Document:

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                                                                    EXHIBIT 10.2

                      EMPLOYMENT AND NON-COMPETE AGREEMENT

          This Employment and Non-Compete Agreement (this "Agreement") is made
and entered into as of June 9, 2000, by and between i2 Technologies, Inc., a
Delaware corporation (the "Company"), and Romesh Wadhwani, an individual (the
"Employee").

                                    RECITALS

          WHEREAS, Employee is employed as Chief Executive Officer of Aspect
Development, Inc. ("Target") and is a significant shareholder of Target; and

          WHEREAS, the Company and Target have entered into an Agreement and
Plan of Reorganization (the "Merger Agreement") dated March 12, 2000, pursuant
to which the Company is purchasing all of the outstanding shares of capital
stock of Target, which includes all of the shares owned by Employee (the
"Transaction"); and

          WHEREAS, the execution and delivery of the Merger Agreement is
conditioned upon the execution and delivery of this Agreement; and

          WHEREAS, the rights and obligations of Company and Employee set forth
in this Agreement are conditioned upon the Closing, as defined in the Merger
Agreement, of the transaction contemplated in the Merger Agreement; and

          WHEREAS, the Company and the Employee have determined that it is in
their respective best interest to enter into this Agreement on the terms and
conditions as set forth herein.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, the execution of the Merger Agreement
and the sale and purchase of capital stock in connection therewith, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

                                    AGREEMENT

     1. EMPLOYMENT TERM AND DUTIES

          1.1. EMPLOYMENT TERM. The Company shall employ Employee, and Employee
shall perform services for the Company, for the period commencing on the Closing
(as defined in the Merger Agreement) of the merger pursuant to the Merger
Agreement (the "Hire Date") and continuing for a period of four (4) years (the
"Employment Term") unless terminated earlier as set forth in Section 1.4 herein.
This Agreement (except as otherwise provided herein) and Employee's employment
hereunder, will automatically terminate on the fourth (4th) anniversary of the
Hire Date.

          1.2. DUTIES. Employee shall serve as Vice Chairman of the Company.
Employee shall be involved in all key strategy decisions and key business
decisions of the Company and shall be invited to attend all executive management
meetings. Employee

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understands and agrees that his employment with the Company may require travel
and overnight stays ("Travel Assignments"), and Employee agrees to accept all
Travel Assignments reasonably assigned by the Company. Unless otherwise agreed
upon by the Company, during the Employment Term, the Employee shall devote all
of his normal business time to the performance of his duties to the Company and
Employee shall diligently perform his duties to further the interests of the
Company, provided, however, that Employee shall be permitted to serve on boards
of directors of other business entities and to make and hold investments in
other business entities ("Outside Activities"), provided such Outside Activities
do not violate Employees obligations under Section 3.

          In addition, effective on Closing, the Board of Directors of the
Company will increase the membership of the Board to five (5) persons and
nominate and elect Employee as a Class III Director to fill the resulting
vacancy.

          1.3. COMPENSATION AND BENEFITS.

               1.3.1 BASE SALARY. In consideration of the services rendered to
the Company hereunder by the Employee and the Employee's covenants hereunder,
including but not limited to, his covenants under Sections 3 and 5 below, and
under the Company's Confidentiality, Proprietary Information and Inventions
Agreement, the Company shall, during the Employment Term, pay the Employee a
salary at the annual rate of Two Hundred Twenty-Five Thousand Dollars ($225,000)
(the "Base Salary"). The Base Salary shall be payable in accordance with the
normal payroll practices of the Company then in effect. The Base Salary and all
other forms of compensation paid to the Employee hereunder shall be subject to
all applicable taxes required to be withheld by the Company pursuant to federal,
state or local law. The Employee shall be solely responsible for income taxes
imposed on the Employee by reasons of any cash or non-cash compensation and
benefits provided by this Agreement.

               1.3.2 TARGET BONUS. Employee will be entitled to an annual Target
Bonus of One Hundred Twenty-Five Thousand Dollars ($125,000) based upon
Employee's achievement of goals established by the Company.

               1.3.3 BENEFITS PACKAGE. Employee shall be entitled to receive
such employee benefits as may be in effect from time to time as are afforded to
other comparable executive officers of the Company. For purposes of determining
eligibility and entitlement to benefits, Employee's date of hire will be
considered to be his hire date by Target, to the extent permissible by law.

               Employee shall be provided with reimbursement (on a basis that is
"grossed up" for taxes) for term life insurance coverage in the amount of $3
million and long term disability coverage in the amount of $500,000 per year.

               1.3.4 STOCK OPTIONS. Subject to approval by the Company's Board
of Directors, the Company shall grant to Employee within sixty (60) days after
Closing, in accordance with the terms of the Company's Stock Option Plan, an
option to purchase a total of Three Hundred Five Thousand (305,000) shares of
the Company's common stock (the "i2 Option Shares") at a grant price equal to
the fair market value of the Company's common stock

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on the date of grant. The i2 Option Shares shall be subject to vesting in
accordance with the following schedule: twenty-five percent (25%) upon
Employee's completion of one (1) year of employment with the Company and the
remaining seventy-five percent (75%) in twelve (12) equal installments upon
Employee's completion of each three (3) month period of employment thereafter.
The i2 Option Shares shall be subject to the Company's Stock Option Plan and
form stock option documents.

               In addition, Employee's shares of Target common stock and options
to purchase shares of Target common stock will be converted to shares of Company
common stock and options to purchase shares of Company common stock pursuant to
the terms of the Merger Agreement.

               1.3.5 VACATION. Employee shall be entitled to vacation each
fiscal year in accordance with the vacation policies of the Company in effect
for other comparable executive officers of the Company, but in no event fewer
than four (4) weeks. For purposes of determining eligibility and entitlement to
vacation, Employee's date of hire will be considered to be his hire date by
Target.

               1.3.6 EXPENSES. The Company shall, upon receipt from the Employee
of signed and itemized lists of expenditures with supporting receipts to the
extent required by applicable income tax regulations and the Company's
reimbursement policies, reimburse the Employee for all out-of-pocket business
expenses reasonably incurred by the Employee in connection with his employment
hereunder. The Company shall also provide Employee with a Company credit card
and will pay the credit card company directly for all business expenses
reasonably incurred by Employee in connection with his employment with the
Company.

               1.3.7 WAIVER OF ACCELERATION. Employee agrees to waive all rights
(if any) to acceleration of unvested (as of the Closing of the Transaction)
options to purchase Target stock ("Target Option") contained in any agreement,
offer letter, stock option agreement, or any other document as of Closing that
grants Employee Target Options prior to Closing, including, but not limited to,
those Target Options granted on or about June 6, 2000. In connection therewith,
Employee expressly acknowledges, understands and agrees that he will not receive
any accelerated vesting of Target or Company options granted to Employee prior
to Closing, including, but not limited to, those Target Options granted on or
about June 6, 2000, as a result of the Closing of the transaction contemplated
in the Merger Agreement and/or his employment with the Company pursuant to the
terms and conditions set forth in this Agreement. Employee further agrees that
this Agreement constitutes a writing sufficient to modify or amend the
acceleration provision of any agreement between Employee and Target.

               1.3.8 TRAVEL. The Company agrees to reimburse Employee for first
class travel in connection with Employee's Travel Assignments.

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          1.4. TERMINATION. Employee's employment with the Company shall
terminate upon the occurrence of any of the following, at the time set forth
therefor (the "Termination Date"):

               1.4.1 DEATH OR DISABILITY. Immediately upon the death of the
Employee or the determination by the Board that the Employee has ceased to be
able to perform his essential job duties, with or without reasonable
accommodation, due to a mental or physical illness or incapacity for a period of
more than twelve (12) weeks during any twelve (12) month period ("Disability")
(termination pursuant to this Section 1.4.1 being referred to herein as
termination for "Death or Disability"); or

               1.4.2 VOLUNTARY TERMINATION. Thirty (30) days following the
Employee's written notice to the Company of termination of employment; provided,
however, that during such thirty (30) day notice period, the Company may suspend
the Employee from his duties as set forth herein (including, without limitation,
the Employee's position as a representative and agent of the Company)
(termination pursuant to this Section 1.4.2 being referred to herein as
"Voluntary" termination); or

               1.4.3 TERMINATION FOR CAUSE. Immediately following notice of
termination for "Cause" (as defined below), specifying such Cause, given by the
Company (termination pursuant to this Section 1.4.3 being referred to herein as
termination for "Cause"). As used herein, "Cause" means termination based on (i)
Employee's commission of any crime constituting a felony or any other offense
involving fraud, (ii) willful malfeasance or gross misconduct by the Employee
which discredits or damages the Company, (iii) any material breach of Employee's
obligations under Section 3 or under the Company's Confidentiality, Proprietary
Information and Inventions Agreement, provided that Employee fails to cure the
material breach within 60 days after receipt of written notice from the Company
identifying the material breach; and (iv) any material breach by Employee of
this Agreement, provided that Employee fails to cure the material breach within
60 days after receipt of written notice from the Company identifying the
material breach; or

               1.4.4 TERMINATION WITHOUT CAUSE. Thirty (30) days following
notice of termination without Cause given by the Company; provided, however,
that during any such thirty (30) day notice period, the Company may suspend the
Employee from his duties as set forth herein (including, without limitation, the
Employee's position as a representative and agent of the Company) (termination
pursuant to this Section 1.4.4 being referred to herein as termination "Without
Cause"); or

               1.4.5 CONSTRUCTIVE TERMINATION. Employee's resignation during the
ninety (90) days following (i) Employee's loss of his title or duties as Vice
Chairman; (ii) a change in Employee's regular place of work to a location more
than forty (40) miles from the Silicon Valley; or (iii) a reduction in
Employee's cash compensation, equity compensation or benefits below the amounts
provided to comparable executive officers of the Company, provided that prior to
resigning for the reasons set forth above, Employee gives the Company written
notice (pursuant to Section 7.2) of his intent to resign and the specific
reasons for his resignation and the Company fails to cure the alleged basis for
Employee's resignation with thirty (30) business days following its receipt of
the notice.

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               1.4.6 OTHER REMEDIES. Termination pursuant to Section 1.4.3.
above shall be in addition to and without prejudice to any other right or remedy
to which the Company may be entitled at law, in equity, or under this Agreement.

          1.5. SEVERANCE AND TERMINATION.

               1.5.1 VOLUNTARY TERMINATION, TERMINATION FOR CAUSE. In the case
of a termination of Employee's employment hereunder due to Employee's Voluntary
termination of employment hereunder in accordance with Section 1.4.2 above, or a
termination of the Employee's employment hereunder for Cause in accordance with
Section 1.4.3 above, (i) the Employee shall not be entitled to receive payment
of, and the Company shall have no obligation to pay, any severance or similar
compensation attributable to such termination, other than Base Salary earned but
unpaid as of the Termination Date.

               1.5.2 TERMINATION WITHOUT CAUSE, CONSTRUCTIVE TERMINATION,
TERMINATION FOR DEATH OR DISABILITY. In the case of a termination of the
Employee's employment hereunder Without Cause in accordance with Section 1.4.4
above, or in the event of Employee's Constructive Termination in accordance with
Section 1.4.5 above, or in the event of Employee's termination for Death or
Disability in accordance with Section 1.4.1 above, Employee shall receive four
(4) months of salary continuation based upon his Base Salary, less statutory
deductions and withholdings, to be paid in accordance with the Company's normal
payroll practices (hereinafter the "Severance Payment").

               1.5.3 STOCK OPTION VESTING. Notwithstanding Section 1.3.7 above,
Employee shall receive full acceleration of those Target Options assumed by the
Company in the event of a Termination for Death or Disability (Section 1.4.1),
Termination Without Cause (Section 1.4.4) or a Constructive Termination (Section
1.4.5) after Closing. Employee will not receive any acceleration of the Target
Options in the event of a Voluntary Termination (Section 1.4.2), or Termination
for Cause (Section 1.4.3).

     2. PROPRIETARY INFORMATION AGREEMENT. Employee understands and agrees that
his employment with the Company is contingent upon signing the Company's
Confidentiality, Proprietary Information and Inventions Agreement, which is
attached hereto as Exhibit A, prior to beginning work for the Company.

     3. NON-COMPETITION AND NON-INTERFERENCE. In consideration of the Company's
entering in this Agreement, the Merger Agreement, and purchasing all of
Employee's outstanding shares of stock in Target, and providing the Base Salary
and other benefits to the Employee, and in consideration of the Company's
promise to provide Employee with its confidential and proprietary information
and trade secrets of the Company, and the experience Employee will gain
throughout Employee's employment with the Company, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Employee, the Employee covenants as follows:

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          3.1. NON-COMPETITION.

               (i) Employee agrees that during the Employment Term, Employee
will not engage in any employment, business, or activity that is in any way
competitive with the Business, and Employee will not assist any other person or
organization in competing with the Company or in preparing to engage in
competition with the Business. The provisions of this paragraph shall apply both
during normal working hours and at all other times including, without
limitation, nights, weekends and vacation time, during the Employment Term.

               (ii) Employee agrees that for a period equal to the greater of
two (2) years from Employee's Hire Date or one (1) year from the date that
Employee's employment with the Company is terminated, for any reason, Employee
will not, directly or indirectly, engage in Business in the State of California,
or in any other State of the United States, or in any country in the world where
the Company engages in Business, or proposes to engage in Business, on the date
of the termination of Employee's employment with the Company.

               (iii) For purposes of this Agreement "Business" shall mean the
business of Aspect Development, Inc. and those portions of the Company's
business in which Employee participates.

          3.2. NO DIVERSION OF OTHERS. During the Employment Term and for one
(1) year from the date that Employee's employment with the Company is
terminated, for any reason, the Employee shall not, either for himself or for
any other person, firm, corporation or other entity, directly or indirectly, or
by action in concert with others:

               (i) directly or indirectly, individually or on behalf of any
other person, firm, partnership, corporation, or business entity of any type,
solicit, assist or in any way encourage any current employee or consultant of
the Company or any subsidiary of the Company to terminate his or her employment
relationship or consulting relationship with the Company or subsidiary nor will
Employee solicit the employment services of any former employee of the Company
or any subsidiary of the Company whose employment has been voluntarily
terminated for less than six (6) months; or

               (ii) divert or take away or attempt to divert or take away, or
solicit or attempt to solicit, any existing or potential customer of the Company
(whether or not such customer is actually a customer of the Company as of the
date hereof, including without limitation any customer solicited by the Employee
or which became known by the Employee prior to the date hereof) with the purpose
of obtaining such person as an employee or customer for a business competitive
with the Company's business.

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          3.3. ORGANIZING COMPETITIVE BUSINESS. Without limiting any of the
other provisions contained in this Section 3, during the Employment Term and any
period during which Employee receives any severance payment, the Employee shall
not undertake planning for or organization of any business competitive with the
Company, or conspire with agents, employees, consultants or other
representatives of the Company for the purpose of organizing any such
competitive business.

     4. INJUNCTIVE RELIEF AND ADDITIONAL REMEDY

          The Employee acknowledges and agrees that any breach of the terms of
Section 3 above would result in irreparable injury and damage to the Company for
which the Company would have no adequate remedy at law; the Employee therefore
also acknowledges and agrees that in the event of such breach or any threat of
breach, the Company shall be entitled to an immediate injunction and restraining
order to prevent such breach and/or threatened breach and/or continued breach by
the Employee and/or any and all persons and/or entities acting for and/or with
the Employee, without having to prove damages, in addition to any other remedies
to which the Company may be entitled at law or in equity. The terms of this
paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from the Employee.

     5. REPRESENTATIONS AND WARRANTIES BY THE EMPLOYEE

          The Employee represents and warrants to the Company that (i) the
Employee is not bound by or subject to any contractual or other obligation that
would be violated by his execution or performance of this Agreement, including,
but not limited to, any non-competition agreement presently in effect, and (ii)
the Employee is not subject to any pending or, to the Employee's knowledge,
threatened claim, action, judgment, order or investigation that could adversely
affect his ability to perform his obligations under this Agreement or the
business reputation of the Company.

     6. RESTRICTION ON SALE OF COMPANY STOCK

          During each of the three (3) one (1) year periods beginning on the
Hire Date, the maximum number of shares of Company stock currently held or
subsequently acquired by Employee ("Employee's Stock Holdings") that Employee
may directly or indirectly, offer, sell, exchange, transfer, assign, pledge,
contract to sell, or otherwise dispose of (each a "Sale") shall be limited to
the greater of (i) twenty percent (20%) of Employee's Stock Holdings (including
for this purpose all vested and unvested options) as of Closing or, (ii) an
amount equal to (five) 5 times the percentage (if any) of shares of Company
stock, expressed as a percentage of aggregate holdings, sold by Sanjiv S. Sidhu
during any such one (1) year period. The following transactions shall be
excluded from the restrictions of this Section (a) any sale of stock under a
registered offering; (b) stock pledges pursuant to loan transactions or hedging
or exchange funds (provided that if the pledge is executed or foreclosed on, the
pledge shall apply to the annual restriction); and (c) transfers to family
members, trusts or foundations for estate planning or charitable giving purposes
(provided that any Sale by such transferees shall apply to Employee's annual
restriction). The restrictions in this Section shall continue in effect until
the third (3rd) anniversary of the Hire Date after which they will no longer
apply.

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     7. SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS

          Sections 3 and 6 above shall survive any termination of this Agreement
and continue in full force and effect as is necessary or appropriate to enforce
the covenants and agreements of the Employee in Sections 3 and 6. The existence
of any claim or cause of action by the Employee against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants and agreements of Sections 3 and 6
above.

     8. MISCELLANEOUS

          8.1. AGREEMENT CONTINGENT ON CLOSING. The rights and obligations of
the parties to this Agreement are conditioned upon the Closing of the
transaction contemplated in the Merger Agreement. For purposes of this
Agreement, "Closing" shall have the meaning set forth in the Merger Agreement

          8.2. NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission with answer back
confirmation or mailed (postage prepaid by certified or registered mail, return
receipt requested) or by overnight courier to the parties at the following
addresses or facsimile numbers:

          If to the Employee, to:

                Romesh Wadhwani
                470 Juanita Way
                Los Altos, CA  94022

          If to the Company, to:

                Robert Donohoo
                i2 Technologies, Inc.
                909 E. Las Colinas Blvd., 16th Floor
                Irving, Texas 75039
                Facsimile No: (214) 860-6893

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 8.2, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 8.2, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section 8.2, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving written notice specifying such change to the other parties
hereto.

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          8.3. ENTIRE AGREEMENT. Agreement, the Merger Agreement and the
documents executed in connection with the Merger Agreement, supersede all prior
discussions and agreements among the parties and/or among Employee and TARGET
with respect to the subject matter hereof, including, but not limited to, the
Employment and Non-Compete Agreement entered into as of March 12, 2000, and
contain the sole and entire agreement between the parties hereto with respect
thereto.

          8.4. WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party hereto of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by law or otherwise afforded, will be cumulative
and not alternative.

          8.5. AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.

          8.6. NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto (including
the Employee's estate, foundations, family members and trusts for the benefit of
family members) and the Company's successors or assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
person.

          8.7. NO ASSIGNMENT; BINDING EFFECT. This Agreement shall inure to the
benefit of any successors or assigns of the Company. The Employee shall not be
entitled to assign his obligations under this Agreement.

          8.8. HEADINGS. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.

          8.9. SEVERABILITY. The Company and the Employee intend all provisions
of this Agreement to be enforced to the fullest extent permitted by law.
Accordingly, if a court of competent jurisdiction determines that the scope
and/or operation of any provision of this Agreement is too broad to be enforced
as written, the Company and the Employee intend that the court should reform
such provision to such narrower scope and/or operation as it determines to be
enforceable. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, and not subject to
reformation, then (i) such provision shall be fully severable, (ii) this
Agreement shall be construed and enforced as if such provision was never a part
of this Agreement, and (iii) the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by illegal, invalid,
or unenforceable provisions or by their severance.

          8.10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
executed and performed in such State without giving effect to conflicts of laws
principles.

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          8.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by facsimile, each of which will be deemed an original, but all
of which together will constitute one and the same instrument.

                           [SIGNATURE PAGE TO FOLLOW]

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                          [SIGNATURE PAGE TO EMPLOYMENT
                           AND NON-COMPETE AGREEMENT]

          IN WITNESS WHEREOF, the parties hereto have caused Agreement to be
executed on the date first written above.

                                               "COMPANY"

                                               i2 TECHNOLOGIES, INC.
                                               a Delaware corporation

                                               By:  /s/ WILLIAM M. BEECHER
                                                   -----------------------------
                                               Name: William M. Beecher
                                                     ---------------------------
                                               Title: Executive Vice President &
                                                      --------------------------
                                                      Chief Financial Officer
                                                      --------------------------

                                               "EMPLOYEE"

                                               ROMESH WADHWANI

                                               /s/ ROMESH WADHWANI
                                               ---------------------------------<PAGE>   1
                                                                    EXHIBIT 4.14

                           GREAT NORTHERN PAPER, INC.

