Document:

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[CABOT MICROELECTRONICS LOGO]

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                            CODE OF BUSINESS CONDUCT

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                               V.2 November, 2002

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           CABOT MICROELECTRONICS CORPORATION CODE OF BUSINESS CONDUCT

0.0  CABOT MICROELECTRONICS CORPORATION'S VISION AND VALUES

1.0  A LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

2.0  INTRODUCTION

3.0  YOU AND YOUR JOB AT CABOT MICROELECTRONICS
     3.1  Communications Channels
     3.2  Personal Conduct
     3.3  Work Environment
     3.4  Employee Privacy
     3.5  Protecting CMC's Assets
          3.5.1  Physical Assets
          3.5.2  Financial Assets
          3.5.3  CMC Information and Communication Systems
          3.5.4  Proprietary Information
                 3.5.4.1  Inadvertent Disclosure
                 3.5.4.2  Direct Requests for Information and Contacts with the
                          Press, Analysts and Others
                 3.5.4.3  Using Proprietary Information
          3.5.5  CMC Intellectual Property Rights
          3.5.6  Leaving CMC
          3.5.7  Legal Remedies
     3.6  Recording and Reporting Information

4.0  DEALING WITH OTHERS OUTSIDE OF CABOT MICROELECTRONICS
     4.1  Bribes, Gifts and Entertainment
          4.1.1  Business Amenities
          4.1.2  Receiving Gifts
          4.1.3  Referral Fees
          4.1.4  Giving Gifts
          4.1.5  Relationships with Government Employees
          4.1.6  Public Official and Campaign Visits, Speaking Engagements and
                 Honoraria
     4.2  Complying with Laws
          4.2.1  Competition
          4.2.2  Export
          4.2.3  Antiboycott
          4.2.4  Import
          4.2.5  The Environment
          4.2.6  Lobbying
          4.2.7  Disclosure Obligations

5.0  FURTHER GUIDANCE REGARDING WORKING WITH CUSTOMERS, SUPPLIERS AND OTHER
     OUTSIDE PARTIES
     5.1  Avoiding Misrepresentation
     5.2  Dealing with Suppliers
          5.2.1  Avoiding Reciprocal Dealing
     5.3  Competing in the Field
          5.3.1  Working with Customers and Avoiding False and Misleading
                 Statements about Competitors
     5.4  Relationships with Other Organizations
          5.4.1  Complementary Third Parties
          5.4.2  Business Contacts with Competitors
          5.4.3  Prohibitions
     5.5  Acquiring and Using Information about Others
     5.6  Information Owned by Others
          5.6.1  Receiving Information that May Be Confidential or Have
                 Restrictions on Its Use
          5.6.2  Acquiring Software
     5.7  Using Trademarks

                               V.2 November, 2002
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6.0  YOUR OWN ACTIVITIES
     6.1  Conflicts of Interest
          6.1.1  Assisting a Competitor
          6.1.2  Competing against CMC
          6.1.3  Supplying CMC
          6.1.4  Personal Financial Interests
                 6.1.4.1  Publicly Traded Securities
                 6.1.4.2  Closely Held Organizations
     6.2  Using Inside Information and Insider Trading
     6.3  Using CMC's Time and Assets
     6.4  Public Service
     6.5  Participation in Political Life
          6.5.1  Speaking Out
     6.6  Someone Close to You Working in the Industry

7.0  SOME ADDITIONAL GUIDANCE

8.0  CODE OF BUSINESS CONDUCT CERTIFICATION

                               V.2 November, 2002
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0.0  CABOT MICROELECTRONICS CORPORATION'S VISION AND VALUES

VISION

     We are the company others pursue in technology and product performance. Our
     people and our business partners are our competitive advantage. We create
     value for our global customers and shareholders by unlocking the
     opportunity in unsolved problems.

VALUES

     Integrity
               -    We are honest and ethical in all of our dealings with all of
                    our employees, customers, business partners, suppliers,
                    competitors, and other stakeholders.
               -    We adhere to all laws, regulations, and our business
                    practices.
     Respect
               -    We value people's differences.
               -    We value diverse opinions, we listen and learn.
               -    We treat people fairly and respect their need for work/life
                    balance.
               -    We provide honest, constructive, and discreet feedback.
     Accountability
               -    We admit mistakes, we learn from our mistakes, we ask for
                    help.
               -    We take ownership and responsibility for our actions and
                    performance.
               -    We take initiative to make a difference and to help.
               -    We focus on results.
               -    We recognize and celebrate our successes.
     Competitiveness
               -    We are relentless in our pursuit of success.
               -    We are a leader in the markets we serve.
               -    We are committed to ensuring that we have the best people
                    and talent, technology, quality, service, and market
                    knowledge.
               -    We act with a sense of urgency, and we strive for excellence
                    in everything we do.
     Innovation
               -    We work creatively to develop new ways to provide value to
                    our customers.
               -    We drive our innovation by understanding stated and unstated
                    market needs, and we are the first to deliver against those
                    needs.
               -    We create new markets with unique technologies and
                    solutions.

1.0  A LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Dear Fellow CMC Employee:

     This Code of Business Conduct essentially is about Cabot Microelectronics'
     Vision and Values, which are the foundation of our company.

     Each employee has the responsibility to act according to our Vision and
     Values. CMC operates in one of the most competitive and fast-moving
     industries, and this environment emphasizes the importance of each
     employee's responsibility to exercise sound business judgment and act
     ethically. This Code of Business Conduct gives you the basic guidelines for
     understanding your responsibilities.

     While we each know that ethical behavior is important in its own right, it
     also is essential to our business success because it fosters our
     relationships with our customers, suppliers, communities in which we
     operate, and other stakeholders.

     We ask you to read our Code of Business Conduct, follow it, and continue to
     exhibit the Vision and Values and ethical conduct that has been a
     fundamental principle of our company since our beginning.

     Matthew Neville
     Chairman & Chief Executive Officer
     March 2002

                               V.2 November, 2002
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2.0  INTRODUCTION

At Cabot Microelectronics Corporation, the Chief Executive Officer and other
executive officers, along with CMC's Board of Directors, are responsible for
setting standards of business ethics and overseeing compliance with these
standards for CMC and its subsidiaries ("CMC"). It is the individual
responsibility of each employee (including directors and officers) of CMC and
its subsidiaries ("CMC employees") to comply with these standards.

As CMC employees, we frequently encounter a variety of ethical and legal
questions. We should decide these situations in ways that are consistent with
CMC's Vision and Values. CMC expects all employees to obey the law and to act
ethically. CMC's Code of Business Conduct provides general guidance for
resolving a variety of legal and ethical questions for CMC employees.

Because rapid changes in our business and industry present new ethical and legal
issues on an ongoing basis, no one set of guidelines should be considered the
definitive statement for all circumstances. If you have any questions about
interpreting or applying this Code of Business Conduct--or about guidelines and
procedures published by CMC or its subsidiaries or operating units --it is your
responsibility to consult your manager, the Human Resources Department or the
Office of the CMC General Counsel. A violation of any CMC guidelines or this
Code of Business Conduct can result in disciplinary action, including dismissal.

Each section of this Code of Business Conduct covers an area in which we have
responsibilities to CMC as employees:
          -    Personal conduct and protection of CMC's assets
          -    Obligations in conducting CMC's business with other people and
               organizations
          -    Conflicts of interest and other considerations affecting CMC
               that may arise from our own activities

Our responsibilities as CMC employees generally can be summarized as:
          -    Acting according to CMC's Vision and Values
          -    Acting honestly
          -    Treating others fairly
          -    Protecting CMC's physical and intellectual property
          -    Avoiding conflicts of interest
          -    Complying with laws

While CMC employees are expected to comply with all of the provisions of CMC's
Code of Business Conduct, certain sections of the Code will be more applicable
to certain of our employees, depending on their job responsibilities (for
example, Section 5 will be especially informative for those CMC employees whose
jobs involve working with our customers, suppliers or other outside
organizations, like research universities or laboratories).

3.0 YOU AND YOUR JOB AT CMC

3.1 Communications Channels

     If you know of an unlawful or unethical situation, you should immediately
     tell CMC whatever you know or have heard about it; you can do so in one of
     several ways. Contacting your manager is the best place to start, but you
     can also contact CMC's Human Resources Department, CMC counsel, including
     CMC's General Counsel, who has been designated CMC's Compliance Officer,
     CMC's Internal Audit Manager, or any other CMC manager. You may contact us
     in person, on the phone, through email, or in writing. In addition, you may
     call the CMC Ethics Line at 630/499-2702 (either direct or collect) or send
     an email to Ethics_Email@cabotcmp.com to report any concern you may have.
     You also may contact directly any member of our Board of Directors,
     including any member of our Board's Audit Committee. You may report your
     concern on an anonymous basis if you would like.

     CMC will promptly review your report of unlawful or unethical conduct, and
     CMC will not tolerate threats or acts of retaliation against you for
     notifying us of your concerns.

                               V.2 November, 2002
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3.2 Personal Conduct

     We should never take for granted CMC's reputation for integrity and
     business ethics - it's in each of our hands. To maintain that reputation,
     you must follow all of CMC's Code of Business Conduct and exercise good
     judgment in your decisions and actions.

     If CMC finds that your conduct on or off the job adversely affects your
     performance, that of other employees, or CMC's legitimate business
     interests, you can be subject to disciplinary measures, including
     dismissal.

3.3 Work Environment

     CMC strives to maintain a healthy, safe and productive work environment
     that is free from discrimination or harassment based on race, color,
     religion, sex, sexual orientation, age, national origin, disability, or
     other factors that are unrelated to CMC's legitimate business interests.
     CMC will not tolerate sexual advances, actions or comments or racial or
     religious slurs, jokes or any other comments or conduct in the workplace
     that creates, encourages or permits an offensive, intimidating or
     inappropriate work environment.

     If you believe that you are subject to such conduct, or have observed
     others subject to such conduct, you should tell CMC through any of the
     communication channels that you feel most comfortable in using - your
     manager, the Human Resources Department, CMC counsel, or any of the
     communications channels referenced above. Your complaint of such conduct
     will be reviewed promptly. Employees who are found to have engaged in
     harassment or discrimination, or to have misused their positions of
     authority in this regard, will be subject to disciplinary measures,
     including dismissal.

     Other conduct that is prohibited because of its adverse impact on the work
     environment includes: (1) threats; (2) violent behavior; (3) the possession
     of weapons of any type; (4) the use of recording devices, including
     videophones and Web cameras, for other than management approved purposes;
     and (5) the use, distribution, sale or possession of illegal drugs or any
     other controlled substance, except for approved medical purposes. In
     addition, employees should not be on CMC premises, in the CMC work
     environment or at CMC-sponsored events if they are under the influence of
     or affected by illegal drugs, controlled substances used for nonmedical
     purposes or alcoholic beverages. Consumption of alcoholic beverages on CMC
     premises is only permitted, with prior management approval, for
     company-sponsored events.

3.4 Employee Privacy

     CMC and CMC authorized companies and individuals collect and maintain
     personal information that relates to your employment, including
     compensation, medical and benefit information. Because CMC is a global
     organization with business processes, management structures and technical
     systems that cross country borders, you acknowledge that, to run its
     business, CMC and its authorized companies may transfer personal
     information about you as a CMC employee to any of the countries where we do
     business. While not all countries have a data protection law, CMC has
     world-wide policies that are intended to protect information wherever it is
     stored or processed. For example, access to your personal information is
     restricted to people with a need to know. Personal information is normally
     released to outside parties only with employee approval, except that CMC
     and authorized companies and individuals may also release personal
     information to verify employment, to satisfy the legitimate requirements of
     a company or other entity which is considering acquiring some of CMC's
     business operations, or for appropriate investigatory, business or legal
     reasons. Employees who have access to personal information must ensure that
     the information is not disclosed in violation of CMC's policies or
     practices.

     Personal items, messages or information that you consider personal or
     private should not be placed or kept anywhere in the CMC workplace, such as
     in telephone systems, office systems, electronic files, desks, credenzas,
     lockers, or offices. CMC's management has the right to access those areas
     and any other CMC furnished facilities. Additionally, in order to protect
     its employees and assets, CMC may ask to search an employee's personal
     property, including briefcases and bags, located on or being removed from
     CMC locations; the employee is expected to cooperate with such a request.
     Employees, however, should not access another employee's workspace,
     including electronic files, without prior approval from management.

3.5 Protecting CMC's Assets

     CMC has a large variety of assets. Many are of great value to CMC's
     competitiveness and success as a business. They include our physical assets
     and our extremely valuable proprietary information, such as CMC's
     intellectual property and CMC's confidential information.

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     Protecting all of these assets is critical. Their loss, theft or misuse
     jeopardizes the future of CMC.

     You are personally responsible for protecting CMC's property entrusted to
     you and for helping to protect the company's assets in general. To do this,
     you should be aware of and understand CMC's security and information
     protection procedures. You should be alert to any situations or incidents
     that could lead to the loss, misuse or theft of company assets and
     property. You should report all such situations to your manager or the
     Office of the General Counsel as soon as they come to your attention.

     Let's review the types of assets you should be concerned about protecting,
     and your related responsibilities.

     3.5.1 Physical Assets

          CMC's physical assets, such as equipment, systems, facilities,
          corporate charge cards and supplies, must be used only for conducting
          CMC's business or for purposes authorized by management.

     3.5.2 Financial Assets

          CMC's financial assets and funds must be used properly, accurately,
          and only for conducting CMC's business. No undisclosed or unrecorded
          fund or asset of CMC may be established for any purpose. No entity,
          fund or asset of CMC may be created or maintained for any purpose that
          is not properly reflected in CMC's books and records. No payment on
          behalf of CMC may be approved or made with the intention,
          understanding or awareness that any part of such payment is to be used
          for any purpose other than that described by the documents supporting
          the payment.

     3.5.3 CMC Information and Communication Systems

          CMC's information and communication systems, including CMC connections
          to the Internet, are vital to CMC's business; you should only use them
          for appropriate purposes. You can use them for conducting CMC business
          or for other incidental purposes authorized by your management or by
          applicable CMC guidelines, such as those on Internet use. For example,
          it is inappropriate to use CMC systems to visit Internet sites that
          feature sexual content or that advocate intolerance of others. It is
          also inappropriate to use them in a manner that interferes with your
          productivity or the productivity of others. You are responsible to
          ensure that your use of CMC systems is appropriate; inappropriate use
          of our systems is a misuse of CMC assets.

     3.5.4 Proprietary Information

          CMC proprietary information is any information that is owned by CMC,
          including information in CMC databases. Much, but not all, of CMC
          proprietary information is confidential. It may also be subject to
          copyright, patent or other intellectual property or legal rights.
          Proprietary information includes such things as: CMC's technical,
          manufacturing or scientific information relating to current and future
          products, offerings, and research; formulas and formulations; work
          instructions; business or marketing plans or projections; earnings and
          other financial data; personnel information including organizational
          changes; and software.

          CMC's proprietary information is the result of the ideas and hard work
          of many of your fellow employees and of substantial investments by CMC
          in planning, research and development. This information, particularly
          CMC confidential information, gives CMC a competitive advantage in the
          marketplace, and CMC would be damaged if its competitors learned of
          it.

          The value of CMC's proprietary information is well known not only to
          CMC's competitors but also to others in the industry, such as security
          analysts, members of the press, and consultants. CMC would be harmed
          by unauthorized disclosures of its proprietary information to, or the
          unauthorized use of that information by, any of those people. For
          example, unauthorized disclosure of an unannounced CMC product can
          hurt us by giving competitors more time to match our product. Or,
          unauthorized disclosure of financial information or issues with
          particular suppliers or customers, whether positive or negative, can
          impact our stock and our responsibilities with respect to securities
          laws. Another example is unauthorized disclosure of an unannounced
          organizational or personnel change that can adversely affect employee
          morale and can interfere with our plans.

