of Service per day
         which he or she would normally have been scheduled to complete during
         such absence, or eight hours per day, whichever is less.

                  (d) Each hour for which backpay, irrespective of mitigation of
         damages, is either awarded or agreed to by an Affiliate; provided,
         first, that Hours of Service taken into account under clause (a), (b),
         or (c) will not also be taken into account under this clause (d); and,
         second, that Hours of Service taken into account under this clause (d)
         that relate to periods specified in clause (b) will be subject to the
         rules under items (1) through (6) of clause (b).

                  (e) Hours of Service will be credited:

                           (1) In the case of Hours of Service described in
                  clause (a), to the Plan Year in which the duties are
                  performed;

                           (2) In the case of Hours of Service described in
                  clause (b), to the Plan Year in which the period during which
                  no duties are performed occurs; provided, that, if the payment
                  is not calculated on the basis of units of time, the Hours of
                  Service will not be allocated between more than the first two
                  Plan Years of such period;

                           (3) In the case of Hours of Service described in
                  clause (c), to the Plan Year(s) during which such absence
                  occurs; and

                           (4) In the case of Hours of Service described in
                  clause (d), to the Plan Year(s) to which the award or
                  agreement for backpay pertains.

                  (f) Hours of Service completed by an Employee Participant with
         an Affiliate prior to the date on which it became an Affiliate or with
         a business all or any part of which is acquired by an Affiliate will be
         taken into account under this Plan only if, to the extent and for such
         purposes as, provided in any agreement pursuant to which it became an
         Affiliate or was acquired or otherwise provided by the Company, and
         will be specified on an exhibit to the Plan.

                  (g) Notwithstanding the foregoing provisions of this
         definition, the number of Hours of Service that a person completes (1)
         while employed with an Affiliate in a classification other than as an
         employee, (2) while he or she is considered to be a leased employee or
         (3) with any organization to the extent such Hours of Service are
         required to be taken into account pursuant to Code section 414(o), in
         each case determined in the manner specified in clauses (a) through
         (f), will also be taken into account.

         Matching Percentage. "Matching Percentage" means with respect to a
         Qualified Employee the percentage used in calculating the Company's (or
         Affiliate's) matching

                                       30
<PAGE>

         contribution under the Qualified 401(k) Plan, but not including any
         performance matching contribution, on behalf of such Qualified Employee
         for the Qualified 401(k) Plan plan year ending with or within the Plan
         Year for this Plan.

         Participant. "Participant" means a current or former Active Participant
         to whose Account amounts have been credited pursuant to Article 3 and
         who has not ceased to be a Participant pursuant to Section 2.8.

         Participant Deferral Account. "Participant Deferral Account" means the
         account maintained for a Participant pursuant to Section 3.1(a).

         Participating Employer. "Participating Employer" means the Company and
         any other Affiliate that has adopted the Plan, or all of them
         collectively, as the context requires. An Affiliate will cease to be a
         Participating Employer upon a termination of the Plan as to its
         Qualified Employees (and, in the case of the Company, its Qualified
         Directors) and the satisfaction in full of all of its obligations under
         the Plan or upon its ceasing to be an Affiliate.

         Plan. "Plan" means the Ceridian Corporation Deferred Compensation Plan,
         as from time to time amended or restated.

         Plan Year. "Plan Year" means the calendar year.

         Plan Rules. "Plan Rules" are rules, policies, practices or procedures
         adopted by the Administrator pursuant to Section 8.2.

         Price per Share. The "Price per Share" on a given date is the closing
         market price per share of Company Stock at the end of the regular
         trading session on the last business day of the calendar month
         immediately preceding or concurrent with the date in question as
         reported on the New York Stock Exchange Composite Tape on that day (or
         if no shares of Company Stock were traded or quoted on that day, as of
         the next preceding day on which shares of Company Stock were traded or
         quoted). For example, the Price per Share for a transaction that is
         effective on September 30, 2002 is the closing market price per share
         of Company Stock at the end of the regular trading session (i.e., 4:00
         p.m. New York City time) on September 30, 2002 as reported on the New
         York Stock Exchange Composite Tape on September 30, 2002.

