Document:

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                                                                       Form 10-K
                                                             Year Ended 12/31/99
                                                                    Exhibit 4(g)

                         R.R. DONNELLEY & SONS COMPANY

                                   APPROVAL

                                      BY
                    SENIOR VICE PRESIDENT, HUMAN RESOURCES

                                   ADOPTING

                             AMENDMENT NUMBER ONE
                                    to the
                         FEBRUARY 9, 1999 RESTATEMENT
                         -----------------------------
                                    of the
                      DONNELLEY DEFERRED COMPENSATION AND
                      -----------------------------------
                            VOLUNTARY SAVINGS PLAN
                            ----------------------

Pursuant to Section 3.12 of the By-Laws of R.R. Donnelley & Sons Company (the
"Company") and authority delegated pursuant thereto by the Human Resources
Committee of the Board of Directors of the Company, the undersigned Senior Vice
President, Human Resources (the "Senior Vice President") hereby adopts the
document attached hereto entitled "Amendment Number One to the February 9, 1999
Restatement of the Donnelley Deferred Compensation and Voluntary Savings Plan."

Executed by the Senior Vice President this 30th of June, 1999.

                              /s/ Haven E. Cockerham
                              ----------------------
                              Haven E. Cockerham
                              Senior Vice President, Human Resources

<PAGE>

                         R.R. DONNELLEY & SONS COMPANY

                             AMENDMENT NUMBER ONE
                             --------------------
                                    to the
                         February 9, 1999 Restatement
                                    of the
                      DONNELLEY DEFERRED COMPENSATION AND
                      -----------------------------------
                            VOLUNTARY SAVINGS PLAN
                            ----------------------

                Providing for Automatic Enrollment in the Plan,
                ----------------------------------------------
            Matching Contributions and a Match Equalization Feature
            -------------------------------------------------------

WHEREAS, R.R. Donnelley & Sons Company (the "Company") maintains for the benefit
of certain of its employees and certain employees of its participating
subsidiaries the Donnelley Deferred Compensation and Voluntary Savings Plan (the
"Plan");

WHEREAS, the Company desires to automatically enroll newly hired employees in
the Plan;

WHEREAS, certain employees of the Company's Wheeling Division and certain
employees of R.R. Donnelley Seymour, Inc. currently receive a match under
Section 4.3(b) of the Plan;

WHEREAS, the Company desires to provide matching contributions to certain
Members who are not currently receiving matching contributions under the Plan;

WHEREAS, pursuant to Section 7.1(a) of the Plan, an investment fund will be
established for the purposes of (i) holding matching contributions and (ii)
permitting Members to invest in Company Stock under the Plan (the "Company Stock
Fund"); and

WHEREAS, the Company desires to allow Members to direct voting with respect to
shares of Company Stock represented by units of the Company Stock Fund credited
to Members' Accounts under the Plan.

NOW, THEREFORE, pursuant to the power of amendment in Section 18.1 of the Plan,
the Plan is amended, effective July 1, 1999, in the following respects:

1.   Section 2(1) (the definition of "Account") is amended by adding "Donnelley
     Matching Account," after "Matching Account," where it appears therein.

2.   The following new Section 2(13) is added and the remaining subsections are
     renumbered accordingly:
<PAGE>

          Company Stock Fund. The "Company Stock Fund" is an investment fund
          ------------------
          established by the Company pursuant to Section 7.1(a) which consists
          of shares of Company Stock, cash and cash equivalents.

3.   The following new Section 2(17) is added and the remaining subsections are
     renumbered accordingly:

          Donnelley Matching Account. A Member's "Donnelley Matching Account" is
          --------------------------
          the account maintained for a Member to which are allocated the
          matching contributions made pursuant to Sections 4.3(a) and 4.3(b), if
          any, made on such Member's behalf, plus earnings and net of any
          withdrawals or losses.

4.   Section 2(26) (the definition of "Matching Account") is amended by adding
     "made pursuant to Section 4.3(d)" after "matching contributions" where it
     appears therein.

5.   Section 2(27) (the definition of "Member") is amended in its entirety to
     read as follows:

          A "Member" is an Eligible Employee who has elected, or who is deemed
          to have elected, to make deferred compensation contributions under the
          Plan as described in Section 4.1 on a before-tax basis, voluntary
          savings contributions under the Plan as described in Section 3.1 on an
          after-tax basis, a rollover contribution to the Plan as described in
          Section 3.5 or on whose behalf a TRASOP Account is established
          pursuant to Section 4.5. An Employee shall cease to be a Member as of
          the date on which he receives a full and final distributions equal to
          his entire Account balance.

