Document:

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                                                                    Exhibit 4(e)

                STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY
                              AMENDED AND RESTATED
                      INCENTIVE DEFERRED COMPENSATION PLAN

                               Initially Effective

                              ______________, 1995,
                           and as amended and restated
                                  March 1, 2001

                                      -8-
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                STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY
                              AMENDED AND RESTATED

                      INCENTIVE DEFERRED COMPENSATION PLAN

                                  (THE "PLAN")

                                        I

                                     PURPOSE
                                     -------

         State Auto Property & Casualty Insurance Company (the "Company") is
willing to provide as an incentive for those individuals to continue their
relationship with the Company, the benefits certain key employees could
otherwise earn under the State Auto Insurance Companies Capital Accumulation
Plan (the "Qualified Plan") if certain federal law restrictions did not apply
and to provide such individuals an opportunity to defer designated amounts of
salary and bonuses. Only a select group of the Company's management or highly
compensated employees will be eligible to participate in this program. The
Company's goal is to retain and reward its key employees by helping them to
accumulate benefits for retirement.

         The Plan is the continuation of the State Auto Insurance Companies
Incentive Deferred Compensation Plan effective ____________, 1995, which is
being amended and restated effective March 1, 2001, to reflect (1) two
additional investment options in which a participant may be permitted to direct
the investment of the portion of the Company's funds allocated to him; and (2)
the assignment to, and assumption by, the Company of all rights, duties and
obligations under the Plan from State Automobile Mutual Insurance Company and
its other affiliates.

                                       II

                                   ELIGIBILITY
                                   -----------

         Selection of the Company's employees eligible to participate in the
Plan is within the sole discretion of the President, Chairman and C.E.O. of
State Auto Property & Casualty Insurance Company (the "Chairman"). Only high
income or key management employees are eligible for selection by the Chairman.
If you fall into one of these groups and are chosen by the Chairman to
participate in the Plan, you will sign an Incentive Deferred Compensation
Agreement which details the requirements you must satisfy to be eligible to
receive this additional retirement benefit from the Company. The Chairman will
review and determine his selections each year. Thus, selection in one year does
not automatically confer a right to participate in succeeding years.

                                       III

                  INCENTIVE DEFERRED COMPENSATION ACCUMULATIONS
                  ---------------------------------------------

         The benefits provided to participants under their Incentive Deferred
Compensation Agreements are paid from the Company's general assets. The program
is, therefore, considered to be an "unfunded" arrangement as amounts are not set
aside or held by the Company in a trust,

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escrow, or similar account or fiduciary relationship on your behalf. Each
participant's rights to benefits under the Plan are equivalent to the rights of
any unsecured general creditor of the Company. However, the Company may (a) open
accounts with one or more investment companies selected by the Chairman, in his
discretion, including from among those used as investment options under the
Qualified Plan, (b) open accounts with one or more firms to hold common shares,
without par value, of State Auto Financial Corporation, purchased in open market
transactions ("SAFC Shares"), or (c) create phantom stock units each of which
shall represent the fair market value one SAFC share, ("Phantom Stock Units"),
and may invest funds subject to this Plan in these mutual funds, SAFC Shares or
Phantom Stock Units (collectively, the "investment options") at their then
current offering price or market value, as the case may be. Each participant may
be permitted to direct how the portion of the Company's funds allocable to him
or her is invested among the investment options, if such accounts are
established and such Phantom Stock Units are created. The Company currently
expects any such investment options (other than the Phantom Stock Units) to be
similar to those available under the Qualified Plan, but is not obligated to
make these or any other particular investment options available or, if made
available at any one time, to continue to make them available. The total number
of SAFC Shares that may be made available as an investment option hereunder is
250,000. All investments shall at all times continue to be a part of the
Company's general assets for all purposes.

         To measure the amount of the Company's obligations to a participant in
this program, the Company will maintain a bookkeeping record or account of each
participant's "Accumulations." There are two basic components of each
participant's Accumulations:

                  First, to encourage each participant to invest in his or her
                  own future, you may also elect (within 30 days of when you
                  first become eligible to participate in the Plan for your
                  initial year of participation or, for subsequent years, not
                  later than the December 31 prior to each such year) to defer
                  payment of a portion of your compensation to be earned during
                  the balance of the current or next calendar year, as
                  applicable, as a credit to your Accumulations. This source of
                  Accumulations, adjusted for earnings or losses as described
                  below, is known as the "DEFERRAL VALUE." The minimum amount
                  you may defer is 1% and the maximum is ___% of your
                  compensation, less the amount deferrable through the Qualified
                  Plan. For this purpose, your compensation includes salary,
                  commission and bonus payments made for the year, but does not
                  include other cash or noncash compensation, expense
                  reimbursements or other benefits provided by the Company,
                  other than your own salary deferrals into this Plan or the
                  Qualified Plan. Also, who is eligible to participate in the
                  deferral portion of the Plan is determined on a year to year
                  basis by the Company. If you were a participant one year but
                  are not eligible in a succeeding year, you will still be a
                  participant, but will be treated as "inactive."

                  Second, the Company will also MATCH your deferral at the same
                  rate it is generally matching 401(k) deferrals under the
                  Qualified Plan for the period in question. Any "caps" on the
                  match under the Qualified Plan will also apply to this Plan,
                  with the match under this Plan being offset by the

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                  match to the Qualified Plan to the extent duplicative. For
                  example, at the present time under the Qualified Plan the
                  Company will match up to 6% of salary at the rate of 75 cents
                  on the dollar on up to the first 2% of salary plus 50 cents on
                  the dollar for three to six percent of salary. Under this
                  Plan, the Company will similarly match up to 6% of all
                  compensation, as defined above, less amounts matched under the
                  Qualified Plan. The amounts credited to your Accumulations on
                  a matching basis, adjusted for earnings or losses as described
                  below, are referred to as your "MATCHING VALUE."

         EARNINGS (OR LOSSES): At least once each calendar year while you have a
credit balance in your Accumulations, the Company will credit your Accumulations
with earnings (or losses), if any, for the period since the last such crediting
and determine the value of your Accumulations at that time. The earnings (or
losses) may either be credited on the basis of the earnings (or losses)
allocable to your directed portion of the Company investment options, if any, or
on the basis of a hypothetical earnings rate, as determined by the Company in
its sole discretion from time to time. The Company also reserves the right to
adjust the earnings (or losses) credited to your Accumulations and to determine
the value of your Accumulations as of any date by adjusting such earnings (or
losses) or such fair market value for the Company's tax and other costs of
providing this Plan.

         TAX CONSEQUENCES: These earnings may compensate for the postponement of
the receipt of the Accumulations and give you the benefit of tax-deferred growth
of the accumulating amounts, if any. Under current federal income tax rules, the
amounts credited to your Accumulations, including earnings, will not be taxable
income to you in the year they are credited to your account. You, or your
beneficiaries in the event of your death, will generally be taxed on these
amounts and the credited earnings, if any, only if and when benefits are
actually paid to you. And any such amounts, when paid, will be taxable as
ordinary income. Thus, this program provides the opportunity to defer income and
the payment of income taxes.

         SELECTION OF INVESTMENT OPTIONS: In the event the Company makes some or
all of the investment options available to participants, at such time each year
as you elect to defer a portion of your compensation (the "Deferred Amount"),
you will be given a form pursuant to which you may direct how such Deferred
Amount is to be invested among the available investment options. The Company may
also provide information to participants how they may change their directions
with respect to the allocation of their Deferred Amount among the investment
options or reallocate their Accumulations among the investment options, from
time to time.

         The Company will invest a participant's Deferred Amount in accordance
with the participant's directions [promptly] upon such amount being deemed by
the Company to have been earned. All purchases by the Company of shares of
investment companies will be at such shares' current offering price, and
purchases by the Company of SAFC Shares will be made in the open market at their
then current market value. The Company, however, reserves the right to delay or
suspend its purchase of SAFC Shares as it may deem necessary or appropriate to
comply with all applicable securities laws, including the Securities Exchange
Act of 1934, as amended.

                                      -11-
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                  The Company may also periodically advise participants
generally as to reporting requirements and other possible limitations associated
with directing a portion of their Deferral Amount or Accumulations be invested
in SAFC Shares.

                                       IV

                                    BENEFITS
                                    --------

A.       Vesting
         -------

                  If you participate in the deferral portion of the Plan, your
         Deferral Value will always be 100% "vested." This means you will always
         be entitled to receive benefits from this portion of your
         Accumulations.

                  The portion of your Accumulations derived from the Matching
         Value will not be vested until you complete 5 years of service for the
         Company. A "year of service" for this purpose means a period of 12
         consecutive calendar months during which you were employed by the
         Company. Years of service are calculated from the date you were first
         hired as an employee by the Company, and anniversaries of that date.

                  In addition, you also become 100% vested in your Matching
         Value Accumulations upon retirement, upon your death, or if you become
         permanently disabled prior to retirement or other termination of
         service with the Company.

B.       Forfeiture of Benefits
         ----------------------

                  If your employment with the Company terminates for any reason
         other than retirement, death, or disability prior to the time you have
         completed 5 years of service, you will forfeit your rights to receive
         benefits under the Plan, except that you will still be entitled to
         receive benefits based on your Deferral Value.

C.       Payment of Benefits.
         -------------------

                  1. CASH PAYMENT ONLY. Any benefits payable to you under the
                  Plan will be made solely in cash and not in the form of any
                  other property or securities, including any shares of an
                  investment company or SAFC Shares that may be an investment
                  option hereunder. Any investment options representing a
                  participant's Accumulations under the Plan are the sole and
                  exclusive property of the Company. As a result, you will have
                  no rights as a shareholder, including voting rights, with
                  respect to these investment options representing your
                  Accumulations.

                  2. RETIREMENT BENEFITS. You will be eligible to receive
                  retirement benefits under the Plan upon your retirement.
                  Retirement benefits will generally be paid as a monthly
                  benefit payable for 60 months. The amount of your benefit will
                  equal the amount necessary to amortize your total
                  Accumulations over the 60 month period. The amount payable
                  each month will either be based on an approximately equal
                  amortization of principal plus actual earnings (or less actual
                  losses) or an amortization based on an assumed interest rate
                  declared by the

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                  Company from time to time during the period of distribution.
                  You must give the Company at least 30 days advance written
                  notice of your intention to retire and receive retirement
                  benefits. Actual benefit payments will begin on the first day
                  of the second month following your satisfaction of all
                  requirements for payment.

                  3. DISABILITY BENEFITS. If you become totally disabled before
                  satisfying the requirements for retirement benefits, you will
                  be eligible to receive payment of the amounts credited to your
                  Accumulations as a monthly benefit commencing after six months
                  of total disability and payable for 60 months. The amount of
                  the benefit will be determined in the same manner as
                  retirement benefits. For this purpose, "total disability"
                  means a physical or mental condition which totally and
                  presumably permanently prevents you from engaging in your
                  usual occupation or any occupation for which you are qualified
                  by reason of training, education, or experience. It is up to
                  the Company to determine whether you qualify as being totally
                  disabled and the Company may require you to submit to periodic
                  medical examinations to confirm that you are, and continue to
                  be, totally disabled. If your disability ends, your disability
                  benefit payments will stop. However, you could continue to
                  qualify for benefits under another provision of the Plan.

                  4. DEATH BENEFITS. In the event of your death while receiving
                  benefit payments under the Plan, the Company will pay the
                  beneficiary or beneficiaries designated by you any remaining
                  payments due under the terms of your Incentive Deferred
                  Compensation Agreement, using the same method of distribution
                  in effect to you at the date of your death. In the event of
                  death prior to beginning to receive benefits under the
                  Incentive Deferred Compensation Agreement, the Company will
                  pay any vested benefits to your beneficiary or beneficiaries,
                  beginning as soon as practicable after your death. In this
                  case, benefits will generally be paid as a monthly benefit
                  payable for 60 months computed in the same manner as
                  retirement benefits. The Company will provide you with the
                  form for designating your beneficiary or beneficiaries. If you
                  fail to make a beneficiary designation, or if your designated
                  beneficiary predeceases you or cannot be located, any death
                  benefits will be paid to your estate.

                  5. OTHER TERMINATION OF SERVICE. If your service with the
                  Company terminates for any reason other than retirement,
                  death, or total disability, then the vested portion of your
                  Accumulations will be paid to you as a monthly benefit payable
                  for 60 months computed in the same manner as retirement
                  benefits, beginning as soon as administratively practicable
                  after your employment terminates.

                  6. PAYMENT ALTERNATIVES. At the Company's election, or upon
                  your request, benefits may be paid in a lump sum or over a
                  shorter or longer period of time than the 60 months generally
                  called for, as described above. However, no request by you or
                  your beneficiaries for a different payment method will be
                  binding on the Company, and any accelerated or deferred
                  payment of benefits shall be made only in the sole discretion
                  of the Company. In addition, the Company may alter the payment
                  method in effect from time to time in its discretion, for
                  example, in order

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                  to avoid the loss of a deduction under Code ss.162(m). If the
                  payment method is altered, the amount you or your
                  beneficiaries will receive will be computed under one of the
                  alternative methods for determining payment amounts provided
                  for under the normal form of distribution for your
                  Accumulations, determined by the Company in its discretion.

                                        V

                            MISCELLANEOUS PROVISIONS
                            ------------------------

A.       No Right to Company Assets.
         --------------------------

                  As explained previously, this Incentive Deferred Compensation
         Plan is an unfunded arrangement and the agreement you will enter into
         with the Company does not create a trust of any kind or a fiduciary
         relationship between the Company and you, your designated beneficiaries
         or any other person. To the extent you, your designated beneficiaries,
         or any other person acquires a right to receive payments from the
         Company under the Incentive Deferred Compensation Agreement, that right
         is no greater than the right of any unsecured general creditor of the
         Company.

B.       Modification or Revocation.
         --------------------------

                  Your Incentive Deferred Compensation Agreement will continue
         in effect until revoked, terminated, or all benefits are paid, even
         during any period of time when you are an "inactive" participant
         because you are not designated by the Company as eligible to accumulate
         additional benefits. However, the Incentive Deferred Compensation
         Agreement and this Plan may be amended, revoked or terminated at any
         time, in whole or in part, by the Company in its sole discretion.
         Unless you agree otherwise, you will still be entitled to the vested
         benefit, if any, that you have earned through the date of any amendment
         or revocation. Such benefits will be payable at the times and in the
         amounts provided for in the Incentive Deferred Compensation Agreement,
         or the Company may elect to accelerate distribution and pay all amounts
         due immediately. The Plan will continue until terminated by the
         Company, which may be at any time, in the Company's discretion.

C.       Rights Preserved.
         ----------------

                  Nothing in the Incentive Deferred Compensation Agreement or
         this Plan gives any employee the right to continued employment by the
         Company. The relationship between you and the Company shall continue to
         be "at will" and may be terminated at any time by the Company or you,
         with or without cause, except as may be specifically set forth in any
         separate written employment agreement between you and the Company.

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D.       Controlling Documents.
         ---------------------

                  This is merely a summary of the key provisions of the
         Incentive Deferred Compensation Agreement currently in use by the
         Company. In the event of any conflict between the provisions of this
         Plan and the Incentive Deferred Compensation Agreement, the Agreement
         shall in all cases control.

                                      -15-<PAGE>   1
                                                                    Exhibit 4(e)

                         STATE AUTO INSURANCE COMPANIES

                            CAPITAL ACCUMULATION PLAN

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989)

                    THIS INSTRUMENT HAS BEEN EXECUTED IN ____
                COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE
                 THE ORIGINAL. THIS IS COUNTERPART NUMBER ____.

<PAGE>   2

                                TABLE OF CONTENTS

                                                                         Page

INTRODUCTION                                                               1

ARTICLE I             DEFINITIONS                                          2

ARTICLE II            ELIGIBILITY AND PARTICIPATION                       10

ARTICLE III           CONTRIBUTIONS                                       12

ARTICLE IV            INVESTMENT OF CONTRIBUTIONS                         18

ARTICLE V             ALLOCATIONS, ACCOUNTING AND ADJUSTMENTS             19

ARTICLE VI            VESTING                                             23

ARTICLE VII           TIME AND METHOD OF PAYMENT                          25

ARTICLE VIII          WITHDRAWALS                                         29

ARTICLE IX            LOANS TO PARTICIPANTS                               31

ARTICLE X             TOP-HEAVY PROVISIONS                                33

ARTICLE XI            MANAGEMENT OF FUNDS                                 38

ARTICLE XII           PLAN ADMINISTRATION                                 39

ARTICLE XIII          CLAIMS PROCEDURE                                    41

ARTICLE XIV           AMENDMENT AND TERMINATION                           42

ARTICLE XV            MISCELLANEOUS                                       44

APPENDIX A            ASSET TRANSFER FROM ROYAL INDEMNITY COMPANY         47

<PAGE>   3

                         STATE AUTO INSURANCE COMPANIES

                            CAPITAL ACCUMULATION PLAN

                                  INTRODUCTION
                                  ------------

          Effective June 1, 1982, the Board of Directors (the "Board") of State
Automobile Mutual Insurance Company, an Ohio corporation with its principal
offices located in Columbus, Ohio (the "Company"), by appropriate Board
Resolution, adopted the State Auto Insurance Companies Thrift Savings Plan (the
"Plan").

          Effective January 1, 1983, the Board by appropriate Board Resolution
amended the Plan to add an Internal Revenue Code Section 401(k) feature to the
Plan and a voluntary nondeductible contribution feature to the Plan for the
benefit of all its regular Employees. The Plan was amended and restated to
incorporate these changes.

          Effective January 1, 1985, the Plan was amended and restated to meet
the requirements of the Deficit Reduction Act of 1984 and the Retirement Equity
Act of 1984.

          The Plan is hereby further amended and restated to meet the
requirements of the Tax Reform Act of 1986 and subsequent legislation,
regulation and rulings. This amendment and restatement is generally effective
January 1, 1989. However, certain provisions of this amendment and restatement
are effective as of other dates. These provisions include, without limitation, a
change in the name of the Plan to the "State Auto Insurance Companies Capital
Accumulation Plan" and certain revisions in connection with the adoption of a
daily valuation system, all as of October 1, 1994. Events occurring before the
applicable effective date of any provision of this amendment and restatement
shall be governed by the applicable provision of the Plan as in effect on the
date of the event.