          As a CMC employee, you will have access to information that CMC
          considers proprietary. Given outside interest in CMC and the
          increasingly competitive nature of our industry, you might come into
          contact with someone who

                               V.2 November, 2002
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          is interested in acquiring CMC proprietary information. It is critical
          that you do not disclose or distribute that information except as
          authorized by CMC and that you follow all CMC safeguards for
          protecting that information.

     3.5.4.1 Inadvertent Disclosure

          You should be careful to avoid the inadvertent disclosure of
          proprietary information.

          To avoid inadvertent disclosure, never discuss with any unauthorized
          person proprietary information that CMC considers confidential or
          which CMC has not made public. Furthermore, you should not discuss
          such information even with authorized CMC employees if you are in the
          presence of others who are not authorized--for example, at a trade
          show reception or in a public area, such as an airplane, or when using
          a cellular or wireless telephone or an electronic bulletin board or
          database. You should also not discuss such information with family
          members or with friends, who might innocently or unintentionally pass
          the information on to someone else.

          Finally, keep in mind that a harmful disclosure may start with the
          smallest leak of bits of information. Fragments of information you
          disclose may be pieced together with fragments from other sources to
          form a fairly complete picture.

     3.5.4.2 Direct Requests for Information and Contacts with the Press,
     Analysts and Others

          CMC's business activities are monitored closely by reporters, industry
          consultants and securities analysts. You should not initiate contact
          with these individuals or groups or respond to their inquiries without
          authorization as follows:

            Reporters - CMC Chief Financial Officer
            Consultants - CMC Chief Financial Officer
            Securities Analysts - CMC Investor Relations

          Similarly, if you receive a request for information on CMC from an
          attorney, investigator, law enforcement official, or government
          official or agency, you should not respond to their inquiries and
          instead refer the request to CMC's General Counsel or Associate
          General Counsel - Intellectual Property.

          If you do not know what functional area a questioner should be
          referred to, ask your manager before responding.

     3.5.4.3 Using Proprietary Information

          Besides your obligation to protect CMC proprietary information from
          unauthorized disclosure or distribution, you are also required as an
          employee to use such information only in connection with CMC's
          business. This obligation applies whether or not you developed the
          information yourself, and it applies by law in virtually all countries
          in which CMC does business.

     3.5.5 CMC Intellectual Property Rights

          When you joined CMC or its predecessor in interest, or at the time we
          became an independent company, you were required to sign an agreement
          under which you, as an employee of CMC, assumed specific obligations
          relating to intellectual property as well as the treatment of
          confidential information. Among other things in the agreement, you
          assign to CMC all of your right, title, and interest in intellectual
          property you develop. The intellectual property you assign includes
          such things as ideas, inventions, computer programs and documents
          which relate to CMC's actual or anticipated business, research or
          development or that are suggested by, or result from, work or tasks
          you perform for, or on behalf of, CMC. Subject to the laws of each
          country, this obligation applies no matter where or when--at work or
          after hours--such intellectual property is created. You must report
          that intellectual property to CMC, and protect it like any other
          proprietary information of the company. However, if you believe that
          your idea, invention, computer program, or other material neither
          falls within the area of CMC's actual or anticipated business
          interests, nor resulted from, nor was suggested by, any of your work
          assignments at CMC, you should discuss it with CMC's Associate General
          Counsel - Intellectual Property. Throughout your employment with CMC,
          you should receive advice and direction from CMC's Associate General
          Counsel - Intellectual Property before taking any action with respect
          to an invention that may be patentable, and provide her with copies of
          any patent you have applied for or obtained outside of CMC.

                               V.2 November, 2002
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     3.5.6 Leaving CMC

          If you cease to be an employee of CMC for any reason, you must return
          all CMC property, including documents and media which contain CMC
          proprietary information, and you may not disclose or use CMC
          proprietary information, including CMC confidential information. Also,
          CMC's ownership of intellectual property that you created while you
          were a CMC employee continues after you leave the company.

     3.5.7 Legal Remedies

          Regrettably, there have been cases in which CMC's physical, financial
          or intellectual property assets have been wrongfully taken or misused,
          or employees or former employees have violated their agreements with
          CMC with respect to protecting our property or refraining from
          competing against CMC. In some of these instances, CMC has not limited
          its response to disciplinary action against offending employees or
          former employees, but has taken legal action as well. Also,
          individuals can be subject to prosecution for their actions by
          government authorities and convicted of crimes for their part in
          stealing CMC assets.

          CMC will continue to take every step necessary, including legal
          measures, to protect its assets.

3.6  Recording and Reporting Information

     You must record and report all information accurately and honestly.

     Every employee records information of some kind and submits it to the
     company. For example: an engineer fills out a product test report; a
     marketing representative reports orders; an accountant records revenues and
     costs; a scientist prepares a research report; a quality technician
     completes a time-card; and, a product line manager makes an employee
     benefit claim. Each employee must accurately and honestly fill in reports.

     One important report that many employees use is the expense account.
     Employees are entitled to reimbursement for reasonable expenses--but only
     if those expenses were actually incurred. To submit an expense account for
     meals not eaten, miles not driven, airline tickets not used or for any
     other expense not incurred is dishonest reporting and is prohibited.

     Under various laws, such as tax and securities laws, environmental laws, or
     the Foreign Corrupt Practices Act, CMC is required to maintain books and
     records reflecting CMC's transactions. It is essential that these books and
     records are accurate. Regardless of whether reporting is required by law,
     dishonest reporting within CMC, for example to CMC management or CMC
     auditors or during an internal investigation, or to organizations and
     people outside the company, is strictly prohibited. This includes not only
     reporting information inaccurately but also organizing it in a way that is
     intended to mislead or misinform those who receive it. Employees must
     ensure that they do not make false or misleading statements in external
     financial reports, environmental monitoring reports and other documents
     submitted to or maintained for government agencies. Dishonest reporting can
     lead to civil or even criminal liability for you or CMC. Employees who are
     found to have engaged in dishonest reporting, or to have misused their
     positions of authority in this regard, will be subject to disciplinary
     measures, including dismissal.

4.0 DEALING WITH OTHERS OUTSIDE OF CMC

4.1 Bribes, Gifts and Entertainment

     Gifts offered by employees of different companies vary widely. They can
     range from widely distributed advertising novelties of nominal value, which
     you may give or accept, to bribes, which you unquestionably may not give or
     accept.

     Gifts include not only material goods, but also services, promotional
     premiums and discounts.

     The following are CMC's guidelines on giving and receiving gifts and
     business amenities. Exceptions may be approved by an executive officer, but
     those exceptions must not be prohibited by law or known customer business
     practice.

                               V.2 November, 2002
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     4.1.1 Business Amenities

          With management approval, you may give or accept customary business
          amenities, such as meals and entertainment, provided the expenses
          involved are kept at a reasonable level and are not prohibited by law
          or known customer business practice. Suppliers, including CMC,
          frequently find it appropriate to provide education and briefings for
          their customers or suppliers. It is all right to provide or accept
          some services in connection with this type of activity, such as
          transportation, and food and lodging, if you have prior management
          approval.

     4.1.2 Receiving Gifts

          Neither you nor any member of your family may solicit or accept from a
          supplier or customer money or a gift that could influence or could
          reasonably give the appearance of influencing CMC's business
          relationship with that supplier or customer. However, unless CMC has
          specified to the contrary, you may accept promotional premiums and
          discounts offered by transportation companies, hotels, auto rental
          agencies and restaurants if they are based upon membership in bonus
          programs for individuals and are offered to travelers generally.
          Furthermore, you may accept a gift of nominal value, such as an
          advertising novelty, when it is customarily offered to others having a
          similar relationship with the customer or supplier. If you have any
          doubts about a particular situation, you should consult your manager.

          If you are offered a gift which has more than nominal value or which
          is not customarily offered to others, or money, or if either arrives
          at your home or office, tell your manager immediately. Appropriate
          arrangements will be made to return or dispose of what has been
          received, and the supplier or customer will be reminded of CMC's
          policy in this regard.

     4.1.3 Referral Fees

          When authorized by CMC, you may refer customers to third party
          vendors, such as CMC's distributors, transportation and shipping
          entities, or support organizations. However, CMC employees may not
          accept any fee, commission or other compensation for this activity
          from anyone.

     4.1.4 Giving Gifts

          You may not give money or any gift to an executive, official or
          employee (or related person) of any supplier, customer or any other
          organization if doing so would influence or could reasonably give the
          appearance of influencing the organization's relationship with CMC.
          You may, however, provide a gift of nominal value, such as a CMC
          advertising novelty, if it is not prohibited by law or the customer's,
          supplier's or other organization's known business practices.

     4.1.5 Relationships with Government Employees

          When we are dealing with government employees or those who act on the
          government's behalf, practices that are acceptable in the commercial
          business environment, such as providing education, transportation,
          meals, entertainment or other things of value, may be entirely
          unacceptable, and may even violate certain federal, state, local or
          foreign laws and regulations,. Therefore, you must be aware of, and
          adhere to, the relevant laws and regulations governing relations
          between government employees and business entities in every country
          where you conduct business. You should contact the CMC General Counsel
          for guidance.

          You must not give money or a gift to an official or an employee of a
          governmental entity if doing so could be reasonably construed as
          having any connection with CMC's business relationship. U.S. and
          foreign laws often prohibit such actions: for example, the Foreign
          Corrupt Practices Act (FCPA), a U.S. law, makes it a crime to pay
          money or to give anything of value to a foreign official to assist the
          company or another to obtain or retain business with the government,
          whether the improper payment or gift is made directly by a company or
          indirectly through someone acting for the company. Any proposed
          payment or gift to a foreign official, political party or candidate
          must have prior review and approval by the CMC General Counsel, even
          if such payment or gift is common in that country. Keep in mind that
          foreign officials, under the FCPA, can include executives and
          employees of government-owned corporations, such as universities, and
          other entities such as industrial parks. Always ask if you have some
          doubt regarding government ownership or participation.

                               V.2 November, 2002
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          In countries where local customs call for giving gifts to customers or
          others on special occasions, you may, with prior approval from
          management and the CMC General Counsel, present gifts that are lawful,
          appropriate, and of nominal value, provided the action cannot be seen
          as seeking special favor.

          Furthermore, certain legal or ethical restrictions may exist with
          respect to the hiring by CMC of current or former employees of the
          government or their family members. You should consult with the CMC
          General Counsel before any attempts, even preliminary discussions, are
          made to hire any such persons.

     4.1.6 Public Official and Campaign Visits, Speaking Engagements and
     Honoraria

          CMC encourages public officials to make non-partisan visits to CMC
          locations to better understand our company, products, programs and our
          views on public policy issues. However, political campaigning is not
          allowed on CMC property.

          Likewise, public officials, candidates and prominent former officials
          may request or be invited to speak at various CMC events. We generally
          do not pay honoraria or travel expenses since in many instances such a
          payment would not be lawful. You should review any matters in this
          area with CMC's Office of the General Counsel.

4.2 Complying with Laws

     CMC's policy is to comply with all laws and regulations that apply to its
     business. As you conduct CMC's business, you may encounter a variety of
     legal issues, particularly in the areas described below. If you have
     questions on specific laws or regulations, contact CMC's Office of the
     General Counsel.

     4.2.1 Competition

          Laws governing competition exist in most of the countries in which CMC
          does business. The purpose of competition laws, which also may be
          known as antitrust, monopoly, fair trade or cartel laws, is to prevent
          interference with the functioning of a competitive market system.
          While the purpose of such laws is primarily economic, their effect is
          often seen as going beyond consumer or customer welfare to protecting
          other values of society, including individual freedoms.

          Under these laws, companies may not enter into agreements with other
          companies, including their distributors and competitors, however
          informally, that unreasonably restrict the functioning of the
          competitive system, such as price fixing, or dividing customers or
          territories.

          Companies also may violate competition laws without acting jointly
          with other companies by, for example, illegally monopolizing or
          attempting to monopolize an industry or unlawfully abusing a dominant
          position through arrangements such as "tie-in", certain pricing, or
          exclusive dealing arrangements.

          CMC's policy is to comply fully with competition laws throughout the
          world. You can help by adhering to CMC's Code of Business Conduct and
          related policies and procedures, by being sensitive to legal concerns
          under competition laws, and by raising any such concerns with CMC's
          General Counsel.

     4.2.2 Export

          It is CMC's policy to comply with the export control laws and
          regulations of all countries in which we do business. When certain CMC
          products and technical data are exported, CMC may have to obtain an
          export authorization from the U.S. or appropriate foreign government.

          It is against the law to export without authorization or to facilitate
          the unauthorized export of CMC technology. Penalties for failure to
          comply with export laws and regulations are severe and can result in
          fines, loss of export privileges for our products and imprisonment. If
          you have questions on export-related issues, talk with your manager or
          the CMC General Counsel.

     4.2.3 Antiboycott

          U.S. law prohibits CMC and its subsidiaries and affiliates and their
          agents from complying with or supporting a foreign country's boycott
          of a country that is "friendly" to the United States. CMC is also
          required to report promptly to the U.S. Government any request to
          support a boycott or to furnish information concerning a boycott. A
          foreign country or an entity associated with the country could make
          such a request in writing, orally in

                               V.2 November, 2002
<PAGE>

          connection with a transaction or in a number of other ways. Examples
          of improper boycott requests are requests that we refuse to do
          business with a boycotted country, including its corporation and
          citizens, or with so-called blacklisted companies who do business with
          the boycotted country or that we provide information about activities
          in a boycotted country or implement letters of credit with boycott
          conditions. If you hear of a boycott or receive a request to support a
          boycott or to provide information related to a boycott, you should
          contact CMC's General Counsel.

     4.2.4 Import

          As an importer, CMC must comply with import regulations and
          requirements when engaging in international trade. Because of the
          continued globalization of CMC's business, there are many situations,
          some of them very subtle, in which your work may have import
          implications. For example, in addition to the obvious one in which you
          are importing raw materials, parts or products into the U.S. or
          another country, there may be import implications in activities, --
          such as development process activity requiring non-U.S. sourcing,
          customer activity requiring the shipment of products to another
          country, or the shipment of samples. In addition, experience has shown
          that designing parts and ensuring accuracy of inventory of parts will
          have import implications whenever those parts will cross international
          borders. You need to be aware of import regulations and requirements,
          especially if you are involved in importing. A failure to comply with
          the law can result in fines, penalties, imprisonment and/or a loss of
          import privileges. If you have questions about imports, contact your
          manager, Manager of Planning and Distribution, or the Office of the
          General Counsel.

     4.2.5 Safety, Health and the Environment

          CMC is committed to leadership in safety, health and environmental
          protection. Not only will we comply with all safety, health and
          environmental laws in the countries in which we operate, but if there
          is no law or if the law does not protect the safety and health of our
          employees and the environment, we will set and adhere to stringent
          standards of our own. Each of us must comply with safety, health and
          environmental laws and CMC's related policies.

          If you are involved with processes that affect the environment, such
          as measuring, recording or reporting discharges and emissions to the
          environment or handling hazardous wastes, you must be sure to comply
          with environmental regulations and permits. You must also maintain CMC
          standards and ensure that reports are accurate and complete.

          As an employee, you have a role to play in working in a manner that
          supports your own safety and health and that of others, as well as in
          protecting the environment. If you become aware of any violation of
          safety, health or environmental law or any action that may appear to
          conceal such a violation, you should immediately report the matter to
          your manager, CMC's Director, Safety, Health and Environment, or to
          CMC's General Counsel.

     4.2.6 Lobbying

          Any contact with government personnel for the purpose of influencing
          legislation or rule making, including how CMC operates in a particular
          country or locality, is considered lobbying. Some laws also define
          lobbying even more broadly to include our normal marketing activities.
          You are responsible for knowing and adhering to all the relevant
          lobbying laws and associated gift laws, if applicable, and for
          compliance with all reporting requirements.

          In general, any and all lobbying activity related to CMC is
          coordinated through CMC's General Counsel. You must obtain the prior
          approval of CMC's General Counsel to lobby or authorize anyone else
          (for example, a consultant or agent) to lobby on CMC's behalf.

