Document:

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                                                                     EXHIBIT 4.4

                   NS GROUP EMPLOYEES RETIREMENT SAVINGS PLAN

                          SEPTEMBER 2, 2003 RESTATEMENT

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                                TABLE OF CONTENTS

                                    PREAMBLE

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                                           ARTICLE I
                                          DEFINITIONS

1.1      Plan Definitions ............................................................          2
1.2      Interpretation...............................................................          8

                                          ARTICLE II
                                            SERVICE

2.1      Special Definitions..........................................................         10
2.2      Crediting of Hours of Service................................................         11
2.3      Hours of Service Equivalencies...............................................         12
2.4      Limitations on Crediting of Hours of Service.................................         12
2.5      Department of Labor Rules....................................................         13
2.6      Crediting of Continuous Service..............................................         13
2.7      Years of Eligibility Service.................................................         13
2.8      Years of Vesting Service.....................................................         14
2.9      Crediting of Hours of Service with Respect to Short Computation Periods......         14
2.10     Crediting of Service on Transfer or Amendment................................         15
2.11     Crediting of Service to Leased Employees.....................................         15

                                          ARTICLE III
                                          ELIGIBILITY

3.1      Eligibility..................................................................         16
3.2      Transfers of Employment......................................................         16
3.3      Reemployment.................................................................         16
3.4      Notification Concerning New Eligible Employees...............................         16
3.5      Effect and Duration..........................................................         17

                                          ARTICLE IV
                                  TAX-DEFERRED CONTRIBUTIONS

4.1      Tax-Deferred Contributions...................................................         18
4.2      Amount of Tax-Deferred Contributions.........................................         18
4.3      Amendments to Reduction Authorization........................................         19
4.4      Suspension of Tax-Deferred Contributions.....................................         19
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4.5      Resumption of Tax-Deferred Contributions.....................................         19
4.6      Delivery of Tax-Deferred Contributions.......................................         19
4.7      Vesting of Tax-Deferred Contributions........................................         19

                                           ARTICLE V
                             AFTER-TAX AND ROLLOVER CONTRIBUTIONS

5.1      No After-Tax Contributions...................................................         21
5.2      Rollover Contributions.......................................................         21
5.3      Vesting of Rollover Contributions............................................         21

                                           ARTICLE VI
                                     EMPLOYER CONTRIBUTIONS

6.1      Contribution Period..........................................................         22
6.2      Profit-Sharing Contributions.................................................         22
6.3      Newport Steel Corporation Profit-Sharing Contributions.......................         22
6.4      Allocation of Profit-Sharing Contributions...................................         22
6.5      Allocation of Newport Steel Corporation Profit-Sharing Contributions.........         22
6.6      Matching Contributions.......................................................         23
6.7      Verification of Amount of Employer Contributions by the Sponsor..............         24
6.8      Payment of Employer Contributions............................................         24
6.9      Allocation Requirements for Employer Contributions...........................         24
6.10     Fail Safe if Allocation Requirements Cause Plan to Fail Coverage.............         25
6.11     Vesting of Employer Contributions............................................         25
6.12     Election of Former Vesting Schedule..........................................         26
6.13     Forfeitures to Reduce Employer Contributions.................................         26
6.14     Years of Service.............................................................         26

                                          ARTICLE VII
                                 LIMITATIONS ON CONTRIBUTIONS

7.1      Definitions .................................................................         28
7.2      Code Section 402(g) Limit....................................................         32
7.3      Distribution of Excess Deferrals.............................................         33
7.4      Limitation on Tax-Deferred Contributions of Highly Compensated Employees.....         34
7.5      Determination and Allocation of Excess Tax-Deferred Contributions
           Among Highly Compensated Employees.........................................         35
7.6      Distribution of Excess Tax-Deferred Contributions............................         36
7.7      Limitation on Matching Contributions of Highly Compensated Employees.........         36
7.8      Determination and Allocation of Excess Matching Contributions Among
           Highly Compensated Employees...............................................         37
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7.9      Distribution of Excess Contributions.........................................         39
7.10     Multiple Use Limitation......................................................         39
7.11     Treatment of Forfeited Matching Contributions................................         40
7.12     Determination of Income or Loss..............................................         40
7.13     Code Section 415 Limitations on Crediting of Contributions and Forfeitures...         40
7.14     Application of Code Section 415 Limitations Where Participant is
           Covered Under Other Qualified Defined Contribution Plan....................         41
7.15     Scope of Limitations.........................................................         43

                                         ARTICLE VIII
                                   TRUST FUNDS AND ACCOUNTS

8.1      General Fund.................................................................         44
8.2      Investment Funds.............................................................         44
8.3      Loan Investment Fund.........................................................         44
8.4      Income on Trust..............................................................         44
8.5      Accounts.....................................................................         45
8.6      Sub-Accounts.................................................................         45

                                          ARTICLE IX
                                   LIFE INSURANCE CONTRACTS

9.1      No Life Insurance Contracts..................................................         46

                                           ARTICLE X
                            DEPOSIT AND INVESTMENT OF CONTRIBUTIONS

10.1     Future Contribution Investment Elections.....................................         47
10.2     Deposit of Contributions.....................................................         47
10.3     Election to Transfer Between Funds...........................................         47
10.4     404(c) Protection............................................................         48

                                          ARTICLE XI
                                CREDITING AND VALUING ACCOUNTS

11.1     Crediting Accounts...........................................................         49
11.2     Valuing Accounts.............................................................         49
11.3     Plan Valuation Procedures....................................................         49
11.4     Finality of Determinations...................................................         50
11.5     Notification.................................................................         50
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                                          ARTICLE XII
                                             LOANS

12.1     Application for Loan.........................................................         51
12.2     Reduction of Account Upon Distribution.......................................         51
12.3     Requirements to Prevent a Taxable Distribution...............................         52
12.4     Administration of Loan Investment Fund.......................................         54
12.5     Default......................................................................         54
12.6     Deemed Distribution Under Code Section 72(p).................................         54
12.7     Treatment of Outstanding Balance of Loan Deemed Distributed Under
           Code Section 72(p).........................................................         55
12.8     Special Rules Applicable to Loans............................................         55

                                         ARTICLE XIII
                                  WITHDRAWALS WHILE EMPLOYED

13.1     Age 59 1/2 Withdrawals.......................................................         57
13.2     Overall Limitations on Non-Hardship Withdrawals..............................         57
13.3     Hardship Withdrawals.........................................................         57
13.4     Hardship Determination.......................................................         57
13.5     Satisfaction of Necessity Requirement for Hardship Withdrawals...............         59
13.6     Conditions and Limitations on Hardship Withdrawals...........................         60
13.7     Order of Withdrawal from a Participant's Sub-Accounts........................         60

                                          ARTICLE XIV
                         TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE

14.1     Termination of Employment and Settlement Date................................         61
14.2     Recrediting of Forfeited Amounts.............................................         61

                                          ARTICLE XV
                                         DISTRIBUTIONS

15.1     Distributions to Participants................................................         63
15.2     Distributions to Beneficiaries...............................................         63
15.3     Cash Outs and Participant Consent............................................         64
15.4     Required Commencement of Distribution........................................         64
15.5     Reemployment of a Participant................................................         64
15.6     Restrictions on Alienation...................................................         64
15.7     Facility of Payment..........................................................         65
15.8     Inability to Locate Payee....................................................         65
15.9     Distribution Pursuant to Qualified Domestic Relations Orders.................         65
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                                          ARTICLE XVI
                                        FORM OF PAYMENT

16.1     Normal Form of Payment.......................................................         66
16.2     Optional Form of Payment.....................................................         66
16.3     Change of Election...........................................................         66
16.4     Direct Rollover..............................................................         66
6.5      Notice Regarding Forms of Payment............................................         67
16.6     Reemployment.................................................................         68
16.7     Distribution in the Form of Employer Stock...................................         68

                                         ARTICLE XVII
                                         BENEFICIARIES

17.1     Designation of Beneficiary...................................................         69
17.2     Spousal Consent Requirements.................................................         69

                                         ARTICLE XVIII
                                        ADMINISTRATION

18.1     Authority of the Sponsor.....................................................         70
18.2     Discretionary Authority......................................................         70
18.3     Action of the Sponsor........................................................         70
18.4     Claims Review Procedure......................................................         71
18.5     Qualified Domestic Relations Orders..........................................         73
18.6     Indemnification..............................................................         73
18.7     Actions Binding..............................................................         74

                                          ARTICLE XIX
                                   AMENDMENT AND TERMINATION

19.1     Amendment ...................................................................         75
19.2     Limitation on Amendment......................................................         75
19.3     Termination .................................................................         75
19.4     Reorganization...............................................................         76
19.5     Withdrawal of an Employer....................................................         77

                                          ARTICLE XX
                                  ADOPTION BY OTHER ENTITIES

20.1     Adoption by Related Companies................................................         78
20.2     Effective Plan Provisions....................................................         78
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                                          ARTICLE XXI
                                   MISCELLANEOUS PROVISIONS

21.1     No Commitment as to Employment...............................................         79
21.2     Benefits.....................................................................         79
21.3     No Guarantees................................................................         79
21.4     Expenses.....................................................................         79
21.5     Precedent....................................................................         79
21.6     Duty to Furnish Information..................................................         79
21.7     Merger, Consolidation, or Transfer of Plan Assets............................         79
21.8     Back Pay Awards..............................................................         80
21.9     Condition on Employer Contributions..........................................         80
21.10    Return of Contributions to an Employer.......................................         80
21.11    Validity of Plan.............................................................         81
21.12    Trust Agreement..............................................................         81
21.13    Parties Bound ...............................................................         81
21.14    Application of Certain Plan Provisions.......................................         81
21.15    Merged Plans.................................................................         82
21.16    Transferred Funds............................................................         82
21.17    Veterans Reemployment Rights.................................................         82
21.18    Delivery of Cash Amounts.....................................................         82
21.19    Written Communications.......................................................         82

                                         ARTICLE XXII
                                     TOP-HEAVY PROVISIONS

22.1     Definitions .................................................................         83
22.2     Applicability ...............................................................         85
22.3     Minimum Employer Contribution................................................         85
22.4     Accelerated Vesting..........................................................         86
22.5     Exclusion of Collectively-Bargained Employees................................         86

                                         ARTICLE XXIII
                                        EFFECTIVE DATE

23.1     GUST Effective Dates.........................................................         87
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                                    PREAMBLE

The NS Group Employees Retirement Savings Plan, originally effective as of
September 30, 1984 and heretofore known as the NS Group, Inc. Salaried Employees
Retirement Savings Plan, or the NS Group, Inc. Salaried Employees Flexible
Compensation Plan, is hereby amended and restated in its entirety. Except as
otherwise specifically provided herein, this amendment and restatement shall be
effective as of September 2, 2003. The Plan, as amended and restated hereby, is
intended to qualify as a profit-sharing plan under Code Section 401(a), and
includes a cash or deferred arrangement that is intended to qualify under Code
Section 401(k). The Plan is maintained for the exclusive benefit of eligible
employees and their beneficiaries.

Notwithstanding any other provision of the Plan to the contrary, a Participant's
vested interest in his Account under the Plan on and after the effective date of
this amendment and restatement shall be not less than his vested interest in his
account on the day immediately preceding the effective date.

Effective as of September 2, 2003 (the "merger date"), the Newport Steel
Corporation Hourly Employees Retirement Savings Plan and the Koppel Steel
Corporation Hourly Employees Retirement Savings Plan (the "merged plans") are
merged into and made a part of the Plan. All assets and liabilities of the
"merged plans" are transferred to and made a part of the Plan. Each Employee who
was eligible to participate in either "merged plan" immediately prior to the
"merger date" shall continue to be eligible to participate in the Plan on and
after the "merger date". In no event shall a Participant's vested interest in
his Sub-Account attributable to amounts transferred to the Plan from a "merged
plan" (his "transferee Sub-Account") on and after the "merger date" be less than
his vested interest in his account under such "merged plan," immediately prior
to the "merger date". Notwithstanding any other provision of the Plan to the
contrary, a Participant's service credited for eligibility and vesting purposes
under a "merged plan" as of the "merger date", if any, shall be included as
Eligibility and Vesting Service under the Plan to the extent Eligibility and
Vesting Service are credited under the Plan.

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                                  ARTICLE XVII
                                   DEFINITIONS

                  Section 1. Plan Definitions

As used herein, the following words and phrases have the meanings hereinafter
set forth, unless a different meaning is plainly required by the context:

An "ACCOUNT" means the account maintained by the Trustee in the name of a
Participant that reflects his interest in the Trust and any Sub-Accounts
maintained thereunder, as provided in Article VIII.

The "ADMINISTRATOR" means the Sponsor unless the Sponsor designates another
person or persons to act as such.

An "AFTER-TAX CONTRIBUTION" means any after-tax employee contribution made by a
Participant to the Plan as may be permitted under Article V or as may have been
permitted under the terms of the Plan prior to this amendment and restatement or
any after-tax employee contribution made by a Participant to another plan that
is transferred directly to the Plan.

The "BENEFICIARY" of a Participant means the person or persons entitled under
the provisions of the Plan to receive distribution hereunder in the event the
Participant dies before receiving distribution of his entire interest under the
Plan.

A Participant's "BENEFIT PAYMENT DATE" means the first day on which all events
have occurred which entitle the Participant to receive payment of his benefit.

A "BREAK IN SERVICE" means any "computation period" (as defined in Section 2.1
for purposes of determining years of Vesting Service) during which a person
completes fewer than 501 Hours of Service except that no person shall incur a
Break in Service solely by reason of temporary absence from work not exceeding
12 months resulting from illness, layoff, or other cause if authorized in
advance by an Employer or a Related Company pursuant to its uniform leave
policy, if his employment shall not otherwise be terminated during the period of
such absence.

The "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a Code section includes such section and any comparable
section or sections of any future legislation that amends, supplements, or
supersedes such section.

The "COMPENSATION" of a Participant for any period means the wages as defined in
Code Section 3401(a), determined without regard to any rules that limit
compensation included in

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wages based on the nature or location of the employment or services performed,
and all other payments made to him for such period for services as an Employee
for which his Employer is required to furnish the Participant a written
statement under Code Sections 6041(d), 6051(a)(3), and 6052 (commonly referred
to as W-2 earnings), but excluding reimbursements or other expense allowances,
fringe benefits, moving expenses, deferred compensation, and welfare benefits.

In addition, with respect to Non-Union Employees, Compensation shall exclude
directors fees.

In addition to the foregoing, Compensation includes any amount that would have
been included in the foregoing description, but for the Participant's election
to defer payment of such amount under Code Section 125, 402(e)(3), 402(h)(1)(B),
403(b), or 457(b) and certain contributions described in Code Section 414(h)(2)
that are picked up by the employing unit and treated as employer contributions.
Effective for Plan Years beginning on and after January 1, 2001, Compensation
shall also include any amount that is not included in the Participant's taxable
gross income pursuant to Code Section 132(f).

Notwithstanding the foregoing, for purposes of the Profit-Sharing Contributions
portion of the Plan for Local #1870 Union Employees, Compensation shall include
any amounts paid or credited to him for union business (determined by
multiplying the number of hours reported off for union business by the
Employee's actual average hourly rate for the period), worker's compensation
(which shall not exceed the wages the Employee would have received from the
Employer during the period) and sickness and accident benefits and shall exclude
Tax-Deferred Contributions made under Section 6.5(b)(i).

In no event, however, shall the Compensation of a Participant taken into account
under the Plan for any Plan Year exceed $150,000 (subject to adjustment annually
as provided in Code Sections 401(a)(17)(B) and 415(d); provided, however, that
the dollar increase in effect on January 1 of any calendar year, if any, is
effective for Plan Years beginning in such calendar year). If the Compensation
of a Participant is determined over a period of time that contains fewer than 12
calendar months, then the annual compensation limitation described above shall
be adjusted with respect to that Participant by multiplying the annual
compensation limitation in effect for the Plan Year by a fraction the numerator
of which is the number of full months in the period and the denominator of which
is 12; provided, however, that no proration is required for a Participant who is
covered under the Plan for less than one full Plan Year if the formula for
allocations is based on Compensation for a period of at least 12 months.

A "CONTRIBUTION PERIOD" means the period specified in Article VI for which
Employer Contributions shall be made.

"DISABLED" means a Participant can no longer continue in the service of his
employer because of a mental or physical condition that is likely to result in
death or is expected to continue for a

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period of at least six months. A Participant shall be considered Disabled only
if he is eligible to receive a disability benefit under the terms of the Social
Security Act.

Notwithstanding the foregoing, a Local #1870 Union Employee or a Local #9368
Union Employee shall be considered disabled only if the Administrator determines
(on the basis of medical evidence and examination of other facts known to him)
that he has incurred an injury or illness which will permanently, continuously
and wholly prevent him from ever engaging in any work of the type covered under
his collective bargaining agreement and such injury or illness has continued for
a period of at least six consecutive months.

Notwithstanding the foregoing, a Local #9305 Union Employee shall be considered
disabled only if the Administrator and his collective bargaining representative
determine (on the basis of medical evidence and examination of other facts known
to them) that he has incurred an injury or illness which will permanently,
continuously and wholly prevent him from ever engaging in any work of the type
covered under his collective bargaining agreement and such injury or illness has
continued for a period of at least six consecutive months.

An "ELIGIBLE EMPLOYEE" means any Employee who has met the eligibility
requirements of Article III to participate in the Plan.

The "ELIGIBILITY SERVICE" of an employee means the period or periods of service
credited to him under the provisions of Article II for purposes of determining
his eligibility to participate in the Plan as may be required under Article III.

An "EMPLOYEE" means any Union Employee or Non-Union Employee. Any individual who
is not treated by an Employer as a common law employee of the Employer shall be
excluded from Plan participation even if a court or administrative agency
determines that such individual is a common law employee and not an independent
contractor.

An "EMPLOYER" means the Sponsor and any entity which has adopted the Plan as may
be provided under Article XX, including Newport Steel Corporation, Koppel Steel
Corporation and Erlanger Tubular Corporation.

An "EMPLOYER CONTRIBUTION" means the amount, if any, that an Employer
contributes to the Plan as may be provided under Article VI or Article XXII.

An "ENROLLMENT DATE" has the following meanings:

(a)      For Non-Union Employees, the first day of each Plan Year quarter;
         provided, however, that for purposes of participation in the
         Profit-Sharing Contribution portion of the Plan, the term "Enrollment
         Date" shall mean the first day of each Plan Year.

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(b)      For Local #1870 Union Employees and Local #9368 Union Employees, the
         first day of each Plan Year.

(c)      For Local #9305 Union Employees, the first day of each payroll period.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Reference to a section of ERISA includes such section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.

A "FULL-TIME EMPLOYEE" means a Non-Union Employee who is regularly scheduled to
complete thirty or more hours of work per week for an Employer.

The "GENERAL FUND" means a Trust Fund maintained by the Trustee as required to
hold and administer any assets of the Trust that are not allocated among any
separate Investment Funds as may be provided in the Plan or the Trust Agreement.
No General Fund shall be maintained if all assets of the Trust are allocated
among separate Investment Funds.

A "HIGHLY COMPENSATED EMPLOYEE" means any Employee or former Employee who is a
"highly compensated active employee" or a "highly compensated former employee"
as defined hereunder.

A "highly compensated active employee" includes any Employee who performs
services for an Employer or any Related Company during the Plan Year and who (i)
was a five percent owner at any time during the Plan Year or the "look back
year" or (ii) received "compensation" from the Employers and Related Companies
during the "look back year" in excess of $80,000 (subject to adjustment annually
at the same time and in the same manner as under Code Section 415(d)).

A "highly compensated former employee" includes any Employee who (1) separated
from service from an Employer and all Related Companies (or is deemed to have
separated from service from an Employer and all Related Companies) prior to the
Plan Year, (2) performed no services for an Employer or any Related Company
during the Plan Year, and (3) was a "highly compensated active employee" for
either the separation year or any Plan Year ending on or after the date the
Employee attains age 55, as determined under the rules in effect under Code
Section 414(q) for such year.

The determination of who is a Highly Compensated Employee hereunder shall be
made in accordance with the provisions of Code Section 414(q) and regulations
issued thereunder.

For purposes of this definition, the following terms have the following
meanings:

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                  (A)      An employee's "compensation" means compensation as
defined in Code Section 415(c)(3) and regulations issued thereunder.

                  (B)      The "look back year" means the 12-month period
immediately preceding the Plan Year.

An "HOUR OF SERVICE" with respect to a person means each hour, if any, that may
be credited to him in accordance with the provisions of Article II.

An "INVESTMENT FUND" means any separate investment Trust Fund maintained by the
Trustee as may be provided in the Plan or the Trust Agreement or any separate
investment fund maintained by the Trustee, to the extent that there are
Participant Sub-Accounts under such funds, to which assets of the Trust may be
allocated and separately invested.

A "LOCAL #1870 UNION EMPLOYEE" means any person classified by Newport Steel
Corporation as a union employee, and who is covered by a collective bargaining
agreement between Newport Steel Corporation and United Steelworkers of America,
Local #1870.

A "LOCAL #9305 UNION EMPLOYEE" means any person classified by Koppel Steel
Corporation as a union employee, and who is covered by a collective bargaining
agreement between Koppel Steel Corporation and United Steelworkers of America,
Local #9305.

A "LOCAL #9368 UNION EMPLOYEE" means any person classified by Erlanger Tubular
Corporation as a union employee, and who is covered by a collective bargaining
agreement between Erlanger Tubular Corporation and United Steelworkers of
America, Local #9368.

A "MATCHING CONTRIBUTION" means any Employer Contribution made to the Plan on
account of a Participant's Tax-Deferred Contributions as provided in Article VI.

A "NON-UNION EMPLOYEE" means any person who is classified by an Employer, in
accordance with its payroll records, as a salaried or non-union hourly employee
of the Employer, other than any such person who is either (i) covered by a
collective bargaining agreement or (ii) classified as a co-op, intern, temporary
employee or contract employee.

The "NORMAL RETIREMENT DATE" of an employee means the date he attains age 62.

A "PARTICIPANT" means any person who has an Account in the Trust.

The "PLAN" means the NS Group Employees Retirement Savings Plan, as from time to
time in effect.

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A "PLAN YEAR" means the 12-consecutive-month period ending each December 31.

A "PREDECESSOR EMPLOYER" means any company that is a predecessor organization to
an Employer under the Code, provided that the Employer maintains a plan of such
predecessor organization.

"PRE-TAX PROFITS" shall mean the Employer's earnings or profits as defined in
the current collective bargaining agreement.

A "PROFIT-SHARING CONTRIBUTION" means any Employer Contribution made to the Plan
as provided in Article VI, other than Matching Contributions.

A "RELATED COMPANY" means any corporation or business, other than an Employer,
which would be aggregated with an Employer for a relevant purpose under Code
Section 414.

A Participant's "REQUIRED BEGINNING DATE" means the following:

(a)      for a Participant who is not a "five percent owner", April 1 of the
         calendar year following the calendar year in which occurs the later of
         the Participant's (i) attainment of age 70 1/2 or (ii) Settlement Date.

(b)      for a Participant who is a "five percent owner", April 1 of the
         calendar year following the calendar year in which the Participant
         attains age 70 1/2.

A Participant is a "five percent owner" if he is a five percent owner, as
defined in Code Section 416(i) and determined in accordance with Code Section
416, but without regard to whether the Plan is top-heavy, for the Plan Year
ending with or within the calendar year in which the Participant attains age 70
1/2. The Required Beginning Date of a Participant who is a "five percent owner"
hereunder shall not be redetermined if the Participant ceases to be a five
percent owner as defined in Code Section 416(i) with respect to any subsequent
Plan Year.

A "ROLLOVER CONTRIBUTION" means any rollover contribution to the Plan made by a
Participant as may be permitted under Article V.

The "SETTLEMENT DATE" of a Participant means the date on which a Participant's
interest under the Plan becomes distributable in accordance with Article XV.

The "SPONSOR" means NS Group, Inc., and any successor thereto.

A "SUB-ACCOUNT" means any of the individual sub-accounts of a Participant's
Account that is maintained as provided in Article VIII.

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A "TAX-DEFERRED CONTRIBUTION" means the amount contributed to the Plan on a
Participant's behalf by his Employer in accordance with Article IV.

The "TRUST" means the trust, custodial accounts, annuity contracts, or insurance
contracts maintained by the Trustee under the Trust Agreement.

The "TRUST AGREEMENT" means any agreement or agreements entered into between the
Sponsor and the Trustee relating to the holding, investment, and reinvestment of
the assets of the Plan, together with all amendments thereto and shall include
any agreement establishing a custodial account, an annuity contract, or an
insurance contract (other than a life, health or accident, property, casualty,
or liability insurance contract) for the investment of assets if the custodial
account or contract would, except for the fact that it is not a trust,
constitute a qualified trust under Code Section 401.

The "TRUSTEE" means the trustee or any successor trustee which at the time shall
be designated, qualified, and acting under the Trust Agreement and shall include
any insurance company that issues an annuity or insurance contract pursuant to
the Trust Agreement or any person holding assets in a custodial account pursuant
to the Trust Agreement. The Sponsor may designate a person or persons other than
the Trustee to perform any responsibility of the Trustee under the Plan, other
than trustee responsibilities as defined in ERISA Section 405(c)(3), and the
Trustee shall not be liable for the performance of such person in carrying out
such responsibility except as otherwise provided by ERISA. The term Trustee
shall include any delegate of the Trustee as may be provided in the Trust
Agreement.

A "TRUST FUND" means any fund maintained under the Trust by the Trustee.

A "UNION EMPLOYEE" means any Local #1870 Union Employee, Local #9305 Union
Employee or Local #9368 Union Employee.

A "VALUATION DATE" means the date or dates designated by the Sponsor and
communicated in writing to the Trustee for the purpose of valuing the General
Fund and each Investment Fund and adjusting Accounts and Sub-Accounts hereunder,
which dates need not be uniform with respect to the General Fund, each
Investment Fund, Account, or Sub-Account; provided, however, that the General
Fund and each Investment Fund shall be valued and each Account and Sub-Account
shall be adjusted no less often than once annually.

The "VESTING SERVICE" of an employee means the period or periods of service
credited to him under the provisions of Article II for purposes of determining
his vested interest in his Employer Contributions Sub-Account, if Employer
Contributions are provided for under either Article VI or Article XXII.

                  Section 2. Interpretation

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<PAGE>

Where required by the context, the noun, verb, adjective, and adverb forms of
each defined term shall include any of its other forms. Wherever used herein,
the masculine pronoun shall include the feminine, the singular shall include the
plural, and the plural shall include the singular.

                                       9

<PAGE>

                                  ARTICLE XVIII
                                     SERVICE

                  Section 1. Special Definitions

For purposes of this Article, the following terms have the following meanings.

A "COMPUTATION PERIOD" for purposes of determining an employee's years of
Eligibility Service means (i) the 12-consecutive-month period beginning on the
first date he completes an Hour of Service, and (ii) each 12-consecutive-month
period beginning on an anniversary of such date.

The "CONTINUOUS SERVICE" of an employee means the continuous service credited to
him in accordance with the provisions of this Article.

The "EMPLOYMENT COMMENCEMENT DATE" of an employee means the date he first
completes an Hour of Service.

A "MATERNITY/PATERNITY ABSENCE" means a person's absence from employment with an
Employer or a Related Company because of the person's pregnancy, the birth of
the person's child, the placement of a child with the person in connection with
the person's adoption of the child, or the caring for the person's child
immediately following the child's birth or adoption. A person's absence from
employment will not be considered a maternity/paternity absence unless the
person furnishes the Administrator such timely information as may reasonably be
required to establish that the absence was for one of the purposes enumerated in
this paragraph and to establish the number of days of absence attributable to
such purpose.

The "REEMPLOYMENT COMMENCEMENT DATE" of an employee means the first date
following a "severance date" on which he again completes an Hour of Service.

The "SEVERANCE DATE" of an employee means the earlier of (i) the date on which
he retires, dies, or his employment with all Employers and Related Companies is
otherwise terminated, or (ii) the first anniversary of the first date of a
period during which he is absent from work with all Employers and Related
Companies for any other reason; provided, however, that if he terminates
employment with or is absent from work with all Employers and Related Companies
on account of service with the armed forces of the United States, he shall not
incur a "severance date" if he is eligible for reemployment right sunder the
Uniformed Services Employment and Reemployment Rights Act of 1994 and he returns
to work with an Employer or a Related Company within the period during which he
retains such reemployment rights, but, if he does not return to work within such
period, his "severance date" shall be the earlier of the date which is one year
after his absence commenced or the last day of the period during which he
retains

                                       10

<PAGE>

such reemployment rights; and provided, further, that if an employee is on a
"maternity/paternity absence" beyond the first anniversary of the first day of
such absence, he shall not incur a "severance date" if he returns to employment
before the second anniversary of the first day of such absence but, if he does
not return within such period, his "severance date" shall be the second
anniversary of the first date of such "maternity/paternity absence".

                  Section 2. Crediting of Hours of Service

A person shall be credited with an Hour of Service for:

                  (A)      Each hour for which he is paid, or entitled to
payment, for the performance of duties for an Employer, a Predecessor Employer,
or a Related Company during the applicable period; provided, however, that hours
compensated at a premium rate shall be treated as straight-time hours.

                  (B)      Subject to the provisions of Section 2.4, each hour
for which he is paid, or entitled to payment, by an Employer, a Predecessor
Employer, or a Related Company on account of a period of time during which no
duties are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), lay-off, jury duty, military duty, or leave of absence.

                  (C)      Each hour for which he would have been scheduled to
work for an Employer, a Predecessor Employer, or a Related Company during the
period that he is absent from work because of service with the armed forces of
the United States provided he is eligible for reemployment rights under the
Uniformed Services Employment and Reemployment Rights Act of 1994 and returns to
work with an Employer or a Related Company within the period during which he
retains such reemployment rights; provided, however, that the same Hour of
Service shall not be credited under paragraph (b) of this Section and under this
paragraph (c).

                  (D)      Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an Employer, a
Predecessor Employer, or a Related Company; provided, however, that the same
Hour of Service shall not be credited both under paragraph (a) or (b) or (c) of
this Section, as the case may be, and under this paragraph (d); and provided,
further, that the crediting of Hours of Service for back pay awarded or agreed
to with respect to periods described in such paragraph (b) shall be subject to
the limitations set forth therein and in Section 2.4.

                  (E)      Solely for purposes of determining whether a person
who is on a "maternity/paternity absence" has incurred a Break in Service for a
"computation period", Hours of Service shall include those hours with which such
person would otherwise have been

                                       11

<PAGE>

credited but for such "maternity/paternity absence", or shall include eight
Hours of Service for each day of "maternity/paternity absence" if the actual
hours to be credited cannot be determined; except that not more than the minimum
number of hours required to prevent a Break in Service shall be credited by
reason of any "maternity/paternity absence"; provided, however, that any hours
included as Hours of Service pursuant to this paragraph shall be credited to the
"computation period" in which the absence from employment begins, if such person
otherwise would incur a Break in Service in such "computation period", or, in
any other case, to the immediately following "computation period".