          It is intended that this Plan, together with the Trust Agreement, meet
all the pertinent requirements of the Internal Revenue Code of 1954, as amended
(the "Code"), and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and shall be interpreted to comply with the terms of the Code
and ERISA and all formal regulations and rulings issued thereunder.

                                      -10-
<PAGE>   4

                         STATE AUTO INSURANCE COMPANIES

                            CAPITAL ACCUMULATION PLAN

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

           Whenever used herein with the initial letter capitalized, words and
           phrases shall have the meanings stated below unless a different
           meaning is plainly required by the context. All masculine terms shall
           include the feminine and all singular terms shall include the plural
           in all cases in which they could thus be applied unless the context
           clearly indicates the gender or the number.

1.01       ACCOUNT(S)

           The separate account or accounts which are maintained for each
           Participant.

1.02       APPROVED LEAVE OF ABSENCE

           An absence from work approved by the Employer or Related Employer
           under uniform rules and conditions for all Employees, including a
           "maternity or paternity leave of absence."

           A "maternity or paternity leave of absence" shall mean, for any Plan
           Year beginning on or after January 1, 1985, an absence from work (for
           such period as may be required under Section 102(e) of the Retirement
           Equity Act of 1984 or regulations thereunder) by reason of the
           Participant's pregnancy, birth of the Participant's child, placement
           of a child with the Participant in connection with the adoption of
           such child, or any absence for the purpose of caring for such child
           for a period immediately following such birth or placement.

1.03       ANNIVERSARY DATE

           The first day of the Plan Year.

1.04       ATTAINED AGE

           The age in years of an Employee as of the last anniversary of the
           Employee's date of birth.

1.05       AVERAGE SALARY REDUCTION PERCENTAGE

           The average of the Salary Reduction Percentage for all eligible
           Employees of the Employer. Salary Reduction Percentage means the
           total Salary Reduction Contributions made by a Participant under the
           Plan for a Participant during a Plan Year under Section 3.01(a),
           expressed as a percentage of the Test Compensation of such
           Participant for such Plan Year.

1.06       AVERAGE SUPPLEMENTAL PERCENTAGE

           The average of the Supplemental Participant Contribution Percentages
           for all eligible Employees of the Employer. Supplemental Participant
           Contribution Percentage means the total Supplemental Participant
           Contributions and Regular Matching Contributions made by or on behalf
           of a Participant under the Plan during a Plan Year under Section
           3.02(a) and Section

<PAGE>   5

           3.03(a), expressed as a percentage of the Test Compensation of such
           Participant for such Plan Year.

<PAGE>   6

1.07       BEGINNING BALANCE

           The fair market value of the Trust Fund, each Investment Fund, each
           Salary Reduction Contribution Account, each Supplemental Contribution
           Account, each Rollover Account, and each Employer Contribution
           Account as of the Valuation Date immediately preceding the event for
           which the Beginning Balance is being determined.

1.08       BENEFICIARY

           Any person or persons (or a trust) designated by a Participant or
           former Participant in such form and manner as the Committee shall
           prescribe to receive any death benefit that may become payable under
           this Plan if such person or persons survives the Participant or
           former Participant. This designation may be revoked by a Participant
           or former Participant as prescribed in Section 7.05.

1.09       BOARD

           The board of directors of State Automobile Mutual Insurance Company.

1.10       CLOSING BALANCE

           The fair market value of the Trust Fund, each Investment Fund, each
           Salary Reduction Contribution Account, each Supplemental Participant
           Contribution Account, each Rollover Account, and each Employer
           Contribution Account as of the Valuation Date coincident with or next
           following the event for which the Closing Balance is being
           determined.

1.11       CODE

           The Internal Revenue Code of 1986, as amended, and each formal
           regulation or ruling issued thereunder as may pertain to the tax
           status of this Plan.

1.12       COMMITTEE

           The Administrative Committee appointed by the Chief Executive Officer
           as empowered by the Board pursuant to Article XII.

1.13       COMPANY

           State Automobile Mutual Insurance Company, an Ohio corporation with
           principal offices located in Columbus, Ohio; its successors and
           assigns and, subject to the provisions of Article XV, any corporation
           into which the Company may be merged or consolidated or to which all
           or substantially all of its assets may be transferred.

1.14       COMPENSATION

           An Employee's basic earnings. Such amount shall exclude all overtime,
           bonuses, and extra direct or indirect remuneration. Such amount shall
           include amounts, if any, deferred under a salary reduction agreement
           in accordance with Section 401(k) of the Code. Effective for each
           Plan Year beginning on or after January 1, 1989, in no event shall
           the amount of Compensation taken into account under the Plan exceed
           the adjusted annual limitation permitted under Code Section
           401(a)(17) for such Plan Year. Such adjusted annual limitation shall
           be, for each Plan Year beginning on and after January 1, 1989 and
           prior to January 1, 1994, $200,000 as adjusted for such year in the
           same manner as under Section 415(d) of the Code and, for each Plan
           Year

<PAGE>   7

           beginning on and after January 1, 1994, $150,000 as adjusted for such
           year as provided under Section 401(a)(17)(B) of the Code.

           Compensation of an Employee for purposes of the foregoing annual
           limitation, the Compensation paid to any Family Member shall be
           aggregated with the Compensation of such Employee; provided, however,
           that for purposes of this Section Family Member shall include only
           the spouse of the Employee and any lineal descendant of the Employee
           who has not attained age nineteen (19) before the end of the calendar
           year. If, as a result of the family aggregation rules, the adjusted
           annual limitation is exceeded, then the limitation shall be prorated
           among such Family Members in proportion to each individual's
           Compensation as determined under this paragraph without regard to the
           adjusted annual limitation.

1.15       CONSOLIDATED NET ACCUMULATED OR CURRENT EARNINGS OF THE COMPANY

           The consolidated net accumulated or current earnings of the Company
           and all affiliated companies as reported in the published financial
           statements of the Company or affiliated companies.

1.16       CONTRIBUTION PERCENTAGE LIMIT

           The maximum percentage for any Plan Year (determined in accordance
           with the provision of Section 3.01 hereof) of Regular Matching
           Contributions and Supplemental Participant Contributions which may be
           contributed to the Plan under Section 401(m) of the Code and
           regulations issued thereunder. The Company shall establish the
           Contribution Percentage Limit from time to time for the Plan Year for
           the purpose of meeting the nondiscrimination tests of Section 401(m)
           of the Code and applicable regulations, and shall apply the limit to
           such Employees as is necessary to assure compliance with such tests.

1.17       EFFECTIVE DATE

           January 1, 1989, the Effective Date of this amended and restated
           Plan.

1.18       EMPLOYEE

           Any person employed as a common law employee by an Employer or a
           Related Employer.

1.19       EMPLOYER

           The Company, State Auto Property and Casualty Insurance Company (a
           South Carolina corporation with its principal offices located in
           Greer, South Carolina), and any other Related Employer which, with
           the approval of the Board, shall adopt this Plan for the benefit of
           its Employees, according to an appropriate written resolution of the
           board of directors of such Related Employer. Such a Related Employer
           shall execute such documents as may be necessary.

1.20       EMPLOYER CONTRIBUTION ACCOUNT

           The separate Account maintained for each Participant to reflect
           Regular Matching Contributions made on behalf of the Participant and
           any earnings thereon.

1.21       EMPLOYMENT COMMENCEMENT DATE

           The date on which an Employee completes his first hour of Service for
           an Employer or a Related Employer.

<PAGE>   8

1.22       ERISA

           The Employee Retirement Income Security Act of 1974, as amended, and
           each formal regulation or ruling thereunder governing the management
           and operation of this Plan as in effect from time to time.

1.23       FAMILY MEMBER

           The spouse, and lineal ascendants and descendants, and the spouses of
           such lineal ascendants and descendants, of a 5% owner or of the 10
           most highly paid Highly-Compensated Employees.

1.24       FORFEITURE

           The portion of a Participant's or former Participant's Employer
           Contribution Account to which he is not entitled at the termination
           of his employment as determined in Section 6.03.

1.25       HIGHLY-COMPENSATED EMPLOYEE

           Any Employee of the Employer or a Related Employer who meets any of
           the following requirements in either the prior Plan Year (the
           "lookback year") or the current Plan Year (the "determination year"):

           (a)    is more than a five percent owner of an Employer;

           (b)    earns $75,000 or more in Test Compensation;

           (c)    earns $50,000 or more in Test Compensation and is among the
                  top 20% of Employees when ranked on the basis of Test
                  Compensation during the given year excluding, however,
                  Employees who

                  (i)     have less than six months of Service,

                  (ii)    ordinarily work less than six months per year,

                  (iii)   are under age 21,

                  (iv)    ordinarily work less than 17-1/2 hours per week, or

                  (v)     are non-resident aliens;

           (d)    is an officer of an Employer (as described in Section 416(i)
                  of the Code) who earns Test Compensation of more than 50% of
                  the amount in effect under Section 415(b)(1)(A) of the Code
                  for such year; or

           (e)    is a former Employee who was a Highly-Compensated Employee
                  upon separation from service prior to the determination year,
                  performs no service for an Employer during the determination
                  year or was a Highly-Compensated Employee at any time after
                  age 55.

           In addition, the Test Compensation paid to any Family Member shall be
           aggregated with the Test Compensation of the Highly-Compensated
           Employee for the purposes of this definition. Notwithstanding the
           foregoing, an Employee will not be a Highly-Compensated Employee for
           the current year merely by compensation or officer status, unless he
           is in the top 100
<PAGE>   9

           Employees ranked by Test Compensation. The amounts indicated in (b)
           and (c) above shall be adjusted for cost of living by the Secretary
           of the Treasury at the same time and in the same manner as under Code
           Section 415(d). To the extent permitted under regulations and other
           guidance promulgated by the Internal Revenue Service, the Company and
           Related Employers may elect to determine the status of
           Highly-Compensated Employees on a basis other than that provided
           above.

1.25       A HOUR OF SERVICE

           Hour of Service shall mean:

           (a)    Each hour for which an Employee is paid, or entitled to
                  payment, for the performance of duties for an Employer or a
                  Related Employer. These hours shall be credited to the
                  Employee for the computation period or periods in which the
                  duties are performed;

           (b)    Each hour for which an Employee is paid, or entitled to
                  payment, by an Employer or a Related Employer 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), layoff, jury duty, military duty, or
                  leave of absence;

           (c)    Each hour for which back pay, irrespective of mitigation of
                  damages, is either awarded or agreed to by an Employer or
                  Affiliate. The same Hours of Service shall not be credited
                  both under subsections (a) or (b) above, as the case may be,
                  and under this subsection (c). These hours 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;

           (d)    Except as provided in subsection (e) below, hours under the
                  foregoing subsections shall be calculated and credited
                  pursuant to the minimum requirements prescribed under Section
                  2530.200b-2 of the Department of Labor Regulations, which are
                  incorporated herein by this reference;

           (e)    Notwithstanding the foregoing, in the case of any Employee for
                  whom an Employer's records do not accurately reflect the
                  actual number of Hours of Service as determined above, such
                  Employee shall be credited with 45 Hours of Service for each
                  week in which he is credited with at least one Hour of
                  Service.

1.26       INVESTMENT FUND

           An investment fund offered by the Committee under the Plan to
           Participants for the purpose of enabling them to direct investment of
           their Accounts under the procedures described in Section 4.01. The
           Committee may, in its discretion, offer additional Investment Funds
           or cease to offer any Investment Fund(s) at such time as it may deem
           appropriate.

1.27       NORMAL RETIREMENT AGE

           Age 65.

1.28       ONE-YEAR BREAK IN SERVICE

           The first day of the month following the period of 12 consecutive
           months during which the Employee does not complete an Hour of
           Service.

<PAGE>   10

1.29       PARTICIPANT

           An Employee who has met the requirements of Article II for
           participation in the Plan.

1.30       PARTICIPATION DATE

           The first day of any pay period on which a Participant commences
           participation in the Plan after meeting the eligibility requirements
           of Article II and submitting the appropriate election forms in a
           manner prescribed by the Committee.

1.31       PENSION PLAN

           The State Auto Insurance Companies Employee Retirement Plan,
           including any Appendix hereto, as the same may be amended from time
           to time.

1.32       PLAN

           The State Auto Insurance Companies Capital Accumulation Plan.

1.33       PLAN YEAR

           A 12-consecutive month period from January 1 to December 31 each
           year.

1.34       REGULAR MATCHING CONTRIBUTIONS

           The contributions made to the Employer Contribution Account of a
           Participant by an Employer as provided in Section 3.02.

1.35       RELATED EMPLOYER

           Related Employer means one of the following:

           (a)    a member of a controlled group of corporations as defined in
                  Section 1563(a) of the Code, determined without regard to
                  Sections 1563(a)(4) and 1563(e)(3)(C), in which the Company is
                  a member;

           (b)    a trade or business which is under common control with the
                  Company, as determined in accordance with Section 414(c) of
                  the Code and regulations which may be issued thereunder;

           (c)    a member of an affiliated service group, as determined in
                  accordance with Section 414(m) of the Code and regulations
                  which may be issued thereunder; or

           (d)    an organization described under Section 414(o) of the Code.

           Provided, however, for purposes of Sections 5.05 and 5.06 of this
           Plan, the phrase "more than 50%" shall be substituted for the phrase
           "at least 80%" in each place it appears in Section 1563(a)(1) of the
           Code.

1.36       ROLLOVER ACCOUNT

           The separate Account maintained for each Participant who elects to
           make a Rollover Contribution as described in Section 3.04 to reflect
           any Rollover Contribution made by the Participant and any earnings
           thereon.

<PAGE>   11

1.37       ROLLOVER CONTRIBUTION

           Any contribution by an eligible Employee of sums distributed to him
           from any other qualified employee benefit plan or from an individual
           retirement account, provided such prior distribution meets all the
           applicable requirements to qualify for rollover treatment and the
           rollover is approved by the Committee. Notwithstanding the foregoing,
           the Committee shall not approve the contribution by an eligible
           Employee of any sums distributed to such eligible Employee from a
           qualified employee benefit plan if the Plan's acceptance of such
           contribution would require that distributions under the Plan be made
           in the form of a qualified joint and survivor annuity or a qualified
           preretirement survivor annuity as prescribed in Sections 401(a)(11)
           and 417 of the Code.

1.38       SALARY REDUCTION CONTRIBUTION ACCOUNT

           The separate Account maintained for each Participant to reflect
           Salary Reduction Contributions and any earnings thereon.

1.39       SALARY REDUCTION CONTRIBUTIONS

           The contributions made by an Employee that are attributable to the
           reduction in Compensation a Participant agrees to accept from an
           Employer each Plan Year as described in Section 3.01.

1.40       SALARY REDUCTION CONTRIBUTION LIMIT

           The maximum percentage for any Plan Year (determined in accordance
           with the provision of Section 3.01 hereof) of an Employee's
           Compensation which may be contributed to the Plan pursuant to a
           Salary Reduction Agreement under Section 401(k) of the Code and
           regulations issued thereunder. The Employer shall establish the
           Salary Reduction Contribution Limit from time to time for the Plan
           Year for the purpose of meeting the nondiscrimination tests of
           Section 401(k) of the Code and applicable Regulations, and shall
           apply the limit to such Employees as is necessary to assure
           compliance with such tests.

1.41       SERVICE

           The years and months of employment (including Approved Leaves of
           Absence, if any) with an Employer or Related Employer, where any
           partial month shall constitute a complete month. Such years and
           months shall be calculated from the Participant's Employment
           Commencement Date to the Participant's final termination date less
           any period or periods of non-employment with the Employer or a
           Related Employer.

           Notwithstanding the foregoing, if a Participant is absent from work
           due to any reason other than quit, discharge, retirement, or death,
           the period up to the first anniversary of the first day of such
           absence (or up to the date of quit, discharge, retirement, or death,
           if earlier) shall be counted as Service for all purposes under the
           Plan.

           Notwithstanding the above, an Employee, whose employer immediately
           prior to employment by the Company was Columbus Life Insurance
           Company (formerly known as Columbus Mutual Life Insurance Company)
           and who was employed by the Company in 1982, shall have all service
           with Columbus Life Insurance Company counted as Service for all
           purposes under the Plan.

1.42       SUPPLEMENTAL PARTICIPANT CONTRIBUTION ACCOUNT

<PAGE>   12

           The separate Account maintained for each Participant to reflect
           Supplemental Participant Contributions and any earnings thereon.

1.43       SUPPLEMENTAL PARTICIPANT CONTRIBUTIONS

           The nondeductible contributions made by the Participant as described
           in Section 3.03.

1.44       TEST COMPENSATION (EFFECTIVE JANUARY 1, 1987)

           An Employee's gross Earnings from the Employer or a Related Employer,
           reported under Sections 6041 and 6051 of the Code on Form W-2, plus
           Salary Reduction Contributions, as defined in Section 125, 402(a)(8),
           402(h) or 403(b) of the Code, used for the purpose of
           anti-discrimination testing and highly compensated and key employee
           determination. In no event shall the amount of Test Compensation
           taken into account under the Plan exceed the adjusted annual
           limitation permitted under Section 1.14.

1.45       TOTAL AND PERMANENT DISABILITY

           A physical or mental condition which totally and permanently prevents
           the Participant from engaging in his regular occupation or employment
           for remuneration or profits, except for purposes of rehabilitation
           not incompatible with a finding of total and permanent disability.
           The determination as to whether a Participant is Totally and
           Permanently Disabled shall be made on the basis of any one or all of
           the following as determined by the Committee in its sole discretion:

           (a)        on medical evidence by a licensed physician designated by
                      the Committee, or

           (b)        on evidence that the Participant is eligible for
                      disability benefits under any long-term disability plan
                      sponsored by his Employer, or

           (c)        on evidence that the Participant is eligible for
                      disability benefits under the Social Security Act in
                      effect at the date of disability.

<PAGE>   13

           Total and Permanent Disability shall exclude disabilities arising
           from:

           (d)        a proven felony or unlawful enterprise on the part of the
                      Participant, or

           (e)        intentionally self-inflicted injury or intentionally
                      self-induced sickness, or

           (f)        military service where the Participant is eligible to
                      receive a government-sponsored disability pension.