     4.2.7 Disclosure Obligations

          The policy of CMC is to provide full, fair, accurate, timely and
          understandable disclosure in reports and documents that CMC submits to
          or files with the Securities and Exchange Commission, other regulatory
          bodies, and in other public communications made by us. The accuracy
          and timeliness of public disclosure can have an impact on the
          investment decisions of hundreds of investors. CMC's executive,
          financial, and accounting officers are responsible for assuring that
          the information we release to the public is free from material
          misstatements, omissions, or inaccuracies, but you must also do your
          part. Your first responsibility is to assure that all of our business
          is conducted in accordance with our Vision and Values and with this
          Code of Business Conduct . If you become aware of any facts or
          circumstances that cause you to believe that any information that has
          been or will be released to the public contains material
          misstatements, omissions, or inaccuracies, you are encouraged and

                               V.2 November, 2002
<PAGE>

          expected to contact CMC's General Counsel, CEO, or CFO to discuss the
          matter. See Section 3.1. Communications Channels, for a complete
          description of the channels open to you to express any concerns about
          this or other matters covered by this Code or otherwise.

5.0 FURTHER GUIDANCE REGARDING WORKING WITH CUSTOMERS, SUPPLIERS AND OTHER
OUTSIDE PARTIES

You must be ethical and lawful in all of your business dealings whether you are
selling, buying or representing CMC in any other capacity.

Today CMC is engaged in a variety of business relationships with other companies
and organizations, including customers, suppliers, distributors, and
co-suppliers/original equipment manufacturers. No matter what type of
organization you are dealing with or what its relationship is to CMC, you should
always observe the following general standards.

5.1  Avoiding Misrepresentation

     Never make misrepresentations or dishonest statements to anyone. If you
     believe that the other person may have misunderstood you, promptly correct
     any misunderstanding. Honesty based on clear communication is integral to
     ethical behavior. The resulting trustworthiness is essential to forming and
     maintaining sound, lasting relationships.

5.2  Dealing with Suppliers

     In deciding among competing suppliers, we weigh the facts impartially to
     determine the best supplier. You should do so whether you are in a
     purchasing job, a local office or any other part of our business, and
     without regard to the type or volume of transaction.

     Whether or not you are in a position to influence decisions involving the
     evaluation or selection of suppliers, you must not exert or attempt to
     exert influence to obtain "special treatment" for a particular supplier.
     Even to appear to do so can undermine the integrity of our established
     procedures. CMC uses an evaluation process to select the best suppliers.
     Prices and other information submitted by suppliers and our evaluation of
     that information are confidential to CMC. Employees and former employees
     may not use any of this information outside of CMC without written
     permission from management. It is essential that suppliers competing for
     our business have confidence in the integrity of not only our selection
     process but also our working relationship with them once they have been
     selected as a supplier.

     5.2.1 Avoiding Reciprocal Dealing

          Seeking reciprocity is contrary to CMC policy and may also be
          unlawful. You should not tell a prospective supplier that your
          decision to buy its goods or services is conditioned on the supplier's
          agreement to buy CMC products or services.

          This does not mean that a customer of CMC cannot be a supplier to CMC
          or that CMC can never consider its other relationships with the
          supplier when it is evaluating the supplier. It simply means that
          CMC's decision to buy from a supplier must be made independently from
          that supplier's decision to buy from CMC.

5.3  Competing in the Field

     CMC will compete vigorously for business. If circumstances require modified
     pricing or service or support terms, the modifications must be specifically
     approved by the appropriate level of management. Never extend any modified
     contract terms to any customer without prior authorization.

     If you are performing a marketing or customer service or support activity,
     CMC expects you to compete not just vigorously and effectively, but
     lawfully and ethically as well.

     5.3.1 Working with Customers and Avoiding False and Misleading Statements
     about Competitors

          It is CMC's policy to sell our products and offerings on their merits,
          enabling our customers to make their choices in an unrestrained
          manner, based on accurate information. Never force, or suggest that it
          is a requirement that our customers take other CMC products or
          offerings as a condition of delivery of the desired product or
          offering. In addition, we will not sell a product on the condition
          that the customer will not use or purchase the products of a
          particular competitor. Also, false or misleading statements and
          innuendoes about competitors, their products or

                               V.2 November, 2002
<PAGE>

          their offerings are improper. All of this type of conduct only invites
          disrespect from customers and complaints from competitors.

          Be sure that all comparisons to competitors and their products and
          offerings are substantiated, and that they are complete, accurate and
          not misleading whenever they are made. Certain countries prohibit
          comparative advertising. Advice on this subject is available from the
          Office of the General Counsel.

5.4  Relationships with Other Organizations

     Frequently, other organizations have multiple relationships with CMC. For
     example, a co-supplier/original equipment manufacturer may be both an end
     user and a competitor. Another organization may be a CMC supplier and
     Customer at the same time, or a supplier to us in one aspect of its
     business and a competitor in another. Still another organization may be an
     agent for our customer (for example, a third party chemical manager), and
     also a competitor to us. In any dealings, it is important that you
     understand each one of the relationships involved, and act accordingly.

     5.4.1 Complementary Third Parties

          CMC has various relationships with complementary third parties, such
          as distributors and sales representatives, to help CMC market and
          support CMC's products and offerings, and those relationships are
          governed by the arrangements we have with those third parties as well
          as relevant law in many countries. If your responsibilities bring you
          into contact with these third parties, and you have questions about
          how to work with them, please contact the Office of the General
          Counsel.

     5.4.2 Business Contacts with Competitors

          It is important to recognize when a company you are dealing with, as a
          supplier, customer, or agent to a customer of ours, is also a CMC
          competitor. Such relationships require extra care. It is inevitable
          that you and competitors will, from time to time, meet, talk and
          attend the same industry or association meetings. Many of these
          contacts are perfectly acceptable as long as you follow established
          procedures. Acceptable contacts include: sales to other companies in
          our industry and purchases from them; approved participation in joint
          meetings or interactions with mutual customers; and attendance at
          business shows, standards organizations and trade associations. But
          even these contacts require caution. If in doubt, you should seek
          advice from the Office of the General Counsel.

     5.4.3 Prohibitions

          In all contacts with competitors, do not discuss pricing policy,
          contract terms, costs, inventories, marketing and product plans,
          market surveys and studies, production plans and capabilities,
          arrangements with, or identity of, suppliers --and, of course, any
          other proprietary or confidential information.

          Discussion of these subjects or collaboration on them with competitors
          can be illegal. If a competitor raises any of them, even lightly or
          with apparent innocence, you should object, stop the conversation
          immediately, and tell the competitor that under no circumstances will
          you discuss these matters. If necessary, you should leave the meeting.

          In summary, disassociate yourself and CMC from participation in any
          possibly illegal activity with competitors; confine your communication
          to what is clearly legal and proper. Finally, report immediately to
          the CMC General Counsel any incident involving a prohibited subject.

5.5  Acquiring and Using Information about Others

     In the normal course of business, it is not unusual to acquire information
     about many other organizations, including competitors. Doing so is a normal
     business activity and is not unethical in itself. In fact, CMC quite
     properly gathers this kind of information for such purposes as evaluating
     suppliers and creditworthiness. We also collect information on competitors
     from a variety of legitimate sources to evaluate the relative merits of
     their products, services, and marketing methods. This activity is proper
     and necessary in a competitive system.

     There are, however, limits to the ways that information should be acquired
     and used, especially information about competitors. No company should use
     improper means to acquire a competitor's trade secrets or other
     confidential information. Illegal practices such as trespassing, burglary,
     wiretapping, bribery and stealing are obviously wrong; so

                               V.2 November, 2002
<PAGE>

     is attempting to acquire a competitor's confidential information from the
     competitor's employees or CMC's customers. CMC will not tolerate any form
     of questionable intelligence-gathering.

     Information about other companies, especially that of our customers and
     suppliers, should be treated with sensitivity and discretion. Such
     information is often about individuals. Other companies are rightly
     concerned about their proprietary information, reputations and the privacy
     of their people.

     In addition, individuals, such as the employees of customers and suppliers,
     are also concerned about their privacy, especially now that Internet use
     has become so widespread. CMC remains committed to protecting the privacy
     of personal information of others. CMC will only collect, use, process, and
     disclose an individual's personal information in accordance with our
     privacy policies and guidelines.

     When working with sensitive information about other companies and
     individuals, you should use that information in the proper context and make
     it available only to other CMC employees with a legitimate need to know. In
     presenting such information, you should disclose the identity of the
     organization or individuals only if necessary. If disclosure is not
     necessary, you should present the information in the aggregate or by some
     other means.

5.6  Information Owned by Others

     Like CMC, other organizations and some individuals have intellectual
     property, including confidential information, they want to protect. They
     are sometimes willing to disclose and allow others to use their proprietary
     information for a particular purpose. If you receive another party's
     proprietary information, you must proceed with caution to prevent any
     accusations that CMC misappropriated or misused the information.

     5.6.1 Receiving Information that May Be Confidential or Have Restrictions
     on Its Use

          To avoid the risk of CMC being accused of misappropriating or misusing
          someone's confidential or restricted information, there are certain
          steps you must take before receiving such information. The receipt of
          confidential or restricted information (whether oral, visual or
          written) must not take place until the terms of its use have been
          formally agreed to by CMC and the other party in a written agreement
          approved by CMC's Associate General Counsel - Intellectual Property.
          Once another party's confidential or restricted information is
          properly in your hands, you must not use, copy, distribute or disclose
          that information unless you do so in accordance with the terms of the
          agreement.

          In any case, do not take the status of information for granted. If you
          have information in your possession that you believe may be
          confidential to a third party or may have restrictions on its use, you
          should consult immediately with CMC's Associate General Counsel -
          Intellectual Property.

     5.6.2 Acquiring Software

          Special care should be taken in acquiring software from others. As
          intellectual property, software is protected by copyright, and may
          also be protected by patent or trade secret laws. Software includes
          computer programs in "beta" or finished form, databases and related
          documentation. The software may be on CD-ROMs or diskettes or it may
          reside on electronic online bulletin boards or databases. Before you
          accept software, access software or data on a network, or accept a
          license agreement, you must review the matter with CMC's Associate
          General Counsel - Intellectual Property. The terms and conditions of
          any license agreement--such as provisions not to copy or distribute
          programs--must also be strictly followed. If you acquire software for
          your personally owned equipment, you should not copy any part of such
          software in any work you do for CMC or place such software on any
          CMC-owned computer system. This includes any copies of software which
          reside on any electronic online bulletin boards or databases.

          It is your responsibility to make sure that all third party software
          you are using is appropriately licensed and that you use it only in
          accordance with the terms of its license.

     5.7 Using Trademarks

          CMC and many other companies have trademarks--words, names, symbols or
          devices--that are used to identify and distinguish the company's
          products. Two of CMC's most prominent trademarks are our logo and
          name, Cabot Microelectronics. Some trademarks are registered in the
          U.S. Patent and Trademark Office; others are not. For example, "iCue"
          is a registered trademark of CMC, indicated by an "(R)". There are
          other trademarks of

                               V.2 November, 2002
<PAGE>

          CMC that are not yet registered, for example, "LUSTRA". Its trademark
          status is indicated by "TM". There may be additional or different
          trademark designations outside of the U.S.

          In all countries, it is important that you properly acknowledge and
          use CMC trademarks and the trademarks of other companies.
          Specifically, you should always ensure that the trademark is spelled
          correctly and written the way the owner of the trademark writes it.
          You should not use the trademark as a generic name and should use the
          trademark only as an adjective. Also, you should indicate the first
          time the trademark is mentioned in a publication that it is a
          trademark of CMC or of the company who owns it.

          You should consult CMC's Associate General Counsel - Intellectual
          Property if you have questions on the proper use of a trademark.

6.0 YOUR OWN ACTIVITIES

6.1 Conflicts of Interest

     Your private life is very much your own. Still, a conflict of interest may
     arise if you engage in any activities or advance any personal interests, at
     the expense of CMC's interests. It's up to you to avoid situations in which
     your loyalty may become divided. Each individual's situation is different,
     and in evaluating your own, you will have to consider many factors. The
     most common types of conflicts are addressed here to help you make informed
     decisions. You should consult with CMC's General Counsel if you have any
     questions about these matters.

     6.1.1 Assisting a Competitor or Other Organizations

          An obvious conflict of interest is providing assistance to an
          organization that markets products and offerings in competition with
          CMC's current or potential products or offerings. You may not work for
          such an organization in any capacity, such as an employee, a
          consultant or as a member of its board of directors; you may not hold
          more than a nominal financial interest in such an organization if it
          is publicly traded, and not hold any interest if it is privately held.
          Such activities are prohibited because they could divide your loyalty
          between CMC and that organization.

          In addition, you may not serve as a member of the board of directors
          of any for-profit entity, whether publicly or privately held, without
          prior approval from the CMC General Counsel.

     6.1.2 Competing against CMC

          Employees should be careful to avoid activities that conflict with
          CMC's business interests.

          Obviously, you may not commercially market or develop products or
          services in competition with CMC's current or potential products or
          offerings. Such activities are "commercial" if you receive direct or
          indirect remuneration of any kind. In addition, certain non-commercial
          activity, such as research collaborations with universities or
          consortiums, also might conflict with CMC's business interests.

          Because CMC is expanding into new lines of business and new areas of
          interest, the company will redraw lines of acceptable activity on an
          ongoing basis. It is unlikely that you will find definitive answers to
          many of your questions regarding the boundaries of acceptable activity
          in published guidelines. It is therefore your responsibility to
          consult with your management or the Office of the General Counsel to
          determine whether your planned activity will compete with any of CMC's
          actual or potential businesses. This should be done before you pursue
          any activity that might create a conflict of interest or the
          appearance of a conflict of interest with CMC.

     6.1.3 Supplying to or Other Relationships with CMC

          Unless approved in advance by an executive officer and CMC's General
          Counsel, you may not be a supplier of any kind of product or services
          to CMC, represent a supplier to CMC, work for a supplier to CMC, hold
          more than a nominal financial interest in a supplier, or be a member
          of its board of directors while you are an employee of CMC. In
          addition, you may not accept money or benefits of any kind for any
          advice or services you may provide to a supplier in connection with
          its business with CMC. These same prohibitions also apply to your
          dealings with any entity with whom CMC does business.

                               V.2 November, 2002
<PAGE>

     6.1.4 Other Personal Financial Interests

          In addition to the restrictions discussed above, you should not have
          any financial interest in any organization with whom CMC does business
          or competes if that interest would give you or would appear to give
          you a conflict of interest with CMC. Such organizations include
          suppliers, competitors, customers, distributors and
          co-suppliers/original equipment manufacturers. You should consult with
          CMC's General Counsel if you have any questions remaining after
          considering the following:

          6.1.4.1 Publicly Traded Securities

               To determine whether an improper interest exists, ask yourself
               the following questions:
               -    What is the extent of the competition or the nature of the
                    relationship between CMC and the other company?
               -    If the other company is in more than one line of business,
                    how significant is the part that competes with or supplies
                    CMC?
               -    What is the size of my investment in relation to my salary
                    and other family income, including income from other
                    investments?
               -    Is it significant enough to cause me to take some action as
                    a CMC employee to protect or enhance my investment?
               -    Given the nature of my job in CMC, could my actions as a CMC
                    employee affect the value of my investment in the other
                    company (for example, do you have anything to do, either
                    directly or indirectly, in deciding whether CMC does
                    business with that company)?
               -    Could my actions significantly enhance my investment, even
                    if it is a relatively modest one?

               A financial interest is improper if your job, the amount of your
               investment, or the particular company in which you invested
               could--when viewed objectively by another person--influence your
               actions as a CMC employee.

               Additionally, from time to time, an existing or prospective CMC
               supplier, distributor or customer may offer stock options or
               other securities to a select small group of investors in
               connection with the company's initial public offering. You should
               not accept or buy any of that company's securities in such a
               situation without receiving prior approval from CMC's General
               Counsel.

