Document:

EXHIBIT 10(gg)

                           QUAKER CHEMICAL CORPORATION
                     SUPPLEMENTAL RETIREMENT INCOME PROGRAM

         As Adopted by the Compensation/Management Development Committee
                               on November 6, 1984
                           as amended November 8, 1989

Purpose
-------

     The purpose of the Supplemental Retirement Income Program (the "Program")
is to provide Officers of Quaker Chemical Corporation (the "Company") an
improved retirement program which will enhance the Company's ability to attract
and retain committed senior executives, as well as to reflect their achievements
and valued contributions to the Company.

Administration
--------------

     The Program shall be a non-qualified plan of deferred compensation for
federal income tax purposes, administered by the Chief Financial Officer,
subject to the supervision of the Compensation/Management Development Committee
of the Board of Directors (the "Committee"). As the Program contemplates payment
of benefits on a post-retirement basis, the Company will establish on the
Company's books and records an appropriate account for each potentially eligible
Officer, commencing with the month in which such Officer reaches the age of 55.

     At the time a potentially eligible Officer reaches the age of 55, a copy of
the Program will be supplied to such Officer, as an attachment to a formal
letter agreement between the Company and the Officer (the "Agreement"), formally
committing the Company to provide the Officer with the supplemental benefits of
the Program as described herein, upon achievement of his or her normal
retirement age of 65 while in the employment of the Company or of one of the
Company's affiliated companies ("Affiliates"). For this purpose, any corporation
in which 40% or more of the voting power is held, directly or indirectly, by the
Company, shall be deemed an Affiliate. The Agreement may contain such other
provisions as the Company's Board of Directors may consider necessary or
appropriate to protect the reasonable business interests of the Company. In the
case of an Officer who continues to be employed by the Company or any of its
Affiliates after reaching age 65, the benefits payable under this Program shall
be deferred

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until the date of actual retirement and, in such a case, shall be based
upon the factors in effect and otherwise computed as if retirement occurred at
age 65 rather than the actual date of retirement. In the case of an Officer who
elects early retirement before achieving the age of 65, the benefits payable
shall be based on factors projected to be in effect at the date of the Officer's
65th birthday.

     The Board may, at any time, at its sole discretion, delete or change any
provision of the Program. Further, the Board may, in its sole discretion,
increase the benefit payable hereunder to any participant where the Board
determines that it is appropriate so to do in order to carry out the purpose of
the Program. Notwithstanding the foregoing, no change or deletion in the Program
shall operate to diminish the potential benefits payable under the Program to
any eligible Officer.

Eligibility
-----------

     Officers of the Company elected to his or her office by the Board of
Directors are eligible to participate in the Program upon the achievement of the
Officer's 55th birthday. Officers elected after achieving the age of 55 shall
become eligible immediately upon election.

Basic Plan Concept
------------------

     The benefits payable under the Program are based on a formula which will
provide the maximum supplemental benefit to Officers who have been employed by
the Company (including any of the Company's Affiliates) for 30 or more years.
For Officers whose employment is less than 30 years, the maximum supplemental
benefit will be reduced by 2% for each full and fractional year less than 30
years of employment by the Company.

Definitions
-----------

     Salary. "Salary" means the actual or projected annual base salary on
     the date of the Officer's 65th birthday.

     Bonus.  "Bonus" means the average of the three largest bonuses earned
     (not received) by the Officer concerned during his or her last five full
     consecutive calendar years of employment. Contributions made to the
     Company's Profit Sharing Plan (or any other plan of deferred compensation
     sponsored by the Company) shall not be included within the definition of
     this term.

                                        2

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Benefit Calculation
-------------------

     The following factors will be taken into account in calculating the
benefits payable to any given Officer under the Program --

                               First Calculation

Salary     plus           Bonus,

           less           Actual Social Security taxes paid on Salary
                          and Bonus,

           less           Pennsylvania income tax on Salary and Bonus at the
                          rate in effect on the date of retirement,

           less           Federal income tax on Salary and Bonus, calculated in
                          accordance with Internal Revenue Schedules for a joint
                          return with no dependents,

           less           Pennsylvania local taxes on Salary and Bonus, where
                          applicable.

     Computation of the above will generate the "Net Pre-Retirement Income" of
the Officer.

                               Second Calculation

Projected benefits
payable from the Com-
pany's qualified Pension.
Plan, based on the "Life
Only" option at age 65,           plus              Projected Social Security
                                                    benefit at age 65,
                                                    assuming that the Officer
                                                    is married and that both
                                                    the Officer and spouse
                                                    are the same age,

                                  less              Projected Pennsylvania
                                                    income taxes on projected
                                                    Pension and Social
                                                    Security benefits at the
                                                    actual rate,

                                  less              Projected federal income
                                                    taxes on projected
                                                    Pension and Social
                                                    Security benefits based
                                      3

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                                                    on IRS schedules, for a
                                                    joint return with no
                                                    dependents,

                                  less              Pennsylvania local taxes
                                                    on projected Pension and
                                                    Social Security benefits
                                                    where applicable.

     Computation of the above will generate the "Net After-Retirement Income."

                               Third Calculation

          The maximum benefit payable will be equal to the amount (if
          any) by which the Net After-Retirement Income is less than 80% of the
          Net Pre-Retirement Income. As indicated above, the maximum benefit is
          payable to Officers who have completed 30 years of employment service,
          commencing with the first day of employment. In the case of Officers
          who have completed less than 30 years of employment, the benefit
          payable shall be reduced by 2% for each full and fractional year of
          employment less than 30.

Payments and Term
-----------------

     Benefits payable to retired Officers under the Program shall be made in
equal monthly installments and shall be made for the life of the Officer only.

                                       4DONEGAL MUTUAL INSURANCE COMPANY 401(K) PLAN

                           (Effective January 1, 1998)

                                                                     Issue Date:
                                                                     May 1, 1998

<PAGE>

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

                                                                           Page
                                                                           ----
ARTICLE I         DEFINITIONS..............................................  1

         Section  1.1      Parties.........................................  1
                  1.2      Important Dates.................................  2
                  1.3      Service and Compensation........................  2
                  1.4      Miscellaneous...................................  5
                  1.5      Construction....................................  5

ARTICLE II        PARTICIPATION............................................  5

         Section  2.1      Eligibility for Participation...................  5
                  2.2      Continuing Participation........................  6
                  2.3      Reemployment After Termination of
                           Employment......................................  6

ARTICLE III       CONTRIBUTIONS............................................  6

         Section  3.1      Employer's Matching Contribution................  6
                  3.2      Payment of Employer Matching
                           Contributions...................................  6
                  3.3      Return of Contributions.........................  6
                  3.4      Participant's Salary Reduction
                           Election........................................  7
                  3.5      Participant Withdrawals.........................  8
                  3.6      Limitations on Participant's Salary
                           Reduction Election or Elective Deferrals........  9
                  3.7      Limitations on Employee Contributions
                           and Matching Employer Contributions............. 11
                  3.8      Limitations on Contributions and Benefits....... 12
                  3.9      Distribution of Excess Deferrals................ 15
                  3.10     Excess Contributions............................ 15
                  3.11     Employee Rollover Contributions................. 16
                  3.12     Direct Rollovers Permitted...................... 17
                  3.13     Reemployment After Distribution................. 18

ARTICLE IV        PARTICIPANTS' ACCOUNTS................................... 19

         Section  4.1      Individual Accounts............................. 19
                  4.2      Valuation of the Trust.......................... 19
                  4.3      Adjustments and Allocations to
                           Accounts........................................ 19
                  4.4      Combined Limitations............................ 20

                                      (1)

<PAGE>

                  4.5      Self-Directed Accounts.......................... 21

ARTICLE V         PAYMENT OF BENEFITS...................................... 23

         Section  5.1      Vesting and Forfeitures......................... 23
                  5.2      Retirement...................................... 23
                  5.3      Age 59-1/2...................................... 23
                  5.4      Disability...................................... 24
                  5.5      Death........................................... 24
                  5.6      Termination of Employment Prior to
                           Retirement, Disability or Death................. 24
                  5.7      Limitation on Distributions..................... 24
                  5.8      Distribution upon Retirement, Disability,
                           Death or Other Termination of Employment........ 25
                  5.9      Distributions of $5,000 or Less................. 26
                  5.10     Additional Distribution Restrictions............ 26

ARTICLE VI        FIDUCIARY RESPONSIBILITY................................. 27

         Section  6.1      Named Fiduciary................................. 27
                  6.2      Allocation of Fiduciary Responsibility.......... 27
                  6.3      Service in More than One Capacity............... 27
                  6.4      Employment of Advisers.......................... 27
                  6.5      Compensation of Fiduciaries and
                           Advisers........................................ 27
                  6.6      Liability of Fiduciaries ....................... 28

ARTICLE VII       PLAN ADMINISTRATION...................................... 28

         Section  7.1      Plan Committee.................................. 28
                  7.2      Duties and Powers of the Plan Committee......... 28
                  7.3      Claims Procedure................................ 29
                  7.4      Records and Reports............................. 29
                  7.5      Application and Forms for Benefits.............. 30

ARTICLE VIII      AMENDMENT, MERGER AND TERMINATION
                    OF THE PLAN............................................ 30

         Section  8.1      Amendment and Termination....................... 30
                  8.2      Action by Employer.............................. 31
                  8.3      Effect of Termination........................... 31
                  8.4      Partial Termination............................. 31
                  8.5      Manner of Distribution.......................... 31
                  8.6      Merger.......................................... 31
                  8.7      Successor Employer.............................. 32

                                      (2)

<PAGE>

ARTICLE IX        TOP-HEAVY PROVISIONS AND DEFINITIONS..................... 32

         Section  9.1      Top-Heavy Plan Definitions...................... 32
                  9.2      Effective Date.................................. 34
                  9.3      Minimum Contribution Requirements............... 34
                  9.4      Maximum Compensation Limitation................. 35
                  9.5      Adjustment to Section 415 Limits................ 35
                  9.6      Remedial Provisions............................. 35
                  9.7      Top Heavy Vesting Schedule ..................... 36

ARTICLE X         MISCELLANEOUS...........................................  36

         Section  10.1     Non-Guarantee of Employment..................... 36
                  10.2     Non-Alienation of Benefits...................... 36
                  10.3     Facility of Payment............................. 36
                  10.4     Exclusive Benefit............................... 37
                  10.5     No Reversion.................................... 37
                  10.6     Effect of Social Security Benefits.............. 37
                  10.7     Titles.......................................... 37
                  10.8     Severability.................................... 37
                  10.9     Applicable Law.................................. 37
                  10.10    Initial Qualification........................... 37
                  10.11    Plan Designation................................ 37

                                      (3)
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

     Whenever used herein, the following words shall have the meaning set forth
below, unless otherwise clearly required by the context.

     1.1 Parties

     (a) "Employer" means Donegal Mutual Insurance Company, a Pennsylvania
corporation, and any successor.

     (b) "Plan Committee" or "Committee" means the Committee established by the
Employer to administer the Plan as set forth in Article VII hereof.

     (c) "Trustee" means the corporation, individual or individuals appointed by
the Employer to hold and administer the assets of the Trust.

     (d) "Employee" means any individual employed by the Employer or an
Affiliated Employer, except that such term shall not include: (i) any leased
Employee as defined in Section 414(n)(2) and (ii) any employee who is hired as a
temporary employee and whose employment is to be of limited duration generally
not in excess of six (6) months.

     (e) "Participant" means an Employee who has satisfied the eligibility
requirements and has entered the plan as provided in Article II.

     (f) "Beneficiary" or "Designated Beneficiary" means a person or persons
(natural or otherwise) designated by a Participant to receive any death benefit
payable under this plan. If there is no such designation, or if the designated
person or persons predecease the Participant, Beneficiary shall mean the
surviving spouse, surviving children, surviving parents or estate of the
Participant, in the order listed.

     (g) "Plan" means the Donegal Mutual Insurance Company 401(k) Plan as set
forth herein and as it may be amended in the future.

     (h) "Trust" or "Trust Agreement" means the Donegal Mutual Insurance Company
401(k) Plan Trust established by the Employer.