1.46       TRUST AGREEMENT AND TRUST

           Trust Agreement and Trust mean, respectively, the agreement between
           the Company and the Trustee governing the administration of the
           Trust, as it may be amended from time to time, and the trust
           established thereunder.

1.47       TRUST FUND

           All money, securities, and other property held under the Trust
           Agreement for the purposes of the Plan, together with the income
           therefrom.

1.48       TRUSTEE

           The person, persons, entity, or entities appointed by the Company as
           Trustee of the Trust.

1.49       VALUATION DATE

           The last day of each quarter of the Plan Year; provided, however,
           that effective October 1, 1994, "Valuation Date" shall mean each day
           the New York Stock Exchange is open for business.

1.50       YEAR OF ELIGIBILITY SERVICE

           An Eligibility Computation Period (as hereinafter defined) in which
           an Employee is credited with at least 1,000 Hours of Service in the
           employ of an Employer or a Related Employer.

           The initial Eligibility Computation Period with respect to an
           Employee shall mean the 12-consecutive month period that begins on
           the day on which the Employee first completes an Hour of Service in
           the employ of an Employer or a Related Employer (his "date of hire")
           and ends on the day preceding the first anniversary of such date.
           Thereafter, all subsequent Eligibility Compensation Periods shall
           coincide with the Plan Year (beginning with the Plan Year that
           commences immediately following the Employee's date of hire). An
           Employee who completes 1,000 Hours of Service in both his initial
           Eligibility Computation Period and in the Plan Year which commences
           immediately after the Employee's date of hire shall be credited with
           two Years of Eligibility Service.

<PAGE>   14

                                   ARTICLE II

                          ELIGIBILITY AND PARTICIPATION
                          -----------------------------

2.01       ELIGIBILITY

           (a)        Each individual who was an Employee of an Employer on
                      January 1, 1989, and who was a Participant in the Plan on
                      that date shall continue to be eligible to participate in
                      the Plan.

           (b)        Each Employee who is not described in Section 2.01(a), who
                      is employed by an Employer, and who is hired in a
                      classification other than that of a temporary Employee or
                      an Employee employed on a retainer or consultant basis
                      shall be eligible to become a Participant as of the
                      January 1 next following the Employee's Employment
                      Commencement Date and attainment of age 20; provided the
                      Employee remains in the employment of an Employer as of
                      such January 1. Effective on and after July 1, 1995, such
                      Employee shall be eligible to become a Participant as of
                      the first day of the month next following the Employee's
                      Employment Commencement Date and attainment of age 20.

           (c)        Notwithstanding subsections (a) and (b) above, an Employee
                      who is employed by an Employer and who is hired as a
                      temporary Employee or as an Employee employed on a
                      retainer or consultant basis shall be eligible to become a
                      Participant as of the January 1 or July 1 coincident with
                      or next following the later of:

                      (i)        such Employee's attainment of the age of 21
                                 years; and

                      (ii)       such Employee's completion of one Year of
                                 Eligibility Service; provided such Employee
                                 remains in the employment of an Employer as of
                                 such January 1 or July 1.

                      For the purpose of this Section 2.01(c), a temporary
                      Employee shall be defined as an individual who is not
                      employed on a regular basis by the Employer and who is
                      compensated for services performed for such Employer on an
                      hourly basis. Each temporary Employee shall be notified
                      upon employment of his status as a temporary Employee. The
                      Employer shall maintain records documenting the Employee's
                      temporary status.

                      For the purpose of this Section 2.01(c), an Employee hired
                      on a retainer or consultant basis shall be defined as an
                      Employee who is employed by an Employer because of his
                      specialized skills to provide strategic guidance to the
                      Employer. Such employment shall be for an indeterminate
                      period of time. Each such Employee shall be notified of
                      his employment status when hired, and the Employer shall
                      maintain records documenting this status.

2.02       PARTICIPATION

           Each Employee who has met the applicable eligibility requirements
           described in Section 2.01 shall become a Participant on the
           Participation Date which is not later than 15 days following the date
           on which he has agreed to make Salary Reduction Contributions to the
           Plan.

2.03       PARTICIPATION FORMS

<PAGE>   15

           Employees who are eligible and desire to become Participants shall be
           required to enter into a salary reduction agreement as prescribed by
           the Company. Each Participant shall designate a Beneficiary on a form
           prescribed by the Company as provided in Section 7.05. In addition,
           an Employee who meets the requirements of Section 3.03 may make
           Supplemental Participant Contributions. Contributions to be made
           pursuant to Section 3.03 must be elected by the Participant as
           prescribed by Company. Such election shall take effect on the first
           day of a pay period following the date on which he has agreed to make
           Contributions.

2.04       TERMINATION AND REEMPLOYMENT

           (a)    If an Employee who has met the eligibility requirements of
                  Section 2.01 terminates employment and is subsequently rehired
                  by an Employer, he shall again be eligible to participate in
                  the Plan on this date of reemployment.

           (b)    If an Employee who has not met the eligibility requirements of
                  Section 2.01 terminates employment and is subsequently rehired
                  by an Employer, he shall be eligible to participate in the
                  Plan when he meets the eligibility requirements of Section
                  2.01(b), based upon his original date of employment.

<PAGE>   16

                                   ARTICLE III

                                  CONTRIBUTIONS
                                  -------------

3.01       SALARY REDUCTION CONTRIBUTIONS

           (a)        Each Employee who has met the eligibility requirements of
                      Section 2.01 shall have the option to enter into a salary
                      reduction agreement with his Employer or a designated
                      agent of his Employer which shall be applicable to all
                      Compensation paid thereafter. Such salary reduction
                      agreement shall be made in writing or, for periods on and
                      after October 1, 1994, in accordance with
                      nondiscriminating and uniform procedures established by
                      the Company and Trustee. The salary reduction agreement
                      will provide that the Participant agrees to accept a
                      reduction in salary from the Employer of between 1% and
                      16% of his Compensation. On an annual basis, such Salary
                      Reduction Contribution amount shall not exceed the annual
                      401(k) deferral limit as outlined in Section 402(g) of the
                      Code. The Employer shall contribute to the Trust Fund, as
                      soon as practicable after the end of each payroll period
                      (but not later than 90 days after the Employee would have
                      received such amounts if he had declined to enter into a
                      salary reduction agreement or, if earlier, 30 days after
                      the end of the Plan Year), such Salary Reduction
                      Contributions.

           (b)        Any provision of this Plan to the contrary
                      notwithstanding, no Participant shall be permitted, during
                      any calendar year beginning on or after January 1, 1987,
                      to make Salary Reduction Contributions under the Plan
                      (when combined with the Participant's elective deferrals
                      under any other plans, contracts, or arrangements
                      maintained by the Employer or Related Employer) that will
                      exceed the adjusted limitation in affect for such year
                      under Section 402(g)(1) of the Code.

           (c)        In the event any amount of a Participant's Salary
                      Reduction Contributions for a calendar year exceeds the
                      limitation applicable under Section 3.01(b) for such
                      calendar year, such excess amount (hereafter described for
                      purposes of this Section 3.01(c), as "Excess Deferrals"),
                      as adjusted for any income or loss allocable thereto in
                      accordance with regulations, shall be distributed to such
                      Participant, as provided in subparagraph (i), (ii) and
                      (iii) below:

                      (i)        At a date not later than the April 1st of the
                                 calendar year immediately following the
                                 calendar year to which such Excess Deferrals
                                 are attributable, any Participant to whom this
                                 Section 3.01 applies may notify, in writing,
                                 the Committee by submitting a form as may be
                                 provided by the Committee which shall specify
                                 the amount of the Participant's Excess
                                 Deferrals for the given calendar year and shall
                                 contain a certified statement by the
                                 Participant indicating that if such amount is
                                 not distributed, such Excess Deferrals will
                                 exceed the limit imposed on the Participant by
                                 Section 402(g) of the Code for the year in
                                 which the Salary Reduction Contribution
                                 occurred. Notwithstanding the foregoing and
                                 solely for the purpose of facilitating a
                                 distribution of Excess Deferrals as required by
                                 regulation, in the event a Participant
                                 hasExcess Deferrals in a given year calculated
                                 by taking into account his Salary Reduction
                                 Contributions hereunder and his elective
                                 deferrals under any other plan, contract, or
                                 arrangement maintained by the Employer or
                                 Related Employer, the Participant will be
                                 deemed to have notified the Committee in the
                                 manner provided in this subparagraph.

                      (ii)       At a date not later than the April 15th of the
                                 calendar year immediately following the
                                 calendar year to which such Excess Deferrals
                                 are attributable, the Plan shall distribute to
                                 the Participant the amount of the Excess
                                 Deferrals allocated to the

<PAGE>   17

                                 Plan as adjusted for any income or any loss
                                 allocable to such excess. Any Excess Deferrals
                                 distributed pursuant to this subparagraph are
                                 to be included in the gross income of the
                                 Participant for the year to which such Excess
                                 Deferrals relate. Any income that is allocable
                                 to such Excess Deferrals (as determined in
                                 accordance with rules promulgated by the
                                 Secretary of the Treasury or his delegate) that
                                 is distributed pursuant to this subparagraph is
                                 to be included in the gross income of the
                                 Participant for the year in which such amount
                                 is distributed. In making a distribution as
                                 permitted under this Section, the Committee
                                 shall specifically designate the distribution
                                 as that consisting of Excess Deferrals within
                                 the meaning of Section 402(g)(1) of the Code.
                                 Any distribution of less than the entire amount
                                 of Excess Deferrals plus income or loss
                                 attributable to such deferral contributions
                                 shall be treated as a prorata distribution of
                                 such excess deferral contributions and
                                 income/loss.

                      (iii)      To the extent provided by the Secretary of the
                                 Treasury or his delegate, such Excess Deferrals
                                 distributed pursuant to this subparagraph are
                                 to be taken into account for purposes of
                                 applying the actual deferral percentage test
                                 specified in 3.01(f) (except if such excess is
                                 both prohibited under Section 401(a)(30) of the
                                 Code and is attributable to an Employee other
                                 than a Highly Compensated Employee), and for
                                 any other purpose of the Code which may be
                                 prescribed by the Secretary of the Treasury or
                                 his delegate. No corrective distribution under
                                 this Section shall be recognized for purposes
                                 of determining whether the minimum distribution
                                 requirements of Section 401(a)(9) of the Code
                                 are satisfied with respect to any Participant.

                      (iv)       Any distribution in accordance with this
                                 Section 3.01(c) shall be made without regard to
                                 any notice or consent otherwise required under
                                 Sections 411(a)(11) or 417 of the Code.

           (d)        Prior to October 1, 1994, each Participant may change the
                      percentage of his Salary Reduction Contributions by
                      entering into a new salary reduction agreement at least 15
                      days prior to the January 1, April 1, July 1, or October 1
                      on which such election is to take effect. In addition,
                      each Participant may suspend his Salary Reduction
                      Contribution at any time by entering into a new salary
                      reduction agreement and electing 0% Salary Reduction
                      Contributions. Such suspension election shall become
                      effective on the first day of a pay period which begins
                      not later than 15 days after the election is made. The
                      resumption of Salary Reduction Contributions cannot occur
                      before the next-following January 1, April 1, July 1 or
                      October 1.

                      Effective on and after October 1, 1994, each Participant
                      may at any time elect to change the percentage of his
                      Salary Reduction Contributions by entering into a new
                      salary reduction agreement which shall become effective on
                      the first day of a pay period which begins not later than
                      15 days after the election is made. Each Participant may
                      also suspend his Salary Reduction Contributions at any
                      time by entering into a new salary reduction agreement
                      (and electing 0% Salary Reduction Contributions) which
                      shall become effective on the first day of a pay period
                      which begins not later than 15 days after the election is
                      made. A Participant who has suspended his Salary Reduction
                      Contributions may at any time elect to resume his Salary
                      Reduction Contributions by entering into a new salary
                      reduction agreement which shall be effective on the first
                      day of a pay period which begins not later than 15 days
                      after the election is made. Notwithstanding the foregoing
                      provisions of this paragraph, the number of changes in
                      percentage which a Participant may make to his Salary
                      Reduction Contributions in any given calendar year shall
                      not exceed four.

<PAGE>   18

           (e)        The Company shall establish and maintain a Salary
                      Reduction Contribution Account in the name of each
                      Participant who elects to enter into a salary reduction
                      agreement.

           (f)        The Company may amend or revoke any salary reduction
                      agreement entered into by a Participant if the Company
                      determines that such a revocation or amendment is
                      necessary to ensure that the additions to a Participant's
                      Account for any Plan Year will not exceed the limitations
                      set forth in Sections 5.05 and 5.06 of the Plan, or to
                      ensure that the following discrimination tests of Sections
                      401(k) and 401(m) of the Code are met for any Plan Year
                      beginning on and after January 1, 1987:

                      (i)        The Average Salary Reduction Percentage of the
                                 group of eligible Highly-Compensated Employees
                                 shall not exceed the Average Salary Reduction
                                 Percentage of all other eligible Employees
                                 multiplied by 1.25.

                      (ii)       The Average Salary Reduction Percentage of the
                                 group of eligible Highly-Compensated Employees
                                 shall not exceed the Average Salary Reduction
                                 Percentage of all other eligible Employees
                                 multiplied by two, provided that the Average
                                 Salary Reduction Percentage of eligible
                                 Highly-Compensated Employees is not more than
                                 two percentage points higher than the Average
                                 Salary Reduction Percentage for all other
                                 eligible Employees.

           (g)        In accordance with the nondiscrimination requirements of
                      Section 401(m) of the Code and applicable regulations, for
                      each Plan Year beginning on and after January 1, 1987, the
                      Committee shall establish a Contribution Percentage Limit
                      with respect to Supplemental Participant Contributions and
                      Regular Matching Contributions credited to a
                      Highly-Compensated Employee's Account during a Plan Year
                      and may adjust such percentage limit from time to time
                      during the year in order to satisfy one of the following
                      tests:

                      (i)        The Average Supplemental Percentage of the
                                 group of eligible Highly-Compensated Employees
                                 shall not exceed the Average Supplemental
                                 Percentage of all other eligible Employees
                                 multiplied by 1.25.

                      (ii)       To the extent allowed, the Average Supplemental
                                 Percentage of the group of eligible
                                 Highly-Compensated Employees shall not exceed
                                 the Average Supplemental Percentage of all
                                 other eligible Employees, multiplied by two,
                                 provided that the Average Supplemental
                                 Percentage for eligible Highly-Compensated
                                 Employees is not more than two percentage
                                 points higher than the Average Supplemental
                                 Percentage for all other eligible Employees.

                      Notwithstanding the foregoing, the provisions of this
                      paragraph (g) shall be deemed to include the provisions of
                      Section 401(k)(3) and 401(m) of the Code as incorporated
                      (by this reference).

           (h)        For purposes of determining the Average Salary Reduction
                      Percentage and Average Supplemental Percentage under
                      paragraphs (f) and (g) above, the Test Compensation,
                      Salary Reduction Contributions, Supplemental Participant
                      Contributions and Regular Matching Contributions of an
                      eligible Employee who is a Highly-Compensated Employee and
                      either a 5% owner or one of the 10 most Highly-Compensated
                      Employees shall include the Test Compensation, Salary
                      Reduction Contribution, Supplemental Participant
                      Contributions, and Regular Matching Contributions, if any,
                      of a Family Member of such eligible Employee.

<PAGE>   19

           (i)        If the average percentages described in Sections 3.01(f)
                      and/or 3.01(g) applicable to the group of eligible
                      Highly-Compensated Employees are expected to exceed the
                      maximum average percentage necessary to comply with the
                      rules described in such Sections, the Committee may direct
                      that the Average Salary Reduction Percentage and/or the
                      Average Supplemental Percentage, as the case may be, for
                      each member of the group of eligible Highly-Compensated
                      Employees be reduced respectively to the extent necessary
                      to comply with the limit described in Sections 3.01(f)
                      and/or 3.01(g).

                      The reduction shall be effected by successive reductions
                      of the highest individual current Salary Reduction
                      Percentage and/or current percentage of Supplemental
                      Participant Contribution and Regular Matching Contribution
                      attributable to one or more members of the group of
                      eligible Highly-Compensated Employees until the applicable
                      average percentage for such group of Highly-Compensated
                      Employees does not exceed the applicable limit described
                      in Sections 3.01(f) and 3.01(g) above.

           (j)        Any provision of Article III to the contrary
                      notwithstanding, if both the Average Salary Reduction
                      Percentage and the Average Supplemental Percentage for
                      Highly-Compensated Employees exceed such percentages for
                      Non-Highly Compensated Employees by more than 25%, the
                      Committee shall apply the aggregate alternative limitation
                      in accordance with Section 1.401(m)-2 of the Income Tax
                      Regulations, the provisions of which are incorporated
                      herein by reference. In the event the combined alternative
                      limitation is not satisfied by any given Plan Year, the
                      Company shall direct the Committee to reduce the Average
                      Salary Reduction Percentage of the Average Supplemental
                      Percentage for Highly-Compensated Employees to the extent
                      necessary to satisfy the combined alternative limitation.

           (k)        For purposes of this Section 3.01, if the
                      nondiscrimination test of Section 401(k) and/or 401(m) of
                      the Code is not satisfied for a Plan Year, amounts in
                      excess of the limits described in Sections 3.01(f) and/or
                      3.01(g) as the case may be, and the earnings thereon,
                      shall be refunded to such Highly-Compensated Employees, or
                      in the case of nonvested Regular Matching Contributions,
                      forfeited, not later than the close of the Plan Year
                      following the Plan Year in which such excess arose.
                      Amounts to be refunded to Highly-Compensated Employees
                      shall be paid in a single payment and shall be deemed to
                      have been made before the close of the Plan Year in which
                      such excess contributions arose.

                      Any Employee who, during the current Plan Year, is not a
                      Highly-Compensated Employee under Section 1.25 but who is
                      either a 5% owner, or who satisfies the requirements in
                      paragraphs (b), (c) or (d) of Section 1.25 above and is
                      among the top 100 Employees ranked by Test Compensation
                      for the current Plan Year shall also be considered a
                      Highly-Compensated Employee.