               You should not evade these guidelines on investments by acting
               indirectly through anyone else.

          6.1.4.2 Privately Held Organizations

               Investments in privately (sometimes referred to as "closely")
               held organizations--typically, privately held corporations,
               partnerships or even sole proprietorships--raise additional
               concerns over those in publicly traded companies because of the
               closer ties of investors to most privately held organizations.
               For example, there are generally relatively few investors or
               owners of such companies, giving each a greater stake in
               ownership; the investors often have a chance to participate in
               the company's day-to-day operations; and the investors may be
               perceived to be closely identified with the company.

               This relatively close relationship may give the appearance to
               competitors of the privately held organization that it derives
               some benefit from CMC. Such a relationship may also give the
               appearance to CMC employees that the investing employee is using
               CMC's time, facilities or confidential information for the
               benefit of the privately held company. For these reasons,
               employees may not make any investment in a privately held
               organization that is a competitor, supplier, distributor,
               customer or other organization with whom CMC does business.

6.2 Using Inside Information and Insider Trading

     In the course of your employment with CMC, you may become aware of
     information about CMC or other companies that has not been made public. The
     use of such nonpublic or "inside" information about CMC or another company
     for your financial or other benefit not only is unethical, but also may be
     a violation of law. U.S. law makes it unlawful for any person who has
     "material" nonpublic information about a company to trade the stock or
     other securities of the company or to disclose such information to others
     who may trade. Violation of such laws may result in civil and criminal
     penalties, including fines and jail sentences. CMC will not tolerate the
     improper use of inside information. These prohibitions also apply outside
     the U.S.

                               V.2 November, 2002
<PAGE>

     Material inside information is information which is not available to the
     general public and which could influence a reasonable investor to buy, sell
     or hold stock or securities. While it is not possible to identify in
     advance all information that could be viewed as material inside
     information, some examples might include nonpublic information about: CMC's
     financial performance including earnings and actions related to its stock;
     acquisitions or other business combinations; divestitures; major new
     product announcements; significant advances in research; significant
     contracts or the loss of them; and, other significant activities affecting
     CMC. Here are some examples of how you can avoid the improper use of inside
     information:

          -    If you know that CMC is considering an alliance or is about to
               announce a new product or make a purchasing decision that could
               affect the price of the stock of a CMC supplier or other company,
               you should not buy or sell the stock of that company until after
               the information becomes public.
          -    Similarly, if you know that CMC is about to make an announcement
               that could affect the price of its own stock, you should not buy
               or sell CMC stock on the open market until after the
               announcement.
          -    You should not buy or sell the stock of a customer or other
               company with whom CMC does business based on any inside
               information you have about that company.
          -    If you have nonpublic information that CMC is about to build a
               new facility or expand an existing facility, you should not
               invest in land or in any business near the new site.
          -    You should not disclose inside information to CMC employees who
               do not have a business need to know or to anyone outside of CMC.

     CMC's directors, officers, and other key employees are also subject to
     additional responsibilities and guidelines with respect to trading in CMC's
     stock, such as a prohibition on trading during quarterly "blackout"
     periods.

     As with investments, you should not evade these guidelines by acting
     through anyone else or by giving inside information to others for their use
     even if you will not financially benefit from it.

     If you have any doubt about what you can or cannot do in this area, you
     should consult with CMC's General Counsel.

6.3  Using CMC's Time and Assets

     You may not perform non-CMC work or solicit such business on CMC premises
     or while working on CMC time, including time you are given with pay to
     handle personal matters. Also, you are not permitted to use CMC assets,
     including equipment, information systems, telephones, materials, resources
     or proprietary information for any outside work.

6.4  Public Service

     CMC encourages employees to be active in the civic life of their
     communities. However, such service may, at times, place you in a situation
     that poses a conflict of interest with CMC. As a board or committee member,
     you may, for example, be confronted with a decision involving CMC. It might
     be a decision by a board of tax assessors or a zoning board that affects
     CMC property. In such circumstances, your interest in CMC and your
     obligation to the civic organization might pull you in opposite directions.
     The law may require you to abstain, depending on your position in CMC and
     whether you stand to gain personally from the decision. On the other hand,
     there may be circumstances in which the law does not permit you to abstain.
     While you are in the best position to make the decision and bear the
     responsibility for the decision, before making your decision, you should
     get advice from the civic organization's lawyer and from the Office of the
     General Counsel. In order to protect CMC from embarrassment or other
     issues, whether or not you finally abstain, you should make it clear that
     you are a CMC employee and thereby head off any charges of trying to
     conceal your association with CMC. If you decide to abstain, state clearly
     that you are doing so because there would be a conflict of interest--or the
     appearance of one--if you did not.

6.5  Participation in Political Life

     CMC will not make contributions or payments or otherwise give any
     endorsement of support which would be considered a contribution directly or
     indirectly to political parties or candidates, including through
     intermediary organizations, such as political action committees or campaign
     funds. For example, CMC will not purchase tickets or pay fees for you or
     anyone else to attend any event where any portion of the funds will be used
     for election campaigns. In many countries, political contributions by
     corporations are illegal. CMC will not make such contributions, even in
     countries where they are legal. Also, the company will not provide any
     other form of support that may be considered a contribution.

     You must not make any political contribution as a representative of CMC.
     You may not request reimbursement from CMC, nor will CMC reimburse you, for
     any personal contributions you make. In addition, you should recognize that

                               V.2 November, 2002
<PAGE>

     your work time or use of CMC assets is the equivalent of such a
     contribution. Therefore, you will not be paid by CMC for any time spent
     running for public office, serving as an elected official or campaigning
     for a political candidate, unless required by law. You can, however, take
     reasonable time off without pay for such activities if your CMC duties
     permit the time off and it is approved by your manager. You also may use
     vacation time for political activity.

     6.5.1 Speaking Out

          When you speak out on public issues, make sure that you do so as an
          individual. Don't give the appearance that you are speaking or acting
          on CMC's behalf.

6.6  Someone Close to You Working in the Industry

     With the growth in two-career families and the expansion of our industry,
     you may find yourself in a situation where your spouse, another member of
     your immediate family or someone else you are close to is a competitor or
     supplier of CMC or is employed by one. While everyone is entitled to choose
     and pursue a career, such situations call for extra sensitivity to
     security, confidentiality and conflicts of interest. The closeness of the
     relationship might lead you to inadvertently compromise CMC's interests.

     There are several factors to consider in assessing such a situation. Among
     them are the relationship between CMC and the other company, the nature of
     your responsibilities as a CMC employee and those of the person close to
     you, and the access each of you has to your respective employer's
     confidential information.

     If you have any questions about your situation, you should review it with
     your manager to assess the nature and extent of any concern and how it can
     be resolved. Frequently, any risk to CMC's interests is sufficiently remote
     that your manager need only remind you to guard against inadvertently
     disclosing CMC confidential information. However, in some instances, a
     change in the job responsibilities of one of the people involved may be
     necessary.

7.0 SOME ADDITIONAL GUIDANCE

As already stated, while this Code of Business Conduct provides you with basic
guidelines for performing your responsibilities as a CMC employee in a lawful
and ethical way and in conjunction with CMC's Vision and Values, it cannot serve
as a definitive statement for each situation that you may encounter as a CMC
employee. If you are in doubt about a particular business conduct situation, you
might ask yourself the following questions:

          -    Is it legal?
          -    Does it violate CMC's policy?
          -    Is it consistent with CMC's Vision and Values?
          -    Is it fair and just? How does it make me feel about myself?
          -    What would my family think about it?
          -    How would it look in a newspaper article?
          -    Will I sleep soundly tonight?
          -    What would I tell a child to do?

If you are unsure about what to do, ask questions - contact your manager, a more
senior-level manager, the Human Resources Department or the Office of the
General Counsel.

To keep pace with the complexity and change that is an ongoing part of our
business and industry, we will maintain this Code of Business Conduct online and
update it on an ongoing basis as necessary. Employees also need to comply with
CMC's employee policies and procedures, and employees who work with particular
matters - for example, safety, health and environment, human resources, finance,
export/import - also may have additional guidelines to follow.

Any exceptions to CMC's Code of Business Conduct for CMC employees other than
Directors or Executive Officers must be specifically approved by CMC's Chief
Compliance Officer, who is CMC's General Counsel; any exceptions for Directors
or Executive Officers must be specifically approved by the Board of Directors of
CMC.

                               V.2 November, 2002

<PAGE>
                     CODE OF BUSINESS CONDUCT CERTIFICATION

I acknowledge that I have received and will comply with Cabot Microelectronics
Corporation's Code of Business Conduct. I understand that if I have questions
related to the Code of Business Conduct, or become aware of any violations of
it, I need to discuss them promptly with my manager, any other CMC manager, the
Human Resources Department, CMC counsel, including CMC's General Counsel, who is
CMC's Compliance Officer, or CMC's Internal Audit Manager, call the Ethics Line
at 630/499-2702, send an email to Ethics_Email@cabotcmp.com, or contact any
member of CMC's Board of Directors, including any member of the Audit Committee
of the Board.

     ---------------------------------------------------------------------------
     Signature

     ---------------------------------------------------------------------------
     Name

     ---------------------------------------------------------------------------
     Date

                               V.2 November, 2002<PAGE>

                                                                   EXHIBIT 10.11

                          INGLES MARKETS, INCORPORATED
                         INVESTMENT/PROFIT SHARING PLAN

         THIS INDENTURE is made on the 25th day of September, 2002, by INGLES
MARKETS, INCORPORATED (hereinafter called the "Primary Sponsor") and MILKCO,
INC., an Affiliate of the Primary Sponsor, corporations duly organized and
existing under the laws of the State of North Carolina.

                                  INTRODUCTION

         The Primary Sponsor established the Ingles Markets, Incorporated
Investment/Profit Sharing Plan (the "Plan") by indenture dated September 25,
1972, and the Plan was last restated in its entirety by indenture dated February
2, 1994.

         The Primary Sponsor now wishes to amend and restate the Plan primarily
to comply with and make changes permitted by the provisions of the Uniformed
Service Employees Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the
Community Renewal Tax Relief Act of 2000, to amend the Plan to the extent
currently possible to comply with the provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001, and to incorporate into the Plan the
provisions relating to the merger into the Plan of the Ingles Distribution
Division Savings and Retirement Plan (the "Distribution Division Plan") that was
effective as of September 1, 2000.

         The Plan is intended to be a profit sharing plan within the meaning of
Treasury Regulations Section 1.401-1(b)(1)(ii) and also contains a cash or
deferred arrangement as described in Section 401(k) of the Internal Revenue Code
of 1986.

         The provisions of the Plan, as amended and restated herein, shall apply
to Plan Years beginning after September 27, 1997, except to the extent the
provisions are required to apply at an earlier date to comply with applicable
law.

        NOW, THEREFORE, the Primary Sponsor does hereby amend and restate the
Plan in its entirety, generally effective as of September 28, 1997, except as
otherwise provided herein, to read as follows:

<PAGE>

                          INGLES MARKETS, INCORPORATED
                         INVESTMENT/PROFIT SHARING PLAN

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----

<S>          <C>                                                                          <C>
ARTICLE 1    DEFINITIONS....................................................................1

ARTICLE 2    ELIGIBILITY...................................................................13

ARTICLE 3    CONTRIBUTIONS.................................................................13

ARTICLE 4    INDIVIDUAL FUNDS AND INVESTMENT OF TRUST ASSETS...............................17

ARTICLE 5    PLAN LOANS....................................................................19

ARTICLE 6    WITHDRAWALS DURING EMPLOYMENT.................................................24

ARTICLE 7    PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT..............................25

ARTICLE 8    PAYMENT OF BENEFITS ON RETIREMENT OR DISABILITY...............................28

ARTICLE 9    DEATH BENEFITS................................................................28

ARTICLE 10   GENERAL RULES ON DISTRIBUTIONS................................................28

ARTICLE 11   ADMINISTRATION OF THE PLAN....................................................35

ARTICLE 12   CLAIM REVIEW PROCEDURE........................................................37

ARTICLE 13   ANTI-ALIENATION, INCOMPETENT DISTRIBUTEE & UNCLAIMED PAYMENTS.................40

ARTICLE 14   PROHIBITION AGAINST DIVERSION.................................................41

ARTICLE 15   LIMITATION OF RIGHTS..........................................................41

ARTICLE 16   AMENDMENT TO OR TERMINATION OF THE PLAN AND THE TRUST.........................41

ARTICLE 17   ADOPTION OF PLAN BY AFFILIATES................................................43

ARTICLE 18   QUALIFICATION AND RETURN OF CONTRIBUTIONS.....................................43

ARTICLE 19   INCORPORATION OF SPECIAL LIMITATIONS..........................................44

APPENDIX A     LIMITATION ON ALLOCATIONS....................................................1

APPENDIX B     TOP-HEAVY PROVISIONS.........................................................1

APPENDIX C     SPECIAL NONDISCRIMINATION RULES..............................................1
</TABLE>

<PAGE>

                                    ARTICLE 1
                                   DEFINITIONS

         Wherever used herein, the masculine pronoun shall be deemed to include
the feminine, and the singular to include the plural, unless the context clearly
indicates otherwise and the following words and phrases shall, when used herein,
have the meanings set forth below:

         1.1      "Account" means a Participant's aggregate balance in the
following accounts, as adjusted pursuant to the Plan as of any given date:

                  (a)      "Employee 401(k) Contribution Account," which shall
         reflect a Participant's interest in contributions made by a Plan
         Sponsor under Section 3.1.

                  (b)      "Employer Match Account," which shall reflect a
         Participant's interest in Matching Contributions made by a Plan Sponsor
         under Section 3.2.

                  (c)      "Employer Profit Sharing Account," which shall
         reflect a Participant's interest in Profit Sharing Contributions made
         by a Plan Sponsor under Section 3.3 and forfeitures of Profit Sharing
         Contributions allocated under Section 3.5.

                  (d)      "Rollover Account," which shall reflect a
         Participant's interest in Rollover Amounts contributed to the Plan by
         the Participant.

                  (e)      "qmac/qnec Account," which shall reflect a
         Participant's interest in Qualified Matching Contributions and/or
         Qualified Nonelective Contributions made by a Plan Sponsor pursuant to
         Appendix C.

                  (f)      "Prior Plan Account," which shall reflect a
         Participant's interest in amounts transferred into the Plan from the
         Distribution Division Plan. The "Prior Plan Account" shall consist of
         the following sub-accounts: the "Prior Plan Employee Contribution
         Subaccount," the "Prior Rollover Subaccount," the "Prior Plan Company
         Match Subaccount," the "Prior Plan Profit Sharing Subaccount," and the
         "Prior Plan QMAC/QNEC Subaccount."

In addition, the Plan Administrator shall allocate the interest of a Participant
in any amounts transferred to the Plan in a trust-to-trust transfer (other than
Rollover Amounts) or pursuant to the merger of another tax-qualified retirement
plan with the Plan among the above accounts as the Plan Administrator determines
best reflects the interest of the Participant.

         1.2      "Affiliate" means:

                  (a)      any corporation which is a member of the same
         controlled group of corporations (within the meaning of Code Section
         414(b)) as is a Plan Sponsor,

                  (b)      any other trade or business (whether or not
         incorporated) under common control (within the meaning of Code Section
         414(c)) with a Plan Sponsor,

<PAGE>

                  (c)      any other corporation, partnership or other
         organization which is a member of an affiliated service group (within
         the meaning of Code Section 414(m)) with a Plan Sponsor, and

                  (d)      any other entity required to be aggregated with a
         Plan Sponsor pursuant to regulations under Code Section 414(o).

         1.3      "Alternate Payee" means any spouse, former spouse, child or
other dependent of a Participant who is recognized by a domestic relations order
as having a right to receive all, or a portion of, the benefits payable under
the Plan with respect to such Participant.