6.   Section 3.2 is amended by adding the following proviso at the end of the
     first sentence thereof: "; provided, however, that the aggregate amount of
     a Member's voluntary savings contribution under this Section, together with
     his deferred compensation contribution made under Section 4.1, if any,
     shall not exceed 23% of his Compensation per pay period."

7.   Section 4.1 is amended by adding the following proviso at the end of the
     first sentence of the second paragraph thereof: "; provided further,
     however, that the aggregate amount of a Member's deferred compensation
     contribution under this Section, together with his voluntary savings
     contribution made under Section 3.2, if any, shall not exceed 23% of his
     Compensation per pay period."

8.   Section 4.1 is further amended to add a new paragraph at the end thereof to
read as follows:

               With respect to an Eligible Employee who commences or recommences
          employment on or after July 1, 1999, such Employee shall be deemed to
          have elected to have deferred compensation contributions made on the
          Employee's behalf at a rate of 3 percent of the Employee's

                                      -2-
<PAGE>

          Compensation and to have his or her Compensation reduced by the same
          amount (a "deemed deferred compensation contribution election") . An
          Eligible Employee's deemed deferred compensation contribution election
          shall become effective on the first day of the second month following
          the date of the correspondence containing the Employee's personal
          identification number (or as soon as administratively practicable
          thereafter). Until the twentieth day of the month preceeding the
          effective date of a Member's deemed deferred compensation contribution
          election (or, if such twentieth day is not a trading day on the New
          York Stock Exchange, such earlier day as is the last trading day on
          the New York Stock Exchange prior to such twentieth day), such an
          Employee shall have the right to file an application, in the manner
          prescribed by the Applicable Named Fiduciary, specifying a different
          rate of deferred compensation contributions from that described above,
          or an election specifying the Employee's desire to have no deferred
          compensation contributions made on his or her behalf. Such Employee
          also shall have the right to change or terminate such contributions,
          at the same time and in the same manner as prescribed for voluntary
          savings contributions in Section 3.3. Notwithstanding anything
          contained herein to the contrary, no deemed deferred compensation
          contribution election shall be made pursuant to this paragraph on
          behalf of any Eligible Employee who is (i) classified by his Employer
          as a "task-force employee" or collectively bargained employee, and in
          either case, is employed in Haddon Craftsman Inc.'s Bloomsburg
          facility or (ii) an Employee of the Company's Wheeling Division or
          R.R. Donnelley Seymour, Inc.

9.   Paragraph (b) of Section 4.3 is redesignated paragraph (d) of such Section,
     paragraph (a) is amended in its entirety, and new paragraphs (b) and (c)
     are added to Section 4.3 as follows:

               Section 4.3. Matching Contributions. (a) In General. Subject to
               -----------  ----------------------      ----------
          the limitations of Section 4.4 and Article 5, each Employer shall
          contribute for each Member for whom such Employer makes deferred
          compensation contributions pursuant to Section 4.1 a matching
          contribution equal to 50% of such deferred compensation contributions
          up to the first 3% of Compensation. Deferred compensation
          contributions made on behalf of a Member for any payroll period which
          exceed 3% of the Member's Compensation for such payroll period shall
          not be considered for purposes of this paragraph. Notwithstanding
          anything herein to the contrary, no matching contributions shall be
          made pursuant to this paragraph on behalf of any Member who is (i)
          classified by his Employer as a "task-force employee" or collectively
          bargained employee, and in either case, is employed in Haddon
          Craftsman Inc.'s Bloomsburg facility or (ii) entitled to matching
          contributions under subsection (d) below.

                                      -3-
<PAGE>

               (b)  Supplemental Matching Contributions. Subject to the
                    -----------------------------------
          limitations of Section 4.4 and Article 5, each Employer shall make a
          supplemental matching contribution for each Member (i) who is an
          Eligible Employee of such Employer on the last day of such Plan Year
          or who (x) died, (y) became disabled or (z) terminated employment with
          his Employer on or after attaining age 55 during such Plan Year, (ii)
          for whom such Employer made deferred compensation contributions for
          any payroll period during such Plan Year, and (iii) in the following
          sentence, (A) is greater than (B). Such supplemental matching
          contributions shall be in an amount equal to the difference, if any,
          between (A) 50% of the deferred compensation contributions made on
          behalf of such Member up to 1 1/2% of the Member's total Compensation
          for such Plan Year and (B) the amount of matching contributions
          contributed for the Member under paragraph (a) above with respect to
          payroll periods ending in such Plan Year. Notwithstanding anything
          herein to the contrary, no matching contributions shall be made
          pursuant to this paragraph on behalf of any Member who is (i)
          classified by his Employer as a "task-force employee" or collectively
          bargained employee, and in either case, is employed in Haddon
          Craftsman Inc.'s Bloomsburg facility or (ii) entitled to matching
          contributions under subsection (d) below.

