Document:

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                                                                     EXHIBIT 4-O

                   AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENTS

          AMENDMENT NO. 1 dated as of April 1, 1999 to each of the Note Purchase
Agreements dated September 10, 1998 (the "NOTE PURCHASE AGREEMENTS"), between
TruServ Corporation (the "Company") and the Purchasers listed on the signature
pages hereto (the "PURCHASERS").

          The parties hereto desire to amend each of the Note Purchase
Agreements as more fully set forth below.

          The parties hereto agree as follows:

          SECTION 1. DEFINITIONS; REFERENCES. Unless otherwise specifically
defined herein (a) each term used herein which is defined in the Note Purchase
Agreements shall have the meaning assigned to such term in the Note Purchase
Agreements and (b) each reference to a paragraph shall mean a paragraph of the
Note Purchase Agreements. Each reference to "hereof," "hereunder," "herein" and
"hereby" and each other similar reference and each reference to "this Agreement
'and each other similar reference contained in each of the Note Purchase
Agreements (including, without limitation, paragraph 7A thereto) or any other
document shall from and after the Effective Date (as defined in Section 4 below)
refer to each of the Note Purchase Agreements as amended hereby.

          SECTION 2. AMENDMENTS.

     2.1  Additions to Definitions. The following definitions are added to
Paragraph 10A of each Note Purchase Agreement in the appropriate alphabetical
sequence:

          "ASSET BASE" shall mean, as of the last day of any, fiscal month, the
     total of (i) 85% of the remainder of (A) the daily average for such month
     of the amount of "Accounts and notes receivable, net 'as would be shown on
     the Company's consolidated balance sheet minus (B) all Debt payable to
     members of the Company plus (ii) 50% of the amount, based on the lower of
     cost or market value, of "Inventories" as would be shown on the Company's
     consolidated balance sheet as of the last day of such month plus (iii) the
     remainder of (x) the Specified Percentage (as defined below) of the amount
     of "Properties, less accumulated depreciation" as would be shown on the
     Company's consolidated balance sheet as of the last day of such month minus
     (y) the then outstanding amount of all Indebtedness secured by a Lien on
     any such properties; provided that the amount determined pursuant to clause
     (ii) (the "INVENTORY AMOUNT") shall be reduced by the amount (if any)
     necessary so that the Inventory Amount is not more than 45% of the total of
     clauses (i), (ii) and (iii). For purposes of the foregoing, "SPECIFIED
     PERCENTAGE" means (a) from April 3, 1999 9 through December 31, 1999, 50%,
     (b) from January 1, 2000 through December 3 1, 2000, 40%, (c) from January
     1, 2001 through December 31, 2001, 30%, and (d) thereafter, 20%.

<PAGE>   2

          "BA CREDIT AGREEMENTS" shall mean (i) the Credit Agreement dated as of
     July 1, 1997 among the Company, Bank of America National Trust and Savings
     Association, as agent, and the various financial institutions party
     thereto, as amended from time to time, (ii) the 364-Day Credit Agreement
     dated as of September 30, 1998 among the Company, Bank of America National
     Trust and Savings Association, as agent, and the various financial
     institutions party thereto, as amended from time to time, and (iii) any
     refinancings, renewals or replacements of either of the credit agreements
     referred to in clauses (i) and (ii) above.

          "CONTRACTUAL OBLIGATION" shall mean, as to any Person, any provision
     of any security issued by such Person or of any agreement, undertaking,
     contract, indenture, mortgage, deed of trust or other instrument, document
     or agreement to which such Person is a party or by which it or any of its
     property is bound.

          "EBITDA" shall mean, for any period, Consolidated Net Earnings for
     such period plus, to the extent deducted in computing such Consolidated Net
     Earnings, interest expense, taxes, depreciation and amortization.

          "FIXED CHARGE COVERAGE RATIO" shall mean, as of the last day of any
     fiscal quarter, the ratio of

          (a) the sum, for the period of four consecutive fiscal quarters ending
          on such day, of (i) Consolidated Net Earnings plus. (ii) to the extent
          deducted in determining such Consolidated Net Earnings, interest
          expense, operating lease expense, depreciation and amortization,

          to

          (b) the sum for such period of (i) operating lease expense and (ii)
          interest expense;

     each as determined for the Company and its Subsidiaries on a consolidated
     basis.

          "GOVERNMENT AUTHORITY" shall mean any nation or government any state
     or other political subdivision thereof, any central bank (or similar
     monetary or regulatory authority) thereof, any entity ex exercising
     executive-, legislative, judicial, regulatory or administrative functions
     of or pertaining, to government, and any corporation or other entity owned
     or controlled, through stock. or capital ownership or otherwise, by any of
     the foregoing.

          "PRUDENTIAL AGREEMENT" means the Note Purchase Agreement dated as of
     November 13, 1997 among the Company and The Prudential Insurance Company of
     America and certain of its affiliates as amended from time to time.

          "RATIO COMPLIANCE DATE" shall mean the first date to: occur after
     April 3, 1999 on which financial statements of the Company have been
     delivered pursuant to Section 5A showing that for each of the two most
     recent fiscal quarters of the

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     Company, as reported in such financial statements, the Total Senior Debt to
     EBITDA Ratio has been below 3.0 to 1.0 as of the last day of such fiscal
     quarters.

          "SUPPLEMENTAL COUPON ELIMINATION DATE" shall mean the first January
     1st or July 1st to occur after the Ratio Compliance Date.

          "TOTAL SENIOR DEBT" shall mean all Debt of the Company and its
     Subsidiaries other than Subordinated Debt.

          "TOTAL SENIOR DEBT TO EBITDA RATIO" shall mean, as of the last day of
     any fiscal quarter, the ratio of (a) the remainder of (i) the daily average
     of the amount of Total Senior Debt outstanding during the last fiscal month
     of such fiscal quarter' minus (ii) the daily average of cash and marketable
     securities during the last fiscal month of such fiscal quarter to (b)
     EBITDA for the period of four consecutive fiscal quarters then ending.

          "YEAR 2000 PROBLEM" shall mean the risk that computer applications and
     embedded microchips in non-computing devices may be unable to recognize and
     perform properly date-sensitive functions involving certain dates prior to
     and any date after December 31, 1999.

     2.2  Amendment to Definition of Consolidated Net Earnings. The definition
of "Consolidated Net Earnings in Paragraph 10A is amended to read as follows:

     "CONSOLIDATED NET EARNINGS" shall mean with respect to any period:

     (i) consolidated gross revenues of the Company and its Subsidiaries, minus

     (ii) all operating and non-operating expenses of the Company and its
     Subsidiaries including all charges of a proper character (including current
     and deferred taxes on income, provision for taxes on unremitted foreign
     earnings which are included in gross revenues, and current additions to
     reserves and merger integration costs),

     provided that it is agreed and understood that the following shall not be
     included in the calculation of consolidated gross revenues of the Company
     and its Subsidiaries:

     (a)  any gains (net of expenses and taxes applicable thereto) in excess of
          losses resulting from the sale, conversion or other disposition of
          capital assets (i.e., assets other than current assets);

     (b)  any gains resulting from the appraised write-up of assets;

     (c)  any equity of the Company or any Subsidiary in the unremitted earnings
          of any corporation which is not a Subsidiary;

     (d)  any earnings of any Person acquired by the Company or any Subsidiary
          through purchase, merger or consolidation or otherwise for any year
          prior to the year of acquisition; or

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     (e)  any deferred credit representing the excess of equity in any
          Subsidiary at the date of acquisition over the cost of the investment
          in the Subsidiary,

     all determined in accordance with GAAP provided that, to the extent that
     amounts are deducted from Consolidated Net Earnings during the Company's
     1999 fiscal year as a result of SOP 98-5, "Reporting the Costs of Start-up
     Activities", issued by the American Institute of Certified Public
     Accountants ("SOP 98-5"), in excess of the amount that would have been
     deducted absent SOP 98-5, such excess shall be added back to Consolidated
     Net Earnings.

     2.3  Amendment of Definition of Current Debt. The definition of "Current
Debt" in Paragraph 10A is amended to read as follows:

          "CURRENT DEBT" shall mean, with respect to any Person, all
     Indebtedness of such Person for borrowed money which by its terms or by the
     terms of any instrument or agreement relating thereto matures on demand or
     within one year from the date of the creation thereof and is not directly
     or indirectly renewable or extendible at the option of the debtor to a date
     more than one year from the date of the creation thereof, provided that (i)
     borrowings under any revolving credit facility (including, without
     limitation, the BA Credit Agreements) shall constitute Current Debt and
     (ii) Guarantees of Indebtedness of Company members in an aggregate amount
     not to exceed $20,000,000 shall not constitute Current Debt, so long as no
     event has occurred the result of which would be to cause or permit such
     Indebtedness to become due prior to any stated, maturity.

     2.4  Amendment to Paragraph 1. Paragraph 1 is amended by the addition of
the following paragraph:

          For the period from (and including) April 1, 1999 to (but excluding)
     the Supplemental, Coupon Elimination Date, the Company shall pay to each
     holder of Notes supplemental interest on the unpaid balance of the
     aggregate principal amount, of the Notes held by it at the rate of 0.50%
     per annum. Such supplemental interest shall be computed on the basis of a
     360 day year of twelve 30 day months and shall be payable semiannually on
     the first day of January and July in each year, commencing with July 1,
     1999. To the extent permitted by law, any overdue payment of supplemental,
     interest shall bear interest (payable on demand) at a rate per annum from
     time to time equal to the greater of (i) 9.60% or (ii) 2% over the rate of
     interest publicly announced by Morgan Guaranty Trust Company of New York
     from time to time as its "base" or "prime" rate. For the avoidance of
     doubt, all references in this Agreement to interest shall be deemed to
     include the supplemental interest payable pursuant to this paragraph
     (including, Without limitation, the references to interest in Paragraphs 4,
     7A(ii), and 12B).

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<PAGE>   5

     2.5  Amendment to Paragraph 5A. Paragraph 5A is amended by (a) deleting the
word "and" immediately after clause 5A(v), (b) renumbering clause (vi) as clause
(ix), and (c) inserting the following new clauses (vi), (vii) and (viii):

          (vi)  promptly, such information or documentation as any such holder
                of Notes may request from time to time regarding the efforts of
                the Company and its Subsidiaries to address the Year 2000
                Problem;

          (vii) promptly, and in any event within, five Business Days after a
                Responsible Officer becoming aware of any of the following, a
                written notice to you setting forth the nature of any of the
                following matters that has resulted or may reasonably be
                expected to result in a Material Adverse Effect: (a) any breach
                or nonperformance of, or any default under, a Contractual
                Obligation of the Company or any Subsidiary; (b) any dispute,
                litigation, investigation, proceeding or suspension between the
                Company or any Subsidiary and any -Governmental Authority; or
                (c) the commencement of, or any material development in, any
                litigation or proceeding affecting the Company or any Subsidiary
                including pursuant to any applicable Environmental Laws;

          (viii)together with each delivery on or prior to the Ratio Compliance
                Date of financial statements required by clauses (i) and (ii)
                above relating to each of the periods covered by the projections
                attached hereto as Schedule 8E, the Company will deliver to each
                such holder of Notes a management's discussion and analysis (x)
                discussing the results of such period and (y) showing all the
                variances from such projections that occurred in such period and
                explaining in reasonable detail the reasons therefor, and

     2.6  Amendment to Paragraph 6A(1)(x). Paragraph 6A(1)(x) is amended to read
as follows:

          (x) other Liens securing Funded Debt (other than Funded Debt that
     constitutes Subordinated Debt); provided, however, that (a) such Funded
     Debt is permitted by the provisions of paragraph 6A(2) and (b) the
     aggregate amount of all Secured Funded Debt outstanding together with all
     Funded Debt of any Subsidiary (other than as permitted by clause (i) of
     paragraph 6A (2)) does not at any time exceed (A) prior to the Ratio
     Compliance Date, $25,000,000 and (B) on and after the Ratio Compliance
     Date, an amount equal to ten percent (10%) of Consolidated Total Assets.

     2.7  Amendment to Paragraph 6A(2). Paragraph 6A(2) is amended by (a)
amending Paragraph 6A(2)(iii) in its entirety to read as follows:

          (iii) Senior Funded Debt of the Company and its Subsidiaries, so long
     as (a) the aggregate principal amount of consolidated Senior Funded Debt
     does not exceed at any time (i) through (and including) December 31, 1999
     an amount equal to sixty) per cent (60%) of Consolidated Capitalization,
     (ii) from (and including) January 1, 2000 through (and including) July 1,
     2000 an amount equal to fifty-eight per cent

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     (58%) of Consolidated Capitalization, (iii) from (and including) July 2,
     2000 through (and including) June 30, 2001 an amount equal to fifty-five
     per cent (55%) of, Consolidated Capitalization and (iv) after June 30, 2001
     an amount equal to 50% of Consolidated Capitalization and (b) the aggregate
     amount of all Funded Debt of Subsidiaries (excluding that permitted by
     clause (i) of this paragraph 6A(2)), together with all Secured Funded Debt
     does not exceed 10% of Consolidated Total Assets (it being understood that
     for purposes of this clause (iii) Consolidated Capitalization and
     Consolidated Total Assets shall be measured as of the later of (x) the end
     of the Company's most recent quarterly period and (y) any other date as of
     which the Company has prepared and delivered to each holder of the Notes
     that is an Institutional Investor a consolidated balance sheet of the
     Company and its Subsidiaries).

and (b) by adding the following paragraph at the end of Paragraph 6A(2):

          Without limiting the foregoing provisions of this paragraph 6A(2), the
     Company shall not permit the aggregate principal amount of all Debt of the
     Company and its Subsidiaries (other than (i) Debt hereunder, (ii) Debt
     under the BA Credit Agreements referred to in clauses (i) and (ii) of the
     definition thereof (without giving effect to any amendments thereto that
     would increase the amounts that may be borrowed thereunder), (iii) Debt
     referred to on Schedule 6A2 which was outstanding on March 25, 1999 and
     (iv) Subordinated Debt owed to members of the Company) to exceed
     $35,000,000 at any time prior to the Ratio Compliance Date.

     2.8  Amendment to Paragraph 6G. Paragraph 6G is amended in its entirety to
read as follows:

     6G. RATIO OF ASSET BASE TO DEBT. The Company will not permit, at any time
     prior to the Ratio Compliance Date, the ratio of (a) the Asset Base as of
     the last day of any, fiscal month to (b) the remainder of (i) the daily
     average of the amount of Total Senior Debt outstanding during the fiscal
     month ending on such date minus (ii) the daily average of cash and
     marketable securities during the fiscal month ending on such date to be
     equal to or less than the applicable ratio set forth below:

     Fiscal Month(s) Ending                          Ratio
     ----------------------                          -----
     04/3/99 through 05/29/99                        1.10 to 1
     07/3/99 through 10/2/99                         1.15 to 1
     10/30/99 through 12/31/99                       1.20 to 1
     01/29/00                                        1.10 to 1
     2/26/00 through 12/31/00                        1.20 to 1
     01/27/01                                        1.10 to 1
     2/24/01 through 12/31/01                        1.20 to 1
     01/26/02                                        1.10 to 1
     2/23/02 and thereafter                          1.20 to 1

     2.9  Addition of Paragraph 6H. Paragraph 6 is amended by adding the
following new paragraph immediately after Paragraph 6G:

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     6H. FIXED CHARGE COVERAGE RATIO. The Company shall not permit the Fixed
     Charge Coverage Ratio as of the end of any fiscal quarter to be less than
     the applicable ratio set forth below:

     Fiscal Quarter Ending                           Ratio
     ---------------------                           -----
     4/3/99                                          1.30 to 1.00
     7/3/99                                          1.35 to 1.00
     10/2/99                                         1.50 to 1.00
     12/31/99                                        1.85 to 1.00
     4/1/00                                          2.00 to 1.00
     7/1/00                                          2.15 to 1.00
     9/30/00 and thereafter                          2.25 to 1.00

     2.10 Amendment to Paragraph 7A. (a) Paragraph 7A(ii) is amended by deleting
the number "10" and inserting in place thereof the number "3"; and (b) Paragraph
7A(iii) is amended by deleting the number "$7,000,000" and inserting in place
thereof the number "$5,000,000."

     2.11 Amendments to Paragraph 8. (a) Paragraph 8E is amended by adding the
following paragraph at the end thereof

          The projections relating to the Company and its Subsidiaries for the
     two-year period 1999-2000, a copy of which is attached hereto as Schedule
     8E, disclose all material assumptions used in formulating such projections.
     The Company is not aware of any facts that (individually or in the
     aggregate) would result in any material change in any of such projections.
     Such projections have been prepared on the basis of the assumptions stated
     therein (all of which were made by the Company in good, faith), and reflect
     the reasonable estimates of the Company of the financial condition, results
     of operations and other information projected therein.

     (b)  Paragraph 8 is also amended by adding a new paragraph after Paragraph
8S as follows:

     8T. YEAR 2000 PROBLEM. The Company and its Subsidiaries (a) have reviewed
     the areas within their business and operations which could be adversely
     affected by, and have developed or are developing a program to address on a
     timely basis, the Year 2000 Problem and (b) have made appropriate inquiries
     as to the effect the Year 2000 Problem will have on their material
     suppliers and customers. Based on such a review, program and inquiries, the
     Company reasonably believes that the Year 2000 Problem will not have a
     Material Adverse Effect.

     2.12 Amendment to Paragraph 13. Paragraph 13 is amended by adding a new
paragraph at the end of paragraph 13A as follows:

     COMPANY INDEMNIFICATION. Whether or not the transactions contemplated by
     this Agreement are consummated, the Company shall indemnify and hold you
     and each of your respective officers, directors, employees, counsel, agents
     and attorneys-in-fact

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     (each an "INDEMNIFIED PERSON") harmless from and against any and all
     liabilities, obligations, losses, damages, penalties, actions, judgments,
     suits, costs, charges, expenses and disbursements (including attorney's
     fees and expenses) of any kind or nature whatsoever which may at any time
     (including at any time following repayment, or transfer by you, of the
     Notes) be imposed on, incurred by or asserted against any such Person in
     any way relating to or arising out of this Agreement, or the Notes or any
     document contemplated by or referred to herein or therein, or the
     transactions contemplated hereby or thereby, or any action taken or omitted
     by any such Person under or in connection with any of the foregoing,
     including with respect to any investigation, litigation or proceeding
     (including any bankruptcy, insolvency, reorganization or other similar
     proceeding or any appellate proceeding) related to or arising out of this
     Agreement or the Notes or the use of the proceeds thereof, whether or not
     any Indemnified Person is a party thereto (all the foregoing, collectively,
     the "INDEMNIFIED LIABILITIES") provided that the Company shall not have
     obligation under this Paragraph 13A to any Indemnified Person with respect
     to Indemnified Liabilities resulting solely from the gross negligence or
     willful misconduct of such Indemnified Person.

     2.13 Addition of Schedules 6A2 and 8E. The Schedule 6A2 and the Schedule 8E
attached to this Amendment is added to the Agreement as Schedule 6A2 and
Schedule 8E, respectively.

          SECTION 3. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each of the Purchasers that, after giving effect hereto (a) each
representation and warranty set forth in Paragraph 8 (including, without
limitation, Paragraph 8E) of each Note Purchase Agreement is true and correct as
of the date of the execution and delivery of this Amendment by the Company with
the same effect as if made on such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they were true and correct as of such earlier date) and (b) no Event of Default
or Default exists.

          SECTION 4. EFFECTIVENESS. The amendments described in Section 2 above
shall become effective on the date when (the "Effective Date") each Purchaser
has received:

          (a) the fees referred to in Section 5 below and all costs and expenses
     of such Purchaser in connection with this Amendment;

          (b) the following documents, each (including, with limitation, those
     referred to in clause (viii) below) in a form and substance satisfactory to
     the Purchasers:

              (i)  counterparts of this Amendment executed by the Company and
          the Purchasers;

              (ii) certified copies of the resolutions of the Board of
          Directors of the Company authorizing the execution and delivery of
          this Amendment and the performance by the Company of its obligations
          under the Agreement and

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<PAGE>   9

          of all documents evidencing other necessary corporate action and
          governmental approvals, if any, with respect to this Amendment;

               (iii) a certificate of the Secretary or an Assistant Secretary
          dated the Effective Date certifying the names and true signatures of
          the officers of the Company authorized to sign this Amendment and
          certifying as to the resolutions attached to such certificate and
          other corporate proceedings relating to the authorization, execution
          and delivery of this Amendment;

               (iv) certified copies of the Certificate of Incorporation and
          By-laws of the Company;

               (v) a favorable opinion of Daniel T. Burns, general counsel of
          the Company (or such other counsel designated by the Company and
          acceptable to the Purchasers) in form and substance satisfactory to
          the Purchasers. The Company hereby directs such counsel to deliver
          such opinions and understands and agrees that the Purchasers upon
          receipt of such opinions will and hereby are authorized to rely on
          such opinions;

               (vi) evidence satisfactory to the Purchasers that the Company has
          paid the fees, charges and disbursements of Howard, Smith & Levin LLP;

               (vii) good standing certificates for the Company from the
          Secretaries of State of Delaware and Illinois dated of a recent date
          and such other evidence of the status of the Company as the Purchasers
          may reasonably request;

               (viii) certified copies of each of the BA Credit Agreements and
          the Prudential Agreement (as such terms are defined in Section 2.1
          above); and

               (ix) such other documents or certificates as the Purchasers may
          reasonably request; and

          (c)  All corporate and other proceedings in connection with the
     transactions contemplated by this Amendment shall be satisfactory to the
     Purchasers and its special counsel, and the Purchasers shall have received
     all such counterpart originals or certified or other copies of such
     documents as they may reasonably request.

          SECTION 5. FEES. In consideration of the Purchasers entering into this
Amendment, the Company agrees to pay, on or before the Effective Date, to each
Purchaser an amendment fee in an amount equal to 0.25% of the aggregate
principal amount of the Notes held by such Purchaser.

          SECTION 6. MISCELLANEOUS.

          6.1 Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York.

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          6.2 Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

          6.3 Successors and Assigns. This Amendment shall be binding upon the
Company, the Purchasers and their respective successors and permitted assigns,
and shall inure to the benefit of the Company and the Purchasers and the
respective successors and permitted assigns of the Purchasers.

                                       10
<PAGE>   11

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duty executed as of the date first above written.

                                        TRUSERV CORPORATION

                                        /s/ KERRY J KIRBY
                                        ---------------------------------
                                        By:       KERRY J KIRBY
                                        Title:    EVP, CFO

                                        MORGAN GUARANTY TRUST
                                        COMPANY OF NEW YORK
                                        as Trustee for a Commingled
                                        Pension Trust Fund

                                        ---------------------------------
                                        By:
                                        Title:

                                        J.P. MORGAN INVESTMENT
                                        MANAGEMENT INC.
                                        as Investment Manager for various
                                        Institutional Investors

                                        ---------------------------------
                                        By:
                                        Title:

                                       11
<PAGE>   12

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.