         1.4      "Annual Compensation Limit" means $150,000, which amount shall
be adjusted in subsequent Plan Years based on changes in the cost of living as
announced by the Secretary of the Treasury. For the short Plan Year beginning
September 29, 2002 and ending on December 31, 2002, the "Annual Compensation
Limit" shall be an amount equal to $50,556 ($200,000 multiplied by a fraction,
the numerator of which is the number of months in such Plan Year (3.0333) and
the denominator of which is 12). For the Plan Year beginning on January 1, 2003,
the "Annual Compensation Limit" means $200,000, which amount may be adjusted for
each subsequent Plan Year based on changes in the cost of living as announced by
the Secretary of Treasury.

         1.5      "Beneficiary"

                  (a)      A Participant's Beneficiary is the person or trust
         that a Participant designated most recently in writing to the Plan
         Administrator on such form and in such manner as is reasonably required
         by the Plan Administrator. Except as outlined in Subsection (c) below,
         a Participant may change his Beneficiary at any time by providing a new
         written election to the Plan Administrator on such form and in such
         manner as is reasonably required by the Plan Administrator.

                  (b)      If the Participant has failed to make a designation,
         no person designated is alive, no trust has been established, or no
         Beneficiary or successor Beneficiary has been designated who is alive,
         the term "Beneficiary" means:

                           (1)      the Participant's spouse; or

                           (2)      if no spouse is alive, the deceased
                  Participant's estate.

                  (c)      Nonspouse Beneficiaries

                           (1)      Notwithstanding the foregoing, the spouse of
                  a married Participant shall be his Beneficiary unless that
                  spouse has consented in writing to the designation by the
                  Participant of some other person or trust and the spouse's
                  consent acknowledges the effect of the designation and is
                  witnessed by a notary public or a Plan representative.

                                       2
<PAGE>

                           (2)      A Participant may change his designation of
                  a nonspouse beneficiary at any time. However, a Participant
                  may not change his designation without further consent of his
                  spouse unless the spouse's consent permits designation of
                  another person or trust without further spousal consent and
                  acknowledges that the spouse has the right to limit consent to
                  a specific beneficiary and that the spouse voluntarily
                  relinquishes this right.

                           (3)      The spouse's consent shall not be required
                  if the Participant establishes to the satisfaction of the Plan
                  Administrator that

                                    (A)     the spouse cannot be located,

                                    (B)      the Participant has a court order
                           indicating that he is legally separated or has been
                           abandoned (within the meaning of local law) unless a
                           "qualified domestic relations order" (as defined in
                           Code Section 414(p)) provides otherwise, or

                                    (C)      there are other circumstances as
                           the Secretary of the Treasury prescribes.

                  If the spouse is legally incompetent to give consent, consent
                  by the spouse's legal guardian shall be deemed to be consent
                  by the spouse.

                  (d)      If, subsequent to the death of a Participant, the
         Participant's Beneficiary dies while entitled to receive benefits under
         the Plan, the successor Beneficiary, if any, or the Beneficiary listed
         under Subsection (b)(1) or, if no spouse is alive, Subsection (b)(2)
         shall be the Beneficiary.

         1.6      "Board of Directors" means the Board of Directors of the
Primary Sponsor.

         1.7      "Break in Service" means the failure of an Employee, in
connection with a Termination of Employment other than by reason of death,
Disability, or reaching a Retirement Date, to complete more than 500 Hours of
Service in any Plan Year. For the short Plan Year beginning September 29, 2002
and ending December 31, 2002, a Break in Service means the failure of an
Employee, in connection with a Termination of Employment other than by reason of
death, Disability or reaching a Retirement Date, to complete more than 500 Hours
of Service in the fifty-two week period beginning on September 29, 2002, and
ending on September 27, 2003.

         1.8      "Catch-Up Contribution" means a contribution on behalf of a
Participant pursuant to Section 3.1(c).

         1.9      "Code" means the Internal Revenue Code of 1986, as amended.

         1.10     "Company Stock" means the class A and class B common stock of
the Primary Sponsor.

                                       3
<PAGE>

         1.11     "Company Stock Fund" means the Ingles Class A Fund and the
Ingles Class B Fund.

         1.12     "Compensation" means W-2 Compensation, to the extent not in
excess of the Annual Compensation Limit for all purposes under the Plan except
for purposes of determining who are Highly Compensated Employees.
Notwithstanding the above, Compensation shall be determined as follows:

                  (a)      for purposes of determining, with respect to each
         Plan Sponsor, the amount of contributions and allocations made by or on
         behalf of an Employee under Section 3 and for purposes of applying the
         provisions of Appendix C hereto for such Plan Years as the Secretary of
         the Treasury may allow, Compensation shall only include amounts
         received for the portion of the Plan Year during which the Employee was
         a Participant;

                  (b)      for purposes of determining, with respect to each
         Plan Sponsor, for purposes of Appendix B hereto, Compensation shall
         include amounts received by the Employee for the entire Plan Year;

                  (c)      for purposes of determining, with respect to each
         Plan Sponsor, the amount of contributions and allocations made by or on
         behalf of an Employee under Article 3, Compensation shall not include
         amounts paid by any Affiliate that is not a Plan Sponsor or amounts
         realized from the exercise of non-qualified stock options;

                  (d)      for all purposes under the Plan, except as provided
         in Subsection (e) of this Section, Compensation shall include any
         amount which would have been paid during a Plan Year, but was
         contributed by a Plan Sponsor on behalf of an Employee pursuant to a
         salary reduction agreement which is not includable in the gross income
         of the Employee under Code Section 125 [cafeteria plans], 402(g)(3)
         [salary deferrals to 401(k), 403(b), and simple IRA plans] or 457
         [certain plans of state and local governments and tax-exempt
         organizations], and effective September 30, 2001, Code Section
         132(f)(4) [pre-tax parking plans]; and

                  (e) effective until September 26, 1998, for purposes of
         applying the annual addition limits in Appendix A, Compensation shall
         not include the amounts described in Subsection (d).

         1.13     "Deferral Amount" means a contribution of a Plan Sponsor on
behalf of a Participant pursuant to Section 3.1(a).

         1.14     "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.

         1.15     "Disability" means a disability of a Participant within the
meaning of Code Section 72(m)(7), to the extent that the Participant is entitled
to disability retirement benefits under the federal Social Security Act as
determined by the Social Security Administration.

                                       4
<PAGE>

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

         1.17     "Early Retirement Date" means the date on which the
Participant terminates employment on or after the later of (a) reaching age 60;
or (b) completing ten (10) years of Vesting Service with the Plan Sponsor.

         1.18     "Elective Deferrals" means, with respect to any taxable year
of the Participant, the sum of:

                  (a)      any Deferral Amounts;

                  (b)      any contributions made by or on behalf of a
         Participant under any other qualified cash or deferred arrangement as
         defined in Code Section 401(k), whether or not maintained by a Plan
         Sponsor, to the extent such contributions are not or would not, but for
         Code Section 402(g)(1) be included in the Participant's gross income
         for the taxable year; and

                  (c)      any other contributions made by or on behalf of a
         Participant pursuant to Code Section 402(g)(3).

         1.19     "Eligibility Service" means:

                  (a)      Effective for Plan Years beginning before September
         29, 2002, a twelve-consecutive-month period during which the Employee
         completes no less than 1,000 Hours of Service beginning on the date on
         which the Employee first performs an Hour of Service upon his
         employment or reemployment with a Plan Sponsor or, in the event the
         Employee fails to complete 1,000 Hours of Service in that
         twelve-consecutive-month period, any Plan Year thereafter during which
         the Employee completes no less than 1,000 Hours of Service, including
         the Plan Year which includes the first anniversary of the date the
         Employee first performed an Hour of Service upon his employment or
         reemployment.

                  (b)      Effective for Plan Years beginning on September 29,
         2002 and thereafter, means a twelve-consecutive-month period during
         which the Employee completes no less than 1,000 Hours of Service
         beginning on the date on which the Employee first performs an Hour of
         Service upon his employment or reemployment with a Plan Sponsor or, in
         the event the Employee fails to complete 1,000 Hours of Service in that
         twelve-consecutive-month period, any twelve-consecutive-month period
         thereafter that begins on the first day of a month during which the
         Employee completes no less than 1,000 Hours of Service, including all
         such periods that occur during the Employee's first year of employment
         or reemployment.

                                       5
<PAGE>

         1.20     "Eligible Employee" means any Employee of a Plan Sponsor other
than an Employee who is:

                  (a)      covered by a collective bargaining agreement between
         a union and a Plan Sponsor, provided that retirement benefits were the
         subject of good faith bargaining, unless the collective bargaining
         agreement provides for participation in the Plan;

                  (b)      a Leased Employee with respect to a Plan Sponsor;

                  (c)      deemed to be an Employee of a Plan Sponsor pursuant
         to regulations under Code Section 414(o);

                  (d)      a nonresident alien (within the meaning of Code
         Section 7701(b)(1)(B)) who received no earned income (within the
         meaning of Code Section 911(d)(2)) from a Plan Sponsor which
         constitutes income from sources within the United States (within the
         meaning of Code Section 861(a)(3)); or

                  (e)      any person who is initially classified by a Plan
         Sponsor as an independent contractor for federal income tax purposes
         regardless of any subsequent determination that any such person should
         have been characterized as a common law employee of the Plan Sponsor
         for the period in question.

         1.21     "Eligible Retirement Plan" means an individual retirement
account described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code Section
403(a) or a qualified trust described in Code Section 401(a) that accepts the
Distributee's Eligible Rollover Distribution. For Plan Years beginning on or
after September 29, 2002, Eligible Retirement Plan shall also include an annuity
contract described in Code Section 403(b) and an eligible plan under Code
Section 457(b) which is maintained by a state or political subdivision of a
state, or any agency or instrumentality of a state or political subdivision and
which agrees to separately account for amounts transferred into such Plan from
this Plan.

         1.22     "Eligible Rollover Distribution" means any distribution of all
or any portion of the Distributee's Account, 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 Code Section 401(a)(9); the
portion of any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities); and, effective for distributions made after December 31,
2000, any hardship distributions of Deferral Amounts or Catch-Up Contributions
pursuant to Section 7.1.

         1.23     "Employee" means any person who is:

                  (a)      a common law employee of a Plan Sponsor or an
         Affiliate;

                                       6
<PAGE>

                  (b)      a Leased Employee with respect to a Plan Sponsor; or

                  (c)      deemed to be an employee of a Plan Sponsor pursuant
         to regulations under Code Section 414(o).

         1.24     "Entry Date" means:

                  (a)      prior to September 29, 2002, the first (1st) and the
         one hundred eighty-second (182nd) day of the Plan Year; and

                  (b)      beginning September 29, 2002, the first day of the
         third month following a Participant's satisfaction of the requirements
         of Article 2 hereof.

         1.25     "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

         1.26     "Fiduciary" means each Named Fiduciary and any other person
who exercises or has any discretionary authority or control regarding management
or administration of the Plan, any other person who renders investment advice
for a fee or has any authority or responsibility to do so with respect to any
assets of the Plan, or any other person who exercises or has any authority or
control respecting management or disposition of assets of the Plan.

         1.27     "Fund" means the amount at any given time of cash and other
property held by the Trustee pursuant to the Plan.

         1.28     "Highly Compensated Employee" means, with respect to a Plan
Year, each Employee who:

                  (a)      was at any time during the Plan Year or the
         immediately preceding Plan Year an owner of more than five percent (5%)
         of the outstanding stock of a Plan Sponsor or Affiliate or more than
         five percent (5%) of the total combined voting power of all stock of a
         Plan Sponsor or Affiliate; or

                  (b)      received Compensation in excess of $80,000 during the
         immediately preceding Plan Year ($85,000 during the preceding Plan Year
         for determining Highly Compensated Employees for the Plan Years
         beginning after September 30, 2000), which amount shall be adjusted for
         changes in the cost of living as provided in regulations issued by the
         Secretary of the Treasury and was in the top-paid group of employees
         for such preceding year.

                  (c)      is a former Employee who met the requirements of
         Subsection (a) or (b) at the time the former Employee separated from
         service with the Plan Sponsor or an Affiliate or at any time after the
         former Employee reached age 55.

                  For purposes of determining who is a Highly Compensated
         Employee for the Plan Year beginning on January 1, 2003, the calendar
         year beginning on January 1, 2002 and ending December 31, 2002 shall be
         considered to be the "preceding Plan Year."

                                       7
<PAGE>

         1.29     "Hour of Service" means:

                  (a)      Each hour for which an Employee is paid, or entitled
         to payment, for the performance of duties for a Plan Sponsor or any
         Affiliate during the applicable computation period, and such hours
         shall be credited to the computation period in which the duties are
         performed;

                  (b)      Each hour for which an Employee is paid, or entitled
         to payment, by a Plan Sponsor or any Affiliate on account of a period
         of time during which no duties are performed (irrespective of whether
         the employment relationship has terminated) due to vacation, holiday,
         illness, incapacity (including disability), layoff, bereavement, jury
         duty, military duty or leave of absence;

                  (c)      Each hour for which back pay, irrespective of
         mitigation of damages, is either awarded or agreed to by a Plan Sponsor
         or any Affiliate, and such hours shall be credited to the computation
         period or periods to which the award or agreement for back pay pertains
         rather than to the computation period in which the award, agreement or
         payment is made; provided, that the crediting of Hours of Service for
         back pay awarded or agreed to with respect to periods described in
         Subsection (b) of this Section shall be subject to the limitations set
         forth in Subsection (f);

                  (d)      Solely for purposes of determining whether a Break in
         Service has occurred, each hour during any period that the Employee is
         absent from work (1) by reason of the pregnancy of the Employee, (2) by
         reason of the birth of a child of the Employee, (3) by reason of the
         placement of a child with the Employee in connection with the adoption
         of the child by the Employee, or (4) for purposes of caring for such
         child for a period immediately following its birth or placement shall
         be credited (A) only in the computation period in which the absence
         from work begins, if the Employee would be prevented from incurring a
         Break in Service in that year solely because of that credit, or (B), in
         any other case, in the next following computation period;

                  (e)      Without duplication of the Hours of Service counted
         pursuant to Subsection (d) hereof and solely for such purposes as
         required pursuant to the Family and Medical Leave Act of 1993 and the
         regulations thereunder (the "FMLA"), each hour (as determined pursuant
         to the FMLA) for which an Employee is granted leave under the FMLA (1)
         for the birth of a child, (2) for placement with the Employee of a
         child for adoption or foster care, (3) to care for the Employee's
         spouse, child or parent with a serious health condition, or (4) for a
         serious health condition that makes the Employee unable to perform the
         functions of the Employee's job;

                  (f)      The Plan Administrator shall credit Hours of Service
         in accordance with the provisions of Section 2530.200b-2(b) and (c) of
         the U.S. Department of Labor Regulations or such other federal
         regulations as may from time to time be applicable and determine Hours
         of Service from the employment records of a Plan Sponsor or in any
         other manner consistent with regulations promulgated by the Secretary
         of Labor, and shall construe any ambiguities in favor of crediting
         Employees with Hours of Service.

                                       8
<PAGE>
         Notwithstanding any other provision of this Section, in no event shall
         an Employee be credited with more than 501 Hours of Service during any
         single continuous period during which he performs no duties for the
         Plan Sponsor or Affiliate; and

                  (g) In the event that a Plan Sponsor or an Affiliate acquires
         substantially all of the assets of another corporation or entity or a
         controlling interest of the stock of another corporation or merges with
         another corporation or entity and is the surviving entity, or if an
         Employee of a Plan Sponsor was previously employed by an entity that is
         under common control or ownership with the Plan Sponsor, as determined
         by the Board of Directors of the Plan Sponsor, then service of an
         Employee who was employed by the prior corporation or entity shall be
         counted in the manner provided, with the consent of the Primary
         Sponsor, in resolutions adopted by the Plan Sponsor which authorizes
         the counting of such service.

         1.30     "Individual Fund" means individual subfunds of the Fund as may
be established by the Plan Administrator from time to time for the investment of
the Fund, other than the Company Stock Funds.