                  (F)      Solely for purposes of determining whether he has
incurred a Break in Service, each hour for which he would have been scheduled to
work for an Employer, a Predecessor Employer, or a Related Company during the
period of time that he is absent from work on an approved leave of absence
pursuant to the Family and Medical Leave Act of 1993; provided, however, that
Hours of Service shall not be credited to an employee under this paragraph if
the employee fails to return to employment with an Employer or a Related Company
following such leave.

                  (G)      For Local #1870 Union Employees or Local #9368 Union
Employees, each hour for which he is paid for union business.

Except as otherwise specifically provided with respect to Predecessor Employers,
Hours of Service shall not be credited for employment with a corporation or
business prior to the date such corporation or business becomes a Related
Company.

                  Section 3. Hours of Service Equivalencies

Notwithstanding any other provision of the Plan to the contrary, if an Employer
does not maintain records that accurately reflect actual hours of service
creditable to a person hereunder, such person shall be credited with 45 Hours of
Service for each week in which he performs an Hour of Service.

                  Section 4. Limitations on Crediting of Hours of Service

In the application of the provisions of paragraph (b) of Section 2.2, the
following shall apply:

                  (A)      An hour for which a person is directly or indirectly
paid, or entitled to payment, on account of a period during which no duties are
performed shall not be credited to him if such payment is made or due under a
plan maintained solely for the purpose of complying with applicable workers'
compensation, unemployment compensation, or disability insurance laws; provided,
however, that the exclusion with respect to workers' compensation or

                                       12
<PAGE>

disability insurance laws shall not apply to a Local #1870 Union Employee or a
Local #9368 Union Employee.

                  (B)      Hours of Service shall not be credited with respect
to a payment which solely reimburses a person for medical or medically-related
expenses incurred by him.

                  (C)      A payment shall be deemed to be made by or due from
an Employer, a Predecessor Employer, or a Related Company (i) regardless of
whether such payment is made by or due from such employer directly or
indirectly, through (among others) a trust fund or insurer to which any such
employer contributes or pays premiums, and (ii) regardless of whether
contributions made or due to such trust fund, insurer, or other entity are for
the benefit of particular persons or are on behalf of a group of persons in the
aggregate.

                  (D)      No more than 501 Hours of Service shall be credited
to a person on account of any single continuous period during which he performs
no duties (whether or not such period occurs in a single "computation period"),
unless no duties are performed due to service with the armed forces of the
United States for which the person retains reemployment rights as provided in
paragraph (c) of Section 2.2.

                  Section 5. Department of Labor Rules

The rules set forth in paragraphs (b) and (c) of Department of Labor Regulations
Section 2530.200b-2, which relate to determining Hours of Service attributable
to reasons other than the performance of duties and crediting Hours of Service
to particular periods, are hereby incorporated into the Plan by reference.

                  Section 6. Crediting of Continuous Service

A person shall be credited with "continuous service" for the aggregate of the
periods of time between his "employment commencement date" or any "reemployment
commencement date" and the "severance date" that next follows such "employment
commencement date" or "reemployment commencement date"; provided, however, that
an employee who has a "reemployment commencement date" within the
12-consecutive-month period following the earlier of the first date of his
absence or his "severance date" shall be credited with "continuous service" for
the period between his "severance date" and "reemployment commencement date".

                  Section 7. Years of Eligibility Service

An employee shall be credited with a year of Eligibility Service for each
"computation period" in which he completes at least 1,000 Hours of Service.

                                       13

<PAGE>

                  Section 8. Years of Vesting Service

There shall be no Vesting Service credited under the Plan.

                  Section 9. Crediting of Hours of Service with Respect to Short
Computation Periods

The following provisions shall apply with respect to crediting Hours of Service
with respect to any short "computation period":

                  (A)      For purposes of this Article, the following terms
have the following meanings:

                  (A)      An "old computation period" means any "computation
         period" that ends immediately prior to a change in the "computation
         period".

                  (B)      A "short computation period" means any "computation
         period" of fewer than 12 consecutive months.

                  (B)      Notwithstanding any other provision of the Plan to
the contrary, no person shall incur a Break in Service for a short "computation
period" solely because of such short "computation period".

                  (C)      For purposes of determining the years of Eligibility
Service to be credited to an Employee, a "computation period" shall not include
the "short computation period", but shall include the 12-consecutive-month
period ending on the last day of the "short computation period" and the
12-consecutive-month period ending on the first anniversary of the last day of
the "old computation period"; provided, however, that no more than one year of
Eligibility Service shall be credited to an Employee with respect to such
periods.

                  (D)      For purposes of determining the years of Vesting
Service to be credited to an Employee, a "computation period" shall not include
the "short computation period", but if an Employee completes at least 501 Hours
of Service in the 12-consecutive-month period

                                       14

<PAGE>

beginning on the first day of the "short computation period", such Employee
shall be credited with a year of Vesting Service for such 12-consecutive-month
period.

                  Section 10. Crediting of Service on Transfer or Amendment

Notwithstanding any other provision of the Plan to the contrary, if an Employee
is transferred from employment covered under a qualified plan maintained by an
Employer or a Related Company for which service is credited based on elapsed
time in accordance with Treasury Regulations Section 1.410(a)-7 to employment
covered under the Plan or, prior to amendment, the Plan provided for crediting
of service on the basis of elapsed time in accordance with Treasury Regulations
Section 1.410(a)-7, an affected Employee shall be credited with Eligibility
Service and Vesting Service hereunder as provided in Treasury Regulations
Section 1.410(a)-7(f)(1).

                  Section 11. Crediting of Service to Leased Employees

Notwithstanding any other provision of the Plan to the contrary, a "leased
employee" working for an Employer or a Related Company (other than an
"excludable leased employee") shall be considered an employee of such Employer
or Related Company for purposes of Eligibility and Vesting Service crediting
under the Plan, but shall not be eligible to participate in the Plan. Such
"leased employee" shall also be considered an employee of such Employer or
Related Company for purposes of applying Code Sections 401(a)(3), (4), (7), and
(16), and 408(k), 415, and 416.

A "leased employee" means any person who performs services for an Employer or a
Related Company (the "recipient") (other than an employee of the "recipient")
pursuant to an agreement between the "recipient" and any other person (the
"leasing organization") on a substantially full-time basis for a period of at
least one year, provided that such services are performed under primary
direction of or control by the "recipient". An "excludable leased employee"
means any "leased employee" of the "recipient" who is covered by a money
purchase pension plan maintained by the "leasing organization" which provides
for (i) a nonintegrated employer contribution on behalf of each participant in
the plan equal to at least ten percent of compensation, (ii) full and immediate
vesting, and (iii) immediate participation by employees of the "leasing
organization" (other than employees who perform substantially all of their
services for the "leasing organization" or whose compensation from the "leasing
organization" in each plan year during the four-year period ending with the plan
year is less than $1,000); provided, however, that "leased employees" do not
constitute more than 20 percent of the "recipient's" nonhighly compensated work
force. For purposes of this Section, contributions or benefits provided to a
"leased employee" by the "leasing organization" that are attributable to
services performed for the "recipient" shall be treated as provided by the
"recipient".

                                       15

<PAGE>

                                   ARTICLE XIX
                                   ELIGIBILITY

                  Section 1. Eligibility

Each Employee who was an Eligible Employee immediately prior to September 2,
2003 shall continue to be an Eligible Employee on September 2, 2003.

Each Non-Union Employee who is a Full-Time Employee shall become an Eligible
Employee as of the Enrollment Date coinciding with or next following the date on
which he has attained age 20 1/2. Each Non-Union Employee who is not a
Full-Time Employee shall become an Eligible Employee as of the Enrollment Date
coinciding with or next following the date on which he has both attained age
20 1/2 and completed one year of Eligibility Service.

Each Local #9305 Union Employee shall become an Eligible Employee as of the
Enrollment Date coinciding with or next following the earlier of (i) the date he
completes four months of continuous service or (ii) the date he completes 692
Hours of Service.

Each Local #1870 Union Employee or Local #9368 Union Employee shall become an
Eligible Employee as of the Enrollment Date coinciding with or next following
the date on which he has attained age 20-1/2.

                  Section 2. Transfers of Employment

If a person is transferred directly from employment with an Employer or with a
Related Company in a capacity other than as an Employee to employment as an
Employee, he shall become an Eligible Employee as of the date he is so
transferred if prior to an Enrollment Date coinciding with or preceding such
transfer date he has met the eligibility requirements of Section 3.1. Otherwise,
the eligibility of a person who is so transferred to participate in the Plan
shall be determined in accordance with Section 3.1.

                  Section 3. Reemployment

If a person who terminated employment with an Employer and all Related Companies
is reemployed as an Employee and if he had been an Eligible Employee prior to
his termination of employment, he shall again become an Eligible Employee on the
date he is reemployed. Otherwise, the eligibility of a person who terminated
employment with an Employer and all Related Companies and who is reemployed by
an Employer or a Related Company to participate in the Plan shall be determined
in accordance with Section 3.1 or 3.2.

                  Section 4. Notification Concerning New Eligible Employees

                                       16

<PAGE>

Each Employer shall notify the Administrator as soon as practicable of Employees
becoming Eligible Employees as of any date.

                  Section 5. Effect and Duration

Upon becoming an Eligible Employee, an Employee shall be entitled to make
Tax-Deferred Contributions to the Plan in accordance with the provisions of
Article IV and receive allocations of Employer Contributions in accordance with
the provisions of Article VI (provided he meets any applicable requirements
thereunder) and shall be bound by all the terms and conditions of the Plan and
the Trust Agreement. A person shall continue as an Eligible Employee eligible to
make Tax-Deferred Contributions to the Plan and to participate in allocations of
Employer Contributions only so long as he continues employment as an Employee.

                                       17

<PAGE>

                                   ARTICLE XX
                           TAX-DEFERRED CONTRIBUTIONS

                  Section 1. Tax-Deferred Contributions

Effective as of the date he becomes an Eligible Employee, each Eligible Employee
may elect, in accordance with rules prescribed by the Administrator, to have
Tax-Deferred Contributions made to the Plan on his behalf by his Employer as
hereinafter provided. An Eligible Employee's election shall include his
authorization for his Employer to reduce his Compensation and to make
Tax-Deferred Contributions on his behalf. An Eligible Employee who elects not to
have Tax-Deferred Contributions made to the Plan as of the first Enrollment Date
he becomes eligible to participate may change his election by amending his
reduction authorization as prescribed in this Article.

Tax-Deferred Contributions on behalf of an Eligible Employee shall commence with
the first payroll period beginning on or after the date on which his election is
effective.

                  Section 2. Amount of Tax-Deferred Contributions

The amount of Tax-Deferred Contributions to be made to the Plan on behalf of an
Eligible Employee by his Employer shall be an integral percentage of his
Compensation of not less than 1 percent nor more than the percentage prescribed
by the Administrator. In the event an Eligible Employee elects to have his
Employer make Tax-Deferred Contributions on his behalf, his Compensation shall
be reduced for each payroll period by the percentage he elects to have
contributed on his behalf to the Plan in accordance with the terms of his
currently effective reduction authorization. Notwithstanding the above, for
purposes of this paragraph, Compensation for a Local #9305 Union Employee shall
not include "Bonus Cap" payments.

Subject to the limits set forth in Section 402(g) of the Code, but not subject
to the percentage limitations specified above, a Local #9305 Union Employee may
authorize a special reduction for the Plan Year for that portion of his
Compensation that is attributable to the "Bonus Cap" provisions of the current
collective bargaining agreement in an amount up to 100% of such bonus.

Notwithstanding Section 4.1, prior to the date the Profit-Sharing Contribution
under Section 6.5(b)(i) is made to the Plan for the Contribution Period, each
Eligible Employee may elect in writing, in accordance with rules prescribed by
the Administrator, to have his entire share of the Profit-Sharing Contribution
determined pursuant to Section 6.5(b)(i) either made to the Plan as a
Tax-Deferred Contribution on his behalf by the Employer or distributed directly
to him in cash. An Eligible Employee's written election shall include his
authorization for the Employer to either made a distribution to him in cash or
make a Tax-Deferred Contribution on his behalf.

                                       18

<PAGE>

If any Participant shall fail to make an effective election under this Section,
he shall be deemed to have elected to make a Tax-Deferred Contribution.
Notwithstanding the foregoing, the Administrator may limit the amount of a
Participant's Tax-Deferred Contribution to satisfy the requirements of Section
415 of the Code for any Plan Year.

                  Section 3. Amendments to Reduction Authorization

An Eligible Employee may elect, in the manner prescribed by the Administrator,
to change the amount of his future Compensation that his Employer contributes on
his behalf as Tax-Deferred Contributions. An Eligible Employee may amend his
reduction authorization at such time or times during the Plan Year as the
Administrator may prescribe by giving such number of days advance notice of his
election as the Administrator may prescribe. An Eligible Employee who amends his
reduction authorization shall be limited to selecting an amount of his
Compensation that is otherwise permitted under this Article IV. Tax-Deferred
Contributions shall be made on behalf of such Eligible Employee by his Employer
pursuant to his properly amended reduction authorization commencing with
Compensation paid to the Eligible Employee on or after the date such amendment
is effective, until otherwise altered or terminated in accordance with the Plan.

                  Section 4. Suspension of Tax-Deferred Contributions

An Eligible Employee on whose behalf Tax-Deferred Contributions are being made
may elect, in the manner prescribed by the Administrator, to have such
contributions suspended at any time by giving such number of days advance notice
of his election as the Administrator may prescribe. Any such voluntary
suspension shall take effect commencing with Compensation paid to such Eligible
Employee on or after the expiration of the required notice period and shall
remain in effect until Tax-Deferred Contributions are resumed as hereinafter set
forth.

                  Section 5. Resumption of Tax-Deferred Contributions

An Eligible Employee who has voluntarily suspended his Tax-Deferred
Contributions may elect, in the manner prescribed by the Administrator, to have
such contributions resumed. An Eligible Employee may make such election at such
time or times during the Plan Year as the Administrator may prescribe, by giving
such number of days advance notice of his election as the Administrator may
prescribe.

                  Section 6. Delivery of Tax-Deferred Contributions

As soon after the date an amount would otherwise be paid to an Employee as it
can reasonably be separated from Employer assets, each Employer shall cause to
be delivered to the Trustee in cash all Tax-Deferred Contributions attributable
to such amounts.

                  Section 7. Vesting of Tax-Deferred Contributions

                                       19

<PAGE>

A Participant's vested interest in his Tax-Deferred Contributions Sub-Account
shall be at all times 100 percent.

                                       20

<PAGE>

                                  ARTICLE XXI
                      AFTER-TAX AND ROLLOVER CONTRIBUTIONS

                  Section 1. No After-Tax Contributions

There shall be no After-Tax Contributions made to the Plan.

                  Section 2. Rollover Contributions

An Employee who was a participant in a plan qualified under Code Section 401 and
who receives (or is eligible to receive) a cash distribution from such plan that
he elects either (i) to roll over immediately to a qualified retirement plan or
(ii) to roll over into a conduit IRA from which he receives a later cash
distribution, may elect to make a Rollover Contribution to the Plan if he is
entitled under Code Section 402(c) or 408(d)(3)(A) to roll over such
distribution to another qualified retirement plan. The Administrator may require
an Employee to provide it with such information as it deems necessary or
desirable to show that he is entitled to roll over such distribution to another
qualified retirement plan. An Employee shall make a Rollover Contribution to the
Plan by delivering, or causing to be delivered, to the Trustee the cash that
constitutes the Rollover Contribution amount. If the Employee received a cash
distribution that he is rolling over, such delivery must be made within 60 days
of receipt of the distribution from the plan or from the conduit IRA in the
manner prescribed by the Administrator.

                  Section 3. Vesting of Rollover Contributions

A Participant's vested interest in his Rollover Contributions Sub-Account shall
be at all times 100 percent.

                                       21

<PAGE>

                                  ARTICLE XXII
                             EMPLOYER CONTRIBUTIONS

                  Section 1. Contribution Period

The Contribution Periods for Employer Contributions shall be as follows:

                  (A)      The Contribution Period for Matching Contributions
under the Plan is each payroll period.

                  (B)      The Contribution Period for Profit-Sharing
Contributions under the Plan is each Plan Year.

                  Section 2. Profit-Sharing Contributions for Non-Union
Employees

Each Employer may, in its discretion, make a Profit-Sharing Contribution to the
Plan on behalf of its Non-Union Employees for the Contribution Period in an
amount determined by the Employer.

                  Section 3. Newport Steel Corporation Profit-Sharing
Contributions for Local # 1870 Union Employees

Pursuant to the collective bargaining agreement in effect for the Contribution
Period, Newport Steel Corporation shall make a Profit-Sharing Contribution to
the Plan on behalf of its Local #1870 Union Employees for the Contribution
Period in an amount equal to 6% of its Pre-Tax Profits for the Contribution
Period.

                  Section 4. Allocation of Profit-Sharing Contributions for
Non-Union Employees

Any Profit-Sharing Contribution made by an Employer for a Contribution Period
pursuant to Section 6.2 shall be allocated among its Non-Union Employees during
the Contribution Period who have met the allocation requirements for
Profit-Sharing Contributions described in this Article. The allocable share of
each such Non-Union Employee shall be in the ratio which his Compensation from
the Employer for the Contribution Period bears to the aggregate of such
Compensation for all such Non-Union Employees.

                  Section 5. Allocation of Newport Steel Corporation
Profit-Sharing Contributions for Local # 1870 Union Employees

                                       22

<PAGE>

The Profit-Sharing Contribution made by Newport Steel Corporation for a
Contribution Period pursuant to Section 6.3 shall be allocated as set forth
below among its Local #1870 Union Employees during the Contribution Period who
are eligible to participate in the allocation of Profit-Sharing Contributions
for the Contribution Period, as determined under Section 6.9.

                  (A)      The allocable share of each such Local #1870 Union
Employee shall be determined as follows:

                  (A)      seventy percent (70%) of the Profit-Sharing
         Contribution shall be allocated to each such Local #1870 Union Employee
         in the ratio which his Compensation from the Employer for the Plan Year
         bears to the aggregate of such Compensation for all such Local #1870
         Union Employees for the Plan Year;

                  (B)      thirty percent (30%) of the Profit-Sharing
         Contribution shall be allocated to each such Local #1870 Union Employee
         in the ratio which his total "years of service" (as defined in Section
         6.14) with the Employer as of the last day of the Plan Year bears to
         the aggregate of such "years of service" for all such Local #1870 Union
         Employees as of the last day of the Plan Year.

                  (B)      The allocable share of each such Local #1870 Union
Employee shall then be allocated as follows:

                  (A)      twenty percent (20%) of the Local #1870 Union
         Employee's total allocable share of the Profit- Sharing Contribution
         shall be either allocated directly to his Profit-Sharing Contribution
         Sub-Account as a Tax-Deferred Contribution or distributed directly to
         him in cash, as elected by the Local #1870 Union Employee pursuant to
         Section 4.2.

                  (B)      eighty percent (80%) of the Local #1870 Union
         Employee's total allocable share of each Profit- Sharing Contribution
         shall be allocated directly to his Profit-Sharing Contribution
         Sub-Account.

                  Section 6. Matching Contributions

Each Employer will make a Matching Contribution to the Plan on behalf of each of
its Non-Union Employees during the Contribution Period who has met the
allocation requirements for Matching Contributions described in this Article.
The amount of the Matching Contribution

                                       23

<PAGE>

shall be equal to 50 percent of the first 4 percent of the eligible Non-Union
Employee's Compensation that he contributes to the Plan as Tax-Deferred
Contributions.

Newport Steel Corporation will make a Matching Contribution to the Plan on
behalf of each of its Local #1870 Union Employees who has met the allocation
requirements for Matching Contributions described in this Article. The amount of
the Matching Contribution shall be equal to 50 percent of the first 6 percent of
the eligible Local #1870 Union Employee's Compensation that he contributes to
the Plan as Tax-Deferred Contributions.

Effective May 4, 2003, Erlanger Tubular Corporation will make a Matching
Contribution to the Plan on behalf of each of its Local #9368 Union Employees
who has met the allocation requirements for Matching Contributions described in
this Article. The amount of the Matching Contribution shall be equal to 50
percent of the first 6 percent of the eligible Local #9368 Union Employee's
Compensation that he contributes to the Plan as Tax-Deferred Contributions.

                  Section 7. Verification of Amount of Employer Contributions by
the Sponsor

The Sponsor shall verify the amount of Employer Contributions to be made by each
Employer in accordance with the provisions of the Plan. Notwithstanding any
other provision of the Plan to the contrary, the Sponsor shall determine the
portion of the Employer Contribution to be made by each Employer with respect to
an Employee who transfers from employment with one Employer as an Employee to
employment with another Employer as an Employee.

                  Section 8. Payment of Employer Contributions

Employer Contributions made for a Contribution Period shall be paid in cash or
in qualifying employer securities, as defined in ERISA Section 407(d)(5), to the
Trustee within the period of time required under the Code in order for the
contribution to be deductible by the Employer in determining its Federal income
taxes for the Plan Year.

                  Section 9. Allocation Requirements for Employer Contributions

A person who is a Non-Union Employee shall be eligible to receive an allocation
of Profit-Sharing Contributions for a Contribution Period only if (i) he was an
Eligible Employee during such Contribution Period, (ii) he is employed by an
Employer or a Related Company on the last day of the Contribution Period, (iii)
he has completed at least 500 Hours of Service during the Contribution Period,
and (iv) he is not classified as a president or vice-president. The number of
Hours of Service required to receive an allocation of Profit-Sharing
Contributions hereunder shall be pro-rated for any short Contribution Period.

                                       24

<PAGE>

A person who is a Local #1870 Union Employee shall be eligible to receive an
allocation of Profit-Sharing Contributions for a Contribution Period only if (i)
he was an Eligible Employee during such Contribution Period, (ii) he is employed
by an Employer or a Related Company on the last day of the Contribution Period,
and (iii) he has completed at least 500 Hours of Service during the Contribution
Period.

A person who is a Non-Union Employee, Local #1870 Union Employee or a Local
#9368 Union Employee shall be eligible to receive an allocation of Matching
Contributions for a Contribution Period only if he was an Eligible Employee at
any time during such Contribution Period.

                  Section 10. Fail Safe if Allocation Requirements Cause Plan to
Fail Coverage

If after application of the last day and annual service allocation requirements
described in this Article the percentage of non-Highly Compensated Employees
eligible to receive an allocation of contributions for a Contribution Period is
less than 70 percent of the percentage of Highly Compensated Employees eligible
to receive an allocation of such contributions for the Contribution Period, then
the group of Eligible Employees eligible to receive an allocation of such
contributions shall be expanded to include the minimum number of Eligible
Employees who are not Highly Compensated Employees and who would have been
eligible to receive an allocation of such contributions except for their failure
to complete the annual service allocation requirement that is necessary to meet
the ratio percentage test in Code Section 410(b)(1)(B). The Eligible Employees
who become eligible to receive an allocation under the provisions of the
immediately preceding sentence shall be those Eligible Employees who have
completed the greatest number of Hours of Service during the Contribution
Period. If the group of Eligible Employees eligible to receive an allocation of
contributions for the Contribution Period still does not meet the ratio
percentage test in Code Section 410(b)(1)(B) after it has been expanded to
include all Eligible Employees who are not Highly Compensated Employees and who
have satisfied the last day allocation requirement described in this Article,
the group of Eligible Employees eligible to receive an allocation of such
contributions shall be expanded further to include the minimum number of
Eligible Employees who are not Highly Compensated Employees and who have not
satisfied such last day allocation requirement that is necessary to meet the
ratio percentage test in Code Section 410(b)(1)(B). The Eligible Employees who
become eligible to receive an allocation under the provisions of the immediately
preceding sentence shall be those Eligible Employees who have completed the
greatest number of Hours of Service during the Contribution Period.

                  Section 11. Vesting of Employer Contributions

A Participant's vested interest in his Profit-Sharing and Matching Contributions
Sub-Accounts shall be at all times 100 percent; provided, however, that the
Profit-Sharing Sub-Account of a Local #9305 Union Employee shall be determined
in accordance with the prior Koppel Steel Corporation Hourly Employees
Retirement Savings Plan.

                                       25

<PAGE>

                  Section 12. Election of Former Vesting Schedule

If the Sponsor adopts an amendment to the Plan that directly or indirectly
affects the computation of a Participant's vested interest in his Employer
Contributions Sub-Account, any Participant with three or more years of Vesting
Service shall have a right to have his vested interest in his Employer
Contributions Sub-Account continue to be determined under the vesting provisions
in effect prior to the amendment rather than under the new vesting provisions,
unless the vested interest of the Participant in his Employer Contributions
Sub-Account under the Plan as amended is not at any time less than such vested
interest determined without regard to the amendment. A Participant shall
exercise his right under this Section by giving written notice of his exercise
thereof to the Administrator within 60 days after the latest of (i) the date he
receives notice of the amendment from the Administrator, (ii) the effective date
of the amendment, or (iii) the date the amendment is adopted. Notwithstanding
the foregoing, a Participant's vested interest in his Employer Contributions
Sub-Account on the effective date of such an amendment shall not be less than
his vested interest in his Employer Contributions Sub-Account immediately prior
to the effective date of the amendment.

                  Section 13. Forfeitures to Reduce Employer Contributions

Notwithstanding any other provision of the Plan to the contrary, the amount of
the Employer Contribution required under this Article for a Plan Year shall be
reduced by the amount of any forfeitures occurring during the Plan Year or any
prior Plan Year that are applied against Employer Contributions as provided in
Article VII.

                  Section 14. Years of Service

For purposes of the Profit-Sharing Contribution for Local #1870 Union Employees,
an Employee's number of "years of service" as at any date equals the number of
years, including fractional portions thereof, elapsed during the period
beginning on the first day for which the Employee was credited with an Hour of
Service and ending on the date for which the Employee is last credited with an
Hour of Service, subject to the following:

                  (A)      the period during which the Employee is on an
"Approved Absence" shall be included in determining his number of "years of
service". The term "Approved Absence" means an absence from the employment of
the Employer:

                  (A)      for any period authorized by the Employer for
         personal, medical, disability or maternity and paternity leaves of
         absence;

                                       26

<PAGE>

                  (B)      during a period of layoff or furlough with recall
         rights (as determined pursuant to the collective bargaining agreement
         applicable to him as a Participant) or suspension;

                  (C)      for the period of his service with the armed forces
         of the United States of America provided that he returns to employment
         with the Employer within the time that his reemployment rights are
         protected by law.

                  (B)      An Employee shall not earn "years of service" for any
period that he is classified as a Non-Union Employee.

                  (C)      An Employee shall not earn "years of service" for the
period between the date he was last credited with an Hour of Service due to his
termination of employment with the

         Employer and the first day thereafter for which he is credited with an
         Hour of Service by reason of his reemployment by the Employer.

                                       27
<PAGE>

                                  ARTICLE XXIII
                          LIMITATIONS ON CONTRIBUTIONS

                  Section 1. Definitions

For purposes of this Article, the following terms have the following meanings:

The "AGGREGATE LIMIT" means the sum of (i) 125 percent of the greater of the
average "contribution percentage" for "eligible participants" other than Highly
Compensated Employees or the average "deferral percentage" for Eligible
Employees other than Highly Compensated Employees and (ii) the lesser of 200
percent or two plus the lesser of such average "contribution percentage" or
average "deferral percentage", or, if it would result in a larger "aggregate
limit", the sum of (iii) 125 percent of the lesser of the average "contribution
percentage" for "eligible participants" other than Highly Compensated Employees
or the average "deferral percentage" for Eligible Employees other than Highly
Compensated Employees and (iv) the lesser of 200 percent or two plus the greater
of such average "contribution percentage" or average "deferral percentage". For
purposes of determining the "aggregate limit", the "contribution percentages"
and "deferral percentages" used shall be for the applicable "testing year".

The "ANNUAL ADDITION" with respect to a Participant for a "limitation year"
means the sum of the Tax-Deferred Contributions, Employer Contributions, and
forfeitures allocated to his Account for the "limitation year" (including any
"excess contributions" that are distributed pursuant to this Article), the
employer contributions, "employee contributions", and forfeitures allocated to
his accounts for the "limitation year" under any other qualified defined
contribution plan (whether or not terminated) maintained by an Employer or a
Related Company concurrently with the Plan, and amounts described in Code
Sections 415(l)(2) and 419A(d)(2) allocated to his account for the "limitation
year".

The "ANNUAL ADDITION" with respect to a Participant for a "limitation year"
means the sum of the Tax-Deferred Contributions and Employer Contributions
allocated to his Account for the "limitation year" (including any "excess
contributions" that are distributed pursuant to this Article), the employer
contributions, "employee contributions", and forfeitures allocated to his
accounts for the "limitation year" under any other qualified defined
contribution plan (whether or not terminated) maintained by an Employer or a
Related Company concurrently with the Plan, and amounts described in Code
Sections 415(l)(2) and 419A(d)(2) allocated to his account for the "limitation
year".

The "CONTRIBUTION PERCENTAGE" with respect to an "eligible participant" for a
particular Plan Year means the ratio of the Matching Contributions made to the
Plan on his behalf for the Plan Year to his "test compensation" for such Plan
Year. To the extent permitted by regulations

                                       28

<PAGE>

issued under Code Section 401(m), the Sponsor may elect to include the
Tax-Deferred Contributions made to the Plan on an "eligible participant's"
behalf for the Plan Year in computing the numerator of such "eligible
participant's" "contribution percentage". Notwithstanding the foregoing, any
Tax-Deferred Contributions that are included in determining the numerator of an
"eligible participant's" "deferral percentage" may not be included in
determining the numerator of his "contribution percentage".

Contributions made on an "eligible participant's" behalf for a Plan Year shall
be included in determining his "contribution percentage" for such Plan Year only
if the contributions are allocated to the "eligible participant's" Account as of
a date within such Plan Year and are made to the Plan before the end of the
12-month period immediately following the Plan Year to which the contributions
relate. The determination of an "eligible participant's" "contribution
percentage" shall be made after any reduction required to satisfy the Code
Section 415 limitations is made as provided in this Article VII and shall
satisfy such other requirements as may be prescribed by the Secretary of the
Treasury.

The "DEFERRAL PERCENTAGE" with respect to an Eligible Employee for a particular
Plan Year means the ratio of the Tax-Deferred Contributions made on his behalf
for the Plan Year to his "test compensation" for the Plan Year. Notwithstanding
the foregoing, any Tax-Deferred Contributions that are included in determining
the numerator of an Eligible Employee's "contribution percentage" may not be
included in determining the numerator of his "deferral percentage".

Contributions made on an Eligible Employee's behalf for a Plan Year shall be
included in determining his "deferral percentage" for such Plan Year only if
they meet the following requirements:

                  (A)      The contributions must relate to Compensation that
would, but for the Eligible Employee's deferral election, have been received by
the Eligible Employee during such Plan Year.

                  (B)      The contributions must be allocated to the Eligible
Employee's Account as of a date within such Plan Year.