                                        TRUSERV CORPORATION

                                        ---------------------------------
                                        By:
                                        Title:

                                        MORGAN GUARANTY TRUST
                                        COMPANY OF NEW YORK
                                        as Trustee for a Commingled
                                        Pension Trust Fund

                                        /s/ E. CLIFFORD COLE
                                        ---------------------------------
                                        By:       E. CLIFFORD COLE
                                        Title:    VICE PRESIDENT

                                        J.P. MORGAN INVESTMENT
                                        MANAGEMENT INC.
                                        as Investment Manager for various
                                        Institutional Investors

                                        /s/ E. CLIFFORD COLE
                                        ---------------------------------
                                        By:       E. CLIFFORD COLE
                                        Title:    VICE PRESIDENT

                                       11
<PAGE>   13

                                        J.P. MORGAN INVESTMENT
                                        MANAGEMENT INC.
                                        as Investment Advisor for an
                                        Institutional Investor

                                        /s/ E. CLIFFORD COLE
                                        ---------------------------------
                                        By:       E. CLIFFORD COLE
                                        Title:    VICE PRESIDENT

                                        ALLSTATE LIFE INSURANCE COMPANY

                                        ---------------------------------
                                        By:
                                        Title:

                                        ---------------------------------
                                        By:
                                        Title:

                                        ALLSTATE INSURANCE COMPANY

                                        ---------------------------------
                                        By:
                                        Title:

                                        ---------------------------------
                                        By:
                                        Title:

                                       12
<PAGE>   14

                                        J.P. MORGAN INVESTMENT
                                        MANAGEMENT INC.
                                        as Investment Advisor for an
                                        Institutional Investor

                                        ---------------------------------
                                        By:
                                        Title:

                                        ALLSTATE LIFE INSURANCE COMPANY

                                        /s/ JOHN M. GOENSE
                                        ---------------------------------
                                        By:       JOHN M. GOENSE
                                        Title:    AUTHORIZED SIGNATORY

                                        /s/ RONALD A. MENDEL
                                        ---------------------------------
                                        By:       RONALD A. MENDEL
                                        Title:    AUTHORIZED SIGNATORY

                                        ALLSTATE INSURANCE COMPANY

                                        /s/ JOHN M. GOENSE
                                        ---------------------------------
                                        By:       JOHN M. GOENSE
                                        Title:    AUTHORIZED SIGNATORY

                                        /s/ RONALD A. MENDEL
                                        ---------------------------------
                                        By:       RONALD A. MENDEL
                                        Title:    AUTHORIZED SIGNATORY

                                       12
<PAGE>   15

                              AID ASSOCIATION FOR LUTHERANS

                              /s/ Frederick J. Russler
                              ---------------------------------
                              By:       Frederick J. Russler
                              Title:    Assistant Vice President
                                        Mortgages and Real Estate

                              /s/ ALAN D. ONSTAD
                              ---------------------------------
                              By:       ALAN D. ONSTAD
                              Title:    ASSISTANT VICE PRESIDENT-SECURITIES

                              KEYPORT LIFE INSURANCE COMPANY by
                              Stein Roe &
                              Farnham Incorporated as Agent

                              ---------------------------------
                              By:
                              Title:

                              NATIONWIDE LIFE INSURANCE
                              COMPANY

                              ---------------------------------
                              By:
                              Title:

                                       13

<PAGE>   16

                                        AID ASSOCIATION FOR LUTHERANS

                                        ---------------------------------
                                        By:
                                        Title:

                                        ---------------------------------
                                        By:
                                        Title:

                                        KEYPORT LIFE INSURANCE COMPANY by
                                        Stein Roe &
                                        Farnham Incorporated as Agent

                                        /s/ Richard Hegwood
                                        ---------------------------------
                                        By:       Richard Hegwood
                                        Title:    Senior Vice President

                                        NATIONWIDE LIFE INSURANCE
                                        COMPANY

                                        ---------------------------------
                                        By:
                                        Title:

                                       13
<PAGE>   17

                                        AID ASSOCIATION FOR LUTHERANS

                                        ---------------------------------
                                        By:
                                        Title:

                                        ---------------------------------
                                        By:
                                        Title:

                                        KEYPORT LIFE INSURANCE COMPANY by
                                        Stein Roe &
                                        Farnham Incorporated as Agent

                                        ---------------------------------
                                        By:
                                        Title:

                                        NATIONWIDE LIFE INSURANCE
                                        COMPANY

                                        /s/ MARK W. POEPPELMAN
                                        ---------------------------------
                                        By:       MARK W. POEPPELMAN
                                        Title:    AUTHORIZED SIGNATORY

                                       13

<PAGE>   18

                                FEDERATED MUTUAL INSURANCE
                                COMPANY

                                /s/ Mark A. Hood
                                ---------------------------------
                                By:       Mark A. Hood
                                Title:    Second Vice President

                                FEDERATED LIFE INSURANCE COMPANY

                                /s/ Mark A. Hood
                                ---------------------------------
                                By:       Mark A. Hood
                                Title:    Second Vice President

                                MODERN WOODMEN OF AMERICA

                                ---------------------------------
                                By:
                                Title:

                                AMERITAS LIFE INSURANCE CORP.
                                by Ameritas Investment Advisors, Inc. as Agent

                                ---------------------------------
                                By:
                                Title:

                                       14

<PAGE>   19

                                FEDERATED MUTUAL INSURANCE
                                COMPANY

                                ---------------------------------
                                By:
                                Title:

                                FEDERATED LIFE INSURANCE COMPANY

                                ---------------------------------
                                By:
                                Title:

                                MODERN WOODMEN OF AMERICA

                                /s/ C. Ernest Beane
                                ---------------------------------
                                By:       C. Ernest Beane
                                Title:    General Counsel

                                AMERITAS LIFE INSURANCE CORP.
                                by Ameritas Investment Advisors, Inc. as Agent

                                ---------------------------------
                                By:
                                Title:

                                       14

<PAGE>   20

                              FEDERATED MUTUAL INSURANCE
                              COMPANY

                              ---------------------------------
                              By:
                              Title:

                              FEDERATED LIFE INSURANCE COMPANY

                              ---------------------------------
                              By:
                              Title:

                              MODERN WOODMEN OF AMERICA

                              ---------------------------------
                              By:
                              Title:

                              AMERITAS LIFE INSURANCE CORP.
                              by Ameritas Investment Advisors, Inc. as Agent

                              /s/ Patrick J. Henry
                              ---------------------------------
                              By:       Patrick J. Henry
                              Title:    Vice President Fixed Income Securities

                                       14
<PAGE>   21

                                  NATIONAL GUARDIAN LIFE INSURANCE COMPANY

                                  /s/ R. A. Mucci
                                  ---------------------------------
                                  By:       R. A. Mucci
                                  Title:    Vice President and Treasurer

                                       15

<PAGE>   22

                                  SCHEDULE 6A2

                      (Debt Outstanding on March 25, 1999)
                                 (in thousands)

Senior Notes:

       8.60%                                                     $ 39,000
       7.38%                                                       50,000
       6.91%                                                       25,000
       6.79%                                                       50,000
       6.73%                                                       25,000
Variable term loan (6.21%)                                          6,200
Redeemable (subordinated) term notes:
          Fixed Interest rates ranging from 5.15% to 7.47%         28,655
Industrial Revenue Bonds (4.50%)                                    4,000
Other, including capital lease obligations                          9,456
                                                                 --------
                                                                 $237,311
                                                                 ========

                                       16<PAGE>   1
                                                                     Exhibit 10c

                               TRUSERV CORPORATION

                          DEFINED LUMP SUM PENSION PLAN

                             As Amended and Restated

                              as of January 1, 1998

<PAGE>   2

                TRUSERV CORPORATION DEFINED LUMP SUM PENSION PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                           <C>
INTRODUCTION -- SECTION I

        1.1    History of the Plan................................................................1
        1.2    Preservation of Rights.............................................................1
        1.3    Intent to Comply...................................................................1
        1.4    Application of Plan................................................................2

DEFINITIONS -- SECTION 2

        2.1    Definitions........................................................................3

PARTICIPATION -- SECTION 3

        3.1    Date of Participation.............................................................13
        3.2    Events Affecting Participation....................................................14
        3.3    Participation upon Reemployment...................................................14

NORMAL PENSION -- SECTION 4

        4.1    Formula...........................................................................15
        4.2    Eligibility and Commencement-- Normal Pension.....................................15
        4.3    Amount of Normal Pension..........................................................15
        4.4    Terminations and Retirements Before January 2, 1998...............................18
        4.5    Uniformed Services Employment and Reemployment Rights.............................18
        4.6    SERVISTAR Plan....................................................................18

IMMEDIATE, EARLY AND LATE PENSION -- SECTION 5

        5.1    Immediate Pension.................................................................19
        5.2    Early Retirement Pension..........................................................19
        5.3    SERVISTAR Plan....................................................................19
        5.4    Late Retirement Pension...........................................................20
</TABLE>

<PAGE>   3

                TRUSERV CORPORATION DEFINED LUMP SUM PENSION PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                           <C>
NORMAL FORM OF PAYMENT -- SECTION 6

        6.1    Normal Form of Payment-- Joint and Survivor.......................................21
        6.2    Normal Form of Payment-- Single Life Annuity......................................21
        6.3    Optional Forms of Payment.........................................................21
        6.4    Election of Option................................................................21
        6.5    Notice to Participants............................................................22
        6.6    SERVISTAR Protected Payment Forms.................................................22
        6.7    Payment of Pension to the Participant.............................................23
        6.8    Payment Options...................................................................23
        6.9    Minimum Amounts to be Paid........................................................25
        6.10   TEFRA Transition Rule Elections...................................................25
        6.11   Restoration of Retired Participant or Other Former Associate to Service...........27
        6.12   Direct Rollover of Certain Distributions..........................................27

SURVIVING SPOUSE BENEFIT -- SECTION 7

        7.1    Eligibility.......................................................................29
        7.2    Amount............................................................................29
        7.3    Payments..........................................................................29
        7.4    Minimum Benefit and Payment Form..................................................30

TRUST FUND AND TRUSTEE -- SECTION 8

        8.1    Trust Fund........................................................................31
        8.2    Trust Fund Applicable Only to Payment of Benefits and Expenses....................31
        8.3    Trustee Capacity..................................................................31
        8.4    Resignation and Removal of Trustee................................................31
        8.5    Taxes, Expenses and Compensation of Trustee.......................................32
        8.6    Funding Policy and Investment Managers............................................32

FUNDING OF BENEFITS -- SECTION 9

        9.1    Contributions to the Fund.........................................................33
        9.2    Fund for Exclusive Benefit of Participants........................................33
        9.3    Disposition of Credits and Forfeitures............................................33
</TABLE>

<PAGE>   4

                TRUSERV CORPORATION DEFINED LUMP SUM PENSION PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                           <C>
PLAN ADMINISTRATOR -- SECTION 10

        10.1   Plan Administrator/Appointment of Committee.......................................34
        10.2   Duties and Authority..............................................................34
        10.3   Removal of Plan Administrator.....................................................35
        10.4   Appointment of Successor Plan Administrator.......................................35
        10.5   Plan Administration-- Miscellaneous...............................................35

AMENDMENT AND TERMINATION OF PLAN -- SECTION 11

        11.1   Amendment-- General...............................................................42
        11.2   Amendment-- Merger or Consolidation of Plan.......................................42
        11.3   Termination of Plan...............................................................42

RESTRICTION OF BENEFITS UPON EARLY TERMINATION OF THE PLAN -- SECTION 12

        12.1   Limitation Concerning Highly Compensated Employees or
               Highly Compensated Former Employee................................................43

SPECIAL PENSION BENEFITS PROVISIONS -- SECTION 13

        13.1   Statutory Maximum Pension Benefits................................................44
        13.2   Top-Heavy Provisions..............................................................49

EXECUTION PAGE...................................................................................54
</TABLE>

<PAGE>   5

                TRUSERV CORPORATION DEFINED LUMP SUM PENSION PLAN

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----
<S>                                                                                           <C>
SUPPLEMENT A   ACTUARIAL ASSUMPTIONS.............................................................55

SUPPLEMENT B   MERGER OF NORTHERN WHOLESALE HARDWARE CO
               RETIREMENT PLAN WITH AND INTO PRIOR PLAN..........................................56

SUPPLEMENT C   SERVISTAR COAST TO COAST CORPORATION
               RETIREMENT INCOME PLAN PROVISIONS.................................................57

SUPPLEMENT D   1999 SPECIAL RETIREMENT OPPORTUNITY...............................................70

TABLE A        LATE RETIREMENT ADJUSTMENT FACTOR.................................................71

TABLE B        CONTINGENT PENSIONER ADJUSTMENT FACTORS
               JOINT AND SURVIVOR ADJUSTMENT FACTORS.............................................72

TABLE C        IMMEDIATE ANNUITY 10-YEAR CERTAIN ANNUITY
               MONTHLY INCOME PER 1000...........................................................77
</TABLE>

<PAGE>   6

                            INTRODUCTION -- SECTION 1

1.1      HISTORY OF PLAN

         As of January 1, 1958, Cotter & Company established a program for
         providing retirement income and other benefits for certain of its
         associates and their beneficiaries. This program was set forth in a
         document entitled the Cotter & Company Pension Plan. Since the Cotter &
         Company Pension Plan was initially established, it has been amended and
         restated and its name changed to the Cotter & Company Defined Lump Sum
         Pension Plan.

         On July 1, 1997, Cotter & Company and SERVISTAR COAST TO COAST
         Corporation merged to form TruServ Corporation. In conjunction with the
         merger, the Cotter & Company Defined Lump Sum Pension Plan changed its
         name to be known as the TruServ Corporation Defined Lump Sum Pension
         Plan effective as of January 1, 1998. On January 2, 1998, the TruServ
         Corporation Defined Lump Sum Pension Plan and the SERVISTAR COAST TO
         COAST Corporation Retirement Income Plan were combined. Between July 1,
         1997 and January 1, 1998, all Associates of the TruServ Corporation who
         were participants in the SERVISTAR Plan on June 30, 1997 remained
         participants in the SERVISTAR Plan. All benefit accruals under the
         SERVISTAR COAST TO COAST Corporation Retirement Income Plan ceased as
         of December 31, 1997. On January 2, 1998, all participants under the
         SERVISTAR Plan became participants under the TruServ Corporation
         Defined Lump Sum Pension Plan and will be entitled to the retirement
         benefits described in this Plan, including current accruals beginning
         on January 1, 1998.

1.2      PRESERVATION OF RIGHTS

         No provisions, other than those required to maintain this Plan as one
         qualified under Section 401(a) of the Code, of any previous amendment,
         this amendment and restatement of the Plan, or any future amendment
         shall operate to diminish or otherwise adversely affect the amount or
         terms of retirement income accrued in respect to a Participant's
         coverage under the Plan prior to the effective date of any such
         amendment or restatement.

1.3      INTENT TO COMPLY

         It is the intent of the Employer that the Plan shall be established and
         maintained (1) as a retirement program which is in full compliance with
         ERISA, and (2) as a qualified plan under the terms of Section 401(a) of
         the Internal Revenue Code of 1986 as amended from time to time.

                                       1
<PAGE>   7

1.4      APPLICATION OF PLAN

         This Plan supersedes the Cotter & Company Defined Lump Sum Pension Plan
         and the SERVISTAR COAST TO COAST Corporation Retirement Income Plan,
         both in effect on December 31, 1997. With respect to all persons who
         have retired on or prior to December 31, 1997, retirement benefits will
         be made in accordance with such plan in effect on the date of
         retirement or separation from service. With respect to all persons who
         retire or otherwise separate from service on or after January 1, 1998,
         the retirement benefits will be made in accordance with the terms of
         the Plan.

                                       2
<PAGE>   8

                            DEFINITIONS -- SECTION 2

2.1      DEFINITIONS

         The terms, as capitalized and defined in this Section, shall for all
         purposes of this Plan have the meaning described in this Section unless
         the context clearly requires otherwise or as otherwise expressly
         provided.

         (A)      ACCRUED BENEFIT -- The yearly Pension commencing on the
                  Participant's Normal Retirement Date determined in accordance
                  with Section 4, as if the Participant's termination of
                  employment occurred on the date of determination and he had a
                  Vesting Percentage of 100%.

         (B)      ACTUARIAL EQUIVALENT OR ACTUARIALLY EQUIVALENT -- The amount
                  of equal value when computed on the basis of the actuarial
                  assumptions set forth in Supplement A of the Plan. Application
                  of such assumptions to the computation of benefits under the
                  Plan shall be made uniformly and consistently with respect to
                  all Participants in similar circumstances.

         (C)      ADJUSTMENT FACTOR -- The appropriate adjustment factor(s)
                  which may be applicable to a Participant's Pension in
                  accordance with the further terms of the Plan.

         (D)      AFFILIATED EMPLOYER -- Any company not participating in the
                  Plan which is a member of a controlled group of corporations
                  (as defined in Section 414(b) of the Code) which also includes
                  as a member the Employer; any trade or business under common
                  control (as defined in Section 414(c) of the Code) with the
                  Employer; any 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.
                  Notwithstanding the foregoing sentence, for purposes of
                  Section 13.1, the definitions in Sections 414(b) and (c) of
                  the Code shall be modified as provided in Section 415(h) of
                  the Code.

         (E)      ANNUITY STARTING DATE -- The first day of the first period for
                  which an amount is payable as an annuity or in the case of a
                  lump sum payment the first date on which all events have
                  occurred which entitle a Participant to such benefit.

         (F)      ASSOCIATE -- Any person in the employ of the Employer, but
                  excluding any person who is:

                  (1)      a Leased Employee as defined in Section 414(n) of the
                           Code;

                                       3
<PAGE>   9

                  (2)      in a unit of Associates covered by a collective
                           bargaining agreement which does not provide for
                           participation in the Plan;

                  (3)      a participant, or eligible to become a participant,
                           in any other retirement or pension plan (except the
                           TruServ Corporation Associates' Savings and
                           Compensation Deferral Plan) intended to qualify under
                           Section 401(a) of the Code and which is established
                           by the Employer or to which the Employer makes any
                           contribution; or

                  (4)      any person who is treated as being other than a
                           common law employee on the payroll records of the
                           Employer, including any person classified as an
                           independent contractor or consultant by the Employer
                           during the period such person is so classified by the
                           Employer regardless of such person's reclassification
                           for such period by the Internal Revenue Service or
                           other controlling authority for tax withholding
                           purposes.

                  The term "Associate" as used in this Plan means any person who
                  is employed by the Employer or an Affiliated Employer as a
                  common law employee of the Employer or an Affiliated Employer,
                  regardless of whether the person is an "Associate," and any
                  Leased Employee.

         (G)      AVERAGE COMPENSATION -- The annual average of the Compensation
                  of an Associate during the three consecutive calendar years
                  within the ten calendar years up to an including the calendar
                  year of such Associate's termination of employment which yield
                  the highest average. For purposes of computing an Associate's
                  Average Compensation, if the date of such Associate's
                  termination of employment shall occur prior to the end of a
                  calendar year, then that calendar year shall be included as
                  one of the ten calendar years, and the Associate shall be
                  deemed to have received Compensation during that calendar year
                  equal to the annualized rate of his base wages received during
                  that calendar year plus any bonuses actually received during
                  that calendar year.

         (H)      BENEFICIARY -- The person or persons named by a Participant by
                  written designation filed with the Employer to receive
                  payments after the Participant's death as provided in Section
                  7.4.

         (I)      CODE -- The Internal Revenue Code of 1986, as amended from
                  time to time.

         (J)      COMMITTEE -- The individuals appointed by the Employer to
                  administer the Plan as described in Section 10.1.

         (K)      COMPENSATION -- For any calendar year is the total cash
                  compensation (including commissions, bonuses [other than
                  sign-on bonuses], overtime pay, sick pay, vacation pay and
                  holiday pay) paid to him by the Employer during that calendar
                  year for personal services rendered to an Employer as an
                  Associate, plus elective

                                       4
<PAGE>   10

                  deferrals under Sections 125 and 401(k) of the Code for that
                  calendar year, but excluding severance pay, moving or
                  relocation allowances or bonuses, tuition reimbursements, auto
                  or travel expense allowances or bonuses, or any other
                  extraordinary remuneration. During the period of any Leave of
                  Absence, an Associate shall be deemed to receive Compensation
                  at the annual rate of Compensation actually received by him
                  during such period, or, if no compensation is paid, the annual
                  rate of Compensation immediately prior to the commencement of
                  such Leave of Absence.

                  However, effective on and after the first day of the Plan Year
                  beginning in 1989 and before the first day of the Plan Year
                  beginning in 1994, Compensation taken into account for any
                  purpose under the Plan, including the determination of Average
                  Compensation, shall not exceed $200,000 per year. Except as
                  provided below, as of January 1 of each calendar year on and
                  after January 1, 1990 and before January 1, 1994, the
                  applicable limitation as determined by the Commissioner of
                  Internal Revenue for that calendar year shall become effective
                  as the maximum Compensation to be taken into account for Plan
                  purposes for 12-month compensation computation periods
                  beginning within that calendar year only in lieu of the
                  $200,000 limitation set forth above. Commencing with the Plan
                  Year beginning in 1994, Compensation taken into account for
                  any purpose under the Plan, including the determination of
                  Average Compensation, shall not exceed $150,000 (as adjusted
                  from time to time by the Secretary of the Treasury in
                  accordance with Section 401(a)(17)(B) of the Code). Effective
                  January 1, 1997, the compensation limit shall be applied
                  without regard to the family aggregation provisions of the now
                  repealed Section 414(q)(6) of the Code in determining benefit
                  accruals for Plan Years beginning on and after January 1,
                  1997, and, to the extent permissible under the Internal
                  Revenue Service rules or regulations, for any earlier Plan
                  Year.

                  Solely for purposes of this subsection 2.1(K), for those
                  individuals who were employed by SERVISTAR Corporation or
                  SERVISTAR COAST TO COAST Corporation and who were participants
                  in the SERVISTAR Corporation Retirement Income Plan or the
                  SERVISTAR COAST TO COAST Corporation Retirement Income Plan,
                  Compensation for periods beginning before January 1, 1998
                  shall include "Earnings" as defined in the SERVISTAR Plan as
                  restated in Supplement C hereto subject to the above statutory
                  limits and for the purposes of this Plan recasted on a
                  calendar year basis assuming level "Earnings." Compensation
                  shall not include any "Earnings" received by an individual
                  while an associate of Coast to Coast Stores, Inc.

         (L)      DEFINED LUMP SUM -- The amount determined under Section
                  4.3(B).

         (M)      DISABILITY INSURANCE PLAN -- Any plan from time to time in
                  force which provides for the payment of income benefits to
                  Associates of an Employer by reason of disability resulting
                  from accident or sickness.

                                       5
<PAGE>   11

         (N)      EFFECTIVE DATE -- January 1, 1998, unless otherwise noted.

         (O)      EMPLOYER -- On and after July 1, 1997, Employer shall mean
                  TruServ Corporation or any successor by merger, purchase or
                  otherwise, with respect to its associates. Before July 1,
                  1997, Employer shall mean Cotter & Company, a Delaware
                  corporation, and any Affiliated Employer which adopted the
                  Plan by resolution of its board of directors and with the
                  consent of Cotter & Company.

         (P)      EMPLOYMENT CONTINUITY -- The period commencing with the date
                  on which an associate first performs an Hour of Service for an
                  Employer or an Affiliated Employer and ending on the first day
                  of the 12-month period in which the associate incurs a
                  One-Year Break in Service; provided, however, that if an
                  Associate leaves the employ of the Employer or an Affiliated
                  Employer other than pursuant to an authorized Leave of Absence
                  and does not return until after a One-Year Break in Service,
                  his Employment Continuity upon return to employment by the
                  Employer or an Affiliated Employer shall be determined on the
                  basis of the date on which the associate first performs an
                  Hour of Service subsequent to his return to the employ of the
                  Employer or an Affiliated Employer. A former associate who
                  terminates employment and is reemployed by the Employer or an
                  Affiliated Employer before incurring a One-Year Break in
                  Service will not be deemed to have terminated employment with
                  the Employer or an Affiliated Employer. Solely for purposes of
                  determining Employment Continuity with respect to all persons
                  who were active participants in the SERVISTAR Plan on December
                  31, 1997, for periods on or before June 30, 1997, Employer
                  means SERVISTAR COAST TO COAST Corporation and its
                  predecessors.

         (Q)      ERISA -- The Employee Retirement Income Security Act of 1974,
                  as it may be amended from time to time, and any regulations
                  issued pursuant thereto.

         (R)      FUND -- The fund or funds established by separate written
                  agreement between the Employer and an insurance company and/or
                  trustee or trustees for the purpose of accumulating
                  contributions made in accordance with the Funding of Benefits
                  Section and paying the benefits and expenses described in
                  certain other Sections of this Plan.

         (S)      HIGHLY COMPENSATED EMPLOYEE -- With respect to a Plan Year
                  commencing on or after January 1, 1997, any associate of the
                  Employer or an Affiliated Employer (whether or not eligible
                  for the Plan) who

                  (i)      was a 5% owner of the Employer for such Plan Year or
                           the prior Plan Year, or

                  (ii)     for the preceding Plan Year received "statutory
                           compensation" in excess of $80,000 (as adjusted by
                           the Secretary of the Treasury from time to time). For
                           this purpose, "statutory compensation" shall mean the
                           wages, salaries,

                                       6
<PAGE>   12

                           and other amounts paid in respect of an associate for
                           services actually rendered to an Employer or an
                           Affiliated Employer and including amounts excluded
                           from the income of an associate pursuant to Sections
                           125, 402(e)(3), 402(h)(1)(B) and 403(b) of the Code,
                           but excluding deferred compensation, stock options
                           and other distributions which receive special tax
                           benefits under the Code.

                  Notwithstanding the foregoing, associates who are nonresident
                  aliens and who receive no earned income from the Employer or
                  an Affiliated Employer which constitutes income from sources
                  within the United States shall be disregarded for all purposes
                  of this Section.

                  The provisions of this definition shall be further subject to
                  such additional requirements as shall be described in Section
                  414(q) of the Code and its applicable regulations, which shall
                  override any aspects of this Section inconsistent therewith.

         (T)      HOUR OF SERVICE -- With respect to the applicable computation
                  period:

                  (1)      each hour for which the Associate is either directly
                           or indirectly paid by the Employer or Affiliated
                           Employer or entitled to payment for the performance
                           of duties for the Employer or an Affiliated Employer;
                           and

                  (2)      up to a maximum of 501 hours for reasons other than
                           the performance of duties (such as but not limited to
                           paid sick leave, paid vacation time), irrespective of
                           whether the employment relationship has terminated,
                           which hours shall be credited to the Associate during
                           the computation period in which payment is made or
                           amounts payable to the Associate become due, and

                  (3)      any additional hours as normally would have been
                           credited to the Associate had he worked on a
                           nonovertime basis during military leave while the
                           Associate's reemployment rights are protected by law
                           or is eligible to receive a benefit under a
                           Disability Insurance Plan, provided that any such
                           periods qualify as a Leave of Absence in accordance
                           with the terms of the Leave of Absence definition,
                           and

                  (4)      each hour for which back pay is either awarded or
                           agreed to by the Employer or an Affiliated Employer,
                           irrespective of mitigation of damages, which hour
                           shall be credited to the Associate for the
                           computation period to which the award, agreement or
                           payment pertains, rather than the period in which the
                           award, agreement or payment was made.