     (i) "Affiliated Employer" means the Employer, and any trade or business
(whether or not incorporated) which is under common control (as defined in
Section 414(c) of the Code) with the Employer; an organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
Section 414(m) of the Code) which includes the Employer; and any other entity
required to be aggregated with the Employer pursuant to regulations under
Section 414(o) of the Code.

     (j) 'Highly Compensated Employee' means an Employee who performs services
during the determination year and is described in one or more of the following
groups:

          1. An Employee who is a 5% owner, as defined in Section

<PAGE>

     416(i)(1)(A)(iii), at anytime during the determination year or the
     preceding year.

          2. An Employee who received compensation during the preceding year in
     excess of $80,000 (indexed in accordance with IRC Section 415(d)).

          3. If the Employer so elects, an Employee who is in the top paid group
     during the preceding year as such term is defined in IRC Section 414(q).

     For purposes of this paragraph:

               (1) Compensation is compensation within the meaning of IRC
          Section 415(c)(3), including elective or salary reduction
          contributions to a cafeteria plan, cash or deferred arrangement or
          tax-sheltered annuity, and

               (2) Employers aggregated under IRC Sections (415)(b), (c), (m),
          or (o) are treated as a single employer.

               (3) Highly Compensated Employee includes a former employee who
          was separated from service for the Employer prior to the determination
          year and was a Highly Compensated Employee for the year of the
          termination or for any determination year in or after the date on
          which he attains age 55.

     (k) "Non-Highly Compensated Employee" means an Employee of the Employer who
is not a Highly Compensated Employee.

     1.2 Important Dates

     (a) "Effective Date" means January 1, 1998, the date on which the
provisions of the Plan became effective.

     (b) "Plan Year" means the calendar year.

     (c) "Anniversary Date" means the last day of each Plan Year after the
Effective Date.

     (d) "Limitation Year" means the Plan Year.

     1.3 Service and Compensation

     (a) "Hour of Service" means:

                                      -2-

<PAGE>

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

          (2) Each hour for which an Employee is paid, or entitled to payment,
     by the 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. No more
     than 501 Hours of Service shall be credited under this paragraph for any
     single continuous period (whether or not such period occurs in a single
     computation period). Hours under this paragraph shall be calculated and
     credited pursuant to Section 2530,200(b)2 of the Department of Labor
     Regulations which are incorporated herein by reference; and

          (3) Each hour for which back pay, irrespective of mitigation of
     damages, is either awarded or agreed to by the Employer. The same Hours of
     Service shall not be credited both under paragraph (1) or paragraph (2), as
     the case may be, and under this paragraph (3). 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.

          (4) For absences beginning on or after the first day of the Plan Year,
     solely for purposes of determining whether a One-Year Break in Service for
     participation and vesting purposes has occurred in a Plan Year (or other
     computation period), an Employee who is on Maternity or Paternity Leave
     shall receive credit for the Hours of Service which would otherwise have
     been credited to such Employee but for such absence, or in any case in
     which such Hours cannot be determined, 8 Hours of Service per day of such
     absence. No more than 501 Hours of Service shall be credited under this
     paragraph for any single absence due to Maternity or Paternity Leave. The
     Hours of Service credited under this paragraph shall be credited only (i)
     in the Plan Year (or other computation period) in which the absence begins
     if the crediting is necessary to prevent a One-Year Break in Service in
     that period, or (ii) in any other case, in the immediately following Plan
     Year (or other computation period).

     (b) "One-Year Break in Service" means a Plan Year during which an Employee
fails to complete at least 500 Hours of Service. For purposes of Section 2.1,
the relevant eligibility computation period shall be substituted for the Plan
Year.

     (c) "Years of Service" means

          (1) For purposes of eligibility to participate, as provided in Section
     2.1.

          (2) Years of Service credited prior to a period of consecutive
     One-Year Breaks in Service shall not be credited if the number of
     consecutive One-Year Breaks in Service during such period before the
     Employee earns any vested benefit in Employer contributions under the Plan
     equals or exceeds the greater of (A) five (5), or (B) the aggregate number
     of Years of Service before such period.

          (3) An Employee's Years of Service shall include Years of Service with

                                       -3-

<PAGE>

     the Employer and with other businesses under common control which includes
     the Employer and with other members of an affiliated service group which
     includes the Employer.

     (d) "Compensation" means the total taxable compensation paid to an Employee
by the Employer during the Plan Year except as hereinafter provided. Any bonus,
payments under any Employee incentive plan, disability payments, taxable fringe
benefits, non-taxable fringe benefits, amounts realized from the exercise of
stock options, or when restricted stock (or property) held by the Employee
either becomes freely transferrable or is no longer subject to a substantial
risk of forfeiture, and amounts realized from the sale, exchange or other
disposition of stock options shall not be considered compensation. The foregoing
notwithstanding, compensation shall include any elective contributions made by
the Employer that are not includable in the Employee's gross income under Code
Sections 125, 402(g)(3), 402(h), 403(b) or any compensation deferred under Code
Section 457(b).

     Compensation shall include all compensation (as defined above) which is
actually paid to the Employee during the applicable Plan Year, including the
Plan Year in which the Employee becomes a Participant. Compensation shall be
limited for all purposes to $160,000 as adjusted from time to time in accordance
with Code Section 401(a)(17).

     (e) "Authorized Leave of Absence" means any absence authorized by the
Employer under the Employer's standard personnel practices provided that all
persons under similar circumstances must be treated alike in the granting of
such Authorized Leaves of Absence and provided further that the Employee returns
within the period of authorized absence. In the event of absence due to service
in the Armed Forces of the United States, (1) such absence shall be considered
an Authorized Leave of Absence provided that the Employee returns to employment
with the Employer within the period provided by law, and (2) credit for Hours of
Service shall be given to the extent required by law.

     (f) "Employment Commencement Date" means the first day on which an Employee
completes an Hour of Service for the Employer.

     (g) "Maternity or Paternity Leave" means an absence from work:

          (1) By reason of pregnancy of the Participant;

          (2) By reason of the birth of a child of the Participant;

          (3) By reason of the placement of a child with the Participant in
     connection with the adoption of such child by the Participant; or

          (4) For purposes of caring for such child, for a period beginning
     immediately after such birth or placement.

In approving such leave, the Plan Committee may require the Participant to
furnish such timely information as it may reasonably require to establish that
the reason for the absence from work is for one of the reasons set forth above
and the number of days for which there was such absence.

                                      -4-

<PAGE>

     1.4 Miscellaneous

     (a) "Disability" means a condition which renders a Participant unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of a long, continued and indefinite duration. The Plan Committee
may require such proof of Disability as it deems necessary, and may require a
Participant to be examined by a physician of its own choosing.

     (b) "Participant's Elective Deferral" or "Participant's Elective
Contribution" means as to each Participant the amount of the Participant's
salary reduction election made pursuant to Section 3.4 during the Plan Year by
the Employee and allocated to the Participant's Elective Deferral Account.

     (c) "Employer Matching Contribution" means any contribution to the Plan
made by the Employer for the Plan Year and allocated to a Participant's Employer
Matching Contribution Account by reason of the Participant's Elective Deferrals.

     (d) "ERISA" means Public Law No. 93-406, the Employees Retirement Income
Security Act of 1974, as amended from time to time.

     (e) "Code" or "IRC" means the Internal Revenue Code of 1986 and amendments
thereto.

     (f) "Forfeiture" means that portion of a Participant's account that is not
vested and occurs on the earlier of:

          (1) The distribution of the entire vested portion of a Participant's
     account, or

          (2) The last day of the Plan Year in which the Participant incurs five
     consecutive one year breaks in service.

     (g) USERRA Compliance. Notwithstanding any provision of this Plan to the
contrary, contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Section 414 (u) of the
Code.

     1.5 Construction. Words used herein in the masculine include the feminine,
in the singular include the plural and in the plural include the singular,
unless the context indicates otherwise.

                                   ARTICLE II

                                  PARTICIPATION

     2.1 Eligibility for Participation. Each Employee who is employed by the
Employer on the Effective Date shall eligible to become a Participant as of that
date. Each other Employee shall be eligible to become a Participant as of the
first day of the month immediately succeeding

                                       -5-

<PAGE>

the month in which the Employee commences employment with the Employer. An
Employee becomes a Participant by filing with the Plan Committee a salary
reduction election in accordance with Section 3.4 hereof in the form prescribed
by the Committee.

     2.2 Continuing Participation.

     (a) The Participant shall continue to be a Participant until he incurs a
One-Year Break in Service. Participation shall cease as of the last day of the
Plan Year during which such event occurs.

     (b) During a period of Authorized Leave of Absence, an Employee shall not
be deemed to have incurred a One-Year Break in Service. In the event that an
Employee is laid off, such layoff shall be treated as an Authorized Leave of
Absence, to the extent that the Employer's personnel policies so provide, or in
the absence of any such policies, for a period of one year from the date of
layoff.

     2.3 Reemployment After Termination of Employment. Upon the reemployment of
any Employee who was a Participant such Employee again shall become a
Participant on the first day of the month coincident with or next following his
completion of at least one Hour of Service. All of an Employee's Years of
Service with the Employer shall be credited except Years of Service which are
disregarded under Section 1.3(c)(2).

                                   ARTICLE III

                                  CONTRIBUTIONS

     3.1 Employer's Matching Contribution. The Employer shall contribute
annually on behalf of each Participant in the employ of the Employer on the
Anniversary Date an amount equal to twenty-five percent (25%) of each
Participant's Elective Deferrals for the Plan Year but not in excess of two
percent (2%) of the Participant's Compensation for the Plan Year ("Matching
Contribution"). The requirement that a Participant be employed by the Employer
on the Anniversary Date shall be waived if the employment of the Participant
terminated during the Plan Year because of retirement, disability or death.

     3.2 Payment of Employer Matching Contributions. The Employer shall pay its
matching contribution to the Plan within thirty (30) days of the end of each
calendar quarter and under all circumstances the Employer's matching
contribution must be paid not later than the last date, including extensions
thereof for filing it income tax return for the Plan Year with respect to which
the matching contribution is made.

     3.3 Return of Contributions. In no event shall any Employer Contributions
revert to or be recoverable  by the Employer, unless:

     (a) the contribution is made by reason of a mistake of fact, in which case
it shall be returned within one (1) year after the payment of the contribution,
or,

                                      -6-

<PAGE>

     (b) the contribution is conditioned upon qualification of the Plan under
Section 401 of the Code and if the Plan does not initially so qualify, it shall
be returned to the Employer within one (1) year after the date of denial of
qualification.

     All contributions are conditioned upon the deductibility of the
contribution under Section 404 of the Code. To the extent the deduction is
disallowed, the contribution shall be returned within one (1) year after the
disallowance of the deduction.

     3.4 Participant's Salary Reduction Election.

     (a) Each Participant may make an Elective Contribution to the Plan and to
the extent he elects to reduce or forego an increase in his Compensation, the
amount by which his Compensation is reduced shall be treated as the
Participant's Elective Contribution and be allocated to that Participant's
Elective Account. The amount of the Elective Contribution may not be less than
1% nor more than 8% of the Participant's Compensation as elected by the
Participant in units of one percentage point on forms provided by the Plan
Committee, which may limit the amount of a Participant's Elective Contribution
at any time, if it determines that such limitation is necessary to satisfy the
requirements of IRC Section 401(k).

     (b) The balance in each Participant's Elective Account shall be fully
vested at all times and shall not be subject to forfeiture for any reason.

     (c) A Participant may not make withdrawals from his Elective Account prior
to his attaining age 59-1/2, except in the event of disability, retirement,
termination of employment or hardship as provided in Section 3.5. Distributions
made pursuant to this Section shall be deemed to be made as of the last day of
the preceding accounting quarter and the Participant's Elective Account shall be
reduced accordingly.

     (d) The Employer shall pay all Participants' Elective Contributions
accumulated through payroll deduction to the Trustee with reasonable promptness
and in all events before the end of the succeeding month following such payroll
deductions.

     (e) A Participant may change or terminate his deferral election as provided
in subparagraph (a) by giving thirty (30) days' written notice of such change or
termination to the Plan Committee or its designee and such change or termination
shall be effective as of the first pay period coincident with or next following
the expiration of said thirty (30)-day period. A Participant who has terminated
or not commenced making Elective Contributions pursuant to paragraph (a) above
may commence or reinstate his deferral election upon thirty (30) days' written
notice to the Plan Committee or its designee and the Participant's Elective
Contributions shall commence with the first pay period commencing on or after
the expiration of the thirty (30)-day period.