             SAVINGS AND CAPITAL GROWTH PLAN FOR SALARIED EMPLOYEES

                (AMENDED AND RESTATED, EFFECTIVE JANUARY 1, 1997)

<PAGE>   2

                                TABLE OF CONTENTS
                                -----------------

                                                                         PAGE
                                                                         ----

ARTICLE I  -  DEFINITIONS................................................ 1
     1.1      Account.................................................... 1
     1.2      ACP Test................................................... 1
     1.3      ADP Test................................................... 3
     1.4      Affiliate.................................................. 5
     1.5      After-Tax Contributions.................................... 5
     1.6      After-Tax Employee Account................................. 5
     1.7      After-Tax Matched Account.................................. 5
     1.8      After-Tax Unmatched Account................................ 5
     1.9      Before-Tax Contributions................................... 5
     1.10     Before-Tax Matched Account................................. 5
     1.11     Before-Tax Unmatched Account............................... 6
     1.12     Beneficiary................................................ 6
     1.13     Board...................................................... 6
     1.14     Break in Service........................................... 6
     1.15     Code....................................................... 6
     1.16     Compensation............................................... 6
     1.17     Current or Accumulated Profits............................. 7
     1.18     Elective Contributions..................................... 7
     1.19     Elective Deferrals......................................... 7
     1.20     Eligible Employee.......................................... 8
     1.21     Employee................................................... 8
     1.22     Employee Contributions..................................... 8
     1.23     ERISA...................................................... 8
     1.24     Employer................................................... 8
     1.25     Excess Aggregate Contributions............................. 8
     1.26     Excess Contributions....................................... 9
     1.27     FlexPlan Contribution...................................... 9
     1.28     Full-Time Employee......................................... 9
     1.29     Gainsharing Contribution.................................. 10
     1.30     GNP....................................................... 10
     1.31     GNP Basic Contributions................................... 10
     1.32     GNP Basic Contribution Account............................ 10
     1.33     GNP Matching Account...................................... 10
     1.34     GNP Matching Contributions................................ 10
     1.35     Highly Compensated Eligible Employee...................... 10
     1.36     Hour of Service........................................... 11
     1.37     Investment Fund........................................... 11
     1.38     Leave of Absence.......................................... 11
     1.39     Lower Paid Eligible Employee.............................. 11
     1.40     Matching Contributions.................................... 11

<PAGE>   3

     1.41     Military Leave of Absence................................. 11
     1.42     Nonelective Contributions................................. 12
     1.43     Part-Time Employee........................................ 12
     1.44     Participant............................................... 12
     1.45     Plan...................................................... 12
     1.46     Plan Administrator........................................ 12
     1.47     Plan Sponsor.............................................. 12
     1.48     Plan Year................................................. 12
     1.49     Qualified Matching Contributions.......................... 12
     1.50     Qualified Nonelective Contributions....................... 12
     1.51     Service................................................... 13
     1.52     Severance Date............................................ 13
     1.53     Trust Agreement........................................... 13
     1.54     Trust Fund................................................ 13
     1.55     Trustee................................................... 13
     1.56     USERRA.................................................... 14
     1.57     Valuation Date............................................ 14
     1.58     Vested Value.............................................. 14

ARTICLE II - PARTICIPATION REQUIREMENTS................................. 14
     2.1      GNP Basic Contributions (Capital Growth).................. 14
     2.2      Before-Tax and After-Tax Contributions.................... 14
     2.3      Participation Following Reemployment...................... 15
     2.4      Calculation of Service.................................... 15
     2.5      Not a Contract of Employment.............................. 21

ARTICLE III - CONTRIBUTIONS............................................. 21
     3.1      GNP Basic Contributions................................... 21
     3.2      Before-Tax Contributions.................................. 23
     3.3      GNP Matching Contributions................................ 25
     3.4      After-Tax Contributions................................... 26
     3.5      Election Rules............................................ 28
     3.6      Section 415 Limitations................................... 29
     3.7      Combined Plans Limitation................................. 31
     3.8      Excess Contributions and Aggregate Contributions.......... 32
     3.9      Contributions Upon Return From Military Leave............. 33

ARTICLE IV - INVESTMENT AND ALLOCATION OF INVESTMENT
             GAINS AND LOSSES........................................... 33
     4.1      Investment Funds.......................................... 33
     4.2      Elections................................................. 34
     4.3      Allocation of Investment Gains and Losses................. 35

                                       ii

<PAGE>   4

ARTICLE V - DISTRIBUTIONS, WITHDRAWALS AND LOANS........................ 35
     5.1      Distribution Events....................................... 35
     5.2      Withdrawals............................................... 37
     5.3      Loans..................................................... 39
     5.4      Form and Timing of Distributions.......................... 41

ARTICLE VI - FIDUCIARIES................................................ 46

ARTICLE VII - PLAN ADMINISTRATION....................................... 46
     7.1      Administration by Fiduciaries............................. 46
     7.2      Responsibilities of the Plan Sponsor...................... 47
     7.3      Responsibilities of the Trustee........................... 48
     7.4      Responsibilities of the Plan Administrator................ 48
     7.5      Delegation of Duties...................................... 49
     7.6      Committee Action.......................................... 49
     7.7      Individual Indemnification................................ 49
     7.8      Expenses.................................................. 50

ARTICLE VIII - TRUST FUND AND TRUSTEE................................... 50

ARTICLE IX - AMENDMENT AND TERMINATION.................................. 50
     9.1      Amendment................................................. 50
     9.2      Merger, Consolidation or Transfer of Assets............... 50
     9.3      Termination............................................... 51
     9.4      Withdrawal of an Employee................................. 51
     9.5      Procedure................................................. 51

ARTICLE X - MISCELLANEOUS............................................... 51
     10.1     Construction.............................................. 51
     10.2     Spendthrift Clause........................................ 52
     10.3     Legally Incompetent....................................... 52
     10.4     Benefits Supported Only By Trust Fund..................... 52
     10.5     Discrimination............................................ 52
     10.6     Claims.................................................... 52
     10.7     No Reversion.............................................. 52
     10.8     Agent for Service of Process.............................. 53
     10.9     Rollover Contributions.................................... 53
     10.10    Shareholder Rights for Bowater Incorporated
              Common Stock.............................................. 54
     10.11    Qualified Domestic Relations Order........................ 56
     10.12    Plan to Plan Transfers.................................... 56

                                       iii

<PAGE>   5

ARTICLE XI - TRANSFER OF ASSETS FROM AND ASSUMPTION OF
             CERTAIN LIABILITIES OF THE GEORGIA-PACIFIC
             CORPORATION SAVINGS AND CAPITAL GROWTH PLAN............... 57
     11.1     Asset Transfer........................................... 57
     11.2     Vesting.................................................. 57
     11.3     Eligibility to Participate............................... 57

ARTICLE XII - TOP HEAVY PROVISIONS..................................... 57
     12.1     Overriding Provision..................................... 57
     12.2     Definitions.............................................. 58
     12.3     Minimum Contribution..................................... 60

ARTICLE XIII - CHANGE IN CONTROL PROVISIONS............................ 60
     13.1     General.................................................. 60
     13.2     Special Vesting.......................................... 60
     13.3     Definitions.............................................. 60
     13.4     No Amendment............................................. 62

                                       iv

<PAGE>   6
                           GREAT NORTHERN PAPER, INC.
                         SAVINGS AND CAPITAL GROWTH PLAN
                (AMENDED AND RESTATED, EFFECTIVE JANUARY 1, 1997)

         GREAT NORTHERN PAPER, INC., a corporation organized and existing under
the laws of the State of Delaware, on its behalf and on behalf of each other
Employer, amends and restates the Great Northern Paper, Inc. Savings and Capital
Growth Plan (originally effective January 1, 1992) in the form of this restated
Plan, effective as of January 1, 1997 (the "Effective Date"). This plan is
amended and restated for the benefit of Eligible Employees who worked for, or
who continued to work for, an Employer after January 1, 1997. The rights to
benefits of Eligible Employees who terminated employment with the Employer
before January 1, 1997 shall be determined in accordance with the Plan document
then in effect.

                                    ARTICLE I
                                   DEFINITIONS

         The following words and phrases as used herein shall, for the purposes
of the Plan and any subsequent amendment thereof, have the following meanings,
unless a different meaning is plainly required by the context. Wherever
applicable, the masculine pronoun shall include the feminine pronoun, and the
singular shall include the plural:

         1.1      ACCOUNT. Account means the Account established by the Plan
Administrator to show as of any Valuation Date the contributions made by, or on
behalf of, a Participant, plus the investment gains and less the investment
losses on such contributions. An Account shall cease to exist when exhausted
through distributions or forfeitures made in accordance with this Plan.

         1.2      ACP TEST.
                  --------

         (a)      ACP Test means the Actual Contribution Percentage ("ACP")
                  test, which the Plan Administrator shall perform as of the
                  last day of each Plan Year to determine the extent to which
                  the GNP Matching Contributions and After-Tax Contributions for
                  such Plan Year can be made, and such test shall be satisfied
                  only if the Actual Contribution Percentage (as defined in
                  subsection (b)) for all Highly Compensated Eligible Employees
                  for the Plan Year does not exceed the greater of:

                  (1)      125% of the Actual Contribution Percentage for all
                           Lower Paid Eligible Employees for the preceding Plan
                           Year, or

                  (2)      The lesser of (i) two times the Actual Contribution
                           Percentage for all Lower Paid Eligible Employees for
                           the preceding Plan Year or (ii) the Actual
                           Contribution Percentage for all Lower Paid Eligible
                           Employees for the preceding Plan Year plus two
                           percentage points.

<PAGE>   7

                  The ACP for Lower Paid Eligible Employees shall be determined
                  on the basis of the preceding Plan Year, unless the Employer
                  elects to make such determinations on the basis of the current
                  Plan Year. Any such election shall be irrevocable with respect
                  to all Plan Years, except as otherwise permitted by the
                  Secretary of the Treasury by issued determination, ruling or
                  regulation.

         (b)      The term "Actual Contribution Percentage" means as to all
                  Highly Compensated Eligible Employees and all Lower Paid
                  Eligible Employees for the applicable Plan Year, the average
                  of the ratios ("Actual Contribution Ratios"), calculated
                  separately for each Eligible Employee in each such group, of
                  (1) the sum of the GNP Matching Contributions, After-Tax
                  Contributions and Employer contributions to permit investments
                  in Company Stock under Section 4.1(a) made on his behalf to
                  (2) his "compensation" (as defined in Section 414(s) of the
                  Code, as determined by the Plan Administrator) for such Plan
                  Year.

         (c)      For purposes of applying the ACP Test, all Employee and
                  Matching Contributions that are made under two or more plans
                  that are aggregated for purposes of Code Section 401(a)(4) or
                  410(b) (other than Code Section 410(b)(2)(A)(ii)) are to be
                  treated as made under a single plan. If two or more plans are
                  permissively aggregated for purposes of Code Section 401(m),
                  the aggregated plans must also satisfy Code Sections 401(a)(4)
                  and 410(b) as though they were a single plan.

         (d)      For purposes of the ACP Test, the Employer may, to the extent
                  permitted under Code Section 401(m)(3), elect to treat
                  Elective Contributions and Qualified Nonelective Contributions
                  for a given Plan Year as GNP Matching Contributions, provided
                  that such Elective Contributions are not disregarded for
                  purposes of the ACP Test to the extent required by Code
                  Section 401(m)(3).

         (e)      In any Plan Year in which the "two times, but not more than
                  two percentage points" alternative (described in paragraph
                  (a)(2) of Sections 1.2 and 1.3) must be utilized to pass both
                  the ACP Test and the ADP Test, the sum of the ACP and the ADP
                  for Highly Compensated Eligible Employees shall not exceed the
                  greatest of:

                  (1)      (A)      1.25 times the greater of the ACP or ADP for
                                    Lower Paid Eligible Employees plus

                           (B)      Two percent plus (but not more than two
                                    times) the lesser of the ACP or ADP for
                                    Lower Paid Eligible Employees;

                  (2)      (A)      1.25 times the lesser of the ACP or ADP for
                                    Lower Paid Eligible Employees plus

                                        2

<PAGE>   8

                           (B)      Two percent plus the greater of (but not
                                    more than two times the lesser of) the ACP
                                    or ADP for Lower Paid Eligible Employees; or

                  (3)      The maximum permitted by the Multiple Use Test set
                           forth in Treasury Regulation Section 1.401(m)-2(b)
                           (as amended).

         (f)      If the Multiple Use Test Limit is exceeded, the Employer will
                  reduce the ADP of the Highly Compensated Eligible Employees in
                  the manner described in Treasury Regulation Section
                  1.401(k)-1(f)(2), as provided in Treasury Regulation Section
                  1.401(m)-2(c)(3).

         1.3      ADP TEST.
                  --------

         (a)      ADP Test means the Actual Deferral Percentage ("ADP") test,
                  which the Plan Administrator shall perform as of the last day
                  of each Plan Year to determine the extent to which the
                  Before-Tax Contributions each Highly Compensated Eligible
                  Employee elects for the Plan Year can be made, and such test
                  shall be satisfied only if the Actual Deferral Percentage (as
                  defined in subsection (b)) for all Highly Compensated Eligible
                  Employees for the Plan Year does not exceed the greater of:

                  (1)      125% of the ADP for all Lower Paid Eligible
                           Employees for the preceding Plan Year, or

                  (2)      The lesser of (i) two times the ADP for all Lower
                           Paid Eligible Employees for the preceding Plan Year
                           or (ii) the ADP for all Lower Paid Eligible Employees
                           for the preceding Plan Year plus two percentage
                           points.

                  The ADP for Lower Paid Eligible Employees shall be determined
                  on the basis of the preceding Plan Year, unless the Employer
                  elects to make such determinations on the basis of the current
                  Plan Year. Any such election shall be irrevocable with respect
                  to all Plan Years, except as otherwise permitted by the
                  Secretary of the Treasury by issued determination, ruling or
                  regulation.

         (b)      The term "Actual Deferral Percentage" means as to all Highly
                  Compensated Eligible Employees and all Lower Paid Eligible
                  Employees for the applicable Plan Year, the average of the
                  ratios ("Actual Deferral Ratios"), calculated separately for
                  each Eligible Employee in each such group, of (1) the amount
                  of his Before Tax Contributions to be credited for such Plan
                  year to his Before-Tax Employee Account to (2) his
                  "compensation" (as defined in Section 414(s) of the Code, as
                  determined by the Plan Administrator) for such Plan Year.

         (c)      The Employer may elect to take into account in computing the
                  ADP for all Employees Qualified Matching Contributions and
                  Qualified Nonelective

                                        3

<PAGE>   9

                  Contributions, if the requirements of section 1.401(k)-l(b)(5)
                  of the Treasury Regulations under the Code are satisfied.

         (d)      If Elective Deferrals are taken into account for purposes of
                  the ACP Test of subsection (a) of Section 1.2 for any Plan
                  Year, such contributions shall not be taken into account under
                  subparagraph (a) of this definition of ADP for such year.

         (e)      For purposes of applying the provisions of this subsection,
                  all Elective Contributions that are made under two or more
                  plans that are aggregated for purposes of Code Section
                  401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii))
                  are to be treated as made under a single plan. If two or more
                  plans are permissively aggregated for purposes of Code Section
                  401(k), the aggregated plans must also satisfy Code Sections
                  401(a)(4) and 410(b) as though they were a single plan.

         (f)      Excess Contributions must be corrected within two and one-half
                  (2-1/2) months after the close of the Plan Year for which they
                  were made.

         (g)      In any Plan Year in which the "two times, but not more than
                  two percentage points" alternative (described in paragraph (b)
                  of Sections 1.2 and 1.3) must be utilized to pass both the ACP
                  Test and the ADP Test the sum of the ACP and the ADP for
                  Highly Compensated Eligible Employees shall not exceed the
                  greatest of:

                  (1)      (A)      1.25 times the greater of the ACP or ADP for
                                    Lower Paid Eligible Employees plus

                           (B)      Two percent plus (but not more than two
                                    times) the lesser of the ACP or ADP for
                                    Lower Paid Eligible Employees;

                  (2)      (A)      1.25 times the lesser of the ACP or ADP for
                                    Lower Paid Eligible Employees plus

                           (B)      Two percent plus the greater of (but not
                                    more than two times the lesser of) the ACP
                                    or ADP for Lower Paid Eligible Employees; or

                  (3)      The maximum permitted by the Multiple Use Test set
                           forth in Final Treasury Regulation Section
                           1.401(m)-2(b) (as amended).

         (h)      If the Multiple Use Test Limit is exceeded, the Employer will
                  reduce the ADP of the Highly Compensated Eligible Employees in
                  the manner described in Treasury Regulation Section
                  1.401(k)-l(f)(2), as provided in Treasury Regulation Section
                  1.401(m)-2(c)(3).

                                        4

<PAGE>   10

         1.4      AFFILIATE.  Affiliate means:
                  ---------

         (a)      Any parent, subsidiary or brother-sister corporation that is a
                  member of a controlled group of corporations (as defined in
                  Code Section 1563(a), disregarding Sections 1563(a)(4) and
                  1563(e)(3)) of which the Plan Sponsor is a member;

         (b)      Any trade or business, whether or not incorporated, which is
                  considered to be under common control with the Plan Sponsor
                  under regulations prescribed by the Secretary of the Treasury
                  pursuant to Code Section 414(c); and

         (c)      Any person or organization that is a member of an affiliated
                  service group (as defined in Code Section 414(m)) with the
                  Plan Sponsor; provided, solely for purposes of Section 3.6,
                  the phrase "more than fifty percent (50%)" shall be
                  substituted for "at least eighty percent (80%)" each place
                  that "at least eighty percent (80%)" appears in Code Section
                  1563(a)(1).

         1.5      AFTER-TAX CONTRIBUTIONS. After-Tax Contribution means that
part of a Participant's Compensation that a Participant (other than a
Participant described in Section 1.44(b)) may elect to contribute to the Plan
under Section 3.4 and which is includable in the Participant's gross income.

         1.6      AFTER-TAX EMPLOYEE ACCOUNT. After-Tax Employee Account means
the sub-Account to which After-Tax Contributions with respect to a Participant
under Section 3.4 are credited.

         1.7      AFTER-TAX MATCHED ACCOUNT. After-Tax Matched Account means the
sub-Account to which After-Tax Contributions eligible for GNP Matching
Contributions under Section 3.4(a) are credited on behalf of a Participant.

         1.8      AFTER-TAX UNMATCHED ACCOUNT. After-Tax Unmatched Account means
the sub-Account to which After-Tax Contributions ineligible for GNP Matching
Contributions under Section 3.04(a) are credited on behalf of a Participant.

         1.9      BEFORE-TAX CONTRIBUTIONS. Before-Tax Contributions mean that
part of a Participant's Compensation that the Plan Administrator contributes to
this Plan on his behalf under Section 3.2 and which his Employer is not required
to report as his taxable income to the Internal Revenue Service on its Form W-2,
or on any successor or substitute form, solely by reason of the application of
Code Section 401(k).

         1.10     BEFORE-TAX MATCHED ACCOUNT. Before-Tax Matched Account means
the sub-Account to which contributions with respect to a Participant under
Section 3.2(a) are credited.

                                        5

<PAGE>   11

         1.11     BEFORE-TAX UNMATCHED ACCOUNT. Before-Tax Unmatched Account
means the sub-Account to which contributions with respect to a Participant under
Sections 3.2(b) and (c) are credited.

         1.12     BENEFICIARY. The person, estate or trust last designated by a
Participant, by written notice filed with the Plan Administrator, to receive any
benefits payable in the event of his death. In the absence of an effective
designation, or if no Beneficiary so designated survives the Participant, the
Beneficiary shall be the first of the following classes of successive preference
beneficiaries then surviving (in equal shares, where more than one): the
Participant's (a) surviving spouse; (b) children; (c) parents; (d) siblings; and
(e) executor or administrator.

         Notwithstanding the above, if a Participant is married on the date of
his death, his Beneficiary shall be his surviving spouse unless:

         (a)      The Participant has designated a Beneficiary other than his
                  spouse, and

         (b)      the Participant's spouse has consented in writing to such
                  other Beneficiary designation and the spouse's consent
                  acknowledges the effect of such election and is witnessed by a
                  Plan representative or a notary public, or it is established
                  to the satisfaction of the Plan Administrator that such
                  consent cannot be obtained because there is no spouse or
                  because the spouse cannot be located.

         1.13     BOARD.  Board means the Board of Directors of the Plan
Sponsor.

         1.14     BREAK IN SERVICE.  Break in Service means a period of absence
from employment as described in Article II.

         1.15     CODE. Code means the Internal Revenue Code of 1986, as
amended, or any successor statute (in the event an amendment to the Code
renumbers a section of the Code referred to in this Plan, any such reference to
such section automatically shall become a reference to such section as
renumbered) and the rulings and regulations promulgated thereunder.

         1.16     COMPENSATION. Compensation means the sum of (i) basic cash
compensation and overtime paid by the Employer to the Employee (excluding any
bonus or gainsharing contributions) determined without regard to any salary
reduction contributions made on the Employee's behalf under any plan maintained
by the Employer pursuant to Code Sections 125 or 401(k), and (ii) any periodic
severance pay that the Employee is entitled to receive following his or her
termination from active employment.

         Notwithstanding the foregoing, Compensation taken into account shall
not exceed $150,000, as adjusted by the Commissioner of Internal Revenue for
increases in the cost of living in accordance with Code Section 401(a)(17)(B).

                                        6

<PAGE>   12

         1.17     CURRENT OR ACCUMULATED PROFITS. The Employer's net profits
determined in accordance with generally accepted accounting principles before
provision for income taxes and extraordinary items. No Employer Contribution
shall be made in any Plan Year where there are not sufficient current or
accumulated net profits. If the current or accumulated net profits of any
Employer are not sufficient to permit the required Employer Contributions, then
the amount of the Employer Contribution which such Employer is not permitted to
make may be contributed by the Plan Sponsor or any other Employer to the extent
of the current or accumulated net profits of the Plan Sponsor or such Employer
that remain after the Plan Sponsor's contributions to other plans to which it is
obligated or permitted to contribute, or after contribution of the Employer
Contributions required on behalf of Participants employed by such other
Employer. No reimbursement shall be required as a result of such contribution.

         1.18     ELECTIVE CONTRIBUTIONS. Elective Contributions are Employer
Contributions made to a plan that were subject to a cash or deferred election
under a cash or deferred arrangement (whether or not a qualified cash or
deferred arrangement). No amount that has become currently available to an
Employee or that is designated or treated, at the time of deferral or
contribution, as an after-tax Employee Contribution may be treated as an
Elective Contribution.

         1.19     ELECTIVE DEFERRALS.  Elective Deferral means, with respect to
any taxable year, the sum of:

         (a)      Any Employer contribution under a qualified cash or deferred
                  arrangement (as defined in Code Section 401(k)) to the extent
                  not includable in a Participant's gross income for the taxable
                  year under Code Section 402(e)(3) (determined without regard
                  to the limits in Code Section 402(g)), and

         (b)      Any Employer contribution to the extent not includable in
                  gross income for the taxable year under Code Section
                  402(h)(1)(B) (determined without regard to the limits in Code
                  Section 402(g)), and

         (c)      Any Employer contribution to purchase an annuity contract
                  under section 403(b) under a salary reduction agreement
                  (within the meaning of Code Section 3121(a)(5)(D)); unless
                  such contribution is made pursuant to a one-time irrevocable
                  election made by the Employee at the time of initial
                  eligibility to participate in the agreement or is made
                  pursuant to a similar arrangement involving a one-time
                  irrevocable election specified in the Treasury Regulations
                  under the Code, and

         (d)      Any Employee Contribution designated as deductible under a
                  trust described in Code Section 501(c)(18) to the extent
                  deductible from the individual's income for the taxable year
                  on account of Code Section 501(c)(18) (determined without
                  regard to the limits in Code Section 402(g)).

                                        7

<PAGE>   13

         1.20     ELIGIBLE EMPLOYEE. Eligible Employee means for each Plan Year
each Employee of an Employer who is employed in connection with the Employer's
business operations in Maine on a regular salaried basis, other than an Employee
who is treated as such solely by reason of the "leased employee" rules set forth
in Code Section 414(n).

         1.21     EMPLOYEE. Employee means for each Plan Year each person who is
an employee under common law of the Employer or an Affiliate and each person who
is treated as an employee of the Employer or an Affiliate by reason of the
"leased employee" rules set forth in Code Section 414(n).

         1.22     EMPLOYEE CONTRIBUTIONS. Employee Contribution means any
mandatory or voluntary contribution to the Plan that is treated at the time of
contribution as an after-tax Employee Contribution and is allocated to a
separate account to which attributable earnings and losses are allocated.

         1.23     ERISA. ERISA means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute (in the event an amendment to
ERISA renumbers a section of ERISA referred to in this Plan, any such reference
to such section automatically shall become a reference to such section as
renumbered), and the rulings and regulations promulgated thereunder.

         1.24     EMPLOYER. Employer means GNP, the Forest Products Division of
the Plan Sponsor, and each Affiliate which the Plan Sponsor designates in
writing as such from time to time and which adopts the Plan.

         1.25     EXCESS AGGREGATE CONTRIBUTIONS.  Excess Aggregate Contribution
means, with respect to any Plan Year, the excess of:

         (a)      The aggregate amount of the Matching Contributions and
                  Employee Contributions (and including any Qualified
                  Nonelective Contribution or Elective Deferral taken into
                  account in computing the ACP, but excluding Qualified Matching
                  Contributions treated as Elective Contributions under
                  subsection (c) of section 1.3) actually made on behalf of
                  Highly Compensated Eligible Employees for such Plan Year, over

         (b)      The maximum amount of such contributions permitted under the
                  limitations of Section 1.2, determined by reducing
                  contributions made on behalf of Highly Compensated Eligible
                  Employees in order of their Actual Contribution Ratios
                  (described in Section 1.2) beginning with the highest of such
                  percentages, as described below.