                  (C)      The contributions must be made to the Plan before the
end of the 12-month period immediately following the Plan Year to which they
relate.

The determination of an Eligible Employee's "deferral percentage" shall be made
after any reduction required to satisfy the Code Section 415 limitations is made
as provided in this

                                       29

<PAGE>

Article VII and shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.

                                       30

<PAGE>

An "ELECTIVE CONTRIBUTION" means any employer contribution made to a plan
maintained by an Employer or a Related Company on behalf of a Participant in
lieu of cash compensation pursuant to his written election to defer under any
qualified CODA as described in Code Section 401(k), any simplified employee
pension cash or deferred arrangement as described in Code Section 402(h)(1)(B),
any eligible deferred compensation plan under Code Section 457, or any plan as
described in Code Section 501(c)(18), and any contribution made on behalf of the
Participant by an Employer or a Related Company for the purchase of an annuity
contract under Code Section 403(b) pursuant to a salary reduction agreement.

An "ELIGIBLE PARTICIPANT" means any Eligible Employee who is eligible to have
Tax-Deferred Contributions made on his behalf (if Tax-Deferred Contributions are
taken into account in determining "contribution percentages"), or to participate
in the allocation of Matching Contributions.

Notwithstanding the foregoing, Eligible Employees who are covered by a
collective bargaining agreement between their Employer and employee
representatives shall not be included as "eligible participants" if retirement
benefits were the subject of good faith bargaining.

An "EMPLOYEE CONTRIBUTION" means any employee after-tax contribution allocated
to an Eligible Employee's account under any qualified plan of an Employer or a
Related Company.

An "EXCESS CONTRIBUTION" means any contribution made to the Plan on behalf of a
Participant that exceeds one of the limitations described in this Article.

An "EXCESS DEFERRAL" with respect to a Participant means that portion of a
Participant's Tax-Deferred Contributions for his taxable year that, when added
to amounts deferred for such taxable year under other plans or arrangements
described in Code Section 401(k), 408(k), or 403(b) (other than any such plan or
arrangement that is maintained by an Employer or a Related Company), would
exceed the dollar limit imposed under Code Section 402(g) as in effect on
January 1 of the calendar year in which such taxable year begins and is
includible in the Participant's gross income under Code Section 402(g).

A "LIMITATION YEAR" means the 12-month period designated as such by the Sponsor.

A "MATCHING CONTRIBUTION" means any employer contribution allocated to an
Eligible Employee's account under any plan of an Employer or a Related Company
solely on account of "elective contributions" made on his behalf or "employee
contributions" made by him.

A "QUALIFIED MATCHING CONTRIBUTION" means any employer contribution allocated to
an Eligible Employee's account under any plan of an Employer or a Related
Company solely on account of "elective contributions" made on his behalf or
"employee contributions" made by him that is a qualified matching contribution
as defined in regulations issued under Code

                                       31

<PAGE>

Section 401(k), is nonforfeitable when made, and is distributable only as
permitted in regulations issued under Code Section 401(k).

A "QUALIFIED NONELECTIVE CONTRIBUTION" means any employer contribution allocated
to an Eligible Employee's account under any plan of an Employer or a Related
Company that the Participant could not elect instead to receive in cash, that is
a qualified nonelective contribution as defined in Code Sections 401(k) and
401(m) and regulations issued thereunder, is nonforfeitable when made, and is
distributable only as permitted in regulations issued under Code Section 401(k).

The "TEST COMPENSATION" of an Eligible Employee or "eligible participant" for a
Plan Year means compensation as defined in Code Section 414(s) and regulations
issued thereunder, limited, however, to $150,000 (subject to adjustment annually
as provided in Code Sections 401(a)(17)(B) and 415(d); provided, however, that
the dollar increase in effect on January 1 of any calendar year, if any, is
effective for Plan Years beginning in such calendar year) and, if elected by the
Sponsor, further limited solely to "test compensation" of an Employee
attributable to periods of time when he is an Eligible Employee or "eligible
participant". If the "test compensation" of an Eligible Employee or "eligible
participant" is determined over a period of time that contains fewer than 12
calendar months, then the annual compensation limitation described above shall
be adjusted with respect to that Eligible Employee or "eligible participant" by
multiplying the annual compensation limitation in effect for the Plan Year by a
fraction the numerator of which is the number of full months in the period and
the denominator of which is 12; provided, however, that no proration is required
for an Eligible Employee or "eligible participant" who is covered under the Plan
for less than one full Plan Year if the formula for allocations is based on
Compensation for a period of at least 12 months.

The "TESTING YEAR" means the Plan Year for which the limitations on "deferral
percentages" and "contribution percentages" of Highly Compensated Employees are
being determined.

                  Section 2. Code Section 402(g) Limit

In no event shall the amount of the Tax-Deferred Contributions made on behalf of
an Eligible Employee for his taxable year, when aggregated with any "elective
contributions" made on behalf of the Eligible Employee under any other plan of
an Employer or a Related Company for his taxable year, exceed the dollar limit
imposed under Code Section 402(g), as in effect on January 1 of the calendar
year in which such taxable year begins. In the event that the Administrator
determines that the reduction percentage elected by an Eligible Employee will
result in his exceeding the Code Section 402(g) limit, the Administrator may
adjust the reduction authorization of such Eligible Employee by reducing the
percentage of his Tax-Deferred Contributions to such smaller percentage that
will result in the Code Section 402(g) limit not being exceeded. If the
Administrator determines that the Tax-Deferred Contributions made on behalf of
an Eligible Employee would exceed the Code Section 402(g) limit for his

                                       32

<PAGE>

taxable year, the Tax-Deferred Contributions for such Participant shall be
automatically suspended for the remainder, if any, of such taxable year.

If an Employer notifies the Administrator that the Code Section 402(g) limit has
nevertheless been exceeded by an Eligible Employee for his taxable year, the
Tax-Deferred Contributions that, when aggregated with "elective contributions"
made on behalf of the Eligible Employee under any other plan of an Employer or a
Related Company, would exceed the Code Section 402(g) limit, plus any income and
minus any losses attributable thereto, shall be distributed to the Eligible
Employee no later than the April 15 immediately following such taxable year. Any
Tax-Deferred Contributions that are distributed to an Eligible Employee in
accordance with this Section shall not be taken into account in determining the
Eligible Employee's "deferral percentage" for the "testing year" in which the
Tax-Deferred Contributions were made, unless the Eligible Employee is a Highly
Compensated Employee.

If an amount of Tax-Deferred Contributions is distributed to a Participant in
accordance with this Section, Matching Contributions that are attributable
solely to the distributed Tax-Deferred Contributions, plus any income and minus
any losses attributable thereto, shall be forfeited by the Participant no
earlier than the date on which distribution of Tax-Deferred Contributions
pursuant to this Section occurs and no later than the last day of the Plan Year
following the Plan Year for which the Matching Contributions were made.

                  Section 3. Distribution of Excess Deferrals

Notwithstanding any other provision of the Plan to the contrary, if a
Participant notifies the Administrator in writing no later than the March 1
following the close of the Participant's taxable year that "excess deferrals"
have been made on his behalf under the Plan for such taxable year, the "excess
deferrals", plus any income and minus any losses attributable thereto, shall be
distributed to the Participant no later than the April 15 immediately following
such taxable year. Any Tax-Deferred Contributions that are distributed to a
Participant in accordance with this Section shall nevertheless be taken into
account in determining the Participant's "deferral percentage" for the "testing
year" in which the Tax-Deferred Contributions were made. If an amount of
Tax-Deferred Contributions is distributed to a Participant in accordance with
this Section, Matching Contributions that are attributable solely to the
distributed Tax-Deferred Contributions, plus any income and minus any losses
attributable thereto, shall be forfeited by the Participant no earlier than the
date on which distribution of Tax-Deferred Contributions pursuant to this
Section occurs and no later than the last day of the Plan Year following the
Plan Year for which the Matching Contributions were made.

                                       33

<PAGE>

                  Section 4. Limitation on Tax-Deferred Contributions of Highly
Compensated Employees

Notwithstanding any other provision of the Plan to the contrary, the
Tax-Deferred Contributions made with respect to a Plan Year on behalf of
Eligible Employees who are Highly Compensated Employees may not result in an
average "deferral percentage" for such Eligible Employees that exceeds the
greater of:

                  (A)      a percentage that is equal to 125 percent of the
average "deferral percentage" for all other Eligible Employees for the "testing
year"; or

                  (B)      a percentage that is not more than 200 percent of the
average "deferral percentage" for all other Eligible Employees for the "testing
year" and that is not more than two percentage points higher than the average
"deferral percentage" for all other Eligible Employees for the "testing year",

unless the "excess contributions", determined as provided in Section 7.5, are
distributed as provided in Section 7.6.

In order to assure that the limitation contained herein is not exceeded with
respect to a Plan Year, the Administrator is authorized to suspend completely
further Tax-Deferred Contributions on behalf of Highly Compensated Employees for
any remaining portion of a Plan Year or to adjust the projected "deferral
percentages" of Highly Compensated Employees by reducing the percentage of their
deferral elections for any remaining portion of a Plan Year to such smaller
percentage that will result in the limitation set forth above not being
exceeded. In the event of any such suspension or reduction, Highly Compensated
Employees affected thereby shall be notified of the reduction or suspension as
soon as possible and shall be given an opportunity to make a new deferral
election to be effective the first day of the next following Plan Year. In the
absence of such an election, the election in effect immediately prior to the
suspension or adjustment described above shall be reinstated as of the first day
of the next following Plan Year.

In determining the "deferral percentage" for any Eligible Employee who is a
Highly Compensated Employee for the Plan Year, "elective contributions",
"qualified nonelective contributions", and "qualified matching contributions"
(to the extent that "qualified nonelective contributions" and "qualified
matching contributions" are taken into account in determining "deferral
percentages") made to his accounts under any plan of an Employer or a Related
Company that is not mandatorily disaggregated pursuant to IRS regulations
Section 1.410(b)-7(c), as modified by Section 1.401(k)-1(g)(11), shall be
treated as if all such contributions were made to the Plan; provided, however,
that if such a plan has a plan year different from the Plan Year, any such
contributions made to the Highly Compensated Employee's accounts under the

                                       34

<PAGE>

plan for the plan year ending with or within the same calendar year as the Plan
Year shall be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not be treated as if
they were made to the Plan if regulations issued under Code Section 401(k) do
not permit such plan to be aggregated with the Plan.

If one or more plans of an Employer or Related Company are aggregated with the
Plan for purposes of satisfying the requirements of Code Section 401(a)(4) or
410(b), then "deferral percentages" under the Plan shall be calculated as if the
Plan and such one or more other plans were a single plan. Plans may be
aggregated to satisfy Code Section 401(k) only if they have the same plan year.

The Administrator shall maintain records sufficient to show that the limitation
contained in this Section was not exceeded with respect to any Plan Year and the
amount of the "qualified nonelective contributions" and/or "qualified matching
contributions" taken into account in determining "deferral percentages" for any
Plan Year.

                  Section 5. Determination and Allocation of Excess Tax-Deferred
Contributions Among Highly Compensated Employees

Notwithstanding any other provision of the Plan to the contrary, in the event
that the limitation on Tax-Deferred Contributions described in Section 7.4 is
exceeded in any Plan Year, the Administrator shall determine the dollar amount
of the excess by reducing the dollar amount of the Tax-Deferred Contributions
included in determining the "deferral percentage" of Highly Compensated
Employees in order of their "deferral percentages" as follows:

                  (A)      The highest "deferral percentage(s)" shall be reduced
to the greater of (1) the maximum "deferral percentage" that satisfies the
limitation on Tax-Deferred Contributions described in Section 7.4 or (2) the
next highest "deferral percentage".

                  (B)      If the limitation on Tax-Deferred Contributions
described in Section 7.4 would still be exceeded after application of the
provisions of paragraph (a), the Administrator shall continue reducing "deferral
percentages" of Highly Compensated Employees, continuing with the next highest
"deferral percentage", in the manner provided in paragraph (a) until the
limitation on Tax-Deferred Contributions described in Section 7.4 is satisfied.

The determination of the amount of "excess contributions" hereunder shall be
made after Tax-Deferred Contributions and "excess deferrals" have been
distributed pursuant to Sections 7.2 and 7.3, if applicable.

After determining the dollar amount of the "excess contributions" that have been
made to the Plan, the Administrator shall allocate such excess among Highly
Compensated Employees in

                                       35

<PAGE>

order of the dollar amount of the Tax-Deferred Contributions (to the extent such
contributions are included in determining "deferral percentages") allocated to
their Accounts as follows:

(a)      The contributions made on behalf of the Highly Compensated Employee(s)
         with the largest dollar amount of Tax-Deferred Contributions allocated
         to his Account for the Plan Year shall be reduced by the dollar amount
         of the excess (with such dollar amount being allocated equally among
         all such Highly Compensated Employees), but not below the dollar amount
         of such contributions made on behalf of the Highly Compensated
         Employee(s) with the next highest dollar amount of such contributions
         allocated to his Account for the Plan Year.

(b)      If the excess has not been fully allocated after application of the
         provisions of paragraph (c), the Administrator shall continue reducing
         the contributions made on behalf of Highly Compensated Employees,
         continuing with the Highly Compensated Employees with the largest
         remaining dollar amount of such contributions allocated to their
         Accounts for the Plan Year, in the manner provided in paragraph (c)
         until the entire excess determined above has been allocated.

                  Section 6. Distribution of Excess Tax-Deferred Contributions

"Excess contributions" allocated to a Highly Compensated Employee pursuant to
the preceding Section, plus any income and minus any losses attributable
thereto, shall be distributed to the Highly Compensated Employee prior to the
end of the next succeeding Plan Year. If such excess amounts are distributed
more than 2 1/2 months after the last day of the Plan Year for which the excess
occurred, an excise tax may be imposed under Code Section 4979 on the Employer
maintaining the Plan with respect to such amounts.

If an amount of Tax-Deferred Contributions is distributed to a Participant in
accordance with this Section, Matching Contributions that are attributable
solely to the distributed Tax-Deferred Contributions, plus any income and minus
any losses attributable thereto, shall be forfeited by the Participant no
earlier than the date on which distribution of Tax-Deferred Contributions
pursuant to this Section occurs and no later than the last day of the Plan Year
following the Plan Year for which the Matching Contributions were made.

                  Section 7. Limitation on Matching Contributions of Highly
Compensated Employees

Notwithstanding any other provision of the Plan to the contrary, the Matching
Contributions made with respect to a Plan Year on behalf of "eligible
participants" who are Highly Compensated Employees may not result in an average
"contribution percentage" for such "eligible participants" that exceeds the
greater of:

                                       36

<PAGE>

                  (A)      a percentage that is equal to 125 percent of the
average "contribution percentage" for all other "eligible participants" for the
"testing year"; or

                  (B)      a percentage that is not more than 200 percent of the
average "contribution percentage" for all other "eligible participants" for the
"testing year" and that is not more than two percentage points higher than the
average "contribution percentage" for all other "eligible participants" for the
"testing year",

unless the "excess contributions", determined as provided in Section 7.8, are
distributed as provided in Section 7.9.

In determining the "contribution percentage" for any "eligible participant" who
is a Highly Compensated Employee for the Plan Year, "matching contributions",
"employee contributions", "qualified nonelective contributions", and "elective
contributions" (to the extent that "qualified nonelective contributions" and
"elective contributions" are taken into account in determining "contribution
percentages") made to his accounts under any plan of an Employer or a Related
Company that is not mandatorily disaggregated pursuant to IRS regulations
Section 1.410(b)-7(c), as modified by IRS regulations Section 1.401(k)-1(g)(11),
shall be treated as if all such contributions were made to the Plan; provided,
however, that if such a plan has a plan year different from the Plan Year, any
such contributions made to the Highly Compensated Employee's accounts under the
plan for the plan year ending with or within the same calendar year as the Plan
Year shall be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not be treated as if
they were made to the Plan if regulations issued under Code Section 401(m) do
not permit such plan to be aggregated with the Plan.

If one or more plans of an Employer or a Related Company are aggregated with the
Plan for purposes of satisfying the requirements of Code Section 401(a)(4) or
410(b), the "contribution percentages" under the Plan shall be calculated as if
the Plan and such one or more other plans were a single plan. Plans may be
aggregated to satisfy Code Section 401(m) only if they have the same plan year.

The Administrator shall maintain records sufficient to show that the limitation
contained in this Section was not exceeded with respect to any Plan Year and the
amount of the "elective contributions", "qualified nonelective contributions",
and/or "qualified matching contributions" taken into account in determining
"contribution percentages" for any Plan Year.

                  Section 8. Determination and Allocation of Excess Matching
Contributions Among Highly Compensated Employees

                                       37

<PAGE>

Notwithstanding any other provision of the Plan to the contrary, in the event
that the limitation on Matching Contributions described in Section 7.7 is
exceeded in any Plan Year, the Administrator shall determine the dollar amount
of the excess by reducing the dollar amount of the contributions included in
determining the "contribution percentage" of Highly Compensated Employees in
order of their "contribution percentages" as follows:

                  (A)      The highest "contribution percentage(s)" shall be
reduced to the greater of (1) the maximum "contribution percentage" that
satisfies the limitation on Matching Contributions described in Section 7.7 or
(2) the next highest "contribution percentage".

                  (B)      If the limitation on Matching Contributions described
in Section 7.7 would still be exceeded after application of the provisions of
paragraph (a), the Administrator shall continue reducing "contribution
percentages" of Highly Compensated Employees, continuing with the next highest
"contribution percentage", in the manner provided in paragraph (a) until the
limitation on Matching Contributions described in Section 7.7 is satisfied.

The determination of the amount of excess Matching Contributions shall be made
after application of Sections 7.2, 7.3, and 7.6, if applicable.

After determining the dollar amount of the "excess contributions" that have been
made to the Plan, the Administrator shall allocate such excess among Highly
Compensated Employees in order of the dollar amount of the Matching and
Tax-Deferred Contributions (to the extent such contributions are included in
determining "contribution percentages") allocated to their Accounts as follows:

(a)      The contributions made on behalf of the Highly Compensated Employee(s)
         with the largest dollar amount of Matching and Tax-Deferred
         Contributions allocated to his Account for the Plan Year shall be
         reduced by the dollar amount of the excess (with such dollar amount
         being allocated equally among all such Highly Compensated Employees),
         but not below the dollar amount of such contributions made on behalf of
         the Highly Compensated Employee(s) with the next highest dollar amount
         of such contributions allocated to his Account for the Plan Year.

(b)      If the excess has not been fully allocated after application of the
         provisions of paragraph (c), the Administrator shall continue reducing
         the contributions made on behalf of Highly Compensated Employees,
         continuing with the Highly Compensated Employees with the largest
         remaining dollar amount of such contributions allocated to their

                                       38

<PAGE>

         Accounts for the Plan Year, in the manner provided in paragraph (c)
         until the entire excess determined above has been allocated.

                  Section 9. Distribution of Excess Contributions

"Excess contributions" allocated to a Highly Compensated Employee pursuant to
the preceding Section, plus any income and minus any losses attributable
thereto, shall be distributed to the Participant prior to the end of the next
succeeding Plan Year as hereinafter provided. If such excess amounts are
distributed more than 2 1/2 months after the last day of the Plan Year for which
the excess occurred, an excise tax may be imposed under Code Section 4979 on the
Employer maintaining the Plan with respect to such amounts.

The distribution requirement of this Section shall be satisfied by reducing
contributions made by or on behalf of the Highly Compensated Employee to the
extent necessary in the following order:

                  (A)      Matching Contributions included in determining the
Highly Compensated Employee's "contribution percentage" shall be distributed.

                  (B)      Tax-Deferred Contributions included in determining
the Highly Compensated Employee's "contribution percentage" shall be
distributed.

                  Section 10. Multiple Use Limitation

Notwithstanding any other provision of the Plan to the contrary, the following
multiple use limitation as required under Code Section 401(m) shall apply: the
sum of the average "deferral percentage" for Eligible Employees who are Highly
Compensated Employees and the average "contribution percentage" for "eligible
participants" who are Highly Compensated Employees may not exceed the "aggregate
limit". In the event that, after satisfaction of the limitations provided under
this Article, it is determined that contributions under the Plan fail to satisfy
the multiple use limitation contained herein, the multiple use limitation shall
be satisfied by further reducing the "deferral percentages" of Eligible
Employees who are Highly Compensated Employees to the extent necessary to
eliminate the excess, as provided in the preceding Sections. Instead of reducing
"deferral percentages", the Administrator may determine to satisfy the multiple
use limitation in an alternative manner, consistently applied, that may be
permitted by regulations issued under Code Section 401(m).

If an amount of Tax-Deferred Contributions is distributed to a Participant in
accordance with this Section, Matching Contributions that are attributable
solely to the distributed Tax-Deferred Contributions, plus any income and minus
any losses attributable thereto, shall be forfeited by the Participant no later
than the last day of the Plan Year following the Plan Year for which the
Matching Contributions were made.

                                       39

<PAGE>

                  Section 11. Treatment of Forfeited Matching Contributions

Any Matching Contributions that are forfeited pursuant to the provisions of the
preceding Sections of this Article shall be applied against the Employer
Contribution obligations for any subsequent Contribution Period of the Employer
for which the Participant most recently performed services as an Employee.
Notwithstanding the foregoing, however, should the amount of all such
forfeitures for any Contribution Period with respect to any Employer exceed the
amount of such Employer's Employer Contribution obligation for the Contribution
Period, the excess amount of such forfeitures shall be held unallocated in a
suspense account established with respect to the Employer and shall for all Plan
purposes be applied against the Employer's Employer Contribution obligations for
the following Contribution Period.

                  Section 12. Determination of Income or Loss

The income or loss attributable to "excess contributions" that are distributed
pursuant to this Article shall be determined for the preceding Plan Year under
the method otherwise used for allocating income or loss to Participants'
Accounts.

                  Section 13. Code Section 415 Limitations on Crediting of
Contributions and Forfeitures

Notwithstanding any other provision of the Plan to the contrary, the "annual
addition" with respect to a Participant for a "limitation year" shall in no
event exceed the lesser of (i) $30,000 (adjusted as provided in Code Section
415(d)) or (ii) 25 percent of the Participant's compensation, as defined in Code
Section 415(c)(3) and regulations issued thereunder, for the "limitation year";
provided, however, that the limit in clause (i) shall be pro-rated for any short
"limitation year". If the "annual addition" to the Account of a Participant in
any "limitation year" would otherwise exceed the amount that may be applied for
his benefit under the limitation contained in this Section, the limitation shall
be satisfied by reducing contributions made to the Participant's Account to the
extent necessary in the following order:

         Tax-Deferred Contributions made on behalf of the Participant for the
         "limitation year" that have not been matched, if any, shall be reduced.

         Tax-Deferred Contributions made on behalf of the Participant for the
         "limitation year" that have been matched, if any, and the Matching
         Contributions attributable thereto shall be reduced pro rata.

         Profit-Sharing Contributions otherwise allocable to the Participant's
         Account for the "limitation year", if any, shall be reduced.

         Forfeitures otherwise allocable to the Participant's Account for the
         "limitation year", if any, shall be reduced.

                                       40

<PAGE>

The amount of any reduction of Tax-Deferred Contributions (plus any income
attributable thereto) shall be returned to the Participant. The amount of any
reduction of Employer Contributions shall be deemed a forfeiture for the
"limitation year".

Amounts deemed to be forfeitures under this Section shall be held unallocated in
a suspense account established for the "limitation year" and shall be applied
against the Employer's contribution obligation for the next following
"limitation year" (and succeeding "limitation years", as necessary). If a
suspense account is in existence at any time during a "limitation year", all
amounts in the suspense account must be applied against the Employer's
contribution obligation before any further contributions that would constitute
"annual additions" may be made to the Plan. No suspense account established
hereunder shall share in any increase or decrease in the net worth of the Trust.

For purposes of this Article, excesses shall result only from the allocation of
forfeitures, a reasonable error in estimating a Participant's annual
compensation (as defined in Code Section 415(c)(3) and regulations issued
thereunder), a reasonable error in determining the amount of "elective
contributions" that may be made with respect to any Participant under the limits
of Code Section 415, or other limited facts and circumstances that justify the
availability of the provisions set forth above.

                  Section 14. Application of Code Section 415 Limitations Where
Participant is Covered Under Other Qualified Defined Contribution Plan

If a Participant is covered by any other qualified defined contribution plan
(whether or not terminated) maintained by an Employer or a Related Company
concurrently with the Plan, and if the "annual addition" for the "limitation
year" would otherwise exceed the amount that may be applied for the
Participant's benefit under the limitation contained in the preceding Section,
such excess shall be reduced first by returning the "employee contributions"
made by the Participant for the "limitation year" under all defined contribution
plans other than the Plan, and the income attributable thereto, to the extent
necessary in the order prescribed by the Administrator. If the limitation
contained in the preceding Section still is not satisfied after returning all of
the "employee contributions" made by the Participant under all such other plans,
the excess shall be reduced by returning or forfeiting, as provided in each such
defined contribution plan, the "elective contributions" made on the
Participant's behalf for the "limitation year" under all such other plans, and,
if "elective contributions" are returned, the income attributable thereto, to
the extent necessary in the order prescribed by the Administrator. If the
limitation contained in the preceding Section still is not satisfied after
returning or forfeiting all of the "elective contributions" made on the
Participant's behalf under all such other plans, the portion of the employer
contributions and of forfeitures for the "limitation year" under all such other
plans that has been allocated to the Participant thereunder, but which exceeds
the limitation set forth in the preceding Section, shall be deemed a forfeiture
for the "limitation year" and shall be disposed of as provided in such other
plans; provided,

                                       41

<PAGE>

however, that the amount of the employer contributions and forfeitures that is a
deemed forfeiture under this Section shall be effected in the order prescribed
by the Administrator, but first under any other defined contribution plan that
is not a money purchase pension plan and, if the limitation still is not
satisfied, then under such money purchase pension plan. If the limitation
contained in the preceding Section still is not satisfied after all employer
contributions and forfeitures under all such other defined contributions plans
are deemed forfeited for the "limitation year", the limitation shall be
satisfied by reducing "annual additions" under the Plan as provided in the
preceding Section.

                                       42

<PAGE>

                  Section 15. Scope of Limitations

The Code Section 415 limitations contained in the preceding Sections shall be
applicable only with respect to benefits provided pursuant to defined
contribution plans and defined benefit plans described in Code Section 415(k).
For purposes of applying the Code Section 415 limitations contained in the
preceding Sections, the term "Related Company" shall be adjusted as provided in
Code Section 415(h).

                                       43

<PAGE>

                                  ARTICLE XXIV
                            TRUST FUNDS AND ACCOUNTS

                  Section 1. General Fund

The Trustee shall maintain a General Fund as required to hold and administer any
assets of the Trust that are not allocated among the Investment Funds as
provided in the Plan or the Trust Agreement. The General Fund shall be held and
administered as a separate common trust fund. The interest of each Participant
or Beneficiary under the Plan in the General Fund shall be an undivided
interest.

                  Section 2. Investment Funds

The Sponsor shall determine the number and type of Investment Funds and shall
communicate the same and any changes therein in writing to the Administrator and
the Trustee. Each Investment Fund shall be held and administered as a separate
common trust fund. The interest of each Participant or Beneficiary under the
Plan in any Investment Fund shall be an undivided interest.

The Sponsor may determine to offer one or more Investment Funds that are
invested primarily in equity securities issued by an Employer or a Related
Company that are publicly traded and are "qualifying employer securities" as
defined in ERISA Section 407(d)(5). In no event may a Participant's Tax-Deferred
Contributions made for any Plan Year beginning on or after January 1, 1999 in
excess of one percent of the Participant's Compensation for such Plan Year be
required to be invested in such equity securities.

                  Section 3. Loan Investment Fund

If a loan from the Plan to a Participant is approved in accordance with the
provisions of Article XII, the Sponsor shall direct the establishment and
maintenance of a loan Investment Fund in the Participant's name. The assets of
the loan Investment Fund shall be held as a separate trust fund. A Participant's
loan Investment Fund shall be invested in the note(s) reflecting the loan(s)
made to the Participant in accordance with the provisions of Article XII.
Notwithstanding any other provision of the Plan to the contrary, income received
with respect to a Participant's loan Investment Fund shall be allocated and the
loan Investment Fund shall be administered as provided in Article XII.

                  Section 4. Income on Trust

Any dividends, interest, distributions, or other income received by the Trustee
with respect to any Trust Fund maintained hereunder shall be allocated by the
Trustee to the Trust Fund for which the income was received.

                                       44

<PAGE>

                  Section 5. Accounts

As of the first date a contribution is made by or on behalf of an Employee there
shall be established an Account in his name reflecting his interest in the
Trust. Each Account shall be maintained and administered for each Participant
and Beneficiary in accordance with the provisions of the Plan. The balance of
each Account shall be the balance of the account after all credits and charges
thereto, for and as of such date, have been made as provided herein.

                  Section 6. Sub-Accounts

A Participant's Account shall be divided into such separate, individual
Sub-Accounts as are necessary or appropriate to reflect the Participant's
interest in the Trust.

                                       45
<PAGE>

                                   ARTICLE XXV
                            LIFE INSURANCE CONTRACTS

                  Section 1. No Life Insurance Contracts

A Participant's Account may not be invested in life insurance contracts on the
life of the Participant.

                                       46

<PAGE>

                                  ARTICLE XXVI
                     DEPOSIT AND INVESTMENT OF CONTRIBUTIONS

                  Section 1. Future Contribution Investment Elections

Each Eligible Employee shall make an investment election in the manner and form
prescribed by the Administrator directing the manner in which the contributions
made on his behalf shall be invested. An Eligible Employee's investment election
shall specify the percentage, in 1 percent increments, of such contributions
that shall be allocated to one or more of the Investment Funds with the sum of
such percentages equaling 100 percent. The investment election by a Participant
shall remain in effect until his entire interest under the Plan is distributed
or forfeited in accordance with the provisions of the Plan or until he records a
change of investment election with the Administrator, in such form as the
Administrator shall prescribe. If recorded in accordance with any rules
prescribed by the Administrator, a Participant's change of investment election
may be implemented effective as of the date or dates specified by the
Administrator. A Participant's change of investment election must be recorded
with the Administrator such number of days prior to the effective date as the
Administrator shall prescribe.

                  Section 2. Deposit of Contributions

All contributions made on a Participant's behalf shall be deposited in the Trust
and allocated among the Investment Funds in accordance with the Participant's
currently effective investment election; provided, however, that any
contributions made to the Plan in qualifying employer securities shall be
allocated to the Employer stock Investment Fund, pending directions to the
Administrator regarding their future investment. If no investment election is
recorded with the Administrator at the time contributions are to be deposited to
a Participant's Account, his contributions shall be allocated among the
Investment Funds as directed by the Administrator.