     (f) A Participant who has taken a hardship distribution as provided in
Section 3.5 hereof shall have his salary reduction election terminated as of the
date of the hardship distribution and shall not be eligible to reinstate that
election until after the first anniversary date of that distribution.
Additionally, the Participant's Elective Contributions for the taxable year
immediately following the taxable year of the hardship distribution may not
exceed the applicable

                                      -7-

<PAGE>

limit on Elective Deferrals under Code Section 402(g) less the Participant's
Elective Contributions for the year in which the Participant received the
hardship distribution.

     3.5 Participant Withdrawals.

     (a) Participant's Elective Deferral Account. A Participant may not withdraw
any amount attributable to his Elective Deferrals prior to the Participant's
retirement, death, disability, separation from service or attainment of age
59-1/2 except in the case of hardship as provided herein. Upon application to
the Plan Committee for a withdrawal based on hardship, the Plan Committee shall
make a determination of the existence of hardship. If the Plan Committee
determines that a hardship exists with respect to the Participant, the
Participant may withdraw up to 100 percent of his vested interest in the
Participant's Elective Deferral Account, but not in excess of the amount
requested by the Participant in his initial application. Withdrawal of amounts
less than the total amount in the Participant's Elective Deferral Account shall
be in units of $1,000 with a minimum withdrawal of $1,000. The Plan Committee
shall implement the foregoing by such rules, regulations, forms and procedures
as to which the Plan Committee seems appropriate, provided always that
participants similarly situated be treated uniformly. Hardship withdrawals may
be made from Participant's Elective Deferrals only, excluding withdrawal of any
income earned by Participant's Elective Deferrals.

     (b) Participant's Employer Matching Contribution Account. A Participant may
not withdraw any amount attributable to his Employer Matching Contribution
Account prior to the Participant's retirement, death, disability, separation
from service, or attainment of age 59-1/2.

     (c) Hardship Provisions. A distribution because of hardship will be made
only if the Participant has an immediate and heavy financial need which may not
be satisfied from other assets of the Participant. A distribution is deemed to
be on account of an immediate and heavy financial need only if the distribution
is for:

          1. Expenses for medical care described in Section 213(d) of the Code
     previously incurred by the Participant, the Participant's spouse or any
     dependents of the Participant or necessary for those persons to obtain
     medical care described in Section 213(d);

          2. Costs directly related to the purchase of a principal residence for
     the Participant (excluding mortgage payments);

          3. Payment of tuition, related educational fees, and room and board
     expenses for the next twelve (12) months of post-secondary education for
     the Participant or the Participant's spouse, children or dependents; or

          4. Payments necessary to prevent the eviction of a Participant from
     the Participant's principal residence or foreclosure on the mortgage of
     that residence.

     (d) A distribution is deemed necessary to satisfy an immediate and heavy
financial need of a Participant if all of the following are satisfied:

                                      -8-

<PAGE>

          1. The distribution is not in excess of the amount of the immediate
     and heavy financial need of the Participant which may include amounts
     necessary to pay the federal, state or local income taxes and penalties
     reasonably anticipated as a result of the distribution.

          2. The Participant has obtained all distributions other than hardship
     distributions and all non-taxable (at the time of the loan) loans currently
     available under all Plans maintained by the Employer.

          3. The Plan and all other plans maintained by the Employer limit the
     Participant's elective contributions for the next taxable year to the
     applicable limit under Section 402(g) of the Code for that year minus the
     Employee's elective contributions for the year of the hardship
     distribution.

          4. The Participant is prohibited under the terms of the Plan or an
     otherwise legally enforceable agreement from making elective contributions
     and Employee contributions to the Plan and all other plans maintained by
     the Employer for at least twelve (12) months after receipt of the hardship
     distribution.

     3.6 Limitations on Participant's Salary Reduction Election or Elective
Deferrals.

     (a) Maximum Amount of Elective Deferrals. No Employee shall be permitted to
have Elective Deferrals made under this Plan during any calendar year in excess
of $7,000.00 multiplied by the Adjustment Factor for such year as provided by
the Secretary of the Treasury.

     (b) Average Actual Deferral Percentages.

          (1) The Average Actual Deferral Percentage for Eligible Participants
     who are Highly Compensated Employees for the Plan Year shall not exceed the
     Average Actual Deferral Percentage for Eligible Participants who are
     Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or

          (2) The Average Actual Deferral Percentage for Eligible Participants
     who are Highly Compensated Employees for the Plan Year shall not exceed the
     Average Actual Deferral Percentage for Eligible Participants who are
     Non-Highly Compensated Employees for the Plan Year multiplied by 2,
     provided that the Average Actual Deferral Percentage for Eligible
     Participants who are Highly Compensated Employees does not exceed the
     Average Actual Deferral Percentage for Eligible Participants who are
     Non-Highly Compensated Employees by more than two (2) percentage points, or
     such lesser amount as the Secretary of the Treasury shall prescribe to
     prevent the multiple use of this alternative limitation with respect to any
     Highly Compensated Employee.

     (c) Definitions. For purposes of this Section 3.6 the following definitions
shall be used:

                                      -9-

<PAGE>

          (1) "Actual Deferral Percentage" ("ADP") shall mean the ratio
     (expressed as a percentage), of Elective Deferrals on behalf of each
     Eligible Participant for the Plan Year to such Eligible Participant's
     Compensation for the Plan Year. For this purpose, Elective Deferrals shall
     be taken into account only to the extent they relate to Compensation that
     either will be received by the Participant in the Plan Year, but for the
     deferral election, or which is attributable to services performed by the
     Participant in the Plan Year and will be received by the Participant within
     2 1/2 months after the close of the Plan Year but for the deferral
     election. Further, Elective Deferrals shall be taken into account only if
     they are allocated to the Participant's Account within the Plan Year to
     which they relate. An Elective Deferral is considered allocated within the
     Plan Year if the allocation is not contingent upon the Participant's
     performance of services or continued participation in the Plan after the
     allocation date and the Elective Deferral is actually paid to the trust not
     later than 12 months after the Plan Year to which the contribution relates.

          (2) "Average Actual Deferral Percentage" shall mean the average
     (expressed as a percentage) of the Actual Deferral Percentage of all
     Eligible Participants as a group.

          (3) "Eligible Participant" shall mean any Employee of the Employer who
     is otherwise authorized under the terms of the Plan to have Elective
     Deferrals allocated to his account for the Plan Year.

          (4) "Excess Contributions" are defined in IRC Section 401(k)(8)(b) and
     are determined and distributed as provided in Section 3.10 hereof.

     (d) Special Rules.

          (1) For purposes of this Section 3.6, the Actual Deferral Percentage
     for any Eligible Participant who is a Highly Compensated Employee for the
     Plan Year and who is eligible to have Elective Deferrals allocated to his
     account under two or more Plans or arrangements described in Section 401(k)
     of the Code that are maintained by the Employer or an Affiliated Employer
     shall be determined as if all such Elective Deferrals were made under a
     single arrangement.

          (2) For purposes of distributing Excess Contributions, the amount of
     Excess Contributions that may be distributed to a Highly Compensated
     Employee for a Plan Year shall be reduced by the amount of excess deferrals
     previously distributed to the Highly Compensated Employee for his or her
     taxable year ending with or within such Plan Year.

          (3) A Participant's Elective Contributions which are returned as
     provided in (c)(4) above shall not be taken into account in determining the
     amount of Matching Contributions to be made for the Participant's benefit
     for the year. To the extent Matching Contributions have already been made
     with respect to the Elective Contributions, such Matching Contributions
     shall be distributed to the Participant at the same time as the Elective
     Contributions are returned or recharacterized, provided however, that to
     the extent the Participant does not have a vested interest in such Matching
     Contributions, the Participant shall forfeit such Matching

                                      -10-

<PAGE>

     Contributions.

          (4) For purposes of determining the ADP for the Non Highly Compensated
     Employees for any determination year, the Plan shall rely on look-back year
     data. For this purpose, determination year means the Plan Year with respect
     to which the ADP or ACP is being calculated and look-back means the Plan
     Year immediately preceding the determination year.

     3.7 Limitations on Employee Contributions and Matching Employer
Contributions.

     (a) Contribution Percentage. The Average Contribution Percentage ("ACP")
for Eligible Participants who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Contribution Percentage for Eligible Participants
who are Nonhighly Compensated Employees for the Plan Year multiplied by 1.25; or

     The Average Contribution Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Eligible Participants who are Nonhighly Compensated
Employees the Plan Year multiplied by 2, provided that the Average Contribution
Percentage for Eligible Participants who are Highly Compensated Employees does
not exceed the Average Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees by more than two (2) percentage points or such
lesser amount as the Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.

     (b) Definitions. For purposes of this Section 3.7 the following definitions
shall apply.

          (1) "Average Contribution Percentage" shall mean the average
     (expressed as a percentage) of the Contribution Percentages of the Eligible
     Participants in a group.

          (2) "Contribution Percentage" shall mean the ratio (expressed as a
     percentage), of the sum of the Employee Contributions and Matching
     Contributions made on behalf of each Eligible Participant for the Plan Year
     to such Eligible Participant's Compensation for the Plan Year.

          (3) "Eligible Participant" shall mean any employee of the Employer who
     is otherwise authorized under the terms of the plan to have Employee
     Contributions or Matching Contributions allocated to his account for the
     Plan Year.

     (c) Special Rules.

          (1) For purposes of this section 3.7, the Contribution Percentage for
     any Eligible Participant who is a Highly Compensated Employee for the Plan
     Year and who is eligible to receive Matching contributions, or Elective
     Deferrals allocated to his account under two or more plans described in
     Section 401(a) of the Code or arrangements described in Section 401(k) of
     the Code that are maintained by the Employer or an Affiliated Employer
     shall be

                                      -11-

<PAGE>

     determined as if all such contributions and Elective Deferrals were made
     under a single plan.

          (2) In the event that this plan satisfies the requirements of Section
     410(b) of the Code only if aggregated with one or more other plans, or if
     one or more other plans satisfy the requirements of Section 410(b) of the
     Code only if aggregated with this plan, then this Section 3.7 shall be
     applied by determining the Contribution Percentages of Eligible
     Participants as if all such plans were a single plan.

     (d) Excess Aggregate Contributions.

               (i) Excess Aggregate Contributions for a Highly-Compensated
          Employee will be determined by reducing the Actual Contribution Ratio
          (ACR) of the Highly-Compensated Employee with the highest ACR to the
          extent necessary to satisfy the Actual Contribution Percentage ("ACP")
          test or to cause such ratio to equal the ACR of the Highly-Compensated
          Employee with the next highest ratio. This process will be repeated
          until the ACP test is satisfied. In no event will Excess Aggregate
          Contributions remain unallocated or be allocated to a suspense account
          for allocation in the future Plan Year. The amount of the Excess
          Aggregate Contributions shall be distributed first to the
          Highly-Compensated Employee with the highest dollar amounts of
          Matching Contributions or Elective Contributions taken into account in
          computing the ACP in an amount equal to the lesser of such total
          Excess Aggregate Contributions or the amount necessary to cause the
          amount of such Employee's Matching Contributions to equal the amount
          of the Matching Contributions taken into account in computing the ACP
          of the Highly Compensated Employee with the next highest dollar amount
          of Matching Contributions taking into account in computing the ACP.
          This process will be repeated until the aggregate amount required to
          be distributed is so distributed. Income on such Excess Aggregate
          Contributions shall be distributed in accordance with the applicable
          Treasury Regulations. Distribution of Excess Aggregate Contributions
          will be made after the close of the Plan Year to which the
          contributions relate but within twelve months after the close of such
          Plan Year. Such distributions shall be treated as Employer
          contributions for purposes of Code Sections 401(a)(4), 404 and 415.
          Notwithstanding the foregoing, to the extent a Participant receives a
          distribution of Excess Aggregate Contributions which relate to
          Matching Contributions in which the Participant does not have a vested
          interest, such portion of the Excess Aggregate Contribution shall be
          forfeited.

               (ii) The amount of Excess Aggregate Contributions for a Plan Year
          will be determined only after first determining the Excess
          Contributions that are treated as Employee contributions because of
          recharacterization for the Plan Year.