         The amount of Excess Aggregate Contributions for a Highly Compensated
Eligible Employee under a plan subject to the requirements of section 401(m)
will be determined in the following manner. First, the Actual Contribution Ratio
(ACR) of the Highly Compensated Eligible Employee with the highest ACR is
reduced to the extent necessary to satisfy the ACP Test or cause

                                        8

<PAGE>   14

such ratio to equal the ACR of the Highly Compensated Eligible Employee with the
next highest ratio. Second, this process is repeated until the ACP Test is
satisfied. The amount of Excess Aggregate Contributions for a Highly Compensated
Eligible Employee is then equal to the total of Employee, Matching and other
Contributions taken into account for the ACP Test minus the product of the
Employee's Contribution ratio as determined above and the Employee's
Compensation.

         1.26     EXCESS CONTRIBUTIONS.  Excess Contribution means, with respect
to any Plan Year, the excess of:

         (a)      The aggregate amount of Elective Contributions (including
                  Qualified Nonelective Contributions and Qualified Matching
                  Contributions that are treated as Elective Contributions)
                  actually paid over to the trust on behalf of Highly
                  Compensated Eligible Employees for such Plan Year, over

         (b)      The maximum amount of such contributions permitted under the
                  limitations of Section 1.3, determined by reducing
                  contributions made on behalf of Highly Compensated Eligible
                  Employees in order of the Actual Deferral Ratios (described in
                  Section 1.3) beginning with the highest of such percentages,
                  as described below.

         The amount of Excess Contributions for a Highly Compensated Eligible
Employee will be determined in the following manner. First, the ADR of the
Highly Compensated Eligible Employee with the highest ADR is reduced to the
extent necessary to satisfy the ADP Test or cause such ratio to equal the ADR of
the Highly Compensated Eligible Employee with the next highest ratio. Second,
this process is repeated until the ADP Test is satisfied. The amount of Excess
Contributions for a Highly Compensated Eligible Employee is then equal to the
total of elective and other contributions taken into account for the ADP Test
minus the product of the employee's reduced deferral ratio as determined above
and the employee's Compensation.

         1.27     FLEXPLAN CONTRIBUTION. A contribution consisting of an amount
contributed on behalf of an Eligible Employee under an Employer-sponsored plan
meeting the requirements of Code Section 125 that the Eligible Employee elects
to contribute to the Plan in accordance with Section 3.2(c).

         1.28     FULL-TIME EMPLOYEE. Full-Time Employee means an Employee who
is designated as being employed on a full-time basis on an Employer's payroll
records and works either in the State of Maine or for the business operation
located in the State of Maine. Notwithstanding the foregoing, the term
"Employee" shall not include: (a) any individual designated by the Employer on
its records as an independent contractor, consultant or an individual performing
services for the Employer (even if a court, the Internal Revenue Service or
other entity determines that such individual is a common law employee); (b) any
leased employee (as defined under Code Section 414(n)); (c) any seasonal or
temporary employees; and (d) any employee of the Employer whose terms and
conditions of employment are governed by a collective bargaining agreement with
respect

                                        9

<PAGE>   15

to which benefits of the type provided to employees under the Plan were the
subject of good faith bargaining, unless such agreement provides for
participation in the Plan.

         1.29     GAINSHARING CONTRIBUTION. A contribution consisting of an
amount that would otherwise be paid to an Eligible Employee under an
Employer-sponsored gainsharing plan or program that an Eligible Employee elects
to contribute to the Plan in accordance with Section 3.2(b).

         1.30     GNP.  GNP means Great Northern Paper, Inc., a Delaware
corporation, and any successor to such corporation.

         1.31     GNP BASIC CONTRIBUTIONS.  GNP Basic Contributions means the
contributions made by GNP in accordance with Section 3.1.

         1.32     GNP BASIC CONTRIBUTION ACCOUNT.  GNP Basic Contribution
Account means the sub-Account to which GNP Basic Contributions with respect to a
Participant are credited.

         1.33     GNP MATCHING ACCOUNT. GNP Matching Account means the sub-
Account to which GNP Matching Contributions with respect to a Participant are
credited.

         1.34     GNP MATCHING CONTRIBUTIONS.  GNP Matching Contributions means
the contributions made by GNP in accordance with Section 3.3.

         1.35     HIGHLY COMPENSATED ELIGIBLE EMPLOYEE.  Highly Compensated
Eligible Employee means an Eligible Employee who performed services during the
determination year for the Employer and who:

         (a)      Is a five percent owner (as defined in Code Section 416(i)(1)
                  (A)(iii)) at any time during the determination year or the
                  look-back year; or

         (b)      Received compensation in excess of $80,000 (indexed in
                  accordance with Code Section 415(d)) for the look-back year,
                  and if the Employer so elects, was a member of the top-paid
                  group during the look-back year.

For purposes of this definition: (i) the "determination year" is the Plan Year
for which the identification of Highly Compensated Eligible Employees is being
made; (ii) the "look-back year" is the preceding Plan Year; (iii) the "top-paid
group" means the top 20% of Employees ranked on the basis of compensation
received during the year; and (iv) "compensation" is compensation within the
meaning of Section 3.6.

         Notwithstanding the foregoing, the determination of which Eligible
Employees are Highly Compensated Eligible Employees shall at all times be
subject to the rules of Code Section 414(q). A former Employee shall be treated
as a Highly Compensated Eligible Employee if he was a Highly

                                       10

<PAGE>   16

Compensated Eligible Employee upon separation or was a Highly Compensated
Eligible Employee at any time after attaining age 55.

         1.36     HOUR OF SERVICE.  Hour of Service means each hour for which an
Eligible Employee is entitled to credit under the Plan for services performed
for an Employer or one or more Affiliates, as described in Section 2.4

         1.37     INVESTMENT FUND. Investment Fund means the funds set forth in
Section 4.1, and shall mean such funds as established within the Trust Fund from
time to time at the direction of the Plan Sponsor in accordance with Section 4.1
for the investment of the assets held under the Trust Fund.

         1.38     LEAVE OF ABSENCE. Leave of Absence means an absence authorized
by the Employer under its standard personnel practices as applied in a uniform
and non-discriminatory manner to all persons similarly situated, provided the
Employee resumes employment with the Employer within the period specified in the
authorization of the leave of absence.

         1.39     LOWER PAID ELIGIBLE EMPLOYEE. Lower Paid Eligible Employee
means for each Plan Year each Eligible Employee (other than a Highly Compensated
Eligible Employee) who has satisfied the employment requirement for
participation set forth in Sections 2.1 and 2.2 for such Plan Year.

         1.40     MATCHING CONTRIBUTIONS.  Matching Contribution means:
                  ----------------------

         (a)      Any Employer contribution (including a contribution made at
                  the Employer's discretion) made to the Plan on behalf of an
                  Employee on account of the Employee Contributions made by such
                  Employee,

         (b)      Any Employer contribution (including a contribution made at
                  the Employer's discretion) made to the Plan on behalf of an
                  Employee on account of the Employee's Elective Contribution,
                  and

         (c)      Any forfeiture allocated on the basis of Employee
                  Contributions, Matching Contributions or Elective
                  Contributions.

         1.41     MILITARY LEAVE OF ABSENCE. Military Leave of Absence means an
absence from regular employment to perform any uniformed service, duty or
training within the meaning of USERRA. Such Military Leave of Absence shall
continue from the Participant's date of entry into the uniformed service until
the earliest of the following:

         (a)      the expiration of the period following the date of his
                  discharge from uniformed service during which he is required
                  to apply for reemployment with the Employer under USERRA;

                                       11

<PAGE>   17

         (b)      the date of his return to employment to the Employer;

         (c)      the date on which he takes employment with an employer other
                  than the Employer; or

         (d)      the date of his death.

         1.42     NONELECTIVE CONTRIBUTIONS. Nonelective Contribution means
Employer Contributions (other than Matching Contributions) with respect to which
the Employee may not elect to have the contributions paid to the Employee in
cash or other benefits instead of being contributed to the Plan.

         1.43     PART-TIME EMPLOYEE.  Part-Time Employee means an Employee who
is designated as being employed on a part-time basis on an Employer's payroll
records.

         1.44     PARTICIPANT. Participant means for any Plan Year:

         (a)      An Employee who has met the requirements set forth under
                  either Sections 2.1 or 2.2; or

         (b)      A person for whom an Account continues to exist under this
                  Plan.

         1.45     PLAN.  Plan means the Great Northern Paper, Inc. Savings and
Capital Growth Plan as set forth in this document and as it may, from time to
time, be amended.

         1.46     PLAN ADMINISTRATOR.  Plan Administrator means the Plan
Administrator appointed and acting in accordance with Article VII.

         1.47     PLAN SPONSOR.  Plan Sponsor means Bowater Incorporated, a
corporation organized and existing under the laws of the State of Delaware, and
any successor to such corporation.

         1.48     PLAN YEAR.  Plan Year means the calendar year.

         1.49     QUALIFIED MATCHING CONTRIBUTIONS.  Qualified Matching
Contribution means Matching Contributions which satisfy the requirements of
subsection (b) of the definition of Qualified Nonelective Contributions.

         1.50     QUALIFIED NONELECTIVE CONTRIBUTIONS.  Qualified Nonelective
Contribution means any Employer Contribution (other than a Matching Contribution
or Elective Contribution) with respect to which:

         (a)      The Employee may not elect to receive the contribution paid to
                  the Employee in cash instead of being contributed to the Plan,
                  and

                                       12

<PAGE>   18

         (b)      Such contributions are nonforfeitable when made and
                  distributable only under the following circumstances:

                  (1)      The Employee's retirement, death, disability or
                           separation from service;

                  (2)      The termination of the Plan without establishment or
                           maintenance of another defined contribution plan
                           (other than an ESOP or SEP);

                  (3)      The Employee's attainment of age 59-1/2 or the
                           Employee's hardship;

                  (4)      The sale or other disposition by the Employer to an
                           unrelated corporation of substantially all of the
                           assets used in the trade or business to which the
                           Plan relates, but only with respect to Employees who
                           continue employment with the acquiring corporation
                           which does not maintain the Plan after the
                           disposition; and

                  (5)      The sale or other disposition by the Employer of its
                           interest in a subsidiary to an unrelated entity, but
                           only with respect to Employees who continue
                           employment with the subsidiary, the acquiring entity
                           of which does not maintain the Plan after the
                           disposition.

                           Nonelective Contributions which may be treated as
                           Matching Contributions must satisfy these
                           requirements without regard to whether they are
                           actually taken into account as Matching
                           Contributions.

         1.51     SERVICE. Service means employment and certain absences from
employment taken into account for vesting and other purposes under the Plan, as
described in Section 2.4.

         1.52     SEVERANCE DATE. Severance Date means the date as of which a
Full-Time Employee is deemed to have severed his employment relationship, as
described in Section 2.4(a)(6).

         1.53     TRUST AGREEMENT.  Trust Agreement means the Master Trust
Agreement between Bowater Incorporated and Fidelity Management Trust Company
dated as of July 1, 1994.

         1.54     TRUST FUND.  Trust Fund means the assets held by the Trustee
in accordance with the Trust Agreement.

         1.55     TRUSTEE. Trustee means Fidelity Management Trust Company, as
Trustee under the Master Trust Agreement between Bowater Incorporated and
Fidelity Management Trust Company dated as of July 1, 1994, and its successors.

                                       13

<PAGE>   19

         1.56     USERRA. USERRA means the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended, or any successor statute, and the
rulings and regulations promulgated thereunder.

         1.57     VALUATION DATE. Valuation Date means the last business day of
each calendar quarter (and any other date specified by the Trustee), on which
the Trust Fund is valued in accordance with Article IV. As to Accounts
maintained in any Investment Fund which is valued daily, each business day may
be deemed to be a Valuation Date. A Comprehensive Valuation Date is one on which
all Investment Funds are valued.

         1.58     VESTED VALUE.  Vested Value means the nonforfeitable portion
of a Participant's Account(s) as further described in Article V.

                                   ARTICLE II
                           PARTICIPATION REQUIREMENTS

         2.1      GNP BASIC CONTRIBUTIONS (CAPITAL GROWTH). Each Eligible
Employee will satisfy the participation requirement for GNP Basic Contributions
upon his completion of an Hour of Service for the Employer until his employment
as an Employee thereafter terminates, provided that the Eligible Employee meets
the requirements of Section 3.1 for an allocation of GNP Basic Contributions for
each Plan Year.

         2.2      BEFORE-TAX AND AFTER-TAX CONTRIBUTIONS.

         (a)      General Rule. Each Eligible Employee shall satisfy the
                  participation requirements to make Before-Tax Contributions or
                  After-Tax Contributions following the completion of one Year
                  of Service (as defined based upon the Eligible Employee's
                  status as a Full-Time Employee or Part-Time Employee), which
                  participation shall be effective on the first day of the
                  calendar month following the date he completes and delivers a
                  timely Election Form in accordance with Section 3.5. A
                  Participant's participation herein shall continue until the
                  date his election to make such Contributions terminates in
                  accordance with Section 3.5 or Section 5.2(a)(2)(C).

         (b)      Subsequent Elections.  An Eligible Employee whose election to
                  make Before-Tax Contributions and After-Tax Contributions
                  terminates in accordance with Section 3.5 shall automatically
                  satisfy the participation requirement set forth in Section
                  2.2(a) as of the first day of the first calendar month
                  thereafter on which he is again an Eligible Employee and he
                  completes and delivers a timely Election Form in accordance
                  with Section 3.5 to make such contributions; if eligibility to
                  make Before-Tax Contributions terminates in accordance with
                  Section 5.2(a)(2)(C), contributions will recommence as
                  described in that section.

                                       14

<PAGE>   20
         2.3      PARTICIPATION FOLLOWING REEMPLOYMENT.  The provisions of this
Section 2.3 shall apply to a Participant who terminates his employment and is
subsequently reemployed by the Employer.

         (a)      An Employee who terminates his employment and is reemployed
                  before he incurs a one-year Break in Service (as defined based
                  on his status as a Full-Time Employee or Part-Time Employee
                  immediately prior to his termination) shall be eligible to
                  participate in the Plan as of the date of his reemployment,
                  provided that the Employee actively participated in the Plan
                  prior to the termination of his employment. If the Employee
                  satisfied the participation requirements of Section 2.1 prior
                  to the termination of his employment, he shall be deemed to
                  satisfy the participation requirements for GNP Basic
                  Contributions as of the date of his reemployment. If the
                  Employee satisfied the participation requirements of Section
                  2.2 prior to the termination of his employment but did not
                  participate in the Plan with respect to Before-Tax or
                  After-Tax Contributions, he shall be deemed to satisfy the
                  participation requirements for such contributions as of the
                  first day of the calendar month following his reemployment,
                  provided that he completes and delivers a timely Election Form
                  to the Plan Administrator.

         (b)      If a Participant whose Employment terminates subsequently
                  incurs a one year Break in Service and is reemployed, either:
                  (i) had a vested balance under the Plan when his employment
                  terminates equal to the total balance of his Account; or (ii)
                  is reemployed before incurring five or more consecutive years
                  of Break in Service, he may participate in the Plan following
                  his reemployment as follows:

                  (1)      GNP Basic Contributions: The Participant shall
                           satisfy the participation requirements for GNP Basic
                           Contributions as of the date he satisfies the
                           requirements of Section 2.1; provided, that, if the
                           Participant satisfied the requirements of Section 2.1
                           before his prior Employment terminated, he shall be
                           deemed to satisfy the participation requirements for
                           GNP Basic Contributions as of his reemployment.

                  (2)      Before-Tax and/or After-Tax Contributions: The
                           Participant shall satisfy the participation
                           requirements for Before-Tax and/or After-Tax
                           Contributions as of the date he satisfies the
                           requirements of Section 2.2.

         (c)      If a Participant terminates his employment before he becomes
                  fully vested under the Plan and is reemployed after incurring
                  five or more consecutive one-year Breaks in Service, he shall
                  be treated as a new Employee, for purposes of his eligibility
                  to participate in the Plan upon the recommencement of his
                  employment.

         2.4      CALCULATION OF SERVICE.  This Section 2.4 describes the manner
in which Service is calculated under the Plan.

                                       15

<PAGE>   21

         (a)      For all purposes of the Plan the following terms shall have
                  the designated meanings:

                  (1)      Break in Service.
                           ----------------

                           (A)      While an individual is a Full-Time Employee,
                                    "Break in Service" shall mean a Severance
                                    Period of at least 12 consecutive months
                                    during which the Full-Time Employee fails to
                                    perform an Hour of Service, beginning on his
                                    Severance Date; provided, however, that the
                                    first 12 consecutive month period of absence
                                    from work following the Employee's Severance
                                    Date shall not be included in the
                                    calculation of a Break in Service if such
                                    absence is for Maternity or Paternity
                                    Reasons. Notwithstanding the foregoing, an
                                    Employee shall not be deemed to have
                                    incurred a Break in Service if he is on a
                                    Leave of Absence in excess of 12 months and
                                    returns to employment upon the expiration of
                                    such leave.

                           (B)      While an individual is a Part-Time Employee,
                                    "Break in Service" shall mean a Plan Year in
                                    which he fails to complete 501 or more Hours
                                    of Service. A Part-Time Employee who is
                                    absent from employment for Maternity or
                                    Paternity Reasons shall be credited with the
                                    Hours of Service which he would have earned
                                    but for such absence, or, in any case in
                                    which such hours cannot be determined, eight
                                    Hours of Service per day of such absence.
                                    The Hours of Service credited under the
                                    preceding sentence shall be credited in the
                                    computation period in which the Part-Time
                                    Employee's absence begins, if necessary to
                                    prevent a Break in Service in that period,
                                    or, in all other cases, in the following
                                    computation period.

                  (2)      Employment Date.  The date on which an Employee first
                           completes an Hour of Service.

                  (3)      Hour of Service.
                           ---------------

                           (A)      For a Plan Year beginning prior to January
                                    1, 1997, Hours of Service shall be equal to
                                    the hours of service credited under the
                                    provisions of the Plan in effect for such
                                    Plan Year.

                           (B)      Effective January 1, 1997, while an
                                    individual is a Full-Time Employee, "Hour of
                                    Service" shall mean:

                                    (i)     Each hour for which an Employee is
                                            paid, or entitled to payment, for
                                            the performance of duties for the
                                            Employer or an Affiliate during the
                                            applicable period.  These Hours of

                                       16

<PAGE>   22

                                            Service shall be credited to the
                                            Employee for the computation period
                                            or periods in which the duties are
                                            performed.

                                    (ii)    Each hour for which back pay,
                                            irrespective of mitigation of
                                            damages, is either awarded or agreed
                                            to by the Employer or an Affiliate.
                                            Such Hours of Service shall be
                                            credited to the Employee for the
                                            computation period or periods to
                                            which the award or agreement
                                            pertains, rather than the
                                            computation period in which the
                                            award, agreement or payment is made.

                                    Provided, however, that:

                                    (iii)   An hour for which an Employee is
                                            paid, or entitled to payment on
                                            account of a period when he performs
                                            no duties as an Employee shall not
                                            be credited as an Hour of Service if
                                            such payment is made or due under a
                                            plan or arrangement maintained
                                            solely to comply with applicable
                                            unemployment compensation laws, and

                                    (iv)    An Hour of Service shall not be
                                            credited to an Employee on account
                                            of a payment which solely reimburses
                                            such Employee for medical or
                                            medically-related expenses incurred
                                            by or on behalf of the Employee.

                           (C)      Effective January 1, 1997, while an
                                    individual is a Part-Time Employee, "Hour of
                                    Service" shall mean:

                                    (i)     The Hours of Service credited under
                                            subparts (i) and (ii) of part (B)
                                            above; plus

                                    (ii)    Each hour for which the Part-Time
                                            Employee is paid, or entitled to
                                            payment, 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 or pregnancy),
                                            layoff, jury duty, military service
                                            or Leave of Absence.  No more than
                                            501 Hours of Service will be
                                            credited under this subsection (ii)
                                            for any single continuous period
                                            (whether or not such period occurs
                                            during a single computation period).

                                    The same Hours of Service shall not be
                                    credited both under (i) and (ii) of this
                                    part (C).

                                                        17

<PAGE>   23

                                    In determining the Hours of Service credited
                                    to a Part-Time Employee who is employed by
                                    the Company on other than an hourly- rated
                                    basis, such Employee shall be credited with
                                    ten Hours of Service per day for each day he
                                    would, if hourly-rated, be credited with
                                    Hours of Service pursuant to subpart (ii) of
                                    this part (C).

                                    In the case of a payment which is made or
                                    due on account of a period during which a
                                    Part-Time Employee performs no duties, to
                                    the extent that such award or agreement is
                                    made with respect to such a period described
                                    in subsection (ii) of part (B) above, the
                                    number of Hours of Service to be credited
                                    shall be determined in accordance with
                                    Department of Labor Regulations ss.
                                    2530.200b-2, which is incorporated herein by
                                    reference.

                           (D)      Nothing in this Section 2.4(a)(3) shall be
                                    construed as denying an Employee credit for
                                    an Hour of Service if credit is required by
                                    applicable federal law.

                           (E)      Hours of Service with an Affiliated Employer
                                    shall be credited as an Hour of Service
                                    under this Plan. Hours of Service will also
                                    be credited for any individual considered to
                                    be an Employee for purposes of this Plan
                                    under Code Sections 414(n) or (o) and the
                                    regulations thereunder (to the extent
                                    therein required) or for an individual who
                                    is a common law employee but is designated
                                    as an independent contractor.

                           (F)      Solely for purposes of determining an
                                    Employee's eligibility to participate in the
                                    Plan, Hours of Service shall include hours
                                    during an approved Leave of Absence granted
                                    to an Employee under the Family and Medical
                                    Leave Act of 1993, if the Employee returns
                                    to work for an Employer at the end of such
                                    Leave of Absence. Such Hours of Service
                                    shall be calculated in accordance with
                                    applicable regulations of the United States
                                    Department of Labor.

                  (4)      Maternity or Paternity Reasons. With respect to any
                           Employee: (a) the Employee's pregnancy; (b) the birth
                           of the Employee's child; (c) the placement of a child
                           with the Employee in connection with the adoption of
                           such child by the Employee; or (d) the need to care
                           for such child for a period beginning immediately
                           following such birth or placement.

                  (5)      Reemployment Date.  The date on which an Employee
                           first completes an Hour of Service after a Severance
                           Date.

                                       18

<PAGE>   24

                  (6)      Severance Date.  The earlier of:
                           --------------

                           (A)      The date on which a Full-Time Employee
                                    quits, retires (including retirement for
                                    disability under Section 5.1(b)), is
                                    discharged or dies; or

                           (B)      The first anniversary of the first date of a
                                    period in which a Full-- Time Employee
                                    remains absent from service with an Employer
                                    or

                                    Affiliate (with or without pay) for any
                                    reason (such as vacation, holiday, sickness,
                                    Leave of Absence or layoff) other than those
                                    specified in clause (A) above.

                  (7)      Severance Period.  Each period from an Employee's
                           Severance Date to his next Reemployment Date.

         (b)      Subject to the provisions of Sections 2.4(h), for the period
                  preceding January 1, 1989, an Employee shall be credited with
                  Service under this Plan at least equal to the Vesting Service
                  the Employee had accrued under the G-P Plan (as that term is
                  defined in Section 11.1) through December 31, 1988, determined
                  under the provisions of the G-P Plan then in effect.

         (c)      Effective for a Plan Year prior to January 1, 1997, Service
                  shall be credited in accordance with the provisions of the
                  Plan in effect for such Plan Year.