               Notwithstanding anything contained herein to the contrary (but
          subject to the limitations of Section 4.4 and Article 5), for the 1999
          Plan Year, each Employer shall make a supplemental matching
          contribution for each Member (i) who is an Eligible Employee of such
          Employer on the last day of such Plan Year or who, during the period
          beginning July 1, 1999 and ending December 31, 1999 (the "applicable
          period"), (x) died, (y) became disabled or (z) terminated employment
          with his Employer on or after attaining age 55, (ii) for whom such
          Employer made deferred compensation contributions for any payroll
          period during the Plan Year and (iii) in the following sentence, (A)
          exceeds (B). Such supplemental matching contributions shall be in an
          amount equal to the difference, if any, between (A) 50% of the
          deferred compensation contributions made during the Plan Year on
          behalf of such Member up to 1 1/2% of the Member's total Compensation
          for the applicable period and (B) the amount of matching contributions
          contributed for the Member under paragraph (a) above with respect to
          payroll periods ending in such applicable period. Notwithstanding
          anything herein to the contrary, no matching contributions shall be
          made pursuant to this paragraph on behalf of any Member who is (i)
          classified by his Employer as a "task-force employee" or collectively
          bargained employee, and in either case, is employed in Haddon
          Craftsman Inc.'s Bloomsburg facility or (ii) entitled to matching
          contributions under subsection (d) below.

               (c)  Form of Matching Contributions. All matching contributions
                    ------------------------------
          made pursuant to paragraphs (a) and (b) shall be made in the form of
          shares of Company Stock or in cash which the Trustee shall apply to
          purchase Company Stock, unless it holds all or part in the cash
          portion of the Company Stock Fund to fulfil the liquidity guidelines
          established by the Asset Manager pursuant to Section 14.4(e)

                                      -4-
<PAGE>

          of the Trust, all as more particularly set forth below. In the case of
          a Member who is entitled to receive matching contributions pursuant to
          paragraph (a) above, each time the Employer of such Member makes a
          deferred compensation contribution on behalf of such Member pursuant
          to Section 4.1, such Member shall accrue a right to a corresponding
          matching contribution subject to the limitation on the amount of such
          matching contributions prescribed by paragraph (a). All matching
          contributions made pursuant to paragraph (a) shall be funded by the
          Company no later than the last day of the month following the month in
          which a Member's right to such matching contributions arises. All
          matching contributions made pursuant to paragraph (b) shall be funded
          by the Company prior to the due date, including extensions thereof, of
          the Company's federal income tax return for the taxable year of the
          Company with or within which such Plan Year ends. To fund matching
          contributions, the Company shall (i) contribute shares of Company
          Stock then held by the Company as treasury stock with a Fair Market
          Value (as hereinafter defined) equal to the aggregate amount of
          matching contributions to be made to the Plan, (ii) contribute an
          amount of cash equal to the sum of such matching contributions, which
          the Trustee shall apply to purchase Company Stock as soon after
          receipt as is practicable unless it holds all or part in the cash
          portion of the Company Stock Fund to fulfil the liquidity guidelines
          established by the Asset Manager pursuant to Section 14.4(e) of the
          Trust or (iii) contribute a combination of cash and shares as
          described in the preceding clauses (i) and (ii). For purposes of the
          preceding sentence, "Fair Market Value" shall be the closing price (as
          reported in the New York Stock Exchange-Composite Transactions) of
          Company Stock on the last trading day prior to the day such shares are
          transferred. Company Stock which is purchased by the Trustee shall
          either be purchased on a national securities exchange, or elsewhere,
          by a person who is a broker or dealer registered under Section 15 of
          the Securities Exchange Act of 1934, as amended, who also shall be an
          "agent independent of the issuer" as defined in Rule 10b-18(a)(6)
          under such Act.

               Any cash dividends paid with respect to shares of Company Stock
          represented by units of the Company Stock Fund credited to a Member's
          Donnelley Matching Account shall be applied to purchase additional
          shares of Company Stock, unless all or part of such cash dividends are
          held in the cash portion of the Company Stock Fund to fulfil the
          liquidity guidelines established by the Asset Manager pursuant to
          Section 14.4(e) of the Trust or invested in such other manner as the
          Asset Manager may prescribe. Such additional shares of Company Stock
          purchased pursuant to the foregoing sentence shall either be purchased
          on a national securities exchange, or elsewhere, by a person who is a
          broker or dealer registered under Section 15 of the Securities
          Exchange Act of 1934, as amended, who also shall be an "agent
          independent of the issuer" as defined in Rule 10b-18(a)(6) under such
          Act.