         3.8  Limitations on Contributions and Benefits.

     (a) Definition of Annual Additions. For purposes of the Plan, "Annual
Addition" shall mean the amounts allocated to a Participant's account during the
limitation year that constitute:

          (1) Employer Contributions,
          (2) Employee Contributions,
          (3) Forfeitures, and

                                      -12-

<PAGE>

          (4) Amounts described in Sections 415(l)(1) and 419A(d)(2) of the
     Code.

     (b) Maximum Annual Addition. The maximum annual addition that may be
contributed or allocated to a Participant's account under the Plan for any
limitation year shall not exceed the lesser of

          (1) the Defined Contribution Dollar Limitation, or

          (2) Twenty-five (25%) percent of the Participant's compensation,
     within the meaning of Section 415(c)(3) of the Code for the Limitation
     Year.

     (c) Special Rules. The compensation limitation referred to in subsection
(b)(2) shall not apply to:

          (1) Any contribution for medical benefits (within the meaning of
     Section 419A(f)(2) of the Code) after separation from service which is
     otherwise treated as an Annual Addition, or

          (2) Any amount otherwise treated as an Annual Addition under Section
     415(l)(1) of the Code.

     (d) Definitions. For purposes of Section 3.8,

          (1) Defined Contribution Dollar Limitation means $30,000.00 or, if
     greater, 1/4 of the defined benefit dollar limitation set forth in Section
     415(b)(1) of the Code as in effect for the Limitation Year.

          (2) Limitation Year means the calendar year.

     (e) Limitations if Participant in More Than One Plan. The foregoing
limitations of this Section 3.8 shall apply to the Annual Additions to this Plan
and all Annual Additions made to all other defined contribution plans whether
terminated or ever maintained by the Employer or a Related Employer in which the
Participant is or was a Participant.

     (f) Overall Limitation on Defined Benefit and Defined Contribution Plan
Benefits. The sum of a Participant's defined benefit plan fraction and his
defined contribution plan fraction shall not exceed 1.0. This limitation shall
be applied in accordance with the following provisions specified in the
following subparagraphs.

          (1) A Participant's defined benefit plan fraction is the projected
     annual benefit of the Participant under all defined benefit plans (whether
     terminated or not) ever maintained by the Employer or by Related Employers
     divided by the lesser of

     (a) the product of 1.25 multiplied by the dollar limitation in effect from
time to time under Section 415(b)(1)(A) of the Code, or

                                      -13-

<PAGE>

     (b) the product of 1.4 multiplied by the amount that may be taken into
account under Section 415(b)(1)(B) of the Code with respect to such individual
for such year.

     All such amounts shall be determined as of the close of the Limitation
Year, with such applicable adjustments and reductions as are required under
Section 415(b) of the Code. Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer that were in existence on May 6, 1986, the denominator of the fraction
may not be less than 125 percent of the sum of the annual benefits under such
plans that the Participant had accrued as of the close of the Last Limitation
Year beginning before January 1, 1987, disregarding any changes in the terms and
conditions of the plans after May 5, 1986. The preceding sentence shall only
apply if the defined benefit plans individually and in the aggregate satisfied
the requirements of Section 415 of the Code for all Limitation Years beginning
before January 1, 1987.

          (2) A Participant's defined contribution plan fraction is the sum of
     the Annual Additions to the Participant's account under the Plan and all
     other defined contribution plans (whether terminated or not) ever
     maintained by the Employer or by Related Employers as of the close of the
     Limitation Year, divided by the lesser of:

               (a) the sum of the product of 1.25 multiplied by the dollar
          limitation in effect under Section 415(c)(1)(A) of the Code
          (determined without regard to subsection (c)(6) thereof) for such year
          and each prior year of service with the Employer or Related Employers,
          or

               (b) the sum of the product of 1.4 multiplied by the amount that
          may be taken into account under Section 415(c)(1)(B) (or subsection
          (c)(7), if applicable) of the Code for such year and each prior year
          of service with the Employer or Related Employers.

         All such amounts shall be determined as of the close of the Limitation
Year and with such applicable limits and adjustments as are required under
Section 415(b) of the Code. Notwithstanding the above, if the Employee was a
Participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit contribution plans maintained
by the Employer that were in existence on May 6, 1986, the numerator of this
fraction will be adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of the Plan. Under the
adjustment, an amount, equal to the product of the excess of the sum of the
fractions over 1.0 times the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The adjustment is calculated
using the fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and disregarding any changes
in the terms and conditions of the plans made after May 6, 1986, but using the
Section 415 limitation applicable to the first Limitation Year beginning on or
after January 1, 1987.

          (3) For purposes of applying the limitations of this Section 3.8, the
     amount of any nondeductible Employee Contributions credited for the
     Limitation Year under any defined benefit plan maintained by the Employer
     or by any Related Employer shall be treated as an

                                      -14-

<PAGE>

     Annual Addition for the benefit of the Participant under a qualified
     defined contribution plan.

     (g) Source of Benefit Reduction Necessary to Meet Annual Addition
Limitation. If as a result of the foregoing, a Participant's defined
contribution plan Annual Additions will exceed the limitations of this Section,
the required reduction in such Additions shall be made first to the Donegal
Mutual Insurance Company Profit Sharing Plan Annual Additions and, if necessary,
then to the Annual Additions with respect to a Participant made to this Plan,
proceeding first through forfeitures allocated to the Participant's Employer
Matching Contribution account, then the Employer's Matching Contribution for the
Plan Year and then to the return of the Elective Contributions of a Participant
for the Plan Year. Any reduction in Employer Matching Contributions or
forfeitures that would otherwise have been allocated to the Participant under
this Plan in order to meet the above limitations shall be treated as a
forfeiture and used to reduce the Employer Matching Contribution otherwise
required.

     3.9 Distribution of Excess Deferrals.

     (a) In General. Notwithstanding any other provision of the Plan, Excess
Deferral Amounts for any Plan Year and the income allocable thereto shall be
distributed no later than April 15 of the next succeeding year to Participants
who claim such Allocable Excess Deferral Amounts for the calendar year.

     (b) Definitions. For purposes of this Section 3.9, "Excess Deferral Amount"
means the amount of Elective Deferrals for a calendar year that the Participant
allocates to this Plan pursuant to the claim procedure set forth in Section
3.9(c).

     (c) Claims. The Participant's claim shall be in writing and be submitted to
the Plan Committee no later than March 1 of the next succeeding year. It shall
specify the Participant's Excess Deferral Amount for the preceding calendar year
and be accompanied by the Participant's written statement that if such amounts
are not distributed, such Excess Deferral Amount, when added to amounts deferred
under other plans or arrangements described in Section 401(k), 408(k) or 403(b)
of the Code, will exceed the limit imposed on the Participant by Section 402(g)
of the Code for the year in which the deferral occurred.

     (d) Maximum Distribution Amount. The Excess Deferral Amount distributed to
a Participant with respect to a calendar year shall be adjusted for income and,
if there is a loss allocable to the Excess Deferral, shall in no event be less
than the lesser of the Participant's account under the Plan or the Participant's
Elective Deferrals for the Plan Year.

     3.10 Excess Contributions.

     (a) In General. Excess Contributions as defined in IRC Section 401(k)(8)(B)
and the income allocable thereto (as provided in paragraph (c) hereof) shall be
distributed no later than the March 15th of the next succeeding Plan Year to the
Highly-Compensated Employees as provided herein. The amount of Excess
Contributions to be distributed shall be determined by reducing the Elective
Deferral amount of the Highly Compensated Employee having the highest Elective
Deferral amount for such year to the higher of (1), the level at which the ADP
test is passed by the Plan without the reduction of the ADP of any other Highly
Compensated

                                      -15-

<PAGE>
Employees or (2) the ADP of the Highly Compensated Employee having the next
highest Elective Deferral amount. If this process does not satisfy the ADP test
for the Plan, this process as described in the preceding sentence shall be
repeated at the progressively descending elective deferral amount levels amount
Highly Compensated Employees until the ADP test is satisfied, or until the
aggregate of excess Elective Deferral amounts has been refunded, whichever is
the first to occur. All excess contributions must be corrected by the close of
the Plan Year following the Plan Year for which they were made.

     (b) Election to Treat As Employee Contributions. Any amount required to be
distributed to a Participant by paragraph (a) hereof shall, at the election of
the Participant and to the extent provided in Treasury Regulations, be retained
in the Plan as a Voluntary Employee Contribution and treated as an amount
distributed to the Participant and then contributed as such a Voluntary Employee
Contribution. Any excess contributions recharacterized as Employee Contributions
pursuant to the preceding sentence shall nevertheless remain subject to the same
nonforfeitability requirements and distribution limitations as apply to Elective
Contributions.

     (c) Excess Aggregate Contributions. Excess Aggregate Contributions in the
amount allocable thereto (as provided in paragraph (d) hereof shall be
distributed no later than the March 15th of the next succeeding Plan Year to the
Highly-Compensated Participants on the basis of the respective portions of such
amounts attributable to each of such Participants. Excess Aggregate
Contributions means the amount described in Section 401(m)(6)(B) of the Code.

     The foregoing notwithstanding, the amount of Excess Contributions to be
distributed shall be reduced by Excess Deferrals (ss.3.9) previously distributed
for the taxable year ending in the same Plan Year and Excess Deferrals to be
distributed for a taxable year will be reduced by Excess Contributions
previously distributed or recharacterized for the Plan Year beginning in such
taxable year.

     (d) Determination of Income. The income allocable to Excess Contributions
and Excess Aggregate Contributions shall be determined by computing both the
income for the Plan Year with respect to which the excess amounts relate and the
income for the period between the end of that year and the date of distribution
("the gap"). The income allocable to such excess amounts will be equal to the
sum of the income allocable to the Participant's account containing the excess
amounts for the applicable year and the income allocable to such account for the
gap period multiplied by a fraction, the numerator of which is the excess amount
and the denominator of which is the closing balance as of the end of the
applicable year. Until provided otherwise by Treasury Regulations, such
distribution shall be made without reduction for net losses.

     (e) Limitations on Multiple Use of Alternative Limitation. The alternative
method of compliance with IRC Sections 401(k) and 401(m) shall be limited as
provided in Treas. Reg. Section 1.401(m)-(2)(b). In the event a multiple use of
the alternative limitation occurs, correction of such use with respect to the
affected Highly-Compensated Employees shall be accomplished by reducing the
Actual Deferral Percentage of the Highly-Compensated Employees and such
reduction shall be treated as an Excess Contribution subject to the provisions
of this Section 3.10.

     3.11 Employee Rollover Contributions.

                                      -16-

<PAGE>

     (a) An Employee eligible to participate in the Plan, whether or not a
Participant, may transfer to the Plan within the time period and in the manner
prescribed in paragraph (c) below and pursuant to procedures promulgated by the
Plan Committee, a rollover amount as defined in paragraph (b) below, provided
that such rollover amount shall be subject in all respects to this section 3.11.
The rollover amount shall be credited to a Rollover Account maintained for that
Employee/Participant. That Account shall share in the income allocations of the
trust fund as provided in section 4.3(d) hereof, but it shall not share in
Employer contributions nor any other allocations under section 4.3. Upon the
termination of the Participant's employment with the Employer, for whatever
reason, the total balance in the Rollover Account shall be distributed in the
same manner as the balances in the Participant's other accounts in accordance
with Article V hereof.

     (b) For purposes of this section, rollover amount means as to any Employee,
an "eligible rollover distribution" as defined in Section 402(c)(4) of the Code.

     (c) Rollover amounts must be transferred to this Plan on or before the
sixtieth (60th) day following the Employee's receipt of the rollover amount. The
Employee may authorize the Plan Committee to obtain the rollover amount from the
transferor plan directly. As a condition precedent to being permitted to
transfer a rollover amount to the Plan, the Employee shall comply with such
requirements and complete such forms as the Plan Committee reasonably believes
are necessary to insure that any amount it authorizes the Trustee to accept
constitutes a rollover amount as defined in Section 402(c)(4) of the Code.