         (d)      Effective January 1, 1997, the following rules shall apply to
                  the crediting of Service for Full-Time Employees:

                  (1)      Each period from an Employee's Employment Date (or
                           Reemployment Date) to his next Severance Date; and

                  (2)      If an Employee performs an Hour of Service within 12
                           months of a Severance Date, the period from such
                           Severance Date to such Hour of Service; and

                  (3)      In the case of an Employee who leaves employment to
                           enter uniformed service within the meaning of USERRA,
                           the period of such uniformed service, provided that
                           the Employee resumes employment with the Employer or
                           Affiliate within the period during which his
                           reemployment rights are protected under USERRA.

         (e)      Effective January 1, 1997, the following rules shall apply to
                  the crediting of Service for Part-Time Employees:

                                       19

<PAGE>   25
                  (1)      A Part-Time Employee shall be credited with a Year of
                           Service for participation if the Employee is employed
                           by the Employer or an Affiliate during a 12
                           consecutive month period commencing on the date the
                           Part-Time Employee first completes an Hour of
                           Service, provided that he is credited with not less
                           than 1,000 Hours of Service during such 12
                           consecutive month period. If the Part-Time Employee
                           fails to complete 1,000 or more Hours of Service
                           within such 12 consecutive month period, the
                           Part-Time Employee shall be credited with a Year of
                           Service for participation for the first Plan Year
                           (beginning with the Plan Year that includes the first
                           anniversary of the date the Employee first completed
                           an Hour of Service) during which a Part-Time
                           Employee is credited with or more Hours of Service.

                  (2)      A Part-Time Employee shall be credited with a Year of
                           Service for purposes of Sections 2.2, 2.3, 3.1 and
                           5.1 on account of each Plan Year during which a
                           Part-Time Employee completes 1,000 or more Hours of
                           Service.

         (f)      For purposes of determining whether an Employee who transfers
                  between employment as a Full-Time Employee and employment as a
                  Part-Time Employee during a Plan Year has earned a Year of
                  Service for such Plan Year, the following rules shall apply:

                  (1)      In the case of a Full-Time Employee who transfers to
                           employment as a Part-Time Employee, the Employee
                           shall receive credit as of the date of transfer for
                           Years of Service as computed under subsection (d),
                           and shall be credited with ten Hours of Service for
                           each day he worked in such Plan Year as a Full-Time
                           Employee and with the Hours of Service described
                           under subsection (e) above for the portion of the
                           Plan Year he works as a Part-Time Employee.

                  (2)      In the case of a Part-Time Employee who transfers to
                           employment as a Full-Time Employee, the Employee
                           shall receive credit as of the beginning of the Plan
                           Year for Years of Service as computed under
                           subsection (e), and shall receive credit towards a
                           Year of Service equal to the greater of the credit
                           towards a Year of Service he would receive under
                           subsection (d) above for the entire Plan Year and the
                           credit towards a Year of Service he would receive
                           under subsection (a)(3)(C) above for the portion of
                           the Plan Year he worked as a Part-Time Employee.

                  (3)      Notwithstanding any provision of this subsection (f)
                           to the contrary, the Plan shall comply with Treasury
                           Regulation Section 1.410(a)-(7)(f) in crediting Years
                           of Service for Employees who transfer between service
                           as a Full Time Employee and service as a Part-Time
                           Employee during a Plan Year.

                                       20

<PAGE>   26

         (g)      The following rules shall apply for purposes of determining
                  the Years of Service credited to a Participant whose
                  employment terminates and subsequently recommences.

                  (1)      If the Participant's employment terminates and he is
                           either:

                           (A)      fully vested under the Plan; or

                           (B)      reemployed after incurring at least one but
                                    less than five consecutive one-year Break(s)
                                    in Service,

                           then his Years of Service shall include those Years
                           of Service he earned prior to the termination of his
                           employment, provided that he completes the applicable
                           eligibility requirements of Section 2.3 following his
                           reemployment.

                  (2)      If the Participant's employment terminates before he
                           is fully vested under the Plan and he is reemployed
                           after incurring five or more consecutive one-year
                           Breaks in Service, his Years of Service shall not
                           include periods prior to the termination of his
                           employment.

         (h)      In no event shall there be any duplication of the Service of
                  any Employee attributable to the same period of time.

         2.5      NOT A CONTRACT OF EMPLOYMENT. This Plan does not constitute a
contract of employment, and participation in this Plan shall not give any person
the right to be retained in the employ of the Employer or any Affiliate as an
Eligible Employee or as an Employee or, upon the termination of such employment,
to have any interest or right in the Trust Fund other than as expressly set
forth in this Plan.

                                   ARTICLE III
                                  CONTRIBUTIONS

         3.1      GNP BASIC CONTRIBUTIONS

         (a)      General Rules. Subject to the rules set forth in this Section
                  3.1 and in Sections 3.6 and 3.7, the Employer shall make a
                  contribution from its Current or Accumulated Profits for each
                  Eligible Employee who has satisfied the participation
                  requirement for such contribution which is equal to three
                  percent of the first $100,000 of his Compensation for such
                  Plan Year, provided

                  (1)      He has completed one year of Service (including
                           Service credited pursuant to Section 11.3) in such
                           Plan Year and

                                       21

<PAGE>   27

                  (2)      He was an Eligible Employee on the last day of such
                           Plan Year.

         (b)      Exceptions.
                  ----------

                  (1)      Insufficient Earnings and Profits. If the Current and
                           Accumulated Profits of the Employer are insufficient
                           to make the full contribution called for under
                           Section 3.1(a) for each such Eligible Employee, the
                           Employer shall make a contribution under Section
                           3.1(a) which is equal to such Current and Accumulated
                           Profits and the three percent figure set forth in
                           Section 3.1(a) shall be reduced accordingly.

                  (2)      Reemployment Requirements.  The employment
                           requirements set forth in Sections 3.1(a) shall not
                           apply for a Plan Year to an Eligible Employee whose
                           employment during such Plan Year terminates by reason
                           of death or disability (as described in Section
                           5.1(b) and (c)) or whose employment terminates after
                           either reaching at least age 60 or reaching at least
                           age 55 and completing at least ten years of Service.
                           Provided, however, that in determining whether an
                           Eligible Employee's employment has terminated during
                           a Plan Year, any period for which the Participant
                           receives vacation pay shall be considered a
                           continuation of service.

                  (3)      Transfer from Hourly to Salaried Status. An Employee
                           who was employed as an hourly paid employee on the
                           first day of a Plan Year and who becomes an Eligible
                           Employee during such Plan Year as a result of a
                           transfer from hourly to salaried status shall be
                           deemed to satisfy the participation requirement for
                           the GNP Basic Contributions for such Plan Year.

                  (4)      Reemployment. An Employee who is rehired by an
                           Employer, who is an Eligible Employee on his
                           Reemployment Date (as defined in Section 2.4(a)(5))
                           and whose service is restored at such time pursuant
                           to Sections 2.4(f) and (g) will be deemed to have met
                           the requirement of Section 3.1(a)(1) for the Plan
                           Year in which his Reemployment Date occurs.

                  (5)      Highly Compensated Eligible Employees.
                           Notwithstanding anything in Section 2.1 or this
                           Section 3.1 to the contrary, the Plan Administrator
                           reserves the right to reduce or eliminate the GNP
                           Basic Contributions, Before-Tax Contributions,
                           After-Tax Contributions and/or GNP Matching
                           Contributions with respect to Highly Compensated
                           Eligible Employees for a given Plan Year. Except as
                           provided in Section 3.8, any such modification shall
                           be in the form of uniform reduction of the same type
                           of contribution percentage applied first to all such
                           employees whose contributions of that type are at the
                           highest percentage of Compensation for the Plan Year
                           in question, then applied to additional such
                           employees by progressing

                                       22

<PAGE>   28

                           downward one percentage point at a time to the
                           desired percentage of Compensation level.

         (c)      Account. The GNP Basic Contributions made on behalf of each
                  Eligible Employee shall be credited to his GNP Basic
                  Contribution Account as of the last day of the Plan Year for
                  which such contributions are made, and an Eligible Employee's
                  interest in his GNP Basic Contribution Account shall be
                  nonforfeitable.

         3.2      BEFORE-TAX CONTRIBUTIONS. Subject to the rules set forth in
this Section 3.2, Section 3.5, 3.6 and 3.7, an Eligible Employee who has
satisfied the participation requirement set forth in Section 2.2 may elect to
make the types of Before-Tax Contributions described in subsections (a), (b) and
(c) below:

         (a)      Percentage Contributions.  An Eligible Employee may elect that
                  the Employer make contributions on his behalf from his
                  before-tax compensation in one percent increments of his
                  Compensation, from one percent to ten percent of such
                  Compensation, provided that such contribution may not exceed
                  the lesser of $9,500 (adjusted annually for changes in the
                  cost-of-living pursuant to Section 402(g)(5) of the Code), or
                  16% of Compensation (when combined with After-Tax
                  Contributions under Section 3.4). All such contributions shall
                  be made by the Employer exclusively through payroll
                  withholding, and such contributions shall be transferred by
                  the Employer to the Trustee as soon as practicable after the
                  end of the payroll period from which such contributions are
                  withheld.

                  Notwithstanding the foregoing, Before-Tax Contributions shall
                  be withheld on a monthly basis on the last day of each
                  calendar month and may not exceed for any month one-twelfth
                  (1/12th) of the elective deferral limitation amount specified
                  for each Plan Year pursuant to Code Sections 402(g)(1) and
                  (5); provided, that if the cost of living adjustment under
                  Code Section 402(g)(5) is not announced until after the
                  beginning of the affected Plan Year, the Employer may adjust
                  the maximum monthly deferral on a prospective basis so that
                  the maximum amount of authorized deferrals for the Plan year
                  equals the elective deferral limitation under Code Section
                  402(g) for that year; provided, further, that in the event an
                  Eligible Employee is paid on other than a monthly basis,
                  Before-Tax Contributions may be withheld at the end of each
                  payroll period subject to the monthly elective deferral
                  limitation described- above. Contributions pursuant to this
                  Section 3.2(a) shall be credited to the Employee's Before-Tax
                  Matched Account up to six percent of Compensation.

         (b)      Gainsharing Contributions. Effective January 1, 1998, an
                  Eligible Employee may elect to contribute all but not less
                  than all of any amount that would otherwise be paid to him
                  under an Employer-sponsored gainsharing plan or program as a
                  Gainsharing Contribution to the Plan, subject to the annual
                  limitations specified in this Section 3.2 and Sections 3.6 and
                  3.7. Any such election shall be made in

                                       23

<PAGE>   29

                  accordance with procedures set forth in Section 3.5, must be
                  made before the date such gainsharing amount would otherwise
                  be paid and, once submitted, shall be irrevocable. Gainsharing
                  Contributions, under this Section 3.2(b) shall be credited to
                  the Employee's Before-Tax Unmatched Account.

                           Notwithstanding the foregoing, to the extent that an
                  Eligible Employee has made the maximum amount of Before-Tax
                  Contributions permitted under Code Section 402(g) for a Plan
                  Year, any Gainsharing Contributions elected to be contributed
                  by the Eligible Employee to the Plan for such Plan Year shall
                  be treated as After-Tax Contributions in accordance with
                  Section 3.4.

         (c)      FlexPlan Contributions. Effective January 1, 1998, the
                  following provisions shall apply, subject to the annual
                  limitations specified in this Section 3.2 and Sections 3.6 and
                  3.7:

                  (1)      An Eligible Employee may elect to contribute any
                           portion of any amount that is contributed on his
                           behalf to an Employer-sponsored plan meeting the
                           requirements of Code Section 125 to this Plan.

                  (2)      FlexPlan Contributions made under this subsection (c)
                           will be made by payroll withholding with respect to
                           the first full payroll period for which the election
                           is effective and shall be credited to the Employee's
                           Before-Tax Unmatched Account as soon as practicable
                           thereafter. Elections under this subsection (c) shall
                           be made in accordance with procedures set forth in
                           Section 3.5 and, once submitted, shall be
                           irrevocable.

                           Notwithstanding the foregoing, to the extent that an
                  Eligible Employee has made the maximum amount of Before-Tax
                  Contributions permitted under Code Section 402(g) for a Plan
                  Year, any FlexPlan Contributions elected to be contributed by
                  the Eligible Employee to the Plan for such Plan Year shall be
                  treated as After-Tax Contributions in accordance with Section
                  3.4.

         (d)      ADP Test and Account Credits. Notwithstanding the foregoing,
                  in the event that the Employer estimates that the ADP for all
                  Highly Compensated Eligible Employees for a given Plan Year
                  may not satisfy the ADP Test (including the Multiple Use Test,
                  if applicable), it may, without notice or requirement of
                  consent by the Participant or the Participant's spouse, take
                  any of the following actions (or any combination of the
                  following actions) to assure that the ADP Test is satisfied
                  for that Plan Year:

                  (1)      The Employer may direct the Trustee to distribute to
                           the Participant some or all of the Excess
                           Contributions (together with income allocable to the
                           Excess Contributions) on or before the end of the
                           Plan Year following the Plan Year for which they were
                           made. Such distribution must be specifically
                           designated

                                       24

<PAGE>   30

                           by the Employer as a distribution of Excess
                           Contributions (and related income) and shall be made
                           in accordance with Section 3.8.

                  (2)      The Plan Administrator may exercise its right under
                           Section 3.1(b)(5) to return contributions for Highly.
                           Compensated Eligible Employees for the affected Plan
                           Year.

         (e)      Conversions.  The Employer shall have the right in the
                  exercise of its absolute discretion to make an additional
                  contribution under Section 3.1 from its Current or Accumulated
                  Profits on behalf of all Lower Paid Eligible Employees for
                  such Plan Year for whom Before-Tax Contributions were made for
                  the last calendar month of such Plan Year and who are Eligible
                  Employees on the last day of such Plan Year in an amount which
                  will result in satisfying the ADP Test for such Plan Year, and
                  such contribution shall be divided and allocated as of such
                  date equally among the GNP Basic Contribution Accounts of such
                  Lower Paid Eligible Employees.

         (f)      Nonforfeitable Interest.  A Participant's interest in
                  contributions which are credited to his Before-Tax Accounts
                  shall be nonforfeitable.

         (g)      Designation. No contribution credited to an Eligible
                  Employee's Before-Tax Account shall be "designated" as an
                  "employee contribution" within the meaning of Code Section
                  414(h)(1).

         3.3      GNP MATCHING CONTRIBUTIONS.

         (a)      Percentage.  Subject to the rules set forth in this Section
                  3.3 and Section 3.6 and 3.7, the Employer shall as of the last
                  day of each calendar month in each Plan Year make a
                  contribution from its Current or Accumulated Profits on behalf
                  of each Eligible Employee on whose behalf contributions
                  tentatively or actually were credited as of each such date to
                  his Before-Tax Accounts or After-Tax Accounts which, together
                  with the forfeitures under Section 5.1(d)(2), shall equal (i)
                  75% of the contributions (taking into account contributions up
                  to three percent of such Eligible Employee's Compensation
                  only) tentatively or actually credited to his Before-Tax
                  Matched Account and After-Tax Matched Account as of such date,
                  plus (ii) 50% of the contributions (taking into account
                  contributions in excess of three percent, but no more than six
                  percent of such Eligible Employee's Compensation only)
                  tentatively or actually credited to his Before-Tax Matched
                  Account and After-Tax Matched Account as of such date.

         (b)      Insufficient Profits.  If the Employer after making the
                  contribution called for under Section 3.1 has insufficient
                  Current and Accumulated Profits to make the full contribution
                  called for under Section 3.3(a), the Employer shall make such

                                       25

<PAGE>   31

                  contributions to the extent of such Current and Accumulated
                  Profits and the 50% and 75% percentages set forth in Section
                  3.3(a) shall be reduced accordingly.

         (c)      ACP Test and Accounting Credits.  The GNP Matching
                  Contributions made on behalf of each Eligible Employee as of
                  the last day of each calendar month in each Plan Year
                  tentatively shall be credited by, or at the direction of, the
                  Employer to his GNP Matching Account as of such date pending
                  the completion of the ACP Test for such Plan Year.
                  Notwithstanding the foregoing, in the event that the Employer
                  estimates that the ACP for all Highly Compensated Eligible
                  Employees for a given Plan Year may not satisfy the ACP Test
                  (including the Multiple Use Test, if applicable), it may (and
                  in the case of subparagraph (A), shall), without notice or
                  requirement of consent by the Participant or the Participant's
                  spouse, take any of the following actions (or any combination
                  of the following actions) to assure that the ACP Test is
                  satisfied for that Plan Year:

                  (1)      The Employer shall treat tentative GNP Matching
                           Contributions (subject to an adjustment for
                           investment gains or losses allocable to such
                           tentative credit) for Highly Compensated Eligible
                           Employees for the Plan Year in question which are not
                           vested as forfeitures under Section 5.1(d)(2) to the
                           extent necessary to meet the ACP Test.

                  (2)      The Employer may direct the Trustee to distribute to
                           the Participant some or all of the Excess Aggregate
                           Contributions (together with income allocable to the
                           Excess Aggregate Contributions) on or before the end
                           of the Plan Year following the Plan Year for which
                           they were made. Such distribution must be
                           specifically designated by the Employer as
                           distribution of Excess Aggregate Contributions (and
                           related income) and shall be made in accordance with
                           Section 3.8.

                  A Participant's nonforfeitable interest in the GNP Matching
                  Contributions (and in the investment gains and losses
                  allocable to such contributions) actually credited to his GNP
                  Matching Account shall be determined under Section 5.1.

         (d)      Notwithstanding the foregoing, a Participant who is a
                  Part-Time Employee and who fails to complete a Year of Service
                  in a Plan Year shall not meet the participation requirements
                  for GNP Matching Contributions for such Plan Year.

         3.4      AFTER-TAX CONTRIBUTIONS.

         (a)      Percentage Contributions. Subject to the rules set forth in
                  this Section 3.4 and Sections 3.5, 3.6 and 3.7, an Eligible
                  Employee who has satisfied the participation requirements set
                  forth in Section 2.2 may elect to contribute from 1% to 16%
                  of his Compensation, provided that such After-Tax
                  Contribution, when added to an Eligible

                                       26

<PAGE>   32

                  Employee's Before-Tax Contributions (if any) under Section
                  3.2(a) may not exceed 16% of Compensation. Contributions
                  pursuant to this Section 3.4(a) shall be credited to the
                  Employee's After-Tax Matched Account up to six percent of
                  Compensation less any credits to the Employee's Before-Tax
                  Matched Account. All remaining Contributions pursuant to this
                  Section 3.4(a) shall be credited to the Employee's After-Tax
                  Unmatched Account.

                           All such contributions shall be made by the Employer
                  exclusively through payroll withholding, and such
                  contributions shall be transferred by the Employer to the
                  Trustee as soon as practicable after the end of the payroll
                  period from which such contributions are withheld.

         (b)      ACP Test. After-Tax Contributions are subject to the ACP Test.
                  In the event that the Employer estimates that the ACP (as
                  defined in Section 1.2(a)) for all Highly Compensated Eligible
                  Employees for a given Plan Year may not satisfy the ACP Test
                  (including the Multiple Use Test, if applicable), it may,
                  without notice or requirement of consent by the Participant or
                  the Participant's spouse, take any of the following actions
                  (or any combination of the following actions) to assure that
                  the ACP Test is satisfied for that Plan Year:

                  (1)      The Employer may refuse to accept, on a prospective
                           basis, any or all of a Participant's After-Tax
                           Contributions.

                  (2)      The Employer may direct the Trustee to distribute to
                           the Participant some or all of the Excess Aggregate
                           Contributions (together with income allocable to the
                           Excess Aggregate Contributions) on or before the end
                           of the Plan Year following the Plan Year for which
                           they were made. Such distribution must be
                           specifically designated by the Employer as a
                           distribution of Excess Aggregate Contributions (and
                           related income) and shall be made in accordance with
                           Section 3.8.

                           The provisions for the return of After-Tax
                           Contributions under this Section 3.4(b)(2) shall
                           apply prior to the application of any similar
                           provisions under Section 3.3(c)(2) for GNP Matching
                           Contributions.

         (c)      G-P Plan Contributions. After-Tax Contributions were permitted
                  pursuant to the G-P Plan (as described in Section 11.1). Such
                  contributions have been transferred to this Plan. Amounts
                  contributed to the G-P Plan before 1988 as After-Tax
                  Contributions and earnings thereon shall continue to be held
                  in existing fully-vested After-Tax Employee Accounts subject
                  to the provisions of this Plan applicable to such accounts.

                                       27

<PAGE>   33

         3.5      ELECTION RULES. Each Eligible Employee who has satisfied the
participation requirements set forth in Section 2.2 may elect to have GNP make
Before-Tax Contributions on such Employee's behalf under Section 3.2 and such
Employee may elect to make After-Tax Contributions under Section 3.4, as
follows:

         (a)      Elections under Sections 3.2(a) and 3.4(a) with respect to
                  Percentage Contributions shall be effective with respect to
                  the first full payroll period of a month following the receipt
                  of a properly completed Election Form by the Employer on or
                  before the fifteenth day of the immediately preceding month
                  (or at any other time and in any other manner, deemed
                  appropriate by the Plan Administrator). Elections under this
                  subsection (a) can be changed effective as of the first day of
                  a subsequent month, provided the Eligible Employee completes
                  and delivers the related Election Form to the Employer on or
                  before the fifteenth day of the immediately preceding month
                  (or at any other time and in any other manner deemed
                  appropriate by the Plan Administrator). However, an Eligible
                  Employee shall have the right to revoke elections under
                  Section 3.2(a) or 3.3(a) during a calendar month, and any such
                  termination shall become effective as soon as practicable
                  after the Eligible Employee completes and delivers the related
                  Election Form to the Employer.

         (b)      Elections under Sections 3.2(b) with respect to Gainsharing
                  Contributions shall be made at least two weeks prior to the
                  date upon which such amounts would otherwise be paid.
                  Elections made under this subsection (b) shall be irrevocable.

         (c)      Elections under Sections 3.2(c) with respect to FlexPlan
                  Contributions shall be made annually no later than the
                  fifteenth day of December preceding the Plan Year for which
                  they are effective; provided, however, that Employees first
                  enrolling in a Code Section 125 plan on any date other than
                  January 1 of a calendar year (such Employee's "effective
                  date") may make an election pertaining to FlexPlan
                  Contributions for the period commencing on their effective
                  date and ending on the following December 31 by delivering the
                  appropriate Election Form to the Plan Administrator on or
                  before the fifteenth day of the month preceding that effective
                  date. Elections made under this subsection (c) shall be
                  irrevocable.

         (d)      The Employer shall have the right to reject any Election Form
                  (or any other form of election approved by the Plan
                  Administrator) which is not properly completed or which is not
                  timely delivered. Any Eligible Employee whose status as such
                  terminates or whose employment as an Employee terminates shall
                  be deemed to have completed and delivered an Election Form to
                  terminate all contributions hereunder as of the date his
                  status or his employment so terminates.

                                       28

<PAGE>   34

         3.6      SECTION 415 LIMITATIONS.

         (a)      Notwithstanding any other provisions of the Plan, the "annual
                  addition" to a Participant's Accounts shall not exceed the
                  lesser of (1) and (2) below:

                  (1)      The Maximum Permissible Dollar Amount; and

                  (2)      25% of the Employee's compensation for the Plan Year.