10.  Section 7.1(a)(3) is amended by adding at the end thereof: "and/or a
     Donnelley Matching Account"

                                      -5-
<PAGE>

11.  Section 7.1(d) is amended in its entirety to read as follows:

               (d)  Special Rule for TRASOP Account and Donnelley Matching
                    ------------------------------------------------------
          Account. Notwithstanding subsections (b) and (c) above, a Member's
          -------
          TRASOP Account shall be invested primarily in shares of Company Stock.
          To the extent provided by Section 4.3, all of a Member's Donnelley
          Matching Account shall be invested in units of the Company Stock Fund.
          Notwithstanding anything herein to the contrary, a Member shall not be
          permitted to provide any investment direction with respect to the
          balance of his TRASOP Account or the balance of his Donnelley Matching
          Account. Any cash dividends paid with respect to shares of Company
          Stock credited to a Member's TRASOP Account shall be held uninvested
          in such account until such accumulated dividends are distributed in
          accordance with Section 8.5. Any cash dividends paid with respect to
          units of the Company Stock Fund credited to a Member's Donnelley
          Matching Account shall be invested in accordance with Section 4.3.

12.  Section 7.2(c) is amended in its entirety to read as follows:

          (c)  Allocation of Matching Contributions. All matching contributions
               ------------------------------------
          made pursuant to Section 4.3(a) and supplemental matching
          contributions made pursuant to Section 4.3(b) shall be allocated to
          the Donnelley Matching Account of each Member for whom such
          contributions are made as of the last day of the payroll period with
          respect to which such Member's Employer makes the deferred
          compensation contribution to which the Matching Contribution relates.

13.  Section 7.3(b) is amended by adding "other" before "portions" where it
     appears therein and by deleting "Matching" therefrom.

14.  Section 7.3(c) is amended by adding "Donnelley Matching Account," after
     "Matching Account," where it appears therein.

15.  The first paragraph of Section 8.3(a) is amended by adding ", Donnelley
     Matching Account" after "Matching Account" where it appears therein.

16.  Section 8.3(d) is amended by deleting "and" from the end of clause (4)
     thereof, adding a new clause (5) thereto which reads as follows: "Donnelley
     Matching Account and", and renumbering the existing clause (5) as clause
     (6).

17.  Section 8.3(d) is further amended by adding ", Donnelley Matching Account"
     after "Matching Account" where it appears in the last paragraph thereof.

18.  Clause (1) of Section 9.1(b) is amended by adding ", Donnelley Matching
     Account" after "Matching Account" where it appears therein.

                                      -6-
<PAGE>

19.  The second sentence of paragraph (c) of Section 9.1 is amended by inserting
     the word "TRASOP" prior to the word "Account" and by changing the last word
     thereof from "date" to "Valuation Date."

20.  The first sentence of Section 9.3 is amended by deleting the phrase ", and
     the portion of the Member's Matching Account that is invested in Company
     Stock,".

21.  Clause (b) of Section 9.4 is amended by deleting the phrase ", and the
     portion of the Member's Matching Account that is invested in Company
     Stock,".

22.  Section 11.3(b) is amended by adding "or Donnelley Matching Account" after
     "Matching Account" where it appears therein.

23.  Sections 12.1 and 12.2 are amended in their entireties to read as follows:

               Section 12.1. Voting Rights. Each Member, as a named fiduciary
               ------------  -------------
          within the meaning of section 403(a)(1) of ERISA, shall be entitled to
          direct the Trustee with respect to the vote of the shares of Company
          Stock held by the Trustee and allocated to his Account or represented
          by units of the Company Stock Fund credited to his Account (including
          fractional shares or units as the case may be) as of the shareholder
          record date for such vote, and the Trustee shall follow the directions
          of such Member. To the extent that the Trustee does not receive timely
          instructions from a Member who has the authority pursuant to the
          preceding sentence to instruct the Trustee to vote the shares
          allocated or units of the Company Stock Fund credited to his Account,
          such Member, as a named fiduciary within the meaning of Section
          403(a)(1) of ERISA, shall be deemed to have timely instructed the
          Trustee to vote such shares, or the shares represented by such units,
          as the case may be, against the proposal on which the vote is being
          taken as such proposal is set forth in the proxy or other materials
          distributed to stockholders of the Company. The Trustee shall vote all
          unallocated shares of Company Stock, and shares of Company Stock
          represented by units of the Company Stock Fund which are not credited
          to Members' Accounts, to the extent permitted by law, against the
          proposal on which the vote is being taken as such proposal is set
          forth in the proxy or other materials distributed to stockholders of
          the Company. Written notice of any meeting of stockholders of the
          Company or other occasion for the exercise of voting or other rights
          and a request for voting instructions, together with a description of
          the consequences of a Member failing to provide timely instructions
          with respect to the exercise of such voting or other rights, shall be
          given by the Administrator in such manner as the Trustee shall
          determine, to each Member entitled to give instructions for voting
          such shares of Company Stock on such occasion, within the time for
          furnishing such notice to stockholders of the Company.