                           The same hours of service shall not be credited under
                           more than one paragraph of this definition. In no
                           event will Hours of Service be allowed

                                       7
<PAGE>   13

                           and computed in a manner less liberal than the manner
                           described in the Department of labor Regulation
                           2530.200b-2.

                  Solely for purposes of this subsection 2.1(T), the term
                  Associate shall be deemed to include any person who is in the
                  common law employ of the Employer or an Affiliated Employer so
                  that Associates may be credited under the Plan with Hours of
                  Service for participation purposes for period of employment
                  during which they are not Associates as such term is defined
                  in subsection 2.1(F).

         (U)      LEAVE OF ABSENCE -- A temporary absence from active service
                  with the Employer or an Affiliated Employer that, in the
                  discretion of the Employer or an Affiliated Employer, may be
                  granted to an Associate because of temporary incapacity or
                  other good cause. If an Associate on a Leave of Absence does
                  not return to employment with the Employer or an Affiliated
                  Employer within the period authorized by the Employer or an
                  Affiliated Employer, the Associate's employment shall be
                  deemed to have terminated as of the first day following the
                  period of the Leave of Absence. A Participant shall
                  automatically be entitled to a Leave of Absence during any
                  period of time for which he is eligible to receive a benefit
                  under a Disability Insurance Plan. An Associate shall
                  automatically be entitled to a Leave of Absence during any
                  period of time he is in the military services of the United
                  States, provided that he returns to employment within the
                  period within which his right to reemployment is protected by
                  law.

         (V)      NAMED FIDUCIARY -- For purposes of ERISA, is the Committee
                  appointed in Section 10.

         (W)      NORMAL RETIREMENT DATE -- For benefit eligibility and vesting
                  purposes, the day on which the Participant attains his 65th
                  birthday. For all other purposes, the first day of the month
                  coinciding with or next following the Participant's 65th
                  birthday.

         (X)      ONE-YEAR BREAK IN SERVICE -- For an associate, a 12-month
                  period commencing on the date of an associate's termination of
                  employment and on each anniversary thereof during which such
                  associate is not employed (i.e., does not complete an Hour of
                  Service) with an Employer or an Affiliated Employer. In the
                  case of a maternity or paternity Leave of Absence, the
                  12-month period beginning on the first day of such absence
                  shall not constitute a One-Year Break in Service. For purposes
                  of this subsection 2.1(X), maternity or paternity Leave of
                  Absence means an absence from work by reason of the
                  associate's pregnancy, birth of the associate's child, or
                  placement of a child with the associate in connection with the
                  adoption of such child, or an absence for the purpose of
                  caring for such child for a period immediately following such
                  birth or placement.

                                       8
<PAGE>   14

         (Y)      PARTICIPANT -- Any Associate who becomes covered under this
                  Plan. A former Associate who is entitled to a vested Pension
                  under the Plan shall continue to be a Participant until he has
                  received his vested Pension.

         (Z)      PENSION -- Yearly payments (and lump sum payment, if elected)
                  under the Plan in the amount provided in Section 4.1 and the
                  forms provided in Section 7 payable to the Participant or his
                  Beneficiary under the Plan as a consequence of the termination
                  of employment of the Participant.

         (AA)     PLAN -- The TruServ Corporation Defined Lump Sum Pension Plan
                  as set forth in this document, as amended from time to time
                  thereafter.

         (BB)     PLAN ADMINISTRATOR -- The individual or group of individuals
                  designated by the Employer to administer and supervise the
                  Plan as provided in Section 10.

         (CC)     PLAN YEAR -- The 12-month period commencing on a January 1 and
                  ending on the following December 31.

         (DD)     PRIOR PLAN -- The Cotter & Company Pension Plan in effect on
                  December 31, 1995.

         (EE)     PROTECTED BENEFITS -- As of any date of determination, the
                  Accrued Benefit of a Participant and

                  (1)      any right of the Participant under the terms of the
                           Plan as of such date to have such Accrued Benefit,
                           and the Prior Plan benefit, commence on a date other
                           than the Normal Retirement Date;

                  (2)      any right of the Participant under the terms of the
                           Plan as of such date to have such Accrued Benefit,
                           and the Prior Plan benefit, payable in an optional
                           form of payment; and

                  (3)      the methodology under the terms of the Plan as of
                           such date for determining the amount of benefit
                           payable as a result of the exercise of any right of
                           the Participant expressed in paragraph (1) or (2)
                           above.

                  For the sole purposes of paragraph (3) above, any provision of
                  the Plan that requires payment of a Participant's Pension in a
                  form other than that described in Section 6.2 shall be
                  considered to be the exercise of a right by the Participant
                  therefor.

                  See Sections 2.1(OO), 4.1(B), 5.3, 6.6 and 7.4 and for any
                  Protected Benefits rights with respect to the SERVISTAR Plan.

                                       9
<PAGE>   15

         (FF)     QUALIFIED JOINT AND SURVIVOR ANNUITY --

                  (1)      in the case of a 50% Qualified Joint and Survivor
                           Annuity, an annuity for the life of the Participant
                           with a survivor annuity for the life of his Spouse
                           which is one-half of the amount of the annuity
                           payable during the joint lives of the Participant and
                           his Spouse, and which is the Actuarial Equivalent of
                           a single annuity for the life of the Participant in
                           the amount specified by the relevant provision of
                           Section 4; and

                  (2)      in the case of a 100% Qualified Joint and Survivor
                           Annuity, an annuity for the life of the Participant
                           with an survivor annuity for the life of his Spouse
                           which is equal to the amount of the annuity payable
                           during the joint lives of the Participant and his
                           Spouse, and which is the Actuarial Equivalent of a
                           single annuity for the life of the Participant in the
                           amount specified by the relevant provision of Section
                           4.

         (GG)     RETIREMENT DATE -- The date on which the payment of a
                  Participant's Pension is to commence as a result of his
                  termination of employment, as determined in accordance with
                  the further terms of the Plan.

         (HH)     SERVISTAR -- Is SERVISTAR COAST TO COAST Corporation, which
                  merged with Cotter & Company to form the TruServ Corporation
                  on July 1, 1997.

         (II)     SERVISTAR PLAN -- Is the SERVISTAR COAST TO COAST Corporation
                  Retirement Income Plan in effect on December 31, 1997. Certain
                  provisions of the SERVISTAR Plan are contained in Supplement C
                  to this Plan to assist the Committee's administration of this
                  Plan's provisions where they relate to the SERVISTAR Plan
                  provisions.

         (JJ)     SPOUSAL CONSENT -- The Spouse's consent to the Participant's
                  election of a form of payment other than Qualified Joint and
                  Survivor Annuity must be in writing, must acknowledge the
                  effect of the election, and the Spouse's signature must be
                  witnessed by a Plan representative or notary public.
                  Additionally, the Spouse's consent must specifically
                  acknowledge any nonspouse Beneficiary designated by the
                  Participant in conjunction with his election of an optional
                  form of payment. The Participant may not subsequently
                  designate another nonspouse Beneficiary without the further
                  written consent of the Spouse. Notwithstanding this consent
                  requirement, if the Participant establishes to the
                  satisfaction of a Plan representative that such written
                  consent cannot be obtained because there is no Spouse; the
                  Spouse cannot be located; of other circumstances as the
                  Secretary of the Treasury may by regulations prescribe, the
                  Participant's election to waive coverage will be considered
                  valid. Any consent necessary under this provision will be
                  valid only with respect to the Spouse who signs the consent. A
                  Participant is allowed to revoke his election without the
                  consent of his Spouse. The number of his revocations is not
                  limited.

                                       10
<PAGE>   16

         (KK)     SPOUSE -- The lawful wife of a male Participant, or the lawful
                  husband of a female Participant, on the Participant's
                  Retirement Date, date of death, or other event date as the
                  context requires, if earlier.

         (LL)     TRUST -- The trust established with the Trustee to hold the
                  assets which fund the benefits payable by the Plan.

         (MM)     TRUSTEE -- The Trustee of the Fund appointed by the Employer,
                  which may be a bank, trust company or other corporation
                  possessing trust powers under applicable state and Federal
                  law, or one or more individuals or any combination thereof.

         (NN)     VESTING PERCENTAGE -- The percentage which may be applied to a
                  Participant's Accrued Benefit in accordance with the further
                  terms of the Plan as determined below:

<TABLE>
<CAPTION>
                                                           Vesting
                                                          Percentage
                                                          ----------
<S>                                                       <C>
        If he has 5 Years of Service                         100%
        On his Normal Retirement Date                        100%
        In all other cases                                     0%
</TABLE>

                  Notwithstanding the above, a Participant shall have a 100%
                  Vesting Percentage in his Accrued Benefit if he:

                  (i)      attained age 50, regardless of his Years of Service,
                           and

                  (ii)     became a participant in the SERVISTAR Plan before
                           July 1, 1996.

         (OO)     YEAR OF SERVICE -- Shall be credited to each Participant based
                  on the number of days during a Participant's period of
                  Employment Continuity divided by 365.25 rounded to the nearest
                  1/10 of a year, subject to the following:

                  (1)      a Prior Plan participant shall be credited with his
                           Years of Service earned through December 31, 1995 in
                           accordance with provisions of the Prior Plan;

                  (2)      a Participant in the SERVISTAR Plan as of December
                           31, 1997 shall be credited with a minimum number of
                           Years of Service which shall be equal to his Years of
                           Service as of June 30, 1997 under the SERVISTAR Plan;

                  (3)      in addition, if an individual was a participant in
                           the SERVISTAR Plan on July 1, 1997 and earned at
                           least 500 hours of service (as defined in the
                           SERVISTAR Plan and included in Supplement C hereto in
                           which the Employer and Affiliated Employer referred
                           to therein has the same meaning as defined in this
                           Plan) during the period July 1, 1997 through December
                           31, 1997, he shall be credited with an additional
                           one-half Year of Service under this Plan and
                           thereafter shall be credited with a Year of Service
                           (and fractions thereof) as generally provided in this
                           subsection (OO).

                                       11
<PAGE>   17

                  (4)      if a former Participant with no Vesting Percentage in
                           the Plan again becomes a Participant in this Plan,
                           his Years of Service prior to any One-Year Break in
                           Service shall be taken into account only if the
                           number of consecutive One-Year Breaks in Service is
                           less than five.

                  (5)      no more than one Year of Service shall be granted to
                           any individual for any period; and

                  (6)      notwithstanding any Plan provision to the contrary,
                           for purposes of Section 4.3, no Year of Service shall
                           be credited to any Participant for any of the
                           following periods: (a) periods of employment with
                           Coast to Coast Stores, Inc. occurring prior to July
                           1, 1996, (b) periods of employment with Advocate
                           Services, Inc. occurring prior to January 1, 1998,
                           (c) periods of employment while such person is in an
                           employment classification, including but not limited
                           to a unit of associates covered by a collective
                           bargaining agreement which does not provide for
                           participation in this Plan, (d) periods of employment
                           during which an employee was a participant (or
                           eligible to be a participant) in any retirement plan
                           which is intended to be qualified under the Code
                           (except the TruServ Corporation Employees' Savings
                           and Compensation Deferral Plan and the SERVISTAR
                           Plan) sponsored by the Employer or an Affiliated
                           Employer, (e) periods of employment as a Leased
                           Employee as defined in Section 414(n) of the Code,
                           (f) periods of employment for which an employee has
                           received or is receiving benefits under this Plan.

                                       12
<PAGE>   18

                           PARTICIPATION -- SECTION 3

3.1      DATE OF PARTICIPATION

         (A)      Each Associate who:

                  (1)      was a Participant in the Cotter & Company Defined
                           Lump Sum Pension Plan on January 1, 1998; or

                  (2)      was a Participant in the SERVISTAR Plan on January 1,
                           1998

                  shall automatically become a Participant in the Plan on
                  January 2, 1998 provided that his Employment Continuity did
                  not end on January 1, 1998.

         (B)      Each other Associate will become a Participant under the Plan
                  on the January 1 or July 1 which coincides with or next
                  following the date the Associate has completed "one year of
                  employment" and has attained age 21.

         (C)      Notwithstanding any Plan provision to the contrary, each
                  individual, who on January 1, 1998 was employed by Advocate
                  Services, Inc. and who became an Associate of the Employer on
                  January 2, 1998, shall commence participation in the Plan on
                  January 2, 1998.

         (D)      For the purposes of this Section, an Associate shall be
                  credited with "one year of employment" when he completes a
                  12-month period of employment during his period of Employment
                  Continuity.

         (E)      Notwithstanding any Plan provision to the contrary, for
                  purposes of this Section, each individual who is hired as a
                  temporary employee shall be credited with "one year of
                  employment" for the 12-month computation period beginning on
                  the date he first completes an Hour of Service if he completes
                  at least 1,000 Hours of Service by the end of that period, and
                  he shall become a Participant as provided in (B) above. If a
                  temporary employee terminates employment prior to becoming a
                  Participant, but after having worked 1,000 Hours of Service in
                  the 12-month period during which he was employed, and is
                  subsequently rehired, he shall become a Participant as of the
                  first January 1 or July 1 which coincides with or immediately
                  follows his reemployment. If he terminates employment, is
                  subsequently rehired as a temporary employee, and had not
                  worked 1,000 Hours of Service in the 12-month period
                  commencing with his initial date of hire, his prior service
                  shall be disregarded and he shall begin a new computation
                  period and his Hours of Service shall be counted from his date
                  of rehire.

                                       13
<PAGE>   19

3.2      EVENTS AFFECTING PARTICIPATION

         A person's participation in the Plan shall end when he is no longer
         employed by the Employer, if he is not entitled to either an immediate
         or a deferred Pension under the Plan. Participation shall continue
         while on a Leave of Absence or during a period while he is not an
         Associate but is in the employ of the Employer or an Affiliated
         Employer, but no Years of Service for the purpose of determining the
         Accrued Benefit shall be counted for that period, except as
         specifically provided otherwise in this Plan, and such person's Pension
         shall be determined in accordance with the provisions of the Plan in
         effect on the date he ceased to be an Associate.

3.3      PARTICIPATION UPON REEMPLOYMENT

         (A)      If an Associate's participation in the Plan ends and he again
                  becomes an Associate, he shall again become a Participant as
                  of his date of restoration to service as an Associate if his
                  Vesting Percentage was 100% or he had not incurred five
                  One-Year Breaks in Service. In any other case, he will
                  participate in the Plan when he again meets the requirements
                  of Section 3.1

         (B)      However, if an associate's employment is terminated before he
                  participates in the Plan and:

                  (i)      he is later reemployed before he incurred a One-Year
                           Break in Service, his employment after reemployment
                           shall be aggregated with his previous period of
                           employment and the period between his date of
                           termination and his date of reemployment shall be
                           included in his requirement of one year of
                           employment; or

                  (ii)     he incurred at least a One-Year Break in Service and
                           the length of his break in service exceeded his
                           Service prior to his Break, his employment before
                           reemployment shall not be aggregated with his period
                           of employment after his absence,

                  in which case he will participate in the Plan when he meets
                  the requirements of Section 3.1.

                                       14
<PAGE>   20

                           NORMAL PENSION -- SECTION 4

4.1      FORMULA

         With respect to a Participant who retires or terminates on or after
         January 2, 1998, the Pension payable under the Plan is the greater of
         (A), (B) or (C):

         (A)      The Vesting Percentage of the Participant's Accrued Benefit
                  determined in Section 4.3; or

         (B)      The Vesting Percentage of the Participant's accrued benefit
                  payable under the SERVISTAR Plan as of January 1, 1998, as
                  modified by Sections 2.1(OO)(4) and 4.6; or

         (C)      The Vesting Percentage of the Participant's accrued benefit
                  under the Prior Plan as of December 31, 1995.

4.2      ELIGIBILITY AND COMMENCEMENT -- NORMAL PENSION

         Each Participant who retires from the employ of the Employer on his
         Normal Retirement Date will receive a normal Pension commencing as of
         such date.

4.3      AMOUNT OF NORMAL PENSION

         The yearly Pension payable to such Participant will be equal to the
         amount described in subsections (A), (B), (C), (D) and (E) below
         (subject, however, to Section 13.1 of this Plan, if applicable, and the
         election of the Participant to take the Accrued Benefit in a lump sum
         form under Section 6.8):

         (A)      The Participant's Accrued Benefit shall equal his Defined Lump
                  Sum converted into an Actuarially Equivalent single life
                  annuity payable at the Participant's Normal Retirement Date
                  or, if the Participant retires after his Normal Retirement
                  Date, the age he retires after his Normal Retirement Date.

         (B)      The Participant's Defined Lump Sum equals the sum of (1) and
                  (2) below:

                  (1)      the Participant's Average Compensation multiplied by
                           the sum of the annual pension credit percentages in
                           the table below that are earned by the Participant
                           for each Year of Service (and fraction thereof):

                                       15
<PAGE>   21

<TABLE>
<CAPTION>
      YEARS OF SERVICE        ANNUAL PENSION       YEARS OF SERVICE       ANNUAL PENSION
          WHILE AGE          CREDIT PERCENTAGE         WHILE AGE         CREDIT PERCENTAGE
      ----------------       -----------------     ----------------      -----------------
<S>                          <C>                   <C>                   <C>
        Less than 26               2.0%                   46                   7.0%
           26 - 28                 2.5%                   47                   7.5%
           29 - 31                 3.0%                   48                   8.0%
           32 - 33                 3.5%                   49                   8.5%
           34 - 35                 4.0%                   50                   9.0%
           36 - 37                 4.5%                   51                   9.5%
           38 - 39                 5.0%                   52                   10.0%
           40 - 41                 5.5%                   53                   10.5%
           42 - 43                 6.0%                   54                   11.0%
           44 - 45                 6.5%                 55- 60                 11.5%
                                                      61 or More               12.0%
</TABLE>

                  For each Participant who: (a) was a participant in the
                  SERVISTAR Plan and attained age 50 and completed 15 Years of
                  Service as of December 31, 1997, or (b) was a participant in
                  the Prior Plan and attained age 50 and completed 15 Years of
                  Service as of January 1, 1996, the sum of his annual pension
                  credit percentages shall be increased by 25 percentage points.

                  (2)      50% of the sum of the Participant's annual pension
                           credit percentages, determined under (1) above,
                           multiplied by the excess of the Participant's Average
                           Compensation over the "integration level." For this
                           purpose, the "integration level" shall be 2/3 of the
                           contribution and benefit base under Section 230 of
                           the Social Security Act (42 U.S.C. Section 430), as
                           amended, as in effect on the first day of the Plan
                           Year for which a determination is made for purposes
                           of a retirement or other termination of employment
                           occurring during such year.

                                       16
<PAGE>   22

         (C)      With respect to any Participant specified by the Chief
                  Executive Officer of TruServ Corporation pursuant to a
                  supplement to the Plan, such Participant's Defined Lump Sum
                  shall not be less than an amount which is equal to the sum of
                  33% of the Participant's Average Compensation for each Year of
                  Service up to age 55 and 42% of the Participant's Average
                  Compensation for each Year of Service after age 55, up to a
                  maximum of 20 Years of Service, limited to 660%, reduced by 96
                  times the Participant's "primary social security benefit"
                  times his Years of Service divided by 20 (but this fraction
                  cannot exceed one). For this purpose, the Participant's
                  "primary social security benefit" means the estimated monthly
                  primary old-age Social Security insurance benefit to which the
                  Participant is or would be entitled at his Normal Retirement
                  Date or at his later retirement date based on the provisions
                  of the Social Security Act in effect on the date of
                  retirement, before any offsets for earned income. For purposes
                  of estimating the "primary social security benefit," it shall
                  be assumed that the Participant has no wages covered by Social
                  Security after retirement.

         (D)      Minimum Benefit Protection

                  (1)      With respect to a Participant in the Prior Plan, the
                           lump sum benefit payable under this Plan shall be no
                           less than the Actuarial Equivalent of the
                           Participant's Accrued Benefit under the Prior Plan.
                           Further, for a Participant eligible for an immediate
                           benefit under the Prior Plan, the lump sum shall be
                           no less than the Actuarial Equivalent of the
                           immediate Prior Plan benefit payable to the
                           Participant.

                  (2)      With respect to a Participant in the Prior Plan who
                           attains age 62 or completes 30 Years of Service while
                           an active Associate, the lump sum shall be no less
                           than the lump sum calculated in (1) above, assuming
                           the Participant commenced receipt of the lump sum at
                           the later of (a) January 1, 1996, and (b) the first
                           day of the month coincident with or next following
                           the earlier of (i) the date the Associate attains age
                           62, and (ii) the date the Associate completes 30
                           Years of Service.

                  (3)      With respect to a Participant in the SERVISTAR Plan,
                           the lump sum benefit payable under this Plan will not
                           be less than the Actuarial Equivalent of the
                           Participant's Accrued Benefit under the SERVISTAR
                           Plan.

                  (4)      With respect to a Participant in the SERVISTAR Plan
                           who attains age 60 while an active Associate, the
                           lump sum shall be no less than the lump sum
                           calculated in (3) above, assuming the Participant
                           commenced receipt of the lump sum at the later of (a)
                           January 1, 1998, and (b) the first day of the month
                           coincident with or next following the date the
                           Associate attains age 60.

                                       17
<PAGE>   23

4.4      TERMINATIONS AND RETIREMENTS BEFORE JANUARY 2, 1998

         Any pension benefit that a Participant, who terminated his employment
         or retired prior to January 2, 1998, may be entitled to receive shall
         be governed by the provisions of the Plan, Prior Plan and/or SERVISTAR
         Plan as in effect on the date of his termination of employment or
         retirement. Any Participant who terminated employment or retired prior
         to January 2, 1998 and who is reemployed on or after January 2, 1998
         shall have his benefits calculated in accordance with the Plan as in
         effect on the date of his subsequent retirement or termination of
         employment as provided in Section 6.11.

         With respect to participants in the SERVISTAR Plan who terminated
         employment or retired on or after July 1, 1997 and before January 2,
         1998, a lump sum pension option, calculated as the Actuarial Equivalent
         of the Participant's Accrued Benefit under the SERVISTAR Plan, was made
         available, effective June 1, 1998.

4.5      UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS

         Notwithstanding any Plan provision to the contrary, for re-employments
         initiated on or after December 12, 1994, benefits and service credit
         with respect to qualified military service will be provided in
         accordance with Section 414(u) of the Code.

4.6      SERVISTAR PLAN

         On and after January 1, 1998, a participant under the SERVISTAR Plan
         will cease to be credited with service, credited service, earnings,
         and/or cash balance credit for purposes of benefit accrual under the
         SERVISTAR Plan.

                                       18
<PAGE>   24

                 IMMEDIATE, EARLY AND LATE PENSION -- SECTION 5

5.1      IMMEDIATE PENSION

         A Participant, whose employment with the Employer or an Affiliated
         Employer terminates with a 100% Vesting Percentage, may upon such
         termination of employment prior to his Normal Retirement Date be
         entitled to receive an immediate Pension. An immediate Pension is the
         Participant's Accrued Benefit converted into an Actuarially Equivalent
         single life annuity. With the consent of the Participant and Spousal
         Consent, if applicable, such immediate Pension shall commence on the
         first day of the month coinciding with or immediately following the
         Participant's termination of employment and shall be payable in any
         form of benefit as described in Section 6. Such Immediate Pension
         election must be made within 60 days from the date the Pension
         information and forms are provided to the Participant which will be as
         soon as administratively practical after the earlier of the submission
         of the Participant's written notice of termination or the Participant's
         actual termination from employment.

5.2      EARLY RETIREMENT PENSION

         A Participant who does not timely elect an immediate Pension under
         Section 5.1 upon his termination of employment may next elect to
         receive his Pension as an early retirement Pension under the Plan at a
         date not earlier than his attainment of age 55 (or age 50 for a former
         SERVISTAR Plan participant) and not later than his Normal Retirement
         Date. The early retirement Pension shall equal his Accrued Benefit
         reduced by 2/3 of 1% for each of the first 60 months and by 1/3 of 1%
         for each of the next 60 months by which payment of his early retirement
         Pension precedes his Normal Retirement Date (see SERVISTAR Plan
         application in Section 5.3 below). In no event, however, shall a
         Participant's early retirement Pension be less than his immediate
         Pension. With the consent of the Participant and Spousal Consent, if
         applicable, the early retirement Pension shall be payable in any form
         of benefit described in Section 6.

5.3      SERVISTAR PLAN

         For any Participant whose Pension is determined under Section 4.1(B),
         the calculation of any immediate or early retirement reduction factors
         will be based upon an age 60 Normal Retirement Date in accordance with
         the terms of the SERVISTAR Plan in effect at the earlier of his
         termination, retirement or January 1, 1998, as restated in Supplement C
         hereto.