                      Highly-Compensated Employees shall also include any
                      Employee who has a break in service prior to the
                      applicable Plan Year and was a Highly-Compensated
                      Employee, as defined above, for either (a) the Plan Year
                      during which such Employee has a Separation Date, or (b)
                      any Plan Year ending on or after the Employee's 55th
                      birthday.

                      A Highly-Compensated Employee shall be determined in
                      accordance with the provision of Section 414(q) of the
                      Code and Regulations promulgated thereunder.

           (l)        Except under such conditions described in paragraph (h)
                      above, distribution of a Participant's Salary Reduction
                      Contribution Account shall not commence prior to the
                      earliest of his death, the day he incurs a Total and
                      Permanent Disability, other termination of employment,
                      attainment of age 59-1/2, or his demonstration of
                      hardship.

<PAGE>   20

3.02       EMPLOYER CONTRIBUTIONS

           (a)    For each eligible Employee who authorizes Salary Reduction
                  Contributions during the Plan Year, the Employer will pay to
                  the Trustee a Regular Matching Contribution equal to:

                  (i) 75% of the Participant's Salary Reduction Contributions
                  up to 2% of his Compensation, plus

                  (ii) 50% of the Participant's Salary Reduction Contributions
                  in excess of 2% but not in excess of 6% of his Compensation.

                  Regular Matching Contributions shall be made to the Trustee as
                  soon as practicable after the end of the quarter of the Plan
                  Year to which they relate.

           (b)    The Company shall establish and maintain an Employer
                  Contribution Account in the name of each Participant on whose
                  behalf Regular Matching Contributions, if any, are made.

           (c)    In order to meet the nondiscrimination requirements of Section
                  401(k) of the Code, the Board, in its sole discretion, may
                  authorize the Employer to make additional Employer
                  contributions applicable only to those Participants who earn
                  less than a specified level of Compensation. Contributions
                  made under this paragraph (c) shall be deemed for all Plan
                  purposes to be Salary Reduction Contributions except that no
                  Regular Matching Contribution will be made based upon such
                  contributions.

           (d)    Employer contributions under the Plan (including, for purposes
                  of this paragraph (d), Salary Reduction Contributions) shall
                  be made out of the Consolidated Net Accumulated or Current
                  Earnings of the Company; provided, however, that the total of
                  such contributions for any Plan Year shall not exceed the
                  amount allowable as a deduction under Section 404 of the Code,
                  as amended and in force from time to time.

3.03       SUPPLEMENTAL PARTICIPANT CONTRIBUTIONS

           (a)    A Participant may elect to make Supplemental Participant
                  Contributions to the Trust Fund in each Plan Year of
                  between 1% and 10%, in integral percentages, of an amount
                  equal to his Compensation for the year less his Salary
                  Reduction Contributions, if any, for the year. In no
                  event, however, should a Participant be permitted under
                  this Article III to make on a combined basis an amount in
                  excess of 17% of his Compensation. A Participant who
                  elects to make Supplemental Participant Contributions
                  prior to October 1, 1994, shall complete an authorization
                  form as prescribed by the Company. For periods on and
                  after October 1, 1994, a participant shall make his
                  Supplemental Participant Contribution election in
                  accordance with nondiscriminatory and uniform procedures
                  established by the Company and Trustee. The Employer shall
                  deduct each Participant's Supplemental Participant
                  Contributions from his Compensation for each payroll
                  period. The Employer shall transfer these Supplemental
                  Participant Contributions to the Trust Fund as soon as
                  practicable after they are deducted (but not later than 90
                  days after the Employee would have received such amounts
                  if he had declined to enter into an election hereunder or,
                  if earlier, 30 days after the end of the Plan Year).

           (b)    The Company shall establish and maintain a Supplemental
                  Participant Contribution Account in the name of each
                  Participant who elects to make such contributions.

<PAGE>   21

           (c)        Prior to October 1, 1994, a Participant may change the
                      percentage of his Supplemental Participant Contributions
                      by filing a new authorization form with the Company, at
                      least 15 days prior to the January 1, April 1, July 1 or
                      October 1 on which such election is to take effect. A
                      Participant may suspend his Supplemental Participant
                      Contributions at any time by filing a new authorization
                      form with the Company. Such suspension shall become
                      effective on the first day of a pay period which begins
                      not later than 15 days after the authorization form is
                      filed with the Company. The resumption of Supplemental
                      Participant Contributions cannot occur before the next
                      following January 1, April 1, July 1 or October 1.

                      Effective on and after October 1, 1994, each Participant
                      may at any time elect to change the percentage of his
                      Supplemental Participant Contributions by completing a new
                      authorization which shall become effective on the first
                      day of a pay period which begins not later than 15 days
                      after the authorization is made. Each Participant may also
                      suspend his Supplemental Participant Contributions at any
                      time by completing a new authorization (and electing 0%
                      Supplemental Participant Contributions) which shall become
                      effective on the first day of a pay period which begins
                      not later than 15 days after the authorization is made. A
                      participant who has suspended his Supplemental Participant
                      Contributions may at any time elect to resume his
                      Supplemental Participant Contributions by completing a new
                      authorization which shall be effective on the first day of
                      a pay period which begins not later than 15 days after the
                      authorization is made. Notwithstanding the foregoing
                      provisions of this paragraph, the number of changes in
                      percentage which a Participant may make to his
                      Supplemental Participant Contributions in any given
                      calendar year shall not exceed four.

           (d)        In addition to or in lieu of the foregoing payroll
                      deduction Supplemental Participant Contributions, a
                      Participant may also elect, not more frequently than once
                      a year, to make a Supplemental Participant Contribution by
                      a cash payment to the Trust Fund in an amount which,
                      together with all other Supplemental Participant
                      Contributions made by that Participant in prior years,
                      will not cause his total Supplemental Participant
                      Contributions to exceed 10% of the Compensation (less all
                      Salary Reduction Contributions) received by the
                      Participant for all years that he has been a Participant
                      in the Plan.

           (e)        Before making a Supplemental Participant Contribution in
                      any Plan Year, the maximum benefit provisions of Sections
                      5.05 and 5.06 of the Plan will be considered. All
                      Supplemental Participant Contributions are subject to the
                      approval of the Committee.

           (f)        In the event a Participant's Salary Reduction
                      Contributions are reduced pursuant to Section 3.01(d), his
                      election under Section 3.03(a) shall not be amended or
                      revoked except by the Participant pursuant to Section
                      3.03(c) or the Committee in accordance with Sections
                      3.01(f), (g) or (i).

3.04       ROLLOVER CONTRIBUTIONS

           A Participant may elect to make a Rollover Contribution to the Plan.
           An eligible Employee who elects to make a Rollover Contribution shall
           complete such forms as may be required by the Company. Subject to the
           approval of the Committee (as described in Section 1.37), the Company
           shall establish and maintain a Rollover Account in the name of each
           eligible Employee who elects to make a Rollover Contribution to the
           Plan.

3.05       FORFEITURES

<PAGE>   22

           Any Forfeiture under the Plan shall be used to reduce Regular
           Matching Contributions and shall not be applied to increase the
           Accounts of Plan Participants.

3.06       REVERSION OF EMPLOYER CONTRIBUTIONS

           At no time shall any part of the corpus or income of the Trust Fund
           be used for or diverted to purposes other than for the exclusive
           benefit of Participants and their Beneficiaries and to pay the
           reasonable expenses of administration of the Plan and Trust, to the
           extent that such expenses are not paid by the Employers.
           Notwithstanding the above, a contribution which is made by an
           Employer by a mistake of fact may be returned to the Employer within
           one year after the payment of the contribution to the Trust Fund.
           Contributions, other than Supplemental Participant Contributions, are
           conditioned upon the deductibility of the contribution under Section
           404 of the Internal Revenue Code of 1986 to the extent the deduction
           is disallowed, such a contribution shall be returned to the Employer
           within one year after the disallowance of the deduction.

3.07       INTER-COMPANY TRANSFERS

           If a Participant is transferred from one Employer to another Employer
           hereunder, he shall remain a Participant under the Plan and shall
           share in the allocation of Employer contributions to the extent the
           Employee both continues to be eligible for participation under
           Section 2.01 and continues to make Salary Reduction Contributions
           with the respective Employer. If a Participant is transferred to a
           Related Employer which has not adopted this Plan, he shall continue
           to share in the investment experience of the Trust Fund but shall
           cease to participate in Employer contributions until such time as he
           is again employed by an Employer in a position covered under the Plan
           and he begins Salary Reduction Contributions hereunder. If such an
           Employee terminates employment without ever again becoming a
           Participant, the terms of Section 6.03 shall apply. If an Employee
           transfers employment from a Related Employer which is not an Employer
           hereunder to an Employer, he shall become a Participant in accordance
           with Section 2.01 taking into account his prior employment with the
           Related Employer.

3.08       CHANGE IN EMPLOYMENT STATUS

           If a Participant becomes ineligible to participate in accordance with
           the provisions of Section 2.01(c), he shall continue to share in the
           investment experience of the Trust Fund but shall cease to
           participate in Employer contributions until such time as he again
           becomes a Participant and begins Salary Reduction Contributions
           hereunder.

<PAGE>   23

                                   ARTICLE IV

                           INVESTMENT OF CONTRIBUTIONS
                           ---------------------------

4.01       INVESTMENT OF ACCOUNTS

           Each Participant shall elect upon his Participation Date the manner
           in which all contributions made to his Accounts are to be invested in
           each Investment Fund. A Participant may direct that contributions to
           his Accounts shall be allocated to such Investment Fund(s) as the
           Participant selects in 10% increments (1% increments, effective
           October 1, 1994).

           Such investment election shall remain in force until a Participant or
           former Participant changes such election in accordance with Section
           4.02. If a Participant fails to elect the manner in which the
           contributions to his Accounts are to be invested, then the
           contributions to his Accounts shall be invested in the fixed income
           Investment Fund (or such other Investment Fund as the Company shall
           deem appropriate, upon such notice to the Participant as the Company
           shall deem appropriate).

4.02       CHANGE IN INVESTMENT ELECTION

           (a)        Prior to October 1, 1994, a Participant may change the
                      manner in which future contributions to his Accounts are
                      to be allocated by filing a new authorization form as
                      prescribed by the Company at least 15 days prior to the
                      January 1, April 1, July 1 or October 1 on which the
                      election is to take effect. In addition, a Participant may
                      elect to have the investment of his Account or Accounts
                      reallocated among the Investment Funds in 10% increments
                      no more than four times in each Plan Year by filing a new
                      authorization form as prescribed by the Company at least
                      15 days prior to the January 1, April 1, July 1 or October
                      1 on which the election is to take effect. Upon
                      termination of a Participant's or former Participant's
                      employment (whether by reason of retirement, Total and
                      Permanent Disability or for other reasons), as of any
                      January 1, April 1, July 1 or October 1 thereafter, the
                      Company will transfer the Participant's or former
                      Participant's Account or Accounts into the fixed income
                      Investment Fund. Said Account or Accounts will remain
                      invested in this Investment Fund until withdrawn.

           (b)        Effective October 1, 1994, a Participant may at any time
                      elect to (i) change the manner in which future
                      contributions to his Accounts are to be allocated, and/or
                      (ii) reallocate the investment of his Account or Accounts
                      among the Investment Funds. Such elections shall be made
                      in 1% increments in accordance with nondiscriminatory and
                      uniform procedures established by the Company and Trustee.
                      Any election under this Section 4.02(b) shall be effective
                      as of the Valuation Date on which the completed election
                      is made or as of the next subsequent Valuation Date in
                      accordance with nondiscriminatory and uniform procedures
                      established by the Company and Trustee. Such elections
                      shall remain in effect until changed by another election
                      under this Section.

<PAGE>   24

                                    ARTICLE V

                     ALLOCATIONS, ACCOUNTING AND ADJUSTMENTS
                     ---------------------------------------

5.01       VALUATION

           As of each Valuation Date, the Trustee shall determine the Closing
           Balance of each Investment Fund, and the Committee shall determine
           the Closing Balance of the Salary Reduction Contribution Account,
           Supplemental Participant Contribution Account, Employer Contribution
           Account, and Rollover Account of each Participant and former
           Participant. The Closing Balance of these Accounts of each active
           Participant and former Participant shall be equal to the Beginning
           Balance of such Accounts plus or minus the applicable adjustments
           contained in Section 5.03, 5.04, 5.05, or 5.06.

5.02       COMPOSITION OF TRUST FUND

           All amounts contributed to the Plan, as increased or decreased by
           income, expenditure, appreciation, and depreciation shall constitute
           a single fund known as the Trust Fund. A separate Salary Reduction
           Contribution Account shall be maintained for each Participant. A
           second separate Account, called an Employer Contribution Account,
           shall be maintained for each Participant. Additional accounts, if
           any, shall be maintained for each Participant who elects to make
           Supplemental Participant Contributions pursuant to Section 3.03 and
           Rollover Contributions pursuant to Section 3.04. Each Participant's
           Accounts shall be further subdivided into one, two or more
           sub-accounts to reflect contributions invested in the various
           investment funds described in Section 4.01 as appropriate.

5.03       ALLOCATION OF EARNINGS AND LOSSES

           (a)        As of each Valuation Date, the Accounts of each
                      Participant or former Participant shall be adjusted to
                      account for investment earnings or losses. The investment
                      earnings (or losses) of each Investment Fund shall equal
                      the sum of all income received and realized and unrealized
                      appreciation since the last Valuation Date, less all
                      charges, expenses and realized and unrealized depreciation
                      since the last Valuation Date.

           (b)        Prior to October 1, 1994, investment earnings (or losses)
                      of a given Investment Fund shall be allocated to the
                      Salary Reduction Contribution Account, Employer
                      Contribution Account, Supplemental Participant
                      Contribution Account, and Rollover Account of each active
                      Participant and former Participant still invested in that
                      Investment Fund on the Valuation Date in the ratio that
                      the Beginning Balance of each such account, reduced by any
                      withdrawals and distributions and increased by one-half of
                      all contributions made during the quarter and one-half of
                      all principal and interest repaid during the quarter,
                      bears to the Beginning Balance of the Salary Reduction
                      Contribution Account, Employer Contribution Account,
                      Supplemental Participant Contribution Account, and
                      Rollover Account of all Participants and former
                      Participants invested in such Investment Fund as of the
                      last Valuation Date, reduced by any withdrawals and
                      increased by one-half of all contributions made during
                      that quarter and one-half of all principal and interest
                      repaid during the quarter. For the purposes of allocating
                      investment earnings (or losses), any withdrawals or other
                      distributions made during a quarter shall first be
                      subtracted from the Beginning Balance of the applicable
                      Account and then to the extent the Beginning Balance is
                      insufficient to pay the withdrawal or distribution in
                      full, the excess amount shall be subtracted from
                      contributions made during the current quarter. Earnings
                      (or losses) shall then be allocated based upon the reduced
                      Beginning Balance and one-half of the contributions
                      remaining that were made since the last Valuation Date.

<PAGE>   25

           (c)        Effective October 1, 1994, investment earnings (or losses)
                      of a given Investment Fund shall be allocated to the
                      Salary Reduction Account, Employer Contribution Account,
                      Supplemental Participant Contribution Account and Rollover
                      Account of each active Participant and former Participant
                      still invested in that Investment Fund on the Valuation
                      Date to reflect his share (if any) of contributions, loan
                      repayments, withdrawals and distributions since the
                      preceding Valuation Date. Such allocation of investment
                      earnings (or losses) shall be made in accordance with
                      nondiscriminatory and uniform procedures established by
                      the Company and Trustee and shall be based on the fair
                      market value of the given Investment Fund.

           (d)        If a Participant or former Participant has received a loan
                      from the Plan pursuant to Article IX, then such loan
                      amount shall be deemed to be a self-directed investment by
                      the Participant or former Participant, and the interest
                      charged on the loan amount as determined by the Committee
                      shall be deemed to be earnings which shall be allocated
                      directly to the Participant's or former Participant's
                      appropriate Accounts on each Valuation Date. Loan amounts
                      outstanding shall not share in the earnings of the Funds.

5.04       CONTRIBUTIONS AND FORFEITURES

           (a)        As of each pay period, the Salary Reduction Contribution
                      Account of each Participant shall be increased by any
                      Salary Reduction Contribution made on behalf of the
                      Participant for that pay period pursuant to Section 3.01.
                      The Employer Contribution Account of each such Participant
                      shall be increased as of that pay period, or not later
                      than 60 days after the Valuation Date coincident with or
                      following a pay period, by any allocation of Regular
                      Matching Contributions made pursuant to Section 3.02. The
                      aggregate value of Employer Contribution Accounts or
                      portions thereof forfeited under Section 6.03, if any,
                      shall be used to reduce Employer contributions for the
                      next quarter, or a subsequent quarter.

           (b)        As of each pay period, but not later than 90 days after
                      the Participant would have received such amounts if he had
                      declined to make an election to make Supplemental
                      Participant Contributions, the Participant's Supplemental
                      Participant Contribution Account of a Participant shall be
                      increased by any Supplemental Participant Contributions
                      the Participant made for that pay period pursuant to
                      Section 3.03.

5.05       MAXIMUM ANNUAL ADDITIONS (EFFECTIVE JANUARY 1, 1987)

           (a)        The sum of the following additions to a Participant's
                      Accounts in any Plan Year shall not exceed the lesser of
                      $30,000 (or, if greater, 25% of the dollar limitation in
                      effect under Section 415(b)(1)(A) of the Code) or 25% of
                      the Participant's compensation as defined in Treasury
                      Regulations Section 1.415-2(d):

                      (i)        The Regular Matching Contributions (Employer
                                 contributions) allocated to such Participant's
                                 Employer Contribution Account.

                      (ii)       The Salary Reduction Contributions allocated to
                                 such Participant's Salary Reduction
                                 Contribution Account.

                      (iii)      The Supplemental Participant Contributions
                                 allocated to such Participant's Supplemental
                                 Participant Contribution Account.