                                      -7-
<PAGE>

               Section 12.2. Shareholder Rights in the Event of a Tender Offer.
               ------------  -------------------------------------------------
          In the event a tender offer is made generally to the shareholders of
          the Company to transfer all or a portion of their shares of stock in
          return for valuable consideration, including but not limited to,
          offers regulated by Section 14(d) of the Securities Exchange Act of
          1934, each Member, as a named fiduciary within the meaning of Section
          403(a)(1) of ERISA, shall be entitled to direct the Trustee with
          respect to the sale, exchange or transfer of shares of Company Stock
          held by the Trustee and allocated to such Member's Account or
          represented by units of the Company Stock Fund credited to such
          Member's Account (including fractional shares or units, as the case
          may be), and the Trustee shall follow the directions of such Member.
          To the extent that the Trustee does not receive timely instructions
          from a Member who has the authority pursuant to the preceding sentence
          to instruct the Trustee to tender or exchange either the shares
          allocated to his Account or the shares represented by the units of the
          Company Stock Fund credited to his Account, such Member, as a named
          fiduciary within the meaning of Section 403(a)(1) of ERISA, shall be
          deemed to have timely instructed the Trustee not to tender or exchange
          such shares of Company Stock allocated to his Account or such shares
          represented by the units of the Company Stock Fund credited to such
          Member's Account. Written notice of any tender offer and a request for
          tender instructions, together with written notice of the consequences
          of a Member failing to provide timely instructions with respect to the
          sale, exchange or transfer of such shares of Company Stock, shall be
          given by the Administrator, in such manner as the Trustee shall
          determine, to each Member entitled to give tender instructions for
          such shares of Company Stock, within the time for furnishing such
          notice to stockholders of the Company. With respect to the tender or
          exchange of all unallocated shares of Company Stock, and shares of
          Company Stock represented by units of the Company Stock Fund which are
          not credited to Members' Accounts, to the extent permitted by law, the
          Trustee shall not tender or exchange such shares of Company Stock. A
          Member shall not be limited in the number of instructions to tender or
          withdraw from tender which he can give but a Member shall not have the
          right to give instructions to tender or withdraw from tender after a
          reasonable time established by the Trustee. Notwithstanding Section
          7.1(d), with respect to proceeds from the sale of any shares of
          Company Stock sold pursuant to this paragraph, the Trustee shall
          invest the proceeds as directed by the Member among the investment
          options then available under the Plan.

24.  Supplement Number One to the Plan is hereby deleted in its entirety.

                                      -8-<PAGE>

                                                                       Form 10-K
                                                             Year Ended 12/31/99
                                                                  Exhibit 10 (a)

                        RETIREMENT POLICY FOR DIRECTORS
                    (As revised, effective March 23, 2000)

1.   An outside director will retire from the Board as of the first day of the
     month following his or her attaining age 70. An outside director, for the
     purposes of this policy, is one who has never been an employee of the
     Company.

2.   Any employee director who was first elected to the Board prior to September
     28, 1990 will tender his or her resignation from the Board to be effective
     no later than the effective date of his or her retirement from the Company
     and such resignation will be accepted absent a determination by the Board
     that the services of the director are unique and essential for such period
     as the Board may determine.

3.   Any employee director who was first elected to the Board on or after
     September 28, 1990 will retire from the Board no later than the effective
     date of his or her termination of employment for any reason or at the age
     of 65, whichever occurs first. However, an employee director who is serving
     as Chief Executive Officer will retire from the Board at the end of his or
     her current term after retirement as an employee from the Company or no
     later than the effective date of his or her termination of employment for
     any reason other than retirement. If desired by the Board, such a retiring
     Chief Executive Officer may serve as a consultant to the Board.