                                       19
<PAGE>   25

5.4      LATE RETIREMENT PENSION

         If a Participant's employment with the Employer continues after his
         Normal Retirement Date, such Participant will receive a late retirement
         Pension commencing on the first day of the month immediately following
         the calendar month in which his employment ceases by reason other than
         death. The Participant's late retirement Pension is the Participant's
         Accrued Benefit.

         In the event a Participant's Pension is required to begin under Section
         6.7 while the Participant is in active service, such required beginning
         date shall be the Participant's Annuity Starting Date for purposes of
         Section 6 and the Participant shall receive a late retirement Pension
         commencing on or before such required beginning date in an amount
         determined as if he had retired on the last day of the preceding Plan
         Year. Subsequently, as of the end of each prior Plan Year before the
         Participant's actual late retirement date (and as of his actual late
         retirement date), the Participant's Pension shall be recomputed to
         reflect additional accruals. The Participant's recomputed Pension shall
         then be paid as of the following January 1.

         (A)      If the Participant's Pension is being paid on an annuity form,
                  the Participant's recomputed Pension shall then be reduced by
                  the Actuarial Equivalent of the total payments of his late
                  retirement Pension which were paid prior to each such
                  recomputation to arrive at the Participant's late retirement
                  Pension; provided that no such reduction shall reduce the
                  Participant's late retirement Pension below the amount of late
                  retirement Pension payable to the Participant prior to the
                  recomputation of such Pension.

         (B)      If the Participant's Pension is being paid in a lump sum
                  payment, additional accrual will be based on that Year of
                  Service only and not be reduced by any prior payments.

                                       20
<PAGE>   26

                       NORMAL FORM OF PAYMENT -- SECTION 6

6.1      NORMAL FORM OF PAYMENT -- JOINT AND SURVIVOR

         If the Participant has a Spouse, to whom he was married at least one
         year prior to his Annuity Starting Date, the normal form of payment is
         the 50% Qualified Joint and Survivor Annuity form.

         As an alternative to the 50% Qualified Joint and Survivor Annuity
         described above, a Participant may elect that his benefit be payable to
         him in the 100% Qualified Joint and Survivor Annuity form. Such
         election will not require spousal consent as provided in Section 6.4.

6.2      NORMAL FORM OF PAYMENT -- SINGLE LIFE ANNUITY

         If the Participant does not have a Spouse on his Annuity Starting Date,
         the normal form of payment is the single life annuity form. This form
         provides that payments will be made to the Participant during his
         lifetime with no payments made after death.

6.3      OPTIONAL FORMS OF PAYMENT

         In lieu of receiving his Pension in the normal form applicable to his
         coverage, a Participant may elect to receive a benefit of equal value
         based on one of the optional forms of payment provided in accordance
         with the further terms of the Plan, including Sections 6.6 and 6.8.

6.4      ELECTION OF OPTION

         The Participant may elect or revoke an option during the 90-day period
         before his Annuity Starting Date by filing a written election,
         including the Spousal Consent, with the Employer. However, a
         Participant may not elect more than one option to be effective at the
         same time. No such election or revocation can be made after the
         Participant's Retirement Date.

         In addition a Participant may elect or revoke an optional form of
         payment, to become effective upon his death, at any time on or after
         his Normal Retirement Date and before his late Retirement Date. To
         elect an option the Participant must waive surviving Spouse benefit
         coverage and elect an optional form of payment. His election must
         include the Spousal Consent to both the waiver and election.

                                       21
<PAGE>   27

         If a Participant elects an optional form of payment, the Pension
         payable to him must be more than 50% of the Actuarial Equivalent of a
         Pension payable to the Participant had the option not been elected,
         unless the alternate recipient is the Participant's Spouse; otherwise,
         such election will be inoperative.

6.5      NOTICE TO PARTICIPANTS

         The Employer shall furnish to each Participant, no less than 30 days
         and no more than 90 days, before his Annuity Starting Date a written
         explanation in nontechnical language of the terms and conditions of the
         Pension payable to the Participant in the normal and optional forms
         described in Sections 6.1, 6.2, 6.3, 6.6 and 6.8. Such explanation
         shall include a general description of the eligibility conditions for,
         and the material features and relative values of, the optional forms of
         payment under the Plan, any rights the Participant may have to defer
         commencement of his Pension, the requirement for Spousal Consent, and
         the right of the Participant to make, and to revoke, elections under
         Section 6.4. A Participant's Annuity Starting Date may not occur less
         than 30 days after receipt of the notice. An election under Section 6.4
         shall be made on a form provided by the Plan Administrator and may be
         made during the 90-day period ending on the Participant's Annuity
         Starting Date, but not prior to the date the Participant receives the
         written explanation described in this Section. Notwithstanding any
         provision to the contrary, the Participant may, after having received
         the notice, affirmatively elect (with any applicable Spousal Consent)
         to waive any requirement that the written explanation be provided at
         least 30 days before his Annuity Starting Date if:

         (A)      the Committee clearly informs the Participant that he has a
                  period of at least 30 days after receiving the notice to
                  decide when to have his benefits begin and, if applicable, to
                  choose a particular optional form of payment;

         (B)      the Participant affirmatively elects a date for his benefit to
                  begin and, if applicable, an optional form of payment, after
                  receiving the notice;

         (C)      the Participant is permitted to revoke his election until the
                  later of his Annuity Starting Date or seven days following the
                  day he received the notice;

         (D)      the distribution of his Pension commences more than 7 days
                  after such explanation is provided to the Participant.

6.6      SERVISTAR PROTECTED PAYMENT FORMS

         Each Participant who was a participant in the SERVISTAR Plan on January
         1, 1998 shall have, in addition to the optional forms of payment
         available under this Plan, all of the normal and optional forms of
         payment available under the SERVISTAR Plan, except for the 66-2/3 Joint
         and Survivor Annuity form, with respect to the payment of his Pension

                                       22
<PAGE>   28

         under this Plan. The Participant's Pension payable under said SERVISTAR
         Plan optional payment forms shall be the Actuarial Equivalent of the
         single life annuity form of payment for the life of the Participant and
         all calculations of these forms are based on the provisions contained
         in the SERVISTAR Plan on December 31, 1997 and restated in Supplement C
         hereto.

6.7      PAYMENT OF PENSION TO THE PARTICIPANT

         A Participant's Pension will be payable monthly with each payment
         equivalent to 1/12 of the yearly amount. The first of such monthly
         payments will be made at the Participant's Normal Retirement Date or
         early retirement date, if appropriate, with subsequent monthly payments
         being made at the first of each month thereafter until the
         Participant's death occurs, or in the case of a survivor annuity, until
         the surviving Beneficiary's death occurs.

         Except as otherwise provided in Sections 4, 5 or 7, unless the
         Participant elects otherwise, the payment of a Pension shall commence
         not later than the 60th day after the latest of the close of the Plan
         Year in which:

         (A)      the Participant attains the earlier of age 65 or his Normal
                  Retirement Date, or

         (B)      the fifth anniversary of the year in which the Participant
                  commenced participation in the Plan occurs, or

         (C)      the Participant terminates his Service with the Employer.

         Notwithstanding the preceding paragraph, in the case of a Participant
         in active service of the Employer or an Affiliated Employer, the
         Participant's Pension shall begin not later than the April 1 following
         the calendar year in which he attains age 70 1/2. In this situation,
         the provisions of Section 5.4 shall apply to him. However, a
         Participant who attains age 70 1/2 prior to January 1, 1988 and who is
         not a 5% owner (as defined in Section 416(i) of the Code) of the
         Employer as described above shall not receive payment while in active
         service under the provisions of this Section 6.7.

6.8      PAYMENT OPTIONS

         If not made in a lump-sum under the small benefits provisions of
         Section 10.5(G), payment may be made in one of the following forms upon
         the Participant's election and with Spousal Consent, if applicable::

         (A)      A monthly pension payable in equal installments for the life
                  of the Participant; provided however, that in the event the
                  Participant dies within the 10-year period following his
                  Annuity Starting Date, monthly payments equal to those payable
                  during the life of the Participant shall be made to the
                  Beneficiary or Spouse of the

                                       23
<PAGE>   29

                  deceased Participant designated to receive such payments for
                  the remainder of said 10-year period.

         (B)      A lump sum payment equal to the Participant's Defined Lump
                  Sum, as determined under Section 4.3(B) but in no event less
                  than the lump sum amount determined under Section 4.3(D),
                  which payment shall be made as of the first day of the month
                  following the date an election to receive such lump sum
                  payment is made pursuant to this Section.

         (C)      A monthly pension payable in equal installments for the life
                  of a Participant.

         (D)      Any Participant, who was also a participant in the SERVISTAR
                  Plan and terminated employment with the Employer between July
                  1, 1997 and December 31, 1997, may elect to receive his
                  Accrued Benefit in a lump sum payment effective as of June 1,
                  1998. Such lump sum payment shall be calculated as provided in
                  Sections 4.3(D)(3) and (4) subject to the following
                  modifications, if applicable:

                  (1)      the calculation of the lump sum payment shall include
                           Participant contributions and interest thereon that
                           have not been previously distributed by valuing them
                           based on the Actuarial Equivalent but substituting
                           the May, 1998 rate of interest (5.93%) for the stated
                           lump sum distribution rate of interest.

                  (2)      the lump sum payment calculation shall not take into
                           account any previously distributed Participant
                           contributions and interest thereon;

                  (3)      for a Participant receiving monthly Pension payments
                           prior to June 1, 1998, the lump sum payment amount
                           calculated hereunder will be reduced by the sum of
                           all previous monthly Pension payments.

                  The Committee will provide notice to any affected Participant
                  of this election and provide a method by which the Participant
                  can elect the lump sum payment with Spousal Consent, if
                  applicable.

         The Participant must elect the optional forms of payment described in
         this Section 6.8, subject to the provisions of Section 5.1 and as
         provided in Section 6.4. Each of the optional forms of payment in this
         Section 6.8 (except as modified by Section 6.8(D)) shall be the
         Actuarial Equivalent of the single life annuity form of payment for the
         life of the Participant.

                                       24
<PAGE>   30

6.9      MINIMUM AMOUNTS TO BE PAID

         Notwithstanding any other provision in this Section 6, if the
         Participant's entire interest is to be paid in other than a lump-sum,
         then the amount to be paid each year (recognizing the possibility of
         paying the Cash Balance Benefit in a lump sum in the first year) must
         be at least an amount equal to the quotient obtained by dividing the
         Participant's entire interest by the life expectancy of the Participant
         or joint and last survivor expectancy of the Participant and designated
         beneficiary. Life expectancy and joint and last survivor expectancy are
         computed by the use of the return multiples contained in section 1.72-9
         of the Income Tax Regulations. For purposes of this computation, a
         Participant's life expectancy may be recalculated no more frequently
         than annually, however, the life expectancy of a nonspouse beneficiary
         may not be recalculated. If the Participant's spouse is not the
         designated beneficiary, the method of payment selected must assure that
         at least 50% of the present value of the amount available for payment
         would be payable within the life expectancy of the Participant.

         If the Participant dies after payment of his interest has commenced,
         the remaining portion of such interest shall be paid at least as
         rapidly as under the method of payment being used prior to the
         Participant's death.

         If the Participant dies before payment of his interest commences, the
         Participant's entire interest must be paid no later than 5 years after
         the Participant's death except to the extent that an election is made
         to receive payment in accordance with (a) or (b) below:

         (A)      if any portion of the Participant's interest is payable to a
                  designated beneficiary, such payments shall be made in
                  substantially equal installments over the life or life
                  expectancy of the designated beneficiary and shall commence no
                  later than 1 year after the Participant's death;

         (B)      if, however, the designated beneficiary is the Participant's
                  surviving spouse, the date on which payments are required to
                  begin in accordance with (a) above is not required to be
                  earlier than the date on which the Participant would have
                  attained age 70 1/2; but, if the spouse dies before such
                  payments begin, subsequent payments shall be made as if the
                  spouse had been the Participant.

6.10     TEFRA TRANSITION RULE ELECTIONS

         Notwithstanding the other requirements of this Section and subject to
         the Qualified Joint and Survivor Annuity requirements, distribution on
         behalf of any Participant, including a 5% owner of the Employer, may be
         made in accordance with all of the following requirements (regardless
         of when such distribution commences):

                                       25
<PAGE>   31

         (A)      The distribution by the Plan is one which would not have
                  disqualified such Plan under Section 401(a)(9) of the Code as
                  in effect prior to amendment by the Deficit Reduction Act of
                  1984.

         (B)      The distribution is in accordance with a method of
                  distribution designated by the Participant whose interest in
                  the Plan is being distributed or, if the Participant is
                  deceased, by a beneficiary of such Participant.

         (C)      Such designation was in writing, was signed by the Participant
                  or the beneficiary, and was made before January 1, 1984.

         (D)      The Participant had accrued a benefit under the Plan as of
                  December 31, 1983.

         (E)      The method of distribution designated by the Participant or
                  the beneficiary specifies the time at which distribution will
                  commence, the period over which distributions will be made,
                  and in the case of any distribution upon the Participant's
                  death, the beneficiaries of the Participant listed in order of
                  priority. The method of distribution selected must assure that
                  at least 50% of the present value of the amount available for
                  distribution would be payable within the life expectancy of
                  the Participant.

         A distribution upon death will not be covered by this transition rule
         unless the information in the designation contains the required
         information described above with respect to the distributions to be
         made upon the death of the Participant.

         For any distribution which commences before January 1, 1984, but
         continues after December 31, 1983, the Participant or the beneficiary,
         to whom such distribution is being made, will be presumed to have
         designated the method of distribution under which the distribution is
         being made if the method of distribution was specified in writing and
         the distribution satisfies the requirements in subsections (A) and (E)
         above.

         If a designation is revoked any subsequent distribution must satisfy
         the requirements of Section 6.9. Any changes in the designation will be
         considered to be a revocation of the designation. However, the mere
         substitution or addition of another beneficiary (one not named in the
         designation) under the designation will not be considered to be a
         revocation of the designation, so long as such substitution or addition
         does not alter the period over which distributions are to be made under
         the designation, directly or-indirectly (for example, by altering the
         relevant measuring life).

                                       26
<PAGE>   32

6.11     RESTORATION OF RETIRED PARTICIPANT OR OTHER FORMER ASSOCIATE TO SERVICE

         If a Participant having received his Pension or in receipt of a Pension
         is restored to service with the Employer or an Affiliated Employer, the
         following shall apply:

         (A)      Upon his restoration to service he shall not be required or
                  allowed to repay any benefit he has received and, if his
                  Pension is payable in an annuity form, his Pension shall not
                  be suspended and any optional form of payment shall remain in
                  effect; if the Participant had commenced payment prior to his
                  Normal Retirement Date, however, any additional Pension he
                  accrues after his restoration to service shall be paid to his
                  surviving Spouse in accordance with the provisions of Section
                  7 if he should die in active service.

         (B)      Any Years of Service to which he was entitled when he retired
                  or terminated service shall be restored to him, subject to the
                  provisions of section 2.1(OO) ("Years of Service").

6.12     DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS

         (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 Plan Administrator, to have any
                  portion of an eligible rollover distribution paid directly to
                  an eligible retirement plan specified by the distributee in a
                  direct rollover.

         (B)      The following definitions apply to the terms used in this
                  Section:

                  (1)      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;

                  (2)      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

                                       27
<PAGE>   33

                           of an eligible rollover distribution to the surviving
                           Spouse, an eligible retirement plan is an individual
                           retirement account or individual retirement annuity;

                  (3)      A "distributee" includes an Associate or former
                           Associate. In addition, the Associate's or former
                           Associate's surviving Spouse and the Associate's or
                           former Associate'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; and

                  (4)      A "direct rollover" is a payment by the Plan to the
                           eligible retirement plan specified by the
                           distributee.

         (C)      In the event that the provisions of this Section 6.12 or any
                  part thereof cease to be required by law as a result of
                  subsequent legislation or otherwise, this Section or any
                  applicable part thereof shall be ineffective without the
                  necessity of further amendments to the Plan.

                                       28
<PAGE>   34

                      SURVIVING SPOUSE BENEFIT -- SECTION 7

7.1      ELIGIBILITY

         Upon the death of a Participant before his Retirement Date, his Spouse
         will receive a surviving Spouse benefit as described below in either
         7.2(A) or (B) as applicable, if all the following requirements were met
         when the Participant died:

         (A)      The Participant had a Spouse to whom the Participant had been
                  married at least one full year prior to his death;

         (B)      The Participant dies on or after January 2, 1998; and

         (C)      The Participant's Vesting Percentage is 100%.

7.2      AMOUNT

         (A)      If the Participant dies while actively employed by the
                  Employer, the surviving Spouse benefit shall be equal to 55%
                  of the Participant's Defined Lump Sum, but in no event less
                  than 55% of the lump sum amount determined under Section
                  4.3(D).

         (B)      If the Participant dies after his employment with the Employer
                  is terminated, but prior to commencement of payments under the
                  Plan, the Surviving Spouse benefit shall be equal to 55% of
                  the benefit the Participant would have received if the
                  Participant had survived to age 55 (or the age at his date of
                  death, if older) and elected a 50% Qualified Joint and
                  Survivor Annuity, and died.

7.3      PAYMENTS

         (A)      Subject to the surviving Spouse's right to have the benefit
                  paid at what would have been the Participant's Normal
                  Retirement Date, the surviving Spouse benefit under Section
                  7.2(A) shall be paid commencing as of the first day of the
                  month coinciding with or immediately following the
                  Participant's death. In lieu of immediate monthly payments for
                  life, the surviving Spouse may elect to receive the benefit
                  immediately as a lump sum. Alternatively, the surviving Spouse
                  may elect to defer commencement of the surviving Spouse
                  benefit until the first day of any month coinciding with or
                  immediately following the date the Participant would have
                  attained age 55 (or age at death, if older), but not later
                  than the first day of the month coinciding with or next
                  following the date that would have been the Participant's
                  Normal Retirement Date (or age at death, if older).

                                       29
<PAGE>   35

                  If a surviving Spouse elects to defer commencement of the
                  surviving Spouse benefit, the benefit shall be converted to an
                  Actuarially Equivalent monthly annuity for the life of the
                  surviving Spouse commencing on the date that would have been
                  the Participant's Normal Retirement Date. This benefit will be
                  reduced by 2/3 of 1% for each of the first 60 months and 1/3
                  of 1% for each of the next 60 months by which the benefit
                  commencement date precedes the date that would have been the
                  Participant's Normal Retirement Date. In no event, however,
                  shall this benefit be less than the benefit the surviving
                  Spouse could have received as a monthly annuity for life
                  commencing on the first of the month coinciding with or
                  immediately following the Participant's death.

         (B)      Subject to the surviving Spouse's right to have the benefit
                  paid at what would have been the Participant's Normal
                  Retirement Date, the surviving Spouse benefit under Section
                  7.2(B) shall be paid commencing as of the first day of the
                  month coinciding with or immediately following the
                  Participant's death. In lieu of such immediate payment, the
                  surviving Spouse may elect to defer receipt of the surviving
                  Spouse benefit to any date which is not later than the
                  Participant's Normal Retirement Date. If such an election is
                  made, the surviving Spouse benefit shall be equal to 55% of
                  the benefit the Participant would have received if the
                  Participant had survived to the date at which the surviving
                  Spouse elects to commence the surviving Spouse benefit and had
                  elected a 50% Qualified Joint and Survivor Annuity.

         (C)      An election by the Spouse to commence receiving payments prior
                  to what would have been the Participant's Normal Retirement
                  Date shall be made on a form provided by the Plan
                  Administrator and may be made during the 90-day period ending
                  on the date the payments to the Spouse commence.

7.4      MINIMUM BENEFIT AND PAYMENT FORM

         If a Participant, who was a former participant in the SERVISTAR Plan,
         dies and his Spouse is not eligible to receive the surviving Spouse
         benefit, his Beneficiary will receive a refund of his available
         Participant's contributions together with credited interest computed
         thereon to the date of the Participant's death. Credited interest on a
         Participant's contributions means interest for the number of full
         months from the January 1 following the date each such contribution was
         paid to the Plan to the date specified herein. Prior to January 1,
         1960, the rate of credited interest was 2 1/2% per annum, compounded
         annually. From January 1, 1960 to January 1, 1976, the rate of credited
         interest was 3% per annum, compounded annually. From January 1, 1976 to
         July 1, 1983, the rate of credited interest is 5% per annum. On and
         after July 1, 1983, the rate of credited interest is 7% per annum,
         compounded on each July 1. Any change in the rate of credited interest
         will apply to interest allowed for months occurring after the effective
         date of change.

                                       30
<PAGE>   36

                       TRUST FUND AND TRUSTEE -- SECTION 8

8.1      TRUST FUND

         The Employer has heretofore established the Fund which comprises all of
         the assets of the Plan and into which future contributions to finance
         this Plan shall be made. The Trust shall hold the Fund, which shall be
         used to pay benefits or expenses as provided in this Plan pursuant to
         authorization by the Committee; and such benefits shall be payable only
         from the Fund.

8.2      TRUST FUND APPLICABLE ONLY TO PAYMENT OF BENEFITS AND EXPENSES

         The fund will be used and applied only in accordance with the
         provisions of the Plan and the Trust Agreement entered into by the
         Employer and the Trustee to provide the benefits thereof, and no part
         of the corpus or income of the Trust fund will be used for, or diverted
         to, purposes other than for the exclusive benefit of Participants under
         the Plan and other persons thereunder entitled to benefits except to
         the extent provided in Sections 9.2 and 11.3 or to pay any reasonable
         expenses in the administration of the Plan.

8.3      TRUSTEE CAPACITY

         When there are two or more Trustees, they are authorized to allocate
         specific responsibilities, obligations or duties among themselves by
         their written agreement. An executed copy of such written agreement is
         to be delivered to and retained by the Committee. In the event of more
         than one Trustee, any action shall be taken at the direction of a
         majority of such Trustees.

8.4      RESIGNATION AND REMOVAL OF TRUSTEE

         Any Trustee may resign at any time by delivering to the Board of
         Directors of TruServ Corporation (the "Board of Directors") a written
         notice of resignation, which notice may be waived by the Board of
         Directors, to take effect at a date specified therein, which shall not
         be less than 30 days after the delivery thereof. The Trustee may be
         removed by the Board of Directors with or without cause, by tendering
         to the Trustee a written notice of removal to take effect at a date
         specified therein. Upon such removal or resignation of a Trustee, the
         Board of Directors shall either appoint a successor Trustee who shall
         have the same powers and duties as those conferred upon the resigning
         or discharged Trustee, or, if more than one Trustee is acting,
         determine that a successor shall not be appointed and the number of
         Trustees shall be reduced by one.

                                       31
<PAGE>   37

8.5      TAXES, EXPENSES AND COMPENSATION OF TRUSTEE

         The Trustee shall deduct from and charge against the Trust any taxes
         paid by it which may be imposed upon the Trust, or the income thereof,
         or which the Trustee is required to pay with respect to the interest of
         any Participant or Beneficiary therein. The Employer may pay the
         Trustee's reasonable expenses in administering the Plan and a
         reasonable compensation for its services as Trustee hereunder, either
         directly or through the Fund, at a rate to be agreed upon from time to
         time; provided, however, that no full-time Associate shall receive any
         compensation for acting as Trustee hereunder.

8.6      FUNDING POLICY AND INVESTMENT MANAGERS

         The Employer or its delegate shall be responsible for establishing and
         carrying out a funding policy and method consistent with the objectives
         of this Plan and the requirements of ERISA and shall determine the
         investment policy for the Plan. However, the Employer or its delegate
         may appoint one or more investment managers to manage the assets of the
         Plan (including the power to acquire and dispose of all or part of such
         assets) as the Employer shall designate. In that event, the authority
         over and responsibility for the management of the assets so designated
         shall be the sole responsibility of that investment manager.

         For purposes of this Article, the term "investment manager" means an
         individual who:

         (A)      Has the power to manage, acquire or dispose of any asset of
                  the Plan;

         (B)      Is (i) registered as an investment advisor under the
                  Investment Advisors Act of 1940, (ii) is a bank, as defined in
                  that Act, or (iii) is an insurance company qualified to
                  perform services described in paragraph (A) above; and

         (C)      Has acknowledged in writing that he is a fiduciary with
                  respect to the Plan.

                                       32
<PAGE>   38

                        FUNDING OF BENEFITS -- SECTION 9

9.1      CONTRIBUTIONS TO THE FUND

         From time to time, the Employer shall make such contributions to the
         Fund as the Employer determines are required to maintain the Plan on a
         sound actuarial basis. In determining the amounts and incidence of such
         contributions, the Employer will take into account such actuarial
         recommendations as may be provided by an enrolled actuary as defined by
         ERISA. Contributions by Participants are neither required nor
         permitted.