         (b)      For purposes of this Section 3.6, the following definitions
                  shall apply:

                  (1)      the term "annual additions" shall mean the sum of:

                           (A)      Employer Contributions, Employer
                                    contributions to permit investments in
                                    Company Stock under Section 4.1(a) and
                                    forfeitures allocated to the Participant's
                                    Accounts under Sections 3.1, 3.3 and 5.1;
                                    plus

                           (B)      Before-Tax Contributions and After-Tax
                                    Contributions allocated to the Participant's
                                    Accounts under Sections 3.2 and 3.4;

                  (2)      The "Maximum Permissible Dollar Amount" shall be
                           $30,000, adjusted automatically in accordance with
                           rulings or regulations issued by the Secretary of the
                           Treasury as the corresponding limitation in Section
                           415(c)(1)(A) is adjusted for the cost of living in
                           accordance with Section 415(d) of the Code.

                  (3)      For Plan Years beginning before January 1, 1998, the
                           term compensation" under this Section shall mean the
                           amount paid to the Employee by the Employer during
                           the Plan Year, excluding any salary reduction
                           contributions made on the Employee's behalf under any
                           plan maintained by the Employer pursuant to Code
                           Section 125 or 401(k).

                           For Plan Years beginning on or after January 1, 1998,
                           "compensation" under this Section shall mean the
                           total compensation paid by the Employer to the
                           Employee that is reportable as "wages, tips and other
                           compensation" in Box 1 of the Employee's Federal Wage
                           and Tax Statement (IRS Form W-2), increased by any
                           salary reduction contributions made on the Employee's
                           behalf under any plan maintained by the Employer
                           pursuant to Code Section 125 or 401(k).

         (c)      The limitations of this Section 3.6 with respect to any
                  Participant who at any time has been a participant in any
                  other defined contribution plan maintained by the Employer

                                       29

<PAGE>   35

                  or an Affiliate shall apply as if the total contributions made
                  under all such defined contribution plans in which the
                  Participant has been a participant were made to one plan.

         (d)      If the above limitations would be exceeded in any Plan Year,
                  the Plan Administrator shall take the following actions (which
                  shall not constitute a termination of Participant
                  contributions under Section 3.5) at such times as required and
                  to the extent necessary to prevent the limitations from being
                  exceeded.

                  (1)      Discontinue or reduce the Participant's After-Tax
                           Contributions for the Plan Year.

                  (2)      Instruct the Trustee to return all or a portion of
                           the Employee's After-Tax Contributions (and earnings
                           and income allocable thereto) made during the Plan
                           Year.

                  (3)      Discontinue or reduce the Participant's Before-Tax
                           Contributions, beginning with Before-Tax
                           Contributions contributed (or to be contributed) to
                           his Before-Tax Unmatched Account.

                  (4)      Instruct the Trustee to return all or a portion of
                           the Employee's Before-Tax Contributions (and earnings
                           and income allocable thereto) made during the Plan
                           Year, beginning with Before-Tax Contributions
                           contributed to his Before-Tax Unmatched Account.

         (e)      If after the application of subsection (d) an amount continues
                  to exceed the limitations of this Section 3.6 for a Plan Year
                  (an "excess amount"), the Plan Administrator shall take any of
                  the following actions, in its discretion, at such times as
                  required and to the extent necessary to prevent the
                  limitations from being exceeded.

                  (1)      Allocate and reallocate any excess amount to the
                           Accounts of all other Participants for that Plan
                           Year. However, if such allocation or reallocation
                           results in the limitations of this Section 3.6 being
                           exceeded for all Participants for any such Plan Year,
                           the excess amount shall be held unallocated in a
                           suspense account and allocated and reallocated in the
                           next and succeeding Plan Years (as necessary) to all
                           of the remaining Participants in the Plan. For
                           purposes of this subsection, excess amounts may not
                           be distributed to Participants or former
                           Participants.

                  (2)      Reduce Employer contributions for the next Plan Year
                           (and succeeding Plan Years, as necessary) for that
                           Participant, if that Participant is covered by the
                           Plan as of the end of the Plan Year. If that
                           Participant is not covered by the

                                       30

<PAGE>   36

                           Plan as of the end of the Plan Year, the Plan
                           Administrator shall hold such excess amounts
                           unallocated in a suspense account for the Plan Year
                           and allocate and reallocate such excess amount in the
                           next Plan Year to all of the remaining Participants
                           in the Plan. For purposes of this subsection, excess
                           amounts may not be distributed to Participants or
                           former Participants.

                  (3)      Hold any excess amount unallocated in a suspense
                           account and allocate and reallocate such excess to
                           the Accounts of all other Participants in the next
                           Plan Year. Such excess shall be used to reduce
                           Employer contributions for the next Plan Year (and
                           succeeding Plan Years, as necessary) for all Plan
                           Participants. For purposes of this subsection, excess
                           amounts may not be distributed to Participants or
                           former Participants.

         Notwithstanding the foregoing, the provisions of Section 415 of the
Code, as amended, are hereby incorporated by reference for use as a guide to the
interpretation of the foregoing provisions.

         3.7      COMBINED PLANS LIMITATION.  For Plan Years beginning before
January 1, 2000, this Section 3.7 shall apply.

         (a)      In any case in which a Participant in the Plan is also a
                  participant in any defined benefit pension plan maintained by
                  the Employer, the allocations set for them in this Plan shall
                  be additionally limited so that the sum of the "defined
                  benefit fraction" and the "defined contribution fraction"
                  shall not exceed 1.0 for any Plan Year.

         (b)      The term "defined contribution fraction" for a Plan Year shall
                  mean a fraction, the numerator of which is the sum of annual
                  additions to the Participant's Accounts for all Plan years as
                  of the end of the Plan Year and the denominator of which is
                  the lesser of 125% of the Maximum Permissible Dollar Amount
                  for the Plan Year and all prior Years of Service, or 140% of
                  25% of the Participants' total Compensation for that year and
                  all prior Years of Service.

         (c)      The term "defined benefit fraction" for a Plan Year shall mean
                  a fraction, the numerator of which is the projected annual
                  benefit for the Participant under all qualified retirement
                  plans of the Employer and the denominator of which is the
                  lesser of 125% of the Maximum Permissible Dollar Amount under
                  the retirement plans for the Plan Year or 140% of the
                  Participant's average compensation for the three highest paid
                  years. Such fraction shall be determined as of the end of the
                  Plan Year.

         (d)      The Participant's projected annual benefit shall be determined
                  under such retirement plans assuming that his earnings
                  continue to normal retirement date at the same level as at the
                  end of the Plan Year and assuming that his service continues
                  to accrue to his normal retirement date without a break in
                  service prior to his normal retirement date.

                                       31

<PAGE>   37

                  The terms "earnings," "service," "normal retirement date," and
                  "break in service" shall have the same meaning as defined in
                  such retirement plans.

         3.8      EXCESS CONTRIBUTIONS AND AGGREGATE CONTRIBUTIONS.  Excess
Contributions and excess Aggregate Contributions under Sections 3.2 and 3.3
shall be distributed in accordance with the following procedure:

         (a)      The total dollar amount of Excess Contributions for each
                  affected Highly Compensated Eligible Employee is calculated as
                  described in Section 1.26;

         (b)      The total dollar amount of all Excess Contributions for all
                  affected Highly Compensated Eligible Employees is determined.

         (c)      The Before-Tax Contributions of the Highly Compensated
                  Eligible Employee with the highest dollar amount of Before-Tax
                  Contributions for the Plan Year shall be reduced by the amount
                  required to cause that Highly Compensated Eligible Employee's
                  Before-Tax Contributions to equal the dollar amount of the
                  Before-Tax Contributions of the Highly Compensated Eligible
                  Employee with the next highest dollar amount of Before-Tax
                  Contributions. This amount is then distributed to the Highly
                  Compensated Eligible Employee with the highest dollar amount.
                  However, if a lesser reduction, when added to the total dollar
                  amount already distributed under this step, would equal the
                  total Excess Contributions, the lesser reduction amount shall
                  be distributed.

         (d)      If the total dollar amount distributed is less than the total
                  Excess Contributions for the Plan Year for all affected Highly
                  Compensated Eligible Employees, step (c)is repeated until the
                  total dollar amount distributed equals the total Excess
                  Contributions for the Plan Year.

         (e)      Parallel steps taken in subsections (a) through (d) for Excess
                  Contributions shall be taken to distribute any Excess
                  Aggregate Contributions determined in accordance with Section
                  1.25 under the Plan for a Plan Year.

         After Excess and Excess Aggregate Contributions, if any, have been
distributed using the method described above, the multiple use test of Section
401(m) (9) of the Code is applied. For purposes of Section 401(m)(9) of the
Code, if a corrective distribution of Excess Contributions has been made, or a
recharacterization has occurred, the Actual Deferral Percentage for Highly
Compensated Eligible Employees is deemed to be the largest amount permitted
under Section 401(k) (3) of the Code. Similarly, if a corrective distribution of
Excess Aggregate Contributions has been made, the ACP for Highly Compensated
Eligible Employees is deemed to be the largest amount permitted under Section
401(m) of the Code.

                                       32

<PAGE>   38

         3.9      CONTRIBUTIONS UPON RETURN FROM MILITARY LEAVE. A Participant
returning from a Military Leave of Absence shall be entitled to enter into one
or more Compensation reduction agreements, pursuant to which the Participant may
make up the Before-Tax Contributions and After-Tax Contributions (excluding
interest and earnings on such contributions) the Participant would have been
entitled to make had the Participant worked for the Company and entered into
such Compensation reduction agreements during the period of Military Leave of
Absence. To the extent of such make-up contributions allocated to the
Participant's Before-Tax or After-Tax Matched Account, the Company shall make
GNP Matching Contributions in accordance with Section 3.3, which amounts shall
be credited to the Participant's GNP Matching Account for such period of
Military Leave of Absence. Notwithstanding the foregoing, all contributions made
by a Participant and the Company under this Section 3.9 shall be subject to the
provisions of this Article III and be determined in accordance with and subject
to the limitations of USERRA.

                                   ARTICLE IV
            INVESTMENT AND ALLOCATION OF INVESTMENT GAINS AND LOSSES

         4.1      INVESTMENT FUNDS. The Trust Fund initially shall be subdivided
into, and Participant and Employer Contributions shall be invested by the
Trustee, either as directed under the Plan or as directed by the Participant, in
one or more Investment Funds, which shall include the following:

         (a)      FUND A.  The Plan Sponsor Stock Fund, which invests primarily
                  in shares of Bowater Incorporated common stock. However, a
                  small percentage of the Fund is invested in money market
                  instruments to facilitate daily cash transactions. Cash
                  dividends received on shares of Bowater Incorporated stock
                  held by this Fund will be automatically reinvested in the
                  Fund. Accounts in this Fund shall segregate, separately
                  account for and respectively consist of shares of Bowater
                  Incorporated stock attributable to Employer Contributions and
                  Participant Contributions. All Participant Contributions
                  initially invested directly in this Fund pursuant to Section
                  4.2(b) shall be treated as if invested at 95% of market
                  value, with the Employer making the necessary contributions to
                  effect allocations at full fair market value.

         (b)      Additional Investment Funds: There may be established by the
                  Trustee at the direction of the Board or its designee such
                  further additional Investment Funds as shall be deemed
                  appropriate, including Investment Funds appropriate for
                  purposes of meeting the requirements of Section 404(c) of
                  ERISA and the regulations thereunder. Any such additions,
                  modifications or deletions shall be communicated to
                  Participants.

         (c)      Temporary Investment. Pending investment and reinvestment, the
                  Trustee may invest temporarily all or any part of the
                  Investment Funds and such other Investment Funds as may be
                  established by the Trustee at the direction of the Plan
                  Sponsor or its designee pursuant to the provisions of the Plan
                  in short and medium term securities including but not limited
                  to commercial paper, notes of finance companies

                                       33

<PAGE>   39

                  or in obligations of the U. S. Government or any
                  instrumentality or agency thereof. The Plan Sponsor or its
                  designee may from time to time specify additional or different
                  investment vehicles for the temporary investment of funds by
                  the Trustee, or may direct the Trustee in the temporary
                  investment of funds. The Trustee may invest all or any part of
                  any Investment Fund directly in the securities and obligations
                  authorized for the respective Investment Fund or through the
                  medium of any common, collective or commingled trust fund
                  which is invested principally in securities and obligations
                  authorized for the respective Investment Fund.

         4.2      ELECTIONS.

         (a)      Investment Elections By Participants.  Prior to September 30,
                  1998, each Participant's GNP Basic Contribution Account shall
                  be invested exclusively in the Interest Income Fund, and no
                  Participant shall have the right to elect to invest the
                  Account in any other Investment Fund. Each Participant must
                  elect by "Appropriate Notice" (as hereinafter defined) to have
                  all of his GNP Basic Contribution Account (after October 1,
                  1998) Employee Contributions and GNP Matching Contributions
                  invested in any one of the available Investment Funds or among
                  such Funds, with the Investment in each Fund being a whole
                  number percentage of such contributions and the sum of such
                  percentages equal to 100%. "Appropriate Notice" means, for
                  these purposes, written, telephonic or other electronic
                  communication directed to the Plan Administrator or as the
                  Plan Administrator specifies in rules or procedures uniformly
                  applicable to all similarly situated Participants. A GNP Basic
                  Contribution Account, a GNP Matching Account, a Before-Tax
                  (Matched and Unmatched) Account and an After-Tax Employee
                  Account shall be established for the Participant in each of
                  the Investment Funds in which contributions are invested on
                  his behalf. Contributions and earnings thereon as to which no
                  current, valid investment direction exists may be invested as
                  the Trustee, in its discretion, shall deem appropriate;
                  provided, however, that in the event no trustee has agreed to
                  undertake such investment responsibility, such contributions
                  and earnings shall be temporarily invested in one or more of
                  the investment vehicles authorized in the preceding paragraph
                  for temporary investment of funds, until a valid investment
                  direction is obtained.

         (b)      Changes in Current Investment Elections.  A Participant may,
                  by giving prior Appropriate Notice (as defined in subsection
                  (a) above), change his investment election with respect to
                  contributions received thereafter. Changes in investment
                  elections must be expressed as revised whole number
                  percentages of contributions, totaling 100%. A Participant
                  may, by giving prior Appropriate Notice elect to transfer all
                  or part (specified as a whole number percentage of the
                  existing balance) of his Account in any Investment Fund to
                  another Investment Fund. Such transfer shall be effective as
                  soon thereafter as practicable (which, with respect to Funds
                  which are valued daily and accessible by telephonic or other
                  electronic investment

                                       34

<PAGE>   40

                  direction, can be the same day as directions are transmitted,
                  if received before 4:00 p.m. local time, or the next business
                  day thereafter).

         4.3      ALLOCATION OF INVESTMENT GAINS AND LOSSES. The investment
gains and losses (whether realized or unrealized) for each Investment Fund shall
be determined by, or at the direction of, the Plan Administrator as of each
Valuation Date, and such investment gains shall be credited to each Account (to
the extent invested in each such Investment Fund) and such investment losses
shall be charged against each Account (to the extent invested in each such
Investment Fund) as of such Valuation Date in the same proportion that the
balance to each such Account (to the extent invested in such Investment Fund)
bears to the balance of all Accounts (to the extent invested in such Investment
Fund). Each Account balance shall be determined for this purpose based on the
balance actually or tentatively credited to such account as of the immediately
preceding Valuation Date.

                                    ARTICLE V
                      DISTRIBUTIONS, WITHDRAWALS AND LOANS

         5.1      DISTRIBUTION EVENTS.

         (a)      Retirement. A Participant whose employment as an Employee
                  terminates on or after the date he reaches age 60 shall be
                  deemed to have retired under this Plan, and the GNP Matching
                  Account of a Participant who is an Employee on the date he
                  reaches age 60 shall become nonforfeitable on such date. The
                  Account of a Participant who retires under this Plan shall be
                  distributed in accordance with the rules set forth in Section
                  5.4.

         (b)      Disability.

                  (1)      Nonforfeitable. If a Participant's employment as an
                           Employee terminates because he is treated as being
                           "disabled" under this Plan, his GNP Matching Account
                           shall become nonforfeitable on the date his
                           employment so terminates, and his Account shall be
                           distributed to him in accordance with the rules set
                           forth in Section 5.4.

                  (2)      Disabled. A Participant shall be treated as
                           "disabled" under this Plan if his employment as an
                           Employee terminates as a result of an illness, injury
                           or other condition which makes that Participant
                           eligible to receive benefits under the Bowater
                           Incorporated Salaried Employees' Long-Term Disability
                           Plan or which would, in the Plan Administrator's
                           judgment, make such Participant eligible for such
                           benefits if he participated in such plan.

                  (3)      Recovery.  If a former Participant recovers and is
                           reemployed as an Eligible Employee after his Account
                           was distributed to him by reason of his being

                                       35

<PAGE>   41

                           treated as "disabled" under this Plan, his
                           nonforfeitable interest in any GNP Matching,
                           Contribution Account thereafter established for his
                           benefit shall be determined without regard to the
                           fact that his prior GNP Matching Account became
                           nonforfeitable under this Section 5.1(b).

         (c)      Death. If a Participant dies while an Employee, his GNP
                  Matching Account shall become nonforfeitable as of his date of
                  death, and his Account shall be distributed to his Beneficiary
                  in accordance with the rules set forth in Section 5.4.

         (d)      Other Termination of Employment.

                  (1)      Nonforfeitable Interest. If a Participant's
                           employment as an Employee terminates for any reason
                           other than retirement, disability or death under this
                           Section 5.1, his nonforfeitable percentage interest
                           in his GNP Matching Account shall equal 20%
                           multiplied by the number of Years of Service which he
                           completed on or before the date his employment as an
                           Employee so terminated or 100%, whichever is less.
                           Such a Participant's nonforfeitable percentage
                           interest in his GNP Matching Account and in all his
                           other Accounts shall be distributed as a result of
                           his termination of employment in accordance with the
                           rules set forth in Section 5.4.

                  (2)      Forfeitable Interest. If under this Section 5.1(d)
                           the nonforfeitable percentage interest of a
                           Participant in his GNP Matching Account is less than
                           100% on the date his employment as an Employee
                           terminates, his remaining Forfeitable percentage
                           interest in such account shall be treated as a
                           forfeiture as of the first Comprehensive Valuation
                           Date which immediately follows the date his
                           employment so terminates or, if his employment
                           terminates on a Valuation Date, as of such Valuation
                           Date, and such forfeiture shall become part of the
                           general GNP Matching Contributions made under Section
                           3.3 on or after that date. If a Participant has no
                           nonforfeitable interest in his GNP Matching Account,
                           he shall be deemed to have received a distribution of
                           his benefits (which are deemed to have a value of
                           zero) as of the last day of the Plan Year in which
                           his employment terminated.

                  (3)      Reemployment as Employee. If a Participant or a
                           former Participant who is described in Section
                           5.1(d)(2) is reemployed as an Employee prior to
                           incurring a Break in Service which equals or exceeds
                           five years, the Forfeitable percentage interest in
                           his GNP Matching Account which was treated as a
                           forfeiture under Section 5.1(d)(2) and the investment
                           gains or losses which would have been allocable to
                           such interest if such interest had been invested
                           (from the Valuation Date as of which it was treated
                           as a forfeiture through the Valuation Date as of
                           which restoration is made) in U.S. Treasury Bills of
                           the longest duration available as of the deemed date
                           of

                                       36

<PAGE>   42

                           purchase (deemed to be purchased as of the Valuation
                           Date of forfeiture and sold as of the Valuation Date
                           as of which restoration is made, and reinvested at
                           each intervening maturity date) (or deemed to have
                           been invested in any other manner, or in such
                           successor fund as shall be designated by the Plan
                           Sponsor) shall be restored by the Plan Administrator.
                           Such restoration shall be made as of the Valuation
                           Date which immediately, follows the date he is
                           reemployed as an Employee or, if he is reemployed on
                           a Valuation Date, as of such Valuation Date, and such
                           restoration shall be credited as of such date to his
                           GNP Matching Account by, or at the direction of, the
                           Plan Administrator. After a Participant's GNP
                           Matching Account has been restored, his
                           nonforfeitable percentage interest in such account
                           thereafter shall be determined for purposes of this
                           Section 5.1(d) under the formula,

                                    X =     P (AB + D) - D, where:

                                    X =     The dollar amount, if any, of his
                                            nonforfeitable percentage interest
                                            in his GNP Matching Account;

                                    P =     The Participant's nonforfeitable
                                            percentage interest on the date his
                                            employment as an Employee thereafter
                                            terminates;

                                    D =     The dollar amount initially
                                            distributed to the Participant under
                                            this Section 5.1(d) from his GNP
                                            matching Account; and

                                    AB =    Such amount of money, if any, as
                                            evidenced by the last balance posted
                                            to his GNP Matching Account.

                  (4)      Separation From Service.  No Participant's employment
                           shall be deemed to have terminated under this Section
                           5.1(d) unless he has a "separation from service"
                           within the meaning of Code Section 401(k)(2)(B).

         5.2      WITHDRAWALS.

         (a)      Before-Tax Accounts.  Subject to paragraphs (1) and (2) below
                  and to Section 5.3(f), a Participant who is then an Employee
                  may request a "hardship" withdrawal from the contributed
                  balance of his Before-Tax Accounts (excluding from the balance
                  available for "hardship" withdrawal the earnings on such
                  contributions) by properly completing and delivering to the
                  Plan Administrator an Election Form together with such
                  additional information to support his request as the
                  Participant or the Plan Administrator deems necessary or
                  appropriate. Hardship distributions under this subsection
                  shall be made only if the Employee demonstrates to the
                  Employer that the distribution is on account of immediate and
                  heavy financial need and is necessary to satisfy such
                  financial need. The Plan Administrator will determine that
                  such request

                                       37

<PAGE>   43

                  is based on a "hardship" within the meaning of Code Section
                  401(k) by applying the following standards:

                  (1)      The distribution shall be deemed "on account of
                           immediate and heavy financial need" only if it is on
                           account of:

                           (A)      Medical expenses described in Code Section
                                    213(d) incurred by the Employee, the
                                    Employee's spouse or any dependent(s) of the
                                    Employee (as defined in Code Section 152);

                           (B)      Purchase (excluding mortgage payment or
                                    refinancing) of a principal residence for
                                    the Employee;

                           (C)      Payment of tuition and related educational
                                    fees for the next quarter, semester or
                                    twelve months of post-secondary education
                                    for the Employee or the Employee's spouse,
                                    children or dependents; or

                           (D)      The need to prevent the eviction of the
                                    Employee from his principal residence or the
                                    foreclosure on the mortgage of the
                                    Employee's principal residence.

                  (2)      The distribution shall be deemed "necessary to
                           satisfy" a financial need described in paragraph (1)
                           above if the following requirements are satisfied:

                           (A)      The distribution is not in excess of the
                                    amount of the financial need (including any
                                    amounts necessary to pay any federal, state
                                    or local income taxes or penalties
                                    reasonably anticipated to result from the
                                    distribution);

                           (B)      The Employee has obtained all distributions
                                    (other than hardship distributions) and all
                                    non-taxable loans available under all
                                    qualified retirement plans administered by
                                    the Plan Sponsor;

                           (C)      The Employee shall not be eligible to make
                                    Before-Tax or After-Tax Contributions to
                                    this Plan pursuant to Section 3.2 for 12
                                    consecutive months following the month of
                                    the distribution; provided, however, that
                                    such contributions may recommence during the
                                    month following the end of the 12-month
                                    suspension period (unless the suspension
                                    period is extended in connection with a
                                    subsequent hardship withdrawal) or
                                    thereafter if the Employee files on a timely
                                    basis a completed Election Form in
                                    accordance with Section 3.5;

                                       38

<PAGE>   44

                           (D)      The Employee's Before-Tax Contributions
                                    pursuant to Section 3.2 for the Plan Year
                                    following the Plan Year of the distribution
                                    may not exceed the limit on such
                                    contributions specified under Section 3.2(a)
                                    for such following Plan Year reduced by the
                                    Employee's Before-Tax Contributions for the
                                    Plan Year of the distribution.