4.   Nothing in this policy shall be construed to restrict the stockholders'
     right to elect any person a director of the Company in accordance with the
     Certificate of Incorporation and By-Laws.
<PAGE>

   RETIREMENT BENEFITS, PHANTOM STOCK GRANTS AND STOCK OPTIONS FOR DIRECTORS
          (Effective January 1, 1997, as revised September 24, 1998;
                      November 18, 1999; March 23, 2000)

     No retirement benefit will be paid to any director whose service begins on
     or after November 18, 1999. Retirement benefits for directors whose service
     began prior to November 18, 1999, will be determined as follows:

 .    A director who is retired as of January 1, 1997 will receive an annual
     retirement benefit equal to 10% of the annual retainer fee payable to
     active directors at the time such benefit is actually paid for each year or
     fraction thereof of service as a director (with a maximum of ten years).

 .    Each director who was active as of January 1, 1997 shall have elected,
     prior to February 15, 1997, to:

     (1) receive an annual retirement benefit equal to 10% of the annual
     retainer fee payable to active directors at the time such benefit is
     actually paid for each year or fraction thereof of service as a director
     (with a maximum of ten years); or

     (2) have an amount equal to the present value of that director's earned
     annual retirement benefit at December 31, 1996 credited as of January 1,
     1997 to a book-entry account of that director pursuant to a Deferred
     Compensation Agreement; or

     (3) convert the present value of that director's earned annual retirement
     benefit at December 31, 1996 to the number of shares of phantom stock
     (carried to four decimal places) determined by dividing such present value
     by the fair market value of a share of common stock on the most recent
     trading day of the common stock on the NYSE, which shares will be credited
     as of January 1, 1997 to a book-entry phantom stock account.

 .    A non-employee director who (i) was active as of January 1, 1997 with less
     than ten years of service as a director and who chose alternative (2) or
     (3) in the preceding paragraph or (ii) is first elected to the Board on or
     after January 1, 1997, but prior to November 18, 1999, will be credited as
     of January 1 of each year beginning January 1, 1997 with the number of
     shares of phantom stock (carried to four decimal places) determined by
     dividing an amount equal to 35% of the annual retainer fee payable to
     active directors for such year by the fair market value of a share of
     common stock on the most recent trading day of the common stock; provided
     that a non-employee director shall be credited with phantom shares only
     until the commencement of the tenth year of service as a non-employee
     director; provided, further, that a non-employee director may elect, as set
     forth in and pursuant to the applicable Stock Incentive Plan of the
     Company, to receive in lieu of crediting all or some of such shares of
     phantom stock, an option to purchase shares of common stock.

                                                                          Page 2
<PAGE>

PAYMENT OF ANNUAL RETIREMENT BENEFITS, DEFERRED COMPENSATION AND PHANTOM STOCK
AND TREATMENT OF STOCK OPTIONS

Annual Retirement Benefits
--------------------------

Annual retirement benefits will be paid quarterly in advance as follows:

 .    The annual retirement benefit of a director whose service on the Board
     terminates at or after age 65 for any reason will begin with the first
     calendar quarter following the effective date of retirement.

 .    The annual retirement benefit of a director whose service on the Board
     terminates prior to age 65 for any reason except disability that ends the
     director's active business career or employment will begin with the first
     calendar quarter following the attainment of age 65.

 .    The annual retirement benefit of a director whose service on the Board
     terminates prior to age 65 by reason of disability that ends the director's
     active business career or employment will begin with the first calendar
     quarter following the effective date of retirement.

 .    In all cases, no payment of an annual retirement benefit will occur
     following the date of death.

 .    A former director who is receiving an annual retirement benefit will
     receive any future increases in annual retirement benefits from and after
     the time such increases are put into effect.

Deferred Compensation
---------------------

 .    A director who was active as of January 1, 1997 who elected to have an
     amount equal to the present value of that director's earned annual
     retirement benefit at December 31, 1996 credited as of January 1, 1997 to a
     book-entry account pursuant to a Deferred Compensation Agreement will be
     paid in accordance with the terms and conditions of that Agreement.

Phantom Stock
-------------

 .    On each dividend payment date in respect of the common stock, a director's
     phantom stock account shall be credited with the number of shares of
     phantom stock (carried to four decimal places) determined by dividing (i)
     the product of the number of shares of phantom stock credited to that
     director's phantom stock account as of the record date for such dividend
     multiplied by the per share amount of the dividend by (ii) the fair market
     value of a share of common stock on the dividend payment date (or if the
     dividend payment date is not a trading day on the NYSE, the most recent
     trading day of the common stock on the NYSE).