         Qualified 401(k) Plan. "Qualified 401(k) Plan" means the qualified
         retirement plan sponsored by the Company or an Affiliate which includes
         a qualified cash or deferred arrangement within the meaning of Code
         section 401(k) and in which the Qualified Employee is eligible to
         participate.

         Qualified Director. "Qualified Director" means an individual who is a
         member of the Company's board of directors and is independent (i.e., is
         not an employee of the Company or any of its affiliates or
         subsidiaries).

         Qualified Employee. "Qualified Employee" means an individual who
         performs services for a Participating Employer as an employee of the
         Participating Employer (as classified

                                       31
<PAGE>

         by the Participating Employer at the time the services are performed
         without regard to any subsequent reclassification), whose Base
         Compensation exceeds an amount established by Plan Rules, and who is
         (a) an officer of the Participating Employer elected by the
         Participating Employer's Board, (b) a Vice President of the
         Participating Employer or (c) a Director of the Participating Employer
         with a salary grade level of D1 or D2. The Company may, pursuant to
         Plan Rules, establish additional requirements or conditions an employee
         must satisfy in order to be treated as a Qualified Employee under the
         Plan.

         Retirement. "Retirement" means:

         (a)      in the case of an Employee Participant, the Participant's
                  Severance after his or her

                  (1)      attainment of age 65 or

                  (2)      attainment of age 55 and completion of at least 10
                           years of Vesting Service; or

         (b)      in the case of a Director Participant, the Participant's
                  Severance after his or her completion of at least three
                  complete years of service as a Qualified Director.

         Severance. "Severance" means:

         (a)      the date on which an Employee Participant has completely
                  severed his or her employment relationship with all
                  Affiliates; or

         (b)      the date on which a Director Participant ceases to be a member
                  of the Company's board of directors.

         Total Compensation. "Total Compensation" means an Employee
         Participant's Base Compensation plus his or her Annual Bonus which does
         not exceed his or her "target" bonus amount for the Plan Year.

         Trust. "Trust" means any trust or trusts established by a Participating
         Employer pursuant to Section 5.1.

         Trustee. "Trustee" means the independent corporate trustee or trustees
         that at the relevant time has or have been appointed to act as Trustee
         of the Trust.

         Unforeseeable Emergency. "Unforeseeable Emergency" means an
         unanticipated emergency that is caused by an event beyond the
         Participant's or Beneficiary's control resulting in a severe financial
         hardship that cannot be satisfied through other means. The existence of
         an unforeseeable emergency will be determined by the Administrator.

         Valuation Date. "Valuation Date" means the last day of each calendar
         month on which the New York Stock Exchange is open for regular business
         and any interim dates selected by the Administrator.

                                       32
<PAGE>

         Vesting Date. "Vesting Date" is the first to occur of the following
         dates:

                  (a)      the last day of the Applicable Vesting Period.

                  (b)      the effective date of a Change of Control.

                  (c)      the date of the Participant's death; or

                  (d)      the effective date of the Participant's Disability.

         Vesting Service. "Vesting Service," with respect to an Employee
         Participant, means:

                  (a)      Subject to the provisions of clauses (b) and (c)
                           below, the sum of:

                           (1) One year, for the Plan Year during which he or
                  she first becomes a Participant or resumes participation in
                  the Plan, as the case may be, regardless of the number of
                  Hours of Service that he or she completes during such Plan
                  Year; plus

                           (2) If the Employee Participant completes fewer than
                  900 Hours of Service during the Plan Year immediately
                  preceding the Plan Year in which he or she first becomes a
                  Participant or resumes participation, as the case may be, a
                  partial year for such immediately preceding Plan Year,
                  determined by dividing the number of Hours of Service he or
                  she completes during such preceding Plan Year, by 900; plus