                                 An excess amount resulting from the application
                                 of subsection (b)(ii) or (iii) of this Section
                                 5.05 which reduces Employer contributions in a
                                 succeeding Plan Year

<PAGE>   26

                                 shall be considered annual additions for such
                                 Plan Year. Annual additions shall also include
                                 (1) amounts allocated during a Plan Year to an
                                 individual medical account, as defined in
                                 Section 415(1)(2) of the Code, which is part of
                                 a pension or annuity plan maintained by the
                                 Employer, and (2) amounts derived from
                                 contributions paid or accrued after December
                                 31, 1985, in Plan Years ending after such date,
                                 which are attributable to post-retirement
                                 medical benefits allocated to the separate
                                 account of a key employee, as defined in
                                 Section 419A(d)(3) of the Code, under a welfare
                                 benefit fund, as defined in Section 419(e) of
                                 the Code, maintained by the Employer.

           (b)        In the event that such additions to a Participant's
                      Accounts in any Plan Year are in excess of the maximum
                      limits described in Section 5.05(a), because of a
                      reasonable error in estimating the Participant's
                      Compensation, a reasonable error in determining the amount
                      of Salary Reduction Contributions that a Participant made
                      within the limitations of this Section 5.05, or for such
                      other reasons as may be found justifiable, the following
                      adjustments shall be made in the order listed, to the
                      extent necessary to bring the addition within the required
                      limits. Any such adjustments made pursuant to this
                      subsection (b) shall be made no later than the end of such
                      Plan year.

                      (i)        Any Supplemental Participant Contributions, if
                                 any, otherwise allocable to the Participant's
                                 Supplemental Participant Contribution Account
                                 shall be returned to him.

                      (ii)       The Salary Reduction Contributions, if any,
                                 otherwise allocable to the Participant's Salary
                                 Reduction Contribution Account, shall be
                                 distributed to the Participant.

                      (iii)      The Regular Matching Contributions, if any,
                                 otherwise allocable to the Participant's
                                 Employer Contribution Account shall be reduced,
                                 and the amount of such reduction shall be
                                 allocated to a suspense account (which shall
                                 not share in the allocation of earnings under
                                 Section 5.03 and shall be applied to reduce
                                 Employer contributions in the succeeding Plan
                                 Year).

           (c)        For purposes of this Section 5.05, this Plan and any other
                      qualified defined contribution plan maintained by an
                      Employer shall be considered as one defined contribution
                      plan if a Participant is a participant in both plans. If a
                      reduction is necessary under paragraph (b), then the
                      reduction shall be made to the annual addition under one
                      of such plans as determined by the Committee.

5.06       COMBINED MAXIMUM LIMITATIONS

           In the event that any Participant in this Plan is also participating
           in any defined benefit plan which is a qualified plan (within the
           meaning of Section 401 of the Code) maintained by an Employer, then
           for any Plan Year, the sum of the "Defined Benefit Plan Fraction" and
           the "Defined Contribution Plan Fraction" for such Plan Year shall not
           exceed 1.0. For purposes of this Section 5.06, such sum shall be
           determined in accordance with the following:

           (a)        The "Defined Benefit Plan Fraction" for any year is a
                      fraction:

                      (i)        The numerator of which is a projected annual
                                 benefit of the Participant under each defined
                                 benefit plan (as determined as of the close of
                                 the year), and

                      (ii)       the denominator of which is the lesser of the
                                 maximum dollar limit allowable for such year
                                 times 1.25, or the percentage of compensation
                                 limit (100% of the

<PAGE>   27

                                 average compensation paid during the Employee's
                                 highest three consecutive years of
                                 participation) times 1.4.

           (b)        The "Defined Contribution Plan Fraction" for any year is a
                      fraction:

                      (i)        The numerator of which is the sum of the annual
                                 additions to the Participant's accounts under
                                 each defined contribution plan as of the close
                                 of the year, and

                      (ii)       the denominator of which is the sum, for all
                                 years of Service with the Employer(s), of the
                                 lesser of the maximum dollar amount of annual
                                 additions to such accounts which could have
                                 been made under Section 415(c) of the Code for
                                 such year times 1.25, or the percentage of
                                 compensation limit for such year times 1.4.

           For purposes of this Section 5.06, all defined benefit plans or
           defined contribution plans shall be treated as one plan by class. In
           the event the above limitations would otherwise be exceeded in any
           Plan Year, the Participant's annual additions under this Plan are to
           be limited, and the Committee shall advise any affected Participant
           of any additional limitation on his annual benefits required by this
           Section 5.06.

5.07       RELATED COMPANIES

           In the event that Related Employers become signatory to this Plan,
           completely independent records, allocations and contributions may by
           maintained for each Employer. The Trustee may invest all Funds
           without segregating assets between or among Employers.

<PAGE>   28

                                   ARTICLE VI

                                     VESTING
                                     -------

6.01       PARTICIPANT CONTRIBUTION ACCOUNTS

           A Participant or former Participant shall at all times be 100% vested
           in his Salary Reduction Contribution Account, his Supplemental
           Participant Contribution Account, and his Rollover Account.

6.02       EMPLOYER CONTRIBUTION ACCOUNT

           An Employee shall be 100% vested in his Employer Contribution Account
           on the first to occur of the following:

           (a)        his Normal Retirement Age,

           (b)        the date on which he shall be determined to have a Total
                      and Permanent Disability,

           (c)        the date of his death, or

           (d)        completion of five years of Service.

6.03       TERMINATION OF EMPLOYMENT

           (a)        If an Employee terminates employment prior to the
                      completion of five years of Service for any reason other
                      than retirement, Total and Permanent Disability, or death,
                      he shall be vested in a portion of the Closing Balance of
                      his Employer Contribution Account in accordance with the
                      following:

                      (i)        he shall be entitled to 33-1/3% of the
                                 contributions and earnings (or losses)
                                 attributable to these contributions, if any,
                                 allocated to his Employer Contribution Account
                                 for the Plan Year preceding the Plan Year in
                                 which his termination of employment occurs,
                                 plus

                      (ii)       66-2/3% of the contributions and earnings (or
                                 losses) attributable to these contributions, if
                                 any, allocated to his Employer Contribution
                                 Account for the second Plan Year preceding the
                                 Plan Year in which his termination of
                                 employment occurs, plus

                      (iii)      100% of the contributions and earnings (or
                                 losses) attributable to these contributions, if
                                 any, allocated to his Employer Contribution
                                 Account for the third Plan Year preceding the
                                 Plan Year in which his termination of
                                 employment occurs, and for all Plan Years prior
                                 to such Plan Year.

           (b)        An Employee who terminates employment prior to the
                      completion of five years of Service for any reason other
                      than retirement, Total and

                      Permanent Disability, or death shall be entitled to
                      receive (in accordance with Article VII) the vested
                      portion of the Closing Balance of his Employer
                      Contribution Account in accordance with paragraph (a),
                      adjusted for any loans outstanding and for any withdrawals
                      made subsequent to the applicable Valuation Date but prior
                      to the payment of benefits.

<PAGE>   29

           (c)        The portion of an Employee's Employer Contribution Account
                      determined to be nonvested under Section 6.03(a) shall be
                      declared a Forfeiture on the Valuation Date next following
                      a One Year Break in Service; provided, however, that in
                      the event the Employee failed to receive a distribution of
                      his Accounts as of such date, the Forfeiture shall be
                      declared as of the Valuation Date next following the
                      earlier of:

                      (i)        the distribution of his Accounts, and

                      (ii)       five consecutive One Year Breaks in Service.

                      Such Forfeitures shall first be applied, as specified in
                      Section 6.04, to restore to an Employee's Employer
                      Contribution Account the amount forfeited pursuant to this
                      Section 6.03(c); remaining Forfeitures, if any, shall be
                      used to reduce future Employer contributions.

           (d)        In addition to the vested interest in his Employer
                      Contribution Account, the Employee, upon termination,
                      shall be entitled to receive the Closing Balance in his
                      Supplemental Contribution Account, Salary Reduction
                      Contribution Account, and Rollover Account.

6.04       EFFECT OF REEMPLOYMENT

           (a)        If a terminated Employee returns to the employ of an
                      Employer or Related Employer prior to incurring a period
                      of severance of more than 60 months, he shall have the
                      amount forfeited from his Employer Contribution Account
                      pursuant to Section 6.03(c) restored to such Account, and
                      he shall continue to vest in such Account. To the extent
                      the Forfeitures available pursuant to Section 6.03(c) are
                      not sufficient to fully restore such forfeited amount, the
                      Employer shall make additional contributions to such
                      Employee's Employer Contribution Account.

           (b)        If a terminated Employee returns to the employ of an
                      Employer or Related Employer after incurring a period of
                      severance of more than 60 months, the amount forfeited
                      from his Employer Contribution Account pursuant to Section
                      6.03(c) shall in no event be restored. However, such
                      Employee's prior Service shall be restored to him.

           (c)        As used in this Section 6.04, the term "period of
                      severance" shall mean the period of time commencing with
                      an Employee's termination of Service and ending on the day
                      he next performs an hour of Service.

<PAGE>   30

                                   ARTICLE VII

                           TIME AND METHOD OF PAYMENT
                           --------------------------

7.01       METHOD OF PAYMENT

           (a)        The Committee shall direct the Trustee to make payment to
                      a Participant or former Participant or his Beneficiary
                      upon termination of the Participant's or former
                      Participant's employment from all Employers or Related
                      Employers (whether by reason of retirement, death, Total
                      and Permanent Disability, or for other reasons) as
                      provided in this Section 7.01.

           (b)        For Participants terminating (whether by reason of
                      retirement, death, Total and Permanent Disability) prior
                      to January 1, 1986, payment shall be made in cash in one
                      of the following methods, subject to the provisions of
                      Section 7.07. A Participant or former Participant who
                      terminates employment for reasons other than retirement,
                      death, or Total and Permanent Disability shall receive
                      payment according to method (i).

                      (i)        In a lump sum equal to the vested value of the
                                 Closing Balance of his Employer Contribution
                                 Account, Salary Reduction Contribution Account,
                                 Supplemental Participant Contribution Account,
                                 and Rollover Account as of the Valuation Date
                                 coincident with or next preceding the date of
                                 payment.

                      (ii)       With the approval of the Committee, in
                                 substantially equal installments payable over a
                                 period not exceeding 10 years from the date of
                                 employment termination (or, in the case of a
                                 retired Participant, over a period not to
                                 exceed his normal life expectancy or the joint
                                 normal life expectancy of the retired
                                 Participant and his designated Beneficiary)
                                 with the amount of each installment calculated
                                 based upon the vested value of the former
                                 Participant's Accounts as of the Valuation Date
                                 coincident with or next preceding the date of
                                 payment. The unpaid balance in that former
                                 Participant's Accounts will share in the
                                 allocation of earnings pursuant to Section
                                 5.03.

           (c)        For Participants terminating on or after January 1, 1986,
                      payment shall be made in cash in accordance with method
                      (i) of Section 7.01(b) to a Participant or former
                      Participant who terminates employment for any reason.

           (d)        Payment of a Participant's or former Participant's
                      Accounts shall be made within 60 days of the Valuation
                      Date coincident with or next following his termination of
                      employment or as soon thereafter as the amount of the
                      payment can be computed. However, the Committee will defer
                      commencement of payments to a later date, unless the
                      Participant consents to an immediate payment, but not
                      later than the applicable date specified in Section 7.02.

7.02       REQUIRED DISTRIBUTION RULES

           (a)        Notwithstanding any provision in this Plan to the
                      contrary, a Participant's Accounts shall be distributed to
                      him not later than April 1 of the calendar year following
                      the calendar year in which he attains age 70-1/2.
                      Alternatively, distributions to a Participant must begin
                      no later than the April 1 following such calendar year and
                      must be made over a period not in excess of the life
                      expectancy of the Participant (or the lives of the
                      Participant and his Beneficiary) or the life expectancy of
                      the Participant (or the life expectancies of the
                      Participant and his Beneficiary).

<PAGE>   31

           (b)        If the distribution of a Participant's interest has begun
                      in accordance with method (ii) under Section 7.01(b) and
                      the Participant dies before his entire interest has been
                      distributed to him, the remaining portion of such interest
                      shall be distributed at least as rapidly as under method
                      (ii).

           (c)        If a Participant dies before he has begun to receive any
                      distributions of his interest under the Plan, his entire
                      interest shall be distributed within five years after his
                      death.

           (d)        For the purposes of this Section 7.02, the life expectancy
                      of a Participant and a Participant's spouse (other than in
                      the case of a life annuity) may be redetermined, but not
                      more frequently than annually and in accordance with such
                      rules as may be prescribed by Treasury regulations.

           (e)        The restrictions imposed by this Section 7.02 shall not
                      apply if a Participant has, prior to January 1, 1984, made
                      a written designation to have his death benefits paid in
                      an alternative method acceptable under Section 401(a) of
                      the Code as in effect prior to the enactment of the Tax
                      Equity and Fiscal Responsibility Act of 1982. Any such
                      written designation made by a Participant shall be binding
                      upon the plan administrator notwithstanding the provisions
                      of this Section 7.02.

           (f)        Notwithstanding the foregoing, all distributions under the
                      Plan shall be made in accordance with regulations under
                      Section 401(a)(9) of the Code (including Section
                      1.401(a)(9)-2 of the Income Tax Regulations). Those
                      provisions reflecting Code Section 401(a)(9) (as included
                      here by reference if not specifically stated) shall
                      override any provision hereof inconsistent with Code
                      Section 401(a)(9).

7.03       DISTRIBUTION OF UNALLOCATED CONTRIBUTIONS

           If, on the date of termination of an Employee's employment, the
           Employer shall be holding Plan contributions made by or on behalf of
           the Employee, but not yet allocated to his specific Accounts, the
           Employer shall pay such amounts either directly to the Employee (or
           his Beneficiary, as the case may be), or to the Trustee, to be
           distributed by the Trustee in accordance with the method of
           distribution determined under Section 7.01.

7.04       CERTAIN DELAYED PAYMENTS

           If the amount of the payment required to commence on the date
           determined under Section 7.01 cannot be ascertained by such date, a
           payment retroactive to such date may be made no later than 60 days
           after the earliest date on which the amount of such payment can be
           ascertained under the Plan.

7.05       BENEFICIARY

           (a)        Subject to subsection (b) of this Section 7.05, each
                      Participant or former Participant shall have the right to
                      designate, by giving a written designation to the
                      Committee, a person or persons, or entity or entities, to
                      receive any benefit which may become payable upon his
                      death or any installments under Section 7.01(b)(ii)
                      remaining unpaid at his death. Successive designations may
                      be made, and the last valid designation received by the
                      Committee prior to his death shall be effective and shall
                      revoke all prior designations. If a designated person
                      shall die before the Participant or former Participant,
                      his interest shall terminate and, unless otherwise
                      provided in the written designation, such interest shall
                      be paid in equal shares to those Beneficiaries, if any,
                      who survive the Participant or former Participant. The
                      Participant or former Participant shall have the right to
                      revoke the

<PAGE>   32

                      designation of any Beneficiary without the consent of the
                      Beneficiary, unless such Beneficiary is the spouse of the
                      Participant.

           (b)        Notwithstanding any provision in the Plan to the contrary,
                      the designated Beneficiary of a married Participant shall
                      be his spouse, unless the spouse consents, in writing, to
                      the designation by the Participant of a different
                      Beneficiary (which designation shall be in accordance with
                      subsection (a) of this Section 7.05). The spouse's consent
                      must acknowledge the effect of such consent and be
                      witnessed by a Plan representative or a notary public.
                      Such consent shall not be required if it is established to
                      the satisfaction of the Committee that the required
                      consent cannot be obtained because there is no spouse, the
                      spouse cannot be located, or other circumstances that may
                      be prescribed by Treasury regulations preclude such
                      consent. The designation made by the Participant and
                      consented to by his spouse may be revoked by the
                      Participant in writing without the consent of the spouse
                      at any time. Any new designation must comply with the
                      requirements of this Section 7.05(b). A former spouse's
                      waiver shall not be binding on a new spouse.

           (c)        If a Participant or former Participant shall fail to
                      designate a Beneficiary, if such designation shall for any
                      reason be illegal or ineffective, or if no Beneficiary
                      shall survive him, his death benefits shall be paid:

                      (i)        to his surviving spouse who was married to the
                                 Participant at the time of the Participant's
                                 death;

                      (ii)       if there is no surviving spouse, to his
                                 descendants (including legally adopted children
                                 and their descendants) per stirpes; or

                      (iii)      if there is neither surviving spouse nor
                                 surviving descendants, to the executor or other
                                 personal representative of the Participant or
                                 former Participant to be distributed in
                                 accordance with his will or applicable law.

           (d)        The Committee may determine the identity of the
                      distributees and in so doing may act and rely upon any
                      information it may deem reliable upon reasonable inquiry,
                      or upon any affidavit, certificate, or other paper
                      believed by it to be genuine, or upon any evidence
                      believed by it sufficient.

7.06       ADMINISTRATIVE POWERS RELATING TO PAYMENTS

           If a Participant, former Participant or Beneficiary is under a legal
           disability or, by reason of illness or mental or physical disability,
           is unable, in the opinion of the Committee, to attend properly to his
           personal financial matters, the Trustee may make such payments in
           such of the following ways as the Committee shall direct:

           (a)        directly to such Participant, former Participant or
                      Beneficiary;

           (b)        to the legal representative of such Participant, former
                      Participant or Beneficiary; or

           (c)        to some relative by blood or marriage, or friend, for the
                      benefit of such Participant, former Participant, or
                      Beneficiary.

           Any payment made pursuant to this Section 7.06 shall be in complete
           discharge of the obligation for such payment under the Plan.

7.07       BEGINNING BALANCE ELECTION

<PAGE>   33

           Notwithstanding the provisions of Section 7.01 and subject to
           approval by the Committee, effective for periods prior to October 1,
           1994, a Participant or former Participant or Beneficiary who
           qualifies for a distribution under this Plan may elect to receive the
           Beginning Balance of his Accounts, subject to the provisions of
           Section 6.03(c), in lieu of the Closing Balance as of his date of
           retirement, determination of Total and Permanent Disability, death,
           or termination, plus any vested Regular Matching Contributions,
           Salary Reduction Contributions, or Supplemental Participant
           Contributions made since the last Valuation Date and less any
           outstanding loans or any withdrawals made since the last Valuation
           Date. The Committee shall inform all Plan Participants or former
           Participants of the beginning balance election, and it shall approve
           or deny requests for such elections in a nondiscriminatory manner in
           compliance with the Code and ERISA.