                  Section 3. Election to Transfer Between Funds

A Participant may elect to transfer investments from any Investment Fund to any
other Investment Fund. The Participant's transfer election shall specify either
(i) a percentage, in 1 percent increments, of the amount eligible for transfer,
which percentage may not exceed 100 percent or (ii) a dollar amount that is to
be transferred. Any transfer election must be recorded with the Administrator,
in such form as the Administrator shall prescribe. Subject to any restrictions
pertaining to a particular Investment Fund, if recorded in accordance with any
rules prescribed by the Administrator, a Participant's transfer election may be
implemented effective as of the date or dates specified by the Administrator. A
Participant's transfer election must be recorded with the Administrator such
number of days prior to the effective date as the Administrator shall prescribe.

                                       47

<PAGE>

                  Section 4. 404(c) Protection

The Plan is intended to constitute a plan described in ERISA Section 404(c) and
regulations issued thereunder. The fiduciaries of the Plan may be relieved of
liability for any losses that are the direct and necessary result of investment
instructions given by a Participant, his Beneficiary, or an alternate payee
under a qualified domestic relations order.

                                       48

<PAGE>

                                 ARTICLE XXVII
                         CREDITING AND VALUING ACCOUNTS

                  Section 1. Crediting Accounts

All contributions made under the provisions of the Plan shall be credited to
Accounts in the Trust Funds by the Trustee, in accordance with procedures
established in writing by the Administrator, either when received or on the
succeeding Valuation Date after valuation of the Trust Fund has been completed
for such Valuation Date as provided in Section 11.2, as shall be determined by
the Administrator.

                  Section 2. Valuing Accounts

Accounts in the Trust Funds shall be valued by the Trustee on the Valuation
Date, in accordance with procedures established in writing by the Administrator,
either in the manner adopted by the Trustee and approved by the Administrator or
in the manner set forth in Section 11.3 as Plan valuation procedures, as
determined by the Administrator.

                  Section 3. Plan Valuation Procedures

With respect to the Trust Funds, the Administrator may determine that the
following valuation procedures shall be applied. As of each Valuation Date
hereunder, the portion of any Accounts in a Trust Fund shall be adjusted to
reflect any increase or decrease in the value of the Trust Fund for the period
of time occurring since the immediately preceding Valuation Date for the Trust
Fund (the "valuation period") in the following manner:

                  (A)      First, the value of the Trust Fund shall be
determined by valuing all of the assets of the Trust Fund at fair market value.

                  (B)      Next, the net increase or decrease in the value of
the Trust Fund attributable to net income and all profits and losses, realized
and unrealized, during the valuation period shall be determined on the basis of
the valuation under paragraph (a) taking into account appropriate adjustments
for contributions, loan payments, and transfers to and distributions,
withdrawals, loans, and transfers from such Trust Fund during the valuation
period.

                                       49

<PAGE>

                  (C)      Finally, the net increase or decrease in the value of
the Trust Fund shall be allocated among Accounts in the Trust Fund in the ratio
of the balance of the portion of such Account in the Trust Fund as of the
preceding Valuation Date less any distributions, withdrawals, loans, and
transfers from such Account balance in the Trust Fund since the Valuation Date
to the aggregate balances of the portions of all Accounts in the Trust Fund
similarly adjusted, and each Account in the Trust Fund shall be credited or
charged with the amount of its allocated share.

                  Section 4. Finality of Determinations

The Trustee shall have exclusive responsibility for determining the value of
each Account maintained hereunder. The Trustee's determinations thereof shall be
conclusive upon all interested parties.

                  Section 5. Notification

Within a reasonable period of time after the end of each Plan Year, the
Administrator shall notify each Participant and Beneficiary of the value of his
Account and Sub-Accounts as of a Valuation Date during the Plan Year.

                                       50

<PAGE>

                                 ARTICLE XXVIII
                                      LOANS

                  Section 1. Application for Loan

A Participant who is a party in interest as defined in ERISA Section 3(14) may
make application to the Administrator for a loan from his Account. Loans shall
be made to Participants in accordance with written guidelines which are hereby
incorporated into and made a part of the Plan. To the extent that such written
guidelines comply with the requirements of Code Section 72(p), but are
inconsistent with the provisions of this Article, such written guidelines shall
be given effect.

As collateral for any loan granted hereunder, the Participant shall grant to the
Plan a security interest in his vested interest under the Plan equal to the
amount of the loan; provided, however, that in no event may the security
interest exceed 50 percent of the Participant's vested interest under the Plan
determined as of the date as of which the loan is originated in accordance with
Plan provisions. In the case of a Participant who is an active employee, the
Participant also shall enter into an agreement to repay the loan by payroll
withholding. No loan in excess of 50 percent of the Participant's vested
interest under the Plan shall be made from the Plan. Loans shall not be made
available to Highly Compensated Employees in an amount greater than the amount
made available to other employees.

A loan shall not be granted unless the Participant consents to the charging of
his Account for unpaid principal and interest amounts in the event the loan is
declared to be in default.

                  Section 2. Reduction of Account Upon Distribution

Notwithstanding any other provision of the Plan, the amount of a Participant's
Account that is distributable to the Participant or his Beneficiary under
Article XIII or XV shall be reduced by the portion of his vested interest that
is held by the Plan as security for any loan outstanding to the Participant,
provided that the reduction is used to repay the loan. If distribution is made
because of the Participant's death prior to the commencement of distribution of
his Account and the Participant's vested interest in his Account is payable to
more than one individual as Beneficiary, then the balance of the Participant's
vested interest in his Account shall be adjusted by reducing the vested account
balance by the amount of the security used to repay the loan, as provided in the
preceding sentence, prior to determining the amount of the benefit payable to
each such individual.

                                       51

<PAGE>

                  Section 3. Requirements to Prevent a Taxable Distribution

Notwithstanding any other provision of the Plan to the contrary, the following
terms and conditions shall apply to any loan made to a Participant under this
Article:

                  (A)      The interest rate on any loan to a Participant shall
be a reasonable interest rate commensurate with current interest rates charged
for loans made under similar circumstances by persons in the business of lending
money.

                  (B)      The amount of any loan to a Participant (when added
to the outstanding balance of all other loans to the Participant from the Plan
or any other plan maintained by an Employer or a Related Company) shall not
exceed the lesser of:

                  (A)      $50,000, reduced by the excess, if any, of the
         highest outstanding balance of any other loan to the Participant from
         the Plan or any other plan maintained by an Employer or a Related
         Company during the preceding 12-month period over the outstanding
         balance of such loans on the date a loan is made hereunder; or

                  (B)      50 percent of the vested portions of the
         Participant's Account and his vested interest under all other plans
         maintained by an Employer or a Related Company.

                  (C)      The term of any loan to a Participant shall be no
greater than five years, except in the case of a loan used to acquire any
dwelling unit which within a reasonable period of time is to be used (determined
at the time the loan is made) as a principal residence (as defined in Code
Section 121) of the Participant.

                  (D)      Substantially level amortization shall be required
over the term of the loan with payments made not less frequently than quarterly,
except that if so provided in the written guidelines applicable to Plan loans,
the amortization schedule may be waived and payments suspended while a
Participant is on a leave of absence from employment with an Employer or any
Related Company (for periods in which the Participant does not perform military
service as described in paragraph (e)), provided that all of the following
requirements are met:

                  (A)      Such leave is either without pay or at a reduced rate
         of pay that, after withholding for employment and income taxes, is less
         than the amount required to be paid under the amortization schedule;

                                       52

<PAGE>

                  (B)      Payments resume after the earlier of (a) the date
         such leave of absence ends or (b) the one-year anniversary of the date
         such leave began;

                  (C)      The period during which payments are suspended does
         not exceed one year;

                  (D)      Payments resume in an amount not less than the amount
         required under the original amortization schedule; and

                  (E)      The waiver of the amortization schedule does not
         extend the period of the loan beyond the maximum period permitted under
         this Article.

                  (E)      If a Participant is absent from employment with any
Employer or any Related Company for a period during which he performs services
in the uniformed services (as defined in chapter 45 of title 38 of the United
States Code), whether or not such services constitute qualified military
service, the suspension of payments shall not be taken into account for purposes
of applying either paragraph (c) or paragraph (d) of this Section provided that
all of the following requirements are met:

                  (A)      Payments resume upon completion of such military
         service;

                  (B)      Payments resume in an amount not less than the amount
         required under the original amortization schedule and continue in such
         amount until the loan is repaid in full;

                  (C)      Upon resumption, payments are made no less frequently
         than required under the original amortization schedule and continue
         under such schedule until the loan is repaid in full; and

                  (D)      The loan is repaid in full, including interest
         accrued during the period of such military service, no later than the
         last scheduled repayment date under the original amortization schedule
         extended by the period of such military service.

                                       53

<PAGE>

                  (F)      The loan shall be evidenced by a legally enforceable
agreement that demonstrates compliance with the provisions of this section.

                  Section 4. Administration of Loan Investment Fund

Upon approval of a loan to a Participant, the Administrator shall direct the
Trustee to transfer an amount equal to the loan amount from the Investment Funds
in which it is invested, as directed by the Administrator, to the loan
Investment Fund established in the Participant's name. Any loan approved by the
Administrator shall be made to the Participant out of the Participant's loan
Investment Fund. All principal and interest paid by the Participant on a loan
made under this Article shall be deposited to his Account and shall be allocated
upon receipt among the Investment Funds in accordance with the Participant's
currently effective investment election. The balance of the Participant's loan
Investment Fund shall be decreased by the amount of principal payments and the
loan Investment Fund shall be terminated when the loan has been repaid in full.

                  Section 5. Default

If either (1) a Participant fails to make or cause to be made, any payment
required under the terms of the loan by the end of the calendar quarter
following the calendar quarter in which the payment was due, unless payment is
not made because the Participant is on a leave of absence and the amortization
schedule is waived as provided in Section 12.3(d) or (e), or (2) there is an
outstanding principal balance existing on a loan after the last scheduled
repayment date (extended as provided in Section 12.3(e), if applicable), the
Administrator shall direct the Trustee to declare the loan to be in default, and
the entire unpaid balance of such loan, together with accrued interest, shall be
immediately due and payable. In any such event, if such balance and interest
thereon is not then paid, the Trustee shall charge the Account of the borrower
with the amount of such balance and interest as of the earliest date a
distribution may be made from the Plan to the borrower without adversely
affecting the tax qualification of the Plan or of the cash or deferred
arrangement.

                  Section 6. Deemed Distribution Under Code Section 72(p)

If a Participant's loan is in default as provided in Section 12.5, the
Participant shall be deemed to have received a taxable distribution in the
amount of the outstanding loan balance as required under Code Section 72(p),
whether or not distribution may actually be made from the Plan without adversely
affecting the tax qualification of the Plan.

If a Participant is deemed to have received distribution of an outstanding loan
balance hereunder, no further loans may be made to such Participant from his
Account unless either (a) there is a legally enforceable arrangement among the
Participant, the Plan, and the Participant's employer that repayment of such
loan shall be made by payroll withholding or (b) the loan is

                                       54

<PAGE>

secured by such additional collateral consisting of real, personal, or other
property satisfactory to the Administrator to provide adequate security for the
loan.

                  Section 7. Treatment of Outstanding Balance of Loan Deemed
Distributed Under Code Section 72(p)

With respect to any loan made on or after January 1, 2002, the balance of such
loan that is deemed to have been distributed to a Participant hereunder shall
cease to be an outstanding loan for purposes of Code Section 72(p) and a
Participant shall not be treated as having received a taxable distribution when
his Account is offset by such outstanding loan balance as provided in Section
12.5. Any interest that accrues on a loan after it is deemed to have been
distributed shall not be treated as an additional loan to the Participant and
shall not be included in the Participant's taxable income as a deemed
distribution. Notwithstanding the foregoing, however, unless a Participant
repays such loan, with interest, the amount of such loan, with interest thereon
calculated as provided in the original loan note, shall continue to be
considered an outstanding loan for purposes of determining the maximum
permissible amount of any subsequent loan under Section 12.3(b).

If a Participant elects to make payments on a loan after it is deemed to have
been distributed hereunder, such payments shall be treated as After-Tax
Contributions to the Plan solely for purposes of determining the taxable portion
of the Participant's Account and shall not be treated as After-Tax Contributions
for any other Plan purpose, including application of the limitations on
contributions applicable under Code Sections 401(m) and 415.

                  Section 8. Special Rules Applicable to Loans

Any loan made hereunder shall be subject to the following rules:

                  (A)      Loans Limited to Eligible Employees: No loans shall
be made to an Employee who makes a Rollover Contribution in accordance with
Article V, but who is not an Eligible Employee as provided in Article III.

                  (B)      Minimum Loan Amount: A Participant may not request a
loan for less than $1,000.

                  (C)      Maximum Number of Outstanding Loans: A Participant
with an outstanding loan may not apply for another loan until the existing loan
is paid in full and may not refinance an existing loan or obtain a second loan
for the purpose of paying off the existing loan. The provisions of this
paragraph shall not apply to any loans made prior to the effective date of this
amendment and restatement; provided, however, that any such loan shall be taken
into account in determining whether a Participant may apply for a new loan
hereunder.

                                       55

<PAGE>

                  (D)      Limit on Loans Made During 12-Month Period:
Regardless of the number of loans outstanding to a Participant, no more than one
loan shall be made to the Participant during a calendar year, Plan Year, or such
other consistent 12-month period designated by the Administrator.

                  (E)      Maximum Period for Principal Residence Loan: The term
of any loan to a Participant that is used to acquire any dwelling unit which
within a reasonable period of time is to be used (determined at the time the
loan is made) as a principal residence (as defined in Code Section 121) of the
Participant shall be no greater than ten years.

                  (F)      Pre-Payment Without Penalty: A Participant may
pre-pay the balance of any loan hereunder prior to the date it is due without
penalty.

                  (G)      Effect of Termination of Employment: Upon a
Participant's termination of employment, the balance of any outstanding loan
hereunder shall immediately become due and owing.

                  (H)      No Roll Over of Loans: A Participant may not elect to
roll over any loan note held pursuant to the provisions of this Article.

                                       56

<PAGE>

                                  ARTICLE XXIX
                           WITHDRAWALS WHILE EMPLOYED

                  Section 1. Age 59 1/2 Withdrawals

A Participant who is employed by an Employer or a Related Company and who has
attained age 59 1/2 may elect, subject to the limitations and conditions
prescribed in this Article, to make a cash withdrawal from his vested interest
in any of the following Sub-Accounts:

                  (A)      his Tax-Deferred Contributions Sub-Account.

                  (B)      his Rollover Contributions Sub-Account.

                  Section 2. Overall Limitations on Non-Hardship Withdrawals

Non-hardship withdrawals made pursuant to this Article shall be subject to the
following conditions and limitations:

                  (A)      A Participant must apply for a non-hardship
withdrawal such number of days prior to the date as of which it is to be
effective as the Administrator may prescribe.

                  (B)      Withdrawals may be made effective as soon as
administratively practicable after the Administrator's approval of the
Participant's withdrawal application.

                  Section 3. Hardship Withdrawals

A Participant who is employed by an Employer or a Related Company and who is
determined by the Administrator to have incurred a hardship in accordance with
the provisions of this Article may elect, subject to the limitations and
conditions prescribed in this Article, to make a cash withdrawal from his vested
interest in any of the following Sub-Accounts:

                  (A)      his Tax-Deferred Contributions Sub-Account, excluding
any income credited to such Sub-Account after September 24, 1988.

                  Section 4. Hardship Determination

                                       57

<PAGE>

The Administrator shall grant a hardship withdrawal only if it determines that
the withdrawal is necessary to meet an immediate and heavy financial need of the
Participant. An immediate and heavy financial need of the Participant means a
financial need on account of:

                                       58

<PAGE>

                  (A)      expenses previously incurred by or necessary to
obtain for the Participant, the Participant's spouse, or any dependent of the
Participant (as defined in Section 152 of the Code) medical care described in
Section 213(d) of the Code;

                  (B)      costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the Participant;

                  (C)      payment of tuition, related educational fees, and
room and board expenses for the next 12 months of post-secondary education for
the Participant, the Participant's spouse, or any dependent of the Participant;

                  (D)      the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the Participant's
principal residence; or

                  (E)      costs directly related to the funeral expenses of the
Participant's spouse or any dependent of the Participant.

                  Section 5. Satisfaction of Necessity Requirement for Hardship
Withdrawals

A withdrawal shall be deemed to be necessary to satisfy an immediate and heavy
financial need of a Participant only if the Participant satisfies all of the
following requirements:

                  (A)      The withdrawal is not in excess of the amount of the
immediate and heavy financial need of the Participant.

                  (B)      The Participant has obtained all distributions, other
than hardship distributions, and all non-taxable loans currently available under
all plans maintained by an Employer or any Related Company.

                  (C)      The Participant's Tax-Deferred Contributions and the
Participant's "elective contributions" and "employee contributions", as defined
in Article VII, under all other qualified and non-qualified deferred
compensation plans maintained by an Employer or any Related Company shall be
suspended for at least 12 months after his receipt of the withdrawal.

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<PAGE>

                  (D)      The Participant's Tax-Deferred Contributions and
"elective contributions", as defined in Article VII, for his taxable year
immediately following the taxable year of the withdrawal shall not exceed the
applicable limit under Code Section 402(g) for such next taxable year less the
amount of the Participant's Tax-Deferred Contributions and "elective
contributions" for the taxable year of the withdrawal.

A Participant shall not fail to be treated as an Eligible Employee for purposes
of applying the limitations contained in Article VII of the Plan merely because
his Tax-Deferred Contributions are suspended in accordance with this Section.

                  Section 6. Conditions and Limitations on Hardship Withdrawals

Hardship withdrawals made pursuant to this Article shall be subject to the
following conditions and limitations:

                  (A)      A Participant must apply for a hardship withdrawal
such number of days prior to the date as of which it is to be effective as the
Administrator may prescribe.

                  (B)      Hardship withdrawals may be made effective as soon as
administratively practicable after the Administrator's approval of the
Participant's withdrawal application.

                  (C)      The amount of a hardship withdrawal may include any
amounts necessary to pay any Federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution.

                  Section 7. Order of Withdrawal from a Participant's
Sub-Accounts

Distribution of a withdrawal amount shall be made from a Participant's
Sub-Accounts, to the extent necessary, in the order prescribed by the
Administrator, which order shall be uniform with respect to all Participants and
non-discriminatory. If the Sub-Account from which a Participant is receiving a
withdrawal is invested in more than one Investment Fund, the withdrawal shall be
charged against the Investment Funds as directed by the Administrator.

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                                   ARTICLE XXX
                  TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE

                  Section 1. Termination of Employment and Settlement Date

A Participant's Settlement Date shall occur on the date he terminates employment
with the Employers and all Related Companies because of death, Disability,
retirement, or other termination of employment. Written notice of a
Participant's Settlement Date shall be given by the Administrator to the
Trustee.

                  Section 2. Recrediting of Forfeited Amounts

A former Participant who forfeited the non-vested portion of his Employer
Contributions Sub-Account in accordance with the provisions of the Plan or any
merged plan and who is reemployed by an Employer or a Related Company shall have
such forfeited amounts recredited to a new Account in his name, without
adjustment for interim gains or losses experienced by the Trust, if:

                  (A)      he returns to employment with an Employer or a
Related Company before he incurs five consecutive Breaks in Service commencing
after the date he received, or is deemed to have received, distribution of his
vested interest in his Account;

                  (B)      he resumes employment covered under the Plan before
the earlier of (i) the end of the five-year period beginning on the date he is
reemployed or (ii) the date he incurs five consecutive Breaks in Service
commencing after the date he received, or is deemed to have received,
distribution of his vested interest in his Account; and

                  (C)      if he received actual distribution of his vested
interest in his Account, he repays to the Plan the full amount of such
distribution before the earlier of (i) the end of the five year period beginning
on the date he is reemployed or (ii) the date he incurs five consecutive Breaks
in Service commencing after the date he received distribution of his vested
interest in his Account.

Funds needed in any Plan Year to recredit the Account of a Participant with the
amounts of prior forfeitures in accordance with the preceding sentence shall
come first from forfeitures that arise during such Plan Year, and then from
Trust income earned in such Plan Year, to the extent that it has not yet been
allocated among Participants' Accounts as provided in Article XI, with each
Trust Fund being charged with the amount of such income proportionately, unless
his

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<PAGE>

Employer chooses to make an additional Employer Contribution, and shall finally
be provided by his Employer by way of a separate Employer Contribution.

                                       62
<PAGE>

                                  ARTICLE XXXI
                                  DISTRIBUTIONS

                  Section 1. Distributions to Participants

A Participant whose Settlement Date occurs shall receive distribution of his
vested interest in his Account in the form provided under Article XVI beginning
as soon as reasonably practicable following his Settlement Date or the date his
application for distribution is filed with the Administrator, if later.

                  Section 2. Distributions to Beneficiaries

If a Participant dies prior to his Benefit Payment Date, his Beneficiary shall
receive distribution of the Participant's vested interest in his Account in the
form provided under Article XVI beginning as soon as reasonably practicable
following the date the Beneficiary's application for distribution is filed with
the Administrator. Unless distribution is to be made over the life or over a
period certain not greater than the life expectancy of the Beneficiary,
distribution of the Participant's entire vested interest shall be made to the
Beneficiary no later than the end of the fifth calendar year beginning after the
Participant's death. If distribution is to be made over the life or over a
period certain no greater than the life expectancy of the Beneficiary,
distribution shall commence no later than:

                  (A)      If the Beneficiary is not the Participant's spouse,
the end of the first calendar year beginning after the Participant's death; or

                  (B)      If the Beneficiary is the Participant's spouse, the
later of (i) the end of the first calendar year beginning after the
Participant's death or (ii) the end of the calendar year in which the
Participant would have attained age 70 1/2.

If distribution is to be made to a Participant's spouse, it shall be made
available within a reasonable period of time after the Participant's death that
is no less favorable than the period of time applicable to other distributions.
If a Participant dies after the date distribution of his vested interest in his
Account begins under this Article, but before his entire vested interest in his
Account is distributed, his Beneficiary shall receive distribution of the
remainder of the Participant's vested interest in his Account beginning as soon
as reasonably practicable following the Participant's date of death in a form
that provides for distribution at least as rapidly as under the form in which
the Participant was receiving distribution.

                                       63
<PAGE>

                  Section 3. Cash Outs and Participant Consent

Notwithstanding any other provision of the Plan to the contrary, if a
Participant's vested interest in his Account does not exceed $5,000,
distribution of such vested interest shall be made to the Participant in a
single sum payment or through a direct rollover, as described in Article XVI, as
soon as reasonably practicable following his Settlement Date. If a Participant
has no vested interest in his Account on his Settlement Date, he shall be deemed
to have received distribution of such vested interest on his Settlement Date.

If a Participant's vested interest in his Account exceeds $5,000, distribution
shall not commence to such Participant prior to the date he attains age 62
without the Participant's written consent.

                  Section 4. Required Commencement of Distribution

Notwithstanding any other provision of the Plan to the contrary, distribution of
a Participant's vested interest in his Account shall commence to the Participant
no later than the earlier of:

                  (A)      unless the Participant elects a later date, 60 days
after the close of the Plan Year in which (i) the Participant's Normal
Retirement Date occurs, (ii) the tenth anniversary of the year in which he
commenced participation in the Plan occurs, or (iii) his Settlement Date occurs,
whichever is latest; or

                  (B)      his Required Beginning Date.

Distributions required to commence under this Section shall be made in the form
provided under Article XVI and in accordance with Code Section 401(a)(9) and
regulations issued thereunder, including the minimum distribution incidental
benefit requirements.

                  Section 5. Reemployment of a Participant

If a Participant whose Settlement Date has occurred is reemployed by an Employer
or a Related Company, he shall continue to have a right to any distribution or
further distributions from the Trust arising from his prior Settlement Date and
any amounts credited to his Separate Account with respect to employment after
his prior Settlement Date shall be accounted for separately.

                  Section 6. Restrictions on Alienation

Except as provided in Code Section 401(a)(13) (relating to qualified domestic
relations orders), Code Section 401(a)(13)(C) and (D) (relating to offsets
ordered or required under a criminal conviction involving the Plan, a civil
judgment in connection with a violation or alleged violation of fiduciary
responsibilities under ERISA, or a settlement agreement between the Participant
and the Department of Labor in connection with a violation or alleged violation
of

                                       64
<PAGE>

fiduciary responsibilities under ERISA), Section 1.401(a)-13(b)(2) of Treasury
regulations (relating to Federal tax levies and judgments), or as otherwise
required by law, no benefit under the Plan at any time shall be subject in any
manner to anticipation, alienation, assignment (either at law or in equity),
encumbrance, garnishment, levy, execution, or other legal or equitable process;
and no person shall have power in any manner to anticipate, transfer, assign
(either at law or in equity), alienate or subject to attachment, garnishment,
levy, execution, or other legal or equitable process, or in any way encumber his
benefits under the Plan, or any part thereof, and any attempt to do so shall be
void.

                  Section 7. Facility of Payment

If the Administrator finds that any individual to whom an amount is payable
hereunder is incapable of attending to his financial affairs because of any
mental or physical condition, including the infirmities of advanced age, such
amount (unless prior claim therefore shall have been made by a duly qualified
guardian or other legal representative) may, in the discretion of the
Administrator, be paid to another person for the use or benefit of the
individual found incapable of attending to his financial affairs or in
satisfaction of legal obligations incurred by or on behalf of such individual.
The Trustee shall make such payment only upon receipt of written instructions to
such effect from the Administrator. Any such payment shall be charged to the
Account from which any such payment would otherwise have been paid to the
individual found incapable of attending to his financial affairs and shall be a
complete discharge of any liability therefore under the Plan.

                  Section 8. Inability to Locate Payee

If any benefit becomes payable to any person, or to the executor or
administrator of any deceased person, and if that person or his executor or
administrator does not present himself to the Administrator within a reasonable
period after the Administrator mails written notice of his eligibility to
receive a distribution hereunder to his last known address and makes such other
diligent effort to locate the person as the Administrator determines, that
benefit will be forfeited. However, if the payee later files a claim for that
benefit, the benefit will be restored.

                  Section 9. Distribution Pursuant to Qualified Domestic
Relations Orders

Notwithstanding any other provision of the Plan to the contrary, if a qualified
domestic relations order so provides, distribution may be made to an alternate
payee pursuant to a qualified domestic relations order, as defined in Code
Section 414(p), regardless of whether the Participant's Settlement Date has
occurred or whether the Participant is otherwise entitled to receive a
distribution under the Plan.

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<PAGE>

                                  ARTICLE XXXII
                                 FORM OF PAYMENT

                  Section 1. Normal Form of Payment

Unless a Participant, or his Beneficiary, if the Participant has died, elects
the optional form of payment, distribution shall be made to the Participant, or
his Beneficiary, as the case may be, in a single sum cash payment.

                  Section 2. Optional Form of Payment

A Participant, or his Beneficiary, as the case may be, may elect to receive
distribution of all or a portion of his Account in one or a combination of the
following optional forms of payment:

(a)      Stated Amount - Distribution of a portion of the Participant's Account
         shall be made to him as a cash payment. The Participant will specify
         the dollar amount of the distribution.

(b)      Installment Payments - Distribution shall be made in a series of cash
         installments over a period not exceeding the life expectancy of the
         Participant, or the Participant's Beneficiary, if the Participant has
         died, or a period not exceeding the joint life and last survivor
         expectancy of the Participant and his Beneficiary. Each installment
         shall be equal in amount except as necessary to adjust for any changes
         in the value of the Participant's Account unless the Participant elects
         a more rapid distribution schedule. The determination of life
         expectancies shall be made on the basis of the expected return
         multiples in Tables V or VI of Section 1.72-9 of the Treasury
         regulations and shall be calculated once at the time installment
         payments begin.

                  Section 3. Change of Election

A Participant or Beneficiary who has elected the optional form of payment may
revoke or change his election at any time prior to his Benefit Payment Date by
filing his election with the Administrator in the form prescribed by the
Administrator.

                  Section 4. Direct Rollover

Notwithstanding any other provision of the Plan to the contrary, in lieu of
receiving distribution in a form of payment provided under this Article, a
"qualified distributee" may elect in writing, in accordance with rules
prescribed by the Administrator, to have a portion or all of any "eligible
rollover distribution" paid directly by the Plan to the "eligible retirement
plan" designated by the "qualified distributee". Any such payment by the Plan to
another "eligible retirement plan" shall be a direct rollover.

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<PAGE>

Notwithstanding the foregoing, a "qualified distributee" may not elect a direct
rollover with respect to an "eligible rollover distribution" if the total value
of such distribution is less than $200 or with respect to a portion of an
"eligible rollover distribution" if the value of such portion is less than $500.
For purposes of this Section, the following terms have the following meanings:

                  (A)      An "eligible retirement plan" means an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a) that
accepts rollovers; provided, however, that, in the case of a direct rollover by
a surviving spouse, an eligible retirement plan does not include a qualified
trust described in Code Section 401(a).

                  (B)      An "eligible rollover distribution" means any
distribution of all or any portion of the balance of a Participant's Account;
provided, however, that an eligible rollover distribution does not include the
following:

                  (A)      any distribution to the extent such distribution is
         required under Code Section 401(a)(9).

                  (B)      any distribution that is one of a series of
         substantially equal periodic payment made not less frequently than
         annually for the life or life expectancy of the "qualified distributee"
         or the joint lives or life expectancies of the "qualified distributee"
         and the "qualified distributee's" designated beneficiary, or for a
         specified period of ten years or more.

                  (C)      any hardship withdrawal of Tax-Deferred Contributions
         made in accordance with the provisions of Article XIII.

                  (C)      A "qualified distributee" means a Participant, his
surviving spouse, or his spouse or former spouse who is an alternate payee under
a qualified domestic relations order, as defined in Code Section 414(p).

                  Section 5. Notice Regarding Forms of Payment

Within the 60 day period ending 30 days before a Participant's Benefit Payment
Date, the Administrator shall provide the Participant with a written explanation
of his right to defer

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<PAGE>

distribution until age 62, or such later date as may be provided in the Plan,
his right to make a direct rollover, and the forms of payment provided under the
Plan. Distribution of the Participant's Account may commence fewer than 30 days
after such notice is provided to the Participant if (i) the Administrator
clearly informs the Participant of his right to consider his election of whether
or not to make a direct rollover or to receive a distribution prior to age 62
and his form of payment for a period of at least 30 days following his receipt
of the notice and (ii) the Participant, after receiving the notice,
affirmatively elects an early distribution.

                  Section 6. Reemployment

If a Participant is reemployed by an Employer or a Related Company prior to
receiving distribution of the entire balance of his vested interest in his
Account, his prior election of a form of payment hereunder shall continue to
apply to that portion of his Account attributable to his prior employment.

                  Section 7. Distribution in the Form of Employer Stock

Notwithstanding any other provision of the Plan to the contrary, to the extent
that his Account is invested in Employer stock on the date distribution is to be
made to a Participant, the Participant may elect to receive distribution of the
fair market value of such Account in the form of Employer stock.