                           (3) The aggregate number of Plan Years during each of
                  which the Employee Participant completes at least 900 Hours of
                  Service; plus

                           (4) A partial year for the Plan Year during which the
                  Employee Participant's employment terminates, determined by
                  dividing the actual number of Hours of Service he or she
                  completes during such Plan Year by 900;

         provided, first, that, if the Employee Participant's termination of
         employment occurs during the first or second Plan Year of his or her
         employment, such that the Employee Participant would otherwise be
         entitled to take into account service under more than one of items (1),
         (2) or (3), he or she is entitled to take into account only that
         service determined under either items (1) and (3) or items (2) and (3),
         whichever results in the greater amount of such service for the
         Employee Participant; second, that in no event will an Employee
         Participant be entitled to take into account service determined under
         more than one of the foregoing items (1), (2), (3) or (4) for any
         particular Plan Year; and third, that an Employee Participant who
         terminates employment more than once and is reemployed one or more
         times during any period of Vesting Service, will be entitled to take
         into account partial years of Vesting Service under items (1) or (2)
         and (4) only once during such period of Vesting Service, such partial
         years of Vesting Service being those attributable to his or her first
         participation in the Plan and/or his or her first termination of
         employment, as the case may be, during such period.

                                       33
<PAGE>

                  (b) For service prior to, and during, the Plan Year during
         which the Plan becomes effective with respect to an Affiliate that
         adopts the Plan and becomes a Participating Employer, the sum of:

                           (1) For service prior to the Plan Year during which
                  the Plan becomes effective with respect to the Affiliate, the
                  number of the Employee Participant's full and fractional years
                  of employment during the period commencing with the Employee
                  Participant's most recent date of uninterrupted employment by
                  such Affiliate prior to such effective date and ending with
                  the December 31 prior to such effective date, with any partial
                  calendar month during such period being disregarded for
                  purposes of determining such full and fractional years of
                  employment; plus

                           (2) For service during the Plan Year during which the
                  Plan becomes effective with respect to the Affiliate, the sum
                  of:

                                    (i) For service during that portion of such
                           Plan Year prior to the Plan's becoming effective with
                           respect to the Affiliate the fraction of one year
                           determined by dividing the number of full calendar
                           months of the Employee Participant's employment with
                           such Affiliate during such portion of that Plan Year
                           by 12, with any final partial calendar month being
                           treated as a full month; plus

                                    (ii) For service during that portion of such
                           Plan Year following the Plan's becoming effective
                           with respect to the Affiliate, the fraction of one
                           year determined by dividing the number of Hours of
                           Service completed by the Employee Participant during
                           that Plan Year following such effective date, by 900;

                  provided that, an Employee Participant will not be credited
                  with more than one year of Vesting Service for the Plan Year
                  during which the Plan becomes effective with respect to the
                  Affiliate.

                  (c) Notwithstanding the provisions of clause (a), in no case
         will more than one year of Vesting Service be taken into account for an
         Employee Participant during any 12-month period.

                                       34
<PAGE>

                                   ARTICLE 8.
                                 ADMINISTRATION

8.1.     ADMINISTRATOR. The general administration of the Plan and the duty to
         carry out its provisions is vested in the Company. The Company may
         delegate such duty or any portion thereof to a named person or persons
         and may from time to time revoke such authority and delegate it to
         another person or persons.

8.2.     PLAN RULES. The Administrator has the discretionary power and authority
         to make such Plan Rules as the Administrator determines to be
         consistent with the terms, and necessary or advisable in connection
         with the administration of the Plan and to modify or rescind any such
         Plan Rules.

8.3.     ADMINISTRATOR'S DISCRETION. The Administrator has the discretionary
         power and authority to make all determinations necessary for
         administration of the Plan, except those determinations that the Plan
         requires others to make, and to construe, interpret, apply and enforce
         the provisions of the Plan and Plan Rules whenever necessary to carry
         out its intent and purpose and to facilitate its administration,
         including, without limitation, the discretionary power and authority to
         remedy ambiguities, inconsistencies, omissions and erroneous benefit
         calculations. In the exercise of its discretionary power and authority,
         the Administrator will treat all similarly situated persons uniformly.