9.2      FUND FOR EXCLUSIVE BENEFIT OF PARTICIPANTS

         The Fund is for the exclusive benefit of Participants and other persons
         who may become entitled to benefits hereunder, and may also be used to
         pay any reasonable expenses arising from the administration of the Plan
         not assumed and then paid directly by the Employer. Prior to the
         satisfaction of all liabilities for benefits provided hereunder, no
         contribution made to the Fund will be refunded to the Employer except
         in the following circumstances:

         (A)      The Employer's contributions to the Plan are conditioned upon
                  their deductibility under Section 404 of the Code. If all or
                  part of the Employer's deductions for contributions to the
                  Plan are disallowed by the Internal Revenue Service, the
                  portion of the contributions to which that disallowance
                  applies shall be returned to the Employer without interest,
                  but reduced by any investment loss attributable to those
                  contributions. The return shall be made within one year after
                  the date of the disallowance of deduction.

         (B)      The Employer may recover without interest the amount of its
                  contributions to the Plan made on account of a mistake in
                  fact, reduced by any investment loss attributable to those
                  contributions, if recovery is made within one year after the
                  date of those contributions.

9.3      DISPOSITION OF CREDITS AND FORFEITURES

         No credit or forfeitures arising from the operation of the Plan may be
         used to increase the benefit of any Participant or group of
         Participants but will instead be taken into account in determining
         contributions to be made by the Employer.

                                       33
<PAGE>   39

                        PLAN ADMINISTRATOR -- SECTION 10

10.1     PLAN ADMINISTRATOR/APPOINTMENT OF COMMITTEE

         To the extent provided in this Section, the general administration of
         the Plan and the responsibility for carrying out the provisions of the
         Plan shall be placed in a Committee of not less than 3 persons
         appointed from time-to-time by the Board of Directors of TruServ
         Corporation to serve at the pleasure of the Board of Directors. Any
         person who is appointed a member of the Committee shall signify his
         acceptance by filing written acceptance with the Board of Directors and
         the Secretary of the Committee. Any member of the Committee may resign
         by delivering his written resignation to the Board of Directors and the
         Secretary of the Committee. If the Employer does not appoint a
         Committee, the Employer shall perform the duties of the Committee.

10.2     DUTIES AND AUTHORITY

         The Plan Administrator shall administer the Plan on behalf of the
         Employer in a nondiscriminatory manner for the exclusive benefit of
         Participants and their Beneficiaries.

         The Plan Administrator shall have the exclusive power to, and perform
         all such duties as are necessary to, operate, administer and manage the
         Plan in accordance with the terms thereof, including but not limited to
         the following:

         (A)      To determine all questions relating to a Participant's
                  coverage under the Plan,

         (B)      To maintain all necessary records for the administration of
                  the Plan,

         (C)      To compute and authorize the payment of a Pension and other
                  benefit payments to eligible Participants and Beneficiaries,

         (D)      To adopt and amend rules for the administration of the Plan
                  and the transaction of its business subject to the limitations
                  of the Plan. The Plan Administrator shall have the sole and
                  unilateral discretionary authority to interpret the Plan and
                  to make factual determinations (including but not limited to,
                  determination of an individual's eligibility for Plan
                  participation, the right, amount and form of any benefit
                  payable under the Plan and the date on which any individual
                  ceases to be a Participant and to remedy ambiguities,
                  inconsistences and/or omissions). The determinations, acts and
                  decisions of the Plan Administrator shall be final, conclusive
                  and binding on all parties and, subject to the claim
                  procedures in Section 10.7(B), shall not be overturned unless
                  determined to be arbitrary and capricious by a court of
                  competent jurisdiction.

                                       34
<PAGE>   40

         (E)      To advise or assist Participants regarding any rights,
                  benefits or elections available under the Plan.

         The Plan Administrator shall take such actions as are necessary to
         establish and maintain the Plan as a retirement program which is at all
         times in full and timely compliance with any law or regulation having
         pertinence to this Plan.

         The Plan Administrator shall be exclusively granted by the Employer all
         reasonable powers necessary or appropriate to accomplish his duties as
         Plan Administrator. The Plan Administrator shall use that degree of
         care, skill, prudence and diligence that a prudent man acting in a like
         capacity and familiar with such matters would use in his conduct of a
         similar situation.

10.3     REMOVAL OF PLAN ADMINISTRATOR

         The Plan Administrator may be removed with or without cause by the
         Employer through delivery to him of written notice of removal, to take
         effect at a date specified therein.

10.4     APPOINTMENT OF SUCCESSOR PLAN ADMINISTRATOR

         In the event the office of Plan Administrator is vacant, the Employer
         shall promptly designate a successor Plan Administrator who must
         signify acceptance of this position in writing. In the event no
         successor is appointed, the Board of Directors or other governing body
         of the Employer shall function as the Plan Administrator until a new
         Plan Administrator has been appointed and has accepted such
         appointment.

10.5     PLAN ADMINISTRATION -- MISCELLANEOUS

         (A)      Filing a claim for Benefits. A Participant or Beneficiary
                  shall notify the Plan Administrator of a claim for benefits
                  under the Plan. Such request may be in any form adequate to
                  give reasonable notice to the Plan Administrator and shall set
                  forth the basis of such claim. The claim shall also authorize
                  the Plan Administrator to conduct such examinations as may be
                  necessary to determine the validity of the claim and to take
                  such steps as may be necessary to facilitate the payment of
                  any benefits to which the Participant or Beneficiary may be
                  entitled under the Plan.

         (B)      Claims Procedure. The Plan Administrator shall make all
                  determinations as to the right of any person to receive
                  benefits under the Plan. Any denial by the Plan Administrator
                  of a claim for benefits under the Plan by a Participant,
                  Spouse, retired Participant or beneficiary (collectively
                  referred to herein as "claimant") shall be stated in writing
                  by the Plan Administrator and delivered or mailed to the
                  claimant. Such notice shall set forth:

                                       35
<PAGE>   41

                  (1)      the specific reasons for denial;

                  (2)      specific reference to pertinent provisions of the
                           Plan upon which the denial is based;

                  (3)      a description of any additional material or
                           information necessary for the claimant to perfect his
                           claim with an explanation of why such material or
                           information is necessary; and

                  (4)      an explanation of claim review procedures under the
                           Plan written in a manner that may be understood
                           without legal or actuarial counsel.

                  A claimant whose claim for benefits has been wholly or
                  partially denied by the Plan Administrator may, within 90 days
                  following the date of such denial:

                           (i)      request a review of such denial in a writing
                                    addressed to the Plan Administrator;

                           (ii)     submit such issues or comments, in writing
                                    or otherwise, as he shall consider relevant
                                    to a determination of his claim, and may
                                    include in his request a request for a
                                    hearing in person before the Plan
                                    Administrator; and

                           (iii)    request to review any pertinent documents,
                                    which may be reviewed prior to his
                                    submitting his request for review.

                  The claimant may, at all stages of review, be represented by
                  counsel, legal or otherwise, of his choice, provided that the
                  fees and expenses of such counsel shall be borne by the
                  claimant.

                  All requests for review shall be promptly resolved. The
                  decision of the Plan Administrator with respect to any such
                  review shall be set forth in writing and such shall be mailed
                  to the claimant not later than 60 days following receipt by
                  the Plan Administrator of the claimant's request unless
                  special circumstances, such as need to hold a hearing, require
                  an extension of time for processing, in which case the
                  decision shall be so mailed not later than 120 days after
                  receipt of such request. All decisions of the Plan
                  Administrator shall be final, conclusive and binding on all
                  parties and shall not be overturned unless such decision is
                  determined by a court of competent jurisdiction to be
                  arbitrary and capricious.

         (C)      Governing Law. To the extent not preempted by ERISA, the Plan
                  shall be construed, regulated and administered under the laws
                  of the State of Illinois.

                                       36
<PAGE>   42

         (D)      Masculine and Feminine, Singular and Plural. In construing the
                  text of this Plan, the masculine shall include the feminine
                  and the singular shall include the plural, and the plural the
                  singular wherever the context shall plainly so require.

         (E)      Reference to Laws. Any reference herein to any section of the
                  federal Internal Revenue Code, ERISA, TEFRA or any other
                  statute or law shall be deemed to include any successor
                  statute or law of similar import.

         (F)      Non-Assignment. Except as required by any applicable law, no
                  benefit under the Plan shall in any manner be anticipated,
                  assigned, alienated, subject to garnishment, levy, execution
                  or other legal or equitable process, or otherwise subject to
                  the claims of creditors, and any attempt to do so shall be
                  void. However, payment shall be made in accordance with the
                  provisions of any judgment, decree, or order which:

                  (1)      creates for, or assigns to, a spouse, former spouse,
                           child or other dependent of a Participant the right
                           to receive all or a portion of the Participant's
                           benefits under the Plan for the purpose of providing
                           child support, alimony payments or marital property
                           rights to that spouse, child or dependent,

                  (2)      is made pursuant to a State domestic relations law,

                  (3)      does not require the Plan to provide any type of
                           benefit, or any option, not otherwise provided under
                           the Plan, and

                  (4)      otherwise meets the requirements of Section 206(d) of
                           ERISA, as amended, as a "qualified domestic relations
                           order," as determined by the Plan Administrator.

                  If the present value of any series of payments meeting the
                  criteria set forth in clauses (1) through (4) above amounts to
                  $5,000 or less, a lump sum payment of the Actuarial Equivalent
                  of such assigned amount, determined in the manner described in
                  Section 10.5(G), shall be made in lieu of the series of
                  payments.

                  If the amount payable to an alternate payee under a qualified
                  domestic relations order exceeds such $5,000 present value, it
                  may be paid to the alternate payee as soon as practicable
                  after the order has been determined to be qualified by the
                  Plan Administrator if the qualified domestic relations order
                  so provides and the alternate payee consents thereto;
                  otherwise it may not be payable before the earliest of the
                  Participant's termination of employment or earliest retirement
                  date under the Plan.

         (G)      Small Benefits. If the Actuarial Equivalent of the Vesting
                  Percentage of the Participant's Pension under the Plan is
                  $5,000 or less, such Pension shall be distributed without the
                  Participant's consent (or his Spouse's/Beneficiary's consent,

                                       37
<PAGE>   43

                  if applicable) in the form of a lump sum cash distribution.
                  For purposes of determining such Actuarial Equivalent amount,
                  it shall be assumed that the benefit commencement date is the
                  Participant's Normal Retirement Date.

                  The lump sum payment shall be made as soon as administratively
                  practicable following the Participant's termination of
                  employment or death, but in any event prior to the date his
                  Pension payments would have otherwise commenced. In the event
                  a Participant is not entitled to any Pension upon his
                  termination of employment, he shall be deemed cashed-out under
                  the provisions of this paragraph (G) as of the date he
                  terminated service. However, if a Participant described in the
                  preceding sentence is subsequently restored to service, the
                  provisions of Section 6.11 shall apply to him without regard
                  to such sentence.

         (H)      Conditions of Employment Not Affected by Plan. The
                  establishment of the Plan shall not confer any legal rights
                  upon any Associate or other person for a continuation of
                  employment, nor shall it interfere with the rights of the
                  Employer or an Affiliated Employer to discharge any Associate
                  and to treat him without regard to the effect which that
                  treatment might have upon him as a Participant or potential
                  Participant of the Plan. Participation in the Plan shall not
                  grant any Participant the right to be retained in the service
                  of the Employer or an Affiliated Employer or any other rights
                  other than those to which he is entitled under relevant law or
                  regulations.

         (I)      Clerical Error. If any fact pertaining to eligibility for or
                  amount of benefits payable under the Plan to a Participant or
                  other payee has been misstated, or in the event of clerical
                  error, the benefits will be adjusted by the Plan Administrator
                  on the basis of the correct facts in a manner precluding
                  individual selection.

         (J)      Divestment of Benefits for Cause Precluded. In no event may a
                  Participant be divested for cause of Pension or other benefits
                  which he is eligible to receive.

         (K)      Advisors and Counsel. The Employer, or the Committee acting
                  through the Employer, may employ one or more persons to render
                  advice with respect to any duty or responsibility it may have
                  including, but not limited to, consultants, actuaries,
                  financial advisors, accountants and attorneys.

         (L)      Incompetency. If the Committee receives evidence satisfactory
                  to it that a Participant or his Beneficiary to whom an amount
                  is distributable under this Plan is legally incompetent to
                  receive such amount and give valid receipt therefore, the
                  Committee may cause payment of such amount to be made to the
                  guardian or other legal representative of such Participant or
                  his Beneficiary, or in the absence of a legal guardian or
                  other legal representative, to such other person or
                  institution who is then maintaining and has custody of such
                  Participant or his Beneficiary. Any payments made shall be a
                  complete discharge of liabilities of the Plan for that
                  benefit.

                                       38
<PAGE>   44

         (M)      Erroneous Payments. In the event that a Participant (or his
                  Beneficiary) receives a distribution under this Plan in excess
                  of the amount, if any, to which he is entitled, by reason of a
                  calculation error or otherwise, the Plan Administrator, in his
                  sole and absolute discretion, may adjust future benefit
                  payments to the Participant (or his Beneficiary) to the extent
                  necessary to recoup the amount which the Participant (or his
                  Beneficiary) received which was in excess of the amount to
                  which he was entitled under the term of the Plan. If the Plan
                  Administrator determines, in his sole and absolute discretion,
                  that it is not feasible or desirable to adjust future benefit
                  payments to the Participant, the Plan Administrator may
                  require the Participant (or his Beneficiary) to repay to the
                  Plan the amount which is in excess of the amount to which the
                  Participant (or his Beneficiary) is entitled under the terms
                  of the Plan. All amounts received by the Participant (or his
                  Beneficiary) under the Plan shall be deemed to be paid subject
                  to these conditions. The determination of the Plan
                  Administrator made pursuant to this Section 10.7(M) shall be
                  final, conclusive and binding on all parties, subject to the
                  claims procedures under Section 10.7(B), and shall not be
                  overturned unless such determinations are arbitrary and
                  capricious.

         (N)      Headings. The headings of the Plan have been inserted for
                  convenience of reference only and are to be ignored in the
                  construction of the Plan.

         (O)      Information. Before any benefit shall be payable by the Plan,
                  each Participant, Spouse, Beneficiary or other person entitled
                  to a benefit shall file with the Committee all the information
                  that the Committee shall require to establish such persons
                  rights and benefits under the Plan.

         (P)      Written Elections. Any elections, notifications or
                  designations made by a Participant or any other individual
                  pursuant to the provisions of the Plan shall be made in
                  writing and filed with the Committee in a time and manner
                  determined by the Committee under rules uniformly applicable
                  to all persons similarly situated. The Committee reserves the
                  right to change from time to time the time and manner for
                  making notifications, elections or designations by such
                  persons under the Plan if it determines after due deliberation
                  that such action is justified in that it improves the
                  administration of the Plan. In the event of a conflict between
                  the provisions for making an election, notification or
                  designation set forth in the Plan and such new administrative
                  procedures, those new administrative procedures shall prevail.

         (Q)      Vested Rights. No person shall have any vested rights under
                  the Plan and Trust except to the extent that such rights may
                  accrue to him as provided under the Plan. Furthermore, any
                  person with vested rights under the Plan and Trust shall look
                  solely to the Plan and Trust and the assets thereunder for
                  satisfaction of such vested rights.

                                       39
<PAGE>   45

         (R)      Plan Provisions Controlling. In the event of any conflict
                  between the provisions of the Plan and the provisions of a
                  summary or other description of the Plan or the terms of any
                  agreement or instrument related to the Plan, the provisions of
                  the Plan shall control.

         (S)      Interpretation of the Plan. It is the intent of the Employer
                  that the Plan and Trust qualify under Sections 401(a) and
                  501(a) of the Code, respectively, and meet all applicable
                  requirements of ERISA. Accordingly, the Plan and Trust shall
                  be construed and interpreted in such manner as to give effect
                  to this intent.

         (T)      Limitation of Liability. The Employer, the Board of Directors
                  of the Employer or any Affiliated Employer, the members of the
                  Committee, and any of their officers, associates,
                  representatives, consultants, counsel, or agents shall not
                  incur any liability individually or on behalf of any other
                  individuals or on behalf of the Employer for any act or
                  failure to act, made in good faith in relation to the Plan or
                  the Funds of the Plan. However, this limitation shall not act
                  to relieve any such individual or the Employer from a
                  responsibility or liability for any fiduciary responsibility,
                  obligation or duty under Part 4, Title I of ERISA.

         (U)      Indemnification. The Employer, members of the Committee, the
                  Board of Directors of the Employer or any Affiliated Employer,
                  and their officers, associates, representatives, consultants,
                  counsel, and agents shall be indemnified against any and all
                  liabilities arising by reason of any act, or failure to act,
                  in relation to the Plan or the Fund of the Plan, including,
                  without limitation, expenses reasonably incurred in the
                  defense of any claim relating to the Plan or the Fund of the
                  Plan, and amounts paid in any compromise or settlement
                  relating to the Plan or the Fund of the Plan, except for such
                  liability, losses or costs which result from:

                  (1)      their actions or failures to act made in bad faith;

                  (2)      their own gross negligence or willful conduct;

                  (3)      any settlement, without TruServ Corporation's prior
                           approval, of an action, suit, or preceding; or

                  (4)      suits or actions at law or in equity advanced by
                           TruServ Corporation against such party.

                  The foregoing indemnification shall be from the Fund of the
                  Plan to the extent of this Fund and to the extent permitted
                  under applicable law; otherwise from the assets of the
                  Employer.

                                       40
<PAGE>   46

         (V)      Authority to Act

                  (1)      The Employer and the Committee may authorize one or
                           more of its members, associates, representatives,
                           consultants, counsel, or agents to execute on its
                           behalf instructions or directions to any interested
                           party, and any such interested party may rely
                           thereupon and the information contained therein.

                  (2)      Whenever, under the terms of the Plan or Trust
                           Agreement, the Employer is required or permitted to
                           take action (except when related to administrative
                           duties), such action shall be taken under
                           authorization of the Board of Directors, unless
                           otherwise provided by the Plan or the Trust Agreement
                           or by prior action of such Board of Directors.

                                       41
<PAGE>   47

                 AMENDMENT AND TERMINATION OF PLAN -- SECTION 11

11.1     AMENDMENT -- GENERAL

         The Employer, by action of its Board of Directors, taken at a meeting
         held either in person or by telephone or other electronic means, or by
         unanimous written consent in lieu of a meeting, reserves the right at
         any time and from time to time, and retroactively if deemed necessary
         or appropriate, to amend in whole or in part any or all of the
         provisions of the Plan. However, no amendment shall make it possible
         for any part of the Fund of the Plan to be used for, or diverted to,
         purposes other than for the exclusive benefit of persons entitled to
         benefits under the Plan, before the satisfaction of all liabilities
         with respect to them. No amendment shall be made which has the effect
         of decreasing the Protected Benefit of any Participant or of reducing
         the nonforfeitable percentage of the Accrued Benefit of a Participant
         below the nonforfeitable percentage computed under the Plan as in
         effect on the date on which the amendment is adopted or, if later, the
         date on which the amendment becomes effective.

11.2     AMENDMENT -- MERGER OR CONSOLIDATION OF PLAN

         This Plan may be amended by the Employer to provide for the merger or
         consolidation of the Plan with another retirement plan, or for the
         transfer of assets and liabilities hereunder to another retirement
         plan. Such an event, however, may not occur unless each Participant
         would receive a retirement benefit under such other retirement plan
         after the merger, consolidation, or transfer (assuming that plan had
         then terminated) which is at least as great as the benefit he would
         have received under this Plan immediately prior to the merger,
         consolidation, or transfer (assuming this Plan had then terminated).

11.3     TERMINATION OF PLAN

         The Employer, by action of its Board of Directors, taken at a meeting
         held either in person or by telephone or other electronic means, or by
         unanimous written consent in lieu of a meeting, may terminate the Plan
         for any reason at any time. In case of termination of the Plan, the
         rights of Participants to their Protected Benefits as of the date of
         the termination, to the extent then funded or protected by law, if
         greater, shall be nonforfeitable. The Funds of the Plan shall be used
         for the exclusive benefit of persons entitled to benefits under the
         Plan as of the date of termination, except as provided in Section 9.2.
         However, any funds not required to satisfy all liabilities of the Plan
         for benefits because of erroneous actuarial computation shall be
         returned to the Employer. The Plan Administrator shall determine on the
         basis of actuarial valuation the share of the Fund of the Plan
         allocable to each person entitled to benefits under the Plan in
         accordance with Section 4044 of ERISA, or corresponding provision of
         any applicable law in effect at the time. In the event of a partial
         termination of the Plan, the provisions of this Section shall be
         applicable to the Participants affected by that partial termination.

                                       42
<PAGE>   48

          RESTRICTION OF BENEFITS UPON EARLY TERMINATION OF THE PLAN --
                                   SECTION 12

12.1     LIMITATION CONCERNING HIGHLY COMPENSATED EMPLOYEES OR HIGHLY
         COMPENSATED FORMER EMPLOYEES

         (A)      The provisions of this Section shall apply (i) in the event
                  the Plan is terminated, to any Participant who is a Highly
                  Compensated Employee or Former Highly Compensated Employee of
                  the Employer or an Affiliated Employer and (ii) in any other
                  event, to any Participant who is one of the 25 Highly
                  Compensated Employees of former Highly Compensated Employees
                  of the Employer or Affiliated Employer with the greatest
                  compensation in any Plan Year. The amount of the annual
                  payments to any one of the Participants to whom this Section
                  applies shall not be greater than an amount equal to the
                  annual payments that would be made on behalf of the
                  Participant during the year under a single life annuity that
                  is of Actuarial Equivalent to the sum of the Participant's
                  Accrued Benefit and the Participant's other benefits under the
                  Plan.

         (B)      If, (i) after payment of Pension or other benefits to any one
                  of the Participants to whom this Section applies, the value of
                  Plan assets equals or exceeds 110% of the value of current
                  liabilities (as that term is defined in Section 412(l)(7) of
                  the Code) of the Plan, (ii) the value of the Accrued Benefit
                  and other benefits of any one of the Participants to whom this
                  Section applies is less than 1% of the value of current
                  liabilities of the Plan, or (iii) the value of the benefits
                  payable to a Participant to whom this Section applies does not
                  exceed the amount described in Section 411(a)(11)(A) of the
                  Code, the provisions of paragraph (A) above will not be
                  applicable to the payment of benefits to such Participant.

         (C)      If any Participant to whom this Section applies elects to
                  receive a lump sum payment in lieu of his Pension and the
                  provisions of paragraph (B) above are not met with respect to
                  such Participant, the Participant shall be entitled to receive
                  his benefit in full provided he shall agree to repay to the
                  Plan any portion of the lump sum payment which would be
                  restricted by operation of the provisions of paragraph (A),
                  and shall provide adequate security to guarantee that
                  repayment.

         (D)      Notwithstanding paragraph (A) of this Section, in the event
                  the Plan is terminated, the restriction of this Section shall
                  not be applicable if the benefit payable to any Highly
                  Compensated Employee and any former Highly Compensated
                  Employee is limited to a benefit that is nondiscriminatory
                  under Section 401(a)(4) of the Code.

         (E)      If it should subsequently be determined by statute, court
                  decision acquiesced in by the Commissioner of Internal
                  Revenue, or ruling by the Commissioner of Internal Revenue,
                  that the provisions of this Section are no longer necessary to
                  qualify the Plan under the Code, this Section shall be
                  ineffective without the necessity of further amendment to the
                  Plan.

                                       43
<PAGE>   49

                SPECIAL PENSION BENEFITS PROVISIONS -- SECTION 13

13.1     STATUTORY MAXIMUM PENSION BENEFITS

         The statutory maximum amount of yearly Pension payable during any Plan
         Year, which shall be the limitation year for the purpose attributable
         to the Employer Accrued Benefit shall be determined in accordance with
         the further provisions of this Section 13.1.

         (A)      Basic Limitation

                  Regardless of any other provisions of this Plan, other than
                  paragraphs (B)(4), (C) and (D) below, the amount of yearly
                  Pension payable hereunder for any Limitation Year shall not
                  exceed the lesser of (1) $90,000 or (2) 100% of the
                  Participant's average annual remuneration determined with
                  reference to the three consecutive limitation years of Service
                  which he received the highest aggregate remuneration from the
                  Employer or an Affiliated Employer (referred to hereinafter in
                  this Section 13.1 as "highest average compensation").

         (B)      Secondary Limitations

                  The basic limitation in paragraph (A) shall be reduced or
                  increased, as applicable, for the following situations if they
                  are applicable:

                  (1)      Form of Pension other than a life annuity.

                           If the Pension is payable in a form other than a
                           single life annuity, or a Qualified Joint and
                           Survivor Annuity, the basic limitation in paragraph
                           (A) shall be adjusted to its actuarial equivalent
                           based upon the age at which such Pension commences
                           and an interest rate assumption of the greater of the
                           rate of interest specified in Supplement A - Section
                           A.1.(a) or 5%.

                  (2)      Less Than 10 Years of Service

                           If the Participant has less than 10 full years of
                           Service, the basic limitations in paragraph (A)(2)
                           shall be reduced by multiplying such limitation by a
                           fraction, the numerator of which is the Participant's
                           years of Service (computed to the nearest full month)
                           and the denominator of which is 10. In addition, if
                           the Participant has not been a Participant of the
                           Plan for at least 10 years, the maximum annual
                           Pension in paragraph (A)(1) above shall be multiplied
                           by the ratio which the number of years of his
                           participation in the Plan bears to 10. In both cases,
                           these limits under this Section 13.1(B)(2) shall not
                           be reduced to an amount less than 1/10 of the
                           applicable limitation in Section 13.1(A).