7.08       INVESTMENT OF DEFERRED AMOUNTS

           Effective for periods prior to October 1, 1994, as soon as practical
           after the amount that is distributable to a former Participant is
           finally determined, if the distribution will either be paid in
           installments or delayed more than six months if payable in a lump
           sum, the former Participant's Accounts shall be transferred to the
           fixed income Investment Fund.

7.09       DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS (EFFECTIVE JANUARY
           1, 1993)

           Notwithstanding any provision of the Plan to the contrary, a
           Distributee may elect, subject to provisions adopted by the Committee
           which shall be consistent with income tax regulations, to have any
           portion of an Eligible Rollover Distribution paid directly to an
           Eligible Retirement Plan specified by the Distributee in a direct
           rollover to such plan. For purposes of this Section:

           (a)    The term "Distributee" shall mean an Employee or former
                  Employee. In addition, such an individual's surviving spouse
                  or such an individual's Eligible Spouse or former spouse who
                  is an alternate payee within the meaning of Section 414(p)(8)
                  of the Code are Distributees with respect to the interest of
                  the Eligible Spouse or former spouse.

           (b)    The term "Eligible Rollover Distribution" shall mean any
                  distribution of all or any portion of the balance to the
                  credit of the Distributee other than: any distribution that is
                  one of a series of substantially equal periodic payments made
                  for the life (or life expectancy) of the Distributee or the
                  joint lives (or joint life expectancies) of the Distributee
                  and his beneficiary, or for a specified period of ten (10)
                  years or more; any distribution to the extent such
                  distribution is required under Section 401(a)(9) of the Code;
                  and the portion of any distribution that is not includable in
                  gross income.

           (c)    The term "Eligible Retirement Plan" shall mean an individual
                  retirement account or annuity, as described in Code Section
                  408(a) and 408(b), respectively, an annuity plan described in
                  Section 403(a) of the Code, or a qualified trust described in
                  Section 401(a) of the Code that accepts the Distributee's
                  Eligible Rollover Distribution. However, in the case of an
                  Eligible Rollover Distribution to a surviving spouse, an
                  "Eligible Retirement Plan" is an individual retirement account
                  or annuity.

7.10       DISTRIBUTIONS UNDER A QUALIFIED DOMESTIC RELATIONS ORDER

           Upon determination by the Committee that a domestic relations order
           is a "qualified domestic relations order" as described in Section
           414(p) of the Code, the following shall apply:

           (a)    If the value of the vested interest is to be distributed to an
                  alternate payee (as defined in Section 414(p)(8) of the Code)
                  does not exceed $3,500, such vested interest shall be paid

<PAGE>   34

                  to the alternate payee in the form of a lump sum. Such
                  payment shall be made as soon as practicable following the
                  creation of such alternate payee's interest.

           (b)    If the value of the vested interest to be distributed to an
                  alternate payee exceeds $3,500, the alternate payee may elect
                  to receive such vested interest in the form of a lump sum.
                  Payment pursuant to such election shall be made as soon as
                  practicable following the creation of such alternate payee's
                  interest. In lieu of receiving such a payment, the alternate
                  payee may elect to receive the value of his vested interest in
                  a lump sum at any time after the "earliest retirement age"
                  described in Section 414(p)(4)(B) of the Code.

<PAGE>   35

                                  ARTICLE VIII

                                   WITHDRAWALS
                                   -----------

8.01       SUPPLEMENTAL PARTICIPANT CONTRIBUTIONS

           An Employee may elect in writing to withdraw an amount from his
           Supplemental Participant Contribution Account at any time subject to
           the following conditions:

           (a)    Any request for withdrawal which is made prior to October 1,
                  1994, must be submitted at least 15 days prior to the
                  effective date of the withdrawal and must be in a form
                  approved by the Company. Any request for withdrawal which is
                  made on or after October 1, 1994, must be submitted to the
                  Trustee in accordance with nondiscriminatory and uniform
                  procedures established by the Company and Trustee.

           (b)    A withdrawal shall be no greater than the balance of the
                  Employee's Supplemental Participant Contribution Account. An
                  Employee shall be limited to two withdrawals in any Plan Year
                  under this Section 8.01.

           (c)    No withdrawal under this Section 8.01 may exceed the balance
                  in his Supplemental Participant Contribution Account, less any
                  loans outstanding against this Account.

8.02       ROLLOVER CONTRIBUTIONS

           An Employee may elect in writing to withdraw an amount from his
           Rollover Contribution Account at any time subject to the following
           conditions:

           (a)    Any request for withdrawal which is made prior to October 1,
                  1994, must be submitted at least 15 days prior to the
                  effective date of the withdrawal and must be in a form
                  approved by the Company. Any request for withdrawal which is
                  made on or after October 1, 1994, must be submitted to the
                  Trustee in accordance with nondiscriminatory and uniform
                  procedures established by the Company and Trustee.

           (b)    A withdrawal shall be no greater than the balance of the
                  Employee's Rollover Contribution Account, less any loans
                  outstanding.

8.03       EMPLOYER CONTRIBUTIONS

           An Employee may elect in writing to withdraw an amount from his
           Employer Contribution Account at any time subject to the following
           conditions:

           (a)    Any request for withdrawal which is made prior to October 1,
                  1994, must be submitted at least 15 days prior to the
                  effective date of the withdrawal and must be in a form
                  approved by the Company. Any request for withdrawal which is
                  made on or after October 1, 1994, must be submitted to the
                  Trustee in accordance with nondiscriminatory and uniform
                  procedures established by the Company and Trustee.

           (b)    A withdrawal shall be no greater than the balance of the
                  Employee's Employer Contribution Account.

           (c)    No withdrawal under this Section 8.03 may exceed the vested
                  balance in his Employer Contribution Account, less any loans
                  outstanding.

<PAGE>   36

           (d)    The Employee must have been a Participant for at least five
                  years and, for any withdrawal made prior to October 1, 1994,
                  at least five years must have elapsed since any prior
                  withdrawal. Subject to the foregoing provisions of this
                  Section 8.03 and effective October 1, 1994, an Employee who
                  has been a Participant for at least five years may make a
                  withdrawal if at least two years have elapsed since any prior
                  withdrawal under this Section.

8.04       SALARY REDUCTION CONTRIBUTIONS

           An Employee upon the attainment of age 59-1/2 shall be entitled to
           withdraw all or a portion of the balance of his Salary Reduction
           Contribution Account and Employer Contribution Account upon making a
           proper election on a form approved by the Company. For periods prior
           to October 1, 1994, such election request must be submitted at least
           15 days prior to the effective date of the withdrawal. Any request
           for withdrawal which is made on or after October 1, 1994, must be
           submitted to the Trustee in accordance with nondiscriminatory and
           uniform procedures established by the Company and Trustee. An
           Employee shall be limited to two withdrawals in any Plan Year under
           this Section 8.04.

8.05       HARDSHIP WITHDRAWALS

           In addition to withdrawals described in Sections 8.01, 8.02, 8.03,
           and 8.04, an Employee may elect in writing to withdraw any amount up
           to the vested balance of his Accounts as of December 31, 1988, plus
           any Salary Reduction Contributions made to his account after January
           1, 1989 (less any loans outstanding) at any time subject to the
           following conditions:

           (a)    Any request for a withdrawal which is made prior to October 1,
                  1994, must be submitted at least 15 days prior to the
                  effective date of the withdrawal and must be in a form
                  approved by the Company. Any request for withdrawal which is
                  made on or after October 1, 1994, must be submitted to the
                  Trustee in accordance with nondiscriminatory and uniform
                  procedures established by the Company and Trustee.

           (b)    All hardship withdrawals are subject to approval by the
                  Committee. Such a withdrawal shall be permitted only to
                  the extent necessary to allow the Employee to purchase his
                  principal residence, to pay tuition and related
                  educational fees for the next 12 months of the
                  post-secondary education expense for the Employee, the
                  Employee's spouse or dependents, to meet the cost of
                  unusual medical expenses described in Section 213(d) of
                  the Code incurred by the Employee, Employee's spouse or
                  dependents, or to pay amounts required to prevent
                  Employee's eviction from his principal residence or
                  foreclosure of the mortgage on the Employee's principal
                  residence. The Committee shall administer this Section
                  8.05 in accordance with the applicable Treasury
                  Regulations as in effect from time to time.

           (c)    Such a withdrawal shall only be permitted to the extent the
                  Employee certifies or demonstrates to the satisfaction of the
                  Committee that the purpose described in paragraph (b) imposes
                  an immediate and heavy financial need upon the Employee, and
                  that the need cannot be met from other resources reasonably
                  available to him.

           (d)    Hardship withdrawals shall be applied against the value of the
                  Employee's Salary Reduction Contribution Account, only after
                  all withdrawal opportunities have been exercised against the
                  Employee's Vested Rollover Account, Supplemental Participant
                  Contribution Account and Employer Contribution Account.

<PAGE>   37

                                   ARTICLE IX

                              LOANS TO PARTICIPANTS
                              ---------------------

9.01       TERMS OF PARTICIPANT LOANS

           The Committee may grant a loan to such Employee where the principal
           amount of the loan when added to all other outstanding loans of the
           Employee from the Plan and any other qualified Plan of an Employer
           and Related Employer shall not exceed the lesser of:

           (i)        $50,000, as reduced by the excess, if any, of the
                      Employee's highest outstanding loan balance from the Plan
                      during the one-year period ending on the date before the
                      date such new loan is secured over the outstanding balance
                      of loans from the Plan on the date such loan is made; or

           (ii)       one-half of the value of the vested account maintained on
                      behalf of the Employee under the Plan.

           Loans shall be limited to and applied against the vested value of the
           Employee's Salary Reduction Contribution Account, Employee's Rollover
           Account, Employer Contribution Account, and Supplemental Participant
           Contribution Account.

           From and after July 1, 1989 and prior to October 1, 1994, the
           Committee will not approve a loan unless and until any outstanding
           loan balances are paid in full, except that in cases of financial
           hardship as described in Section 8.05, the Committee may approve a
           loan even though there remains an outstanding loan balance, provided
           that the Employee's Account balances as reduced by the outstanding
           loan balance are sufficient to provide for a loan in conformance with
           limitations imposed by Treasury Regulations as enacted from time to
           time. Loans shall be subject to the approval of the Committee, which
           shall follow uniform, nondiscriminatory policies in this regard.

           From and after October 1, 1994, the Committee may approve a loan to
           an Employee even though the Employee has an outstanding loan balance;
           provided, however, that:

           (i)        the Employee's Account balances as reduced by the
                      outstanding loan balance are sufficient to provide for a
                      loan in conformance with limitation imposed by Treasury
                      Regulations as promulgated from time to time; and

           (ii)       after approval of the loan, the outstanding loans from the
                      Plan to the Employee do not exceed the following
                      limitations based on classification of the loan:

                      (A)        loans used to acquire or construct a principal
                                 residence of the Employee (one);

                      (B)        loans used to relieve a financial hardship
                                 described in Section 8.05(four);

                      (C)        loans used for any purpose other than those
                                 described in (A) or (B) above (one).

           Loans shall be subject to the approval of the Committee, which shall
           follow uniform, nondiscriminatory policies in this regard. On and
           after October 1, 1994, an Employee's application for a loan shall be
           submitted to the Trustee in accordance with nondiscriminatory and
           uniform procedures established by the Company and Trustee.

<PAGE>   38

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

           (a)        Prior to October 1, 1994, an Employee may apply for a loan
                      only on March 1, June 1, September 1, and December 1 of
                      each Plan Year. Effective on and after October 1, 1994, an
                      Employee may apply for a loan at any time in accordance
                      with nondiscriminatory and uniform procedures established
                      by the Company and Trustee.

           (b)        Prior to October 1, 1994, an application for a loan by an
                      Employee shall be made in writing to the Committee whose
                      action thereon shall be final. Effective on and after
                      October 1, 1994, an Employee's application for a loan
                      shall be made to the Trustee in accordance with
                      nondiscriminatory and uniform procedures established by
                      the Company and Trustee. The Committee shall specify the
                      form of the application and any supporting data required.

           (c)        Except as follows, the Employee may select a loan
                      repayment schedule of two years or five years from the
                      last day of the pay period following the date the loan is
                      effective. Repayment of the loan shall be made through
                      payroll deductions. Effective on and after October 1,
                      1994, the Employee may elect to repay his Plan loan over a
                      period of from one to five years. Any loan used to acquire
                      or construct a principal residence of the Employee may be
                      repaid over a period of from one to ten years. Loans shall
                      be repayable in substantially equal installments including
                      interest payable each pay period, beginning with the first
                      pay period following the date the loan is effective.

           (d)        Each loan shall bear interest at a rate which is
                      determined by the Committee, provided that such rate does
                      not violate any applicable Treasury laws.

           (e)        Each loan shall be supported by collateral which is
                      one-half of the Employee's entire vested interest in the
                      Trust. A loan shall also be supported by the Employee's
                      promissory note for the amount of the loan, including
                      interest, payable to the order of the Trustee. The
                      promissory note shall require that the unpaid principal
                      and interest will (at the Committee's option) become due
                      and payable if a loan payment is not made within 30 days
                      after the due date of any installment.

           (f)        The minimum loan amount shall be $1,000.

           (g)        If an Employee is participating in one or more other
                      qualified plans sponsored by an Employer or Related
                      Employer, then all other loans which the Employee may have
                      shall be considered in the application of the limits in
                      this Section 9.01.

<PAGE>   39

                                    ARTICLE X

                              TOP-HEAVY PROVISIONS
                              --------------------

10.01      DEFINITIONS

           For the purposes of this Article, the following terms, when used with
           initial capital letters, shall have the following respective
           meanings:

           (a)    AGGREGATION GROUP

                  Permissive Aggregation Group or Required Aggregation
                  Group, as the context shall require.

           (b)    DETERMINATION DATE

                  For any Plan Year, the last day of the immediately preceding
                  Plan Year, except that in the case of the first Plan Year, the
                  Determination Date shall be the last day of such first Plan
                  Year.

           (c)    COMPENSATION

                  The amount of compensation from the Employer that would be
                  stated on an Employee's W-2 for Federal Income Tax purposes
                  for the calendar year that ends with or within the Plan Year.

           (d)    EXTRA TOP-HEAVY GROUP

                  An Aggregation Group if, as of a Determination Date, the sum
                  of the present value of the aggregate accrued benefits for Key
                  Employees under all defined benefit plans included in the
                  Aggregation Group and the aggregate of the accounts of Key
                  Employees under all defined contribution plans included in the
                  Aggregation Group is more than 90% of a similar sum determined
                  for all employees in such plans. For purposes of determining
                  such sums, aggregate distributions made to any employee during
                  the five consecutive Plan Years ending with the Plan Year that
                  includes the Determination Date shall be included. For Plan
                  Years beginning after December 31, 1984, the aggregate accrued
                  benefits and/or the aggregate of accounts of former employees
                  who have not performed any service for the employer
                  maintaining the plan at any time during the five year period
                  ending on the Determination Date shall be excluded from the
                  foregoing calculation.

           (e)    EXTRA TOP-HEAVY PLAN

                  (i)     Except as provided by paragraph (ii) of this
                          subsection, the Plan shall be an Extra Top-Heavy Plan
                          if as of a Determination Date:

                          (A)    the aggregate of Top-Heavy Account Balances for
                                 Key Employees is more than 90% of the aggregate
                                 of the Top-Heavy Account Balances for all
                                 Employees, excluding for this purpose the
                                 aggregate Top-Heavy Account Balances of Former
                                 Key Employees; or

                          (B)    the Plan is included in a Required Aggregation
                                 Group which is an Extra Top-Heavy Group.

<PAGE>   40

                  (ii)    If the Plan is included in a Permissive Aggregation
                          Group which is not an Extra Top-Heavy Group, the Plan
                          shall not be an Extra Top-Heavy Plan notwithstanding
                          the fact that the Plan would otherwise be an Extra
                          Top-Heavy Plan under paragraph (i) of this subsection.

<PAGE>   41

           f)         FORMER KEY EMPLOYEE

                      A Non-key Employee with respect to a Plan Year who was a
                      Key Employee in a prior Plan Year. Such term shall also
                      include his Beneficiary in the event of his death.

           (g)        KEY EMPLOYEE

                      An Employee or former Employee who, at any time during the
                      current Plan Year or any of the four preceding Plan Years,
                      is:

                      (i)        an officer of an Employer having an annual Test
                                 Compensation greater than 50% of the amount in
                                 effect under Section 415(b)(1)(A) of the Code
                                 for any such Plan Year (limited to no more than
                                 50 Employees or, if lesser, the greater of
                                 three or 10% of the Employees);

                      (ii)       one of the 10 Employees who, (A) own (or are
                                 considered as owning within the meaning of
                                 Section 318 of the Code) during the Plan Year
                                 containing the Determination Date or any of the
                                 four preceding Plan Years both more than 1/2%
                                 ownership interests in value and the largest
                                 percentage ownership interests in value of any
                                 of the employees required to be aggregated
                                 under Section 414(b), (c), or (m) of the Code
                                 and (B) have, during the Plan Year of
                                 ownership, annual Test Compensation from the
                                 employer of more than the limitation in effect
                                 under Section 415(c)(1)(A) of the Code for the
                                 calendar year in which such Plan Years ends;

                      (iii)      a 5% owner (as such term is defined in Section
                                 416(i)(1)(B)(i) of the Code); or

                      (iv)       a 1% owner (as such term is defined in Section
                                 416(i)(1)(B)(ii) of the Code) having an annual
                                 Test Compensation of more than $150,000.

                      The term "Key Employee" shall also include such Employee's
           Beneficiary in the event of his death.

           (h)    NON-KEY EMPLOYEE

                  An Employee or former Employee who is not a Key Employee. Such
                  term shall also include his Beneficiary in the event of his
                  death.