     (d) The foregoing notwithstanding, in determining whether the distribution
to be received as a rollover is being received from a qualified plan, the Plan
Committee shall be entitled to rely on the representations of the Employee as
provided in the Treasury Regulations that the distributing plan is a qualified
plan. Regardless of whether it is ultimately determined that such distributing
plan is or is not a qualified plan, the acceptance of such contribution shall
not be a grounds for disqualification of the Plan. Nevertheless, if the Plan
Committee determines at any time that any amount accepted as a rollover amount
pursuant to this section, for whatever reason, was not eligible for such
classification or otherwise did not qualify as a rollover amount, the Committee
shall direct the Trustees to pay to the Employee/Participant or his designated
beneficiary the total amount accepted as a rollover amount plus all earnings and
increments in value thereon from the date of acceptance to the date of such
distribution. The Plan Committee shall authorize the Trustees or other payor to
withhold from such distribution any taxes as required by law and to submit such
information documents to the taxing authorities as required by law.

     (e) Under all circumstances and at all times the Employee/Participant shall
be 100% vested in the balance of the Employee's Rollover Account.

     3.12 Direct Rollovers Permitted

     (a) Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a distributee may
elect, at the time and in the manner prescribed by the Committee, to have any
portion of an eligible

                                      -17-

<PAGE>

rollover distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.

     (b) Definitions.

          1. Eligible rollover distribution: An eligible rollover distribution
     is any distribution of all or any portion of the balance to the credit of
     the distributee, except that an eligible rollover distribution does not
     include: any distribution that is one of a series of substantially equal
     periodic payments (not less frequently than annually) made for the life (or
     life expectancy) of the distributee or the joint lives (or joint life
     expectancies) of the distributee and the distributee's designated
     beneficiary, or for a specified period of ten 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
     includible in gross income (determined without regard to the exclusion for
     net unrealized appreciation with respect to employer securities).

          2. Eligible retirement plan: An eligible retirement plan is an
     individual retirement account described in Section 408(a) of the Code, an
     individual retirement annuity described in Section 408(b) of the Code, 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 the surviving spouse, an eligible retirement plan
     is an individual retirement account or individual retirement annuity.

          3. Distributee: A distributee includes an Employee or former Employee.
     In addition, the Employee's or former Employee's surviving spouse and the
     Employee's or former Employee's spouse or former spouse who is the
     alternate payee under a qualified domestic relations order, as defined in
     Section 414(p) of the Code, are distributees with regard to the interest of
     the spouse or former spouse.

          4. Direct rollover: A direct rollover is a payment by the Plan to the
     eligible retirement plan specified by the distributee.

     3.13 Reemployment after Distribution. If any former Participant shall be
re-employed by the Employer before incurring five consecutive 1 year Breaks in
Service, and such former Participant had received a distribution of his entire
vested interest prior to his re-employment, his forfeited account shall be
reinstated only if he repays the full amount distributed to him before the
earlier of five years after (1) the first date on which the Participant is
subsequently re-employed by the Employer, or (2) the close of the first of five
consecutive 1 year Breaks in Service commencing after the distribution. If a
distribution occurs for any reason other than a separation from service, the
time for repayment may not end earlier than five years after the date of
separation. In the event the former Participant does repay the full amount
distributed to him, the undistributed portion of the Participant's Account must
be restored in full, unadjusted by any gains or losses occurring subsequent to
the Anniversary Date coinciding with or preceding his

                                      -18-

<PAGE>

termination. The source for such reinstatement shall first be any forfeitures
occurring during the year. if such source is insufficient, then the Employer
shall contribute an amount which is sufficient to restore any such forfeited
Account. Additionally, the Employer shall establish a separate account for the
Participant's interest in the Plan at the time of the distribution and at any
time during which the Participant's vested percentage in that account can
increase that vested portion will equal or exceed an amount determined by
applying the following formula where "x" equals the amount: x = P (ab + (r x d)
- (r x d). "P" is the vested percentage; "ab" is the account balance; "d" is the
amount of the distribution; and "r" is the ratio of the account balance at the
relevant time to the account balance after the distribution.

                                   ARTICLE IV

                             PARTICIPANTS' ACCOUNTS

     4.1 Individual Accounts. The Plan Committee shall establish and maintain
for each Participant (or Beneficiary of a deceased Participant) an Elective
Deferral Account and Employer Matching Contribution Account. Credits and charges
shall be made to each such Account in the manner hereinafter described. The
maintenance of Accounts is for accounting purposes only, and a segregation of
the assets of the Trust to each Account shall not be required.

     4.2 Valuation of the Trust. The Trust shall be valued by the Trustees on
the Anniversary Date in each Plan Year. Such valuation shall be made on the
basis of the fair market value of all property held in Trust. Any contribution
made on account of a particular Plan Year but received by the Trustees after the
end of such Plan Year shall be treated as having been made on the Anniversary
Date.

     4.3 Adjustments and Allocations to Accounts. At the end of each Plan Year,
the Accounts of each Participant (or Beneficiary of a deceased Participant)
shall be adjusted in the following order:

     (a) decreased by any amounts distributed to or for the benefit of the
Participant (or Beneficiary of a deceased Participant);

     (b) increased by the contributions made by or on behalf of the Participant
to his account not previously so allocated;

     (c) increased by the Employer's Matching Contribution which shall be
allocated to each Participant's Employer Matching Contribution Account, provided
that no allocation shall be made to the account of a Participant unless that
Participant is in the employ of the Employer on the last day of the year, except
as provided in Section 3.1; and

     (d) increased by the income of the Trust in proportion to the account
balances in each such account on the last day of each calendar quarter in
proportion to the balances of all such accounts on the same day prior to the
income allocation provided herein.

                                      -19-

<PAGE>

     (e) The foregoing notwithstanding, if as a result of a reasonable error in
estimating a Participant's Plan Compensation, or a reasonable error in
determining the amount of a Participant's Elective Deferrals, the annual
additions for a Participant for a particular Plan Year would cause the
limitations of Code Section 415 applicable to that Participant for that Plan
Year to be exceeded, such excess amounts shall not be deemed to be annual
additions to that Participant's account and shall not increase that
Participant's account, but rather shall be removed from that Participant's
account and be used to reduce the Employer contributions for the next Limitation
Year (Plan Year) and succeeding Limitation Years, if necessary, for that
Participant if that Participant is covered by the Plan as of the end of the
Limitation Year. If the Participant is not covered by the Plan as of the end of
the Limitation Year, then such excess must be held unallocated in a suspense
account for that Limitation Year and allocated and reallocated in the next
Limitation Year to all remaining Participants and such excess amounts must be
used to reduce the Employer contributions for such Limitation Years. No such
excess amounts may be distributed to Participants or former participants.

     4.4 Combined Limitations.

     (a) In the event any Participant in this Plan is a participant under any
other Defined Contribution Plan maintained by the Employer (whether or not
terminated), the total amount of Annual Additions to such Participant's Accounts
for any Limitation Year from all such Defined Contribution Plans shall not
exceed the limitations set forth in Section 3.8. Any reduction shall be made
first from the Employer's profit sharing plan or plans and then from the
Employer's other defined contribution plans. If it is determined that as a
result of the limitations set forth in this Section, the Annual Additions to a
Participant's account in this Plan must be reduced, such reduction shall be
accomplished in accordance with the provisions of Section 3.10.

     (b) In the event that any Participant under this Plan is a participant
under one or more Defined Benefit Plans maintained by the Employer (whether or
not terminated), then for any Limitation Year the sum of the Defined Benefit
Plan Fraction for such Limitation Year and the Defined Contribution Plan
Fraction for such Limitation Year shall not exceed one (1.0). If it is
determined that, as a result of the limitations set forth in this Section 4.4,
the Annual Additions under this Plan must be reduced, such reduction shall be
accomplished in accordance with the provisions of Section 3.10.

     (c) Definitions Relating to Annual Addition Limitations: For purposes of
Section 4.4, the following definitions shall apply:

          (1) "Retirement Plan" means a Plan maintained by the Employer which is
     (A) a profit sharing, or pension plan described in Section 401(a) of the
     Code, (B) an annuity plan or annuity contract described in Sections 403(a)
     or 403(b) of the Code, (C) a qualified bond purchase plan described in
     Section 405(a) of the Code, or (D) an individual retirement account,
     individual retirement annuity or retirement bond described in Sections
     408(a), 408(b) or 409 of the Code.

          (2) "Defined Contribution Plan" means a Retirement Plan which provides
     for an individual account for each Participant and for benefits based
     solely on the amount contributed to the Participant's account, and any
     income, expense, gains and losses, and any

                                      -20-

<PAGE>

     forfeitures of accounts of other participants which may be allocated to
     such participant's account.

          (3) "Defined Benefit Plan" means any Retirement Plan which does not
     meet the definition of a Defined Contribution Plan.

          (4) "Defined Benefit Plan Fraction", for any Limitation Year means a
     fraction (A) the numerator of which is the projected annual benefit of the
     Participant (the annual benefit to which such Participant would be entitled
     under the terms of the Defined Benefit Plan on the assumptions that he
     continues employment until his normal retirement age as determined under
     the terms of such Defined Benefit Plan, that his compensation continues at
     the same rate as in effect in the Limitation Year under consideration until
     the date of his normal retirement age and that all other relevant factors
     used to determined benefits under such Defined Benefit Plan remain constant
     as of the current Limitation Year for all future Limitation Years) under
     all Defined Benefit Plans maintained by the Employer, determined as of the
     close of the Limitation Year, and (B) the denominator of which is the
     lesser of (i) the product of 1.25 multiplied by the dollar limitation in
     effect under subsection (b)(1)(A) of Section 415 of the Code for such
     Limitation Year, or (ii) the product of 1.4 multiplied by 100% of the
     Participant's average compensation for his high three Limitation Years.

          (5) "Defined Contribution Plan Fraction" for any Limitation Year shall
     mean a fraction (A) the numerator of which is the sum of the Annual
     Additions to the Participant's accounts under all Defined contribution
     Plans maintained by the Employer in such Limitation Year, and (B) the
     denominator of which is the sum of the lesser of the following amounts
     determined for such Limitation Year and for each prior Limitation Year of
     service with the Employer: (i) the product of 1.25 multiplied by the dollar
     limitation in effect under subsection (c)(1)(A) of Section 415 of the Code
     for such Limitation Year (without regard to subsection (c)(6) thereof), or
     (ii) the product of 1.4 multiplied by 25% of the Participant's Limitation
     Year Compensation.

          (6) "Limitation Year" shall mean the Plan Year.

          (7) "Limitation Year Compensation" shall mean compensation as defined
     in Section 1.3(d) of the Plan.

          (8) "Employer" means the employer that adopts this Plan, and all
     members of a controlled group of corporations (as defined in Section 414(b)
     of the Code as modified by Section 415(h), all commonly controlled trades
     or businesses (as defined in Section 414(c) of the Code as modified by
     Section 415(h) or affiliated Service groups (as defined in Section 414(m)
     of the Code) of which the adopting employer is a part.

     4.5 Self-Directed Accounts.

     (a) Each Participant shall direct the Trustees as to how all or any portion
of the Participant's Account shall be invested in accordance with such rules and
regulations that permit a Participant the opportunity to exercise control over
the assets in his individual account and provide an opportunity to choose, from
a broad range of investments, the manner in which

                                      -21-

<PAGE>

some or all of such assets are invested. The Trustees shall implement such
Participant instructions except as provided in paragraph (c) below. All rules
and regulations shall be applied consistently and uniformly to all Participants
similarly situated.

     (b) The Trustees shall make available to each Participant the opportunity
to choose from at least three diversified categories of investments (including
look-through investments) and to transfer all or any portion of the
Participant's Account between and among such investments no less frequently than
quarterly annually. In addition to investment directions which may be given
pursuant to paragraph (d) below, a Participant may invest in any of the
look-through investment vehicles as selected by the Trustees. All of the
information concerning such investments shall be made available to a Participant
upon request to the Trustees by distribution of the prospectuses and other
information concerning such look-through investments as is provided to the
Trustees.

     (c) The Trustees shall not honor investment directions which, if
implemented would not be in accordance with the Plan documents to the extent the
Plan documents are consistent with Title I of ERISA; would cause the Plan to
maintain an indicia of ownership of any Plan assets outside of the United
States; would jeopardize the Plan's tax qualified status under the Internal
Revenue Code; would result in a prohibited transaction as described in ERISA
Section 406, or in IRC Section 4975; could result in a loss in excess of the
Participant's Account balance; or, would generate income taxable to the Plan.