8.4.     SPECIALIST'S ASSISTANCE. The Administrator may retain such actuarial,
         accounting, legal, clerical and other services as may reasonably be
         required in the administration of the Plan, and may pay reasonable
         compensation for such services. All costs of administering the Plan
         will be paid by the Participating Employers.

8.5.     INDEMNIFICATION. The Participating Employers jointly and severally
         agree to indemnify and hold harmless, to the extent permitted by law,
         each director, officer, and employee of any Affiliates against any and
         all liabilities, losses, costs and expenses (including legal fees) of
         every kind and nature that may be imposed on, incurred by, or asserted
         against such person at any time by reason of such person's services in
         connection with the Plan, but only if such person did not act
         dishonestly or in bad faith or in willful violation of the law or
         regulations under which such liability, loss, cost or expense arises.
         The Participating Employers have the right, but not the obligation, to
         select counsel and control the defense and settlement of any action for
         which a person may be entitled to indemnification under this provision.

8.6.     BENEFIT CLAIM PROCEDURE. If a request for a benefit by a Participant or
         Beneficiary of a deceased Participant is denied in whole or in part, he
         or she may, not later than 30 days after the denial, file with the
         Administrator a written claim objecting to the denial.

         (a)      The Administrator, not later than 90 days after receipt of
                  such claim, will render a written decision to the claimant on
                  the claim. If the claim is denied, in whole or in part, such
                  decision will include the reason or reasons for the denial; a
                  reference to the Plan provisions on which the denial is based;
                  a description of any additional material or information, if
                  any, necessary for the claimant to perfect his or her

                                       35
<PAGE>

                  claim; an explanation as to why such information or material
                  is necessary; and an explanation of the Plan's claim
                  procedure.

         (b)      The claimant may file with the Administrator, not later than
                  60 days after receiving the Administrator's written decision,
                  a written notice of request for review of the Administrator's
                  decision, and the claimant or his or her representative may
                  thereafter review relevant Plan documents which relate to the
                  claim and may submit written comments to the Administrator.

         (c)      Not later than 60 days after receipt of such review request,
                  the Administrator will render a written decision on the claim,
                  which decision will include the specific reasons for the
                  decision, including a reference to the Plan's specific
                  provisions where appropriate.

         (d)      The foregoing 90- and 60-day periods during which the
                  Administrator must respond to the claimant may be extended by
                  up to an additional 90- or 60 days, respectively, if special
                  circumstances beyond the Administrator's control so require
                  and notice of such extension is given to the claimant prior to
                  the expiration of such initial 90- or 60-day period, as the
                  case may be.

         (e)      A Participant or Beneficiary must exhaust the procedure
                  described in this section before making any claim of
                  entitlement to benefits pursuant to the Plan in any court or
                  other proceeding.

8.7.     DISPUTES.

         (a)      In the case of a dispute between a Qualified Employee
                  Participant or his or her Beneficiary and a Participating
                  Employer, the Administrator or other person relating to or
                  arising from the Plan, the United States District Court for
                  the District of Minnesota is a proper venue for any action
                  initiated by or against the Participating Employer,
                  Administrator or other person and such court will have
                  personal jurisdiction over any Participant or Beneficiary
                  named in the action.

         (b)      Regardless of where an action relating to or arising from the
                  participation in the Plan by a Qualified Employee is pending,
                  the law as stated and applied by the United States Court of
                  Appeals for the Eighth Circuit or the United States District
                  Court for the District of Minnesota will apply to and control
                  all actions relating to the Plan brought against the Plan, a
                  Participating Employer, the Administrator or any other person
                  or against any such Participant or his or her Beneficiary.

         (c)      No civil action arising out of or relating to this Plan may be
                  commenced by a Participant or Beneficiary more than two (2)
                  years after the Participant or Beneficiary had knowledge (or
                  should have had knowledge) of the facts or circumstances that
                  give rise to, or form the basis for, such action.