         1.31     "Ingles Class A Fund" means the individual subfund of the Fund
which is invested primarily in the class A common stock of the Primary Sponsor.

         1.32     "Ingles Class B Fund" means the individual subfund of the Fund
which is invested primarily in the class B common stock of the Primary Sponsor.

         1.33     "Investment Committee" means a committee, which may be
established to direct the Trustee with respect to investments of the Fund.

         1.34     "Investment Manager" means a Fiduciary, other than the
Trustee, the Plan Administrator, or a Plan Sponsor, who may be appointed by the
Primary Sponsor:

                  (a)      who has the power to manage, acquire, or dispose of
         any assets of the Fund or a portion thereof; and

                  (b)      who

                           (1)      is registered as an investment adviser under
                  the Investment Advisers Act of 1940;

                           (2)      is a bank as defined in the Investment
                  Advisers Act of 1940; or

                           (3)      is an insurance company qualified to perform
                  services described in Subsection (a) above under the laws of
                  more than one state; and

                  (c)      who has acknowledged in writing that he is a
         Fiduciary with respect to the Plan.

                                       9
<PAGE>

         1.35     "Leased Employee" means an Employee (other than a common law
employee of the Plan Sponsor or an Affiliate) who, pursuant to an agreement
between the Plan Sponsor or an Affiliate and any other person, has performed
services for the Plan Sponsor or an Affiliate (or for the Plan Sponsor and
related persons determined in accordance with Code Section 414(n)(6)), on a
substantially full-time basis for a period of at least one year, and such
services are performed under the primary direction or control of the Plan
Sponsor or an Affiliate.

         1.36     "Matching Contribution" means a contribution made by a Plan
Sponsor pursuant to Section 3.2.

         1.37     "Named Fiduciary" means only the following:

                  (a)      the Plan Administrator;

                  (b)      the Trustee;

                  (c)      the Investment Committee; and

                  (d)      the Investment Manager.

         1.38     "Normal Retirement Age" means age 65.

         1.39     "Normal Retirement Date" means the date on which the
Participant terminates employment on or after reaching Normal Retirement Age.

         1.40     "Participant" means any Employee or former Employee who has
become a participant in the Plan for so long as his vested Account has not been
fully distributed pursuant to the Plan.

         1.41     "Plan Administrator" means the organization or person
designated to administer the Plan by the Primary Sponsor and, in lieu of any
such designation, means the Primary Sponsor.

         1.42     "Plan Sponsor" means individually the Primary Sponsor and any
Affiliate or other entity which has adopted the Plan and Trust.

         1.43     "Plan Quarter" means:

                  (a)      prior to September 29, 2002, the approximate three
         (3) month period beginning on the day after the last day of the
         immediately prior Plan Quarter and ending on the last Saturday in
         March, June, September and December; and

                  (b)      the period beginning September 29, 2002 and ending
         December 31, 2002; and

                  (c)      effective January 1, 2003, each three (3) month
         period ending March 31, June 30, September 30 and December 31 of each
         year.

                                       10
<PAGE>

         1.44     "Plan Year" means:

                  (a)      prior to September 29, 2002, the
         fifty-two/fifty-three week period beginning on the day after the last
         day of the immediately preceding Plan Year and ending on the last
         Saturday in September of each year;

                  (b)      the period beginning on September 29, 2002 and ending
         on December 31, 2002; and

                  (c)      the calendar year beginning January 1, 2003 and each
         calendar year that begins thereafter.

         1.45     "Profit Sharing Contribution" means a contribution made by a
Plan Sponsor pursuant to Section 3.3.

         1.46     "Qualified Joint and Survivor Annuity" means an immediate
annuity for the life of the Participant with a survivor annuity for the life of
his spouse which is equal to fifty percent (50%) of the annuity payable during
the joint lives of the Participant and his spouse. A Qualified Joint and
Survivor Annuity for an unmarried Participant means an annuity for the life of
the Participant.

         1.47     "Qualified Preretirement Survivor Annuity" means an immediate
annuity for the life of a Participant's spouse, the present value of which is
equal to fifty percent (50%) of the Participant's vested Account as of the
earlier of (a) the Participant's date of death, or (b) the Participant's
Termination of Employment.

         1.48     "Retirement Date" means the Early Retirement Date or the
Normal Retirement Date.

         1.49     "Rollover Amount" means any amount transferred to the Fund by
a Participant, which amount qualifies as an Eligible Rollover Distribution under
Code Section 402(c)(4), or for rollover treatment under Code Sections 403(a)(4),
403(b)(8), 408(d)(3)(A)(ii), or 457(e)(16) and any regulations issued
thereunder.

         1.50     "Termination Completion Date" means the last day of the fifth
consecutive Break in Service computation period, determined under the Section
which defines Break in Service, in which a Participant completes a Break in
Service.

         1.51     "Termination of Employment" means the termination of
employment of an Employee from all Plan Sponsors and Affiliates for any reason
other than death, Disability, or attainment of a Retirement Date. Any absence
from active employment of the Plan Sponsor and Affiliates by reason of an
approved leave of absence shall not be deemed for any purpose under the Plan to
be a Termination of Employment. Transfer of an Employee from one Plan Sponsor to
another Plan Sponsor or to an Affiliate shall not be deemed for any purpose
under the Plan to be a Termination of Employment. In addition, transfer of an
Employee to another employer (other than a Plan Sponsor or an Affiliate) in
connection with a corporate transaction involving a sale of assets, merger, or
sale of stock, shall not be deemed to be a Termination of Employment,

                                       11
<PAGE>

for purposes of the timing of distributions under Section 7.1, if the employer
to which such Employee is transferred agrees with the Plan Sponsor to accept a
transfer of assets from the Plan to its tax-qualified plan in a trust-to-trust
transfer meeting the requirements of Code Section 414(l). If the employer to
which such Employee is transferred does not agree to accept a transfer of assets
from the Plan to its tax-qualified Plan, Section 7.6 is applicable in the event
that such Termination of Employment is not a distributable event under Code
Section 401(k)(10).

         1.52     "Trust" means the trusts (collectively or individually)
established under agreements between the Primary Sponsor and the respective
Trustees to hold the Fund or any successor agreement. The Fund shall be held in
three (3) separate trusts, which shall be referred to as "Trust A," which shall
hold the Individual Funds; "Trust B," which shall hold the Ingles Class B Fund;
and "Trust C," which shall hold the Ingles Class A Fund.

         1.53     "Trustee" means the trustee under each Trust established
pursuant to the Plan.

         1.54     "Valuation Date" means each regular business day or any other
day which the Plan Administrator declares to be a Valuation Date, provided,
however, that the last business day of each Plan Year will always be a Valuation
Date and the selection of other Valuation Dates may not result in discrimination
prohibited by Code Section 401(a)(4).

         1.55     "Vesting Service" means each Plan Year during which an
Employee has completed no less than 1,000 Hours of Service. Notwithstanding
anything contained herein to the contrary, Vesting Service shall not include:

                  (a)      In the case of an Employee who completes five
         consecutive Breaks in Service for purposes of determining the vested
         portion of his Account derived from Plan Sponsor contributions which
         accrued before his Termination Completion Date, all service in Plan
         Years after his Termination Completion Date.

                  (b)      In the case of an Employee who completes five
         consecutive Breaks in Service and at that time does not have any vested
         right in Plan Sponsor contributions, all service before those Breaks in
         Service commenced.

For the short Plan Year beginning on September 29, 2002 and ending on December
31, 2002, a Participant will receive one year of Vesting Service if he completes
at least 1,000 Hours of Service for the fifty-two/fifty-three week period
beginning on September 29, 2002 and ending on September 27, 2003. In addition, a
Participant will receive one year of Vesting Service if he completes at least
1,000 Hours of Service for the Plan Year beginning January 1, 2003 and ending
December 31, 2003.

         1.56     "W-2 Compensation" means wages within the meaning of Code
Section 3401(a) (for purposes of income tax withholding at the source) and all
other amounts paid to an Employee by a Plan Sponsor and Affiliates during a Plan
Year (but without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed, such as the exception for agricultural labor in Code Section
3401(a)(2)) for which the Plan Sponsor is required to furnish the employee a
written statement under Code Sections 6041(d); 6051(a)(3) and 6052.

                                       12
<PAGE>

                                    ARTICLE 2
                                   ELIGIBILITY

         2.1      New Hires. Each Eligible Employee shall become a Participant
as of the Entry Date coinciding with or next following the date on which he has
both:

                  (a)      completed his Eligibility Service, and

                  (b)      attained age 18.

         2.2      Existing Participants. Each individual who was a Participant
on September 27, 1997 shall continue to be a Participant as of September 28,
1997. Each individual who was a participant in the Distribution Division Plan on
August 31, 2000 shall be a Participant in the Plan as of September 1, 2000. Each
individual who is a Participant on the adoption date of this amended and
restated Plan as reflected in the first paragraph on page one of this Plan shall
continue to be a Participant as of such date.

         2.3      Former Participants Rehired. Each former Participant who is
reemployed by a Plan Sponsor shall become a Participant as of the date of his
reemployment as an Eligible Employee.

         2.4      Former Employees Rehired. Each former Employee who completes
his Eligibility Service but terminates employment with a Plan Sponsor before
becoming a Participant shall become a Participant as of the latest of the date
he:

                  (a)      is reemployed;

                  (b)      would have become a Participant if he had not
         incurred a Termination of Employment; or

                  (c)      becomes an Eligible Employee.

                                    ARTICLE 3
                                  CONTRIBUTIONS

         3.1      401(k) Contributions

                  (a)      Deferral Amounts.

                           (1)      Each Participant who is an Eligible Employee
                   may elect to defer a portion of the Compensation otherwise
                  payable to him for a payroll period and to have such portion
                  contributed by the Plan Sponsor to the Fund. A Participant may
                  elect to defer any whole percent of his Compensation between
                  one percent (1%) and fifty percent (50%) for a payroll period.
                  The election must be made

                                       13
<PAGE>
                  before the Compensation is payable to the Participant. The
                  election must be made in such manner and subject to such rules
                  and limitations as the Plan Administrator may prescribe, and
                  shall specify the percentage of Compensation that the
                  Participant desires to defer and to have contributed to the
                  Fund. Notwithstanding the foregoing, the Plan Administrator
                  may restrict the amount which Highly Compensated Employees may
                  elect to defer under this Section.

                           (2)      Each payroll period, the Plan Sponsor shall
                  deduct the portion of the Compensation that the Participant
                  elected to defer in Subparagraph (1) above from the
                  Participant's payroll for such period and will contribute such
                  amount to the Fund. Amounts contributed pursuant to this
                  Section 3.1 shall be allocated to the Employee 401(k)
                  Contribution Account of the Participant on whose behalf such
                  contributions were made as soon as reasonably practicable
                  following the date of withholding by the Plan Sponsor and
                  receipt by the Trustee.

                           (3)      Once a Participant has made a deferral
                  election for a Plan Year, the Participant may revoke or modify
                  his election to increase or reduce the rate of future
                  deferrals, as provided in the administrative procedures
                  established by the Plan Administrator.

                  (b)      Limitation on Elective Deferrals.

                           (1)      In no event may the total Elective Deferrals
                  for a Participant exceed the Section 402(g) Limitation in any
                  one taxable year of the Participant, except to the extent
                  permitted under Subsection (c) of this Section 3.1.

                           (2)      The "Section 402(g) Limitation" is the
                  amount designated in Code Section 402(g)(1), which is $11,000
                  for 2002, and which shall be adjusted for changes in the cost
                  of living as provided by the Secretary of the Treasury.

                           (3)      If the amount of Elective Deferrals
                  contributed on behalf of a Participant to the Plan or to any
                  other plan exceeds the Section 402(g) Limitation in any one
                  taxable year then, not later than the March 1 following such
                  taxable year, the Participant may notify the Plan
                  Administrator that a portion of the Participant's Deferral
                  Amounts consists of excess Elective Deferrals. If such
                  notification is made, the Trustee shall distribute to the
                  Participant the amount of such excess Elective Deferrals, as
                  adjusted to reflect income, gain, or loss attributable to such
                  amount through the end of the Plan Year on or before the
                  following April 15th.

                           (4)      The amount to be distributed under
                  subparagraph (1) above shall be reduced by any "Excess
                  Deferral Amounts," as defined in Appendix C hereto, previously
                  distributed or recharacterized with respect to the Participant
                  for the Plan Year beginning with or within that taxable year.

                                       14
<PAGE>

                           (5)      The payment of the excess Elective
                  Deferrals, as adjusted and reduced, from the Plan shall be
                  made to the Participant without regard to any other provision
                  in the Plan.

                           (6)      If a Participant's total Elective Deferrals
                  under the Plan and other plans of the Plan Sponsor and its
                  Affiliates exceed the Section 402(g) Limitation in any taxable
                  year, the Participant shall be deemed to have designated for
                  distribution under the Plan the lesser of (A) the amount of
                  such excess Elective Deferrals or (B) the amount of Elective
                  Deferrals under this Plan, as adjusted and reduced pursuant to
                  subparagraphs (1) and (2) above.

                  (c)      Catch-Up Contributions.

                           (1)      Effective as of January 1, 2003, a
                  Participant who has reached age fifty (50) prior to or during
                  a Plan Year shall be eligible to defer a portion of
                  Compensation otherwise payable to him for the Plan Year and to
                  have such portion contributed to the Fund on his behalf as
                  Catch-Up Contributions in accordance with, and subject to the
                  limitations of, Code Section 414(v). Such Catch-Up
                  Contributions shall not be taken into account for purposes of
                  implementing the Section 402(g) Limitation and the annual
                  addition limitations in Appendix A hereto. The Plan shall not
                  be treated as failing to satisfy the provisions of Appendix B
                  of the Plan, Appendix C of the Plan or the requirements of
                  Code Section 410(b), as applicable, by reason of the making of
                  such Catch-Up Contributions.

                           (2)      Any election under this Subsection (c) must
                  be made before the Compensation that the Participant desires
                  to defer is payable and may only be made in such manner and
                  subject to such rules and limitations as the Plan
                  Administrator may prescribe and shall specify the amount of
                  Compensation that the Participant desires to defer and to have
                  contributed to the Fund.

                           (3)      Once a Participant has made an election for
                  a Plan Year, the Participant may revoke or modify his election
                  to increase or reduce the rate of future deferrals under this
                  Subsection (c), in accordance with the administrative
                  procedures provided by the Plan Administrator.

         3.2      Matching Contributions.

                  (a)      For Plan Years beginning prior to September 29, 2002.

                           (1)      The Plan Sponsor shall, in its discretion,
                  determine the amount of Matching Contributions to be
                  contributed to the Fund for a given Plan Quarter.

                           (2)      The Matching Contribution for a Plan Quarter
                  shall be allocated to Participants' Accounts within a
                  reasonable time after the amount is deposited to the Plan by
                  the Plan Sponsor, in the same proportion that the Deferral
                  Amounts contributed on behalf of each eligible Participant
                  under Section 3.1 for the Plan

                                       15
<PAGE>

                  Quarter to which the Matching Contribution relates (not to
                  exceed five percent (5%) of the Participant's Compensation
                  payable for such Plan Quarter) bear to the total Deferral
                  Amounts contributed for all eligible Participants during the
                  Plan Quarter to which the Matching Contribution relates. Such
                  amount shall be allocated to each eligible Participant who is
                  employed by a Plan Sponsor on the last day of a Plan Quarter.

                  (b)      For Plan Years beginning on or after September 29,
         2002.

                           (1)      The Plan Sponsor shall, in its discretion,
                  determine the amount of Matching Contributions to be
                  contributed to the Fund for each payroll period.