                                       44
<PAGE>   50

                  (3)      Commencement of Pension

                           For purposes of this Section 13, the Participant's
                           Social Security retirement age shall be the
                           retirement age for the Participant under Section
                           216(l) of the Social Security Act, but shall be
                           applied without regard to the age increase factor
                           under Section 216(l) of the Social Security Act and
                           as if the early retirement age under the Social
                           Security Act were 62 years of age. If the Pension
                           begins before the Participant's Social Security
                           retirement age, the maximum Pension in paragraph
                           (A)(1) above shall be adjusted to the Actuarial
                           Equivalent amount based on an interest rate
                           assumption of the greater of the rate of interest
                           specified in Supplement A-Section A.1.(a) or 5% per
                           year and the Group Annuity Mortality Table specified
                           in Supplement A - Section A.1.(b).

                  (4)      Commencement of Pension After Social Security
                           Retirement Age

                           If the Pension begins after the Participant's Social
                           Security retirement age, the maximum Pension in
                           paragraph (A)(1) above shall be adjusted to the
                           Actuarial Equivalent amount based on an interest rate
                           assumption of the lesser of 5% per year or the
                           interest rate specified in Supplement A-Section
                           A.1.(a). and the Group Annuity Mortality Table
                           specified in Supplement A - Section A.1.(b).

         (C)      Minimum Pension

                  If the Participant's yearly Pension is not more than $10,000,
                  as adjusted in accordance with paragraph (B)(2) above, the
                  Participant may receive such $10,000 without regard to the
                  other secondary limitations, provided the Participant did not
                  at any time participate in a defined contribution plan
                  maintained by the Employer.

         (D)      Cost-of-Living Limitation Adjustment

                  Effective January 1, 1988, and each January 1 thereafter, the
                  $90,000 limitation of paragraph (A) above will be
                  automatically adjusted to the new dollar limitation determined
                  by the Commissioner of Internal Revenue for that calendar
                  year. The new limitation will apply to limitation years in
                  which the dollar limitation is changed.

         (E)      Participation in More Than One Defined Benefit Plan

                  If the Participant participated in more than one defined
                  benefit plan maintained by the Employer or an Affiliated
                  Employer regardless of whether any such plans are terminated,
                  the statutory maximum retirement benefit shall be determined
                  as if there were just one defined benefit plan, but the
                  retirement income so determined will apply on a pro rata basis
                  between, or among, such plans.

                                       45
<PAGE>   51

         (F)      Annual Additions

                  The sum of:

                  (1)      amounts defined as annual additions under applicable
                           defined contribution plans or the Employer or an
                           Affiliated Employer; and

                  (2)      the Participant's non-deductible contributions to
                           this and all other defined benefit plans maintained
                           by the Employer or an Affiliated Employer, regardless
                           of whether any such plan is terminated; and

                  (3)      amounts allocated in Plan Years commencing after
                           March 31, 1984 to an individual medical account, as
                           defined in Section 415(l)(2) of the Code, which is a
                           part of this or any other defined benefit plan
                           maintained by the Employer or an Affiliated Employer;
                           and

                  (4)      amounts derived from contributions paid or accrued
                           attributable to post-retirement medical benefits
                           allocated to the separate account of a key associate,
                           as defined in Section 419A(d)(3) of the Code, under a
                           welfare benefit fund, as defined in Section 419(e) of
                           the Code, maintained by the Employer or an Affiliated
                           Employer.

         (G)      Participation in one or more Defined Contribution Plans

                  If any Participant is or has been a Participant in a defined
                  contribution plan maintained by the Employer regardless of
                  whether any such plans are terminated, the Participant may not
                  have contributions made to the defined contribution plan(s)
                  which would cause the sum of the defined benefit plan fraction
                  and the defined contribution plan fraction to exceed l.0. This
                  shall be accomplished by reducing the Pension otherwise
                  determined under this Plan to the extent necessary to preclude
                  such excess.

                  (1)      Defined Benefit Fraction

                           A fraction, the numerator of which is the sum of the
                           Participant's projected annual benefit under each
                           defined benefit plan maintained by the Employer or an
                           Affiliated Employer regardless of whether any such
                           plans are terminated, and the denominator of which is
                           the lesser of 125% of the dollar limitation in effect
                           for the limitation year under Section 415(b)(1)(A) of
                           the Code or 140% of the "highest average
                           compensation."

                           Notwithstanding the above, if the Participant was a
                           Participant in one or more defined benefit plans
                           maintained by the Employer which were in existence on
                           July 1, 1982, the denominator of this fraction will
                           not be less than 125% of the sum of the annual
                           benefits under such plans which the

                                       46
<PAGE>   52

                           Participant had accrued as of December 31, 1982. The
                           preceding sentence applies only if the defined
                           benefit plans individually and in the aggregate
                           satisfied the requirements of Section 415 of the Code
                           as in effect at the end of the 1982 Limitation Year.

                           The projected annual benefit shall be the yearly
                           Pension to which a Participant is entitled under the
                           terms of each applicable defined benefit plan
                           assuming continued employment until normal retirement
                           age, or current age if later, and Compensation and
                           all other relevant factors used to determine benefits
                           under the plan remaining constant until normal
                           retirement age, or current age if later.

                  (2)      Defined Contribution Fraction

                           A fraction, the numerator of which is the sum of the
                           Annual Additions to the Participant's account under
                           all the defined contribution plans maintained by the
                           Employer or an Affiliated Employer regardless of
                           whether any such plans are terminated for the current
                           and all prior limitation years and the denominator of
                           which is the sum of the maximum aggregate amounts for
                           the current and all prior Limitation Years of service
                           with the Employer (regardless of whether a defined
                           contribution plan was maintained by the Employer).
                           The maximum aggregate amount in any limitation year
                           is the lesser of 125% of the dollar limitation in
                           effect under Section 415(c)(1)(A) of the Code or 140%
                           multiplied by 25% of the Participant's Compensation
                           for such year.

                           If the Associate was a Participant in one or more
                           defined contribution plans maintained by the Employer
                           which were in existence on July 1, 1982, 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 this
                           Plan. Under the adjustment, an amount equal to the
                           product of (1) the excess of the sum of the fractions
                           over 1.0 multiplied by (2) 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 later of the end of the last
                           Limitation Year beginning before January 1, 1983 or
                           June 30, 1983. This adjustment also will be made if,
                           at the end of the last limitation year beginning
                           before January 1, 1984, the sum of the fractions
                           exceeds 1.0 because of accruals or additions that
                           were made before the limitations of this Article
                           became effective to any Plan of the Employer in
                           existence on July 1, 1982.

                                       47
<PAGE>   53

         (H)      Remuneration

                  For the purposes of this Section 13.1 and the following
                  Section 13.2, a Participant's remuneration means his earned
                  income, wages, salaries, and fees for professional services,
                  and other amounts received for personal services actually
                  rendered in the course of employment with the employer
                  maintaining the plan determined for purposes of Section 13.1
                  before any pre-tax contributions under a "qualified cash or
                  deferred arrangement" (as defined under Section 401(k) of the
                  Code and its applicable regulations) or under a "cafeteria
                  plan" (as defined under Section 125 of the Code and its
                  applicable regulations) (including, but not limited to,
                  commissions paid salesmen, compensation for services on the
                  basis of a percentage of profits, commissions on insurance
                  premiums, tips and bonuses [except as excluded below]), and
                  excluding the following:

                  (1)      Employer contributions to a plan of deferred
                           compensation which are not included in the
                           associate's gross income for the taxable year in
                           which contributed or employer contributions under a
                           simplified associate pension plan to the extent such
                           contributions are deductible by the associate, or any
                           distributions from a plan of deferred compensation;

                  (2)      Amounts realized from the exercise of a nonqualified
                           stock option, or when restricted stock (or property)
                           held by the associate either becomes freely
                           transferable or is no longer subject to a substantial
                           risk or forfeiture;

                  (3)      Amounts realized from the sale, exchange or other
                           disposition of stock acquired under a qualified stock
                           option;

                  (4)      Other amounts which received special tax benefits, or
                           contributions made by the employer (whether or not
                           under a salary reduction agreement) towards the
                           purchase of an annuity described in section 403(b) of
                           the Code (whether or not the amounts are actually
                           excludable from the gross income of the associate).

                           Remuneration for any limitation year is the
                           remuneration actually paid or includible in gross
                           income during such year.

         (I)      Discrepancy With Code

                  The limitations set forth in this Section 13.1 are intended to
                  comply with the provisions of Section 415 of the Code and any
                  regulations issued pursuant thereto, so that the maximum
                  Pension shall be exactly equal to the maximum amount allowed
                  under said Section 415, and any regulations issued pursuant
                  thereto. Should there be any discrepancy between the
                  provisions of this Section 13.1 and those of said Section 415
                  and any regulations issued pursuant thereto, such

                                       48
<PAGE>   54

                  discrepancy shall be resolved by giving full effect to the
                  provisions of said Section 415 and any regulations issued
                  pursuant thereto.

13.2     TOP-HEAVY PROVISIONS

         As required by TEFRA, the following provisions shall become effective
         in any Plan Year subsequent to the 1983 Plan Year in which this Plan is
         a Top-Heavy Plan.

         The provisions of this Section 13.2 will apply to both active and
         frozen plans and, with the exception of the minimum Pension and minimum
         Vesting Percentage provisions, will apply to any terminated plans which
         were maintained at any time during the five years ending on the
         Determination Date.

         (A)      Top-heavy Plan Status. This Plan will be a Top-Heavy Plan as
                  of a Determination Date if:

                  (1)      this Plan is not a Plan that is required to be
                           aggregated and the ratio of the Present Value of
                           Accrued Benefits of Participants who are Key
                           Employees to the Present Value of the Accrued
                           Benefits of all Participants in the Plan exceeds
                           6/10; or

                  (2)      this Plan is part of a Required Aggregation Group and
                           the ratio of the Present Value of Accrued Benefits of
                           Participants who are Key Employees to the Present
                           Value of Accrued Benefits of all Participants in the
                           Required Aggregation Group exceeds 6/10.

                  Notwithstanding anything in (A)(2) to the contrary, the
                  determination of whether this Plan is a Top-Heavy Plan of a
                  Determination Date shall be made after aggregating all Plans
                  in the Required Aggregation Group, and after aggregating any
                  other Plans which are in the Permissive Aggregation Group, if
                  such permissive aggregation thereby eliminates the Top-Heavy
                  status of the Required Aggregation Group. Regardless of the
                  results of any aggregation, a Plan that was not part of the
                  Required Aggregation Group will not be top-heavy.

         (B)      Super Top-Heavy Plan. This Plan will be a Super Top-Heavy Plan
                  for a given Plan Year in which the ratio defined in A, above,
                  exceeds 9/10.

         (C)      Key Employee. The term Key Employee means any Associate or
                  former Associate (including deceased Associates) of the
                  Employer who at any time during the Plan Year or the four
                  preceding Plan Years is:

                                       49
<PAGE>   55

                  (1)      An officer of the Employer, but in no event if there
                           are more than 500 Associates, shall more than 50
                           Associates or, if there are less than 500 Associates,
                           shall the greater of three Associates or 10% of all
                           Associates, be taken into account under this
                           subsection as Key Employees;

                           In no event shall an officer whose annual
                           Compensation, as defined in Section 13.1(I) of this
                           Plan, is less than 50% of the limitation in effect
                           under Section 415(b)(1)(A) of the Code as adjusted
                           from time to time, be a Key Employee for any such
                           Plan Year.

                  (2)      One of the ten Associates owning (or considered as
                           owning within the meaning of Section 318 of the Code)
                           the largest interest in the Employer, or, if the
                           Employer is other than a corporation, one of the ten
                           Associates owning the largest interest of the capital
                           or profits interest in the Employer. If two or more
                           Associates own equal interests in the Employer the
                           ranking of ownership share will be in descending
                           order of the Associates' Earnings;

                           In no event shall an Associate who meets the
                           requirements of the prior paragraph but whose
                           interest in the Employer is not greater than 1/2% or
                           whose Compensation is less than the dollar limitation
                           in effect under Section 415(c)(i)(A) of the Code, as
                           adjusted from time to time, be a Key Employee.

                  (3)      Associates owning (or considered as owning within the
                           meaning of Section 318 of the Code, as modified by
                           Section 416(i)(1)(B)(i) of the Code) 5% or more of
                           the outstanding stock of the Employer or stock
                           possessing 5% or more of the total combined voting
                           power of all stock of the Employer, or, if the
                           Employer is other than a corporation, any Associate
                           owning 5% or more of the capital or profits interest
                           in the Employer;

                  (4)      Associates owning (or considered as owning within the
                           meaning of Section 318 of the Code, as modified by
                           Section 416(i)(1)(B)(ii) of the Code) 1% or more of
                           the outstanding stock of the Employer or stock
                           possessing 1% or more of the total combined voting
                           power of all stock of the Employer and whose annual
                           Compensation from the Employer is $150,000 or more,
                           or, if the Employer is other than a corporation, any
                           Associate owning 1% or more of the capital or profits
                           interest in the Employer, and whose annual
                           Compensation from the Employer is $150,000 or more;

                  The beneficiary of any deceased Associate who was a Key
                  Employee shall be considered a Key Employee for the same
                  period as the deceased Associate would have been so
                  considered.

                                       50
<PAGE>   56

         (D)      Non-Key Employee. A Non-Key Employee means any Associate who
                  is not a Key Employee. Any Associate who previously was a Key
                  Employee and is now a Non-Key Employee will be excluded
                  entirely from the calculation done to determine Top-heavy
                  Status.

         (E)      Employer. For purposes of Section 13.2 the Employer is the
                  Employer who adopts this Plan, and any Affiliated Employer.

         (F)      Accrued Benefit. The Accrued Benefit is the yearly Pension
                  commencing on the Participant's Normal Retirement Date
                  determined in accordance with Section 4 as if the
                  Participant's Termination of Employment had occurred as of the
                  most recent valuation date prior to the Determination Date.
                  For purposes of Section 13.2 the Accrued Benefit will not
                  include the accrued benefit attributable to any Associate who
                  has not performed an Hour of Service during the five-year
                  period ending on the Determination Date, but will include any
                  distribution made to a Key Employee or Non-Key Employee during
                  the five-year period ending on the Determination Date.

                  The extent to which rollover contributions and transfers are
                  to be taken into account in determining the Accrued Benefit
                  will be determined in accordance with Section 416(g)(4)(A) of
                  the Code and IRS Regulation 1.416-1, T-32.

         (G)      Present Value. Present Value shall be based on the actuarial
                  assumptions specified in Supplement A - Section A.1. If this
                  Plan is part of a Required or Permissive Aggregation Group,
                  the mortality and interest assumptions shall be the same for
                  all plans within the Group. In determining Present Value,
                  proportional subsidies shall not be taken into account, but
                  nonproportional subsidies shall be taken into account. The
                  Present Value will be determined as of the valuation date
                  occurring during the twelve-month period ending on the
                  Determination Date. The valuation date is the date used in
                  computing Plan costs for minimum funding.

         (H)      Required Aggregation Group. The term Required Aggregation
                  Group means all of the plans of the Employer which cover a Key
                  Employee during the five-year period ending on the relevant
                  Determination Date, or those plans which during said five-year
                  period were aggregated, so that a plan which covers a Key
                  Employee would satisfy the requirements of Sections 401(a)(4)
                  or 410 of the Code.

         (I)      Permissive Aggregation Group. The term Permissive Aggregation
                  Group means all of the plans of the Employer which are
                  included in the Required Aggregation Group plus any plans of
                  the Employer which provide comparable benefits to the benefits
                  provided by plans in the Required Aggregation Group and are
                  not included in the Required Aggregation Group, but which
                  satisfy the requirements of Sections 401(a)(4) and 410 of the
                  Code when considered together with the Required Aggregation
                  Group.

                                       51
<PAGE>   57

         (J)      Determination Date. The term Determination Date means, with
                  respect to a 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.

         (K)      Minimum Pension Benefit. The yearly amount of Pension as
                  described in Section 4.1 for a Participant who is a Non-Key
                  Employee, shall not be less than the Participant's average
                  yearly Compensation, during the Participant's five
                  highest-paid consecutive calendar years, multiplied by the
                  lesser of (1) 2%, multiplied by the number of the
                  Participant's years of Service after December 31, 1983 in
                  which this Plan is a Top-Heavy Plan, or (2) 20%. This minimum
                  amount is assumed to be payable on a single life annuity
                  basis, commencing on his Normal Retirement Date.

                  If a Participant who is a Non-Key Employee is covered under
                  this Plan and a defined contribution plan maintained by the
                  Employer, the yearly amount of Pension, for such Participant,
                  determined in the preceding paragraph shall not be applicable
                  to such Participant if the minimum contribution under such
                  defined contribution plan is equal to 5% of the Participant's
                  Compensation (or is equal to 7 1/2% of the Participant's
                  Compensation if the Employer uses a factor of 1.25 in
                  computing the denominators of the defined benefit and defined
                  contribution fractions under Section 415(e) of the Code).

                  If this Plan is not Super Top-Heavy, such 2% benefit accrual
                  shall be increased to 3% and such 20% by one percentage point
                  for any year in which the Employer also maintains a defined
                  contribution plan if such increase is necessary to avoid the
                  application of Section 416(h)(1) of the Code relating to
                  special adjustments to Section 415 of the Code limitations for
                  plans which are Top-Heavy, if the adjusted limitations of said
                  Section 416(h)(1) would otherwise be exceeded if such minimum
                  contribution were not so increased.

                  If the minimum Pension payable on a basis other than a single
                  life annuity or on a date other than Normal Retirement Date,
                  it shall be adjusted to be the actuarial equivalent of the
                  single life annuity form payable at Normal Retirement Date.

         (L)      Minimum Vesting Percentage. Notwithstanding any other Vesting
                  Percentage provision of this Plan to the contrary unless it
                  would produce a greater Vesting Percentage, the Vesting
                  Percentage that is applied to the Participant's Accrued
                  Benefit, on and after this Plan becomes a Top-Heavy Plan,
                  shall, in accordance with the further terms of this Plan, be
                  as determined below:

                                       52
<PAGE>   58

<TABLE>
<CAPTION>
                  YEARS OF SERVICE                     PERCENTAGE
            ---------------------------                ----------
<S>                                                     <C>
            If he has less than 2 years                   0%
                 If he has 2 years                       20%
                 If he has 3 years                       40%
                 If he has 4 years                       60%
                 If he has 5 years                      100%
</TABLE>

         (M)      Compensation Limitation. For any Plan Year in which this is a
                  Top-Heavy Plan, the annual Compensation for each Participant
                  shall not exceed the dollar limitation set forth in the
                  definition of Earnings.

         (N)      Modification to Section 13.1 When a Plan is a Top-Heavy Plan.
                  For any Limitation Year in which the Plan is determined to be
                  a Top-Heavy Plan, the definitions of the "Defined Benefit
                  Fraction" and "Defined Contribution Fraction" shall be changed
                  by substituting in the denominator of each Fraction "100%" for
                  "125%".

                                       53
<PAGE>   59

TRUSERV Corporation herewith causes this amended and restated Plan to be
executed by its duly authorized officers on this __________ day of
______________, 1998.

                                        TRUSERV CORPORATION

                                        ---------------------------------

                                       54
<PAGE>   60

                                  SUPPLEMENT A

                              ACTUARIAL ASSUMPTIONS

A.1.     LUMP SUM DISTRIBUTIONS

         For purposes of determining "Actuarially Equivalent" or "Actuarial
         Equivalent" lump sum distributions under the Plan, the following
         actuarial assumptions are used:

         (a)      Rate of Interest: The rate in use during a Plan Year shall be
                  the annual rate of interest on 30-year Treasury securities for
                  the month of November immediately preceding such Plan Year as
                  specified by the Commissioner for such month in the Internal
                  Revenue Bulletin but not greater than 8.0%.

         (b)      Mortality: The mortality table prescribed by the Secretary of
                  the Treasury, in revenue rulings, notices, or other guidance
                  pursuant to Section 807(d)(5)(A) of the Code that has been
                  published in the Internal Revenue Bulletin as of the date such
                  lump sum distribution is being determined.

A.2.     TYPE OF ANNUITY

         For purposes of determining "Actuarially Equivalent" or "Actuarial
         Equivalent" benefits under the Plan, the following factors shall be
         used in determining benefits that are actuarially equivalent to the
         normal single annuity for the life of the Participant form of benefit
         provided under the Plan (in no event will a factor exceed one):

         (a)      50% Qualified Joint and Survivor Annuity: 90%, plus (or minus)
                  0.4 of 1% for each full year that the Participant is younger
                  (or older) than the Participant's spouse; except that, if the
                  Participant's age at the Annuity Starting Date is less than 55
                  years, "94%" shall be substituted for "90%." In no event will
                  this factor exceed 100%.

         (b)      100% Qualified Joint and Survivor Annuity: 81%, plus (or
                  minus) 0.7 of 1% for each full year that the Participant is
                  younger (or older) than the Participant's spouse; except that,
                  if the Participant's age at the Annuity Starting Date is less
                  than 55 years, "89%" shall be substituted for "81%." In no
                  event will this factor exceed 100%.

         (c)      Life and 10-Year Certain Annuity: 94%; except that, if the
                  Participant's age at the Annuity Starting Date is less than 55
                  years, "98%" shall be substituted for "94%."

                                       55
<PAGE>   61

                                  SUPPLEMENT B

                    MERGER OF NORTHERN WHOLESALE HARDWARE CO.
                    RETIREMENT PLAN WITH AND INTO PRIOR PLAN

B.1.     MERGER

         Effective as of January 1, 1990, the Northern Wholesale Hardware Co.
         Retirement Plan ("Northern Plan") was amended, continued and merged
         with the Cotter & Company Pension Plan ("Prior Plan").

B.2.     PARTICIPATION

         On January 1, 1990, each former participant in the Northern Plan
         ("Northern Participant") became a Participant in the Prior Plan and
         will have benefits determined and paid in accordance with this Plan.

B.3.     PRESERVATION OF ACCRUED BENEFIT

         Notwithstanding any provisions of the Plan to the contrary, in no event
         shall a Northern Participant's accrued benefit under the Prior Plan as
         in effect on January 1, 1990 be less than the accrued earned by such
         Northern Participant under the Northern Plan as at December 31, 1989.

B.4.     YEARS OF SERVICE

         Each Northern Participant will be credited with the Years of Service
         before January 1, 1990 that such Northern Participant had earned under
         the Northern Plan as in effect on December 31, 1989 for participation,
         vesting and accrued benefit purposes.

B.5.     RECORDS

         The Committee shall maintain such records as it deems necessary and
         desirable to demonstrate the amount of each Northern Participant's
         benefits and Years of Service under Paragraphs B.3 and B.4 above
         pursuant to applicable Internal Revenue Service regulations.

B.6.     EFFECTIVE DATE

         The effective date of this Supplement B is January 1, 1990.

                                       56
<PAGE>   62

                                  SUPPLEMENT C

                      SERVISTAR COAST TO COAST CORPORATION
                        RETIREMENT INCOME PLAN PROVISIONS

The following provisions from the SERVISTAR Plan are included herein (with
slight modification if appropriate) to assist the administration of this Plan as
it requires inclusion of the SERVISTAR Plan provisions or the calculation of the
Participant's Accrued Benefit under the SERVISTAR Plan:

Certain defined terms from the SERVISTAR Plan are referred to in this Supplement
C, but are not reproduced in the interest of conciseness. The terms - Accrued
Benefit, Code, Contingent Pensioner, Credited Interest, Employee, Employer,
Excess Benefit Plan, Long-Term Disability, Normal Retirement Date, Participant
Pension, Retirement Date, Termination of Employment - should not need further
defining and are intended to continue their meaning from the SERVISTAR Plan. The
term "Plan" was used in the SERVISTAR Plan to refer to itself, but will be used
herein to refer to this Plan. Any reference to "Plan" from the SERVISTAR Plan
document is changed herein to "SERVISTAR Plan" where appropriate. Any use of the
term "Plan Year" in Supplement C will refer to the SERVISTAR Plan Year (July 1
to June 30) unless otherwise indicated. The method used to recast SERVISTAR Plan
"Earnings" for this Plan is described in Plan Section 2.1(K). Vesting Percentage
as used herein is now defined in Section 2.1(NN) of the Plan.

SERVISTAR PLAN SECTION REFERENCES HAVE BEEN CHANGED TO SUPPLEMENT C SECTIONS IF
INCLUDED IN THIS SUPPLEMENT C, OTHERWISE SERVISTAR PLAN REFERENCES HAVE BEEN
MAINTAINED.

The provisions of this Supplement C are subject to Section 4.6 of the Plan which
provides that SERVISTAR Plan service, credited service, earnings and cash
balance credits shall cease on January 2, 1998.