           (i)    PERMISSIVE AGGREGATION GROUP

                  The group of qualified plans of an employer consisting of:

                  (i)     the plans in the Required Aggregation Group; plus

                  (ii)    one or more plans designated from time to time by the
                          Employer that are not part of the Required Aggregation
                          Group but that satisfy the requirements of Section
                          401(a)(4) and 410 of the Code when considered with the
                          Required Aggregation Group.

           (j)    REQUIRED AGGREGATION GROUP

                  The group of qualified plans of an employer consisting of:

                  (i)     each plan in which a Key Employee participates, plus

<PAGE>   42

                  (ii)    each other plan which enables a plan in which a Key
                          Employee participates to meet the requirements of
                          Sections 401(a)(4) or 410 of the Code.

                  For purposes hereof, a Required Aggregation Group shall
                  include a terminated plan if such plan was maintained within
                  the five-year period ending on the Determination Date for the
                  Plan Year in question and it would be, but for the fact it
                  terminated, part of a Required Aggregation Group for such Plan
                  Year.

           (k)    TOP-HEAVY ACCOUNT BALANCES

                  An Employee's or former Employee's (or his Beneficiary's)
                  aggregate balance standing to his Account as of the Valuation
                  Date coinciding with or immediately preceding the
                  Determination Date (as adjusted by the amount of any Employer
                  contributions made or due to be made after such Valuation Date
                  but before the expiration of the extended payment period in
                  Section 412(c)(10) of the Code), provided, however, that such
                  balance shall include the aggregate distributions made to such
                  Employee or former Employee (or Beneficiary) during the five
                  consecutive Plan Years ending with the Plan Year that includes
                  the Determination Date. For Plan Years beginning after
                  December 31, 1984, the Account of a former Employee who has
                  not performed any service with the Employer during the five
                  year period ending on the Determination Date shall be excluded
                  in determining Top-Heavy Account Balances under the Plan.

           (l)    TOP-HEAVY GROUP

                  An Aggregation Group if, as of the Determination Date, the sum
                  of the present value of the aggregate accrued benefits for Key
                  Employees under all defined benefit plans included in the
                  Aggregation Group and the aggregate of the accounts of Key
                  Employees under all defined contribution plans included in the
                  Aggregation Group is more than 60% of a similar sum determined
                  for all employees in such plans. For purposes of determining
                  such sums, aggregate distributions made to any employee during
                  the five consecutive Plan Years ending with the Plan Year that
                  includes that Determination Date shall be included. For Plan
                  Years beginning after December 31, 1984, the aggregate accrued
                  benefits and/or the aggregate of accounts of former employees
                  who have not performed any service for the employer
                  maintaining the plan at any time during the five year period
                  ending on the Determination Date shall be excluded from the
                  foregoing calculation.

           (m)    TOP-HEAVY PLAN

                  (i)     Except as provided by paragraph (ii) of this
                          subsection, the Plan shall be a Top-Heavy Plan,
                          if as of a Determination Date:

                          (A)    the aggregate of Top-Heavy Account Balances for
                                 Key Employees is more than 60% of the aggregate
                                 of the Top-Heavy Account Balances for all
                                 Employees, excluding for this purpose the
                                 aggregate Top-Heavy Account Balances of Former
                                 Key Employees; or

                          (B)    the Plan is included in a Required Aggregation
                                 Group which is a Top-Heavy Group.

                  (ii)    If the Plan is included in a Permissive Aggregation
                          Group which is not a Top-Heavy Group, the Plan shall
                          not be a Top-Heavy Plan notwithstanding the fact that
                          the Plan would otherwise by a Top-Heavy Plan under
                          paragraph (i) of this subsection.

<PAGE>   43

10.02      TOP-HEAVY PLAN REQUIREMENTS

           Notwithstanding any other provisions of the Plan to the contrary, if
           the Plan is a Top-Heavy Plan for any Plan Year beginning on or after
           January 1, 1984, the Plan shall then satisfy the following
           requirements for such Plan Year:

           (i)        the minimum vesting requirement as set forth in Section
                      10.03;

           (ii)       the minimum contribution requirement as set forth in
                      Section 10.04; and

           (iii)      the adjustment to maximum benefits and allocations as set
                      forth in Section 10.06.

10.03      MINIMUM VESTING REQUIREMENT

           If the Plan is a Top-Heavy Plan for any Plan Year beginning on or
           after January 1, 1984, each Employee who has been credited with an
           Hour of Service after the Plan becomes a Top-Heavy Plan shall have a
           nonforfeitable right to a percentage of his Accrued Benefit derived
           from Company contributions determined under the following table:

                        Years of                         Nonforfeitable
                         Service                           Percentage
                     ----------------                   ------------------
                      less than 2                              0%
                           2                                   20%
                           3                                   40%
                           4                                   60%
                           5                                   80%
                       6 or more                              100%

           The vesting schedule described in the immediately preceding sentence
           shall cease to be applicable when the Plan ceases to be a Top-Heavy
           Plan, provided that the percentage of an Employee's Accrued Benefit
           that becomes nonforfeitable pursuant thereto before the Plan ceases
           to be a Top-Heavy Plan shall remain nonforfeitable, and the change in
           the vesting schedule which occurs when the Plan ceases to be a
           Top-Heavy Plan shall be subject to the provisions of Section
           14.01(b).

10.04      MINIMUM CONTRIBUTION REQUIREMENT

           (a)    If the Plan is a Top-Heavy Plan for any Plan Year beginning on
                  or after January 1, 1984, then each Participant who is a
                  Non-key Employee shall be entitled to an allocation from
                  Employer Contributions and Forfeitures which is at least equal
                  to 3% of his Compensation for such Plan Year. As used in this
                  Section 10.04(a), the term "Participant" shall mean:

                  (i)     each Participant who is not separated from service by
                          the end of the Plan Year (regardless of whether such
                          Participant completes 1,000 hours of service (or the
                          equivalent) for such Plan year);

                  (ii)    any Employee who is excluded from participation in the
                          Plan (or accrues no benefit) solely because the
                          Employee's compensation is less than a stated amount;
                          or

<PAGE>   44

                  (iii)   any Employee who is excluded from participation in the
                          Plan (or accrues no benefit) solely because of a
                          failure to make mandatory employee contributions or,
                          in the case of a cash or deferred arrangement,
                          elective contributions.

           (b)    The percentage minimum contribution requirement set forth in
                  paragraph (a) with respect to a Plan Year shall not exceed
                  the percentage at which Employer Contributions are made
                  (or required to be made) under the Plan for such Plan Year
                  for the Key Employee for whom such percentage is the
                  highest for such year. The determination referred to in
                  the immediately preceding sentence shall be determined for
                  each Key Employee by dividing the Employer contribution
                  allocated to such Key Employee in that Plan Year (where,
                  for this purpose, amounts contributed pursuant to a salary
                  reduction agreement are to be considered Employer
                  contributions) by such Key Employee's Compensation.

                  Except to the extent used for the purpose of determining the
                  largest percentage of Compensation contributed by an Employer
                  for a given year on behalf of a Key Employee, Salary Reduction
                  Contributions shall not be considered Employer Contributions
                  under this Section 10.04.

           (c)    The percentage minimum contribution requirement as set forth
                  in paragraph (a) above may also be reduced or eliminated in
                  accordance with Section 10.07.

           (d)    For purposes of paragraph (b) above, contributions taken into
                  account shall include like contributions under all other
                  defined contribution plans in the Required Aggregation Group,
                  excluding any such plan in the Required Aggregation Group if
                  that plan enables a defined benefit plan in such Required
                  Aggregation Group to meet the requirements of Section
                  401(a)(4) or Section 410 of the Code.

10.05      LIMITATION ON COMPENSATION REQUIREMENT

           If the Plan is a Top-Heavy Plan for any Plan Year beginning on or
           after January 1, 1984, the annual Compensation of each Employee taken
           into account under the Plan for such Plan Year shall not exceed the
           first $200,000; provided, however, that said $200,000 amount shall be
           automatically adjusted each Plan Year to the amount prescribed by the
           Secretary of the Treasury, or his delegate, for that Plan Year
           pursuant to Section 416(d)(2) of the Code and the Regulations
           thereunder.

           Notwithstanding the foregoing, with respect to Plan Years beginning
           on and after January 1, 1989, the annual Compensation of an Employee
           that may be taken into account hereunder shall be limited to the
           adjusted annual limitation as provided under Section 1.14.

10.06      ADJUSTMENT TO MAXIMUM BENEFITS AND CONTRIBUTIONS

           The Company maintains the State Auto Insurance Companies Employee
           Retirement Plan (the "Defined Benefit Plan") which provides benefits
           to Participants in this Plan. If this Plan is a Top-Heavy Plan for
           any Plan Year beginning on or after January 1, 1984, and if the
           Defined Benefit Plan is a top-heavy plan, then:

           (a)    Each Non-key Employee shall receive the minimum benefit
                  provided under Section 14.04 of the Defined Benefit Plan.

           (b)    If the Plan is not an Extra Top-Heavy Plan (but is a Top-Heavy
                  Plan), and if the Employer desires to use a factor of 1.25 in
                  computing the denominators of the defined benefit fraction and
                  the defined contribution fraction under Section 415(e) of the
                  Code, then each Non-key Employee shall receive the minimum
                  benefit provided under Section

<PAGE>   45

                      14.04 of the Defined Benefit Plan as in effect on January
                      1, 1984, as modified by Section 14.06(2) of such Defined
                      Benefit Plan.

           (c)        If the Plan is an Extra Top-Heavy Plan, then calculations
                      under paragraphs (2)(B) and (3)(B) of Section 415(e) of
                      the Code shall be made by substituting "1.0" for "1.25"
                      for each place such "1.25" figure appears, and
                      calculations under Section 415(e)(6)(B)(I) of the Code
                      shall be made by substituting "$41,500" for "$51,875" for
                      each place such "$51,875" amount appears.

10.07      COORDINATION WITH OTHER PLANS

           (a)        In applying this Article, an employer required to be
                      combined under Section 414(b), (c), or (m) of the Code
                      shall be treated as a single employer, and the qualified
                      plans maintained by such single employer shall be taken
                      into account.

           (b)        In the event that another defined contribution plan or
                      defined benefit plan maintained by any employer required
                      to be combined under Section 414(b), (c), or (m) of the
                      Code provides contributions or benefits on behalf of
                      Participants in this Plan, such other plan(s) shall be
                      taken into account in determining whether this Plan
                      satisfies Section 10.02; and the minimum contribution
                      required for a Non-key Employee in this Plan under Section
                      10.04 will be reduced or eliminated, in accordance with
                      the requirements of Section 416 of the Code and the
                      Regulations thereunder, if a minimum contribution or
                      benefit is made or accrued in whole or in part in respect
                      of such other plan(s).

<PAGE>   46

                                   ARTICLE XI

                               MANAGEMENT OF FUNDS
                               -------------------

11.01      TRUST AGREEMENT

           State Automobile Mutual Insurance Company has entered into a Trust
           Agreement with the Trustee to hold the Funds necessary to provide the
           benefits under this Plan. The Trust Agreement shall be deemed to form
           a part of the Plan, and all rights of Participants or others under
           this Plan shall be subject to the provisions of the Trust Agreement.

11.02      EXCLUSIVE BENEFIT

           The Trust Fund shall be received, held in Trust, and disbursed by the
           Trustee in accordance with the provisions of the Trust Agreement and
           this Plan. No part of the Trust Fund shall be used for or diverted to
           purposes other than for the exclusive benefit of Participants,
           retired Participants, disabled Participants or their Beneficiaries
           under this Plan, except as provided in Sections 3.06 and 15.12. No
           person shall have any interest in or right to the Trust Fund or any
           part thereof, except as specifically provided for in this Plan and
           Trust Agreement.

11.03      REMOVAL OF TRUSTEE

           The Board may remove the Trustee at any time upon the notice required
           by the terms of the Trust Agreement and, upon such removal or upon
           the resignation of the Trustee, the Board shall appoint a successor
           Trustee.

11.04      POWERS

           The Trustee shall have such powers to hold, invest, reinvest, or to
           control and disburse the Funds as at that time shall be set forth in
           the Trust Agreement or in this Plan.

11.05      SETTLEMENT OF ACCOUNTS

           The Trust Agreement may contain provisions granting authority to the
           Company to settle the Accounts of the Trustee on behalf of all
           persons having or claiming an interest in the Trust Fund.

<PAGE>   47

                                   ARTICLE XII

                               PLAN ADMINISTRATION
                               -------------------

12.01      ADMINISTRATIVE COMMITTEE

           The Chief Executive Officer of the Company as empowered by the Board
           shall appoint an Administrative Committee, to be known as the
           "Committee," to assist the Company (which is the Plan administrator,
           in accordance with Section 15.07) in the administration of the Plan,
           to keep records of Accounts, and to notify each Participant, former
           Participant, or Beneficiary of his benefit. The members of the
           Committee shall serve at the pleasure of the Board; they may be
           officers, directors, or employees of an Employer or any other
           individuals. Any member may resign by delivering his written
           resignation to the Board. Vacancies arising by resignation, death,
           removal or otherwise shall be filled by the Board. The Company shall
           advise the Trustee in writing of the names of the members of the
           Committee and of any changes in membership. The Committee shall
           consist of not less than three persons nor more than five persons.

12.02      POWERS AND DUTIES OF THE COMMITTEE

           The Committee shall administer the Plan in accordance with its terms
           and shall have all powers necessary to carry out the provisions of
           the Plan. The Committee shall direct the Trustee in writing
           concerning all payments which shall be made out of the Trust Fund
           pursuant to the Plan. Such written order to the Trustee shall specify
           the name of the person, his address, and the amount and frequency of
           payments. The Committee shall make recommendations to the Board with
           respect to the appointment and dismissal of investment managers under
           the Trust and will review the performance of the investment managers
           periodically. Subject to the stated purposes and provisions of this
           Plan Document, the Plan Administrator shall have the full and
           exclusive power and authority, in its sole discretion, to determine
           all questions of coverage and eligibility for benefits, methods of
           providing or arranging for benefits and all other related matters.
           The Plan Administrator shall have the full power and authority, in
           its sole discretion, to construe and interpret the provisions and
           terms of this Plan Document and all other written documents. Any such
           determination and any such construction adopted by the Plan
           Administrator in good faith shall be binding upon all of the parties
           hereto and the beneficiaries thereof. The regularly kept records of
           the Employers shall be conclusive and binding upon all persons with
           respect to an Employee's Service, date and length of employment,
           amount of Compensation, type and length of any absence from work and
           all other matters contained therein relating to Employees. All rules
           and determination of the Committee shall be uniformly and
           consistently applied to all persons in similar circumstances.

12.03      EXERCISE OF THE COMMITTEE'S DUTIES

           The Committee shall discharge its duties:

           (a)    for the exclusive purpose of providing benefits to Plan
                  Participants, former Participants, and Beneficiaries, and

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

12.04      ORGANIZATION AND OPERATIONS OF THE COMMITTEE

<PAGE>   48

           (a)    The Committee shall act by a majority vote of its members at
                  the time in office, and such action may be taken either by a
                  vote at a meeting or in writing without a meeting. The
                  signature of any one of the members on behalf of the Committee
                  will be sufficient to authorize Committee action. A Committee
                  member shall not participate in discussions of or vote upon
                  matters pertaining to his own participation in the Plan,
                  except to the extent such matters affect Participants
                  generally.

           (b)    The Committee may authorize any one of its members or any
                  other person to execute any document or documents on behalf of
                  the Committee, in which event the Committee shall notify the
                  Trustee in writing of such action and the name or names of
                  such member or person. The Trustee thereafter shall accept and
                  rely upon any document executed by such members or persons as
                  representing action by the Committee, until the Committee
                  shall file with the Trustee a written revocation of such
                  designation.

           (c)    The Committee may adopt such by-laws and regulations as it
                  deems desirable for the conduct of its affairs and, with the
                  consent of the Company, may appoint such accountants, counsel,
                  actuaries, and other persons as it deems necessary or
                  desirable in connection with the administration of this Plan.
                  The Committee shall be entitled to rely conclusively upon, and
                  shall be fully protected in any action taken by it in good
                  faith in relying upon, any opinions or reports which shall be
                  furnished to it by any such accountant, counsel, actuary, or
                  other specialist.

12.05      RECORDS AND REPORTS OF THE COMMITTEE

           The Committee shall keep a record of all its proceedings and acts and
           shall keep all such records and other data as may be necessary for
           the proper administration of the Plan. The Committee shall notify the
           Trustee and the Company of any action taken by the Committee and,
           when required, shall notify any other interested person or persons.

12.06      COMPENSATION AND EXPENSES OF THE COMMITTEE

           The members of the Committee shall serve without Compensation for
           service as such, but all proper expenses incurred by the Committee
           incident to the functioning of the Plan shall be paid by the
           Employers.

12.07      INDEMNITY OF THE COMMITTEE MEMBERS

           The Company shall indemnify and defend each member of the Committee
           against any and all claims, losses, damages, expenses (including
           reasonable attorneys' fees), and liability arising from any action or
           failure to act in connection with the administration of the Plan,
           except when the same is judicially determined or admitted by the
           Committee member to be due to the gross negligence or willful
           misconduct of such member.

<PAGE>   49

                                  ARTICLE XIII

                                CLAIMS PROCEDURE
                                ----------------

13.01      INFORMAL REVIEW

           Any Participant, former Participant, or Beneficiary who wishes to
           request an informal review of a claim for benefits or who wishes an
           explanation of a benefit or its denial may direct to the Committee a
           written request for an informal review. The Committee shall respond
           to the request by issuing a notice to the claimant as soon as
           possible, but in no event later than 60 days from the date of the
           request. This notice furnished by the Committee shall be written in a
           manner calculated to be understood by the claimant and shall include
           the following:

           (a)    the specific reason or reasons for denial of benefits;

           (b)    the specific Plan provisions on which any denial is based;

           (c)    a description of any further material or information which is
                  necessary for the claimant to perfect his claim and an
                  explanation of why the material or information is needed; and

           (d)    an explanation of the Plan's formal claim review procedure.

           If the claimant does not respond to the notice, posted by first class
           mail to the address of record of the claimant, within 120 days from
           the posting of the notice, the claimant shall be considered satisfied
           in all respects. If the Committee fails to respond to the claimant's
           written request for an informal review, the claimant shall be
           entitled to proceed to the formal claim review procedure described in
           Section 13.02.