                                    Such withdrawal shall be effected as of a
                                    Valuation Date which follows the date the
                                    Plan Administrator grants such request as
                                    soon as practicable after such date.

         (b)      After-Tax Employee Account.  Subject to such uniform and
                  nondiscriminatory rules as the Plan Administrator may
                  establish from time to time and to Sections 5.3(c) and 5.3(i),
                  a Participant may request a withdrawal under this Section
                  5.2(b) from his After-Tax Employee Account by properly
                  completing and delivering to the Plan Administrator an
                  Election Form (or such other form of request as the Plan
                  Administrator shall approve for use by all Participants
                  similarly situated) on or before the Valuation Date as of
                  which the Participant desires to make such withdrawal, and the
                  requested withdrawal shall be made as of such date. Such a
                  withdrawal may be made from a Participant's After-Tax Employee
                  Account in accordance with such uniform and nondiscriminatory
                  rules as the Plan Administrator may establish from time to
                  time. Withdrawals under this Section 5.2(b) shall be permitted
                  only once per Plan Year and shall be charged to principal or
                  income of the sub-account in accordance with the provisions of
                  Code Section 72(e)(8).

         (c)      The taxable portion of any amount withdrawn in accordance with
                  this Section 5.2 is an "eligible rollover distribution" as
                  defined in Section 5.4(d), eligible for direct rollover as set
                  forth in Section 5.4(d).

         5.3      LOANS. Any Active Participant or inactive Participant who is
an "interested party" as defined in Section 3(14) of ERISA may apply for a loan
from the Plan in lieu of a withdrawal. To obtain a loan, such Participant must
submit a written application for approval on a form and in such manner as may be
prescribed by the Plan Administrator.

         Such loan (1) must be at least $1,000, and (2) shall not exceed the
lesser of (i) $50,000, reduced by the excess of the highest outstanding balance
of loans from the Plan during the one-year period ending on the day before the
date the loan is made over the outstanding balance of the loans from the Plan on
the date the loan is made, or (ii) 50% of the Participant's vested Account under
the Plan.

                                       39

<PAGE>   45

         In addition to such rules and regulations as the Plan Administrator may
adopt, all loans shall comply with the following terms and conditions:

         (a)      The Participant shall execute a promissory note and assign to
                  the Plan his rights to his Accounts to the extent necessary to
                  pay off the loan in the event of default.

         (b)      The term for repaying the loan shall be at least 12 months but
                  not more than five years; provided, however, that 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 the principal residence of the Participant shall
                  provide for periodic repayment over a reasonable period of
                  time not to exceed 15 years,

         (c)      Loan disbursements shall be made from the Participant's
                  Investment Funds in proportion to his vested balance in the
                  Investment Funds. A loan shall be considered to be an
                  investment of the Participant's interest in the Plan which has
                  been directed by the Participant, and the evidence of debt
                  shall be held as an asset in an account maintained for the
                  borrowing Participant. Repayments of principal and interest
                  shall be reinvested in accordance with the Participant's
                  then-current investment election.

         (d)      The loan shall bear interest at a reasonable rate as
                  determined by the Plan Administrator. The Plan Administrator
                  shall not discriminate among Participants in the matter of
                  interest rates, but loans granted at different times may have
                  different interest rates if, in the opinion of the Plan
                  Administrator, the difference in rates is justified by
                  economic conditions.

         (e)      The loan shall provide that a Participant shall repay his loan
                  by payroll deductions that will amortize the loan in level
                  payments over its term, but shall also provide that a
                  Participant may repay the remaining balance of the loan in a
                  single lump sum through a withdrawal from the Plan used in
                  whole or in part for such repayment or through a cash payment.

                  If a Participant is absent from work with less than full
                  compensation, payroll deductions will continue as long as his
                  pay is sufficient to cover the amounts due under the terms of
                  the loan. If the Participant's compensation is insufficient to
                  cover the regular payments due, the Participant shall make
                  arrangements with the Plan Administrator for repaying
                  principal and interest on a current basis.

         (f)      A Participant who qualifies for a hardship withdrawal under
                  Section 5.2 may withdraw from the Plan to the extent that such
                  withdrawal will not result in his loan exceeding the maximum
                  limitations under this Section, unless the Participant
                  authorizes the Plan Administrator to apply a sufficient amount
                  of such withdrawal to reduce the loan to the maximum
                  limitations after such withdrawal.

                                       40

<PAGE>   46

         (g)      A Participant shall not be approved for a loan under this
                  Article until any prior loan has been completely amortized.

         (h)      A Participant will be deemed to have defaulted on his loan
                  upon the earlier of:

                  (i)      separation from service due to retirement, death,
                           total and permanent disability, layoff or any other
                           reason; or

                  (ii)     failure to make a loan repayment when due.

         (i)      Upon default, the Plan Administrator may take any action
                  (including reinstatement of the loan upon receipt of amounts,
                  if any, in arrears and resumption of timely, regular repayment
                  installments) permitted by law and consistent with the
                  provisions of the Plan and its continued qualification to
                  collect the balance due on the loan (or see to the application
                  of collateral to the payment thereof). No amount shall be
                  distributed to a Participant in default on an outstanding loan
                  until the loan is repaid in full. If the amount of any such
                  distribution is insufficient to repay the loan, the
                  Participant or his Beneficiary shall be liable for repaying
                  any amount still outstanding.

         (j)      Nothing in this Section shall preclude the Plan Administrator
                  from declaring a moratorium on the approval of loans or from
                  amending this Section subject to applicable regulations issued
                  by the Internal Revenue Service.

         5.4      FORM AND TIMING OF DISTRIBUTIONS.
                  ---------------------------------

         (a)      Election of Benefits. On or before a Participant's retirement,
                  elected benefit commencement date, or "required beginning
                  date" (as defined in Section 5.4(b)(2)(D)) he shall notify the
                  Plan Administrator of his election that benefits due to him
                  upon termination of employment be paid or made available in
                  accordance with one or more of the following methods:

                  (1)      with respect to all Participants: by a lump sum
                           payment in cash or, with respect to the Plan Sponsor
                           Stock Fund, upon the request of the Participant, in
                           kind, plus the cash equivalent of the fair market
                           value of any fractional share of Plan Sponsor common
                           stock; or

                  (2)      with respect only to Participants who will have
                           attained at least age 59-1/2 at the time benefit
                           payment commences: in annual installments over a
                           period not to exceed ten years, provided such period
                           does not exceed the greater of the life expectancy of
                           the Participant or the joint and last survivor life
                           expectancy of the Participant and his Beneficiary the
                           amount of each such installment to be determined by
                           dividing the Participant's Vested Value by

                                       41

<PAGE>   47

                           the number of annual installments which remain to be
                           made at the time a particular installment is to be
                           paid.

                  A Participant may change his election of benefits by filing a
                  new election at any time prior to his benefit commencement
                  date.

                  Notwithstanding the foregoing, if the Participant's Account
                  balance at the time of any distribution exceeds $3,500
                  ($5,000, effective January 1, 1998), then neither that
                  distribution nor any subsequent distribution shall be made to
                  the Participant at any time before he attains age 70-1/2
                  without his or her consent (which age 70-1/2 distributions
                  shall be made in accordance with paragraph (b)(3)). No such
                  consent shall be valid unless the Participant receives a
                  general description of the material features and an
                  explanation of the value of the form of benefit available
                  under the Plan. In addition, the Participant must be informed
                  of his right to defer receipt of the payment or distribution.
                  The Plan Administrator shall deliver such written notice to
                  the Participant during a period beginning no less than 30 days
                  and no more than 90 days before the Participant's date of
                  commencement of benefits. The written consent of the
                  Participant to the payment or distribution shall not be made
                  before the Participant receives the notice and shall not be
                  made more than 90 days before his or her date of commencement
                  of benefits. Notwithstanding the foregoing, a distribution may
                  commence less than 30 days after the notice required under
                  Section 1.411(a)-11(c) of the Treasury Regulations is given,
                  provided that (i) the Plan Administrator clearly informs the
                  Participant that the Participant has a right to a period of at
                  least 30 days after receiving the notice to consider the
                  decision of whether or not to elect a distribution (and, if
                  applicable, a particular distribution option), and (ii) the
                  Participant, after receiving the notice, affirmatively elects
                  a distribution.

         (b)      Method of Payment. Benefits shall be paid or made available
                  under the Plan upon the direction of the Plan Administrator as
                  soon as practicable after termination of employment occurs and
                  shall be distributable thereafter at the written request of
                  the Participant (or, where applicable, his Beneficiary or
                  alternate payee).

                  (1)      Unless the Participant elects otherwise, distribution
                           of benefits will begin no later than sixty days after
                           the end of the Plan Year in which the latest of the
                           following events occurs:

                           (A)      The Participant's attainment of age 65;

                           (B)      The tenth anniversary of the year in which
                                    the Participant commenced participation in
                                    the Plan; or

                                       42

<PAGE>   48

                           (C)      The Participant's termination of employment
                                    with the Employer or an Affiliate.

                  (2)      Notwithstanding any other provision of the Plan:

                           (A)      The entire interest of an Employee (i) will
                                    be distributed to such Participant not later
                                    than the "required beginning date" (as
                                    defined under subsection (3)); or (ii) will
                                    be distributed under Section 5.4(a)(2)
                                    beginning not later than the required
                                    beginning date, in accordance with
                                    regulations prescribed by the Secretary of
                                    the Treasury.

                           (B)      If distributions have begun under (A)(ii),
                                    upon the death of an Employee before his
                                    entire interest has been distributed, the
                                    remaining portion will be distributed at
                                    least as rapidly as under the method being
                                    used under (A)(ii) as of the date of his
                                    death.

                           (C)      If distributions have not begun upon the
                                    death of a Participant, if no election has
                                    been made by the Beneficiary pursuant to
                                    Section 5.4(c), the entire interest of the
                                    Participant will be distributed in
                                    accordance with Section 5.4(a) at the end of
                                    the calendar year containing the fifth
                                    anniversary of the Participant's death.

                  (3)      For purpose of this section, the term "required
                           beginning date" means:

                           (A)      for Plan Years beginning prior to January 1,
                                    1997, April 1 of the calendar year following
                                    the calendar year in which the Employee
                                    attains age 70-1/2;

                           (B)      for Plan Years beginning on or after January
                                    1, 1997:

                                    (1)     for a Participant who is not a five
                                            percent (5%) owner (as defined
                                            under Code Section 416), April 1 of
                                            the calendar year following the year
                                            in which occurs the later of the
                                            Participant's: (A) termination of
                                            Employment with the Employer and all
                                            Affiliated Companies, and (B)
                                            attainment of age 70-1/2; and

                                    (2)     for a Participant who is a five
                                            percent (5%) owner, April 1 of the
                                            calendar year following the calendar
                                            year in which the Employee attains
                                            age 70-1/2, or such other date as
                                            may be prescribed by applicable law
                                            or regulations.

                                       43

<PAGE>   49

                                    Notwithstanding the foregoing, if a
                                    Participant who is not a five percent (5%)
                                    owner attained age 70-1/2 on or after
                                    January 1, 1996 and before January 1, 1999,
                                    and is still employed by the Employer or an
                                    Affiliated Company on April 1 of the
                                    calendar year following the year in which he
                                    or she attained age 70-1/2, such Participant
                                    may elect to commence the distribution of
                                    the Vested Value of his or her Accounts
                                    effective as of April 1 of the calendar year
                                    following the calendar year in which he or
                                    she attained age 70-1/2 or to delay the
                                    commencement of distributions until the
                                    termination of his or her employment.

         (c)      Proof of Death and Right of Beneficiary.  In the event of the
                  death of a Participant who has begun to receive benefits in
                  annual installments under the provisions of subsection
                  5.4(a)(2), his Beneficiary will receive the undistributed
                  value of his Accounts in annual installments on the same basis
                  as the Participant had elected. Alternatively, his Beneficiary
                  may receive the undistributed value of his Accounts in a lump
                  sum of cash by an election in writing filed with the Plan
                  Administrator within 90 days of the Participant's death. The
                  Beneficiary of a deceased Participant other than as noted
                  above shall elect to receive the undistributed value of his
                  Accounts under one of the methods in Section 5.4(a) by an
                  election in writing filed with the Plan Administrator within
                  180 days of the Participant's death, except that the maximum
                  period in Section 5.4(a)(2) shall be five years. If the
                  Beneficiary does not elect a distribution within 180 days, the
                  Plan Administrator will distribute the Account in accordance
                  with Section 5.4(b)(2)(C).

                  The Plan Administrator may require and rely upon such proof of
                  death and such evidence of the right of any Beneficiary to
                  receive benefits of a deceased Participant as the Plan
                  Administrator may deem proper, and its determination of death
                  and of the right of such Beneficiary to receive payments shall
                  be conclusive.

         (d)      Direct Rollover. Any Eligible Rollover Distribution under the
                  Plan may, at the Participant's election, and subject to such
                  uniform and nondiscriminatory conditions as the Plan
                  Administrator may require, be transferred to an Eligible
                  Retirement Plan, subject to the provisions of Code Section 402
                  and the regulations thereunder and as hereinafter provided.

                  (1)      The Plan Administrator shall advise any Distributee
                           entitled to receive an Eligible Rollover Distribution
                           no less than thirty nor more than ninety days before
                           the starting date of any payment (or at such other
                           time as is permitted by law) of his right to elect a
                           Direct Rollover to an Eligible Retirement Plan. To
                           elect a Direct Rollover, the Distributee must request
                           in writing to the Plan Administrator that all or a
                           specified portion of the Eligible Rollover
                           Distribution be transferred directly to one or more
                           Eligible Retirement Plans.

                                       44

<PAGE>   50

                           If a distribution will be made on behalf of the
                           Distributee in more than one year, the notice
                           specified in the first sentence of this paragraph
                           must be given to the Distributee in each year in
                           which there is an Eligible Rollover Distribution, and
                           the Distributee must file a new election with the
                           Plan Administrator if he wishes to have the Eligible
                           Rollover Distribution transferred directly to an
                           Eligible Retirement Plan. The Distributee shall not
                           be entitled to elect a Direct Rollover pursuant to
                           this section unless he has obtained any applicable
                           Spousal Consent that would otherwise be required to
                           obtain a distribution in the amount of the Eligible
                           Rollover Distribution.

                  (2)      For purposes of this section, the following
                           definitions shall apply:

                           (A)      A "Direct Rollover" is a payment by the Plan
                                    to the Eligible Retirement Plan specified by
                                    the Distributee;

                           (B)      A "Distributee" includes Participants, a
                                    Participant's surviving spouse and a
                                    Participant's spouse or former spouse who is
                                    the alternate payee under a qualified
                                    domestic relations order, as defined in Code
                                    Section 414(p), but only with regard to the
                                    interest of such individual under the Plan;

                           (C)      An "Eligible Retirement Plan" is a
                                    retirement plan which meets the requirements
                                    of Code Section 401(a), an annuity described
                                    in Code Section 403(a), an individual
                                    retirement account described in Code Section
                                    408(a), or an individual retirement annuity
                                    (other than an endowment contract) described
                                    in Code Section 408(b), the terms of which
                                    permit the acceptance of a Direct Rollover
                                    of the Distributee's Eligible Rollover
                                    Distribution. However, in the case of an
                                    Eligible Rollover Distribution to the
                                    surviving spouse of a Participant, an
                                    Eligible Retirement Plan is an individual
                                    retirement account or an individual
                                    retirement annuity. The Plan Administrator
                                    may establish reasonable procedures for
                                    ascertaining that the Eligible Retirement
                                    Plan meets these requirements.

                           (D)      An "Eligible Rollover Distribution" is any
                                    distribution from this Plan of all or any
                                    portion of the balance to the credit of the
                                    Distributee, except for distributions (or
                                    portions thereof) which are: (i) part of a
                                    series of substantially equal periodic
                                    payments (not less frequently than annually)
                                    made over the life of the Participant (or
                                    the joint lives of the Participant and the
                                    Participant's designated beneficiary), the
                                    life expectancy of the Participant (or the
                                    joint life and last survivor expectancy of
                                    the Participant and the Participant's
                                    designated beneficiary), or a specified
                                    period of ten years or more; (ii) required

                                       45

<PAGE>   51

                                    under Code Section 401(a)(9) (relating to
                                    the minimum distribution requirements); or
                                    (iii) the portion of any distribution that
                                    is not includible in gross income
                                    (determined without regard to the exclusion
                                    for net unrealized appreciation in employer
                                    securities described in Code Section
                                    402(e)(4)).

         (e)      Claims.  Subject to the distribution deadlines set forth in
                  Section 5.4(b), no Account shall become payable unless and
                  until a claim for payment is completed and filed on an
                  Election Form with the Plan Administrator, unless the Plan
                  Administrator acting in its absolute discretion elects to
                  direct the distribution of such Account in the absence of such
                  a claim. All claims shall be processed in accordance with the
                  claims procedure described in the Summary Plan Description for
                  this Plan. Furthermore, if the distribution of an Account is
                  called for under this Section 5.4 and the Plan Administrator
                  is unable to locate the Participant or his Beneficiary after
                  sending written notice to his last known address and to the
                  United States Social Security Administration and no claim is
                  filed for such Account under this Section 5.4(e), the Plan
                  Administrator shall have the right to presume that the
                  Participant and his Beneficiary are dead and to treat such
                  Account as a forfeiture under Section 5.1(d)(2), subject to
                  reinstatement in the event that the Participant or his
                  Beneficiary subsequently files a claim for such Account.

                                   ARTICLE VI
                                   FIDUCIARIES

         The following parties are Fiduciaries of the Plan:

         (a)      The Employer;

         (b)      The Plan Sponsor;

         (c)      The Trustee; and

         (d)      Any committee or individual appointed by the Employer or the
                  Plan Sponsor as Plan Administrator or to whom discretionary
                  administrative authority or responsibility with respect to the
                  Plan has been delegated by the Employer or the Plan Sponsor.

                                   ARTICLE VII
                               PLAN ADMINISTRATION

         7.1      ADMINISTRATION BY FIDUCIARIES.
                  ------------------------------

         (a)      The Plan Administrator shall be the Named Fiduciary.

                                       46

<PAGE>   52

         (b)      If a Plan Administrator has not been appointed, or ceases for
                  any reason to serve, the Plan Sponsor shall function as the
                  Plan Administrator until a Plan Administrator (or successor)
                  is appointed.

         (c)      The responsibilities of each fiduciary may be specified by the
                  Employer or the Plan Sponsor in writing. If no such delegation
                  is made by the Employer or Plan Sponsor, the fiduciaries may
                  allocate responsibilities among themselves in writing and
                  notify the Employer and the Plan Sponsor that they have done
                  so, specifying in such notification the responsibilities of
                  each fiduciary. If the fiduciaries provide a copy of such
                  notification to the Trustee, the Trustee shall thereafter
                  (until such time as the Employer, the Plan Sponsor, or the
                  fiduciaries deliver to the Trustee a written revocation of
                  such allocation) accept and be justified in relying upon any
                  documents executed by the appropriate fiduciary pursuant to
                  the allocation of responsibilities disclosed in such
                  notification.

         (d)      Each fiduciary shall have only those specific powers, duties,
                  responsibilities and obligations as are assigned to such
                  fiduciary under the Plan, delegated to the fiduciary by action
                  of the Employer or the Plan Sponsor, or allocated to the
                  fiduciary by written allocation among the fiduciaries pursuant
                  to Paragraph (c), above.

         7.2      RESPONSIBILITIES OF THE PLAN SPONSOR. The Plan Sponsor shall
have the following powers and duties, in its sole discretion, with respect to
the Plan.

         (a)      To appoint the individuals and members of any committee
                  created to exercise any responsibility with respect to the
                  Plan;

         (b)      To terminate the Plan in whole or in part pursuant to the
                  procedures provided hereunder;

         (c)      To delegate any of the fiduciary responsibilities under the
                  Plan to any individual, committee, or entity (including the
                  Employer) it may designate; provided, that any delegation of a
                  fiduciary duty that has already been assigned by the
                  provisions of the Plan, by previous action of the Board, or by
                  written allocation among the fiduciaries, shall be effected by
                  delivery in writing to the fiduciaries to and from whom such
                  responsibility is being reassigned;

         (d)      To designate any individual, committee, or entity to whom
                  fiduciary responsibilities are delegated as an additional
                  fiduciary or Named Fiduciary of the Plan; and

         (e)      To exercise any other powers or responsibilities not
                  specifically allocated to another fiduciary.

                                       47

<PAGE>   53

         7.3      RESPONSIBILITIES OF THE TRUSTEE. The Trustee shall have the
powers and duties allocated to it in the trust agreement. The Trustee shall have
no other responsibilities with respect to the Plan, except to the extent such
responsibilities are delegated or assigned by the Plan Sponsor's Board or its
delegate to, and accepted by, the Trustee.

         7.4      RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. The Plan
Administrator shall be responsible for and shall discharge all duties and
obligations imposed on a Plan Administrator by ERISA and the Code. The Plan
Administrator shall prepare, publish, file and furnish the Plan reporting and
disclosure reports, statements, plan descriptions and benefit rights reports of
Participants in the manner and at the times required by law. The Plan
Administrator may employ counsel and/or consultants to render advice with regard
to any responsibility of the Plan Administrator under the Plan and may employ
necessary clerical help. Any individual or committee designated as the Plan
Administrator shall report to (or as directed by) the Board in order that the
Plan Administrator's performance of his duties may be periodically reviewed. In
addition, the Plan Administrator shall have the following discretion, powers and
duties with respect to the Plan:

         (a)      To establish and enforce such rules, regulations and
                  procedures as the Plan Administrator shall deem necessary or
                  proper for the efficient administration of the Plan;

         (b)      To interpret the Plan, the Plan Administrator's interpretation
                  thereof in good faith to be final and conclusive;

         (c)      To decide all questions of fact concerning the Plan and the
                  eligibility of any Employee to participate in or receive
                  benefits from the Plan;

         (d)      To compute the amount of benefits which shall be payable to
                  any Participant, retired Participant or Beneficiary in
                  accordance with the provisions of the Plan, and to determine
                  the person or persons to whom such benefits shall be paid;

         (e)      To advise the Trustee in writing with respect to all benefits
                  which become payable under the terms of the Plan and to direct
                  the Trustee to pay such benefits from the Trust Fund;

         (f)      To submit annually to the Board or its designee a report
                  showing in reasonable summary the financial condition of the
                  Plan and Trust Fund, a summary of the operations of the Plan
                  for the past year, and any further information which the Board
                  or its designee may require;

         (g)      To maintain all such books of account, records and other data
                  as shall be necessary for proper administration of and
                  necessary actuarial valuations for the Plan and to meet the
                  reporting and disclosure requirements of ERISA;

                                       48

<PAGE>   54

         (h)      To appoint any accountant, attorney, consultant or other
                  professional; and

         (i)      To appoint individuals to perform administrative functions and
                  to determine their powers and responsibilities as the Plan
                  Administrator may, subject to this Article VII and the
                  requirements of ERISA, determine. Any such allocation or
                  delegation shall be periodically reviewed by the Plan
                  Sponsor's Board or its designee.