     (d) In addition to the look-through investment vehicles available to the
Participant under paragraph (b) above, a Participant may select any other
investment, subject to the limitations of paragraph (c) and subject to the
Participant bearing the expenses of carrying out the Participant's instructions
in purchasing such investments, all of which shall be detailed in writing by the
Trustees to the Participant to the extent known and, if there are expenses which
are unknown that fact shall be in writing on forms supplied by the Trustees and
shall be signed by the Participant and witnessed by a Trustee.

     (e) Under no circumstances shall the ability of a Participant to direct the
investment of the amounts credited to his Account be interpreted to allow the
Participant to invest such Accounts directly or to ever take possession of all
or any portion of his Account, except as specifically provided by this Plan. All
funds while held in the Trust are part of the trust fund and are managed
exclusively by the Trustees subject to this Section 4.5.

     (f) It is specifically intended that the Plan qualify as an ERISA 404(c)
Plan. The Plan Committee is the identified plan fiduciary to accept
Participant's investment choices and to distribute such investment information.
The Plan Committee may designate all or a portion of this responsibility to
others provided such designation is communicated in writing to the Participants.
To the extent the Plan does qualify as an ERISA 404(c) Plan, with respect to
each Participant the Plan fiduciaries may be relieved of liability for any
losses which are the direct and necessary result of investment choices made by
the Participant or the Participant's beneficiary. A Participant may change the
allocation of his contribution and account balances at least once in any three
months. Each Participant shall have the opportunity to give investment
instructions to the Plan Committee or its designee and will obtain written
conformation of such instructions. Under no circumstances is any person,
including any member of the Plan Committee, or any employee of

                                      -22-

<PAGE>

the Employer, authorized to distribute to a Participant information concerning
any investment that is not contained in a prospectus or otherwise made available
pursuant to all applicable laws regulating the sale and investment of securities
and other property.

                                    ARTICLE V

                               PAYMENT OF BENEFITS

     5.1 Vesting and Forfeitures.

     (a) Elective Deferral Account - A Participant shall be 100% vested at all
times in the amounts held in this account.

     (b) Employer Matching Contribution Account - A Participant will be 100%
vested in the amounts held in this account after the completion of three (3)
Years of Service:

     (c) Except as provided above, for purposes of this Plan, the word
"Accounts" shall mean both a Participant's Elective Deferral Account and the
Employer Matching Contribution Account.

     (d) All forfeitures arising under this Plan shall be applied to the
restoration of any accounts of Participants who are reemployed during the Plan
Year as required by this Plan and forfeitures remaining, if any, will be applied
toward the Employer's Matching Contribution for the Plan Year in which the
forfeitures occurred. If there are any forfeitures remaining unapplied after the
application of the preceding sentence, they will be applied to the Matching
Contribution accounts of the Participants remaining in the Plan in proportion to
their compensation for that Plan Year.

     5.2 Retirement. A Participant shall reach Normal Retirement Age upon
attaining age 65 and Early Retirement Age upon attaining age 55 and may retire
as of the first day of the month coincident with or following his attainment of
such ages as the Participant elects, which day shall be called the Participant's
Retirement Date. A Participant shall have a nonforfeitable right to the balances
in his Accounts upon attainment of Early or Normal Retirement Age. A Participant
may remain actively employed by the Employer after his Normal Retirement Date,
subject to any written mandatory retirement policy of the Employer. He shall
continue to be a Participant in the Plan as long he remains so employed by the
Employer, and he may retire or be retired in accordance with any such written
mandatory retirement policy of the Employer, as of the first day of any month
after his Normal Retirement Date. A Participant who retires under this section
shall be entitled to distribution of his entire Accounts balance at the time and
in the manner provided by Section 5.8.

     5.3 Age 59-1/2. Upon attainment of age 59-1/2, a Participant may request a
distribution of all or any portion of the vested portion of his Accounts
attributable to contributions made pursuant to Sections 3.1, 3.4, and 3.11. Such
distribution may be made even though the Participant has not terminated
employment and continues as a Participant in the Plan thereafter. A Participant
requesting a distribution under this Section shall be entitled to distribution
at the

                                      -23-

<PAGE>

time and in the manner provided by Section 5.8.

     5.4 Disability. A Participant who is determined by the Employer to be
disabled as defined in Section 1.4(a) hereof, shall be considered to have taken
disability retirement as of the first day of the month following the month in
which the Employer makes such determination. The Employer may require the
Participant to submit to medical examinations for the purpose of verifying the
Participant's disability. A Participant who becomes disabled shall have a 100%
nonforfeitable right to the balances in his Accounts and shall be entitled to
distribution of his Accounts at the time and in the manner provided by Section
5.8.

     5.5 Death. In the event of a Participant's death prior to his termination
of employment with the Employer, the balances in such Participant's Accounts
shall become fully vested and payable to the Participant's beneficiary as
designated under the Plan. Distribution of such balances shall be made at the
time and in the manner provided by Section 5.8. Unless otherwise elected in the
manner prescribed in this Section, the Beneficiary of any death benefit payable
hereunder shall be the Participant's spouse. The Participant may designate a
Beneficiary other than his or her spouse only if:

          (a) The Participant's spouse has consented to the Beneficiary
     Designation. Such consent must be in writing and must be witnessed by a
     representative of the Plan Committee or notarized. The consent will be
     valid only as to the spouse who signed it; or

          (b) The Participant establishes to the satisfaction of the Plan
     Committee that he or she has no spouse; or

          (c) The Participant's spouse cannot be located; or

          (d) Because of other circumstances under which no spousal consent is
     required in accordance with applicable regulations under the Code or ERISA.

     5.6 Termination of Employment Prior to Retirement, Disability or Death. A
Participant who terminates employment with the Employer and who is not entitled
to distribution of his account balance under any previous section of this
Article V, shall be entitled to distribution of the vested balances in his
Accounts at the time and in the manner provided by Section 5.8.

     5.7 Limitation on Distributions. Except as provided in Section 5.8, no
distributions shall be made to a Participant from his Accounts until such
Participant's retirement, attainment of age 59-1/2, death, disability, other
termination of employment or due to hardship as provided herein.

     The Plan Administrator shall not permit a distribution of any benefit prior
to the Participant's Normal or Early Retirement Age where the present value of
the non-forfeitable accrued benefit (taking into account benefits derived from
both Employer and Employee contributions) is in excess of $5,000 without the
consent of the Participant's spouse. The Plan Administrator must obtain the
written consent of the Participant and where applicable the Participant's spouse
not more than 90 days before the commencement of the distribution of any part of
an accrued benefit hereunder.

                                      -24-

<PAGE>

     5.8 Distribution upon Retirement, Disability, Death or Other Termination of
Employment.

     (a) Time and Manner of Distribution. Upon a Participant's retirement,
attainment of age 59-1/2 (if a distribution is requested at that time pursuant
to the provisions of Section 5.3), disability, death, or other termination of
employment, there shall be distributed to the Participant, or to his Beneficiary
in the case of death, the vested balances in the Participant's Accounts as of
the Accounting Date immediately preceding the date of such separation from
employment, plus any contributions credited or to be credited to his Accounts
subsequent to such Accounting Date, in a lump sum, to be distributed as soon as
practicable after such separation from employment (and in the case of an age
59-1/2 in-service distribution as soon as practical after the written request is
received by the Plan Committee) unless elected otherwise by the Participant or
the Participant's surviving spouse. For purposes of this Section 5.8 "Accounting
Date" means a date on which the Trustee values the Investment Funds and makes
allocations to Accounts pursuant to Article IV. Notwithstanding the foregoing, a
Participant who has separated from employment may elect, pursuant to Plan
Committee rules, to defer such lump sum distribution to any subsequent date,
subject to the restrictions contained in subsection (b) hereof. The Accounting
Date for such deferred lump sum distribution shall be the Accounting Date which
immediately precedes the date of distribution elected by the Participant. An
election to defer a distribution may be changed no more frequently than annually
and shall be irrevocable upon the death of the Participant.

     If a Participant (or Beneficiary) entitled to receive a distribution under
this Section 5.8 should die prior to the time he has received the full
distribution to which he is entitled, then the amount credited to his Accounts
as of the Accounting Date for the month in which the death occurs shall be
distributed to the deceased Participant's Beneficiary or to the estate of the
Beneficiary in the case of the Beneficiary's death. The provisions of this
Section 5.8 shall apply to all benefits payable to a Participant derived from
both Employer and non-deductible Employee Contributions. If a distribution is
considered to have commenced in accordance with the Treasury Regulations before
the Participant's death, the remaining interest of the Participant will be
distributed at least as rapidly as under the method of distribution being used
as of the date of the Participant's death. Additionally, distributions under
this Plan will be made in accordance with the requirement of the Treasury
Regulations under Section 401(a)(9), including the minimum distribution
incidental benefit requirements of Section 1.401(a)(9)-2 of the proposed
Regulations.

     (b) Restrictions. Distributions are subject to the following restrictions
where applicable:

          (1) No Participant (or Beneficiary) may elect a distribution date
     which is earlier than 60 days following the date on which the Participant's
     Accounts are to be valued.

          (2) Each Participant's Accounts balances must be distributed to him in
     full no later than the April 1st following the calendar year in which he
     attains age 70-1/2; provided however, if Participant dies before his entire
     Accounts balances have been distributed, or if distribution has commenced
     to the Participant's surviving spouse who dies before the entire Account
     balances have been distributed then the entire remaining Account balances
     must be distributed to the Participant's designated Beneficiary within five
     years of the Participant's death

                                      -25-

<PAGE>

     (or the death of his surviving spouse). The foregoing notwithstanding, a
     Participant other than a five (5%) percent owner shall not be required to
     accept a distribution regardless of age prior to the termination of his
     employment with the Employer.

          (3) Notwithstanding (2) above or any other provision herein to the
     contrary, in no event shall distribution of a Participant's Accounts be
     made later than the sixtieth (60th) day after the close of the Plan Year in
     which occurs the latest of the following events:

               (a) The attainment by the Participant of age 65;

               (b) In the case of a Plan Participant who commences participation
          in the Plan within five (5) years before attaining age 65, the fifth
          anniversary of the time the Plan Participant commences participation
          in the Plan;

               (c) In the case of a Plan Participant not described in paragraph
          (b) above, the tenth anniversary of the Plan Year in which the
          Participant joined the Plan as a Participant;

               (d) The termination of the Participant's service with the
          Employer; or

               (e) The date specified by the Participant in his election made
          pursuant to subsection (a) hereof.

     5.9 Distributions of $5,000 or Less. Upon the termination of a
Participant's employment with the Employer, prior to a Participant's annuity
starting date, the Plan Committee shall make an immediate total distribution of
the vested value of the account of the Participant if the present value of such
account to the extent vested (calculated using an interest rate not greater than
the PBGC rate) is $5,000 or less and, at no time prior to the termination of the
Participant's employment, ever exceeded $5,000.00. Such amount shall be paid to
the Participant, or if the Participant is then deceased, to the Participant's
designated beneficiary; provided, however, if the distribution provided
hereunder is less than the total amount of the Participant's account at the time
of the distribution and if the Participant is reemployed within the five (5)
year period commencing on such termination, the Participant shall have repayment
rights with respect to such distribution identical to those provided in Section
3.13 hereof.

     5.10 Additional Distribution Restrictions. Notwithstanding anything else
contained in this Plan, amounts attributable to Elective Deferrals may not be
distributed earlier than the occurrence of one of the following events:

          (1) the Participant's retirement, death or disability or separation
     from service;

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

          (3) the Participant's attainment of age 59 1/2 or hardship as provided

                                      -26-

<PAGE>

     herein;

          (4) the sale or disposition by the Employer to an unrelated
     corporation of substantially all of its assets, but only with respect to
     Employees who continue employment with the acquiring corporation and the
     acquiring corporation does not maintain the Plan after the disposition; and

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

          Clauses, 2, 4, and 5 apply only if the distribution is in the form of
     a lump sum and clauses 4 and 5 apply only if the transferor corporation
     continues to maintain the Plan.