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<PAGE>

                                 ARTICLE XXXIII
                                  BENEFICIARIES

                  Section 1. Designation of Beneficiary

An unmarried Participant's Beneficiary shall be the person or persons designated
by such Participant in accordance with rules prescribed by the Administrator. A
married Participant's Beneficiary shall be his spouse, unless the Participant
designates a person or persons other than his spouse as Beneficiary with his
spouse's written consent. For purposes of this Section, a Participant shall be
treated as unmarried and spousal consent shall not be required if the
Participant is not married on his Benefit Payment Date.

If no Beneficiary has been designated pursuant to the provisions of this
Section, or if no Beneficiary survives the Participant and he has no surviving
spouse, then the Beneficiary under the Plan shall be the deceased Participant's
surviving children in equal shares or, if there are no surviving children, the
Participant's surviving parents in equal shares or, if there are no surviving
parents, the Participant's estate. If a Beneficiary dies after becoming entitled
to receive a distribution under the Plan but before distribution is made to him
in full, and if the Participant has not designated another Beneficiary to
receive the balance of the distribution in that event, the estate of the
deceased Beneficiary shall be the Beneficiary as to the balance of the
distribution.

                  Section 2. Spousal Consent Requirements

Any written spousal consent given pursuant to this Article must acknowledge the
effect of the action taken, must specify any non-spouse Beneficiary designated
by the Participant and that such Beneficiary may not be changed without written
spousal consent, and must be witnessed by a Plan representative or a notary
public. A Participant's spouse will be deemed to have given written consent to
the Participant's designation of Beneficiary if the Participant establishes to
the satisfaction of a Plan representative that such consent cannot be obtained
because the spouse cannot be located or because of other circumstances set forth
in Section 401(a)(11) of the Code and regulations issued thereunder. Any written
consent given or deemed to have been given by a Participant's spouse hereunder
shall be valid only with respect to the spouse who signs the consent.

                                       69
<PAGE>

                                  ARTICLE XXXIV
                                 ADMINISTRATION

                  Section 1. Authority of the Sponsor

The Sponsor, which shall be the administrator for purposes of ERISA and the plan
administrator for purposes of the Code, shall be responsible for the
administration of the Plan and, in addition to the powers and authorities
expressly conferred upon it in the Plan, shall have all such powers and
authorities as may be necessary to carry out the provisions of the Plan,
including the power and authority to interpret and construe the provisions of
the Plan, to make benefit determinations, and to resolve any disputes which
arise under the Plan. The Sponsor may employ such attorneys, agents, and
accountants as it may deem necessary or advisable to assist in carrying out its
duties hereunder. The Sponsor shall be a "named fiduciary" as that term is
defined in ERISA Section 402(a)(2). The Sponsor, by action of its board of
directors, may:

                  (A)      allocate any of the powers, authority, or
responsibilities for the operation and administration of the Plan (other than
trustee responsibilities as defined in ERISA Section 405(c)(3)) among named
fiduciaries; and

                  (B)      designate a person or persons other than a named
fiduciary to carry out any of such powers, authority, or responsibilities;

except that no allocation by the Sponsor of, or designation by the Sponsor with
respect to, any of such powers, authority, or responsibilities to another named
fiduciary or a person other than a named fiduciary shall become effective unless
such allocation or designation shall first be accepted by such named fiduciary
or other person in a writing signed by it and delivered to the Sponsor.

                  Section 2. Discretionary Authority

In carrying out its duties under the Plan, including making benefit
determinations, interpreting or construing the provisions of the Plan, and
resolving disputes, the Sponsor (or any individual to whom authority has been
delegated in accordance with Section 18.1) shall have absolute discretionary
authority.

                  Section 3. Action of the Sponsor

Any act authorized, permitted, or required to be taken under the Plan by the
Sponsor and which has not been delegated in accordance with Section 18.1, may be
taken by a majority of the

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<PAGE>

members of the board of directors of the Sponsor, either by vote at a meeting,
or in writing without a meeting, or by the employee or employees of the Sponsor
designated by the board of directors to carry out such acts on behalf of the
Sponsor. All notices, advice, directions, certifications, approvals, and
instructions required or authorized to be given by the Sponsor as under the Plan
shall be in writing and signed by either (i) a majority of the members of the
Sponsor's board of directors or by such member or members as may be designated
by an instrument in writing, signed by all the members thereof, as having
authority to execute such documents on its behalf, or (ii) the employee or
employees authorized to act for the Sponsor in accordance with the provisions of
this Section.

                  Section 4. Claims Review Procedure

Except to the extent that the provisions of any collective bargaining agreement
provide another method of resolving claims for benefits under the Plan, the
provisions of this Section shall control with respect to the resolution of such
claims. Whenever a claim for benefits under the Plan filed by any person (herein
referred to as the "Claimant") is denied, whether in whole or in part, the
Sponsor shall transmit a written notice of such decision to the Claimant within
90 days of the date the claim was filed or, if special circumstances require an
extension, within 180 days of such date, which notice shall be written in a
manner calculated to be understood by the Claimant and shall contain a statement
of (i) the specific reasons for the denial of the claim, (ii) specific reference
to pertinent Plan provisions on which the denial is based, (iii) a description
of any additional material or information necessary for the Claimant to perfect
the claim and an explanation of why such information is necessary, (iv) that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, (v) records and other information
relevant to the Claimant's claim, a description of the review procedures and in
the event of an adverse review decision, a statement describing any voluntary
review procedures and the Claimant's right to obtain copies of such procedures,
and (vi) a statement that there is no further administrative review following
the initial review, and that the Claimant has a right to bring a civil action
under ERISA Section 502(a) if the Sponsor's decision on review is adverse to the
Claimant. The notice shall also include a statement advising the Claimant that,
within 60 days of the date on which he receives such notice, he may obtain
review of such decision in accordance with the procedures hereinafter set forth.
Within such 60-day period, the Claimant or his authorized representative may
request that the claim denial be reviewed by filing with the Sponsor a written
request therefor, which request shall contain the following information:

                  (A)      the date on which the Claimant's request was filed
with the Sponsor; provided, however, that the date on which the Claimant's
request for review was in fact filed with the Sponsor shall control in the event
that the date of the actual filing is later than the date stated by the Claimant
pursuant to this paragraph;

                                       71
<PAGE>

                  (B)      the specific portions of the denial of his claim
which the Claimant requests the Sponsor to review;

                                       72
<PAGE>

                  (C)      a statement by the Claimant setting forth the basis
upon which he believes the Sponsor should reverse the previous denial of his
claim for benefits and accept his claim as made; and

                  (D)      any written material (offered as exhibits) which the
Claimant desires the Sponsor to examine in its consideration of his position as
stated pursuant to paragraph (c) of this Section.

Within 60 days of the date determined pursuant to paragraph (a) of this Section
or, if special circumstances require an extension, within 120 days of such date,
the Sponsor shall conduct a full and fair review of the decision denying the
Claimant's claim for benefits and shall render its written decision on review to
the Claimant. The Sponsor's decision on review shall be written in a manner
calculated to be understood by the Claimant and shall specify the reasons and
Plan provisions upon which the Sponsor's decision was based.

Notwithstanding the foregoing, special procedures apply for processing claims
and reviewing prior claim determinations if a Claimant's claim for benefits is
contingent upon a determination as to whether a Participant is Disabled under
the Plan.

                  Section 5. Qualified Domestic Relations Orders

The Sponsor shall establish reasonable procedures to determine the status of
domestic relations orders and to administer distributions under domestic
relations orders which are deemed to be qualified orders. Such procedures shall
be in writing and shall comply with the provisions of Code Section 414(p) and
regulations issued thereunder.

                  Section 6. Indemnification

In addition to whatever rights of indemnification the members of the Sponsor's
board of directors or any employee or employees of the Sponsor to whom any
power, authority, or responsibility is delegated pursuant to Section 18.3, may
be entitled under the articles of incorporation or regulations of the Sponsor,
under any provision of law, or under any other agreement, the Sponsor shall
satisfy any liability actually and reasonably incurred by any such person or
persons, including expenses, attorneys' fees, judgments, fines, and amounts paid
in settlement (other than amounts paid in settlement not approved by the
Sponsor), in connection with any threatened, pending or completed action, suit,
or proceeding which is related to the exercising or failure to exercise by such
person or persons of any of the powers, authority, responsibilities, or
discretion as provided under the Plan, or reasonably believed by such person or
persons to be provided hereunder, and any action taken by such person or persons
in connection therewith, unless the same is judicially determined to be the
result of such person or persons' gross negligence or willful misconduct.

                                       73
<PAGE>

                  Section 7. Actions Binding

Subject to the provisions of Section 18.4, any action taken by the Sponsor which
is authorized, permitted, or required under the Plan shall be final and binding
upon the Employers, the Trustee, all persons who have or who claim an interest
under the Plan, and all third parties dealing with the Employers or the Trustee.

                                       74
<PAGE>

                                  ARTICLE XXXV
                            AMENDMENT AND TERMINATION

                  Section 1. Amendment

Subject to the provisions of Section 19.2, the Sponsor may at any time and from
time to time, by action of its board of directors, amend the Plan, either
prospectively or retroactively. Any such amendment shall be by written
instrument executed by the Sponsor.

                  Section 2. Limitation on Amendment

The Sponsor shall make no amendment to the Plan which shall decrease the accrued
benefit of any Participant or Beneficiary, except that nothing contained herein
shall restrict the right to amend the provisions of the Plan relating to the
administration of the Plan and Trust. Moreover, no such amendment shall be made
hereunder which shall permit any part of the Trust to revert to an Employer or
any Related Company or be used or be diverted to purposes other than the
exclusive benefit of Participants and Beneficiaries. The Sponsor shall make no
retroactive amendment to the Plan unless such amendment satisfies the
requirements of Code Section 401(b) and/or Section 1.401(a)(4)-11(g) of the
Treasury regulations, as applicable.

                  Section 3. Termination

The Sponsor reserves the right, by action of its board of directors, to
terminate the Plan as to all Employers at any time (the effective date of such
termination being hereinafter referred to as the "termination date"). Upon any
such termination of the Plan, the following actions shall be taken for the
benefit of Participants and Beneficiaries:

                  (A)      As of the termination date, each Investment Fund
shall be valued and all Accounts and Sub-Accounts shall be adjusted in the
manner provided in Article XI, with any unallocated contributions or forfeitures
being allocated as of the termination date in the manner otherwise provided in
the Plan. The termination date shall become a Valuation Date for purposes of
Article XI. In determining the net worth of the Trust, there shall be included
as a liability such amounts as shall be necessary to pay all expenses in
connection with the termination of the Trust and the liquidation and
distribution of the property of the Trust, as well as other expenses, whether or
not accrued, and shall include as an asset all accrued income.

                  (B)      All Accounts shall then be disposed of to or for the
benefit of each Participant or Beneficiary in accordance with the provisions of
Article XV as if the termination date were his Settlement Date; provided,
however, that notwithstanding the provisions of Article XV, if the Plan does not
offer an annuity option and if neither his Employer nor a Related Company
establishes or maintains another defined contribution plan (other than an

                                       75
<PAGE>

employee stock ownership plan as defined in Code Section 4975(e)(7)), the
Participant's written consent to the commencement of distribution shall not be
required regardless of the value of the vested portions of his Account.

                  (C)      Notwithstanding the provisions of paragraph (b) of
this Section, no distribution shall be made to a Participant of any portion of
the balance of his Tax-Deferred Contributions Sub-Account prior to his
separation from service (other than a distribution made in accordance with
Article XIII or required in accordance with Code Section 401(a)(9)) unless (i)
neither his Employer nor a Related Company establishes or maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7), a tax credit employee stock ownership plan
as defined in Code Section 409, or a simplified employee pension as defined in
Code Section 408(k)) either at the time the Plan is terminated or at any time
during the period ending 12 months after distribution of all assets from the
Plan; provided, however, that this provision shall not apply if fewer than two
percent of the Eligible Employees under the Plan were eligible to participate at
any time in such other defined contribution plan during the 24-month period
beginning 12 months before the Plan termination, and (ii) the distribution the
Participant receives is a "lump sum distribution" as defined in Code Section
402(e)(4), without regard to clauses (I), (II), (III), and (IV) of sub-paragraph
(D)(i) thereof.

Notwithstanding anything to the contrary contained in the Plan, upon any such
Plan termination, the vested interest of each Participant and Beneficiary in his
Employer Contributions Sub-Account shall be 100 percent; and, if there is a
partial termination of the Plan, the vested interest of each Participant and
Beneficiary who is affected by the partial termination in his Employer
Contributions Sub-Account shall be 100 percent. For purposes of the preceding
sentence only, the Plan shall be deemed to terminate automatically if there
shall be a complete discontinuance of contributions hereunder by all Employers.

                  Section 4. Reorganization

The merger, consolidation, or liquidation of any Employer with or into any other
Employer or a Related Company shall not constitute a termination of the Plan as
to such Employer. If an Employer disposes of substantially all of the assets
used by the Employer in a trade or business or disposes of a subsidiary and in
connection therewith one or more Participants terminates employment but
continues in employment with the purchaser of the assets or with such
subsidiary, no distribution from the Plan shall be made to any such Participant
from his Tax-Deferred Contributions Sub-Account prior to his separation from
service (other than a distribution made in accordance with Article XIII or
required in accordance with Code Section 401(a)(9)), except that a distribution
shall be permitted to be made in such a case, subject to the Participant's
consent (to the extent required by law), if (i) the distribution would
constitute a "lump sum distribution" as defined in Code Section 402(e)(4),
without regard to clauses (I),

                                       76
<PAGE>

(II), (III), or (IV) of sub-paragraph (D)(i) thereof, (ii) the Employer
continues to maintain the Plan after the disposition, (iii) the purchaser does
not maintain the Plan after the disposition, and (iv) the distribution is made
by the end of the second calendar year after the calendar year in which the
disposition occurred.

                  Section 5. Withdrawal of an Employer

An Employer other than the Sponsor may withdraw from the Plan at any time upon
notice in writing to the Administrator (the effective date of such withdrawal
being hereinafter referred to as the "withdrawal date"), and shall thereupon
cease to be an Employer for all purposes of the Plan. An Employer shall be
deemed automatically to withdraw from the Plan in the event of its complete
discontinuance of contributions, or, subject to Section 19.4 and unless the
Sponsor otherwise directs, it ceases to be a Related Company of the Sponsor or
any other Employer. Upon the withdrawal of an Employer, the withdrawing Employer
shall determine whether a partial termination has occurred with respect to its
Employees. In the event that the withdrawing Employer determines a partial
termination has occurred, the action specified in Section 19.3 shall be taken as
of the withdrawal date, as on a termination of the Plan, but with respect only
to Participants who are employed solely by the withdrawing Employer, and who,
upon such withdrawal, are neither transferred to nor continued in employment
with any other Employer or a Related Company. The interest of any Participant
employed by the withdrawing Employer who is transferred to or continues in
employment with any other Employer or a Related Company, and the interest of any
Participant employed solely by an Employer or a Related Company other than the
withdrawing Employer, shall remain unaffected by such withdrawal; no adjustment
to his Accounts shall be made by reason of the withdrawal; and he shall continue
as a Participant hereunder subject to the remaining provisions of the Plan.

                                       77
<PAGE>

                                 ARTICLE XXXVI
                           ADOPTION BY OTHER ENTITIES

                  Section 1. Adoption by Related Companies

A Related Company that is not an Employer may, with the consent of the Sponsor,
adopt the Plan and become an Employer hereunder by causing an appropriate
written instrument evidencing such adoption to be executed in accordance with
the requirements of its organizational authority. Any such instrument shall
specify the effective date of the adoption.

                  Section 2. Effective Plan Provisions

An Employer who adopts the Plan shall be bound by the provisions of the Plan in
effect at the time of the adoption and as subsequently in effect because of any
amendment to the Plan.

                                       78
<PAGE>

                                 ARTICLE XXXVII
                            MISCELLANEOUS PROVISIONS

                  Section 1. No Commitment as to Employment

Nothing contained herein shall be construed as a commitment or agreement upon
the part of any person to continue his employment with an Employer or Related
Company, or as a commitment on the part of any Employer or Related Company to
continue the employment, compensation, or benefits of any person for any period.

                  Section 2. Benefits

Nothing in the Plan nor the Trust Agreement shall be construed to confer any
right or claim upon any person, firm, or corporation other than the Employers,
the Trustee, Participants, and Beneficiaries.

                  Section 3. No Guarantees

The Employers, the Administrator, and the Trustee do not guarantee the Trust
from loss or depreciation, nor do they guarantee the payment of any amount which
may become due to any person hereunder.

                  Section 4. Expenses

The expenses of administration of the Plan, including the expenses of the
Administrator and fees of the Trustee, shall be paid from the Trust as a general
charge thereon, unless the Sponsor elects to make payment. Notwithstanding the
foregoing, the Sponsor may direct that the costs incident to the management of
the assets of an Investment Fund or to the purchase or sale of securities held
in an Investment Fund shall be paid by the Trustee from such Investment Fund.

                  Section 5. Precedent

Except as otherwise specifically provided, no action taken in accordance with
the Plan shall be construed or relied upon as a precedent for similar action
under similar circumstances.

                  Section 6. Duty to Furnish Information

The Employers, the Administrator, and the Trustee shall furnish to any of the
others any documents, reports, returns, statements, or other information that
the other reasonably deems necessary to perform its duties hereunder or
otherwise imposed by law.

                  Section 7. Merger, Consolidation, or Transfer of Plan Assets

                                       79
<PAGE>

The Plan shall not be merged or consolidated with any other plan, nor shall any
of its assets or liabilities be transferred to another plan, unless, immediately
after such merger, consolidation, or transfer of assets or liabilities, each
Participant in the Plan would receive a benefit under the Plan which is at least
equal to the benefit he would have received immediately prior to such merger,
consolidation, or transfer of assets or liabilities (assuming in each instance
that the Plan had then terminated).

                  Section 8. Back Pay Awards

The provisions of this Section shall apply only to an Employee or former
Employee who becomes entitled to back pay by an award or agreement of an
Employer without regard to mitigation of damages. If a person to whom this
Section applies was or would have become an Eligible Employee after such back
pay award or agreement has been effected, and if any such person who had not
previously elected to make Tax-Deferred Contributions pursuant to Section 4.1
shall within 30 days of the date he receives notice of the provisions of this
Section make an election to make Tax-Deferred Contributions in accordance with
such Section 4.1 (retroactive to any Enrollment Date as of which he was or has
become eligible to do so), then such Participant may elect that any Tax-Deferred
Contributions not previously made on his behalf but which, after application of
the foregoing provisions of this Section, would have been made under the
provisions of Article IV shall be made out of the proceeds of such back pay
award or agreement. In addition, if any such Employee or former Employee would
have been eligible to participate in the allocation of Employer Contributions
under the provisions of Article VI or XXII for any prior Plan Year after such
back pay award or agreement has been effected, his Employer shall make an
Employer Contribution equal to the amount of the Employer Contribution which
would have been allocated to such Participant under the provisions of Article VI
or XXII as in effect during each such Plan Year. The amounts of such additional
contributions shall be credited to the Account of such Participant. Any
additional contributions made pursuant to this Section shall be made in
accordance with, and subject to the limitations of the applicable provisions of
the Plan.

                  Section 9. Condition on Employer Contributions

Notwithstanding anything to the contrary contained in the Plan or the Trust
Agreement, any contribution of an Employer hereunder is conditioned upon the
continued qualification of the Plan under Code Section 401(a), the exempt status
of the Trust under Code Section 501(a), and the deductibility of the
contribution under Code Section 404. Except as otherwise provided in this
Section and Section 21.10, however, in no event shall any portion of the
property of the Trust ever revert to or otherwise inure to the benefit of an
Employer or any Related Company.

                  Section 10. Return of Contributions to an Employer

Notwithstanding any other provision of the Plan or the Trust Agreement to the
contrary, in the event any contribution of an Employer made hereunder:

                                       80
<PAGE>

                  (A)      is made under a mistake of fact, or

                  (B)      is disallowed as a deduction under Code Section 404,

such contribution may be returned to the Employer within one year after the
payment of the contribution or the disallowance of the deduction to the extent
disallowed, whichever is applicable. In the event the Plan does not initially
qualify under Code Section 401(a), any contribution of an Employer made
hereunder may be returned to the Employer within one year of the date of denial
of the initial qualification of the Plan, but only if an application for
determination was made within the period of time prescribed under ERISA Section
403(c)(2)(B).

                  Section 11. Validity of Plan

The validity of the Plan shall be determined and the Plan shall be construed and
interpreted in accordance with the laws of Kentucky, except as preempted by
applicable Federal law. The invalidity or illegality of any provision of the
Plan shall not affect the legality or validity of any other part thereof.

                  Section 12. Trust Agreement

The Trust Agreement and the Trust maintained thereunder shall be deemed to be a
part of the Plan as if fully set forth herein and the provisions of the Trust
Agreement are hereby incorporated by reference into the Plan.

                  Section 13. Parties Bound

The Plan shall be binding upon the Employers, all Participants and Beneficiaries
hereunder, and, as the case may be, the heirs, executors, administrators,
successors, and assigns of each of them.

                  Section 14. Application of Certain Plan Provisions

For purposes of the general administrative provisions and limitations of the
Plan, a Participant's Beneficiary or alternate payee under a qualified domestic
relations order shall be treated as any other person entitled to receive
benefits under the Plan. Upon any termination of the Plan, any such Beneficiary
or alternate payee under a qualified domestic relations order who has an
interest under the Plan at the time of such termination, which does not cease by
reason thereof, shall be deemed to be a Participant for all purposes of the
Plan. A Participant's Beneficiary, if the Participant has died, or alternate
payee under a qualified domestic relations order shall be treated as a
Participant for purposes of directing investments as provided in Article X.

                                       81
<PAGE>

                  Section 15. Merged Plans

In the event another defined contribution plan (the "merged plan") is merged
into and made a part of the Plan, each Employee who was eligible to participate
in the "merged plan" immediately prior to the merger shall become an Eligible
Employee on the date of the merger. In no event shall a Participant's vested
interest in his Sub-Account attributable to amounts transferred to the Plan from
the "merged plan" (his "transferee Sub-Account") on and after the merger be less
than his vested interest in his account under the "merged plan" immediately
prior to the merger. Notwithstanding any other provision of the Plan to the
contrary, a Participant's service credited for eligibility and vesting purposes
under the "merged plan" as of the merger, if any, shall be included as
Eligibility and Vesting Service under the Plan to the extent Eligibility and
Vesting Service are credited under the Plan. Special provisions applicable to a
Participant's "transferee Sub-Account", if any, shall be specifically reflected
in the Plan or in an Addendum to the Plan.

                  Section 16. Transferred Funds

If funds from another qualified plan are transferred or merged into the Plan,
such funds shall be held and administered in accordance with any restrictions
applicable to them under such other plan to the extent required by law and shall
be accounted for separately to the extent necessary to accomplish the foregoing.

                  Section 17. Veterans Reemployment Rights

Notwithstanding any other provision of the Plan to the contrary, contributions,
benefits, and service credit with respect to qualified military service shall be
provided in accordance with Code Section 414(u). The Administrator shall notify
the Trustee of any Participant with respect to whom additional contributions are
made because of qualified military service.

                  Section 18. Delivery of Cash Amounts

To the extent that the Plan requires the Employers to deliver cash amounts to
the Trustee, such delivery may be made through any means acceptable to the
Trustee, including wire transfer.

                  Section 19. Written Communications

Any communication among the Employers, the Administrator, and the Trustee that
is stipulated under the Plan to be made in writing may be made in any medium
that is acceptable to the receiving party and permitted under applicable law. In
addition, any communication or disclosure to or from Participants and/or
Beneficiaries that is required under the terms of the Plan to be made in writing
may be provided in any other medium (electronic, telephonic, or otherwise) that
is acceptable to the Administrator and permitted under applicable law.

                                       82
<PAGE>

                                 ARTICLE XXXVIII
                              TOP-HEAVY PROVISIONS

                  Section 1. Definitions

For purposes of this Article, the following terms shall have the following
meanings:

The "COMPENSATION" of an employee means compensation as defined in Code Section
415 and regulations issued thereunder. In no event, however, shall the
"compensation" of a Participant taken into account under the Plan for any Plan
Year exceed $150,000 (subject to adjustment annually as provided in Code
Sections 401(a)(17)(B) and 415(d); provided, however, that the dollar increase
in effect on January 1 of any calendar year, if any, is effective for Plan Years
beginning in such calendar year). If the "compensation" of a Participant is
determined over a period of time that contains fewer than 12 calendar months,
then the annual "compensation" limitation described above shall be adjusted with
respect to that Participant by multiplying the annual "compensation" limitation
in effect for the Plan Year by a fraction the numerator of which is the number
of full months in the period and the denominator of which is 12; provided,
however, that no proration is "required" for a Participant who is covered under
the Plan for less than one full Plan Year if the formula for allocations is
based on "compensation" for a period of at least 12 months.

The "DETERMINATION DATE" with respect to any Plan Year means the last day of the
preceding Plan Year, except that the "determination date" with respect to the
first Plan Year of the Plan, shall mean the last day of such Plan Year.

A "KEY EMPLOYEE" means any Employee or former Employee who is a "key employee"
pursuant to the provisions of Code Section 416(i)(1) and any Beneficiary of such
Employee or former Employee.

A "NON-KEY EMPLOYEE" means any Employee who is not a "key employee".

A "PERMISSIVE AGGREGATION GROUP" means those plans included in each Employer's
"required aggregation group" together with any other plan or plans of the
Employer, so long as the entire group of plans would continue to meet the
requirements of Code Sections 401(a)(4) and 410.

A "REQUIRED AGGREGATION GROUP" means the group of tax-qualified plans maintained
by an Employer or a Related Company consisting of each plan in which a "key
employee" participates and each other plan that enables a plan in which a "key
employee" participates to meet the requirements of Code Section 401(a)(4) or
Code Section 410, including any plan that terminated within the five-year period
ending on the relevant "determination date".

                                       83
<PAGE>

A "SUPER TOP-HEAVY GROUP" with respect to a particular Plan Year means a
"required" or "permissive aggregation group" that, as of the "determination
date", would qualify as a "top-heavy group" under the definition in this Section
with "90 percent" substituted for "60 percent" each place where "60 percent"
appears in the definition.

A "SUPER TOP-HEAVY PLAN" with respect to a particular Plan Year means a plan
that, as of the "determination date", would qualify as a "top-heavy plan" under
the definition in this Section with "90 percent" substituted for "60 percent"
each place where "60 percent" appears in the definition. A plan is also a "super
top-heavy plan" if it is part of a "super top-heavy group".

A "TOP-HEAVY GROUP" with respect to a particular Plan Year means a "required" or
"permissive aggregation group" if the sum, as of the "determination date", of
the present value of the cumulative accrued benefits for "key employees" under
all defined benefit plans included in such group and the aggregate of the
account balances of "key employees" under all defined contribution plans
included in such group exceeds 60 percent of a similar sum determined for all
employees covered by the plans included in such group.

A "TOP-HEAVY PLAN" with respect to a particular Plan Year means (i), in the case
of a defined contribution plan (including any simplified employee pension plan),
a plan for which, as of the "determination date", the aggregate of the accounts
(within the meaning of Code Section 416(g) and the regulations and rulings
thereunder) of "key employees" exceeds 60 percent of the aggregate of the
accounts of all participants under the plan, with the accounts valued as of the
relevant valuation date and increased for any distribution of an account balance
made in the five-year period ending on the "determination date", (ii), in the
case of a defined benefit plan, a plan for which, as of the "determination
date", the present value of the cumulative accrued benefits payable under the
plan (within the meaning of Code Section 416(g) and the regulations and rulings
thereunder) to "key employees" exceeds 60 percent of the present value of the
cumulative accrued benefits under the plan for all employees, with the present
value of accrued benefits for employees (other than "key employees") to be
determined under the accrual method uniformly used under all plans maintained by
an Employer or, if no such method exists, under the slowest accrual method
permitted under the fractional accrual rate of Code Section 411(b)(1)(C) and
including the present value of any part of any accrued benefits distributed in
the five-year period ending on the "determination date", and (iii) any plan
(including any simplified employee pension plan) included in a "required
aggregation group" that is a "top-heavy group". For purposes of this paragraph,
the accounts and accrued benefits of any employee who has not performed services
for an Employer or a Related Company during the five-year period ending on the
"determination date" shall be disregarded. For purposes of this paragraph, the
present value of cumulative accrued benefits under a defined benefit plan for
purposes of top-heavy determinations shall be calculated using the actuarial
assumptions otherwise employed under such plan, except that the same actuarial
assumptions shall be used for all plans within a "required" or "permissive
aggregation group". A Participant's interest in the Plan attributable to any
Rollover Contributions, except Rollover Contributions made from a plan
maintained by an Employer or a Related Company, shall not

                                       84
<PAGE>

be considered in determining whether the Plan is top-heavy. Notwithstanding the
foregoing, if a plan is included in a "required" or "permissive aggregation
group" that is not a "top-heavy group", such plan shall not be a "top-heavy
plan".

The "VALUATION DATE" with respect to any "determination date" means the most
recent Valuation Date occurring within the 12-month period ending on the
"determination date".

                  Section 2. Applicability

Notwithstanding any other provision of the Plan to the contrary, the provisions
of this Article shall be applicable during any Plan Year in which the Plan is
determined to be a "top-heavy plan" as hereinafter defined. If the Plan is
determined to be a "top-heavy plan" and upon a subsequent "determination date"
is determined no longer to be a "top-heavy plan", the vesting provisions of
Article VI shall again become applicable as of such subsequent "determination
date"; provided, however, that if the prior vesting provisions do again become
applicable, any Employee with three or more years of Vesting Service may elect
in accordance with the provisions of Article VI, to continue to have his vested
interest in his Employer Contributions Sub-Account determined in accordance with
the vesting schedule specified in Code Section 22.5.

                  Section 3. Minimum Employer Contribution

If the Plan is determined to be a "top-heavy plan" for a Plan Year, the Employer
Contributions, other than Matching Contributions, and forfeitures allocated to
the Account of each "non-key employee" who is an Eligible Employee and who is
employed by an Employer or a Related Company on the last day of such top-heavy
Plan Year shall be no less than the lesser of (i) three percent of his
"compensation" or (ii) the largest percentage of "compensation" that is
allocated as an Employer Contribution and/or Tax-Deferred Contribution for such
Plan Year to the Account of any "key employee"; except that, in the event the
Plan is part of a "required aggregation group", and the Plan enables a defined
benefit plan included in such group to meet the requirements of Code Section
401(a)(4) or 410, the minimum allocation of Employer Contributions and
forfeitures to each such "non-key employee" shall be three percent of the
"compensation" of such "non-key employee". Any minimum allocation to a "non-key
employee" required by this Section shall be made without regard to any social
security contribution made on behalf of the non-key employee, his number of
hours of service, his level of "compensation", or whether he declined to make
elective or mandatory contributions.