         7.5      DELEGATION OF DUTIES. Any committee established by the Plan
Sponsor or at its direction or by its designee may appoint subcommittees and
determine their powers; and the Plan Sponsor and its designees and their
designees may allocate among themselves or may delegate to another person or
persons such of the fiduciary duties as they may in their sole discretion
determine. Any such allocation or delegation shall be periodically reviewed by
the Board.

         The Plan Sponsor, the Plan Administrator and their respective
designees, agents, officers and employees and any committees established by the
Plan Sponsor or at its direction or by its designee, shall be entitled to rely
upon all certificates and reports made by the accountant or consultant and upon
all opinions given by legal counsel; the Plan Sponsor, the Plan Administrator,
and their respective designees, agents, officers and employees and any
committees established by the Plan Sponsor or at its direction or by its
designee, shall be fully protected in respect to any action taken or suffered by
them in good faith and acting as a prudent person would act in like
circumstances in reliance upon such certificate, report or the advice or opinion
of such accountant, consultant or counsel, and all action so taken or suffered
shall be conclusive upon each of them and upon all Participants, retired
Participants, surviving spouses and Beneficiaries.

         7.6      COMMITTEE ACTION. Unless otherwise directed by or at the
direction of the Plan Sponsor, a majority of the members of any committee
established by or at the direction of the Plan Sponsor or by its designee shall
constitute a quorum. Decisions with a quorum present shall be by majority vote.
The action of a majority expressed in writing without a meeting shall constitute
the action of a committee and shall have the same effect as if assented to by
every member.

         7.7      INDIVIDUAL INDEMNIFICATION. To the extent permissible under
ERISA, the Plan Sponsor shall indemnify each member of the Board or Employer's
Board, each member of any committee established by or at the direction of the
Plan Sponsor or its designee, and the Plan Administrator or any of its
delegates, against costs, expenses and liabilities, including attorney's fees,
incurred in connection with any action, suit or proceeding instituted against
them or any one of them because of any act or omission performed by them or any
one of them as a director, committee member or Plan Administrator, or designee
or delegate thereof, as the case may be, while acting in good faith and
exercising his judgment for the best interest of the Plan.

         Promptly after receipt by an indemnified party under this section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the Plan Sponsor, notify the Plan
Sponsor of the commencement thereof, and the omission so to notify the Plan
Sponsor will relieve it from the liability hereunder, but not from any other

                                       49

<PAGE>   55

liability which it may have to such person. The Plan Sponsor shall be entitled
to participate at its own expense in the defense or to assume the defense of any
action brought against any party indemnified hereunder.

         In the event the Plan Sponsor elects to assume the defense of any such
suit, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party, and the indemnified party shall bear the
fees and expenses of any additional counsel retained by him.

         7.8      EXPENSES. Any expenses reasonably incurred by the Plan
Administrator or the member of any committee in the performance of their duties
shall be paid by the Employer. Such reasonable expenses include the Employer's
securing insurance to protect them from personal liability resulting from their
actions taken in a fiduciary capacity with respect to this Plan. All reasonable
expenses incurred in connection with the administration of the Plan, including
(without limitation) the compensation of the Trustee, administrative expenses,
any investment management charges and proper charges and disbursements of the
Trustee and compensation and other expenses and charges of any counsel,
accountant, specialist or other person who shall be retained by the Employer in
connection with the administration of the Plan shall be paid from the Trust
Fund; provided, that the Employer, in its sole discretion, may elect to pay any
such expenses; and provided further, that the Employer's payment of any such
expenses for any Plan Year shall not require the Employer to pay any such
expenses for any subsequent Plan Year.

                                  ARTICLE VIII
                             TRUST FUND AND TRUSTEE

         The Trust Fund shall be held, administered, controlled and invested by
the Trustee subject to the terms of the Trust Agreement.

                                   ARTICLE IX
                            AMENDMENT AND TERMINATION

         9.1      AMENDMENT. The Plan Sponsor reserves the right at any time and
from time to time, and retroactively if deemed necessary or appropriate to
conform with governmental regulations or other policies, to modify or amend in
whole or in part any or all of the provisions of the Plan; provided, that no
such modification or amendment shall make it possible for any part of the funds
of the Plan to be used for, or diverted to, purposes other than for the
exclusive benefit of Participants or their Beneficiaries; and provided further,
that no such amendment shall increase the duties of the Trustee without its
consent thereto in writing. Except as may be required to conform with
governmental regulations, no such amendment shall adversely affect the rights of
any Participant or Beneficiary with respect to contributions made on his behalf
prior to the date of such amendment.

         9.2      MERGER, CONSOLIDATION OR TRANSFER OF ASSETS. The Plan shall
not merge or consolidate with, or transfer its assets or liabilities to any
other plan or entity unless each Participant would, if the surviving plan or
entity then terminated, receive a benefit immediately after the merger,

                                       50

<PAGE>   56

consolidation or transfer which is equal to or greater than the benefit he would
have been entitled to receive if the Plan had terminated immediately before the
merger, consolidation or transfer. Any such merger, consolidation or transfer
shall be accomplished in accordance with applicable regulations of the Internal
Revenue Service.

         9.3      TERMINATION. The Plan is purely voluntary on the part of the
Plan Sponsor and each Employer, and the Plan Sponsor reserves the right to
terminate or completely discontinue contributions under the Plan, and terminate
the Trust Agreement and the trust hereunder. Upon a complete or partial
termination of the Plan, or complete discontinuance of contributions hereunder,
the value of the Account of each Participant affected by such termination or
discontinuance shall be fully vested, and payment of benefits shall be made to
such Participants or their Beneficiaries either upon such termination or upon
the termination of employment of the respective Participants, at the discretion
of the Plan Administrator, in the same manner as on termination of employment
under Section 5.4. In the case of a complete termination or a complete
discontinuance of contributions to the Plan, any forfeitures not previously
applied in accordance with Section 5.1(d)(2) shall be credited ratably to the
Accounts of all Participants in proportion to the amounts of GNP Basic
Contributions credited to their respective GNP Basic Contribution Account during
the current calendar year, or during the prior calendar year if no GNP Basic
Contributions have been made during the current calendar year.

         9.4      WITHDRAWAL OF AN EMPLOYEE. Subject to the requirements of
ERISA and the Code, any one or more of the Employers may, with the consent of
the Plan Sponsor, terminate its participation in and withdraw from the Plan by
giving six months' advance written notice to the Plan Sponsor of its or their
intention to withdraw, unless a shorter notice shall be agreed to by the Board.
Upon such withdrawal, the Plan Sponsor shall certify to the Trustee the
equitable shares of such withdrawing Employers in the Trust Fund and the Trustee
shall thereupon set aside such securities and/or property to such legal
representatives as may be designated by such withdrawing Employer. The
withdrawal of an Employer from the Plan shall not constitute a termination of
the Plan as thereafter in effect for any other Employer that has not withdrawn.

         9.5      PROCEDURE. The termination, partial termination or amendment
of this Plan may be effected by the adoption of a resolution by the Board to
that effect, or by the execution of an instrument amending or terminating the
Plan by the Board's designee, to whom such authority to so act has been given by
resolution of the Board. The authorization of the Board may be general and need
not be given in contemplation of or with reference to specific terms of
amendment or termination.

                                    ARTICLE X
                                  MISCELLANEOUS

         10.1     CONSTRUCTION.  This Plan shall be construed, regulated and
administered in accordance with the laws of the State of Delaware to the extent
that such laws are not preempted by

                                       51

<PAGE>   57

federal law. The Plan and the Trust shall be construed so as to qualify under
sections 401(a), 401(k) and 501(a) of the Code.

         10.2     SPENDTHRIFT CLAUSE. Subject to Sections 5.3 and 10.11, no
Account, benefit, payment or distribution under this Plan shall (except to the
extent permitted by law) be subject to the claim of any creditor of a
Participant or Beneficiary, or to any legal process by any creditor of such
person, and no Participant or Beneficiary shall have any right to alienate,
commute, anticipate or assign all or any portion of his Account, benefit,
payment or distribution under this Plan. Except that, effective January 1, 1998,
such prohibition shall not apply to the offset of any Participant's Account
against any amount the Participant is required to pay on account of a breach of
fiduciary duty to, or a criminal act taken against, the Plan, to the extent
permitted under Section 401(a)(13) of the Code.

         10.3     LEGALLY INCOMPETENT. If the Plan Administrator finds that a
person entitled to a benefit is unable to care for his affairs because he is a
minor or because of an illness or accident, the Plan Administrator may direct
that any benefits due him, unless claim shall have been made therefor by a duly
appointed legal representative, shall be paid to the spouse, child or legal
representative of such person, or to a person who has custody or who has assumed
responsibility for the care of such person. Any payments so made under this
section at the direction of the Plan Administrator shall be a complete discharge
of the liabilities of the Plan therefor.

         10.4     BENEFITS SUPPORTED ONLY BY TRUST FUND. Any person having any
claim for any benefit under the Plan shall look solely to the assets of the
Trust Fund for the satisfaction of such claim. In no event will the Plan
Sponsor, the Plan Administrator, an Employer or the Trustee, or any of their
employees, officers, Participants or their boards of directors or agents, be
liable in their individual capacities to any person whomsoever for the payment
of benefits under this Plan.

         10.5     DISCRIMINATION. The Plan Administrator shall administer this
Plan in a uniform and consistent manner with respect to all Participants and
Beneficiaries and shall not permit discrimination in favor of its officers,
stockholders or "highly compensated employees" (as defined in Code Section
414(q)).

         10.6     CLAIMS. Any payment to a Participant or Beneficiary or to his
legal representative, child, spouse or heirs-at-law, made in accordance with the
provisions of this Plan, shall to the extent thereof be in full satisfaction of
all claims hereunder against the Plan Sponsor, the Plan Administrator, the
Trustee and the Employer, any of whom may require such person, his legal
representative, child, spouse or heirs-at-law, as a condition precedent to such
payment, to execute a receipt and release therefor in such form as shall be
satisfactory to the Plan Sponsor, the Plan Administrator, the Trustee or any
Employer, as the case may be.

         10.7     NO REVERSION.  No part of the Trust Fund shall ever be used
for or be diverted to purposes other than for the exclusive benefit of
Participants and Beneficiaries except:

                                       52

<PAGE>   58

         (a)      As expressly provided otherwise in this Plan;

         (b)      A contribution which is made by the Employer by a mistake of
                  fact upon direction of the Employer shall be refunded by the
                  Trustee to the Employer within one year after the payment of
                  such contribution;

         (c)      A contribution (other than a contribution actually credited to
                  an After-Tax Employee Account) for which the Internal Revenue
                  Service denies an income tax deduction to the Plan Sponsor or
                  an Employer shall be refunded by the Trustee to the Employer
                  within one year after the denial of such deduction upon the
                  Employer's direction, all such contributions being made
                  expressly on the condition that such contributions are
                  deductible in full for federal income tax purposes; and

         (d)      A contribution which would otherwise be an excess contribution
                  or excess aggregate contribution (as defined in Code Sections
                  4979(a) and (d)) may, at the direction of the Employer, be
                  returned to the Employer by the Trustee during the first two
                  and one-half (2-1/2) months of the Plan Year following the
                  Plan Year with respect to which the contribution was made.

         10.8     AGENT FOR SERVICE OF PROCESS. The agent for service of process
for this Plan shall be the person currently listed in the Summary Plan
Description for this Plan as the agent for service of process.

         10.9     ROLLOVER CONTRIBUTIONS. An Eligible Employee may transfer to
this Plan:

         (a)      A total distribution of the balance to the credit of a
                  Participant, or the cash proceeds of any such total
                  distribution in property or securities, to which Code Section
                  402(a)(5) applies to the extent that such section applies to
                  such distribution, or

         (b)      Any distribution from an individual retirement account to
                  which Code Section 408(d)(3)(A)(ii) applies to the extent such
                  section applies to such distribution; provided, that

         (c)      The Plan Administrator reasonably concludes (within the
                  meaning of any ruling or regulations issued by the Secretary
                  of the Treasury) that:

                  (1)      The distributing plan and trust are, at the time of
                           the distribution, qualified pursuant to Code Sections
                           401(a) and 501(a) (and, if requested by the Plan
                           Administrator, appends to such certification a copy
                           of the most recent determination letter issued by the
                           Internal Revenue Service with respect to such plan
                           and trust);

                                       53

<PAGE>   59

                  (2)      The distributing plan is neither a defined benefit
                           plan nor a defined contribution plan subject to the
                           funding standards of Code Section 412; and

                  (3)      With respect to the Participant, the distributing
                           plan is not a direct or indirect transferee (in a
                           transfer after 1984) of a plan described in
                           paragraphs (1) and (2) above or this paragraph (3),
                           provided that this paragraph (3) shall apply only if
                           the distributing plan has separately accounted for
                           the transferred assets and any income allocable to
                           such assets.

         (d)      The Plan Administrator acting in this absolute discretion
                  consents to such transfer;

         (e)      The Eligible Employee satisfies such uniform and
                  nondiscriminatory requirements which the Plan Administrator
                  establishes from time to time as a condition to such a
                  transfer; and

         (f)      Such transfer is made in cash to the Trustee as of a Valuation
                  Date and in a manner which is acceptable to the Plan
                  Administrator and to the Trustee.

         10.10    SHAREHOLDER RIGHTS FOR BOWATER INCORPORATED COMMON STOCK.

         (a)      Voting Shares of Bowater Incorporated Common Stock.  All
                  shares of Bowater Incorporated common stock held in the Trust
                  Fund shall be voted by the Trustee only in accordance with
                  instructions from the Participants or Beneficiaries, as set
                  forth in this Section 10.10. For purposes of the actions taken
                  under this Section 10.10, Participants and Beneficiaries shall
                  be considered to be named fiduciaries within the meaning of
                  Section 402(a) (2) of ERISA. Each Participant or Beneficiary
                  shall be entitled to give voting instructions with respect to
                  the shares of Bowater Incorporated common stock allocated to
                  his Accounts. In the event that a Participant or Beneficiary
                  fails to direct the Trustee as to the exercise of such voting
                  rights, the Trustee shall not exercise such voting rights.
                  With respect to each occasion for the exercise of such voting
                  rights, the Trustee, through the Plan Administrator, will
                  notify each Participant or Beneficiary within a reasonable
                  time (not less than 30 days) before such rights are to be
                  exercised. Such notification will include all the information
                  distributed to the Trustee regarding the exercise of such
                  rights.

         (b)      Directions to the Trustee.  Not less than five business days
                  prior to the date on which such voting rights are to be
                  exercised, each Participant or Beneficiary wishing to exercise
                  such rights shall inform the Trustee, in the form and manner
                  prescribed by the Plan Administrator, with respect to the
                  manner in which such voting rights are to be exercised. To the
                  extent possible, the Trustee shall vote the combined
                  fractional shares of Bowater Incorporated common stock
                  allocated to the Account(s) of Participants and Beneficiaries
                  to reflect the directions of the Participants to whom such
                  fractional shares of Bowater Incorporated common stock are
                  allocated.

                                       54

<PAGE>   60

         (c)      No Recommendations.  Neither the Trustee nor the Plan
                  Administrator nor the members of any committees may make any
                  recommendation to the Participants or Beneficiaries regarding
                  the manner of exercising any voting rights, including whether
                  or not such rights should be exercised.

         (d)      Rights Other Than Voting Rights. Each Participant shall be
                  entitled to direct the Trustee, in the form and manner
                  prescribed by the Plan Administrator, with respect to the
                  exercise of rights, other than voting rights, attributable to
                  his interest in the shares of Bowater Incorporated common
                  stock allocated to his Accounts.

         (e)      Public Offers.  Notwithstanding any provision of the Plan to
                  the contrary, in the event of a "tender offer" within the
                  meaning of Section 14(d) of the Securities Exchange Act of
                  1934, for shares of Bowater Incorporated common stock by any
                  person (other than the Plan Sponsor or any Affiliate), the
                  Trustee, through the Plan Administrator, shall promptly
                  provide a copy of the offer, and any other material or
                  information concerning such offer, to each Participant or
                  Beneficiary (as appropriate). For purposes of the actions
                  taken under this Section 10.10(e), Participants and
                  Beneficiaries shall be considered to be "named fiduciaries"
                  within the meaning of Section 402(a)(2) of ERISA. Each
                  Participant or Beneficiary (as appropriate) shall be entitled
                  to give the Trustee instructions with respect to the tender of
                  all, but not less than all, shares of Bowater Incorporated
                  common stock allocated to his Account. Upon receipt of
                  instructions from a Participant or Beneficiary (as
                  appropriate) to so tender, the Trustee shall tender all such
                  shares of Bowater Incorporated common stock to the tender
                  offeror. In the event that a Participant or Beneficiary fails
                  to direct the Trustee as to whether to tender or to not tender
                  shares of Bowater Incorporated common stock, the Trustee shall
                  tender all or such part of such shares of Bowater Incorporated
                  common stock as the Trustee, in its exercise of discretion,
                  shall deem appropriate.

                  The solicitation and implementation of instructions from
                  Participants (and Beneficiaries) pursuant to this Section
                  10.10(e) shall, to the best of the abilities of the Trustee,
                  be carried out in such a manner as will, for a reasonable
                  time, preserve the "confidentiality" of the instructions given
                  by any particular Participant or Beneficiary within the
                  meaning and intent of that term as used in Section 203(a)(2)
                  of the General Corporation Law of the State of Delaware. In
                  the event that instructions cannot otherwise be returned to
                  the Trustee in a timely fashion, the Plan Sponsor shall use
                  its best efforts to collect and tabulate such instructions in
                  a manner that will assure a confidential and timely tender by
                  the Trustee.

                  The proceeds received by the Trustee as a result of having
                  tendered shares of Bowater Incorporated common stock shall be
                  applied under the Plan as directed by the Plan Administrator,
                  in accordance with the following precepts. The Accounts of
                  Participants and Beneficiaries who directed the Trustee not to
                  tender the shares of

                                       55

<PAGE>   61

                  Bowater Incorporated common stock allocated to their
                  respective Accounts shall continue to be invested in shares of
                  Bowater Incorporated common stock, subject to any other
                  investment direction the Participant (or Beneficiary) may be
                  entitled to give.

                  The Accounts of Participants and Beneficiaries who directed
                  the Trustee to tender the shares of Bowater Incorporated
                  common stock allocated to their respective Accounts shall
                  receive the proceeds of such tender allocable to the tendered
                  shares of Bowater Incorporated common stock from such Account,
                  which shall be invested at the direction of the Participant,
                  as hereinafter provided, subject to any other investment
                  direction the Participant (or Beneficiary) may be entitled to
                  give. There shall be allocated to the Accounts of Participants
                  and Beneficiaries who gave no directions to the Trustee with
                  respect to the tender of shares of Bowater Incorporated common
                  stock, proceeds of the tender allocable to the shares of
                  Bowater Incorporated common stock (if any) tendered from their
                  respective Accounts, and the shares of Bowater Incorporated
                  common stock and such proceeds shall be invested in the same
                  manner provided for in the preceding two sentences. Any cash
                  so received may be invested in short-term investments, pending
                  the Trustee's receipt of directions from the Participant.

                  The Trustee shall give advance notice of at least one full
                  business day to the Plan Sponsor before taking any action in
                  response to such an offer other than the actions described
                  above. The Trustee shall be entitled to reasonable
                  compensation and reimbursement for its out-of-pocket expenses
                  for any extraordinary services attributable to the duties and
                  responsibilities described in this Section.

         10.11    QUALIFIED DOMESTIC RELATIONS ORDER. The prohibitions of
Section 10.2 shall not apply to distributions under a "qualified domestic
relations order," as defined in Section 414(p) of the Code. The Plan
Administrator shall establish written procedures as it deems appropriate to
determine the qualified status of domestic relations orders and shall administer
such qualified domestic relations orders as set forth in such orders, subject to
the terms of this Plan and Section 414(p) of the Code. Distributions shall be
permitted to an alternate payee under a qualified domestic relations order
before the Participant attains "earliest retirement age" under the Plan, as set
forth in Section 414(p) of the Code.

         10.12    PLAN TO PLAN TRANSFERS. The Plan Administrator, in his or her
discretion, may direct transfers to a participant's Before-Tax Unmatched
Account, After-Tax Employee Account, GNP Basic Contribution Account, GNP
Matching Account or Rollover Account, and may authorize the establishment of any
other Account as may be required to effect the transfer from the Trustee of his
or her account in another Bowater Incorporated defined contribution plan
qualified under Code Section 401(a), provided that such transfer would not cause
this Plan to be a direct or indirect transferee within the meaning of Section
401 (a)(11)(B)(iii)(III) of a plan described in Section 401 (a)(11)(B)(i) or
(ii) of the Code.

                                       56

<PAGE>   62

         Any such transfer shall be made as of a Valuation Date which is
acceptable to the Plan Administrator and to the Trustee. The initial investment
of any such transfer amount shall be in accordance with procedures to be
established by the Plan Administrator.

                                   ARTICLE XI
                    TRANSFER OF ASSETS FROM AND ASSUMPTION OF
                             CERTAIN LIABILITIES OF
                         THE GEORGIA-PACIFIC CORPORATION
                         SAVINGS AND CAPITAL GROWTH PLAN

         11.1     ASSET TRANSFER. All assets formerly held by the trustee of the
Georgia-Pacific Corporation Savings and Capital Growth Plan (the "G-P Plan") in
accounts of participants in the G-P Plan who became Employees on January 1, 1992
are a part of the Trust Fund and held in the Accounts of the respective
Employees on whose behalf such assets were held under the G-P Plan. Such amounts
are assets of this Plan for all purposes hereunder. This Plan has assumed the
liabilities of the G-P Plan to the Employees whose G-P Plan accounts were
transferred to the Trustee with respect to the transferred accounts.

         11.2     VESTING. Each former employee of Georgia-Pacific Corporation
on whose behalf one or more accounts under the G-P Plan have been transferred to
this Plan shall have a 100% vested and nonforfeitable interest in each such
transferred Account. For purposes of determining Years of Service for vesting
purposes under the Plan, individuals who became Employees on January 1, 1992 and
who were Georgia-Pacific Corporation employees on the immediately preceding day
shall be credited with the period(s) of employment credited toward years of
service under the G-P Plan as in effect on such date.

         11.3     ELIGIBILITY TO PARTICIPATE. For purposes of determining years
of Service with respect to eligibility to participate in the Plan and
eligibility for contributions under Section 3.1(a), individuals who became
Employees on January 1, 1992 and who were Georgia-Pacific Corporation employees
on the immediately preceding day shall be credited with period(s) of employment
which would have been credited toward eligibility to participate in the G-P Plan
(as in effect on such date), had the individual's employment with the Employer
been continuous employment with Georgia- Pacific Corporation.

                                   ARTICLE XII
                              TOP HEAVY PROVISIONS

         12.1     OVERRIDING PROVISION.  If the Plan is or becomes top-heavy in
any Plan Year, the provisions of this Article shall supersede any conflicting
provisions in the Plan.

                                       57

<PAGE>   63

         12.2     DEFINITIONS.
                  ------------

         (a)      Determination Date. For any Plan Year subsequent to the
                  first Plan Year, the last day of the preceding Plan Year. For
                  the first Plan Year of the Plan, the last day of that Year.

         (b)      Earnings. For purposes of this Article XII, the compensation
                  that is included on an Employee's Form W-2 for the calendar
                  year that ends with or within the Plan Year plus the amount of
                  any Before-Tax Contributions made on behalf of the Employee
                  for such calendar year.