                                   ARTICLE VI

                            FIDUCIARY RESPONSIBILITY

     6.1 Named Fiduciary. The Employer shall be the "named fiduciary" referred
to in Section 402(a) of ERISA with respect to the management, operation and
administration of the Plan and is also responsible for making contributions
provided for under Section 3.1. The "Plan Administrator" as defined in Section
414(g) of the Code and Section 3(16) of ERISA is the Plan Committee as
established by Article VIII hereof.

     6.2 Allocation of Fiduciary Responsibility. Each fiduciary, whether named
herein or otherwise, shall only have the individual responsibility for
exercising the functions and responsibilities assigned or allocated to such
fiduciary hereunder. Unless otherwise specifically provided herein, no fiduciary
responsibility shall be shared by two or more fiduciaries. Where one fiduciary
follows the directions of another fiduciary, who has the fiduciary
responsibility for such action, then the fiduciary following such direction
shall not be deemed a fiduciary hereunder in taking such action.

     6.3 Service in More than One Capacity. Any person, or group of persons, may
serve in more than one fiduciary capacity with respect to this Plan.

     6.4 Employment of Advisers. A fiduciary may engage accountants, attorneys,
actuaries or such other advisers as it deems necessary or advisable to properly
carry out its duties under this Plan. The functions of any such persons
designated by the fiduciary shall be limited to the specific services and duties
for which they are engaged, and such persons shall have no other
duties, obligations or responsibilities under the Plan.

     6.5 Compensation of Fiduciaries and Advisers. The fees, expenses and costs
charged or incurred by any fiduciary or any adviser hereunder may be paid in
whole or in part by the Employer, and any such fees, expenses or costs not paid
by the Employer shall be paid out of the

                                      -27-

<PAGE>

Trust; provided that such compensation or reimbursement is reasonable under the
circumstances; and provided further that no person who already receives
full-time pay from an Employer whose employees are Participants in the Plan
shall receive any compensation from the Trust, except for reimbursement of
expenses properly and actually incurred.

     6.6 Liability of Fiduciaries. Each fiduciary, and each adviser to any
fiduciary, shall be free from all liability for any act or conduct in carrying
out its responsibilities under this Plan, except for acts of willful misconduct
or gross negligence; provided, however, that the foregoing shall not relieve any
such fiduciary or adviser from any responsibility or liability that it may have
pursuant to ERISA.

                                   ARTICLE VII

                               PLAN ADMINISTRATION

     7.1 Plan Committee. A Plan Committee consisting of at least two officers of
the Employer shall be the Plan Administrator. The Plan Committee may appoint one
member authorized to sign any reports required by ERISA in representation of all
members. Members of the Plan Committee shall serve until their resignation or
dismissal by the Employer and vacancies shall be filled in the same manner as
the original appointments. The Employer may dismiss any member of the Plan
Committee at any time with or without cause.

     7.2 Duties and Powers of the Plan Committee. The Plan Committee shall have
such duties and powers as may be necessary to discharge its duties hereunder,
including, but not limited to, the following:

     (a) To construe and interpret the Plan and Trust.

     (b) To decide all questions of the eligibility of Employees to become
Participants under the Plan.

     (c) To determine the amount, manner and time of payment of benefits under
the Plan.

     (d) To authorize and direct all disbursements by the Trustee from the
Trust.

     (e) To prescribe procedures to be followed by Participants or Beneficiaries
for filing applications for benefits.

     (f) To prepare and distribute to Participants information explaining the
Plan.

     (g) To make and publish rules for the regulation of the Plan which are not
inconsistent with the terms of the Plan or with ERISA.

     (h) To designate one or more of its members to assume responsibility for
any of its functions or to delegate to individuals not members of the Committee
any administrative,

                                      -28-

<PAGE>

clerical or other nondiscretionary duties provided always in such delegation,
the Committee shall alone remain responsible for decisions affecting the rights
of Participants and their beneficiaries.

     (i) To take any action required to take self corrective measures as
required by the Internal Revenue Service or the Department of Labor to preserve
the tax qualified status of the Plan, to correct errors in fiduciary conduct or
such other action to maintain the Plan in compliance with all applicable laws.

     The Plan Committee shall have no power to add to, subtract from or modify
any of the terms of the Plan, or to modify any benefits provided by the Plan, or
to waive or fail to apply any requirements for eligibility for a benefit under
the Plan. All policies, rules, interpretations and decisions of the Plan
Committee shall be uniformly and consistently applied in a nondiscriminatory
manner to all Participants in similar circumstances. The Plan Committee shall be
entitled to rely upon information furnished by a Participant or Beneficiary in
carrying out its duties hereunder.

     7.3 Claims Procedure. The Plan Committee shall make all determinations as
to the right of any person to a benefit under this Plan. If a claim is denied by
the Plan Committee, it shall give written notice to the claimant setting forth
(a) the specific reason or reasons for the denial, (b) the specific reference to
pertinent Plan provisions on which the denial is based, (c) a description of any
additional material or information necessary for the claimant to perfect the
claim and an explanation of why such material or information is necessary, and
(d) an explanation of the claim review procedure, in accordance with this
Section.

     Within sixty days after the receipt by the claimant of a written notice of
denial of a claim, or such later time as may be deemed reasonable taking into
account the nature of the benefit subject to the claim and any other attendant
circumstances, the claimant may file a written request with the Plan Committee
that it conduct a full and fair review of the denial of the claim for benefits.
If such review is requested, the claimant or his duly authorized representative
may (a) request a review upon written application, (b) review pertinent
documents, and (c) submit issues and comments in writing.

     The Plan Committee shall issue a written decision on the claim within sixty
days after the receipt of the aforesaid request for review, except that if there
are special circumstances (such as the need to hold a hearing) which require an
extension of time for processing the claim, the aforesaid sixty day period shall
be extended to one hundred twenty days. In the event of such extension, written
notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. Any decision on review shall be in writing, and
shall be written in a manner calculated to be understood by the claimant, shall
include the specific reason or reasons for the decision, and shall contain
specific reference to pertinent Plan provisions upon which the decision is
based.

     The foregoing notwithstanding, the Plan Committee shall be responsible for
maintaining records of Participants' service, account balances, vesting and
other matters relating to amount of benefits under the Plan. The Plan Committee
shall also be responsible for filing such reports, and making such disclosure to
Participants as may be required by ERISA and the Code.

     7.4 Records and Reports. The Plan Committee shall be responsible for
maintaining

                                      -29-

<PAGE>

records of Participants' service, account balances, vesting and other matters
relating to amount of benefits under the Plan. The Plan Committee shall also be
responsible for filing such reports, and making such disclosures to Participants
as may be required by ERISA and the Code.

     7.5 Application and Forms for Benefits. The Plan Committee may require a
Participant to complete and file with the Committee an application for a
benefit, or any other forms approved by the Committee, and to furnish all
pertinent information requested by the Plan Committee. The Plan Committee may
rely on all such information so furnished.

                                  ARTICLE VIII

                  AMENDMENT, MERGER AND TERMINATION OF THE PLAN

     8.1 Amendment and Termination.

     (a) General. The Employer intends to continue this Plan and the payment of
contributions hereunder indefinitely, but such continuance is not assumed as a
contractual obligation, and the Employer expressly reserves the right to
discontinue contributions to the Plan or to terminate the Plan at any time, as
to its Employees without the consent of any other party. Any amendment may be
made retroactive by its terms, but no such amendment shall cause any part of the
Trust to be used for, or diverted to, any purpose other than the exclusive
benefit of Participants or their Beneficiaries; provided, however, the Employer
may make any amendment it determines necessary or desirable, with or without
retroactive effect, to qualify or maintain the Plan as a qualified plan within
the meaning of Section 401(a) of the Code, and to qualify or maintain the Trust
as tax exempt under Section 501(a) of the Code, and the regulations issued
thereunder.

     (b) Limitations on Amendment.

          (1) If the Plan's vesting schedule is amended or the Plan is amended
     in any way that directly or indirectly affects the computation of a
     Participant's nonforfeitable percentage, or if the Plan is deemed amended
     by an automatic change to or from a top-heavy vesting schedule, each
     Participant with at least three years of service with the Employer may
     elect, within a reasonable period after the adoption of the amendment or
     change to have the Participant's nonforfeitability percentage computed
     under the Plan without regard to such amendment or change. The period
     during which the election may be made shall commence with the date the
     amendment is adopted or deemed to be made and shall end on the latest of:

               (i) Sixty (60) days after the amendment is adopted

               (ii) Sixty (60) days after the amendment becomes effective or

                                      -30-

<PAGE>

               (iii) Sixty (60) days after the Participant is issued written
          notice of the amendment by the Plan Committee.

          (2) No amendment to the Plan shall be effective to the extent it has
     the effect of decreasing a Participant's accrued benefit. Notwithstanding
     the preceding sentence, a Participant's account balance may be reduced to
     the extent permitted under Section 412(c)(8) of the Code. For purposes of
     this section, a Plan amendment which has the effect of decreasing a
     Participant's account balance or eliminating an optional form of benefit
     with respect to benefits attributable to service before the amendment shall
     be treated as reducing an accrued benefit. Furthermore, no amendment of the
     Plan shall have the effect of decreasing a Participant's vested interest
     determined without regard to such amendment as of the later of the date
     such amendment is adopted or the date it becomes effective.

     8.2 Action by Employer. Any action by the Employer under this Plan may be
taken by means of a writing signed by an authorized officer.

     8.3 Effect of Termination. Upon termination of the Plan, the accounts of
all Participants or Beneficiaries affected thereby shall become fully vested and
nonforfeitable, and the Plan Committee shall, after payment of expenses properly
chargeable to the Fund, allocate any unallocated assets in the Fund to the
accounts of such Participants or Beneficiaries pursuant to the rules set forth
in Article IV hereof. In making such final allocation, the Plan Committee may,
if it determines that a termination of the Plan has occurred prior to the date
of formal action by the Employer, reverse any forfeitures of accounts of
Participants which have occurred in the interim.

     8.4 Partial Termination. Upon termination of the Plan with respect to a
group of Participants which constitutes a partial termination of the Plan under
the Code, the accounts of such group of Participants shall become fully vested
and non-forfeitable.

     8.5 Manner of Distribution. In the event of termination or partial
termination of the Plan, the Plan Committee shall direct the Trustee either (a)
to make distribution of benefits to Participants or their Beneficiaries affected
by such termination or partial termination pursuant to Section 5.8, or (b) to
retain such benefits for distribution upon the occurrence of one of the events
set forth in Article V hereof.

     To the extent that no discrimination in value results, any distribution
after termination or partial termination of the Plan may be made, in whole or in
part, in cash, in securities or other assets in kind, or in nontransferable
annuity contracts, as the Plan Committee and the Trustee may determine. All
non-cash distributions shall be valued at fair market value at the date of
distribution.

     8.6 Merger. In the event of any merger or consolidation of the Plan with,
or transfer in whole or in part of the assets and liabilities of the Fund to
another trust fund held under any other plan of deferred compensation maintained
or to be established for the benefit of all or some of the Participants in this
Plan, the assets of the Fund applicable to such Participants shall be
transferred to the other trust fund only if:

                                      -31-

<PAGE>

     (a) Each Participant would (if either this Plan or the other plan then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or transfer (if
this Plan had then terminated).

     (b) A writing signed by the authorized partner of the Employer under this
Plan, or of any new or successor employer of the affected Participants, shall
authorize such transfer of assets, and, in the case of the new or successor
employer of the affected Participants, its resolutions shall include an
assumption of liabilities with respect to such Participants' inclusion in the
new employer's plan, and

     (c) Such other plan and trust are qualified under Sections 401(a) and
501(a) of the Internal Revenue Code.

     8.7 Successor Employer. In the event of the dissolution, merger,
consolidation or reorganization of the Employer, provision may be made by which
the Plan and Trust will be continued by the successor; and, in that event, such
successor shall be substituted for the Employer under the Plan. The substitution
of the successor shall constitute an assumption of Plan liabilities by the
successor and the successor shall have all of the powers, duties and
responsibilities of the Employer under the Plan.