In lieu of the minimum top-heavy allocation otherwise required under this
Section, each "non-key employee" who is an Eligible Employee and is employed by
an Employer or a Related Company on the last day of a top-heavy Plan Year and
who is also covered under a top-heavy defined benefit plan or another top-heavy
defined contribution plan or plans maintained by an Employer or a Related
Company will receive the top-heavy benefits provided under the defined

                                       85
<PAGE>

benefit plan or the minimum top-heavy allocation provided under such other
defined contribution plan or plans, as applicable.

Employer Contributions allocated to a Participant's Account in accordance with
this Section shall be considered "annual additions" under Article VII for the
"limitation year" for which they are made and shall be separately accounted for.
Employer Contributions allocated to a Participant's Account shall be allocated
upon receipt among the Investment Funds in accordance with the Participant's
currently effective investment election.

                  Section 4. Accelerated Vesting

If the Plan is determined to be a "top-heavy plan", a Participant's vested
interest in his Employer Contributions Sub-Account shall be determined no less
rapidly than in accordance with the following vesting schedule:

<TABLE>
<CAPTION>
------------------------------------------------------------------------
    YEARS OF VESTING SERVICE                VESTED INTEREST
------------------------------------------------------------------------
<S>                                         <C>
           less than 3                            0%
------------------------------------------------------------------------
           3 or more                            100%
------------------------------------------------------------------------
</TABLE>

                  Section 5. Exclusion of Collectively-Bargained Employees

Notwithstanding any other provision of this Article, Employees who are covered
by an agreement that the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and one or more employers shall not
be included in determining whether or not the Plan is a "top-heavy plan". In
addition, such Employees shall not be entitled to a minimum allocation or
accelerated vesting under this Article, unless otherwise provided in the
collective bargaining agreement.

                                       86
<PAGE>

                                  ARTICLE XXXIX
                                 EFFECTIVE DATE

                  Section 1. GUST Effective Dates

Unless otherwise specifically provided by the terms of the Plan, this amendment
and restatement is effective with respect to each change made to satisfy the
provisions of (i) the Uniformed Services Employment and Reemployment Rights Act
of 1994 ("USERRA"), (ii) Small Business Job Protection Act of 1996 ("SBJPA"),
(iii) the Taxpayer Relief Act of 1997 ("TRA '97"), (iv) any other change in the
Code or ERISA, or (v) regulations, rulings, or other published guidance issued
under the Code, ERISA, USERRA, SBJPA, or TRA '97 (collectively the "GUST
required changes"), the first day of the first period (which may or may not be
the first day of a Plan Year) with respect to which such change became required
because of such provision (including any day that became such as a result of an
election or waiver by an Employee or a waiver or exemption issued under the
Code, ERISA, USERRA, SBJPA, or TRA '97), including, but not limited to, the
changes listed below. In addition, the changes listed below are effective with
regard to each of the "merged plans" as of the effective dates listed below.

                  (A)      The addition of a new Section to Article XXI entitled
"Veterans Reemployment Rights" is effective December 12, 1994.

                  (B)      The following changes are effective for Plan Years
beginning after December 31, 1996:

                  (A)      elimination of the family aggregation requirements;

                  (B)      changes to the definition of "Highly Compensated
         Employee" in Article I of the Plan;

                  (C)      changes to the definition of "leased employee" in
         Article I or II, as applicable;

                  (D)      changes to the 401(k) discrimination test in Article
         VII of the Plan and changes to the method of correction where the Plan
         fails to satisfy the test; and

                  (E)      changes to the 401(m) discrimination test in Article
         VII of the Plan and changes to the method of correction where the Plan
         fails to satisfy the test.

<PAGE>

                  (C)      Changes in the definition of "Required Beginning
Date" in Article I of the Plan are effective January 1, 1997, but with respect
only to Employees who attain age 70 1/2 on or after that date.

                  (D)      Changes to the anti-alienation provisions of Article
XV to include the exceptions in Code Section 401(a)(13)(C) and (D) are effective
for judgments, orders, and decrees issued and settlement agreements entered into
on or after August 5, 1997.

                  (E)      The increase in the cashout limit from $3,500 to the
limit specified in the Plan is effective September 28, 1997.

                  (F)      Elimination of the look back rule for determining
whether the value of a Participant's Account exceeds the cashout limit is
effective March 22, 1999.

                  (G)      Exclusion of hardship withdrawals of Tax-Deferred
Contributions from the definition of "eligible rollover distribution" is
effective January 1, 1999.

                  (H)      Elimination of the combined limit on defined benefit
and defined contribution plans under Code Section 415(e) is effective the first
day of the first "limitation year" beginning on or after January 1, 2000.

                                      * * *

         EXECUTED AT Newport, Kentucky, this 26th day of August, 2003.

                                    NS GROUP, INC.

                                    By: /s/ Frank J. LaRosa
                                        -------------------------------
                                        Title: Vice President of Human Resources
                                                and Information Services

<PAGE>

                                 FIRST AMENDMENT
                                     TO THE
                   NS GROUP EMPLOYEES RETIREMENT SAVINGS PLAN
                         (September 2, 2003 Restatement)

                           EGTRRA Good Faith Amendment

         WHEREAS, NS Group, Inc. (the "Sponsor") adopted the NS Group Employees
Retirement Savings Plan, previously known as the NS Group, Inc. Salaried
Employees Retirement Savings Plan (the "Plan"), and most recently revised and
restated effective September 2, 2003;

         WHEREAS, the Newport Steel Corporation Hourly Employees Retirement
Savings Plan and the Koppel Steel Corporation Hourly Employees Retirement
Savings Plan (the "Merged Plans") were merged into the Plan effective September
2, 2003;

         WHEREAS, certain provisions of this Amendment applied to Participants
under the Merged Plans (the "Union Employees") as of March 1, 2003, and certain
provisions of this Amendment applied to the Participants under the NS Group,
Inc. Salaried Employees Retirement Savings Plan (the "Non-Union Employees") as
of January 1, 2002;

         WHEREAS, the Sponsor desires to amend the Plan and the Merged Plans to
satisfy the "good faith" amendment requirement of IRS Notice 2001-57 for
purposes of complying with the applicable changes made by the Economic Growth
and Tax Relief Reconciliation Act of 2001 ("EGTRRA"); and

         NOW, THEREFORE, the Plan and the Merged Plans are hereby amended by the
adoption of the following Addendum to the Plan:

                             ADDENDUM INCORPORATING
                           EGTRRA GOOD FAITH AMENDMENT

Adoption and Effective Date of Amendment. This Amendment to the Plan is adopted
to reflect certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"). This Amendment is intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance
with EGTRRA and guidance issued thereunder. Except as otherwise provided, this
Amendment shall be effective as of the first day of the first Plan Year
beginning after December 31, 2001.

Supersession of Inconsistent Provisions. This Amendment shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this Amendment.

<PAGE>

1.       INCREASE IN COMPENSATION LIMIT
         (Article I--Definitions)

         The annual Compensation of each Participant taken into account in
         determining allocations for any Plan Year beginning after December 31,
         2001, shall not exceed $200,000, as adjusted for cost-of-living
         increases in accordance with Code Section 401(a)(17)(B). Annual
         Compensation means Compensation during the Plan Year or such other
         consecutive 12-month period over which Compensation is otherwise
         determined under the Plan (the determination period). The
         cost-of-living adjustment in effect for a calendar year applies to
         annual Compensation for the determination period that begins with or
         within such calendar year.

2.       INCREASE IN TAX-DEFERRED CONTRIBUTION LIMITS
         (Article IV--Tax Deferred Contributions)

         The maximum amount of Tax-Deferred Contributions to be made to the Plan
         on behalf of an Eligible Employee for a payroll period cannot exceed
         the maximum amount permitted to be made on his behalf under the
         Internal Revenue Code.

         Effective date: With respect to Non-Union Employees, January 1, 2002;
         with respect to Union Employees, March 1, 2003.

3.       ELECTIVE DEFERRALS--CONTRIBUTION LIMITATION
         (Article IV--Tax Deferred Contributions)

         No Participant shall be permitted to have elective deferrals made under
         this Plan, or any other qualified plan maintained by the Employer or
         Related Employer during any taxable year, in excess of the dollar
         limitation contained in Code Section 402(g) in effect for such taxable
         year, except to the extent permitted under the "catch-up contribution"
         provisions of this Amendment and Code Section 414(v).

4.       CATCH-UP CONTRIBUTIONS
         (Article IV--Tax Deferred Contributions)

         All employees who are eligible to make elective deferrals under this
         Plan and who have attained age 50 before the close of the Plan Year
         shall be eligible to make "catch-up contributions" in accordance with,
         and subject to the limitations of, Code Section 414(v). Such "catch-up
         contributions" shall not be taken into account for purposes of the
         provisions of the Plan implementing the required limitations of Code
         Sections 402(g) and 415. The Plan shall not be treated as failing to
         satisfy the provisions of the Plan implementing the requirements of
         Code Section 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as
         applicable, by reason of the making of such "catch-up contributions".

         Effective Date: With respect to Non-Union Employees, January 1, 2002;
         with respect to Union Employees, March 1, 2003.

<PAGE>

         For purposes of the Plan, "catch-up contributions" are excluded from
         eligibility for Matching Contributions under the Plan.

5.       ROLLOVERS FROM OTHER PLANS
         (Article V--After-Tax and Rollover Contributions)

         The Plan shall accept as Rollover Contributions the Participant
         rollover contributions and/or "direct rollovers" of distributions made
         after the Effective Dates specified in this Section from the types of
         plans specified in this Section:

         Direct Rollovers. The Plan will accept a direct rollover of an
         "eligible rollover distribution" from:

         (a)      A qualified plan described in Code Section 401(a) or 403(a),
                  excluding after-tax employee contributions.

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

         (b)      An annuity contract described in Code Section 403(b),
                  excluding after-tax employee contributions.

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

         (c)      An eligible plan under Code Section 457(b) which is maintained
                  by a state, political subdivision of a state, or any agency or
                  instrumentality of a state or political subdivision of a
                  state.

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

         Participant Rollover Contributions from Other Plans. The Plan will
         accept a participant contribution of an "eligible rollover
         distribution" from:

         (a)      A qualified plan described in Code Section 401(a) or 403(a).

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

<PAGE>

         (b)      An annuity contract described in Code Section 403(b).

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

         (c)      An eligible plan under Code Section 457(b) which is maintained
                  by a state, political subdivision of a state, or any agency or
                  instrumentality of a state or political subdivision of a
                  state.

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

         Participant Rollover Contributions from IRAs. The Plan will accept a
         participant rollover contribution of the portion of a distribution from
         an individual retirement account or annuity described in Code Section
         408(a) or 408(b) that is eligible to be rolled over and would otherwise
         be includible in gross income.

                  Effective Date: With respect to Non-Union Employees, January
                  1, 2002; with respect to Union Employees, March 1, 2003.

6.       INCREASE IN TEST COMPENSATION
         (Article VII--Limitations on Contribution)

         The annual compensation of each Participant taken into account for
         purposes of the ADP and ACP testing provisions of the Plan for any Plan
         Year beginning after December 31, 2001, shall not exceed $200,000, as
         adjusted for cost-of-living increases in accordance with Code Section
         401(a)(17)(B). Annual compensation means compensation within the
         meaning of Code Section 415(c)(3) during the Plan Year. The
         cost-of-living adjustment in effect for a calendar year applies to
         annual compensation for the Plan Year that begins with or within such
         calendar year.

7.       REPEAL OF MULTIPLE USE TEST
         (Article VII--Limitations on Contribution)

         The multiple use test described in Treasury Regulation Section
         1.401(m)-2 and Article VII of the Plan shall not apply for Plan Years
         beginning after December 31, 2001.
<PAGE>

8.       LIMITATIONS ON CONTRIBUTIONS
         (Article VII -- Limitations on Contribution)

         Effective for "limitation years" beginning after December 31, 2001, and
         except to the extent permitted under the "catch-up contribution"
         provisions of this Amendment and Code Section 414(v), if applicable,
         the "annual addition" that may be contributed or allocated to a
         Participant's Account under the Plan for any "limitation year" shall
         not exceed the lesser of:

         (a)      $40,000, as adjusted for increases in the cost-of-living under
                  Code Section 415(d), or

         (b)      100 percent of the Participant's compensation, within the
                  meaning of Code Section 415(c)(3), for the "limitation year".
                  The compensation limit referred to in this paragraph (b) shall
                  not apply to any contribution for medical benefits after
                  separation from service (within the meaning of Code Section
                  401(h) or 419A(f)(2)) which is otherwise treated as an "annual
                  addition".

9.       SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION
         (Article XIII -- Withdrawals While Employed)

         Hardship Withdrawals On and After Special Effective Date. A Participant
         who makes a hardship withdrawal of Tax-Deferred Contributions on or
         after the Special Effective Date below shall be prohibited from making
         "elective contributions" and "employee contributions", as defined in
         Section 7.1, under this Plan and all other plans maintained by an
         Employer or a Related Company for six months after receipt of the
         distribution.

         Hardship Withdrawals Preceding Special Effective Date. A Participant
         who makes a hardship withdrawal of Tax-Deferred Contributions during
         the period immediately preceding the Special Effective Date below shall
         be prohibited from making "elective contributions" and "employee
         contributions", as defined in Section 7.1, under this Plan and all
         other plans maintained by an Employer or a Related Company for six
         months after receipt of the distribution (or, if later, until the
         Special Effective Date).

         Special Effective Date: With respect to Non-Union Employees, January 1,
         2002; with respect to Union Employees, March 1, 2003.

         Safe Harbor Plan

         Hardship Withdrawals On and After Safe Harbor Effective Date.
         Notwithstanding the foregoing provisions, if the Plan consists of a
         cash or deferred arrangement which meets the requirements of Code
         Section 401(k)(12) and Matching Contributions which meets the
         requirements of Code Section 401(m)(11), then a Participant who makes a
         hardship withdrawal of Tax-Deferred Contributions on or after the
         Special Effective Date below shall be prohibited from making "elective
         contributions" and "employee contributions", as defined in Section 7.1,
         under this Plan and all other plans maintained by an Employer or a
         Related Company for six months after receipt of the distribution.

<PAGE>

         Hardship Withdrawals Preceding Safe Harbor Effective Date. Further, a
         Participant who makes a hardship withdrawal of Tax-Deferred
         Contributions during the period immediately preceding the Safe Harbor
         Effective Date below shall be prohibited from making "elective
         contributions" and "employee contributions", as defined in Section 7.1,
         under this Plan and all other plans maintained by an Employer or a
         Related Company for six months after receipt of the distribution (or,
         if later, until the Safe Harbor Effective Date).

         Safe Harbor Effective Date: N/A.

10.      ELIMINATION OF REDUCTION IN 402(g) LIMIT FOR YEAR FOLLOWING YEAR IN
         WHICH HARDSHIP DISTRIBUTION MADE
         (Article XIII -- Withdrawals While Employed)

         Hardship Withdrawals On and After Special Effective Date. A Participant
         who makes a hardship withdrawal of Tax-Deferred Contributions on or
         after the Special Effective Date below shall not have his maximum
         Tax-Deferred Contributions and "elective contributions" for the taxable
         year following the taxable year of the withdrawal reduced under Code
         Section 402(g) by the amount of his Tax-Deferred Contributions and
         "elective contributions" for the taxable year of the withdrawal.

         Hardship Withdrawals Preceding Special Effective Date. A Participant
         who makes a hardship withdrawal of Tax-Deferred Contributions during
         the period immediately preceding the Special Effective Date below shall
         not have his maximum Tax-Deferred Contributions and "elective
         contributions" for the taxable year following the taxable year of the
         withdrawal reduced under Code Section 402(g) by the amount of his
         Tax-Deferred Contributions and "elective contributions" for the taxable
         year of the withdrawal.

         Special Effective Date: With respect to Non-Union Employees, January 1,
         2002; with respect to Union Employees, March 1, 2003.

         Safe Harbor Plan

         Hardship Withdrawals On and After Safe Harbor Effective Date.
         Notwithstanding the foregoing provisions, if the Plan consists of a
         cash or deferred arrangement which meets the requirements of Code
         Section 401(k)(12) and Matching Contributions with respect to which the
         requirements of Code Section 401(m)(11), then a Participant who makes a
         hardship withdrawal of Tax-Deferred Contributions on or after the Safe
         Harbor Effective Date below shall not have his maximum Tax-Deferred
         Contributions and "elective contributions" for the taxable year
         following the taxable year of the withdrawal reduced under Code Section
         402(g) by the amount of his Tax-Deferred Contributions and "elective
         contributions" for the taxable year of the withdrawal.

         Hardship Withdrawals Preceding Safe Harbor Effective Date. A
         Participant who makes a hardship withdrawal of Tax-Deferred
         Contributions during the period immediately preceding the Special
         Effective Date below shall not have his maximum Tax-Deferred

<PAGE>

         Contributions and "elective contributions" for the taxable year
         following the taxable year of the withdrawal reduced under Code Section
         402(g) by the amount of his Tax-Deferred Contributions and "elective
         contributions" for the taxable year of the withdrawal.

         Safe Harbor Effective Date: N/A.

11.      ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS
         (Article XV -- Distributions)

         For purposes of the Section in Article XV entitled "Cash Outs and
         Participant Consent," the value of a Participant's vested interest in
         his Account shall be determined without regard to that portion of the
         account balance that is attributable to Rollover Contributions (and
         earnings allocable thereto) within the meaning of Code Sections 402(c),
         403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16). If the value of
         the Participant's vested interest in his Account as so determined is
         $5,000 or less, the Plan shall immediately distribute the Participant's
         entire vested interest in his Account.

         This Section shall apply to distributions after December 31, 2001 with
         respect to Non-Union Employees who separate from service after December
         31, 2001, and distributions after February 28, 2003 with respect to
         Union Employees who separate from service after February 28, 2003.

12.      DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS
         (Article XVI -- Form of Payment)

         Effective with respect to distributions made after December 31, 2001 to
         Non-Union Employees and distributions made after February 28, 2003 to
         Union Employees, for purposes of the direct rollover provisions of
         Article XVI, the following provisions shall apply:

         Eligible Retirement Plan. An "eligible retirement plan" shall also mean
         an annuity contract described in Code Section 403(b) and an eligible
         plan under Code Section 457(b) which is maintained by a state,
         political subdivision of a state, or any agency or instrumentality of a
         state or political subdivision of a state and which agrees to
         separately account for amounts transferred into such plan from this
         Plan. The definition of "eligible retirement plan" shall also apply in
         the case of a distribution to a surviving spouse, or to a spouse or
         former spouse who is the alternate payee under a qualified domestic
         relation order, as defined in Code Section 414(p).

         Hardship Withdrawals. Any amount that is distributed on account of
         hardship shall not be an "eligible rollover distribution" and the
         distributee may not elect to have any portion of such a distribution
         paid directly to an "eligible retirement plan".

<PAGE>

13.      MODIFICATION OF TOP-HEAVY RULES
         (Article XXII -- Top Heavy Provisions)

         This Section shall apply for purposes of determining whether the Plan
         is a top-heavy plan under Code Section 416(g) for Plan Years beginning
         after December 31, 2001, and whether the Plan satisfies the minimum
         benefits requirements of Code Section 416(c) for such years. This
         Section amends Article XXII of the Plan.

         Determination of Top Heavy Status

         Key Employee. A "key employee" means any Employee or former Employee
         (including any deceased Employee) who at any time during the Plan Year
         that includes the "determination date" was an officer of an Employer or
         a Related Company having annual compensation greater than $130,000 (as
         adjusted under Code Section 416(i)(1) for Plan Years beginning after
         December 31, 2002), a 5-percent owner of an Employer or a Related
         Company, or a 1-percent owner of an Employer or a Related Company
         having annual compensation of more than $150,000. For this purpose,
         annual compensation means compensation within the meaning of Code
         Section 415(c)(3). The determination of who is a "key employee" will be
         made in accordance with Code Section 416(i)(1) and the applicable
         regulations and other guidance of general applicability issued
         thereunder.

         Determination of Present Value and Amounts. The following provisions
         shall apply for purposes of determining the present values of accrued
         benefits and the amounts of account balances of Employees as of a
         "determination date":

         (a)      The present values of accrued benefits and the amounts of
                  account balances of an Employee as of the "determination date"
                  shall be increased by the distributions made with respect to
                  the Employee under the Plan and any plan aggregated with the
                  Plan under Code Section 416(g)(2) during the one-year period
                  ending on the "determination date". The preceding sentence
                  shall also apply to distributions under a terminated plan
                  which, had it not been terminated, would have been aggregated
                  with the Plan under Code Section 416(g)(2)(A)(i). In the case
                  of a distribution made for a reason other than separation from
                  service, death, or disability, this provision shall be applied
                  by substituting "five-year period" for "one-year period".

         (b)      The accrued benefits and accounts of any individual who has
                  not performed services for an Employer or any Related Company
                  during the one-year period ending on the "determination date"
                  shall not be taken into account.

         Minimum Benefits

         Employer matching contributions shall be taken into account for
         purposes of satisfying the minimum contribution requirements of Code
         Section 416(c)(2) and the Plan. The preceding sentence shall apply with
         respect to Matching Contributions under the Plan or, if the Plan
         provides that the minimum contribution requirement shall be met in
         another plan, such other plan. Employer matching contributions that are
         used to satisfy the minimum contribution requirements shall be treated
         as matching contributions for

<PAGE>

         purposes of the actual contribution percentage test and other
         requirements of Code Section 401(m).

         Safe Harbor Plan

         Notwithstanding the foregoing provisions, the top-heavy requirements of
         Code Section 416 and Article XXII of the Plan shall not apply in any
         year beginning after December 31, 2001, in which the Plan consists
         solely of a cash or deferred arrangement which meets the requirements
         of Code Section 401(k)(12) and Matching Contributions with respect to
         which the requirements of Code Section 401(m)(11) are met.

         IN WITNESS WHEREOF, NS Group, Inc. has hereunto caused its name to be
subscribed on this 17th day of September, 2003.

                                    NS GROUP, INC.

                                    By: /s/ Frank J. LaRosa
                                        -------------------------------------

                                    Title: Vice President of Human
                                           Resources and Information Services

<PAGE>

                                SECOND AMENDMENT
                                     TO THE
                   NS GROUP EMPLOYEES RETIREMENT SAVINGS PLAN
                         (September 2, 2003 Restatement)

         WHEREAS, NS Group, Inc. (the "Sponsor") adopted the NS Group Employees
Retirement Savings Plan, previously known as the NS Group, Inc. Salaried
Employees Retirement Savings Plan (the "Plan"), and most recently revised and
restated effective September 2, 2003;

         WHEREAS, the Newport Steel Corporation Hourly Employees Retirement
Savings Plan and the Koppel Steel Corporation Hourly Employees Retirement
Savings Plan (the "Merged Plans") were merged into the Plan effective September
2, 2003; and

         WHEREAS, the Sponsor desires to amend the Plan and the Merged Plans
using the model amendment from IRS Announcement 2001-18 to utilize for calendar
year 2002 the required distribution rules from the proposed Treasury Regulations
issued under Section 401(a)(9) of the Internal Revenue Code;

         NOW, THEREFORE, the Plan and the Merged Plans are hereby amended by the
adoption of the following Model Amendment to the Plan:

                      MODEL AMENDMENT FOR RETIREMENT PLANS
              FOR PROPOSED REGULATIONS UNDER CODE SECTION 401(a)(9)
             (Applicable for Entire Year; From Announcement 2001-18)

With respect to distributions under the Plan made for calendar years beginning
on or after January 1, 2001, the Plan will apply the minimum distribution
requirements of section 401(a)(9) of the Internal Revenue Code in accordance
with the regulations under section 401(a)(9) that were proposed on January 17,
2001, notwithstanding any provision of the Plan to the contrary. This amendment
shall continue in effect until the end of the last calendar year beginning
before the effective date of final regulations under section 401(a)(9) or such
other date as may be specified in guidance published by the Internal Revenue
Service.

         IN WITNESS WHEREOF, NS Group, Inc. has hereunto caused its name to be
subscribed on this 17th day of September, 2003.

                                   NS GROUP, INC.

                                   By: /s/ Frank J. LaRosa
                                        ------------------------------------

                                   Title: Vice President of Human
                                          Resources and Information Services

<PAGE>

                                 THIRD AMENDMENT
                                     TO THE
                   NS GROUP EMPLOYEES RETIREMENT SAVINGS PLAN
                         (September 2, 2003 Restatement)

         WHEREAS, NS Group, Inc. (the "Sponsor") adopted the NS Group Employees
Retirement Savings Plan, previously known as the NS Group, Inc. Salaried
Employees Retirement Savings Plan (the "Plan"), and most recently revised and
restated effective September 2, 2003;

         WHEREAS, the Newport Steel Corporation Hourly Employees Retirement
Savings Plan and the Koppel Steel Corporation Hourly Employees Retirement
Savings Plan (the "Merged Plans") were merged into the Plan effective September
2, 2003; and

         WHEREAS, the Sponsor desires to amend the Plan and the Merged Plans
using the model amendment from IRS Revenue Procedure 2002-29 for purposes of
complying with the applicable changes made by final Treasury Regulations issued
under Section 401(a)(9) of the Internal Revenue Code,

         NOW, THEREFORE, the Plan and the Merged Plans are hereby amended by the
adoption of the following Addendum to the Plan:

                             ADDENDUM INCORPORATING
                        MINIMUM DISTRIBUTION REQUIREMENTS

                                    SECTION 1
                                  GENERAL RULES

1.1      Effective Date

The provisions of this Addendum will apply for purposes of determining required
minimum distributions for calendar years beginning with the 2003 calendar year.

1.2      Precedence

The requirements of this Addendum will take precedence over any inconsistent
provisions of the Plan.

1.3      Requirements of Treasury Regulations Incorporated

All distributions required under this Addendum will be determined and made in
accordance with the Treasury Regulations under Section 401(a)(9) of the Internal
Revenue Code.

1.4      TEFRA Section 242(b)(2) Elections

Notwithstanding the other provisions of this Addendum, distributions may be made
under a designation made before January 1, 1984, in accordance with Section
242(b)(2) of the Tax

<PAGE>

Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that
relate to Section 242(b)(2) of TEFRA.

                                    SECTION 2
                         TIME AND MANNER OF DISTRIBUTION

2.1      Required Beginning Date

The Participant's entire interest will be distributed, or begin to be
distributed, to the Participant no later than the Participant's Required
Beginning Date.

2.2      Death of Participant Before Distributions Begin

If the Participant dies before distributions begin, the Participant's entire
interest will be distributed, or begin to be distributed, no later than as
follows:

(a)      If the Participant's surviving spouse is the Participant's sole
         "designated beneficiary", then, except as may be provided in Section 6
         of this Addendum, distributions to the surviving spouse will begin by
         December 31 of the calendar year immediately following the calendar
         year in which the Participant died, or by December 31 of the calendar
         year in which the Participant would have attained age 70 1/2, if later.

(b)      If the Participant's surviving spouse is not the Participant's sole
         "designated beneficiary", then, except as may be provided in Section 6
         of this Addendum, distributions to the "designated beneficiary" will
         begin by December 31 of the calendar year immediately following the
         calendar year in which the Participant died.

(c)      If there is no "designated beneficiary" as of September 30 of the year
         following the year of the Participant's death, the Participant's entire
         interest will be distributed by December 31 of the calendar year
         containing the fifth anniversary of the Participant's death.

(d)      If the Participant's surviving spouse is the Participant's sole
         "designated beneficiary" and the surviving spouse dies after the
         Participant but before distributions to the surviving spouse begin,
         this Section 2.2, other than Section 2.2(a), will apply as if the
         surviving spouse were the Participant.

For purposes of this Section 2.2 and Section 4, unless Section 2.2(d) applies,
distributions are considered to begin on the Participant's Required Beginning
Date. If Section 2.2(d) applies, distributions are considered to begin on the
date distributions are required to begin to the surviving spouse under Section
2.2(a). If distributions under an annuity purchased from an insurance company
irrevocably commence to the Participant before the Participant's Required
Beginning Date (or to the Participant's surviving spouse before the date
distributions are required to begin to the surviving spouse under Section
2.2(a)), the date distributions are considered to begin is the date
distributions actually commence.

2.3      Forms of Distribution

Unless the Participant's interest is distributed in the form of an annuity
purchased from an insurance company or in a single sum on or before the Required
Beginning Date, as of the first

                                       2
<PAGE>

"distribution calendar year" distributions will be made in accordance with
Sections 3 and 4 of this Addendum. If the Participant's interest is distributed
in the form of an annuity purchased from an insurance company, distributions
thereunder will be made in accordance with the requirements of Section 401(a)(9)
of the Code and the Treasury Regulations.

                                    SECTION 3
                         REQUIRED MINIMUM DISTRIBUTIONS
                          DURING PARTICIPANT'S LIFETIME

3.1      Amount of Required Minimum Distribution For Each Distribution Calendar
         Year

During the Participant's lifetime, the minimum amount that will be distributed
for each "distribution calendar year" is the lesser of the following amounts:

(a)      The quotient obtained by dividing the Participant's "account balance"
         by the distribution period in the Uniform Lifetime Table set forth in
         Section 1.401(a)(9)-9 of the Treasury Regulations, using the
         Participant's age as of the Participant's birthday in the "distribution
         calendar year"; or

(b)      If the Participant's sole "designated beneficiary" for the
         "distribution calendar year" is the Participant's spouse, the quotient
         obtained by dividing the Participant's "account balance" by the number
         in the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9
         of the Treasury Regulations, using the Participant's and spouse's
         attained ages as of the Participant's and spouse's birthdays in the
         "distribution calendar year".

3.2      Lifetime Required Minimum Distributions Continue Through Year of
         Participant's Death

Required minimum distributions will be determined under this Section 3 beginning
with the first "distribution calendar year" and up to and including the
"distribution calendar year" that includes the Participant's date of death.

                                    SECTION 4
                         REQUIRED MINIMUM DISTRIBUTIONS
                            AFTER PARTICIPANT'S DEATH

4.1      Death On or After Date Distributions Begin

If the Participant dies on or after the date distributions begin, the following
rules shall apply:

(a)      Participant Survived by Designated Beneficiary. If the Participant dies
         on or after the date distributions begin and there is a "designated
         beneficiary", the minimum amount that will be distributed for each
         "distribution calendar year" after the year of the Participant's death
         is the quotient obtained by dividing the Participant's "account
         balance" by the

                                       3
<PAGE>

         longer of the remaining "life expectancy" of the Participant or the
         remaining "life expectancy" of the Participant's "designated
         beneficiary", determined as follows:

         (1)      The Participant's remaining "life expectancy" is calculated
                  using the age of the Participant in the year of death, reduced
                  by one for each subsequent year.

         (2)      If the Participant's surviving spouse is the Participant's
                  sole "designated beneficiary", the remaining "life expectancy"
                  of the surviving spouse is calculated for each "distribution
                  calendar year" after the year of the Participant's death using
                  the surviving spouse's age as of the spouse's birthday in that
                  year. For "distribution calendar years" after the year of the
                  surviving spouse's death, the remaining "life expectancy" of
                  the surviving spouse is calculated using the age of the
                  surviving spouse as of the spouse's birthday in the calendar
                  year of the spouse's death, reduced by one for each subsequent
                  calendar year.