         (c)      Key Employee. Any Employee or former employee (and the
                  Beneficiaries) of such employee) who, at any time during the
                  termination period, was a Key Employee in accordance with
                  Section 416(i)(1) of the Code and regulations thereunder.

         (d)      Permissive Aggregation Group. The Required Aggregation Group
                  of plans plus any other plan or plans of the Employer which,
                  when considered as a group with the Required Aggregation
                  Group, would continue to satisfy the requirements of Sections
                  401(a)(4) and 410 of the Code.

         (e)      Present Value.  The value based on the 1983 Group Annuity
                  Mortality Table, separately for males and females, and an
                  interest rate of five percent per annum.

         (f)      Required Aggregation Group.  (1) Each qualified plan of the
                  Employer in which at least one Key Employee participates, and
                  (2) any other qualified plan of the Employer which enables a
                  plan described in (1) to meet the requirements of Sections
                  401(a)(4) and 410 of the Code.

         (g)      Top-Heavy Plan.  This Plan is top-heavy for any Plan Year if
                  any of the following conditions exist:

                  (1)      If the Top-Heavy Ratio for this Plan exceeds 60
                           percent and the Plan is not part of any Required
                           Aggregation Group or Permissive Aggregation Group of
                           plans;

                  (2)      If this Plan is a part of a Required Aggregation
                           Group of plans (but not part of a Permissive
                           Aggregation Group) and the Top-Heavy Ratio for the
                           group of plans exceeds sixty percent (60%); or

                  (3)      If this Plan is a part of a Required Aggregation
                           Group of Permissive Aggregation Group and the
                           Top-Heavy Ratio for the group of plans exceeds 60
                           percent.

                                       58

<PAGE>   64

         (h)      Top-Heavy Ratio.
                  ---------------

                  (1)      If the Employer maintains one or more defined benefit
                           plans and has not maintained any defined contribution
                           plans (including any simplified employee pension
                           plan), which, during the five-year period ending on
                           the Determination Date, has or has had account
                           balances, the Top-Heavy Ratio for this group alone or
                           for the Required or Permissive Aggregation Group, as
                           applicable, is a fraction. The numerator is the sum
                           of the Present Values of accrued benefits of all Key
                           Employees as of the Determination Date, and the
                           denominator of which is the sum of the present values
                           of all accrued benefits, determined in accordance
                           with Code Section 416 and the regulations thereunder.
                           Both the numerator and the denominator include any
                           part of any accrued benefits distributed in the
                           five-year period ending on the Determination Date.

                  (2)      If the Employer maintains one or more defined benefit
                           plans and maintains or has maintained one or more
                           defined contribution plans (including any simplified
                           employee pension plan), which, during the five-year
                           period ending on the Determination Date, has or has
                           had any account balances, the Top- Heavy Ratio for
                           any Required or Permissive Aggregation Group, as
                           applicable, is a fraction. The numerator is the sum
                           of the Present Values of accrued benefits under the
                           aggregate defined benefit plan or plans for all Key
                           Employees, determined in accordance with (a) above,
                           plus the sum of account balances under the aggregate
                           defined contribution plan or plans of all Key
                           Employees as of the Determination Date. The
                           denominator is the sum of the Present Values of all
                           accrued benefits under the aggregate defined benefit
                           plan or plans for all Participants and the sum of the
                           account balances under the aggregate defined
                           contribution plan or plans for all Participants, all
                           determined in accordance with Section 416 of the Code
                           and the regulations thereunder. Both the numerator
                           and the denominator include any part of any accrued
                           benefits or account balances distributed in the
                           five-year period ending on the Determination Date.

                  (3)      For purposes of (a) and (b) above, the value of
                           account balances and the Present Value of accrued
                           benefits will be determined as of the most recent
                           Comprehensive Valuation Date that falls within or
                           ends with the 12-month period ending on the
                           Determination Date, except as provided in Code
                           Section 416 and the regulations thereunder for the
                           first and second plan years for a defined benefit
                           plan. The account balances and accrued benefits will
                           be disregarded for a Participant: (1) who is not a
                           Key Employee but who was a Key Employee in a prior
                           year, or (2) who has not received any compensation
                           from any Employer maintaining the Plan at any time
                           during the five-year period ending on the
                           Determination Date. The calculation of the Top-Heavy

                                       59

<PAGE>   65

                           Ratio, and the extent to which distributions,
                           rollovers, and transfers are taken into account will
                           be made in accordance with Code Section 416 and the
                           regulations thereunder. Deductible Employee
                           Contributions will not be taken into account for
                           computing the Top-Heavy Ratio. When aggregating
                           plans, the values of account balances and accrued
                           benefits will be calculated with reference to the
                           Determination Dates that fall within the same
                           calendar year.

         (i)      Valuation Date.  The first day of the Plan Year.
                  --------------

         12.3     MINIMUM CONTRIBUTION. For any Plan Year in which this Plan is
top-heavy., provided the top-heavy ratio is less than 90%, each Employee who is
eligible to participate under Sections 2.1 or 2.2, and who is not eligible for
participation under any defined benefit plan maintained by his Employer shall
have a contribution of five percent of Earnings credited to his Accounts. Such
contribution will be made with respect to any such Employee irrespective of
whether such Employee has performed or will perform 1,000 Hours of Service (or
the equivalent) for such Plan Year or has made any contributions to this Plan
with respect to such Plan Year. This contribution shall include amounts
contributed under Sections 3.1 and 3.3 and Article IV. For any Plan Year in
which the top-heavy ratio for this Plan is 90% or more, such minimum
contribution shall be three percent of Earnings, and (for Plan Years beginning
before January 1, 2000) the 125% factor in Section 3.7 shall be reduced to 100%.

                                  ARTICLE XIII
                          CHANGE IN CONTROL PROVISIONS

         13.1     GENERAL. In the event of a Change in Control, as hereinafter
defined, the provisions of this Article XIII shall supersede any conflicting
provisions in the Plan.

         13.2     SPECIAL VESTING. Anything in this Plan to the contrary
notwithstanding, upon and following a Change in Control, the GNP Matching
Account of Participants in the Plan who are Employees of the Employer as of the
date of Change in Control shall be nonforfeitable.

         13.3     DEFINITIONS.  The following definitions apply for purposes of
this Article XIII:

         (a)      "Acquiring Person" means the Beneficial Owner, directly or
                  indirectly, of Common Stock representing 20% or more of the
                  common voting power of the Company's then outstanding
                  securities, not including (except as provided in clause (i) of
                  the next sentence) securities of such Beneficial Owner
                  acquired pursuant to an agreement allowing the acquisition of
                  up to and including 50% of such voting power approved by
                  two-thirds of the members of the Board who are Board members
                  before the Person becomes a Beneficial Owner, directly or
                  indirectly, of Common Stock representing 5% or more of the
                  combined voting power of the Company's then outstanding
                  securities. Notwithstanding the foregoing, (i) securities
                  acquired pursuant to an agreement described in the preceding
                  sentence will be included in

                                       60

<PAGE>   66

                  determining whether a Beneficial Owner acquires 5% or more of
                  such voting power other than pursuant to such an agreement so
                  approved and (ii) a Person shall not be an Acquiring Person if
                  such Person is eligible to and files a Schedule 13G with
                  respect to such Person's status as a Beneficial Owner of all
                  Common Stock of the Company of which the Person is a
                  Beneficial Owner.

         (b)      "Affiliate" and "Associate" shall have the respective meanings
                  ascribed to such terms in Rule 12b-2 of the General Rules and
                  Regulations under the Exchange Act of 1934 (the "Act").

         (c)      "Change in Control" shall be deemed to have occurred upon:

                  (i)      The date that any Person is or becomes an Acquiring
                           Person;

                  (ii)     The date that the Plan Sponsor's shareholders approve
                           a merger, consolidation or reorganization of the Plan
                           Sponsor with another corporation or other Person,
                           unless, immediately following such merger,
                           consolidation or reorganization, (A) at least 50% of
                           the combined voting power of the outstanding
                           securities of the resulting entity would be held in
                           the aggregate by the shareholders of the Plan Sponsor
                           as of the record date for such approval (provided
                           that securities held by any individual or entity that
                           is an Acquiring Person, or who would be an Acquiring
                           Person if 5% were substituted for 20% in the
                           definition of such term, shall not be counted as
                           securities held by the shareholders of the Plan
                           Sponsor, but shall be counted as outstanding
                           securities for purposes of this determination), or
                           (B) at least 50% of the board of directors or similar
                           body of the resulting entity are Continuing
                           Directors;

                  (iii)    The date the Plan Sponsor sells or otherwise
                           transfers all or substantially all of its assets to
                           another corporation or other Person, unless,
                           immediately after such sale or transfer, (A) at least
                           50% of the combined voting power of the
                           then-outstanding securities of the resulting entity
                           immediately following such transaction is held in the
                           aggregate by the Plan Sponsor's shareholders as
                           determined immediately prior to such transaction
                           (provided that securities held by any individual or
                           entity that is an Acquiring Person, or who would be
                           an Acquiring Person if 5% were substituted for 20%
                           in the definition of such term, shall not be counted
                           as securities held by the shareholders of the Plan
                           Sponsor, but shall be counted as outstanding
                           securities for purposes of this determination), or
                           (B) at least 50% of the board of directors or similar
                           body of the resulting entity are Continuing
                           Directors; or

                  (iv)     The date on which less than two-thirds (2/3) of the
                           total membership of the Board consists of Continuing
                           Directors.

                                       61

<PAGE>   67

         (d)      "Continuing Directors" means any member of the Board who (i)
                  was a member of the Board prior to the date of the event that
                  would constitute a Change in Control, and any successor of a
                  Continuing Director while such successor is a member of the
                  Board, (ii) is not an Acquiring Person or an Affiliate or
                  Associate of an Acquiring Person, and (iii) is recommended or
                  elected to succeed the Continuing Director by a majority of
                  the Continuing Directors.

         (e)      "Person" means any individual, firm, corporation, partnership,
                  trust or other entity.

         (f)      A "Beneficial Owner" of Common Stock means (i) a Person who
                  beneficially owns such Common Stock, directly or indirectly,
                  or (ii) a Person who has the right to acquire such Common
                  Stock (whether such right is exercisable immediately or only
                  with the passage of time) pursuant to any agreement,
                  arrangement or understanding (whether or not in writing) or
                  upon the exercise of conversion rights, exchange rights,
                  warrants, options or otherwise.

         13.4     NO AMENDMENT. This Article XIII of the Plan shall not be
amended upon or following a Change in Control, in any manner that might have the
effect of reducing the Participants' Accounts under the Plan. Nothing in this
Section 13.4 shall be construed to prohibit, prior to a Change in Control, any
amendment to the Plan, including this Article XIII, or any termination of the
Plan pursuant to its terms.

                                *     *    *

         IN WITNESS WHEREOF, Great Northern Paper, Inc. has adopted and executed
this Plan as of this ___ day of ____________, 1998.

                                         GREAT NORTHERN PAPER, INC.

                                         By
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------
                                         Date Signed:
                                                     ---------------------------

                                       62
<PAGE>   68

                                                                    EXHIBIT 4.14

                                 AMENDMENT NO. 1
                                     TO THE
                           GREAT NORTHERN PAPER, INC.
             SAVINGS AND CAPITAL GROWTH PLAN FOR SALARIED EMPLOYEES

     Effective as of the date specified herein, the Great Northern Paper, Inc.
Savings and Capital Growth Plan for Salaried Employees, as amended and restated
effective January 1, 1997 (the "Plan"), is hereby further amended as follows:

     1.     The first sentence of Section 1.18 of the Plan is amended to read as
            follows:

     "Elective Contributions are Employer Contributions made to a plan that were
     subject to a cash or deferred election under a cash or deferred
     arrangement."

     2.     Paragraph (a) of Section 1.19 of the Plan is amended to read as
            follows:

     "(a)   Any Employer contribution under a qualified cash or deferred
            arrangement (as defined in Code Section 401(k)) to the extent not
            includible in a Participant's gross income for the taxable year
            under Code Section 402(e)(3), and"

     3.     Paragraph (b) of Section 1.19 of the Plan is amended to read as
            follows:

     "(b)   Any Employer contribution to the extent not includible in gross
            income for the taxable year under Code Section 402(h)(1)(B), and"

     4.     Paragraph (d) of Section 1.19 of the Plan is amended to read as
            follows:

     "(d)   Any Employee Contribution designated as deductible under a trust
            described in Code Section 501(c)(18) to the extent deductible from
            the individual's income for the taxable year on account of Code
            Section 501(c)(18)."

     5.     The first sentence of Section 1.41 of the Plan is amended to read as
            follows:

     "Military Leave of Absence means an absence from regular employment to
     perform any uniformed service, duty or training within the meaning of
     USERRA, which is effective as of December 12, 1994."

                                      *  *  *

<PAGE>   69

     IN WITNESS WHEREOF, Great Northern Paper, Inc. has caused this Amendment
No. 1 to the Plan to be executed by its duly designated officers and its
corporate seal to be affixed hereto on the 28th day of May, 1999.

                                   GREAT NORTHERN PAPER, INC.

                                   By:  /s/ David G. Maffucci
                                      ---------------------------------

                                      Its:  Director, Vice President & Treasurer
                                          --------------------------------------

ATTEST:

By:  /s/ Hay L. Grain
   -----------------------------

   Its: Assistant Secretary
       -------------------------

                                       -2-

<PAGE>   70

                             SECOND AMENDMENT TO THE
                           GREAT NORTHERN PAPER, INC.
             SAVINGS AND CAPITAL GROWTH PLAN FOR SALARIED EMPLOYEES
                (AMENDED AND RESTATED, EFFECTIVE JANUARY 1, 1997)

         WHEREAS, Bowater Incorporated (the "Company") sponsors the Great
Northern Paper, Inc. Savings and Capital Growth Plan for Salaried Employees
(amended and restated, effective January 1, 1997) (the "Plan") for the benefit
of eligible employees of Great Northern Paper, Inc. ("GNP"), a wholly-owned
subsidiary of the Company, and has reserved the right to amend the Plan;

         WHEREAS, pursuant to an agreement dated as of May 18, 1999, the Company
has agreed to sell its entire interest in GNP to Inexcon Maine, Inc.;

         WHEREAS, the Company desires to amend the Plan to provide that as of
the Closing Date, (1) (GNP will replace the Company as Plan sponsor, (2) GNP
shall have full responsibility with respect to the administration of the Plan,
and (3) investments in Company stock shall not be permitted.

         NOW, THEREFORE, the Company hereby amends the Plan, effective as of the
date the sale of all the stock of GNP by the Company is consummated, in the
following respects,

1.       Section 1.2 is amended to read as follows:

                  "(b) For Plan Years before January 1, 2000, the term 'Actual
         Contribution Percentage' means as to all Highly Compensated Eligible
         Employees and all Lower Paid Eligible Employees for the applicable Plan
         Year, the average of the ratios ('Actual Contribution Ratios'),
         calculated separately for each Eligible Employee in each such group, of
         (1) the sum of the GNP Matching Contributions, After-Tax Contributions
         and Employer contributions to permit investments in Bowater
         Incorporated common stock under Section 4.1(a) made on his behalf to
         (2) his 'compensation' (as defined in Section 414(s) of the Code, as
         determined by the Plan Administrator) for such Plan Year.

                  For Plan Years beginning on or after January 1, 2000, 'Actual
         Contribution Percentage' means as to all Highly Compensated Eligible
         Employees and all Lower Paid Eligible Employees for the applicable Plan
         Year, the average of the ratios ('Actual Contribution Ratios'),
         calculated separately for each Eligible Employee in each such group, of
         (1) the sum of the GNP Matching Contributions and After-Tax
         Contributions to (2) his 'compensation' (as defined in Section 414(s)
         of the Code, as determined by the Plan Administrator) for such Plan
         Year."

<PAGE>   71

2.       New Section 1.15 is added to read as follows, and subsequent sections
         of Article I are renumbered accordingly:

                  "1.15    CLOSING DATE.  Closing Date means the date on which
         the sale of all of the stock of Great Northern Paper, Inc. by Bowater
         Incorporated is consummated."

3.       Section 1.21 (as renumbered) is amended to read as follows:

                  "1.21    ELIGIBLE EMPLOYEE. Eligible Employee means for each
         Plan Year each Employee of an Employer who is employed on a regular
         salaried basis, other than an Employee who is treated as such solely by
         reason of the "leased employee" rule set forth in Code Section 414(n).

4.       Section 1.25(as renumbered) is amended to read as follows:

                  "1.25    EMPLOYER. Employer means GNP and each Affiliate which
         the Plan Sponsor designates in writing as such from time to time and
         which adopts the Plan."

5.       Section 1.48 (as renumbered) is amended to read as follows:

                  "1.48    PLAN SPONSOR. Plan Sponsor means Great Northern
         Paper, Inc., a Delaware corporation, and any successor corporation."

6.       Section 1.54 (as renumbered) is amended to read as follows:

                  "1.54    TRUST AGREEMENT. Trust Agreement means the Master
         Trust Agreement between Bowater Incorporated and Fidelity Management
         Trust Company dated as of July 1, 1994, and any successor thereto."

7.       Section 1.56 is amended to read as follows:

                  "1.56    TRUSTEE. Trustee means Fidelity Management Trust
         Company, as Trustee under the Master Trust Agreement between Bowater
         Incorporated and Fidelity Management Trust Company dated as of July 1,
         1994, and any successor thereto."

8.       Section 3.6(b)(i) is amended to read as follows:

                  "(1)     For Plan Years before January 1, 2000, the term
         'annual additions' shall mean the sum of:

                                       2
<PAGE>   72

                           (A)      Employer Contributions, Employer
                                    Contributions to permit investments in
                                    Bowater Incorporated common stock under
                                    Section 4.1(a) and forfeitures allocated to
                                    the Participant's Accounts under Section
                                    3.1, 3.3 and 5.1; plus

                           (B)      Before-Tax Contributions and After-Tax
                                    Contributions allocated to the Participant's
                                    Accounts under Sections 3.2 and 3.4.

                           For Plan Years beginning on or after January 1, 2000,
                           the term 'annual additions' shall mean the sum of:

                           (A)      Employer contributions and forfeitures
                                    allocated to the Participant's Accounts
                                    under Section 3.1; 3.3 and 5.1; plus

                           (B)      Before-Tax Contributions and After-Tax
                                    Contributions allocated to the Participant's
                                    Accounts under Sections 3.2 and 3.4."

9.       Section 4.1(a) is amended to read as follows:

         "(a)     FUND A.  The Bowater Incorporated Stock Fund, which invests
                  primarily in shares of Bowater Incorporated common stock.
                  However, a small percentage of the Fund is invested in money
                  market instruments to facilitate daily cash transactions. Cash
                  dividends received on shares of Bowater Incorporated stock
                  held by this Fund will be automatically reinvested in the Fund
                  and held with the assets described in the preceding sentence.
                  Accounts in this Fund shall segregate, separately account for
                  and respectively consist of shares of Bowater Incorporated
                  stock attributable to Employer Contributions and Participant
                  Contributions. All Participant Contributions initially
                  invested directly in this Fund pursuant to Section 4.2(b)
                  shall be treated as if invested at 95% of market value, with
                  the Employer making the necessary contributions to effect
                  allocations at full fair market value. Notwithstanding the
                  foregoing, from and after the Closing Date, no new Employer
                  Contributions or Participant Contributions shall be permitted
                  to be invested in Bowater Incorporated common stock."

10.      The third and fourth sentences of Section 4.2(b) are amended to read as
         follows:

         "A Participant may, by giving prior Appropriate Notice, elect to
         transfer all, or part (specified as a dollar amount or a percentage of
         the existing balance) of his Account in any Investment Fund to another
         Investment Fund. Such transfer shall be effective as soon thereafter as
         practicable. Notwithstanding any provision of the Plan to the contrary,
         from and after the Closing Date, no transfer may be made into the
         Bowater Incorporated Stock Fund."

                                       3
<PAGE>   73

11.      Section 5.1(b)(2) is amended to read as follows:

         "(2)     Disabled. A Participant shall be treated as 'disabled' under
                  this Plan if his employment as an Employee terminates as a
                  result of an illness, injury or other condition which makes
                  that Participant eligible to receive benefits under the Great
                  Northern Paper, Inc. Long-Term Disability Plan or which would,
                  in the Plan Administrator's judgment, make such Participant
                  eligible for such benefits if he participated in such plan."

12.      Section 5.4(a)(1) is amended to read as follows:

         "(1)     with respect to all Participants: by a lump sum payment in
                  cash or, with respect to the Bowater Incorporated Stock Fund,
                  upon the request of the Participant, in kind, plus the cash
                  equivalent of the fair market value of any fractional share
                  of Bowater Incorporated common stock; or"

13.      Article VI is amended to read as follows:

         "The following parties are Fiduciaries of the Plan:

                  (a)      The Plan Sponsor;

                  (b)      The Trustee; and

                  (bi)     Any committee or individual appointed by the Plan
                           Sponsor as Plan Administrator or to whom
                           discretionary administrative authority or
                           responsibility with respect to the Plan has been
                           delegated by the Plan Sponsor."

14.      Sections 7.1(c) and (d) are amended to read as follows:

         (c)      The responsibilities of each Fiduciary may be specified by the
                  Plan Sponsor in writing. If no such delegation is made by the
                  Plan Sponsor, the Fiduciaries may allocate responsibilities
                  among themselves in writing and notify the Plan Sponsor that
                  they have done so, specifying in such notification the
                  responsibilities of each Fiduciary. If the Fiduciaries provide
                  a copy of such notification to the Trustee, the Trustee shall
                  thereafter (until such time as the Plan Sponsor, or the
                  Fiduciaries deliver to the Trustee a written revocation if
                  such allocation) accept and be justified in relying upon any
                  documents executed by the appropriate Fiduciary pursuant to
                  the allocation of responsibilities disclosed in such
                  notification.

         (d)      Each Fiduciary shall have only those specific powers, duties,
                  responsibilities and obligations as are assigned to such
                  Fiduciary under the

                                       4
<PAGE>   74

                  Plan, delegated to the Fiduciary by action of the Plan
                  Sponsor, or allocated to the Fiduciary by written allocation
                  among the Fiduciaries pursuant to paragraph (c), above."

15.      The first full paragraph of Section 7.7 is amended to read as follows:

         "7.7     INDIVIDUAL INDEMNIFICATION. To the extent permissible under
         ERISA, the Plan Sponsor shall indemnify each member of the Board, each
         member of any committee established by or at the direction of the Plan
         Sponsor or its designee, and the Plan Administrator or any of its
         delegates, against costs, expenses and liabilities, including
         attorney's fees, incurred in connection with any action, suit or
         proceeding instituted against them or any one of them because of any
         act or omission performed by them or any one of them as a director,
         committee member or Plan Administrator, or designee or delegate
         thereof, as the case may be, while acting in good faith and exercising
         his judgment for the best interest of the Plan."

16.      Article XIII is deleted.

                                      *    *    *

         IN WITNESS WHEREOF, the undersigned duly authorized officer of Bowater
Incorporated has executed this First Amendment as of the 9th day of August,
1999.

                                          BOWATER INCORPORATED

                                          By: /s/ Anthony H. Barash
                                             -----------------------------------
                                          Name:  Anthony H. Barash
                                          Title: Sr. Vice President, Corporate
                                                 -------------------------------
                                                 Affairs and General Counsel
                                                 -------------------------------
                                          Date signed:        8/9/99
                                                       -------------------------

                                       5

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