                                   ARTICLE IX

                                    TOP-HEAVY
                           PROVISIONS AND DEFINITIONS

     9.1 Top-Heavy Plan Definitions.

     (a) "Top-Heavy Plan" means a plan which, as of the Determination Date (1)
the Present Value of Accrued Benefits of Key Employees and (2) the aggregate of
the Accounts of Key Employees under the plan exceeds sixty percent (60%) of the
Present Value of Accrued Benefits and the aggregate of the Accounts of all
employees under such plan. The determination of whether a plan is top-heavy
shall be made after aggregating all other plans of the Employer or any of its
affiliates which are part of a Required Aggregation Group and after aggregating
any other plan of the Employer or any of its affiliates which is part of the
Permissive Aggregation Group, if such permissive aggregation thereby eliminates
the top-heavy status of any plan within such Permissive Aggregation Group. A
plan is a "Super Top-Heavy Plan" if, as of the Determination Date, the plan
would meet the test specified above for being a Top-Heavy Plan if
ninety percent (90%) were substituted for sixty percent (60%) in each place it
appears in this subsection.

     (b) "Determination Date" means, for purposes of determining whether a plan
is a Top-Heavy Plan for a particular Plan Year, the last day of the preceding
Plan Year (or, in the case of the first Plan Year of a plan, the last day of the
first Plan Year).

                                      -32-

<PAGE>

     (c) "Valuation Date" means, for purposes of determining the value of
Accounts under this Section, the same date as the Determination Date.

     (d) "Key Employee" means any Employee or former Employee (including a
Beneficiary of such Employee) who at any time during the Plan Year of
Determination, or during any of the four (4) preceding Plan Years, is:

          (1) An officer of the Employer having annual Compensation for such
     Plan Year which is in excess of 50% of the dollar limit in effect under
     Section 415(b)(1)(A) for the calendar year in which such Plan Year ends;

          (2) An owner of (or considered as owning within the meaning of Section
     318) both more than an one-half percent interest as well as one of the ten
     largest interests in the Employer and having annual compensation greater
     than the dollar limit in effect under Section 415(c)(1)(A) for the Plan
     Year;

          (3) A 5% owner of the Employer; or

          (4) A 1% owner of the Employer whose annual compensation is more than
     $150,000.

     For purposes of determining 5% and 1% owners, the aggregation rules and the
rules of subsections (b), (c) and (m) of Section 414 of the Code do not apply.

     (e) "Non-Key Employee" means any Employee or former Employee (including a
Beneficiary of such Employee) who is not a Key Employee.

     (f) "Account" means the value of all accounts (as defined in Sections
1.4(b), (c) and (d) under the Plan as of the Valuation Date, including all
employer contributions paid or payable to such Account and all employee
contributions actually paid to such Account, except as follows:

          (1) The value of each Account shall be increased by the aggregate
     distributions made with respect to an Employee under the Plan during the
     five (5) year period ending on the Determination Date.

          (2) In the case of a profit sharing plan, the value of each Account
     shall not include any employer contribution actually made after the
     Determination Date, except in the case of the first Plan Year each account
     shall include such contributions that are allocated to the Account as of a
     date within the first Plan Year.

          (3) The value of an Account maintained for voluntary deductible
     Employee contributions (if any) shall not be included.

          (4) The value of an Account maintained for rollover contributions (if
     any) shall not be included if the rollover contribution was initiated by
     the Employee and was not made from a plan maintained by the Employer (or by
     an employer required to be aggregated with

                                      -33-

<PAGE>

     the Employer under Sections 414(b), (c) or (m) of the Code).

          (5) The value of an Account maintained for an Employee who is a
     Non-Key Employee with respect to a plan for any Plan Year who was a Key
     Employee with respect to a plan for any prior Plan Year shall not be
     included.

          (6) If an individual has not performed any services for any employer
     maintaining the Plan at any time during the five (5) year period ending on
     the Determination Date, the value of the Account of such individual shall
     not be included.

     (g) "Required Aggregation Group" means (1) each qualified plan of the
Employer or any of its affiliates in which at least one Key Employee
participates, including for this purpose any terminated plan that covered a Key
Employee maintained by the Employer within the five year period ending on the
Determination Date, and (2) any other qualified plan of the Employer or any of
its affiliates which enables a plan described in (1) to meet the requirements of
Sections 401(a)(4) or 410 of the Code.

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

     (i) "Present Value of Accrued Benefit" means, in the case of a defined
benefit plan, the present value of a Participant's accrued benefit as determined
under the provisions of the applicable defined benefit plan.

     (j) "Employer or any of its Affiliates" means the Employer maintaining the
Plan, and all commonly controlled trades or businesses (as defined in Section
414(c) of the Code), and affiliated service groups (as defined in Section 414(m)
of the Code) of which the Employer is a part.

     9.2 Effective Date. In any Plan Year in which the Plan is a Top-Heavy Plan,
the Plan shall meet the requirements set forth in Sections 9.3 and 9.7.

     9.3 Minimum Contribution Requirements.

     (a) Definition of Compensation. For purposes of this Section, Compensation
for any Plan Year shall mean the amount of Compensation received from the
Employer for that Plan Year.

     (b) Allocation. The total allocable amount under Section 4.3 shall be
allocated as follows:

          (1) The total allocable amount shall first be allocated among the
     accounts of Participants who have completed a Year of Service as defined in
     Section 2.1 (except that such requirement that the Participant complete
     1,000 Hours of Service in the Plan Year shall not apply to any Participant)
     in the same proportion that each such Participant's Compensation

                                      -34-

<PAGE>

     bears to the aggregate Compensation of all such Participants for such Plan
     Year, provided that the amount so allocated to the account of any
     Participant who is not a Key Employee shall not be less than the lesser of
     3% or the highest rate allocated to any Key Employee for the Plan Year
     (such rate determined by calculating the largest percentage of Compensation
     not in excess of $200,000.00). If the highest rate allocated to a Key
     Employee for such Plan Year is less than 3%, amounts contributed
     attributable to a salary reduction arrangement shall be included in
     determining contributions made on behalf of Key Employees.

          (2) The remainder of the total allocable amount, if any, shall be
     allocated as set forth in Section 4.3.

     (c) Exceptions to the Minimum Contribution Requirement. The minimum
contribution required under subsection (b) shall be reduced or eliminated, as
the case may be, in the following circumstances:

          (1) If the allocation in any Plan Year of the total allocable amount
     under Section 4.3 (determined without regard to this Section) results in an
     allocation to each Participant who is eligible to receive an allocation
     under Section 9.3(b)(1) of at least 3% of such Participant's Compensation
     for the Plan Year, then the provisions of Section 9.3(b) shall not apply
     for such Plan Year.

          (2) No minimum contribution will be required (or the minimum
     contribution percentage will be reduced, as the case may be) for any Plan
     Year for a Participant who is eligible to receive an allocation under
     Section 9.3(b)(1) if the employer maintains another qualified plan under
     which a minimum benefit or contribution is being accrued or made for such
     Plan Year in whole or in part for the Participant in accordance with
     Section 416(c) of the Code.

     (d) Effect of Defined Benefit Plan. The 3% minimum contribution requirement
in subsections (b) and (c) shall be increased to 5% for any Plan Year in which
the Employer also maintains a defined benefit pension plan to the extent
necessary to avoid the application of Section 416(f) of the Code and regulations
thereunder.

     9.4 Maximum Compensation Limitation. The Compensation (as defined in both
Section 9.3(a) and Section 1.3(d)) of each Participant in the Plan for any Plan
Year shall not exceed the first $200,000 of such Participant's Compensation;
provided that such dollar limitation shall be adjusted to take into account any
adjustments prescribed by the Secretary of the Treasury or his delegate under
Section 416(d)(2) of the Code.

     9.5 Adjustment to Section 415 Limits. If the Plan is a Super Top-Heavy Plan
or if the Plan is a Top-Heavy Plan, and the minimum benefits required by Section
416(h) of the Code are not provided, then the 1.25 factor used in the
denominators of the Defined Contribution Plan Fraction (under Section 4.4(c)(5))
and Defined Benefit Plan Fraction (under Section 4.4(c)(4)) shall be changed to
1.0.

     9.6 Remedial Provisions. In addition to the other powers granted hereunder,
the Plan Committee shall have the power to take such action as it deems
necessary or appropriate to determine whether the Plan is a Top-Heavy Plan, and
in such event, to apply the provisions of this

                                      -35-

<PAGE>

Article to the Plan, including, but not limited to the power to reallocate
employer contributions, forfeitures and income, to reverse all or part of any
forfeitures which may have been improperly recognized, and to direct the Trustee
to make required distributions hereunder.

     9.7 Top Heavy Vesting Schedule. For any Plan Year in which the Plan is
determined to be "top heavy", as defined in Section 9.1 hereof, the vesting
schedule applicable to Employer Matching Contributions as provided in Section
5.1(b) shall be superseded by the following schedule:

                      Years                            Vesting
                    of Service                       Percentage
                    ----------                       ----------
                    Less than 2                           0
                         2                               20
                         3                               40
                         4                               60
                         5                               80
                    6 or more                           100

     If the Plan ceases to be top heavy in a subsequent Plan Year, the vesting
schedule provided in Section 5.1(b) will apply to a Participant's benefits
accrued subsequent to the last year the Plan was top heavy, provided however
that any Participant with 5 or more Years of Service must be given the
opportunity to choose between the vesting schedule contained in this Section and
that contained in Section 5.1(b).

                                    ARTICLE X

                                  MISCELLANEOUS

     10.1 Non-Guarantee of Employment. Nothing contained herein shall be
construed as a contract of employment between the Employer and any Employee, or
as a right of any Employee to be continued in the employment of the Employer, or
as a limitation of the right of the Employer to discharge any Employee, with or
without cause.

     10.2 Non-Alienation of Benefits. The benefits payable hereunder shall not
be assigned or alienated by or on behalf of any Participant or Beneficiary
except to the extent permitted under Sections 401(a)(13) and 414(p) of the Code.

     10.3 Facility of Payment. If any Participant or Beneficiary shall be
physically or mentally incapable of receiving or acknowledging receipt of any
payment due under the terms of the Plan, and no legal representative shall have
been appointed for him, the Plan Administrator may direct the Trustee to make
such payment to the person or institution maintaining such Participant or
Beneficiary, and the payment to such person or institution in good faith shall
constitute a valid and complete discharge for such payment.

                                      -36-

<PAGE>

     10.4 Exclusive Benefit. This Plan is established for the exclusive benefit
of the Employees of the Employer.

     10.5 No Reversion. Except as otherwise expressly permitted hereunder, no
assets of the Plan or the Trust shall ever revert to or be used or enjoyed by
the Employer, nor, prior to the satisfaction of all liabilities under this Plan
to Participants and their Beneficiaries, shall any of the assets of the Plan or
Trust ever be used other than for the benefit of the Employees of the Employer
and their Beneficiaries and defraying reasonable expenses of administering the
Plan.

     10.6 Effect of Social Security Benefits. Benefits paid to or on behalf of a
retired or terminated Participant hereunder shall not be reduced or otherwise
affected by increases or other adjustments in Social Security benefits such
Participants may receive.

     10.7 Titles. Titles of Articles and Sections are inserted for convenience
only and shall not affect the meaning or construction of the Plan.

     10.8 Severability. If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and this Plan shall be constructed and enforced as if such
provision had not been included herein.

     10.9 Applicable Law. This Plan shall be construed in accordance with
Pennsylvania law.

     10.10 Initial Qualification. This Plan has been adopted and is based upon
the condition precedent that the Internal Revenue Service issue its
determination that it meets the requirements of the Code and regulations issued
hereunder with respect to qualified plans. Notwithstanding any other provision
herein, if the Internal Revenue Service determines that the Plan does not
initially qualify under the Code, any assets attributable to Employer
contributions which have been made prior to notice of such adverse determination
shall be returned to the Employer, and this Plan shall terminate.

     10.11 Plan designation. For purposes of Codess.401(a)(27), this Plan is a
profit sharing plan.

                                      -37-

<PAGE>

         IN WITNESS WHEREOF, and as evidence of the adoption of the Plan, the
Employer has caused its duly authorized president to execute this Plan as of
this 28th day of October, 1999.

                                            DONEGAL MUTUAL INSURANCE COMPANY

ATTEST:

/s/ Ralph G. Spontak                   By: /s/ Donald H. Nikolaus
-----------------------------              ----------------------------------
               Secretary                                   President

   [CORPORATE SEAL]

                                      -38-

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