         (3)      If the Participant's surviving spouse is not the Participant's
                  sole "designated beneficiary", the "designated beneficiary's"
                  remaining "life expectancy" is calculated using the age of the
                  beneficiary in the year following the year of the
                  Participant's death, reduced by one for each subsequent year.

(b)      No Designated Beneficiary. If the Participant dies on or after the date
         distributions begin and there is no "designated beneficiary" as of
         September 30 of the year after the year of the Participant's death, the
         minimum amount that will be distributed for each "distribution calendar
         year" after the year of the Participant's death is the quotient
         obtained by dividing the Participant's "account balance" by the
         Participant's remaining "life expectancy" calculated using the age of
         the Participant in the year of death, reduced by one for each
         subsequent year.

4.2      Death Before Date Distributions Begin

If the Participant dies before the date distributions begin, the following rules
shall apply:

(a)      Participant Survived by Designated Beneficiary. Except as may be
         provided in Section 6 of this Addendum, if the Participant dies before
         the date distributions begin and there is a "designated beneficiary",
         the minimum amount that will be distributed for each "distribution
         calendar year" after the year of the Participant's death is the
         quotient obtained by dividing the Participant's "account balance" by
         the remaining "life expectancy" of the Participant's "designated
         beneficiary", determined as provided in Section 4.1.

(b)      No Designated Beneficiary. If the Participant dies before the date
         distributions begin and there is no "designated beneficiary" as of
         September 30 of the year following the year of the Participant's death,
         distribution of the Participant's entire interest will be completed by
         December 31 of the calendar year containing the fifth anniversary of
         the Participant's death.

                                       4
<PAGE>

(c)      Death of Surviving Spouse Before Distributions to Surviving Spouse Are
         Required to Begin. If the Participant dies before the date
         distributions begin, the Participant's surviving spouse is the
         Participant's sole "designated beneficiary", and the surviving spouse
         dies before distributions are required to begin to the surviving spouse
         under Section 2.2(a), this Section 4.2 will apply as if the surviving
         spouse were the Participant.

                                    SECTION 5
                                   DEFINITIONS

5.1      Designated Beneficiary

The term "designated beneficiary" means the individual who is designated as the
Participant's Beneficiary under Article XVII of the Plan and is the designated
beneficiary under Section 401(a)(9) of the Internal Revenue Code and Section
1.401(a)(9)-1, Q&A-4, of the Treasury Regulations.

5.2      Distribution Calendar Year

The term "distribution calendar year" means a calendar year for which a minimum
distribution is required. For distributions beginning before the Participant's
death, the first "distribution calendar year" is the calendar year immediately
preceding the calendar year which contains the Participant's Required Beginning
Date. For distributions beginning after the Participant's death, the first
"distribution calendar year" is the calendar year in which distributions are
required to begin under Section 2.2. The required minimum distribution for the
Participant's first "distribution calendar year" will be made on or before the
Participant's Required Beginning Date. The required minimum distribution for
other "distribution calendar years", including the required minimum distribution
for the "distribution calendar year" in which the Participant's Required
Beginning Date occurs, will be made on or before December 31 of that
"distribution calendar year".

5.3      Life Expectancy

The term "life expectancy" means the life expectancy as computed by use of the
Single Life Table in Section 1.401(a)(9)-9 of the Treasury Regulations.

5.4      Participant's Account Balance

The term Participant's "account balance" means the Account balance as of the
last valuation date in the calendar year immediately preceding the "distribution
calendar year" (the "valuation calendar year") increased by the amount of any
contributions made and allocated or forfeitures allocated to the Account balance
as of dates in the "valuation calendar year" after the Valuation Date and
decreased by distributions made in the "valuation calendar year" after the
Valuation Date. The Account balance for the "valuation calendar year" includes
any amounts rolled over or transferred to the Plan either in the "valuation
calendar year" or in the "distribution calendar year" if distributed or
transferred in the "valuation calendar year".

                                       5
<PAGE>

                                    SECTION 6
                               ELECTIVE PROVISIONS

6.1      Election to Allow Participants or Beneficiaries to Elect 5-Year Rule

Participants or beneficiaries may elect on an individual basis whether the
5-year rule or the "life expectancy" rule in Sections 2.2 and 4.2 of this
Addendum applies to distributions after the death of a Participant who has a
"designated beneficiary". The election must be made no later than the earlier of
September 30 of the calendar year in which distribution would be required to
begin under Section 2.2 of this Addendum, or by September 30 of the calendar
year which contains the fifth anniversary of the Participant's (or, if
applicable, surviving spouse's) death. If neither the Participant nor
beneficiary makes an election under this paragraph, distributions will be made
in accordance with Sections 2.2 and 4.2 of this Addendum.

6.2      Election to Allow Designated Beneficiary Receiving Distributions Under
         5-Year Rule to Elect Life Expectancy Distributions

A "designated beneficiary" who is receiving payments under the 5-year rule may
make a new election to receive payments under the "life expectancy" rule until
December 31, 2003, provided that all amounts that would have been required to be
distributed under the "life expectancy" rule for all "distribution calendar
years" before 2004 are distributed by the earlier of December 31, 2003 or the
end of the 5-year period.

         IN WITNESS WHEREOF, NS Group, Inc. has hereunto caused its name to be
subscribed on this 17th day of September, 2003.

                                  NS GROUP, INC.

                                  By: /s/ Frank J. LaRosa
                                      --------------------------------------

                                  Title: Vice President of Human
                                         Resources and Information Services

                                       6<PAGE>

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

                                  BY AND AMONG

                               SSP SOLUTIONS, INC.

                                       AND

                    THE INVESTORS LISTED ON EXHIBIT A HERETO

                          DATED AS OF NOVEMBER 19, 2003

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                                                 TABLE OF CONTENTS
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                                                                                                              PAGE
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<S>      <C>                                                                                                   <C>
1.       DEFINITIONS............................................................................................1

2.       PURCHASE AND SALE OF COMPANY SECURITIES................................................................1

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................2

         3.1      Organization and Qualification................................................................2

         3.2      Authorization; Enforcement; Validity..........................................................2

         3.3      Capitalization................................................................................2

         3.4      Issuance of Securities........................................................................3

         3.5      No Conflicts..................................................................................3

         3.6      SEC Documents; Financial Statements...........................................................4

         3.7      Absence of Certain Changes....................................................................4

         3.8      Absence of Litigation.........................................................................5

         3.9      No Undisclosed Events, Liabilities, Developments or Circumstances.............................5

         3.10     No General Solicitation.......................................................................5

         3.11     Employee Relations............................................................................5

         3.12     Intellectual Property Rights..................................................................6

         3.13     Environmental Laws............................................................................6

         3.14     Title.........................................................................................6

         3.15     Insurance.....................................................................................6

         3.16     Regulatory Permits............................................................................7

         3.17     Internal Accounting Controls..................................................................7

         3.18     Tax Status....................................................................................7

         3.19     Transactions With Affiliates..................................................................7

         3.20     Rights Agreement..............................................................................8

         3.21     Foreign Corrupt Practices.....................................................................8

         3.22     No Undisclosed Liabilities....................................................................8

         3.23     Investment Company Act Status.................................................................8

         3.24     No Integrated Offering........................................................................8

         3.25     Ownership By Certain Stockholders.............................................................8

         3.26     Disclosure....................................................................................9

                                                       -i-

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         3.27     S-3 Eligibility...............................................................................9

         3.28     Significant Shareholders......................................................................9

         3.29     Key Employees. ...............................................................................9

         3.30     Listing.......................................................................................9

         3.31     Anti-Takeover Provisions......................................................................9

         3.32     Acknowledgement Regarding Each Investor's Purchase of the Securities.........................10

         3.33     ACKNOWLEDGEMENT REGARDING SECURITIES.........................................................10

         3.34     Legal Compliance.............................................................................10

         3.35     Variable Securities..........................................................................10

4.       INVESTORS' REPRESENTATIONS AND WARRANTIES.............................................................11

         4.1      Investment Purpose...........................................................................11

         4.2      Accredited Investor Status...................................................................11

         4.3      Reliance on Exemptions.......................................................................11

         4.4      Information..................................................................................11

         4.5      No Governmental Review.......................................................................11

         4.6      Transfer or Resale...........................................................................12

         4.7      Legends......................................................................................12

         4.8      Authorization; Enforcement; Validity.........................................................13

         4.9      Residency....................................................................................13

         4.10     Representations and Warranties Effective as of Closing Date..................................13

5.       INTENTIONALLY DELETED.................................................................................13

6.       COVENANTS.............................................................................................13

         6.1      Payments with Respect to the Preferred Shares................................................13

         6.2      Notice of Default or Litigation..............................................................13

         6.3      Books, Records and Inspections...............................................................13

         6.4      Taxes........................................................................................14

         6.5      Covenants Concerning Intellectual Property and Company Identity..............................14

         6.6      Form D and Blue Sky..........................................................................14

         6.7      Reporting Status.............................................................................14

                                                       -ii-

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                                                                                                              PAGE
                                                                                                              ----

         6.8      Reservation of Shares........................................................................14

         6.9      Listing......................................................................................14

         6.10     Expenses.....................................................................................15

         6.11     Filing of Form 8-K...........................................................................15

         6.12     Stockholder Approval; Proxy Statement........................................................15

         6.13     Chief Operating Officer......................................................................16

         6.14     Investors' Covenants.........................................................................16

         6.15     Independent Nature of Investors. ............................................................16

7.       DEFAULTS AND REMEDIES.................................................................................17

         7.1      Events of Default............................................................................17

         7.2      Remedies. ...................................................................................18

         7.3      Waiver of Past Defaults......................................................................18

8.       INTENTIONALLY DELETED.................................................................................18

9.       CLOSING...............................................................................................18

10.      CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL........................................................18

         10.1     Execution of Transaction Documents...........................................................18

         10.2     Payment of Purchase Price....................................................................18

         10.3     Representations and Warranties True; Covenants Performed.....................................19

         10.4     No Legal Prohibition.........................................................................19

         10.5     Investor Notes. .............................................................................19

11.      CONDITIONS TO EACH INVESTOR'S OBLIGATIONS TO PURCHASE.................................................19

         11.1     Execution of Transaction Documents...........................................................19

         11.2     Delivery of Securities. .....................................................................19

         11.3     Listing. ....................................................................................19

         11.4     Representations and Warranties True; Covenants Performed. ...................................19

         11.5     No Legal Prohibition. .......................................................................20

         11.6     Legal Opinion................................................................................20

         11.7     Corporate Approvals..........................................................................20

         11.8     Investor Notes...............................................................................20

                                                       -iii-

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                                                                                                              PAGE
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12.      MISCELLANEOUS.........................................................................................20

         12.1     Consent to Amendments........................................................................20

         12.2     Form, Registration, Transfer and Exchange of Certificates; Lost Certificates.................20

         12.3     Entire Agreement.............................................................................20

         12.4     Severability.................................................................................21

         12.5     Successors and Assigns.......................................................................21

         12.6     Notices......................................................................................21

         12.7     Accounting Terms.............................................................................21

         12.8     Descriptive Headings.........................................................................22

         12.9     Exhibits and Disclosure Schedules............................................................22

         12.10    Counterparts.................................................................................22

         12.11    Survival.....................................................................................22

         12.12    Remedies.....................................................................................22

         12.13    Governing Law and Choice of Forum............................................................22

         12.14    Indemnification..............................................................................22

         12.15    Representation by Counsel....................................................................23

         12.16    WAIVER OF JURY TRIAL.........................................................................23

EXHIBITS

Exhibit A.........Names, Addresses, Contact Information and Purchase Amounts for Investors

Exhibit B.........List and Description of Promissory Notes

Exhibit C.........Certain Definitions

Exhibit D.........Form of Escrow Agreement

                                                      -iv-
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<PAGE>

                          SECURITIES PURCHASE AGREEMENT

         This Securities Purchase Agreement (this "AGREEMENT") is entered into
as of November 19, 2003 by and among the investor(s) listed on EXHIBIT A hereto
("INVESTORS"), and SSP Solutions, Inc., a Delaware corporation (the "COMPANY").

                                    RECITALS

         A. The Company desires to issue and sell to the Investors, and the
Investors desire to purchase, on the terms and conditions set forth herein, (i)
an aggregate of up to 2,150 shares of Series A Preferred Stock of the Company,
par value $0.01 per share (the "PREFERRED SHARES"); (ii) Series A-1 Warrants to
Purchase Common Stock in the aggregate amount of up to 5,375,000 shares of the
Company's Common Stock; and (iii) Series A-2 Warrants to Purchase Common Stock
in the aggregate amount of 5,375,000 shares of the Company's Common Stock (such
warrants described in this clause (iii) and the preceding clause (ii) as they
may be amended, modified, restated, supplemented or extended, are collectively
referred to herein as the "WARRANTS").

         C. Each of the Investors is purchasing the Preferred Shares and
Warrants set forth opposite his or its respective name on EXHIBIT A by delivery
at the Closing (as defined in SECTION 9) of (i) immediately available funds in
the amount set forth opposite his or its name on EXHIBIT A and (ii) if
applicable, certain of their Promissory Notes for cancellation.

                                    AGREEMENT

         In consideration of the mutual covenants and agreements set forth
herein, and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

1.       DEFINITIONS.

         For the purpose of this Agreement capitalized terms not otherwise
defined herein have the meanings set forth in EXHIBIT C.

2.       PURCHASE AND SALE OF COMPANY SECURITIES.

         Subject to the terms and conditions contained herein, and in reliance
upon the representations, warranties and agreements contained herein, the
Company shall issue and sell to the Investors, and the Investors shall purchase,
the Securities on the Closing Date (as defined in SECTION 9). The purchase price
being paid by the Investors shall be $7,000 per unit of (i) one Preferred Share,
(ii) A-1 Warrant(s) to purchase 2,500 Common Shares and (iii) A-2 Warrant(s) to
purchase 2,500 Common Shares, or an aggregate of up to $15,000,000 ("PURCHASE

<PAGE>

PRICE"). Simultaneously with the execution of this Agreement, the Company and
the Escrow Agent shall execute the Escrow Agreement, and each of the Investors
shall deliver to the Escrow Agent (i) immediately available funds equal to the
"cash consideration" amount set forth opposite their respective names on EXHIBIT
A and (ii) if applicable, their original Promissory Notes for cancellation as
described on EXHIBIT B. Prior to the Closing, the Company shall deliver to the
Escrow Agent (i) certificates representing the Preferred Shares and Warrants
purchased by the Investors hereunder, as set forth on EXHIBIT A and (ii) fully
executed Retained Notes as described on EXHIBIT B. On the Closing Date, and upon
satisfaction of all Closing conditions set forth in this Agreement, the Escrow
Agent shall release (i) to the Company the cash and original Promissory Notes
tendered as consideration for the Preferred Shares and Warrants, and (ii) to the
Investors the certificates representing the Preferred Shares, the Warrants and
the Retained Notes.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Investors that:

         3.1 ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction in which it is incorporated, and has
the requisite corporate power and authorization to own its properties and to
carry on its businesses as now being conducted or as is proposed to be
conducted. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it
or proposed to be conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. The Company has no Subsidiaries except as set
forth on SCHEDULE 3.1.

         3.2 AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants, the Escrow Agreement, the Registration Rights
Agreement and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the "TRANSACTION DOCUMENTS"), and to issue the Securities in accordance with the
terms hereof and thereof. The execution and delivery of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby, including without limitation the issuance of the Warrants
and the reservation for issuance and the issuance of the Conversion Shares
issuable upon conversion of the Preferred Shares and the Warrant Shares issuable
upon exercise of the Warrants have been duly authorized by the Company's Board
of Directors and, except for the approval of the stockholders of the Company as
contemplated by SECTION 6.12, no further consent or authorization is required by
the Company, its Board of Directors or its stockholders. The Transaction
Documents have been duly executed and delivered by the Company. The Transaction
Documents constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.

                                      -2-

<PAGE>

         3.3 CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of (i) 100,000,000 shares of Common Stock and (ii)
5,000,000 shares of Preferred Stock, of which as of the date hereof, no shares
are issued and outstanding. There is disclosed on Schedule 3.3 the number of
shares of Common Stock (x) issued and outstanding, (y) reserved for issuance
pursuant to the Company's stock option and purchase plans and (z) issuable and
reserved for issuance pursuant to securities (other than the Preferred Shares
and the Warrants) exercisable or exchangeable for, or convertible into, shares
of Common Stock. All of such outstanding or issuable shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except as
disclosed in SCHEDULE 3.3, (A) no shares of the Company's capital stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances granted or created by the Company; (B) there are no outstanding
debt securities issued by the Company; (C) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries; (D) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the Securities Act (except this
Agreement); (E) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (F) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement; and (G) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement.

         3.4 ISSUANCE OF SECURITIES. Upon conversion or exercise of the
Preferred Shares or the Warrants, as the case may be, the Conversion Shares and
the Warrant Shares will be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The
number of shares of Common Stock that have been duly authorized and reserved for
issuance upon conversion of the Preferred Shares and upon exercise of the
Warrants and upon payment of interest due under the Retained Notes is set forth
on SCHEDULE 3.4. The issuance by the Company of the Securities is exempt from
registration under the Securities Act.

         3.5 NO CONFLICTS. Except as disclosed in SCHEDULE 3.5, the execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the reservation for issuance and issuance of the Conversion
Shares and the Warrant Shares) will not (i) result in a violation of the
Company's Certificate of Incorporation or the Bylaws; (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party; (iii)

                                      -3-

<PAGE>

result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Except as disclosed in SCHEDULE 3.5, neither
the Company nor any of its Subsidiaries is in violation of any term of its
Certificate of Incorporation or Bylaws or their organizational charter or
bylaws, respectively. Except as disclosed in SCHEDULE 3.5, neither the Company
nor any of its Subsidiaries is in violation or any term of or in default under
any contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to the
Company or its Subsidiaries. The business of the Company and its Subsidiaries is
not being conducted, and shall not be conducted, in violation of any law,
ordinance or regulation of any governmental entity, except where such violation
would not have a Material Adverse Effect. Except as specifically contemplated by
this Agreement and as required under the Securities Act, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof. Except as disclosed in SCHEDULE 3.5, all
consents, authorizations, orders, filings and registrations which the Company is
required to obtain as described in the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its Subsidiaries are
unaware of any facts or circumstances that might give rise to any of the
foregoing. The Company is not in violation of the listing requirements of the
Principal Market and has no actual knowledge of any facts or any reason to
believe that facts exist that would reasonably lead to delisting or suspension
of the Common Stock by the Principal Market in the foreseeable future.

         3.6 SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31, 2001,
except as set forth on SCHEDULE 3.6, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Exchange Act (all of the
foregoing filed prior to the date hereof (including all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein) being hereinafter referred to as the "SEC
DOCUMENTS"). A complete and accurate list of the SEC Documents that have been
filed by the Company on EDGAR is set forth on SCHEDULE 3.6. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its

                                      -4-

<PAGE>

operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Neither the Company
nor any of its Subsidiaries or any of their officers, directors, employees or
agents have provided the Investors with any material, nonpublic information.

         3.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3.7,
since December 31, 2002, there has been no material adverse change and no
material adverse development in the business, properties, assets, operations,
results of operations, financial conditions or prospects of the Company or its
Subsidiaries. The Company has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do so.
Except as disclosed in SCHEDULE 3.7, since December 31, 2002, the Company has
not declared or paid any dividends, sold any assets, individually or in the
aggregate, in excess of $100,000 outside of the ordinary course of business or
had capital expenditures, individually or in the aggregate, in excess of
$100,000.

         3.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries or any of the Company's or any Subsidiary's officers
or directors in their capacities as such, except as expressly set forth in
SCHEDULE 3.8. Except as set forth in SCHEDULE 3.8, to the knowledge of the
Company none of the directors or officers of the Company have been involved in
securities related litigation during the past five years.

         3.9 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES.
Except for the issuance of the Preferred Shares and Warrants contemplated by
this Agreement and as set forth on SCHEDULE 3.9, no event, liability,
development or circumstance has occurred or exists, or is contemplated to occur,
with respect to the Company or its Subsidiaries or their respective business,
properties, prospects, operations or financial condition, that would be required
to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
disclosed.

         3.10 NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Securities.

         3.11 EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. None of the
Company's or its Subsidiaries' employees is a member of a union which relates to
such employee's relationship with the Company or its Subsidiaries, neither the

                                      -5-

<PAGE>

Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer (as defined in Rule 501(f)
of the Securities Act) has notified the Company that he intends to leave the
Company or otherwise terminate his employment with the Company. No executive
officer, to the best knowledge of the Company and its Subsidiaries, is, or is
now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.

         3.12 INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights necessary
to conduct their respective businesses as now conducted or as proposed to be
conducted in the future. Except as set forth on SCHEDULE 3.12, none of the
Company's trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agreement. The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, trade secrets or other intellectual property rights of others, or of
any development of similar or identical trade secrets or technical information
by others and, except as set forth on SCHEDULE 3.12, there is no claim, action
or proceeding being made or brought against, or to the Company's knowledge,
being threatened against, the Company or its Subsidiaries regarding its
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, trade secrets,
or infringement of other intellectual property rights; and the Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its Subsidiaries have taken security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties consistent with industry practices used by comparable
companies. SCHEDULE 3.12 contains a complete list of all patents and trademarks
for which the Company has sought intellectual property protection with the
Patent and Trademark Office.

         3.13 ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.

                                      -6-

<PAGE>

         3.14 TITLE. The Company and its Subsidiaries have good title to all
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
except such as are described in SCHEDULE 3.14 or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries.
Any real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.

         3.15 INSURANCE. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company reasonably believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and, except as set forth in
SCHEDULE 3.15, neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect.

         3.16 REGULATORY PERMITS. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

         3.17 INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

         3.18 TAX STATUS. The Company and each of its Subsidiaries (i) has made
or filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes), (ii) has paid all taxes and other governmental assessments
and charges shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and for which the
Company has made appropriate reserves for on its books, and (iii) has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
(referred to in clause (i) above) apply. There are no unpaid taxes in any

                                      -7-

<PAGE>

material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.

         3.19 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
3.19, and other than the grant of stock options disclosed on SCHEDULE 3.3, none
of the officers, directors, or employees of the Company is presently a party to
any transaction with the Company or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.

         3.20 RIGHTS AGREEMENT. The Company has not adopted a shareholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

         3.21 FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

         3.22 NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations of any nature, whether accrued, absolute, contingent, unliquidated
or otherwise, except those disclosed or described in the SEC Documents,
including the financial statements and notes thereto included in the SEC
Documents, and those liabilities and obligations incurred since the last day
covered by the financial statements included in the most recently filed SEC
Document listed on SCHEDULE 3.6.

         3.23 INVESTMENT COMPANY ACT STATUS. Neither the Company nor any of the
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" as those terms are defined in the Investment Company Act of
1940, as amended.

         3.24 NO INTEGRATED OFFERING. Except as set forth on SCHEDULE 3.24,
neither the Company, nor any of its affiliates, nor any person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the Securities Act or
cause this offering of the Securities to be integrated with prior offerings by
the Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the

                                      -8-

<PAGE>

securities of the Company are listed or designated, nor will the Company or any
of its Subsidiaries take any action or steps that would require registration of
any of the Securities under the Securities Act or cause the offering of the
Securities to be integrated with other offerings.

         3.25 OWNERSHIP BY CERTAIN STOCKHOLDERS. Marvin Winkler is the current
Chairman and Chief Executive Officer of the Company. Kris Shah is the current
President, Chief Operating Officer and Secretary of the Company. Thomas E.
Schiff is the current Executive Vice President and Chief Financial Officer of
the Company. Ramesh Shah and Dilip Shah are brothers of Kris Shah and part of
the management of the Company. Harris Toibb and Richard Kiphart are stockholders
who have agreed in writing to vote in favor of the Transactions. Kris Shah,
Marvin Winkler, Thomas E. Schiff, Ramesh Shah, Dilip Shah, Harris Toibb and
Richard Kiphart owned or controlled the voting rights to at least 50.1% of the
voting securities of the Company that are issued and outstanding as of the
record date for the Company Stockholder Meeting (as defined in Section 6.13(a)).

         3.26 DISCLOSURE. This Agreement (including the schedules and exhibits
hereto) does not contain any untrue statement of any material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading. To the Company's knowledge, there are no facts that, individually or
in the aggregate, would have a Material Adverse Effect that have not been set
forth in this Agreement (including the schedules attached hereto).

         3.27 S-3 ELIGIBILITY. The Company is, and during all relevant periods
under the Registration Rights Agreement, will be, eligible to register the
Registrable Securities on SEC Form S-3.

         3.28 SIGNIFICANT SHAREHOLDERS. Set forth on SCHEDULE 3.28 is a list of
stockholders each of whom is the record owner of 100,000 or more shares of the
Company's Common Stock.

         3.29 KEY EMPLOYEES. Each of the Company's directors and officers and
any Key Employee (as defined below) is currently serving the Company in the
capacity disclosed in the SEC Documents. No Key Employee is, or is now expected
to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its Subsidiaries to any material liability with respect to any
of the foregoing matters. No Key Employee has, to the knowledge of the Company
and its Subsidiaries, any intention to terminate or limit his employment with,
or services to, the Company or any of its Subsidiaries, nor is any such Key
Employee subject to any constraints which would cause such employee to be unable
to devote his full time and attention to such employment or services. For
purposes of this Agreement, "KEY EMPLOYEE" means the persons listed in SCHEDULE
3.29 and any individual who assumes or performs any of the duties of a Key
Employee.

                                      -9-

<PAGE>

         3.30 LISTING. The Common Stock is currently listed for trading on the
Nasdaq National Market (the "NATIONAL MARKET"). The Company is not in violation
of the listing requirements of the National Market, does not reasonably
anticipate that the Common Stock will be delisted by the National Market for the
foreseeable future, and, except as set forth in SCHEDULE 3.30, had not received
during 2003 any notice regarding the possible delisting of the Common Shares
from the National Market. The Company shall secure the listing of the Conversion
Shares and Warrant Shares on the National Market and on each other national
securities exchange, automated quotation system or over-the-counter market upon
which shares of Common Stock are currently listed (subject to official notice of
issuance).

         3.31 ANTI-TAKEOVER PROVISIONS. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under its Certificate of Incorporation or Bylaws which is or could become
applicable to any Investor as a result of the transactions contemplated by this
Agreement and the other Transaction Documents (the "TRANSACTIONS"), including,
without limitation, the Company's issuance of the Securities or any other
securities pursuant to the terms of this Agreement and any and all Investors'
ownership of the Securities or any such other securities.

         3.32 ACKNOWLEDGEMENT REGARDING EACH INVESTOR'S PURCHASE OF THE
SECURITIES. The Company acknowledges and agrees that each Investor is acting
solely in the capacity of an arm's length purchaser with respect to this
Agreement and the other Transaction Documents and the Transactions, and that no
Investor is (i) an officer or director of the Company, (ii) an "affiliate" of
the Company (as defined in Rule 144 under the Securities Act (including any
successor rule, "RULE 144")) or (iii) to the actual knowledge of the Company
(without any inquiry of the Investors), except as set forth on SCHEDULE 3.32, a
"beneficial owner" of more than 5% of the Common Stock (as defined for purposes
of Rule 13d-3 of the Exchange Act). The Company further acknowledges that no
Investor is acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement or the other Transaction
Documents and the Transactions, and any advice given by an Investor or any of
its representatives or agents in connection with this Agreement or the other
Transaction Documents and the Transactions is merely incidental to such
Investor's purchase of the Securities. The Company further represents to each
Investor that the Company's decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

         3.33 ACKNOWLEDGEMENT REGARDING SECURITIES. THE NUMBER OF CONVERSION
SHARES AND THE NUMBER OF WARRANT SHARES ISSUABLE UPON EXERCISE OF THE WARRANT
MAY INCREASE IN CERTAIN CIRCUMSTANCES. THE COMPANY'S DIRECTORS AND EXECUTIVE
OFFICERS HAVE STUDIED AND FULLY UNDERSTAND THE NATURE OF THE SECURITIES BEING
SOLD HEREUNDER. THE COMPANY ACKNOWLEDGES THAT ITS OBLIGATION TO ISSUE CONVERSION
SHARES UPON CONVERSION OF THE PREFERRED SHARES IN ACCORDANCE WITH THE TERMS
THEREOF AND THE WARRANT SHARES UPON THE EXERCISE OF THE WARRANTS IN ACCORDANCE
WITH THE TERMS THEREOF IS ABSOLUTE AND UNCONDITIONAL, REGARDLESS OF THE DILUTION

                                      -10-

<PAGE>

THAT SUCH ISSUANCE MAY HAVE ON THE OWNERSHIP INTERESTS OF OTHER STOCKHOLDERS AND
THE AVAILABILITY OF REMEDIES PROVIDED FOR IN ANY OF THE TRANSACTION DOCUMENTS
RELATING TO A FAILURE OR REFUSAL TO ISSUE CONVERSION SHARES OR WARRANT SHARES.
TAKING THE FOREGOING INTO ACCOUNT, THE COMPANY'S BOARD OF DIRECTORS HAS
DETERMINED IN ITS GOOD FAITH BUSINESS JUDGMENT THAT THE ISSUANCE OF THE
PREFERRED SHARES AND THE WARRANTS HEREUNDER AND THE CONSUMMATION OF THE OTHER
TRANSACTIONS ARE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS.

         3.34 LEGAL COMPLIANCE. The Company shall conduct its business in
compliance with all laws, ordinances or regulations of governmental entities
applicable to such businesses, except where the failure to do so would not have
a Material Adverse Effect.

         3.35 VARIABLE SECURITIES. So long as any Investor (or any of their
respective affiliates) beneficially owns any Securities, the Company shall not,
without first obtaining the written approval of the holders of a majority of the
aggregate face value of the Retained Notes and a majority of the holders of the
Preferred Stock then outstanding (which approval may be given or withheld by
such holders in their sole discretion), issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock, or any other securities
directly or indirectly convertible into or exchangeable or exercisable for
Common Stock, at an effective conversion, exchange or exercise price that varies
or may vary with the market price of the Common Stock, including by way of one
or more reset(s) to any fixed price.

4.       INVESTORS' REPRESENTATIONS AND WARRANTIES.

         Each Investor represents and warrants, with respect to only such
Investor, that:

         4.1 INVESTMENT PURPOSE. The Investor (i) is acquiring the Preferred
Shares and the Warrants, (ii) upon conversion of the Preferred Shares, will
acquire the Conversion Shares then issuable, and (iii) upon exercise of the
Warrants, will acquire the Warrant Shares issuable upon exercise thereof for
such Investor's own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act. Except as set forth on
SCHEDULE 4.1, (x) from April 1, 2003 through the date hereof, the Investor has
not purchased, sold or "sold short" any securities of the Company or (y) on the
date hereof, the Investor does not, and as of the Closing Date will not, have
any "short" position in the Company's securities. Each of Crestview Capital
Fund, L.P. and Crestview Capital Fund II, L.P. represents and warrants that from
April 1, 2003 through the date hereof, it has not purchased, sold or "sold
short" any securities of the Company, except as set forth on SCHEDULE 4.1.