                           (2)      The Matching Contributions for a payroll
                  period shall be allocated to each eligible Participant's
                  Employer Match Account within a reasonable time after such
                  amount is deposited to the Plan by the Plan Sponsor in the
                  same proportion that the total of all Deferral Amounts and
                  Catch-Up Contributions contributed on behalf of each eligible
                  Participant under Section 3.1 for the payroll period to which
                  such Matching Contribution relates (not to exceed five percent
                  (5%) of the Participant's Compensation payable during such
                  payroll period) bears to the Deferral Amounts and Catch-Up
                  Contributions contributed for all eligible Participants for
                  the payroll period to which the Matching Contribution relates.

         3.3      Profit Sharing Contribution. The Plan Sponsor shall, in its
discretion, determine the amount of the Profit Sharing Contribution to be
contributed to the Fund for a given Plan Year. Such amount shall be allocated as
of the last day of the Plan Year to the Employer Profit Sharing Account of each
Participant who: (a) is an Eligible Employee during the Plan Year; (b) is
employed by a Plan Sponsor on the last day of the Plan Year; and (c) has
completed at least 1,000 Hours of Service with a Plan Sponsor during the Plan
Year. The Profit Sharing Contribution for such Plan Year shall be allocated to
each eligible Participant's Employer Profit Sharing Account in the same
proportion that each eligible Participant's Compensation for the Plan Year bears
to the Compensation of all eligible Participants for such Plan Year.

         3.4      Rollover Contributions. Any Participant may, with the consent
of the Plan Administrator and subject to such rules and conditions as the Plan
Administrator may prescribe, transfer a Rollover Amount to the Fund; provided,
however, that the Plan Administrator shall not administer this provision in a
manner which is discriminatory in favor of Highly Compensated Employees.

         3.5      Forfeitures.

                  (a)      For Plan Years beginning on or after September 28,
         1997 and ending prior to September 26, 1999. Forfeitures of Matching
         Contributions and Profit Sharing Contributions shall be used first to
         restore Participant's Accounts in accordance with Section 7.3 hereof.
         Any remaining forfeitures shall be used to reduce Plan Sponsor
         contributions made for the Plan Year in which the forfeitures arose or
         for the following Plan Year and not to increase benefits.

                                       16
<PAGE>

                  (b)      For Plan Years beginning on or after September 26,
         1999 and ending prior to September 29, 2002. Forfeitures of Matching
         Contributions and Profit Sharing Contributions shall first be used to
         restore Participant's Accounts in accordance with Section 7.3 hereof.
         Any remaining forfeitures of Matching Contributions shall be used to
         reduce Plan Sponsor contributions made for the Plan Year in which the
         forfeitures arose or for the following Plan Year and not to increase
         benefits. Any remaining forfeitures of Profit Sharing Contributions
         shall be reallocated among the Employer Profit Sharing Accounts of
         Participants who are eligible to receive an allocation pursuant to
         Section 3.3. Profit Sharing Contributions to be reallocated under this
         Section 3.5 shall be allocated to each eligible Participant's Employer
         Profit Sharing Account in the same proportion that each eligible
         Participant's Compensation for the Plan Year bears to the Compensation
         of all eligible Participants for such Plan Year.

                  (c)      For Plan Years beginning on or after September 29,
         2002. Forfeitures of Matching Contributions and Profit Sharing
         Contributions shall be used first to restore Participant's Accounts in
         accordance with Section 7.3 hereof and then, at the discretion of the
         Plan Administrator, to pay Plan expenses. Any remaining forfeitures
         will be used to reduce Plan Sponsor contributions made for the Plan
         year in which the forfeitures arose or for the following Plan Year and
         not to increase benefits.

         3.6      Form of Contributions. Contributions may be made only in cash
or other property which is acceptable to the Trustee.

         3.7      Military Service. Effective December 12, 1994, notwithstanding
any provision of the Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Section 414(u) of the Code.

         3.8      Corrective Actions. Notwithstanding any provision of the Plan
to the contrary, the Plan Sponsor may make corrective distributions,
contributions, allocations, or other remedial action as required or permitted to
comply with any remedial or fiduciary correction program promulgated by the
Internal Revenue Service, U.S. Treasury Department, or U.S. Department of Labor.

                                    ARTICLE 4
                 INDIVIDUAL FUNDS AND INVESTMENT OF TRUST ASSETS

         4.1      Participant Direction of Investment of Contributions.

                  (a)      Until such time as the Plan Administrator may direct
         otherwise, each Participant and each Beneficiary of a deceased
         Participant may direct the Plan Administrator to invest contributions
         to his Account, other than Profit Sharing Account (except as provided
         in Section 4.2), in one or more Individual Funds and, effective as of
         April 1, 1999, the Ingles Class A Fund.

                  (b)      All investment directions, or changes in investment
         directions, of contributions shall be made in accordance with the
         procedures established by the Plan

                                       17
<PAGE>

         Administrator. New investment directions shall be effective as of the
         date that such directions are processed by the Plan Administrator in
         accordance with the procedures established for such purpose.

                  (c)      An investment direction, once given, shall be deemed
         to be a continuing direction until changed as otherwise provided
         herein. If no direction is effective for the date on which a
         contribution is to be made, all contributions which are to be made for
         such date shall be invested in such Individual Funds as the Plan
         Administrator, the Investment Manager, the Investment Committee, or the
         Trustee, as applicable, may determine. To the extent permissible by
         law, no Fiduciary shall be liable for any loss, which results from a
         Participant's exercise or failure to exercise his investment election
         with respect to that portion of the Fund which is held in Trust A and
         Trust C.

                  (d)      Notwithstanding the foregoing, the Plan Administrator
         may limit the availability of investments in Trust C by Participants
         who are executive officers of the Plan Sponsor.

         4.2      Investment of Profit Sharing Contributions. Profit Sharing
Contributions made to a Participant's Employer Profit Sharing Account pursuant
to Section 3.3 shall be invested solely in the Ingles Class B Fund. Effective
until September 25, 1999, a Participant who is an Employee of a Plan Sponsor may
elect, according to the procedures established by the Plan Administrator, to
transfer up to ten percent (10%) of the balance in his Employer Profit Sharing
Account to one or more Individual Funds and, effective as of April 1, 1999, the
Ingles Class A Fund.

         4.3      Participant Directions to Transfer Among Individual Funds.
Subject to the limitations in Section 4.2, a Participant may elect, according to
the procedures established by the Plan Administrator, to transfer the investment
of his Account among Individual Funds, and, effective April 1, 1999, the Ingles
Class A Fund. An election under this Section 4.3 shall be effective as of the
date that such election is processed by the Plan Administrator in accordance
with the procedures established for such purpose.

         4.4      Application of Investment Directions. A Participant who makes
an election pursuant to Section 4.1 or 4.3 may apply the new investment
direction to his current Account, all future contributions (except as limited
under Sections 4.1 and 4.2), or both his current Account and all future
contributions.

         4.5      Allocation of Net Income and Loss. As of each Valuation Date,
the Trustee of the Trust shall allocate the net income or net loss of each
Individual Fund or the Company Stock Fund to each Account in the proportion that
the value of the Account as of the Valuation Date bears to the value of all
Accounts invested in that Individual Fund or the Company Stock Fund as of the
Valuation Date.

         4.6      Loan Fund. A Loan Fund shall be established by the Trustee on
behalf of each Participant for whom a loan is made pursuant to Article 5. The
Loan Fund shall be credited with the amount of any loan made by the Plan to the
Participant and shall be debited with all principal and interest repayments of
any such loans. Under rules established by the Plan Administrator, a

                                       18
<PAGE>

Participant's interest in the Individual Funds shall be debited by the amount
credited to the Participant's Loan Fund. All principal and interest repayments
debited to the Loan Fund shall be invested as contributions to the Participant's
Account pursuant to Section 4.1. Each Loan Fund shall be invested in a note or
notes made by the Participant evidencing the promised repayment of monies loaned
to the Participant from the Fund.

         4.7      Employer Securities. The Trustee for Trust B and Trust C may
acquire and hold shares of Company Stock that are "qualifying employer
securities" (within the meaning of ERISA Section 407(d)(5)).

                                    ARTICLE 5
                                   PLAN LOANS

         5.1      Eligible Individuals.

                  (a)      Subject to the provisions of the Plan and the Trust,
         each Participant who is an Employee shall have the right, subject to
         prior approval by the Plan Administrator, to borrow from his Account as
         provided in this Section.

                  (b)      (1)      Beginning September 28, 1997 and ending
                  December 31, 1999, a loan shall be withdrawn on a pro rata
                  basis from a borrower's Employee 401(k) Contribution Account.

                           (2)      Beginning January 1, 2000 and ending
                  December 31, 2000, a loan shall be withdrawn on a pro rata
                  basis from a borrower's Employee 401(k) Contribution Account,
                  Rollover Account and Employer Match Account.

                           (3)      Beginning January 1, 2001 and ending
                  September 28, 2002, a loan shall be withdrawn from the
                  borrower's Account in the following order:

                                    (i)      Prior Plan Employee Contribution
                                             Subaccount,

                                    (ii)     Prior Rollover Subaccount,

                                    (iii)    Prior Plan Company Match
                                             Subaccount,

                                    (iv)     Prior Plan Profit Sharing
                                             Subaccount,

                                    (v)      Employee 401(k) Contribution
                                             Account,

                                    (vi)     Rollover Account, and

                                    (vii)    Employer Match Account.

                           (4)      Beginning September 29, 2002, a loan shall
                  be withdrawn on a pro rata basis from each portion of a
                  borrower's Account listed in Subsection (3).

                                       19
<PAGE>

         5.2      Application. In order to apply for a loan, a borrower must
complete and submit to the Plan Administrator documents or information required
by the Plan Administrator for this purpose in whatever form or manner the Plan
Administrator may prescribe. Furthermore, the borrower must consent to have the
loan repaid through payroll deduction, and a borrower's failure or refusal to
provide such consent shall constitute grounds for the Plan Administrator's
denial of the application for a loan. A borrower must wait at least twelve (12)
months between loan applications.

         5.3      Equivalent Basis. Loans shall be available to all eligible
borrowers on a reasonably equivalent basis which may take into account the
borrower's creditworthiness, ability to repay, and ability to provide adequate
security. Loans shall not be made available to Highly Compensated Employees,
officers or shareholders of a Plan Sponsor in an amount greater than the amount
made available to other borrowers. This provision shall be deemed to be
satisfied if all borrowers have the right to borrow the same percentage of their
interest in the Participant's vested Account, notwithstanding that the dollar
amount of such loans may differ as a result of differing values of Participants'
vested Accounts.

         5.4      Interest Rate. Each loan shall bear a "reasonable rate of
interest" and provide that the loan be amortized in substantially level
payments, made no less frequently than quarterly, over a specified period of
time. A "reasonable rate of interest" shall be that rate that provides the Plan
with a return commensurate with the interest rates charged by persons in the
business of lending money for loans which would be made under similar
circumstances. Notwithstanding the foregoing, to the extent that any loan
interest rate is subject to the provisions of the Soldiers and Sailors Relief
Act of 1940, it shall not exceed six percent (6%) per annum.

         5.5      Security. Each loan shall be adequately secured at the time
taken, with the security for the outstanding balance of all loans to the
borrower to consist of one-half (1/2) of the borrower's interest in the
Participant's vested Account. Furthermore, the total loan taken shall not exceed
the value of the Participant's Account exclusive of the Participant's Employer
Profit Sharing Account.

         5.6      Loan Limit. Subject to Section 5.5 above, each loan, when
added to the outstanding balance of all other loans to the borrower from all
retirement plans of the Plan Sponsor and its Affiliates which are qualified
under Section 401 of the Code, shall not exceed the lesser of:

                  (a)      $50,000, reduced by the excess, if any, of

                           (1)      the highest outstanding balance of loans
                  made to the borrower from all retirement plans qualified under
                  Code Section 401 of the Plan Sponsor and its Affiliates during
                  the one (1) year period immediately preceding the day prior to
                  the date on which such loan was made, over

                           (2)      the outstanding balance of loans made to the
                  borrower from all retirement plans qualified under Code
                  Section 401 of the Plan Sponsor and its Affiliates on the date
                  on which such loan was made, or

                                       20
<PAGE>

                  (b)      one-half (1/2) of the value of the borrower's
         interest in the vested Account attributable to the Participant's
         Account.

For purposes of this Section, the value of the vested Account attributable to a
Participant's Account shall be established as of the latest preceding Valuation
Date, or any later date on which an available valuation was made, and shall be
adjusted for any distributions or contributions made through the date of the
origination of the loan.

         5.7      Loan Term. Each loan, by its terms, shall be repaid within
five (5) years, except that, if allowed pursuant to loan procedures established
by the Plan Administrator, any loan which is used to acquire any dwelling unit
which within a reasonable time is to be used (determined at the time the loan is
made) as the principal residence of the borrower may, by its terms, be repaid
within ten (10) years. Notwithstanding the provisions of this Section 5.7, each
loan which previously existed under the Distribution Division Plan that was
merged into the Plan on September 1, 2000 shall continue to be repaid according
to each loan's original repayment schedule, even if the original repayment
schedule exceeds ten (10) years.

         5.8      Minimum Amount. Except as may otherwise be provided pursuant
to loan procedures established by the Plan Administrator, each loan shall be
made in an amount of no less than $500.

         5.9      Limit on Number of Loans. Except as may otherwise be provided
pursuant to loan procedures established by the Plan Administrator, a borrower is
permitted to have only two (2) loans existing under the Plan at any one time.

         5.10     Repayment by Payroll Deduction. All loans hereunder shall be
repaid by the borrower through automatic deduction from the borrower's payroll
with the Plan Sponsor.

         5.11     Default.

                  (a)      A loan shall be in default if:

                           (1)      a borrower fails to make any loan payment
                  when due;

                           (2)      a Participant ceases to be an Employee and
                  is not otherwise a "party in interest" as defined in ERISA
                  Section 3(14);

                           (3)      the vested Account held as security under
                  the Plan for the borrower will, as a result of an impending
                  distribution or withdrawal, be reduced to an amount less than
                  the amount of all unpaid principal and accrued interest then
                  outstanding under the loan;

                           (4)      a borrower makes any untrue representations
                  or warranties in connection with the obtaining of the loan;

                                       21
<PAGE>

                           (5)      a tax lien is filed against a borrower or an
                  attachment or garnishment should be issued against any of the
                  collateral securing the note evidencing the loan, including,
                  without limitation, the starting of an action or proceeding to
                  seize any of the borrower's interest in the Plan; or

                           (6)      if the borrower revokes his or her payroll
                  deduction authorization for repayment of the note evidencing
                  the loan without the consent of the Plan Administrator.

                  (b)      If a default occurs, the Plan Administrator may take
         such steps as it deems necessary to preserve the assets of the Plan,
         including, but not limited to, directing the Trustee to make any
         permissible distribution to the borrower of an offset amount (i.e., a
         deduction of the unpaid principal sum, accrued interest, and any other
         applicable charge under the note evidencing the loan from the
         Participant's Account).

                  (c)      If a distribution of an offset amount would violate
         the requirements of Section 401(a) or 401(k) (because for example, the
         deduction would have to be made from the Participant's Employee 401(k)
         Contribution Account while the Participant is an Employee), the entire
         outstanding balance of the loan (including accrued interest) shall be a
         deemed distribution as provided in Treasury Regulations under Code
         Section 72(p). Thereafter, a distribution of an offset amount may be
         made at the earliest date legally permissible or deferred, at the Plan
         Administrator's discretion applied on a basis not discriminatory in
         favor of Highly Compensated Employees, until the borrower receives
         another distribution from the Plan.

                  (d)      Notwithstanding the foregoing, a loan may be
         satisfied upon a Participant's Termination of Employment (including a
         Termination of Employment arising from the Participant's transfer to
         another employer (other than a Plan Sponsor or an Affiliate) in
         connection with a corporate transaction involving a sale of assets,
         merger, or sale of stock) by distributing the note evidencing the debt
         as part of an Eligible Rollover Distribution. The distribution of the
         note is permitted only if the trustee, custodian, or administrator for
         the Eligible Retirement Plan indicates its willingness to accept such
         property. Any distribution of such note must be accomplished prior to
         the end of the maximum permissible grace period under subparagraph (e)
         below.