                                                                          Page 3
<PAGE>

 .    In the event of any stock split, stock dividend, recapitalization,
     reorganization, merger, consolidation, combination, exchange of shares,
     liquidation, spin-off or other similar change in capitalization or event,
     or any distribution to holders of common stock other than a regular cash
     dividend, the number and class of phantom securities credited to a
     director's account shall be appropriately adjusted by a committee
     designated by the Board.

 .    In connection with termination of service on the Board for any reason other
     than death, the director may elect as of the effective date of such
     cessation of service (and if the director's cessation of service is by
     reason of death, the director shall be deemed to elect as of the date of
     death), to convert the value of that director's phantom stock account
     (determined by multiplying the number of shares of phantom stock by the
     fair market value of the common stock on the effective date of such
     cessation of service) to a cash amount to be credited to a book-entry cash
     account. Such cash account shall be credited quarterly (beginning on the
     last day of the calendar quarter in which the termination of service
     occurred) with an amount of interest on the balance (including interest
     previously credited) at an annual rate equal to the then current yield
     obtainable on United States government bonds having a maturity date of
     approximately five years. Failure to make an election under this clause
     shall result in the continuation of the director's phantom stock account.

 .    If, as a result of any merger, consolidation, exchange, reclassification,
     sale of assets or similar transaction or event, the common stock ceases, or
     as a result of a transaction or event is intended to cease, to be listed
     for trading on the NYSE (and is not otherwise publicly traded), the
     director or any former director may elect at any time after the Company has
     entered into an agreement providing for such transaction or event, as of a
     date designated by the director or former director (and in the absence of
     such an election and designation the director or former director shall be
     deemed to elect as of the effective date of such transaction or event), to
     convert the value of that director's phantom stock account (determined by
     multiplying the number of shares of phantom stock by the fair market value
     of the common stock on the effective date of such cessation of service) to
     a cash amount to be credited to a book-entry cash account. Such cash
     account shall be credited quarterly (beginning on the last day of the
     calendar quarter in which the termination of service occurred) with an
     amount of interest on the balance (including interest previously credited)
     at an annual rate equal to the then current yield obtainable on United
     States government bonds having a maturity date of approximately five years.

A director's cash account or phantom stock account will be paid as follows:

 .    A director whose service on the Board terminates at or after age 65 for any
     reason except death shall elect to receive, as of the first day of the
     first calendar quarter following the effective date of such cessation of
     service, either (1) an annual amount in cash for a number of years not
     exceeding ten determined by dividing the value of the director's phantom
     stock account (the value of the phantom stock is to be determined by
     reference to the fair market value of the common stock on the date of such
     cessation of service), but not the director's cash account, as of the
     effective date of such cessation of service by the number of annual
     payments to be made; provided that the last payment made shall be for

                                                                          Page 4
<PAGE>

     100% of the value of the director's account as of the date of the last
     payment, (2) an annual amount in cash for a number of years not exceeding
     ten determined by dividing the value of the director's cash account or
     phantom stock account (the value of the phantom stock is to be determined
     by reference to the fair market value of the common stock on the effective
     date of the distribution and after giving effect to the crediting of shares
     of phantom stock on each dividend payment date on or prior to the date of
     the distribution) as of the effective date of the distribution by the
     number of annual payments remaining to be made; provided that the last
     payment made shall be for 100% of the value of the director's cash account
     or phantom stock account, as the case may be, as of the date of the last
     payment, or (3) a lump sum amount in cash equal to the value of the
     director's cash account or phantom stock account (the value of the phantom
     stock is to be determined by reference to the fair market value of the
     common stock on the effective date of such cessation of service). In the
     absence of a timely election, a director shall be deemed to have elected
     option (1) with ten annual payments with respect to his phantom stock
     account, and option (2) with ten annual payments with respect to his cash
     account.