         4.2 ACCREDITED INVESTOR STATUS. The Investor is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

                                      -11-

<PAGE>

         4.3 RELIANCE ON EXEMPTIONS. The Investor understands that the
Securities are being offered and sold to the Investor in reliance on specific
exemptions from the registration requirements of the United States federal and
state securities laws and that the Company is relying in part upon the truth and
accuracy of, and the Investor's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Investor set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Securities.

         4.4 INFORMATION. The Investor and the Investor's advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company, including, without limitation, the information
required to be delivered to the Investors under Rule 502(b)(2) of Regulation D
as promulgated under the Securities Act, and any other materials relating to the
offer and sale of the Securities that have been requested by the Investor. The
Investor and such Investor's advisors, if any, have been afforded the
opportunity to ask questions of the Company. The Investor understands that the
Investor's investment in the Securities involves a high degree of risk. The
Investor has sought such accounting, legal and tax advice as the Investor has
considered necessary to make an informed investment decision with respect to the
Investor's acquisition of the Securities.

         4.5 NO GOVERNMENTAL REVIEW. The Investor understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

         4.6 TRANSFER OR RESALE. The Investor understands that, except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the Securities Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) the Investor delivers to the Company an
opinion of counsel, in a generally acceptable form, to the effect that the
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) the Investor
provides the Company with reasonable assurance that the Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the Securities
Act, as amended, (or a successor rule thereto) ("RULE 144"); (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
except as provided in this Agreement (iii) neither the Company nor any other
person is under any obligation to register the Preferred Shares or Warrants
under the Securities Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder. Notwithstanding the foregoing,
the Securities may be pledged in connection with a bona fide margin account or
other loan or financing arrangement secured by the Securities.

                                      -12-

<PAGE>

         4.7 LEGENDS. The Investor understands that the certificates or other
instruments representing the Preferred Shares and the Warrants and, until such
time as the sale of the Registrable Securities has been registered under the
Securities Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Registrable Securities, except as set forth below,
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
         SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
         TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
         REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION
         OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
         REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II)
         UNLESS SOLD PURSUANT TO RULE 144 UNDER THAT ACT. NOTWITHSTANDING THE
         FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
         MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
         SECURITIES.

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Registrable Securities upon
which it is stamped, if, unless otherwise required by state securities laws, (i)
the Registrable Securities are registered for resale under the Securities Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that a
public sale, assignment or transfer of the Registrable Securities may be made
without registration under the Securities Act, or (iii) such holder provides the
Company with reasonable assurances that the Registrable Securities can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold.

         4.8 AUTHORIZATION; ENFORCEMENT; VALIDITY. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Investor and is
a valid and binding agreement of the Investor enforceable against the Investor
in accordance with its terms, subject as to enforceability to general principles
of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.

         4.9 RESIDENCY. The Investor is a resident of that jurisdiction
specified in its address on EXHIBIT A.

                                      -13-

<PAGE>

         4.10 REPRESENTATIONS AND WARRANTIES EFFECTIVE AS OF CLOSING DATE. The
representations and warranties of each Investor set forth in this SECTION 4 will
be true, correct and complete on the Closing Date as if made as of that date.

5.       INTENTIONALLY DELETED

6.       COVENANTS.

         The Company covenants and agrees as set forth in SECTIONS 6.1 THROUGH
6.13. The Investors covenant and agree as set forth in SECTION 6.14. The Company
and the Investors mutually covenant and agree as set forth in SECTION 6.15.

         6.1 PAYMENTS WITH RESPECT TO THE PREFERRED SHARES. The Company shall
make all dividend and other payments due pursuant to the terms of the Preferred
Shares on the dates and in the manner provided in the Certificate of
Designation.

         6.2 NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event within
one Business Day, after an officer of the Company obtains knowledge thereof, the
Company shall deliver to the Investors notice of (i) the occurrence of any
event, act or condition which constitutes a Default or Event of Default, (ii)
any litigation or governmental proceeding pending against the Company and (iii)
any other event which is likely to have a Material Adverse Effect. Each such
notice shall specify in reasonable detail the nature of the event, act,
condition, Default, Event of Default or proceeding and what action the Company
is taking or proposes to take with respect thereto.

         6.3 BOOKS, RECORDS AND INSPECTIONS. The Company shall keep proper books
of record and account in which full, true and correct entries in conformity with
all requirements of law and with GAAP (except that all interim information shall
be subject to normal year-end adjustments) shall be made of all dealings and
transactions in relation to its business and activities. The Company shall
permit designated agents of the Investors to visit and inspect any of the
properties of the Company, and to examine the books of account and records of
the Company and make copies thereof, and discuss the affairs, finances and
accounts of the Company with, and be advised as to the same by, its officers and
independent accountants, all during the Company's normal business hours, upon
prior notice and to such extent as the Investors may request.

         6.4 TAXES. The Company shall pay when due all Taxes, except as
contested in good faith and by appropriate proceedings if adequate reserves have
been established with respect thereto.

         6.5 COVENANTS CONCERNING INTELLECTUAL PROPERTY AND COMPANY IDENTITY.
For so long as any of the Preferred Shares remain outstanding:

                  6.5.1 INTELLECTUAL PROPERTY. Neither the Company nor any
Subsidiary shall, without the prior written consent of the Investors holding a
majority of the outstanding Preferred Shares, create or allow to exist, any

                                      -14-

<PAGE>

lien, encumbrance or other security interest in any intellectual property of the
Company, except for rights of the U.S. government and certain prime contractors
pursuant to government contracts.

                  6.5.2 CORPORATE IDENTITY. Neither the Company nor any
Subsidiary shall change its name, identity, state of incorporation or corporate
structure in any manner unless it shall have given the Investors at least 30
days' prior written notice thereof.

         6.6 FORM D AND BLUE SKY. The Company agrees to file, at its expense, a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof to the Investors and their counsel promptly after the
filing. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities for sale to the Investors pursuant to this Agreement under applicable
securities or "Blue Sky" laws of the states of the United States, and shall
provide evidence of any such action so taken to the Investors. The Company, at
its expense, shall make all filings and reports relating to the offer and sale
of the Securities required under applicable securities or "Blue Sky" laws of the
states of the United States.

         6.7 REPORTING STATUS. Until the date as of which the Investors may sell
all of the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the Securities Act (or successor thereto), the Company shall
timely file all reports required to be filed with the SEC pursuant to the
Exchange Act and with any Principal Market, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would otherwise permit
termination.

         6.8 RESERVATION OF SHARES. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, the
number of shares of Common Stock needed to provide for the issuance of the
shares of Common Stock upon (i) conversion of all Preferred Shares and (ii)
exercise of all outstanding Warrants.

         6.9 LISTING. The Company shall promptly secure the listing of all of
the Registrable Securities upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's authorization for
quotation on The Nasdaq National Market or The Nasdaq SmallCap Market or listed
on The New York Stock Exchange, Inc. or The American Stock Exchange, Inc. (as
applicable, the "PRINCIPAL MARKET"). Neither the Company nor any of its
Subsidiaries shall take any action that would be reasonably expected to result
in the delisting or suspension of the Common Stock from the Principal Market,
and the Company shall use best efforts to continue such listing. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this SECTION 6.8.

                                      -15-

<PAGE>

         6.10 EXPENSES. The Company shall reimburse the Investors an aggregate
of up to $65,000 for expenses incurred by the Investors in connection with the
Transactions, including, without limitation, expenses incurred to perform a due
diligence investigation of the Company and legal expenses in connection with
drafting and negotiation of the Transaction Documents. Prior to the date hereof,
the Company paid certain of the Investors $25,000 of the $65,000 referred to
above, so the Company shall only be obligated to reimburse the Investors for an
aggregate of up to an additional $40,000 pursuant to this SECTION 6.9. Any
additional reimbursement required to be made hereunder shall be made by the
Company promptly upon presentment by the Investors of evidence satisfactory to
the Company that expenses greater than $25,000 have been incurred by the
Investors for the purposes described above. Crestview I (an affiliate of an
Investor) may withhold payment of $40,000 (or such lesser amount of expenses not
previously reimbursed by the Company as contemplated in this SECTION 6.9) of its
subscription price for the Securities as a set-off of the Company's obligations
not previously satisfied hereunder.

         6.11 FILING OF FORM 8-K. On or before the second Business Day following
the Closing Date, the Company shall issue a press release describing the
material terms of the Transactions and shall also file a Current Report on Form
8-K with the SEC describing the terms of the Transactions and including as
exhibits to the Form 8-K this Agreement, the Certificate of Designation, the
Registration Rights Agreement and the form of Warrant, as and to the extent
required by the Exchange Act.

         6.12 STOCKHOLDER APPROVAL; PROXY STATEMENT.

                  (a) The Company shall use its reasonable best efforts to cause
a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be held on
its currently scheduled date of December 19, 2003, for the purpose of voting on
the approval or ratification of the Transactions. The Company's Board of
Directors shall recommend approval and adoption or ratification of the
Transactions.

                  (b) In connection with the Company Stockholder Meeting, the
Company (i) not later than 20 days after the Closing Date, shall prepare and
file with the SEC, and use its reasonable best efforts to have cleared by the
SEC and will thereafter mail to its stockholders as promptly as practicable a
proxy statement meeting the requirements of Regulation 14A promulgated under the
Exchange Act (the "PROXY STATEMENT") and all other proxy materials relating to
the Company Stockholder Meeting, which Proxy Statement shall include the
recommendation of the Company's Board of Directors in favor of the Transactions,
(ii) shall ensure that all proxies solicited in connection with the Company
Stockholder Meeting are solicited in compliance with all applicable statutes,
laws and regulations, including the rules and regulations promulgated by the
SEC, and (iii) shall otherwise comply with Applicable Law in connection with the
Transactions. The Company will provide the Investors with a copy of the
preliminary Proxy Statement and all modifications thereto prior to filing or
delivery to the SEC and will consult with the Investors in connection therewith.
The Company will notify the Investors promptly of any receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information

                                      -16-

<PAGE>

and will supply the Investors with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. If at any time
after the mailing of the Proxy Statement to the Company's stockholders there
occurs any event that should be set forth in an amendment or supplement to the
Proxy Statement, the Company will promptly prepare and mail to its stockholders
such an amendment or supplement. The Company will not mail any Proxy Statement,
or any amendment or supplement thereto, to which the Investors reasonably
object. The Company covenants that the Proxy Statement, including any amendment
or supplement thereto, shall not contain any untrue statement of a material fact
or omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading.

                  (c) If the Transactions are not approved at the Company
Stockholder Meeting, each Investor shall, from and after the date of the Company
Stockholder Meeting, have the redemption rights specified in the Certificate of
Designation and any other rights hereunder, at law or in equity.

         6.13 CHIEF OPERATING OFFICER. Not later than 120 days after the Closing
Date, the Board of Directors shall duly elect a Chief Operating Officer.

         6.14 INVESTORS' COVENANTS. Each Investor hereby covenants and agrees
that (a) he, she or it shall abstain from voting any Registrable Securities he,
she or it may have acquired prior to the record date of the Company Stockholder
Meeting for or against the Transactions to be voted upon at the Company
Stockholder Meeting, and (b) he, she or it shall comply with all prospectus
delivery requirements under applicable law in connection with the Securities as
to which the legend referenced in SECTION 4.7 has been removed, and if a
registration statement covering any such Securities has lapsed, been withdrawn
or is otherwise ineffective, he, she or it shall tender certificates
representing such previously registered Securities held by him, her or it to the
Company (whereupon the Company shall promptly return to such Investors new
certificates for such Securities bearing a legend substantially similar to the
one referenced in SECTION 4.7), it being understood and agreed that the
Investors shall in any case have the right to pursue any remedies they may have
under any applicable law or agreement if such lapse, withdrawal or
ineffectiveness constitutes a breach or violation of the Company's obligations
to one or more Investors.

         6.15 INDEPENDENT NATURE OF INVESTORS. The Company acknowledges that the
obligations of each Investor under the Transaction Documents are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under the Transaction Documents. The decision of each Investor to
purchase Securities pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any information,

                                      -17-

<PAGE>

materials, statements or opinions as to the business, affairs, operation,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiaries which may have
been made or given by any other Investor or by any agent or employee of any
other Investor, and no Investor or any of its agents or employees shall have any
liability to any Investor (or any other person) relating to or arising from any
such information, materials, statements or opinions. The Company further
acknowledges that nothing contained herein, or any Transaction Document, and no
action taken by any Investor pursuant hereto or thereto, including any
renegotiation, amendment, early conversion, exercise or termination, or other
modification to the Transaction Documents or the transactions related thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a "group" for purposes of
Section 13(d) of the 1934 Act with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such purpose. For reasons
of administrative convenience only, at the request of the Company, Investors and
their respective counsel have chosen to communicate with the Company through
Levenfeld Pearlstein, counsel for one of the Investors. Such counsel does not
represent any of the other Investors and each other Investor has retained its
own counsel in connection with the negotiation and review of the Transaction
Documents. The Company has elected to provide all Investors with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Investors.

7.       DEFAULTS AND REMEDIES.

         7.1 EVENTS OF DEFAULT. An "EVENT OF DEFAULT" occurs if:

                  (a) the Company fails to make any dividend or other payment in
respect of the Preferred Shares when due;

                  (b) the Company fails to comply with any of the agreements or
covenants contained in, or otherwise breaches, the Certificate of Designation or
any other agreement, covenant or provision contained in the Transaction
Documents and such failure continues for a period of ten days after an officer
of the Company obtains knowledge thereof;

                  (c) any representation or warranty made by the Company under,
relating to or in connection with this Agreement shall be false or misleading
when made;

                  (d) the Company, pursuant to or within the meaning of any
Bankruptcy Law, commences a voluntary case or proceeding, consents to the entry
of an order for relief against it in an involuntary case or proceeding, consents
to the appointment of a Custodian of it or for all or substantially all of its
property, makes a general assignment for the benefit of its creditors, or
generally is unable to pay its debts as they become due;

                  (e) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that is for relief against the Company in an
involuntary case or proceeding, appoints a Custodian of the Company or for all
or substantially all of its property, or orders the liquidation of the Company;
or

                                      -18-

<PAGE>

                  (f) except for liens or security interests described in
clauses (A) through (D) of Article XI.A(ii)(b) of the Certificate of
Designation, the Company or any Subsidiary grants or agrees to grant to any
Person a security interest in any property of the Company or any Subsidiary.

         7.2 REMEDIES. If any Default or Event of Default occurs and is
continuing, the Investors may proceed to protect and enforce their rights under
this Agreement or the Certificate of Designation with respect to the Preferred
Shares by exercising such remedies as are available in respect thereof under
this Agreement or under applicable law, either by suit in equity or by action at
law, or both, whether for the collection of the payment of dividends in respect
of the Preferred Shares or to enforce the specific performance of any covenant
or other agreement contained in this Agreement or the Certificate of
Designation. No remedy conferred in this Agreement upon the Investors is
intended to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.

         7.3 WAIVER OF PAST DEFAULTS. The Investors, by written notice to the
Company, may waive an existing Default or Event of Default and its consequences
with respect to the Preferred Shares; provided, however, that no such waiver
will extend to any subsequent or other Default or Event of Default or impair any
right of the Investors which may arise as a result of the Default or Event of
Default.

8.       INTENTIONALLY DELETED.

9.       CLOSING.

         The closing of the transactions contemplated by this Agreement
("CLOSING") shall occur on November 19, 2003 or such other date as the Company
and the Investors may agree in writing (the "CLOSING DATE").

10.      CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company hereunder to issue and sell the Preferred
Shares and the Warrants to each Investor hereunder is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions
as to such Investor, provided that such conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:

         10.1 EXECUTION OF TRANSACTION DOCUMENTS. Each Investor shall have
executed such Investor's Execution page to this Agreement and each other
Transaction Document to which such Investor is a party and delivered the same to
the Company.

         10.2 PAYMENT OF PURCHASE PRICE. Each Investor shall have delivered to
the Escrow Agent: (i) the full amount of the cash portion of such Investor's
Purchase Price to the Escrow Agent by wire transfer in accordance with the

                                      -19-

<PAGE>

Company's written wiring instructions; and (ii) if applicable, such Investor's
original Promissory Note.

         10.3 REPRESENTATIONS AND WARRANTIES TRUE; COVENANTS PERFORMED. The
representations and warranties of each Investor shall be true and correct as of
the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date,
which representations and warranties shall be true and correct as of such date),
and such Investor shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Investor at or prior to the Closing Date.

         10.4 NO LEGAL PROHIBITION. No statute, rule, regulation, executive
order, decree, ruling, injunction, action or proceeding shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the consummation of
any of the transactions contemplated by this Agreement.

         10.5 INVESTOR NOTES. The aggregate principal amount of the Retained
Notes shall not exceed $2,000,000, and all other Promissory Notes shall have
been tendered to the Escrow Agent in payment of the Purchase Price for
Securities.

11.      CONDITIONS TO EACH INVESTOR'S OBLIGATIONS TO PURCHASE.

         The obligation of each Investor hereunder to purchase the Preferred
Shares and the Warrants for which it is subscribing from the Company hereunder
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that such conditions are for each Investor's
individual and sole benefit and may be waived by any Investor as to such
Investor at any time in such Investor's sole discretion:

         11.1 EXECUTION OF TRANSACTION DOCUMENTS. The Company shall have
executed this Agreement and each other Transaction Document to which the Company
is a party and delivered executed originals of the same to the Investors.

         11.2 DELIVERY OF SECURITIES. The Company shall have delivered to the
Escrow Agent certificates representing the number of Preferred Shares and
Warrants being purchased by each Investor (each in such denominations as such
Investor shall request), registered in such Investor's name.

         11.3 LISTING. The Common Stock shall be authorized for quotation and
listed on the National Market and trading in the Common Stock (or on the
National Market generally) shall not have been suspended by the SEC or the
National Market.

         11.4 REPRESENTATIONS AND WARRANTIES TRUE; COVENANTS PERFORMED. The
representations and warranties of the Company shall be true and correct as of
the date when made and as of the Closing Date as though made at that time

                                      -20-

<PAGE>

(except for representations and warranties that speak as of a specific date,
which representations and warranties shall be true and correct as of such date)
and the Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Investors
shall have received a certificate, executed by the Chief Executive Officer of
the Company after reasonable investigation, dated as of the Closing Date to the
foregoing effect and as to such other matters as may reasonably be requested by
such Investor.

         11.5 NO LEGAL PROHIBITION. No statute, rule regulation, executive
order, decree, ruling, injunction, action or proceeding shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which restricts or prohibits the consummation of
any of the transactions contemplated by this Agreement.

         11.6 LEGAL OPINION. Such Investor shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in the form and substance
acceptable to the Investors.

         11.7 CORPORATE APPROVALS. Such Investor shall have received a copy of
resolutions, duly adopted by the Board of Directors of the Company, which shall
be in full force and effect at the time of the Closing, authorizing the
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents and the consummation by the Company of the
Transactions, certified as such by the Secretary or Assistant Secretary of the
Company, and such other documents they reasonably request in connection with the
Closing.

         11.8 INVESTOR NOTES. The aggregate principal amount of the Retained
Notes shall not exceed $2,000,000, and all other Promissory Notes shall have
been tendered to the Escrow Agent in payment of the Purchase Price for
Securities.

12.      MISCELLANEOUS.

         12.1 CONSENT TO AMENDMENTS. This Agreement may be amended, restated,
supplemented, modified or extended, and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
if, and only if, prior to taking any such action or omitting to perform any such
act, the Company shall have obtained the written consent of the Investors
holding a majority of the outstanding Preferred Shares to such amendment,
restatement, supplement, modification, extension, action, or omission to act.

         12.2 FORM, REGISTRATION, TRANSFER AND EXCHANGE OF CERTIFICATES; LOST
CERTIFICATES. The Company shall keep at its principal office a register in which
it shall provide for the registration of the Securities and of transfers of the
Securities or any portions thereof. Upon surrender of any certificate for
registration or transfer of such Securities at the principal office in
accordance with the provisions hereof, the Company shall, at its expense and
within three Business Days of such surrender and provided it can do so without

                                      -21-

<PAGE>

violating Applicable Law, execute and deliver one or more new certificates of
like tenor, which new Securities shall be registered in the name of such
Transferee or Transferees.

         12.3 ENTIRE AGREEMENT. This Agreement, the Certificate of
Incorporation, the Registration Rights Agreement, the Escrow Agreement, the
Warrants and the other agreements and instruments furnished pursuant hereto or
in connection herewith constitute the full and entire agreement and
understanding between the Investors and the Company, and supersede all prior
written or oral agreements and understandings relating to the subject matter
hereof, including, without limitation, the term sheet, dated August 20, 2003,
relating to the Transactions.

         12.4 SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

         12.5 SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including, without limitation, any Transferee). The Investors may assign any
and all of their rights under this Agreement, the Preferred Shares, the Retained
Notes and the Warrants to any Transferee and upon such assignment the Transferee
shall be entitled to all of the rights of the Investors hereunder to the same
extent as if the Transferee were an original party hereof, provided that the
Transferee agrees to be bound by any covenants, restrictions or limitations
applicable to the Investors under this Agreement and the other Transaction
Documents.

         12.6 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if transmitted by telecopier with
receipt acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon the expiration of 72 hours
after mailing, if mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

        If to the Company, at:                If to the Investors, at each
                                                of the following:

        SSP Solutions, Inc.                   as designated on Exhibit A,
        17861 Cartwright Road                   at closing
        Irvine, California 92614
        Attention:  President
        Telecopy: (949) 851-8679

                                      -22-

<PAGE>

        With a copy to:

        Rutan & Tucker, LLP
        611 Anton Boulevard, Suite 1400
        Costa Mesa, California 92629
        Attention: Gregg Amber, Esq.
        Telecopy: (714) 546-9035

or at such other address or addresses as the Investors or the Company, as the
case may be, may specify by written notice given in accordance with this SECTION
12.6.

         12.7 ACCOUNTING TERMS. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them by
generally accepted accounting principles and all accounting determinations
hereunder or pursuant hereto shall be made, and all financial statements
required to be delivered by the Company hereunder shall be prepared in
accordance with generally accepted accounting principles applied on a consistent
basis.

         12.8 DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are for convenience of reference only and do not
constitute a part of this Agreement and are not to be considered in construing
or interpreting this Agreement.

         12.9 EXHIBITS AND DISCLOSURE SCHEDULES. The Exhibits and the Schedules
attached hereto are incorporated herein and shall be an integral part of this
Agreement.

         12.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

         12.11 SURVIVAL. The warranties and representations of the Company and
the Investors contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement, the Closing Date and any investigation
of the subject matter thereof made by or on behalf of the Investors.

         12.12 REMEDIES. In the event of any litigation relating to this
Agreement or the Securities, each party shall bear its own fees, costs, and
expenses, including without limitation fees and expenses of attorneys and
accountants and all fees, costs and expenses of appeals. None of the rights,
powers or remedies conferred under this Agreement or the Securities shall be
mutually exclusive, and each such right, power or remedy shall be cumulative and
in addition to any other right, power or remedy whether conferred by this
Agreement or now or hereafter available at law, in equity, by statute or
otherwise.

                                      -23-

<PAGE>

         12.13 GOVERNING LAW AND CHOICE OF FORUM. In all respects, including all
matters of construction, validity and performance, this Agreement and the rights
and obligations arising hereunder shall be governed by, and construed and
enforced in accordance with, the laws of the State of California applicable to
contracts made and performed in such state, without regard to principles thereof
regarding conflicts of laws. The parties hereby consent, in any dispute, action,
litigation or other proceeding concerning the Transaction Documents (including
arbitration) to the jurisdiction of the courts of California, with the County of
Orange being the sole venue for the bringing of the action or proceeding.

         12.14 INDEMNIFICATION. The Company shall indemnify and hold harmless
the Investors, their respective Affiliates and their respective officers,
directors, partners and members (collectively, the "INVESTOR Indemnitees"), from
and against any and all claims, losses, damages and liabilities, and agrees to
reimburse the Investor Indemnitees for all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel), in each case
promptly as incurred by the Investor Indemnitees and to the extent arising out
of or in connection with:

                  (a) any misrepresentation, omission of fact or breach of any
of the representations or warranties by the Company contained in this Agreement,
the annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this Agreement;

                  (b) any failure by the Company to perform in any material
respect its respective covenants, agreements, undertakings or obligations set
forth in this Agreement, the annexes, schedules or exhibits hereto or any
instrument, agreement or certificate entered into or delivered by the Company
pursuant to this Agreement; or

                  (c) any action instituted against the Investors, or any of
them, by any stockholder of the Company who is not an Affiliate of an Investor,
with respect to any of the transactions contemplated by this Agreement.

         12.15 REPRESENTATION BY COUNSEL. Each party represents and warrants
that it has been represented by independent counsel in the negotiation of this
Agreement, its Exhibits and Schedules, the Certificate of Incorporation, the
Registration Rights Agreement, the Escrow Agreement and the Warrants, and has
received the advice of its counsel prior to executing this Agreement and the
Warrants.

         12.16 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION AND UNDERSTANDING THEY ARE WAIVING A CONSTITUTIONAL RIGHT, THE

                                      -24-

<PAGE>

PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS
AGREEMENT, THE SECURITIES AND/OR ANY RELATED AGREEMENT OR THE TRANSACTIONS
COMPLETED HEREBY OR THEREBY.

                         [SIGNATURES ON FOLLOWING PAGE]

                                      -25-

<PAGE>

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

"COMPANY"                       SSP SOLUTIONS, INC.

                                By:/s/ MARVIN J. WINKLER
                                   --------------------------------------------
                                     Marvin J. Winkler, Chief Executive Officer

                                By:/s/ THOMAS E. SCHIFF
                                   --------------------------------------------
                                     Thomas E. Schiff, Chief Financial Officer

"INVESTORS"                     [INVESTORS' SIGNATURES APPEAR ON EXHIBIT A]

                                      -26-

<PAGE>

<TABLE>
                                                  EXHIBIT A

                                   INVESTOR INFORMATION AND SIGNATURE PAGE
<CAPTION>

                                             Cash
                                         Consideration/
                                         Retained Notes/       No. of
             Name, Address                Surrendered         Preferred      No. of
        and Contact Information              Notes             Shares       Warrants                Signature
        -----------------------              -----             ------       --------                ---------
<S>                                      <C>                  <C>           <C>         <C>

                                                     A-1
</TABLE>

<PAGE>

                                    EXHIBIT B

                         LIST AND DESCRIPTION OF NOTES

                                      B-1

<PAGE>

                                    EXHIBIT C

                                   DEFINITIONS

         "AFFILIATE" has the meaning specified in Rule 405 under the Securities
Act.

         "APPLICABLE LAWS" means any federal, state or local statute, law, rule,
regulation or ordinance applicable to the Company or its business, including,
without limitation, laws relating to franchise, building, zoning, health,
sanitation, safety or labor relations, and any order, ruling, judgment or decree
of any court, governmental agency or authority or self-regulatory agency which
is binding on the Company or its properties.

         "BANKRUPTCY LAW" means Title 11 of the U.S. Code or any similar Federal
or state law for the relief of debtors.

         "BOARD OF DIRECTORS" means the board of directors of any Person.

         "BUSINESS DAY" means any day except Saturday, Sunday and any day which
either is a legal holiday under the laws of the State of California or is a day
on which banking institutions located in such state are authorized or required
by law or other governmental action to close.

         "CERTIFICATE OF DESIGNATION" means the Certificate of Designation,
Preferences and Rights of the Company, as filed with the Secretary of State of
the State of Delaware on November 18, 2003.

         "COMMON STOCK" means the common stock, $.01 par value per share, of the
Company.

         "CONVERSION SHARES" means the shares of the Company's Common Stock
issuable upon conversion of (a) the Preferred Shares and (b) those Convertible
Notes that will remain outstanding after the Closing as "Retained Notes."

         "CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

         "DEFAULT" means any event which is, or after notice or lapse of time or
both would be, an Event of Default.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder, all as the same
shall be in effect at the time.

         "ESCROW AGENT" has the meaning ascribed to such term in the Escrow
Agreement.

                                       C-1

<PAGE>

         "ESCROW AGREEMENT" means that certain Escrow Agreement, dated the date
hereof, among the Company, the Escrow Agent and the Investors, substantially in
the form attached hereto as EXHIBIT D.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.

         "GAAP" means generally accepted accounting principles and practices set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.

         "MATERIAL ADVERSE EFFECT" means an adverse effect on the Company's
ability to satisfy its covenants or obligations to the Investors under this
Agreement or the other Transaction Documents or, with respect to any Person, a
material adverse effect on the condition (financial or otherwise), business,
results of operations, prospects or properties of that Person.

         "PERSON" means any individual, trustee, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, limited liability partnership, public
benefit corporation, institution, entity or government.

         "PROMISSORY NOTES" means those original promissory notes previously
issued by the Company to certain of the Investors (or any replacements thereof
in the case of lost promissory notes) and more particularly described on EXHIBIT
B, some portion of which is being tendered in payment of the Purchase Price for
Securities, and some portion of which is being retained by those Investors as
"RETAINED NOTES."

         "REGISTRABLE SECURITIES" has the meaning given to it in the
Registration Rights Agreement.

         "REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement dated the date hereof among the Company and the Investors,
substantially in the form attached hereto as EXHIBIT E.

         "RETAINED NOTES" means the promissory notes described on Exhibit B
which reflect the portion of the principal amount of the Promissory Notes that
is not being tendered by certain Investors as Purchase Price for Securities.

         "SEC" means the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.

                                      C-2

<PAGE>

         "SECURITIES" means the Preferred Shares and the Warrants issuable to
the Investors hereunder and the Conversion Shares and Warrant Shares issuable
upon conversion or exercise thereof and the Interest Shares issued pursuant to
the Bridge Loan Documents and issuable, at the election of the Company, in
satisfaction of the Company's interest payment obligations under the Retained
Notes.

         "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.

         "SUBSIDIARY" and "SUBSIDIARIES" means any Person of which more than 50%
of the total voting power of shares of capital stock (or equivalent interest in
a limited liability company or other entity) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, officers or
trustees thereof, is at the time owned in the aggregate, directly or indirectly,
by the Company or its Subsidiaries.

         "TAXES" means any income, excise, sales, use, stamp or franchise taxes
and any other taxes, fees, duties, levies, withholdings or other charges of any
nature whatsoever imposed by any taxing authority, whether Federal, state, local
or foreign, together with any interest and penalties and additions to tax.

         "TRANSFEREE" means any direct or indirect transferee of all or any part
of the Securities.

         "WARRANT SHARES" means the shares of the Company's Common Stock
issuable upon exercise of the Warrants.

                                      C-3

<PAGE>

                                    EXHIBIT D

                             FORM OF ESCROW AGREEMENT

                                      D-1

                              DISCLOSURE SCHEDULES

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