                                       36
<PAGE>

                                   ARTICLE 9.
                                  MISCELLANEOUS

9.1.     WITHHOLDINGS AND OFFSETS. The Participating Employers and the Trustee
         retain the right to withhold from any compensation, deferral and/or
         benefit payment pursuant to the Plan, any and all income, employment,
         excise and other tax as the Participating Employers or Trustee deems
         necessary and the Participating Employers may offset against amounts
         then payable to a Participant or Beneficiary under the Plan any amounts
         then owing to the Participating Employers by such Participant or
         Beneficiary.

9.2.     OTHER BENEFITS. Neither amounts deferred nor amounts paid pursuant to
         the Plan constitute salary or compensation for the purpose of computing
         benefits under any other benefit plan, practice, policy or procedure of
         a Participating Employer unless otherwise expressly provided
         thereunder.

9.3.     NO WARRANTIES REGARDING TAX TREATMENT. The Participating Employers make
         no warranties regarding the tax treatment to any person of any
         deferrals or payments made pursuant to the Plan and each Participant
         will hold the Administrator and the Participating Employers and their
         officers, directors, employees, agents and advisors harmless from any
         liability resulting from any tax position taken in good faith in
         connection with the Plan.

9.4.     NO RIGHTS TO CONTINUED SERVICE CREATED. Neither the establishment of
         nor participation in the Plan gives any individual the right to
         continued employment with the Company or service on the Company's board
         of directors or limits the right of the Participating Employer to
         discharge, transfer, demote, modify terms and conditions of employment
         or service on the Company's board of directors or otherwise deal with
         any individual without regard to the effect which such action might
         have on him or her with respect to the Plan.

9.5.     SPECIAL PROVISIONS. Special provisions of the Plan applicable only to
         certain Participants may be set forth on an exhibit to the Plan adopted
         in the same manner as an amendment to the Plan. In the event of a
         conflict between the terms of the exhibit and the terms of the Plan,
         the exhibit controls. Except as otherwise expressly provided in the
         exhibit, the generally applicable terms of the Plan control all matters
         not covered by the exhibit.

9.6.     SUCCESSORS. Except as otherwise expressly provided in the Plan, all
         obligations of the Participating Employers under the Plan are binding
         on any successor to the Participating Employer whether the existence of
         such successor is the result of a direct or indirect purchase, merger,
         consolidation or otherwise of all or substantially all of the business
         and/or assets of the Participating Employer.

9.7.     ARBITRON EXECUTIVE INVESTMENT PLAN.

         (a)      Transfer of Accounts. Effective as of January 1, 2001, the
                  Company adopted the Arbitron Executive Investment Plan and,
                  except as otherwise provided in Subsection (b), caused the
                  Account balances of the Transferred Participants, as defined
                  in Subsection (c), as of the close of business on December 31,
                  2000, to be

                                       37
<PAGE>

                  transferred to the Arbitron Executive Investment Plan.
                  Effective as of the close of business on December 31, 2000,
                  except as otherwise provided in Subsection (b), each
                  Transferred Participant will cease to be a Participant and
                  neither any Transferred Participant nor anyone claiming by,
                  through or on behalf of a Transferred Participant will have
                  any right to a benefit arising under or in connection with the
                  Plan unless he or she again becomes an Active Participant
                  after December 31, 2000.

         (b)      Exception to Transfer. The portion of a Transferred
                  Participant's Account scheduled to be distributed to the
                  Transferred Participant on January 1, 2001 will not be
                  transferred to the Arbitron Executive Investment Plan pursuant
                  to Subsection (a) and will be distributed to the Transferred
                  Participant pursuant to applicable provisions of the Plan.

         (c)      Transferred Participant. Each of the following individuals is
                  a Transferred Participant: Dolores Cody Harper; Claire Lee
                  Kummer; Marshall L. Snyder; and William J. Walsh.

                                       38

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