 .    A director whose service on the Board terminates prior to age 65 for any
     reason except death shall elect to receive (1) as of the first day of the
     first calendar quarter following the attainment of age 65, an annual amount
     in cash a number of years not exceeding ten determined by dividing the
     value of the director's cash account or phantom stock account (the value of
     the phantom stock is to be determined by reference to the fair market value
     of the common stock on the effective date of the distribution and after
     giving effect to the crediting of shares of phantom stock on each dividend
     payment date on or prior to the date of the distribution) as of the
     effective date of the distribution by the number of annual payments
     remaining to be made; provided that the last payment made shall be for 100%
     of the value of the director's account as of the date of the last payment,
     or (2) shall elect to receive, as of the first day of the first calendar
     quarter following the effective date of such cessation of service, either
     (i) an annual amount in cash for a number of years not exceeding ten
     determined by dividing the value of the director's phantom stock account
     (the value of the phantom stock is to be determined by reference to the
     fair market value of the common stock on the date of such cessation of
     service), but not the director's cash account, as of the effective date of
     such cessation of service by the number of annual payments to be made;
     provided that the last payment made shall be for 100% of the value of the
     director's account as of the date of the last payment, (ii) an annual
     amount in cash for a number of years not exceeding ten determined by
     dividing the value of the director's cash account or phantom stock account
     (the value of the phantom stock is to be determined by reference to the
     fair market value of the common stock on the effective date of the
     distribution and after giving effect to the crediting of shares of phantom
     stock on each dividend payment date on or prior to the date of the
     distribution) as of the effective date of the distribution by the number of
     annual payments remaining to be made; provided that the last payment made
     shall be for 100% of the value of the director's cash account or phantom
     stock account, as the case may be, as of the date of the last payment, or
     (iii) a lump sum amount in cash equal to the value of the director's cash
     account or phantom stock account (the value of the phantom stock is to be
     determined by reference to the fair market value of the common stock on the
     effective date of such cessation of service). In the absence of a timely
     election, a director shall be deemed to

                                                                          Page 5
<PAGE>

     have elected option (2)(i) with ten annual payments with respect to his
     phantom stock account, and (2)(ii) with ten annual payments with respect to
     his cash account.

 .    In all cases, if a director's cessation of service as a director is by
     reason of death or if a director dies while retired and amounts remain to
     be paid under the director's cash account or phantom stock account, 100% of
     the value of the director's cash account or phantom stock account (the
     value of the phantom stock is to be determined by reference to the fair
     market value of the common stock on the date of death) as of the date of
     death shall be paid as soon as practicable after the date of death to the
     director's estate or any beneficiaries designated by the director.

 .    If, as a result of any recapitalization, reorganization, merger,
     consolidation, combination, exchange of shares or similar transaction or
     event, the common stock will cease, or as a result of a transaction or
     event is intended to cease, to be listed for trading on the NYSE (and is
     not otherwise publicly traded), any former director who has amounts
     remaining to be paid under the former director's cash account or phantom
     stock account, may elect at any time after the Company has entered into an
     agreement providing for such transaction or event, as of a date designated
     by the former director to receive a lump sum amount in cash equal to the
     value of the director's cash account or phantom stock account (the value of
     the phantom stock is to be determined by reference to the fair market value
     of the common stock on the date designated by the former director).

Stock Options
-------------

 .    Each option to purchase shares of common stock held by a non-employee
     director shall be governed by the terms and conditions of the applicable
     stock option agreement and stock incentive plan.

MISCELLANEOUS

To be entitled to receive any benefits under this policy, a former director must
agree to consult with and render advice to the Company as requested at times
that do not unreasonably interfere with his personal or other business
activities. Conduct detrimental to the Company, as determined by the Board of
Directors, will result in forfeiture of all benefits under this policy.

These provisions on benefits will apply to all living, former directors
effective January 1, 1997, regardless of when they were first elected or ceased
to serve, to all active, non-employee directors as of January 1, 1997 whose
service on the Board terminates after January 1, 1997 and to all non-employee
directors who are first elected to the Board on or after January 1, 1997.

 .    A director's rights to receive benefits shall be no greater than the rights
     of any unsecured general creditor of the Company.

 .    A director shall not have any rights as a stockholder of the Company with
     respect to any shares of phantom stock.

                                                                          Page 6
<PAGE>

 .    This policy and all determinations made and actions taken pursuant hereto,
     to the extent not governed by the Internal Revenue Code or the laws of the
     United States, shall be governed by the laws of the State of Delaware and
     construed in accordance therewith without giving effect to principles of
     conflict of laws.

 .    Benefits described herein may not be sold, transferred, assigned, pledged,
     hypothecated, encumbered or otherwise disposed of (whether by operation of
     law or otherwise) or be subject to execution, attachment or similar
     process.

For the purposes of these provisions on retirement benefits and phantom stock
grants:

 .    A non-employee director is a director who is not currently an employee of
     the Company and/or its subsidiaries and who never has been an employee of
     the Company and/or its subsidiaries.

 .    The fair market value of the common stock shall be determined by reference
     to the average of the high and low trading prices as reported in the New
     York Stock Exchange Composite Transactions in The Wall Street Journal for
                                                   -----------------------
     the relevant trading day.

                                                                          Page 7

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