13.02      FORMAL REVIEW

           In the event that the notice concerning the informal review is
           insufficient to satisfy the claimant, the claimant or his duly
           authorized representative shall submit to the Committee within 120
           days of the posting of the notice, a written notification of appeal
           of the claim denial. The notification of appeal of the claim denial
           shall permit the claimant or his duly authorized representative to
           utilize the following formal claim review procedures:

           (a)    to review pertinent documents; and

           (b)    to submit issues and comments in writing to which the
                  Committee shall respond.

           The Committee shall furnish a written decision of formal review not
           later than 60 days after receipt of the notification of appeal,
           unless special circumstances require an extension of the time for
           processing the appeal. In no event, however, shall the Committee
           respond later than 120 days after a request for a formal review. The
           decision on formal review shall be in writing and shall include
           specific reasons for the decision, and shall be written in a manner
           calculated to be understood by the claimant and contain specific
           reference to the pertinent Plan provisions on which the decision is
           based.

<PAGE>   50

                                   ARTICLE XIV

                            AMENDMENT AND TERMINATION
                            -------------------------

14.01      RIGHT TO AMEND OR TERMINATE

           (a)        The Company reserves to itself the right to alter, amend,
                      modify, revoke or terminate in whole or in part this Plan
                      and any Trust that may be established by it to effectuate
                      and implement this Plan, or both, and each Employer, in
                      adopting this Plan, consents to any such alteration,
                      amendment, modification, revocation or termination. The
                      Company, by the adoption of a resolution of the Board, may
                      terminate the Plan with respect to any or all Employers.
                      Each Employer by a resolution of its Board of Directors
                      may terminate its participation in the Plan. If the Plan
                      is terminated by fewer than all Employers, it shall
                      continue in effect for Participants employed by the
                      remaining Employers. Notwithstanding the foregoing, no
                      such alteration, amendment, modification, revocation or
                      termination of this Plan, or of any such Trust shall
                      operate retroactively, except as provided in Section
                      15.11, so as to affect adversely the rights of any
                      Participant, former Participant, or Beneficiary acquired
                      under the terms of the Plan in effect prior to such
                      action; nor shall any such action operate to enlarge any
                      Employer's rights under Section 3.07.

           (b)        If any amendment directly or indirectly changes the
                      vesting schedule for the Employer Contribution Account, a
                      Participant with three or more years of Service may elect
                      to have his vested percentage computed under the vesting
                      schedule in effect prior to the amendment by filing a
                      written request with the Committee within 60 days after he
                      has received notice of such amendment.

14.02      TERMINATION

           (a)        It is the expectation of each Employer that it will
                      continue this Plan and the payment of contributions
                      hereunder indefinitely, but the continuation of the Plan
                      is not assumed as a contractual obligation of any
                      Employer; and the right is reserved by each Employer at
                      any time to permanently discontinue its contributions
                      hereunder. In the event that the Plan is terminated in
                      whole or in part, or if contributions by the Employers are
                      completely discontinued, the interest of all affected
                      Participants shall be fully vested and nonforfeitable.

           (b)        This Plan may be terminated by the Board at any time,
                      effective as of the date of the Board action or any
                      subsequent date determined by the Board.

           (c)        Upon termination of the Plan, further payment of Employer
                      contributions to the Trust Fund shall cease. Each affected
                      Participant shall have a fully vested interest in the
                      entire amount of his Account balances, and the Trustee
                      shall make payment to each Participant of such amount in
                      cash or in assets of the Trust Fund pursuant to the
                      direction of the Committee. The Board shall have the
                      authority to retain or distribute each Participant's
                      Account balances, as it deems appropriate, upon
                      termination of the Plan.

                      Notwithstanding the foregoing, no such distribution shall
                      be made to a Participant prior to his attaining age 59-1/2
                      unless otherwise permitted by Code Section 401(k) or
                      regulations thereunder, and all such distributions shall
                      be in accordance with such Code Section or regulations, as
                      the case may be.

14.03      PROCEDURE FOR BECOMING AN EMPLOYER

<PAGE>   51

           A Related Company may become a party to this Plan and Trust Agreement
           and an Employer hereunder by delivering to the Board a resolution of
           its Board of Directors approving such action and an executed election
           form entitled "Election to Become an Employer under the State Auto
           Insurance Companies Capital Accumulation Plan." With the consent of
           the Board, such Related Company shall become an Employer hereunder as
           of an effective date approved by the Board and shall be subject to
           the terms and provisions of this Plan and the Trust Agreement as then
           in effect or thereafter amended.

14.04      WITHDRAWAL OF AN EMPLOYER

           An Employer that wishes to withdraw from this Plan and the Trust
           Agreement shall deliver to the Board a resolution of its Board of
           Directors which indicates the reason or reasons for such withdrawal.
           Withdrawal must be submitted to the Board at least six months prior
           to the date the withdrawal is to be effective, unless such time
           requirement is waived by the Board.

14.05      PLAN OR BUSINESS TERMINATION

           If the withdrawal of an Employer is a part of the complete
           termination and dissolution of the Employer's business, or the
           discontinuance of the Employer's thrift plan without termination of
           its business and without the immediate establishment of a new and
           comparable plan, the provisions of Article XIV shall apply to such
           Employer's withdrawal as if the withdrawal were a part of the
           complete termination of the Plan, but the participation of other
           Employers shall not be affected nor shall the continuation of the
           Plan with respect to participation of other Employers after the
           withdrawal be affected by such withdrawal.

14.06      ESTABLISHMENT OF NEW PLAN

           If the withdrawal of an Employer is the result of the establishment
           of a new and comparable plan for its employees which will,
           immediately upon withdrawal of the Employer, cover employees of the
           Employer who are covered by this Plan, the Board, upon being
           furnished evidence of the terms of such new plan and that such new
           plan has been approved by the Internal Revenue Service as qualified
           under Section 401(a) of the Code, shall direct the Trustee to
           establish such Employer's interest in the value of the Trust Fund.
           The Employer's interest in the Trust Fund so determined, after
           reduction for charges and other expenses incurred to process the
           withdrawal of the Employer, shall be transferred to the trustee or
           trustees of the new plan or to the insurance company which is to hold
           the funds of the new plan, whichever is applicable. The Board, in its
           sole discretion, shall have the right to transfer the withdrawal
           value of that Employer's interest in the Trust Fund to the trustee or
           trustees of the new plan or to the designated insurance company in
           the form of installments, in cash or in cash and securities over a
           period of time not to exceed six months following the effective date
           of the Employer's withdrawal.

           The application of the withdrawing Employer's interest in the Trust
           Fund pursuant to the terms of this Section shall constitute a
           complete discharge of the responsibility of the remaining Employers,
           the Board and the Trustee without any responsibility on their part
           collectively or individually to see to the application thereof.

14.07      NOTICE OF AMENDMENT OR TERMINATION

           Affected Participants will be notified of an amendment or termination
           of the Plan as required by the applicable provisions of ERISA.

<PAGE>   52

                                   ARTICLE XV

                                  MISCELLANEOUS
                                  -------------

15.01      NO CONTRACT OF EMPLOYMENT

           Nothing herein contained shall be construed to constitute a contract
           of employment between any Employer and any Employee. The employment
           records of the Employers and the Trustee's records shall be final and
           binding upon all Employees as to liability and participation.

15.02      MERGER OR CONSOLIDATION OF PLAN, TRANSFER OF ASSETS

           Any merger or consolidation of the Plan with another plan, or
           transfer of Plan assets or liabilities to any other plan, shall be
           effected in accordance with such regulations, if any as may be issued
           pursuant to Section 208 of ERISA, in such manner that each Plan
           Participant would receive, if the merged, consolidated, or
           transferred Plan were terminated immediately following such event, a
           benefit which is equal to or greater than the benefit he would have
           been entitled to receive if the Plan had terminated immediately
           before such event.

15.03      DATA

           It shall be a condition precedent to the payment of all benefits
           under the Plan that each Participant, former Participant, and
           Beneficiary must furnish to the Company such documents, evidence or
           information as the Company considers necessary or desirable for the
           purposes of administering the Plan, or to protect the Company, the
           Committee or Trustees.

15.04      RESTRICTIONS UPON ASSIGNMENTS AND CREDITORS' CLAIMS

           Except as in the Plan otherwise provided, no Participant, former
           Participant, or any Beneficiary, or the estate of any such person,
           shall have any power to assign, pledge, encumber, or transfer any
           interest in the Trust Fund while the same shall be in the possession
           of the Trustee. Any such attempt at alienation shall be void. No such
           interest shall be subject to attachment, garnishment, execution,
           levy, or any other legal or equitable proceeding or process and any
           attempt to so subject such interest shall be void.

           Notwithstanding the foregoing, this Section 15.04 shall not apply to
           a qualified domestic relations order as defined in Section 414(p) of
           the Code. The Committee shall establish a procedure to determine the
           qualified status of domestic relations orders and to administer
           distributions under such qualified orders. Further, to the extent
           provided under a qualified domestic relations order, a former spouse
           of a Participant shall be treated as the spouse or surviving spouse
           for all purposes under the Plan.

15.05      RESTRICTION OF CLAIMS AGAINST TRUST FUND

           The Trust Fund under this Plan and Trust Agreement from its inception
           shall be a separate entity aside and apart from each Employer and its
           assets. The Trust Fund and the corpus and income thereof shall in no
           event and in no manner whatsoever be subject to the rights or claims
           of any creditor of an Employer. Neither the establishment of the
           Trust Fund, the modification thereof, the creation of any fund or
           account, nor the payment of any benefits shall be construed as giving
           any Participant or any other person whomsoever any legal or equitable
           rights against an Employer or the Trustee unless the same shall be
           specifically provided for in this Plan.

15.06      NAMED FIDUCIARIES

<PAGE>   53

           For the purposes of Part 4 of Title I of ERISA, the Company, the
           Trustee, the Committee and those parties to whom any investment
           management duties are allocated pursuant to the Trust Agreement shall
           each be named fiduciaries. All actions by named fiduciaries shall be
           in accordance with the terms of this Plan and of the Trust Agreement
           insofar as such documents are consistent with the provisions of Title
           I of ERISA. Each named fiduciary shall act solely in the interest of
           Participants and Beneficiaries and for the exclusive purpose of
           providing benefits and defraying reasonable administrative expenses.
           Each named fiduciary shall discharge his or her respective duties
           hereunder with the care, skill, prudence and diligence under the
           circumstances then prevailing that a prudent man acting in a like
           capacity and familiar with such matters would use in the conduct of
           an enterprise of a like character and with like aims.

15.07      ALLOCATION OF FIDUCIARY DUTIES

           The Company shall be responsible for the administration and
           management of the Plan except for those duties specifically allocated
           to the Trustee or the Committee. The Trustee shall have exclusive
           responsibility for all matters specifically delegated to it by the
           Company and this Plan. Each fiduciary shall be responsible only for
           the specific duties assigned to it and shall not be directly or
           indirectly responsible for the duties assigned to another fiduciary.
           The Company shall be deemed the administrator for the purposes of
           ERISA.

15.08      BENEFITS PAYABLE BY TRUST FUND

           All benefits payable under the Plan shall be paid or provided for
           solely from the Trust Fund, and the Company and Employers assume no
           liability or responsibility therefor.

15.09      SUCCESSOR TO COMPANY OR EMPLOYER

           In the event that any successor to the Company or an Employer, by
           merger, consolidation, purchase or otherwise, shall elect to adopt
           the Plan, such successor shall be substituted hereunder for that
           Employer upon filing in writing with the Trustee of its election to
           do so.

15.10      APPLICABLE LAW

           The Plan shall be construed and administered in accordance with ERISA
           and with the laws of Ohio to the extent that such laws are not
           preempted by ERISA.

15.11      INTERNAL REVENUE SERVICE APPROVAL

           This Plan shall be effective as of January 1, 1989, provided that the
           Company shall obtain a favorable determination letter from the
           Internal Revenue Service that this Plan and the related Trust
           Agreement qualify under Section 401(a) and 501(a) of the Code. Any
           modification or amendment of this Plan may be made retroactive as
           necessary or appropriate in order to secure or maintain such
           qualification.

15.12      DEDUCTIBILITY OF EMPLOYER CONTRIBUTIONS

           All contributions under this Plan shall be paid to the Trustee and
           deposited in the Trust Fund. However, all contributions made by an
           Employer are expressly conditioned upon their deductibility under
           Section 404 of the Code. Contributions which do not meet these
           conditions may revert to the Employer, in accordance with Section
           3.06.

<PAGE>   54

                            PREPARATION AND ADOPTION

                                   OF AMENDED

                         STATE AUTO INSURANCE COMPANIES

                            CAPITAL ACCUMULATION PLAN

           The undersigned, President of State Automobile Mutual Insurance
Company pursuant to the authority granted by Resolution of the Board of
Directors of State Auto dated ____________________ hereby authorizes and adopts
said State Auto Insurance Companies Capital Accumulation Plan and renders it
effective on ______________________.

                                  STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

                                  By:___________________________________________
                                  President

<PAGE>   55

                                   APPENDIX A

                   SPECIAL PROVISIONS PERTAINING TO TRANSFERS
                  FROM EMPLOYEE SAVINGS AND PROFIT-SHARING PLAN
                           OF ROYAL INDEMNITY COMPANY

A.1        PURPOSE AND CONSTRUCTION

           The purpose of this Appendix A is to evidence special provisions
           applicable to certain Participants affected by the Company's
           acquisition of the Milbank Insurance Company, effective August 20,
           1993 (the "Closing Date"). The provisions of this Appendix A shall
           apply to individuals who, as of the date prior to the Closing Date,
           were employees of Milbank Insurance Company (or a related entity) and
           who, as of the Closing Date, became Employees of an Employer
           (hereinafter "Affected Employees"). To the extent the provisions of
           the Plan, as applicable to Affected Employees, are inconsistent with
           the provisions of this Appendix A, the provisions of this Appendix A
           shall govern. Words and phrases used herein with initial capital
           letters which are defined in Article I of the Plan are used herein as
           so defined.

A.2        TRUST-TO-TRUST TRANSFERS OF ACCOUNTS

           (a)        In connection with the Company's acquisition of Milbank
                      Insurance Company from Globe Indemnity Company (a
                      subsidiary of Royal Indemnity Company), the Plan shall
                      accept a transfer of assets and liabilities from the
                      Employee Savings and Profit-Sharing Plan of Royal
                      Indemnity Company (the "Royal Plan") which represents the
                      account balances maintained on behalf of Affected
                      Employees under the Royal Plan.

           (b)        The transfer made on behalf of any Affected Employee shall
                      be credited to such Employee's Accounts under the Plan as
                      follows: that portion, if any, of the transfer that is
                      attributable to the Affected Employees "401(k)
                      Contribution Account" under the Royal Plan shall be
                      credited to a subaccount within the Affected Employee's
                      Salary Reduction Contribution Account under the Plan; that
                      portion, if any, of the transfer that is attributable to
                      the Affected Employee's "Savings Incentive Contribution
                      Account" under the Royal Plan shall be credited to a
                      subaccount with the Affected Employee's Supplemental
                      Participant Contribution Account under the Plan and that
                      portion, if any, of the transfer that is attributable to
                      the Affected employee's "Matching Contribution Account"
                      and "Qualified Non-Elective Contribution Account" under
                      the Royal Plan shall be credited to a subaccount within
                      the Affected Employee's Employer Contribution Account
                      under the Plan. All amounts transferred pursuant to this
                      Section A.2 shall be 100% vested and nonforfeitable.

           (c)        Loans granted under the Royal Plan which are outstanding
                      as of the Closing Date shall be administered in accordance
                      with the loan documents then in effect; provided, however,
                      that to the extent permitted under the Plan, revisions to
                      such documents may be made by agreement of the Committee
                      and the Affected Employee.

A.3        PARTICIPATION OF AFFECTED EMPLOYEES

           Affected Employees shall become Participants under the Plan effective
           as of the Closing Date. An Affected Employee shall be eligible to
           make Salary Reduction Contributions as of the Participation Date
           which is, or next follows, the Closing Date.

A.4        INVESTMENT OF TRANSFERRED AMOUNTS

<PAGE>   56

           Notwithstanding any provision of Article IV of the Plan to the
           contrary, an Affected Employee on whose behalf a transfer is made
           pursuant to Section A.2, shall specify, at or prior to the time such
           transfer is made, the manner in which his Accounts shall be invested
           in each Investment Fund under the Plan. The investment election shall
           specify, in 10% increments, the percentage of each Account to be
           invested in each Investment Fund.

A.5        PRE-CLOSING DATE SERVICE OF AFFECTED EMPLOYEES

           The period of employment of an Affected Employee prior to the Closing
           Date, which shall be recognized as Service hereunder for purposes
           including, but not limited to, the determination of the vested status
           of Employer contributions made on and after the Closing Date, shall
           be equal to the sum of (a) and (b), as follows:

           (a)        the whole "Years of Service" credited to the Affected
                      Employee as of the Closing Date under the terms of the
                      Royal Plan in effect on such date; and

           (b)        one month of Service for each month of employment with
                      Milbank Insurance Company or a Related Employer during the
                      period beginning on the anniversary of the Affected
                      Employee's "Employment Commencement Date" that next
                      precedes the Closing Date and ending on the Closing Date
                      (the "Service Transition Period"); provided, however, that
                      Service under this paragraph (b) shall be granted only
                      with respect to Affected Employees who, during the Service
                      Transition Period, have not completed six or more months
                      in such service (and who, therefore, are not entitled to a
                      "Year of Service" under paragraph (a)). Notwithstanding
                      the foregoing, there shall be no duplication of Service
                      hereunder with respect to any single period of employment.

A.6        PRESERVATION OF INSTALLMENT OPTION

           Notwithstanding any provision of Article VII of the Plan to the
           contrary, the installment form of payment available to Affected
           Employees under Section 6.5 of the Royal Plan, is in effect on the
           Closing Date, shall be preserved under the Plan with respect to all
           amounts transferred on behalf of Affected Employees from the Royal
           Plan to the Plan, as increased (decreased) by earnings (losses) on
           such amounts.

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