In the event of a conflict in the terms of the SERVISTAR Plan as included in
Supplement C and the SERIVSTAR Plan itself, the terms of the SERVISTAR Plan
shall control.

C.1      EARNINGS

         Includes basic salary or wages paid to an Employee for services
         rendered to the Employer, determined prior to any pre-tax contributions
         under a "qualified cash or deferred arrangement" (as defined under
         Section 401(k) of the Code and its applicable regulations) or under a
         "cafeteria plan" (as defined under Section 125 of the Code and its
         applicable regulations), including executive bonuses, pay for which no
         duties are performed due to vacation pay, holiday pay, sick pay, and
         any other authorized policy pay, safe driver awards and perfect
         attendance awards (effective July 1, 1994), gain sharing (effective
         July 1, 1995) and overtime payments received from the Employer during
         each Plan Year, excluding Employer contributions to Social Security,
         contributions to this or through any other profit sharing or retirement
         plan or program, capital income compensation or the value of any other
         fringe benefits (including any long-term disability payments) provided
         at the expense of the Employer which are not specifically included
         herein.

         If, in a Plan Year, a Participant has lower Earnings than he had the
         preceding Plan Year because he was paid either Worker's Compensation or
         Long-Term Disability, or both, Earnings will be considered to be his
         Earnings received in the preceding Plan Year. These higher Earnings
         calculations will continue for the period of time that benefits are

                                       57
<PAGE>   63

         paid under either Worker's Compensation or Long-Term Disability, or
         both. Notwithstanding the immediately preceding two sentences, for Plan
         Years beginning on or after July 1, 1996, if a Participant is disabled
         in any Plan Year, only the Participant's Earnings in such Plan Year
         shall be taken into account for any purpose under the SERVISTAR Plan.

         Notwithstanding any SERVISTAR Plan provision to the contrary, Earnings
         for any Participant, who transferred employment from Coast to Coast
         Corporation to SERVISTAR Corporation prior to July 1, 1996, shall only
         include such remuneration paid by SERVISTAR Corporation.

C.2      HOUR OF SERVICE

         (1)      each hour for which the Employee is either directly or
                  indirectly paid by the Employer or Affiliated Employer or
                  entitled to payment,

                  (a)      for duties performed during the applicable
                           computation period, and

                  (b)      for reasons other than the performance of duties
                           (such as but not limited to paid sick leave, paid
                           vacation time), irrespective of whether the
                           employment relationship has terminated, and

         (2)      any additional hours as normally would have been credited to
                  the Employee had he worked on a nonovertime basis during the
                  following periods for the Employer or an Affiliated Employer:

                  (a)      temporary layoff,

                  (b)      leave of absence of up to two years, as authorized by
                           the Employer pursuant to the Employer's established
                           leave policy, and

                  (c)      military leave while the Employee's reemployment
                           rights are protected by law, provided that any such
                           periods qualify as Service in accordance with the
                           terms of the Service definition, and

                                       58
<PAGE>   64

         (3)      each hour for which back pay is either awarded or agreed to by
                  the Employer or an Affiliated Employer, irrespective of
                  mitigation of damages.

         Hours of Service shall be credited to the Employee for the computation
         period(s): (1) in which the duties are performed or payments are due,
         (2) in which payments would have been due during a covered unpaid leave
         of absence or layoff, or (3) to which the back pay award or agreement
         pertains. The same Hours of Service shall not be credited under more
         than one paragraph of this definition.

         In no event will Hours of Service be allowed and computed in a manner
         less liberal than the manner described in the Department of Labor
         Regulation 2530.200b-2.

C.3      SERVISTAR PLAN PRIOR FORMULA

         With respect to each Participant who retires or terminates on or after
         July 1, 1996, the yearly amount of basic Pension payable under the Plan
         is equal to the greater of (A) or (B) plus (C):

         (A)      Is (i) less (ii) where:

                  (i)      is 2% of a Participant's Final Earnings multiplied by
                           the years and fraction of Credited Service, up to a
                           maximum of 25, 1/2 of 1% of a Participant's Final
                           Earnings multiplied by the years and fraction of
                           Credited Service over 25 years, and

                  (ii)     is 3/4 of 1% of the Participant's Offset Earnings
                           multiplied by the years and fraction of Credited
                           Service, up to a maximum of 25, plus 1/4 of 1% of (a)
                           the Participant's Offset Earnings, or (b) effective
                           July 1, 1994 the Participant's Final Earnings (if
                           smaller), multiplied by the years and fractions of
                           Credited Service over 25 years, provided that this
                           offset will not be applied until the first of the
                           month following or coincident with the Participant's
                           attainment of Social Security Retirement Age.

                  Notwithstanding any Plan provision to the contrary, for
                  purposes of calculating the benefit under Supplement C Section
                  C.3(A)(i) and (ii), Credited Service shall not include any
                  period after June 30, 1996.

         (B)      Is the amount the Participant would have received under the
                  terms of Section 4.1(B) of the SERVISTAR Plan (referring to
                  the SERVISTAR Plan as in effect on June 30, 1983) assuming
                  level Earnings from that time forward, using Credited Service
                  through June 30, 1994 only.

                                       59
<PAGE>   65

         (C)      With respect to each Participant who contributed to the
                  SERVISTAR Plan in accordance with its terms prior to July 1,
                  1974, the Employee Accrued Benefit, unless:

                  (1)      if a cash refund of the Participant's Contributions
                           with Credited Interest is elected on or after July 1,
                           1994, the Employee Accrued Benefit is not payable
                           under this paragraph (C);

                  (2)      if a refund of the Participant's contributions with
                           Credited Interest is elected prior to January 1,
                           1994, the benefit calculated under this paragraph (C)
                           is equal to the excess, if any, of the amount
                           determined in paragraph (a) over paragraph (b),
                           where:

                           (a)      is a yearly amount beginning on the
                                    Participant's Normal Retirement Date
                                    determined on an equivalent Value (using the
                                    monthly interest rate in effect when the
                                    refund is paid instead of the yearly rate)
                                    to the cash refund of the Participant's
                                    contributions; and

                           (b)      is the Employee Accrued Benefit;

         provided, however, that the yearly benefit under Supplement C Section
         C.3 of a Participant who is affected by the imposition of the $150,000
         limitation on Earnings shall be equal to the greater of (a) the
         Participant's benefit calculated under the provisions of Supplement C
         Section C.3 as determined with regard to such imposition, or (b) the
         benefit equal to the Participant's Accrued Benefit determined as of the
         last day of the Plan Year beginning in 1993, plus the Participant's
         Accrued Benefit based solely on Credited Service after such date under
         the provisions of Supplement C Section C.3 as determined with regard to
         such imposition. For purposes of the SERVISTAR Plan, the Accrued
         Benefit determined as of the last day of the Plan Year beginning in
         1993 shall be equal to the greater of (c) the Participant's Accrued
         Benefit determined as of the last day of the Plan Year beginning in
         1993 as determined with regard to the $200,000 limitation on Earnings,
         or (d) the Participant's Accrued Benefit determined as of the last day
         of the Plan Year beginning in 1988, plus the Participant's Accrued
         Benefit based solely on Credited Service after such date under the
         provisions of the SERVISTAR Plan as determined with regard to such
         limitation.

         In no event will the Pension determined for a Participant on his
         Retirement Date to be less than the highest amount of Pension the
         Participant would have received in the same form of payment had his
         Credited Service ceased at any time prior to his Retirement Date when
         he was eligible to receive an immediate Pension.

         In no event will any amendment to the SERVISTAR Plan reduce the Accrued
         Benefit to the effective date of such amendment including, but not
         limited to, any Pension payable as a result of the delayed application
         of the offset in Supplement C Section C.3.(A)(ii).

                                       60
<PAGE>   66

         In addition, effective July 1, 1988, in no event will the annuities
         purchased for Participants in the Employer's Excess Benefit Plan plus
         retirement income payable under the Plan (as limited by the maximums
         outlined in Section 13.1 of the Plan) exceed the total retirement
         income as calculated in this Supplement C Section C.3 and the Cash
         Balance Formula under Section 4.4 of the SERVISTAR Plan (assuming the
         maximums in Section 13.1 of the Plan had not been in effect). Any
         excess will be subtracted from the yearly amount of retirement income
         payable under the Plan after reduction to comply with the maximums as
         outlined in Section 13.1 of the Plan. This provision will not reduce
         the amount of retirement income accrued under the SERVISTAR Plan as of
         July 1, 1988.

C.4      FINAL EARNINGS

         The highest average Earnings received in any five consecutive Plan
         Years ending on or before June 30, 1996, excluding any Plan Year in
         which the Credited Service is not granted under Supplement C Section
         C.5. Notwithstanding the foregoing, for the purposes of determining a
         Participant's Final Earnings, all Earnings received during the Plan
         Year starting January 1, 1976 and ending July 1, 1976 shall be
         annualized and counted as a full Plan Year's Earnings.

C.5      CREDITED SERVICE

         That portion of a Participant's Service which is included for purposes
         of determining the amount of his accrued Pension attributable to the
         Prior Formula. With respect to any employment period, a Participant's
         Credited Service shall include employment with the Employer
         corresponding with Service allowed except:

         (1)      Any Plan Year in which the Participant has less than 1,000
                  Hours of Service, except for the Plan Year commencing on
                  January 1, 1976, as determined in Supplement C Section C.6.

         (2)      Service prior to a break-in-service if the Participant
                  received a lump sum payment equal to the equivalent Value of
                  his vested accrued Pension at the time of his latest
                  termination.

         A Participant's Credited Service shall be counted in whole years and
         full months. In no event will a Participant receive Credited Service
         for a period that is considered a "break-in-service," as determined in
         the Service definition.

         Notwithstanding any Plan provision to the contrary, Credited Service
         shall not include any Service for periods after June 30, 1996.

                                       61
<PAGE>   67

C.6      SERVICE

         Shall be the aggregate number of years of employment with the Employer
         excluding any period or portion of any period as determined in
         accordance with the following rules. Service is used to determine an
         Employee's participation and vesting status, and effective for Plan
         Years beginning on or after July 1, 1996, Service also is used to
         determine the Participant's Plan Year Cash Balance Formula benefit
         credit under Section 4.4 of the SERVISTAR Plan.

         (1)      With respect to any employment periods prior to January 1,
                  1976, an Employee's last period of continuous employment
                  immediately prior to such date will be counted as Service.

         (2)      With respect to any employment periods on and after January 1,
                  1976 and before January 2, 1998:

                  (a)      If in any Plan Year an Employee has at least 1000
                           hours of Service, he will be credited with one year
                           of Service.

                  (b)      If in any Plan Year an Employee has less than 1000
                           Hours of Service, no Service will be credited for
                           such Plan Year but a break-in service" will not be
                           deemed to have occurred.

                  (c)      If in any Plan Year an Employee has 500 or less Hours
                           of Service, no Service will be credited for such Plan
                           Year, and a "break-in-service" will be deemed to have
                           occurred.

                  Solely for purposes of determining whether a one year
                  break-in-service has occurred in a Plan Year, an Employee who
                  is absent from work for maternity or paternity reasons shall
                  receive credit for up to 501 Hours of Service which would
                  otherwise have been credited to such Employer but for such
                  absence, or in any case in which such hours cannot be
                  determined 8 Hours of Service per day of such absence. For
                  purposes of this paragraph, an absence from work for maternity
                  or paternity reasons means an absence:

                  (a)      by reason of the pregnancy of the Employee,

                  (b)      by reason of a birth of a child of the Employee,

                  (c)      by reason of the placement of a child with the
                           Employee in connection with the adoption of such
                           child by such Employee, or

                  (d)      for purposes of caring for such child for a period
                           beginning immediately following such birth or
                           placement.

                  The Hours of Service credited under this paragraph shall be
                  credited (a) in the Plan Year in which the absence begins if
                  the crediting is necessary to prevent a break-in-service in
                  that period, or (b) in all other cases, in the following Plan
                  Year.

         (3)      Service prior to a break-in-service which occurs before July
                  1, 1985 will be determined in accordance with the terms of the
                  SERVISTAR Plan as of the date the break-in-service occurred.

                                       62
<PAGE>   68

         (4)      If an Employee who has a break-in-service which occurs after
                  July 1, 1985 is later reemployed by the Employer, the
                  following special rule shall apply:

                  Service prior to his most recent break-in-service shall be
                  counted along with any Service earned on or after the
                  Employee's reemployment date:

                  (a)      he was entitled to any vested Pension attributable to
                           Employer contributions in accordance with Section 6
                           of the SERVISTAR Plan prior to his most recent
                           break-in-service, or

                  (b)      he was not entitled to any vested Pension
                           attributable to Employer contributions and the length
                           of his latest break-in-service did not equal or
                           exceed the greater of:

                           (i)      the Employee's aggregate number of years of
                                    prebreak Service; or

                           (ii)     5 years.

                  If a reemployed Employee fails to meet any of the tests
                  described in (a) or (b) above, any Service earned prior to his
                  most recent break-in-service shall be disregarded.

         (5)      Absence from employment shall be counted as Service if the
                  following circumstances apply:

                  (a)      temporary layoff,

                  (b)      subject to Section 2.1(L) of the SERVISTAR Plan, a
                           leave of absence of up to two years, as authorized by
                           the Employer pursuant to the Employer's established
                           leave policy,

                  (c)      military leave while the Employee's re-employment
                           rights are protected by law,

                  provided that the Employee returns to active employment with
                  the Employer when recalled (if temporary layoff), within 2
                  years (if leave of absence), or within 90 days after he
                  becomes eligible for release from active duty (if military
                  leave). Except as required by law for military leaves, if the
                  Employee does not return to active employment with the
                  Employer, his Service will be deemed to have ceased on the
                  date his absence commenced, and he will receive credit for 501
                  Hours of Service for each year of continuous absence.

                  The Employer's leave policy shall be applied in a uniform and
                  nondiscriminatory manner to all Employees under similar
                  circumstances.

         (6)      Employment with a predecessor company shall be counted as
                  Service to the extent required by ERISA.

         (7)      Transfers and Service with an Affiliated Employer or as a
                  Leased Employee

                  (a)      If an Employee (i) becomes employed by the Employer
                           in any capacity

                                       63
<PAGE>   69

                           other than as an Employee, or (ii) becomes employed
                           by an Affiliated Employer, or (iii) becomes a Leased
                           Employee, he shall retain any Credited Service he has
                           under the SERVISTAR Plan. Upon his later retirement
                           or termination of employment with the Employer or
                           Affiliated Employer (or upon benefit commencement in
                           the case of a Leased Employee), any benefits to which
                           the Employee is entitled under the SERVISTAR Plan
                           shall be determined under the SERVISTAR Plan
                           provisions in effect on the date he ceases to be an
                           Employee, and only on the basis of his Credited
                           Service accrued while he was an Employee.

                  (b)      Subject to the break-in-service provisions of this
                           Supplement C Section C.6, in the case of a person who
                           (i) was originally employed by the Employer in any
                           capacity other than as an Employee, or (ii) was
                           originally employed by an Affiliated Employer, or
                           (iii) was originally providing services to the
                           Employer as a Leased Employee, and thereafter becomes
                           an Employee, upon his later retirement or termination
                           of employment, the benefits payable under the
                           SERVISTAR Plan shall be computed under the SERVISTAR
                           Plan provisions in effect at that time, and only on
                           the basis of the Credited Service accrued while he is
                           an Employee.

                  (c)      Any Participant who was formerly employed with Coast
                           to Coast Stores, Inc. (as it was formerly known)
                           shall receive credit for service with Coast to Coast
                           Stores, Inc. prior to May 29, 1990 (as defined at
                           that time by Coast to Coast Stores, Inc.) for
                           purposes of calculating his Service for the Vested
                           Percentage.

                  (d)      For any Participant who is an Employee of the
                           Employer on July 1, 1996, Service, with respect to
                           Plan Years beginning on or after July 1, 1996, shall
                           include all service recognized under the Coast Profit
                           Sharing and Savings Plan for purposes of vesting
                           thereunder and credited to the Participant as of June
                           30, 1996.

                                       64
<PAGE>   70

C.7      OFFSET EARNINGS

         The average of the Employee's Earnings for the three consecutive Plan
         Years preceding the Plan Year in which the Employee's employment ceases
         or June 30, 1996, if earlier. In determining the Offset Earnings, any
         Earnings for a Plan Year in excess of the taxable wage base in effect
         under Section 230 of the Social Security Act shall be disregarded.
         Prior to June 30, 1994, Offset Earnings shall not include any Plan Year
         excluded from Credited Service under Supplement C Section C.5 and shall
         be the average of the Employee's Earnings for the three highest
         consecutive Plan Years ending with the Plan Year that the Employee's
         employment ceases. Notwithstanding the foregoing, Offset Earnings shall
         not exceed Covered Compensation for the Plan Year in which the
         Employee's employment ceases.

C.8      COVERED COMPENSATION

         For any Participant, the average of the taxable wage bases in effect
         under Section 230 of the Social Security Act for each year in the
         35-year period ending with the year in which the Participant attains
         his Social Security Retirement Age rounded to the nearest $600 or such
         other similar amount designated by the Internal Revenue Service. In
         determining a Participant's Covered Compensation for any Plan Year, the
         taxable wage base for the current Plan Year and any subsequent Plan
         Year shall be assumed to be the same as the taxable wage base in effect
         as of the beginning of the Plan Year for which the determination is
         made.

C.9      SOCIAL SECURITY RETIREMENT AGE

         Age 65 with respect to a Participant who was born before January 1,
         1938; age 66 with respect to a Participant who was born after December
         31, 1937 and before January 1, 1955; and age 67 with respect to a
         Participant who was born after December 31, 1954. For employees who
         terminate prior to July 1, 1994, Social Security Act means the age (in
         years and months) at which he or she qualifies for unreduced old age
         Social Security benefits.

C.10     NORMAL RETIREMENT DATE

         For benefit eligibility and vesting purposes, the day on which the
         Participant attains his 60th birthday. For all other purposes, the
         first day of the month coinciding with or next following the
         Participant's 60th birthday.

                                       65
<PAGE>   71

C.11     VALUE

         With respect to the refund of a Participant's contribution under
         Supplement C Section C.20 or the calculation of the monthly benefit
         derived from the Participant's contributions under Supplement C Section
         C.3(C)(2)(a), Value means the present value of a Participant's Pension
         based upon the Pension Benefit Guaranty Corporation's male annuity
         rates, factors, tables, assumptions and procedures for lump sum
         payments in effect for the month in which the refund is distributed.
         For all other Pensions based on the provisions of the SERVISTAR Plan:
         (i) for terminations occurring on or after July 1, 1996, Value shall
         mean the equivalent actuarial value of the Ten-Year Certain and Life
         form of payment as described in Supplement C Section C.17 computed on
         the basis of the Participant's age at distribution (or the
         Beneficiary's age, if the benefit is payable due to the Participant's
         death prior to commencement of benefits), the 1983 Group Annuity
         Mortality Table as set forth in Revenue Ruling 95-28 or such other
         mortality table as may be required by the Internal Revenue Service in
         any ruling superseding Revenue Ruling 95-28, with interest at the
         annual rate of interest on 30-Year Treasury securities. The rate of
         interest shall be fixed for each Plan Year and shall be determined by
         the rate of interest on 30-year Treasury securities set in April and
         published by the Board of Governors of the Federal Reserve System in
         May of the preceding Plan Year; and (ii) for terminations occurring
         before July 1, 1996, Value shall mean the equivalent actuarial value
         calculated as above but based on the Pension Benefit Guaranty
         Corporation's male annuity rates, factors, tables, assumptions and
         procedures for lump sum payments in effect at the beginning of the Plan
         Year in which the distribution is made.

C.12     ADJUSTMENT FACTOR

         The appropriate adjustment factor(s) which may be applicable to a
         Participant's Pension under the SERVISTAR Plan in accordance with the
         further terms of the SERVISTAR Plan.

         With respect to each Participant whose Retirement Date occurs after
         August 1, 1983, the appropriate Adjustment Factors are the applicable
         gender-neutral Adjustment Factors based on the 1971 GAM, 6% interest
         and the gender mix as shown in the Tables attached hereto and, with
         respect to Participants who are retiring after the Normal Retirement
         Date, the late retirement Adjustment Factors. Table A shall apply to
         Accrued Benefit as of June 30, 1994 in accordance with the procedures
         in Section 5.4 of the SERVISTAR Plan.

C.13     CASH BALANCE ACCOUNT

         Is the bookkeeping account established for eligible Participants who
         accrue Service under the SERVISTAR Plan after June 30, 1996 and who are
         entitled to a Cash Balance Benefit.

                                       66
<PAGE>   72

C.14     CASH BALANCE BENEFIT

         The benefit described in Cash Balance Formula under Section 4.4 of the
         SERVISTAR Plan derived from a Participant's Cash Balance Account, which
         if not distributed in a lump sum, will be the annual benefit which has
         a Value equal to the Participant's Cash Balance Account, adjusted as
         necessary to reflect the form of payment elected by the Participant by
         applying the Adjustment Factor.

C.15     AMOUNT OF EARLY PENSION REDUCTION

         During the period commencing July 1, 1994 and ending June 30, 1996, the
         yearly amount of early Pension payable to the Participant will be equal
         to the amount determined in Supplement C Section C.3, based on Credited
         Service to the date the Participant's employment ceases or June 30,
         1996, if earlier, and then reduced by 1/4 of 1%, for each month (3% per
         year) by which the early retirement date precedes the Normal Retirement
         Date up to 60 months early (5 years) and then 2/5 of 1% for each month
         (4.8% per year) thereafter.

C.16     NORMAL FORM OF PAYMENT - JOINT AND SURVIVOR

         If the Participant has a Spouse on his Retirement Date, the normal form
         of payment is the Joint and Survivor form. This form provides that,
         upon the Participant's death on or after his Retirement Date, 50% of
         the Pension payable to the Participant, will be paid to such Spouse, if
         surviving the Participant, for the balance of the Spouse's life.
         However, if the Participant dies within the ten-year period commencing
         on his Retirement Date, a Pension in the same amount as the Participant
         would have received will be paid until the end of such ten-year period.

         As an alternative to the 50% continuation described above, a
         Participant may elect that 66-2/3% or 100% of the benefit payable to
         him, be continued to his Spouse upon his death. Such election will not
         require Spousal Consent as provided in the Plan.

C.17     NORMAL FORM OF PAYMENT - TEN-YEARS CERTAIN

         If the Participant does not have a Spouse on his Retirement Date or if
         this Termination of Employment occurred prior to January 1, 1976, the
         normal form of payment is the Ten Years Certain form. This form
         provides that payments will be made to the Participant in an amount
         determined in accordance with Supplement C Section C.3 and the Cash
         Balance Formula under Section 4.4 of the SERVISTAR Plan during his
         lifetime and that, if his death occurs within the 10-year period
         commencing upon his Retirement Date, a Pension in the same amount as
         the Participant would have received will be paid to the Beneficiary
         designated by the Participant for the balance of the 10-year period.

                                       67
<PAGE>   73

C.18     CONTINGENT PENSION OPTION

         Subject to the right to elect the lump sum payment of the Cash Balance
         Benefit, the Participant who elects this option will receive a reduced
         Pension amount during his lifetime so that, after his death, a Pension
         in the same amount or 66-2/3% or 50% thereof (as specified in the
         election) will be paid for the life of the Contingent Pensioner
         designated by the Participant if surviving the Participant. However, if
         the Participant dies within the ten-year period commencing on his
         Retirement Date, payments will not be reduced to the elected percentage
         until the tenth anniversary of his Retirement Date.

         If the option is in effect on the Participant's Retirement Date, the
         amount of Pension payable to the Participant will be determined using
         the same procedures specified in Section 4.3(A) of the Plan except that
         the Contingent Pensioner Adjustment Factor will be applied instead of
         the Joint and Survivor Adjustment Factor.

         This option will be inoperative if the Contingent Pensioner dies before
         the Participant's Retirement Date or the Participant dies before his
         Retirement Date and the terms of the next paragraph are not applicable.

         If a Participant who has elected this option dies on or after his
         Normal Retirement Date, but before his Pension is due to commence, his
         Contingent Pensioner will receive Pension payments beginning on the
         first day of the month next following the Participant's death and
         continuing for the balance of his life. Prior to the tenth anniversary
         of such first day of the month, these Pension payments will be equal to
         the amount of Pension which would have been payable to the Participant
         had he retired hereunder on such first day of the month with the option
         in effect; any such payments payable thereafter will be adjusted by the
         continuation percentage (100%, 66-2/3%, or 50%) elected by the
         Participant.

C.19     CASH BALANCE BENEFIT PAYMENT OPTION

         Notwithstanding any Plan provision to the contrary, the entire Vesting
         Percentage of the Cash Balance Benefit portion of the Participant's
         Pension may be distributed in a cash lump sum form of payment if
         elected by the Participant, or his Beneficiary if applicable. Such
         distribution may commence as soon as practicable after the earliest to
         occur of the following: the Participant's death, disability, or
         retirement, or termination of service and in no event later than the
         dates described in Section 8.9 of the Plan. The spousal consent rules
         described in Section 8.4 of the Plan shall apply to such distribution.

                                       68
<PAGE>   74

C.20     REFUND OF PARTICIPANT'S CONTRIBUTIONS TO PARTICIPANT

         If a Participant's Service ceases by reason other than death prior to
         his Normal Retirement Date, he may elect prior to or on his Retirement
         Date to receive a refund of his Participant's contributions made prior
         to July 1, 1974, together with Credited Interest computed thereon to
         the date the election is made.

         Effective July 1, 1994, the cash refund of the Participant's
         contributions shall be no less than the equivalent Value of the yearly
         amount of Pension that can be provided by the Participant's
         contributions with Credited Interest computed to the date such amount
         is applied to purchase this Pension in accordance with the rates in
         Table C. Such benefit shall be on a Full Cash Refund - Ten-Year Certain
         Form of payment.

         Credited Interest on a Participant's Contributions means interest for
         the number of full months from the January 1 following the date each
         such contribution was paid to the Fund to the date specified herein.

         Prior to January 1, 1960, the rate of Credited Interest was 2 1/2% per
         annum, compounded annually. From January 1, 1960 to January 1, 1976,
         the rate of Credited Interest was 3% per annum, compounded annually.
         From January 1, 1976 to July 1, 1983, the rate of Credited Interest is
         5% per annum. On and after July 1, 1983, the rate of Credited Interest
         is 7% per annum, compounded on each July 1. Any change in the rate of
         Credited Interest will apply to interest allowed for months occurring
         after the effective date of change.

                                       69
<PAGE>   75

                                  SUPPLEMENT D

                       1999 SPECIAL RETIREMENT OPPORTUNITY

I.       Each Participant employed at the Employer's World Headquarters location
         (other than the Employer's corporate officers) who will be at least age
         55 and have at least 5 Years of Service on December 31, 1999 and who
         elects to retire by filing a written notice and waiver agreement with
         the Employer on or before August 9, 1999 will be eligible to retire
         between July 1 and December 31, 1999. The actual date of retirement
         will be determined by the Participant's department management.

         Any Participant electing to so retire will be entitled to an enhanced
         Pension. The Pension will be calculated by adding 5 Years of Service
         and 5 years of age to the Participant's Years of Service and age at his
         retirement date. All other benefit provisions will be applied as stated
         in the Plan.

         Any Participant who is eligible for this Special Retirement Opportunity
         and does not elect to retire as provided herein shall not have this
         Opportunity available at any future time.

II.      Each Participant employed at the Employer's West Loop Facility whose
         employment was terminated as a result of that Facility's closing in
         July, 1999 and who would have attained at least 30 Years of Service by
         the end of the year 2000 if he had continued employment with the
         Employer will be eligible for a Pension at the time of such termination
         calculated on the basis of the Years of Service he would have at
         December 31, 2000. All other benefit provisions will be applied as
         stated in the Plan.

         Any Participant who is eligible for this Pension enhancement and
         transfers employment within the Employer or Affiliated Employer rather
         than retire shall not have this enhancement available at any future
         time.

                                       70
<PAGE>   76

                                     TABLE A

                        LATE RETIREMENT ADJUSTMENT FACTOR

<TABLE>
<CAPTION>
====================================================================================================================================
                        Number of Years and Months from Normal Retirement Date to Late Retirement Date
------------------------------------------------------------------------------------------------------------------------------------
Months:  Years:    0          1         2          3          4          5           6         7          8          9          10
------   -----  ------     ------     ------     ------     ------     ------     ------     ------     ------     ------     ------
<S>      <C>    <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
  0                        107.2%     114.4%     122.8%     131.2%     140.8%     150.4%     161.2%     172.0%     182.8%     193.6%
  1             100.6%     107.8      115.1      123.5      132.0      141.6      151.3      162.1      172.9      183.7
  2             101.2      108.4      115.8      124.2      132.8      142.4      152.2      163.0      173.8      184.6
  3             101.8      109.0      116.5      124.9      133.6      143.2      153.1      163.9      174.7      185.5
  4             102.4      109.6      117.2      125.6      134.4      144.0      154.0      164.8      175.6      186.4
  5             103.0      110.2      117.9      126.3      135.2      144.8      154.9      165.7      176.5      187.3
  6             103.6      110.8      118.6      127.0      136.0      145.6      155.8      166.6      177.4      188.2
  7             104.2      111.4      119.3      127.7      136.8      146.4      156.7      167.5      178.3      189.1
  8             104.8      112.0      120.0      128.4      137.6      147.2      157.6      168.4      179.2      190.0
  9             105.4      112.6      120.7      129.1      138.4      148.0      158.5      169.3      180.1      190.9
 10             106.0      113.2      121.4      129.8      139.2      148.8      159.4      170.2      181.0      191.8
 11             106.6      113.8      122.1      130.5      140.0      149.6      160.3      171.1      181.9      192.7
====================================================================================================================================
</TABLE>

Factors for other years and months will be determined in a manner consistent
with the manner used in determining these factors.

                                       71
<PAGE>   77

                                     TABLE B

                     CONTINGENT PENSIONER ADJUSTMENT FACTORS
                      JOINT AND SURVIVOR ADJUSTMENT FACTORS
                                50% CONTINUATION

<TABLE>
<CAPTION>
===============================================================================================================
                                                        Participant
---------------------------------------------------------------------------------------------------------------
                 Age*           55          56           57           58           59          60           61
                -----          ----        ----         ----         ----         ----        ----         ----
<S>            <C>          <C>         <C>          <C>          <C>          <C>         <C>          <C>
     C             41          89.1        88.4         87.7         86.9         86.2        85.4         84.6
     O             42          89.3        88.7         88.0         87.2         86.4        85.7         84.9
     N             43          89.6        89.0         88.2         87.5         86.7        86.0         85.2
     T             44          89.9        89.3         88.5         87.8         87.0        86.3         85.5
     I             45          90.1        89.5         88.8         88.1         87.3        86.6         85.8
     G          -----          ----        ----         ----         ----         ----        ----         ----
     E             46          90.4        89.8         89.1         88.4         87.7        86.9         86.2
     N             47          90.7        90.2         89.4         88.7         88.0        87.3         86.6
     T             48          91.0        90.5         89.8         89.0         88.3        87.6         86.9
                   49          91.3        90.8         90.1         89.4         88.7        88.0         87.3
                   50          91.6        91.1         90.4         89.7         89.0        89.3         87.6
                -----          ----        ----         ----         ----         ----        ----         ----
                   51          91.9        91.4         90.7         90.1         89.4        88.7         88.0
                   52          92.3        91.7         91.1         90.4         89.8        89.1         88.4
                   53          92.6        92.1         91.4         90.8         90.1        89.5         88.8
                   54          92.9        92.4         91.8         91.1         90.5        89.9         89.2
                   55          93.2        92.7         92.1         91.5         90.9        90.3         89.6
                -----          ----        ----         ----         ----         ----        ----         ----
     P             56          93.5        93.1         92.5         91.9         91.3        90.7         90.1
     E             57          93.8        93.4         92.8         92.2         91.7        91.1         90.5
     N             58          94.2        93.7         93.2         92.6         92.1        91.5         90.9
     S             59          94.5        94.1         93.5         93.0         92.4        91.9         91.4
     I             60          94.8        94.4         93.9         93.4         92.8        92.3         91.8
     O          -----          ----        ----         ----         ----         ----        ----         ----
     N             61          95.1        94.7         94.2         93.7         93.2        92.7         92.2
     E             62          95.4        95.0         94.6         94.1         93.6        93.1         92.6
     R             63          95.7        95.4         94.9         94.4         94.0        93.5         93.1
                   64          96.0        95.7         95.2         94.8         94.4        93.9         93.5
                   65          96.3        96.0         95.6         95.2         94.8        94.3         93.9
                -----          ----        ----         ----         ----         ----        ----         ----
                   66          96.5        96.3         95.9         95.5         95.1        94.7         94.7
                   67          96.8        96.5         96.2         95.8         95.5        95.1         94.7
                   68          97.1        96.8         96.5         96.1         95.8        95.5         95.1
                   69          97.3        97.1         96.8         96.5         96.1        95.8         95.5
                   70          97.6        97.4         97.1         96.8         96.5        96.2         95.9
                -----          ----        ----         ----         ----         ----        ----         ----
                   71          97.8        97.6         97.3         97.0         96.8        96.5         96.2
                   72          98.0        97.8         97.5         97.3         97.0        96.8         96.5
                   73          98.2        98.0         97.8         97.6         97.3        97.1         96.9
                   74          98.4        98.2         98.0         97.8         97.6        97.4         97.2
                   75          98.6        98.4         98.3         98.1         97.9        97.7         97.5
===============================================================================================================
</TABLE>

*  Age nearest birthday on Retirement Date, or on date option becomes
   effective, if later.

   Factors for other age combinations will be determined in a manner consistent
   with the manner used in determining these factors.

                                       72
<PAGE>   78

                              TABLE B (CONTINUED)

                     CONTINGENT PENSIONER ADJUSTMENT FACTORS
                              66-2/3% CONTINUATION

<TABLE>
<CAPTION>
===============================================================================================================
                                                        Participant
---------------------------------------------------------------------------------------------------------------
                 Age*           55          56           57           58           59          60           61
                -----          ----        ----         ----         ----         ----        ----         ----
<S>            <C>          <C>         <C>          <C>          <C>          <C>         <C>          <C>
      C            41          85.9        85.2         84.2         83.3         82.4        81.4         80.5
      O            42          86.3        85.5         84.6         83.6         82.7        81.8         80.9
      N            43          86.6        85.8         84.9         84.0         83.1        82.2         81.2
      T            44          86.9        86.2         85.3         84.3         83.4        82.5         81.6
      I            45          87.3        86.5         85.6         84.7         83.8        82.9         82.0
      G        -----          ----        ----         ----         ----         ----        ----         ----
      E            46          87.6        86.9         86.0         85.1         84.2        83.3         82.4
      N            47          88.0        87.3         86.4         85.5         84.6        83.7         82.9
      T            48          88.4        87.7         86.8         85.9         85.0        84.2         83.3
                   49          88.8        88.1         87.2         86.3         85.5        84.6         83.7
                   50          89.1        88.4         87.6         86.7         85.9        85.0         84.2
                -----          ----        ----         ----         ----         ----        ----         ----
                   51          89.5        88.9         88.0         87.2         86.3        85.5         84.7
                   52          89.9        89.3         88.5         87.6         86.8        86.0         85.2
                   53          90.3        89.7         88.9         88.1         87.3        86.5         85.7
                   54          90.7        90.1         89.3         88.5         87.7        87.0         86.2
                   55          91.1        90.5         89.8         89.0         88.2        87.4         86.7
                -----          ----        ----         ----         ----         ----        ----         ----
     P             56          91.5        91.0         90.2         89.5         88.7        87.9         87.2
     E             57          91.9        91.4         90.7         89.9         89.2        88.5         87.7
     N             58          92.4        91.8         91.1         90.4         89.7        89.0         88.3
     S             59          92.8        92.2         91.6         90.9         90.2        89.5         88.8
     I             60          93.2        92.7         92.0         91.3         90.7        90.0         89.3
     O          -----          ----        ----         ----         ----         ----        ----         ----
     N             61          93.6        93.1         92.4         91.8         91.2        90.5         89.9
     E             62          93.9        93.5         92.9         92.3         91.7        91.0         90.4
     R             63          94.3        93.9         93.3         92.7         92.2        91.6         91.0
                   64          94.7        94.3         93.8         93.2         92.6        92.1         91.5
                   65          95.1        94.7         94.2         93.7         93.1        92.6         92.1
                -----          ----        ----         ----         ----         ----        ----         ----
                   66          95.4        95.1         94.6         94.1         93.6        93.1         92.6
                   67          95.8        95.4         95.0         94.5         94.0        93.6         93.1
                   68          96.1        95.8         95.4         94.9         94.5        94.0         93.6
                   69          96.4        96.2         95.8         95.3         94.9        94.5         94.1
                   70          96.8        96.5         96.1         95.8         95.4        95.0         94.6
                -----          ----        ----         ----         ----         ----        ----         ----
                   71          97.0        96.8         96.5         96.1         95.7        95.4         95.1
                   72          97.3        97.1         96.8         96.4         96.1        95.8         95.5
                   73          97.6        97.4         97.1         96.8         96.5        96.2         95.9
                   74          97.8        97.7         97.4         97.1         96.8        96.6         96.3
                   75          98.1        97.9         97.7         97.4         97.2        97.0         96.7
===============================================================================================================
</TABLE>

*  Age nearest birthday on Retirement Date, or on date Contingent Pensioner
   option becomes effective, if later.

   Factors for other age combinations will be determined in a manner
   consistent with the manner used in determining these factors.

                                       73
<PAGE>   79

                              TABLE B (CONTINUED)

                     CONTINGENT PENSIONER ADJUSTMENT FACTORS
                              66-2/3% CONTINUATION

<TABLE>
<CAPTION>
===============================================================================================================
                                                 Participant
---------------------------------------------------------------------------------------------------------------
                  Age*          62          63           64           65           66          67           68
                -----          ----        ----         ----         ----         ----        ----         ----
<S>            <C>          <C>         <C>          <C>          <C>          <C>         <C>          <C>
     C             41          79.5        78.5         77.5         76.5         75.5        74.5         73.5
     O             42          79.9        78.9         77.9         76.9         75.9        74.9         73.9
     N             43          80.2        79.2         78.2         77.2         76.2        75.3         74.3
     T             44          80.6        79.6         78.6         77.6         76.6        75.7         74.7
     I             45          81.0        80.0         79.0         78.0         77.0        76.1         75.1
     G          -----          ----        ----         ----         ----         ----        ----         ----
     E             46          81.4        80.4         79.5         78.5         77.5        76.5         75.6
     N             47          81.9        80.9         79.9         78.9         78.0        77.0         76.1
     T             48          82.3        81.4         80.4         79.4         78.4        77.5         76.5
                   49          82.8        81.8         80.8         79.9         78.9        78.0         77.0
                   50          83.2        82.3         81.3         80.3         79.4        78.4         77.5
                -----          ----        ----         ----         ----         ----        ----         ----
                   51          83.7        82.8         81.8         80.9         79.9        79.0         78.1
                   52          84.2        83.3         82.4         81.4         80.5        79.6         78.6
                   53          84.7        83.8         82.9         82.0         81.1        80.1         79.2
                   54          85.3        84.3         83.4         82.5         81.6        80.7         79.8
                   55          85.8        84.9         84.0         83.1         82.2        81.3         80.4
                -----          ----        ----         ----         ----         ----        ----         ----
     P             56          86.3        85.4         84.6         83.7         82.8        81.9         81.0
     E             57          86.9        86.0         85.2         84.3         83.4        82.6         81.7
     N             58          87.4        86.6         85.8         84.9         84.1        83.2         82.3
     S             59          88.0        87.2         86.3         85.5         84.7        83.8         83.0
     I             60          88.5        87.7         86.9         86.1         85.3        84.5         83.7
     O          -----          ----        ----         ----         ----         ----        ----         ----
     N             61          89.1        88.3         87.6         86.8         86.0        85.2         84.4
     E             62          89.7        88.9         88.2         87.4         86.7        85.9         85.1
     R             63          90.3        89.5         88.8         88.1         87.4        86.6         85.8
                   64          90.8        90.1         89.4         88.8         88.1        87.3         86.6
                   65          91.4        90.7         90.1         89.4         88.7        88.0         87.3
                -----          ----        ----         ----         ----         ----        ----         ----
                   66          91.9        91.3         90.7         90.0         89.4        88.7         88.0
                   67          92.5        91.9         91.3         90.7         90.1        89.4         88.7
                   68          93.0        92.5         91.9         91.3         90.7        90.1         89.5
                   69          93.6        93.0         92.5         92.0         91.4        90.8         90.2
                   70          94.1        93.6         93.1         92.6         92.1        91.5         90.9
                -----          ----        ----         ----         ----         ----        ----         ----
                   71          94.6        94.1         93.6         93.1         92.7        92.1         91.6
                   72          95.0        94.6         94.1         93.7         93.3        92.7         92.2
                   73          95.5        95.1         94.7         94.2         93.8        93.4         92.9
                   74          95.9        95.5         95.2         94.8         94.4        94.0         93.5
                   75          96.4        96.0         95.7         95.4         95.0        94.6         94.2
===============================================================================================================
</TABLE>

*  Age nearest birthday on Retirement Date, or on date Contingent Pensioner
   option becomes effective, if later.

   Factors for other age combinations will be determined in a manner
   consistent with the manner used in determining these factors.

                                       74
<PAGE>   80

                               TABLE B (CONTINUED)

                     CONTINGENT PENSIONER ADJUSTMENT FACTORS
                                100% CONTINUATION

<TABLE>
<CAPTION>
===============================================================================================================
                                                        Participant
---------------------------------------------------------------------------------------------------------------
                 Age*           55          56           57           58           59          60           61
                -----          ----        ----         ----         ----         ----        ----         ----
<S>            <C>          <C>         <C>          <C>          <C>          <C>         <C>          <C>
      C            41          80.3        79.3         78.1         76.9         75.7        74.5         73.4
      O            42          80.8        79.7         78.5         77.4         76.2        75.0         73.8
      N            43          81.2        80.2         79.0         77.8         76.6        75.5         74.3
      T            44          81.6        80.6         79.4         78.3         77.1        75.9         74.7
      I            45          82.1        81.0         79.9         78.7         77.5        76.4         75.2
      G         -----          ----        ----         ----         ----         ----        ----         ----
      E            46          82.6        81.6         80.4         79.2         78.1        76.9         75.8
      N            47          83.1        82.1         80.9         79.8         78.6        77.5         76.3
      T            48          83.6        82.6         81.4         80.3         79.2        78.0         76.9
                   49          84.1        83.1         82.0         80.8         79.7        78.6         77.4
                   50          84.6        83.6         82.5         81.4         80.2        79.1         78.0
                -----          ----        ----         ----         ----         ----        ----         ----
                   51          85.1        84.2         83.1         82.0         80.9        79.8         78.6
                   52          85.6        84.7         83.7         82.6         81.5        80.4         79.3
                   53          86.2        85.3         84.2         83.2         82.1        81.0         79.9
                   54          86.7        85.9         84.8         83.8         82.7        81.7         80.6
                   55          87.3        86.4         85.4         84.4         83.3        82.3         81.2
                -----          ----        ----         ----         ----         ----        ----         ----
     P             56          87.8        87.0         86.0         85.0         84.0        83.0         82.0
     E             57          88.4        87.6         86.6         85.6         84.7        83.7         82.7
     N             58          89.0        88.2         87.3         86.3         85.3        84.4         83.4
     S             59          89.5        88.8         87.9         86.9         86.0        85.0         84.1
     I             60          90.1        89.4         88.5         87.6         86.7        85.7         84.8
     O          -----          ----        ----         ----         ----         ----        ----         ----
     N             61          90.6        90.0         89.1         88.2         87.3        86.5         85.6
     E             62          91.2        90.6         89.7         88.9         88.0        87.2         86.3
     R             63          91.7        91.1         90.3         89.5         88.7        87.9         87.1
                   64          92.3        91.7         90.9         90.2         89.4        88.6         87.8
                   65          92.8        92.3         91.5         90.8         90.1        89.3         88.6
                -----          ----        ----         ----         ----         ----        ----         ----
                   66          93.3        92.8         92.1         91.4         90.7        90.0         89.7
                   67          93.8        93.3         92.7         92.0         91.3        90.7         90.0
                   68          94.3        93.8         93.2         92.6         92.0        91.3         90.7
                   69          94.8        94.4         93.8         93.2         92.6        92.0         91.4
                   70          95.3        94.9         94.3         93.8         93.2        92.7         92.1
                -----          ----        ----         ----         ----         ----        ----         ----
                   71          95.6        95.3         94.8         94.3         93.8        93.2         92.7
                   72          96.0        95.7         95.2         94.8         94.3        93.8         93.3
                   73          96.4        96.1         95.7         95.2         94.8        94.4         93.9
                   74          96.8        96.5         96.1         95.7         95.3        94.9         94.5
                   75          97.2        96.9         96.6         96.2         95.9        95.5         95.1
===============================================================================================================
</TABLE>

*  Age nearest birthday on Retirement Date, or on date Contingent Pensioner
   option becomes effective, if later.

   Factors for other age combinations will be determined in a manner
   consistent with the manner used in determining these factors.

                                       75
<PAGE>   81

                               TABLE B (CONTINUED)

                     CONTINGENT PENSIONER ADJUSTMENT FACTORS
                                100% CONTINUATION

<TABLE>
<CAPTION>
===============================================================================================================
                                                  Participant
---------------------------------------------------------------------------------------------------------------
                  Age*          62          63           64           65           66          67           68
                -----          ----        ----         ----         ----         ----        ----         ----
<S>            <C>          <C>         <C>          <C>          <C>          <C>         <C>          <C>
     C             41          72.1        70.9         69.7         68.5         67.2        66.1         65.0
     O             42          72.6        71.4         70.1         68.9         67.7        66.6         65.4
     N             43          73.1        71.8         70.6         69.4         68.2        67.0         65.9
     T             44          73.5        72.3         71.1         69.8         68.6        67.5         66.3
     I             45          74.0        72.8         71.5         70.3         69.1        67.9         66.8
     G          -----          ----        ----         ----         ----         ----        ----         ----
     E             46          74.5        73.3         72.1         70.9         69.7        68.5         67.4
     N             47          75.1        73.9         72.7         71.5         70.2        69.1         68.0
     T             48          75.7        74.5         73.2         72.0         70.8        69.7         68.5
                   49          76.2        75.0         73.8         72.6         71.4        70.3         69.1
                   50          76.8        75.6         74.4         73.2         72.0        70.8         69.7
                -----          ----        ----         ----         ----         ----        ----         ----
                   51          77.5        76.3         75.1         73.9         72.7        71.5         70.4
                   52          78.1        76.9         75.7         74.6         73.4        72.2         71.1
                   53          78.8        77.6         76.4         75.2         74.1        72.9         71.8
                   54          79.4        78.3         77.1         75.9         74.8        73.6         72.5
                   55          80.1        78.9         77.8         76.6         75.5        74.3         73.2
                -----          ----        ----         ----         ----         ----        ----         ----
     P             56          80.8        79.7         78.5         77.4         76.3        75.2         74.0
     E             57          81.6        80.4         79.3         78.2         77.1        76.0         74.9
     N             58          82.3        81.2         80.1         79.0         77.9        76.8         75.7
     S             59          83.0        81.9         80.9         79.8         78.7        77.6         76.5
     I             60          83.8        82.7         81.6         80.6         79.5        78.4         77.4
     O          -----          ----        ----         ----         ----         ----        ----         ----
     N             61          84.5        83.5         82.5         81.4         80.4        79.4         78.3
     E             62          85.3        84.3         83.3         82.3         81.3        80.3         79.2
     R             63          86.1        85.1         84.2         83.2         82.2        81.2         80.2
                   64          86.9        85.9         85.0         84.0         83.1        82.1         81.1
                   65          87.7        86.7         85.8         84.9         84.0        83.0         82.1
                -----          ----        ----         ----         ----         ----        ----         ----
                   66          88.4        87.5         86.7         85.8         84.9        84.0         83.1
                   67          89.2        88.3         87.5         86.7         85.8        84.9         84.0
                   68          89.9        89.1         88.3         87.5         86.8        85.9         85.0
                   69          90.7        89.9         89.2         88.4         87.7        86.8         86.0
                   70          91.4        90.7         90.0         89.3         88.6        87.8         87.0
                -----          ----        ----         ----         ----         ----        ----         ----
                   71          92.1        91.4         90.7         90.1         89.4        88.7         87.9
                   72          92.7        92.1         91.5         90.9         90.2        89.5         88.8
                   73          93.4        92.8         92.2         91.6         91.1        90.4         89.7
                   74          94.0        93.5         92.9         92.4         91.9        91.3         90.6
                   75          94.7        94.2         93.7         93.2         92.7        92.1         91.5
===============================================================================================================
</TABLE>

*  Age nearest birthday on Retirement Date, or on date Contingent Pensioner
   option becomes effective, if later.

   Factors for other age combinations will be determined in a manner
   consistent with the manner used in determining these factors.

                                       76
<PAGE>   82

                                     TABLE C

                                IMMEDIATE ANNUITY
                             10-YEAR CERTAIN ANNUITY
                             MONTHLY INCOME PER 1000

<TABLE>
<CAPTION>
       Age*         Monthly Income
      -----         --------------
<S>                 <C>
        45                7.72
        46                7.81
        47                7.89
        48                7.98
        49                8.07
        50                8.16
        51                8.26
        52                8.36
        53                8.46
        54                8.57
        55                8.68
        56                8.80
        57                8.93
        58                9.05
        59                9.19
        60                9.33
        61                9.47
        62                9.62
        63                9.77
        64                9.93
        65               10.10
        66               10.26
</TABLE>

*  Age, nearest birthday, or annuity commencement date.

   Purchase of retirement annuity with employee contributions plus Credited
   Interest.

                                       77

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]