                  (e)      If an event occurs under subparagraph (a) above that
         would constitute a default, the Plan Administrator may, in its sole
         discretion and on a nondiscriminatory basis, provide a grace period for
         an employee to cure the default. Such grace period may not extend past
         the date that is the last day of the calendar quarter following the
         calendar quarter in which the default event occurred.

                  (f)      If any part of the indebtedness under the note
         evidencing the loan is collected by law or through an attorney, the
         borrower shall be liable for attorneys' fees in an amount equal to ten
         percent (10%) of the amount then due and all costs of collection.

                                       22
<PAGE>

         5.12     Certain Leaves of Absence.

                  (a)      Except as may otherwise be established pursuant to
         loan procedures established by the Plan Administrator, if an Employee
         is on an approved bona fide leave of absence (not longer than one
         year), either without pay from the Plan Sponsor or an Affiliate or at a
         rate of pay (after income and employment tax withholding) that is less
         than the amount of the installment payments required under the terms of
         the loan, the requirement of loan repayment shall be suspended during
         the leave of absence.

                  (b)      The suspension of the requirement of loan repayment
         may not extend beyond the later of:

                           (1)      the last day of the loan's original term; or

                           (2)      the latest day on which the loan would have
                  been required to be repaid under Section 5.7 for the type of
                  loan taken.

                  (c)      Upon the return of the Participant to service, the
         payments under such loan shall resume at the rate necessary to repay
         the remaining balance of the loan (plus interest accrued during the
         leave of absence) in equal installments for a period not extending
         beyond the latest day on which the loan would have been required to be
         repaid under Section 5.7 for the type of loan taken. Notwithstanding
         the foregoing, the loan payment shall not be less than the payment at
         the time the leave began.

                  (d)      If a Participant is absent from employment due to his
         performing service in the uniformed service, the requirement of loan
         repayment will be suspended for the period of such service in the
         uniformed services. When the Participant resumes employment, loan
         payments will resume and must be completed by the end of the period
         equal to the original term of the loan plus the period of such military
         service.

         5.13     Regulations. Each loan shall be made only in accordance with
regulations and rulings of the Internal Revenue Service and the Department of
Labor and any supplemental loan procedures established by the Plan
Administrator. The Plan Administrator shall be authorized to administer the loan
program of this Section and shall act in his sole discretion to ascertain
whether the requirements of such regulations and rulings and this Section have
been met.

         5.14     Spousal Consent. Prior to January 1, 2003, if a Participant's
vested Account is payable in the form of an annuity and the Participant wishes
to obtain a loan from the Plan in accordance with Article 5, the Participant's
spouse must, within the ninety (90) day period preceding the date the loan is
made, consent to the loan and the possibility of a reduction in the
Participant's vested Account resulting in its non-payment.

                                       23
<PAGE>

                                    ARTICLE 6
                          WITHDRAWALS DURING EMPLOYMENT

         6.1      Hardship Withdrawals.

         (a)      The Trustee shall, upon the direction of the Plan
Administrator, withdraw all or a portion of a Participant's Employee 401(k)
Contribution Account consisting of Deferral Amounts and Catch-Up Contributions
(but not earnings thereon) prior to the time such account is otherwise
distributable. A hardship withdrawal shall only be made only if the Participant
is an Employee and demonstrates that he is suffering from "hardship." For
purposes of this Section, a withdrawal will be deemed to be an account of
hardship only if the withdrawal is on account of:

                  (1)      unreimbursed expenses for medical care described in
         Code Section 213(d) incurred by the Participant, his spouse, or any
         dependents of the Participant (as defined in Section 152 of the Code)
         or necessary for these persons to obtain medical care described in Code
         Section 213(d);

                  (2)      purchase (excluding mortgage payments) of a principal
         residence for the Participant;

                  (3)      payment of tuition and related educational fees for
         the next twelve (12) months of post-secondary education for the
         Participant, his spouse, children, or dependents;

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

                  (5)      any other contingency determined by the Internal
         Revenue Service to constitute an "immediate and heavy financial need"
         within the meaning of Treasury Regulations Section 1.401(k)-l(d).

         (b)      Additional Hardship Withdrawal Requirements. In addition to
the requirements set forth in Section 6.1, any withdrawal pursuant to Section
6.1 shall not be in excess of the amount necessary to satisfy the need
determined under Section 6.1 and shall also be subject to the following
requirements:

                  (1)      The Participant shall first obtain all withdrawals,
         other than hardship withdrawals, and all nontaxable loans currently
         available under all plans maintained by the Plan Sponsor;

                  (2)      the Plan Sponsor shall not permit Elective Deferrals
         or Catch-Up Contributions to be made to the Plan or any other plan
         maintained by the Plan Sponsor, for a period of twelve (12) months
         (effective September 29, 2002, six (6) months) after the Participant
         receives the withdrawal pursuant to this Section.

                  (3)      Effective until September 29, 2002, the Plan Sponsor
         shall not permit Elective Deferrals to be made to the Plan or any other
         plan maintained by the Plan

                                       24
<PAGE>

         Sponsor for the Participant's taxable year immediately following the
         taxable year of the hardship withdrawal in excess of the limit under
         Section 3.1(b) for the taxable year, less the amount of the Elective
         Deferrals made to the Plan or any other plan maintained by the Plan
         Sponsor for the taxable year in which the withdrawal under this Section
         occurs.

         (c)      Hardship withdrawals shall be made only in accordance with
such other rules, policies, procedures, restrictions, and conditions as the Plan
Administrator may from time to time adopt. Any determination of the existence of
hardship and the amount to be withdrawn on account thereof shall be made by the
Plan Administrator (or such other person as may be required to make such
decisions) in accordance with the foregoing rules as applied in a uniform and
nondiscriminatory manner.

         (d)      Unless the Participant requests otherwise, a hardship
withdrawal shall include the amount necessary to pay any federal, state and
local income taxes and penalties reasonably anticipated to result from the
withdrawal.

         (e)      A hardship withdrawal shall be made in a lump sum to the
Participant.

         6.2      Age 59 1/2 Withdrawals. A Participant who has attained at
least age 59 1/2 may elect to receive a distribution of all or a portion of his
vested Employee 401(k) Contribution Account, Employer Match Account, Rollover
Account, QMAC/QNEC Account and Prior Plan Account.

         6.3      Age 70 1/2 Withdrawals. A Participant who has attained at
least age 70 1/2 may elect to receive a distribution of all or a portion of his
Account.

                                    ARTICLE 7
                PAYMENT OF BENEFITS ON TERMINATION OF EMPLOYMENT

         7.1      Eligibility for Payment. A Participant who has a Termination
of Employment shall be eligible to receive payment of his vested Account as
outlined in Article 10.

         7.2      Vesting. That portion of a Participant's Account in which he
is vested at any given time shall be:

                  (a)      his Employee 401(k) Contribution Account, Rollover
         Account, and QMAC/QNEC Account, all of which shall be fully vested and
         nonforfeitable at all times; and

                  (b)      effective for Plan Years beginning on or after
         September 29, 2002, for all Participants who complete an Hour of
         Service after such date, his Employer Match Account, Employer Profit
         Sharing Account, and Prior Plan Account computed according to the
         following vesting schedule:

                                       25
<PAGE>

<TABLE>
<CAPTION>
                              Full Years of                        Percentage
                             Vesting Service                         Vested
                            -----------------                       --------
                            <S>                                    <C>
                               Less than 2                               0%
                                    2                                   20%
                                    3                                   40%
                                    4                                   60%
                                    5                                   80%
                                6 or more                              100%
</TABLE>

                  (c)      for Participants who do not complete at least one
         Hour of Service after September 28, 2002 and became a Participant in
         the Plan prior to October 1, 1989, his Employer Match Account, Employer
         Profit Sharing Account, and Prior Plan Account computed according to
         the following vesting schedule:

<TABLE>
<CAPTION>
                              Full Years of                        Percentage
                             Vesting Service                         Vested
                            -----------------                       --------
                            <S>                                    <C>
                               Less than 1                               0%
                                    1                                   10%
                                    2                                   20%
                                    3                                   30%
                                    4                                   40%
                                    5                                   60%
                                    6                                   80%
                                7 or more                              100%
</TABLE>

                  (d)      for Participants who do not complete at least one
         Hour of Service after September 28, 2002 and become a Participant in
         the Plan on or after October 1, 1989, his Employer Match Account,
         Employer Profit Sharing Account, and Prior Plan Account computed
         according to the following vesting schedule:

<TABLE>
<CAPTION>
                              Full Years of                        Percentage
                             Vesting Service                         Vested
                            -----------------                       --------
                            <S>                                    <C>
                               Less than 3                               0%
                                    3                                   20%
                                    4                                   40%
                                    5                                   60%
                                    6                                   80%
                                7 or more                              100%
</TABLE>

                  (e)      If a Participant receives a distribution from these
         accounts at any time when the Participant is less than one hundred
         percent (100%) vested, then until the earlier of the date the
         Participant forfeits his nonvested Account or the Participant's
         Termination Completion Date, the vested portion of these accounts of
         the Participant at any time shall be equal to "X" computed according to
         the formula X=P(AB+D)-D. For purposes of the formula, "P" is the vested
         percentage at the relevant time, "AB" is the Account balance at the
         relevant time, and D is the amount of the distribution(s).

                                       26
<PAGE>

         7.3      Forfeiture Timing and Cash-out/Buyback.

                  (a)      The nonvested portion of the Account of a Participant
         who has had a Termination of Employment shall be forfeited as of the
         earlier of the date the Participant receives a distribution of the
         vested portion of his Account or the first day of the Plan Year
         following the Participant's Termination Completion Date. For such
         purposes, a Participant who has had a Termination of Employment and who
         is not vested in any portion of his Account, the Participant shall be
         deemed to have received a distribution of his Account as of the date of
         such Termination of Employment.

                  (b)      (1)      If a Participant who has received a
                  distribution of the vested portion of his Account is
                  reemployed by a Plan Sponsor or an Affiliate prior to his
                  Termination Completion Date, any portion of his Account that
                  was forfeited shall be restored if the Participant repays to
                  the Fund all of that portion of his vested Account which was
                  paid to him no later than the fifth anniversary of the
                  Participant's reemployment by the Plan Sponsor or an
                  Affiliate.

                           (2)      If a Participant who was not vested in any
                  portion of his Account had a Termination of Employment and is
                  reemployed by a Plan Sponsor or an Affiliate prior to his
                  Termination Completion Date, any portion of his Account which
                  was forfeited shall be restored.

                           (3)      Any restoration made pursuant to Subsection
                  (b)(1) or (2) above shall be effective on the Valuation Date
                  coinciding with or next following the repayment or the
                  Participant's reemployment, as applicable.

                           (4)      The restoration on any Valuation Date of the
                  forfeited portion of the Account of a Participant pursuant to
                  this Subsection (b) shall be made first from forfeitures
                  available for allocation on that Valuation Date, to the extent
                  available, and secondly from contributions by the Plan
                  Sponsor. Only after restorations have been made shall the
                  remaining forfeitures be available under Section 3.5.

         7.4      Changes to Vesting Schedule. If a Plan amendment directly or
indirectly changes the vesting schedule, the vesting percentage for each
Participant in his Account accumulated to the date when the amendment is adopted
shall not be reduced as a result of the amendment. In addition, any Participant
with at least three (3) years of Vesting Service may irrevocably elect to remain
under the pre-amendment vesting schedule with respect to all of his benefits
accrued both before and after the amendment. If the pre-amendment vesting
schedule provides a Participant with a vested percentage, at each time prior to
the Participant becoming one hundred percent (100%) vested, that is more
favorable to a Participant than the amended vesting schedule, all affected
Participants with at least three (3) years of Vesting Service shall be deemed to
have elected to remain under the preamendment vesting schedule.

         7.5      Suspension for Rehires. If a Participant has a Termination of
Employment and is subsequently reemployed by a Plan Sponsor or an Affiliate
prior to receiving a distribution of his

                                       27
<PAGE>

Account under the Plan, such Participant shall not be entitled to a distribution
under this Article 7 while he is an Employee.

         7.6      Suspension for Nondistributable Events. If a Participant has a
Termination of Employment which is not a distributable event as provided under
Code Section 401(k)(10), the Plan Sponsor is not required to distribute such
Participant's Account to the Participant prior to the time for distribution as
otherwise provided under the Plan.

                                    ARTICLE 8
                 PAYMENT OF BENEFITS ON RETIREMENT OR DISABILITY

         8.1      Eligibility for Payment. A Participant who has reached a
Retirement Date or incurs a Disability while an Employee shall be eligible to
receive payment of his Account as outlined in Article 10.

         8.2      Vesting. The Account of a Participant who has reached a
Retirement Date, has attained Normal Retirement Age while employed, or has
incurred a Disability while an Employee shall be fully vested and
nonforfeitable.

                                    ARTICLE 9
                                 DEATH BENEFITS

         9.1      Eligibility for Payment. If a Participant dies before
receiving a full distribution of his vested Account, his Beneficiary shall be
eligible to receive payment of the Participant's vested Account as outlined in
Article 10 below. If a Participant dies after beginning to receive a
distribution of his vested Account that is payable in a form other than a lump
sum (for Plan years during which such alternate form is available), his
Beneficiary shall continue to receive the undistributed portion of his vested
Account in the form selected by the Participant before his death.

         9.2      Vesting. Accounts of deceased Participants shall be vested to
the extent provided pursuant to Article 7 or 8, as applicable. In addition, the
Account of a Participant who dies while an Employee shall be fully vested and
nonforfeitable.

                                   ARTICLE 10
                         GENERAL RULES ON DISTRIBUTIONS

         10.1     Form and Timing of Distributions On or After January 1, 2003

                  (a)      If the vested Account balance of a Participant or a
         Beneficiary of a deceased Participant (not including any balance in the
         Participant's Rollover Account) is $5,000 or less, it shall be
         distributed in one lump sum not earlier than the Plan Quarter following
         the Plan Quarter in which the Participant or Beneficiary becomes
         eligible for a distribution pursuant to Article 7, 8 or 9, as
         applicable.

                                       28
<PAGE>

                  (b) If the vested Account balance of a Participant or a
         Beneficiary of a deceased Participant (not including any balance in the
         Participant's Rollover Account) exceeds $5,000 and the Participant or
         Beneficiary is eligible for a distribution pursuant to Article 7, 8 or
         9, as applicable, the Participant or Beneficiary will receive payment
         of his Account in the form of one lump sum payment during the Plan
         Quarter following the Plan Quarter in which the Participant or
         Beneficiary is eligible for a distribution or, if later, the date on
         which the Participant or Beneficiary consents to receive such
         distribution.

                  (c)      Notwithstanding the foregoing, a Participant or a
         Beneficiary of a deceased Participant may elect to receive a
         distribution of the Prior Plan Account in one lump sum as soon as
         administratively feasible following eligibility to receive a
         distribution pursuant to Article 7, 8, or 9, as applicable.

                  (d)      In lieu of distributions under Paragraphs (a), (b),
         and (c), a Participant (or a Beneficiary that is the spouse of the
         Participant) may elect to have the vested Account balance paid in the
         form of a Direct Rollover pursuant to Section 10.5 below.

         10.2     Form and Timing of Distributions Prior to January 1, 2003

                  (a)      If the vested Account balance of a Participant or a
         Beneficiary of a deceased Participant (in the case of a deceased
         Participant who did not begin to receive payment of his vested Account
         balance before his death) is $3,500 ($5,000, effective September 27,
         1998) or less, it shall be distributed in one lump sum not earlier than
         the Plan Quarter following the date on which the Participant or
         Beneficiary becomes eligible for a distribution pursuant to Article 7,
         8 or 9, as applicable. Effective for Plan Years beginning on or after
         September 29, 2002, the determination of whether the Participant's
         Account exceeds $5,000 shall be made without taking into account any
         balance in the Participant's Rollover Account.

                  (b)      If the vested Account balance of a Participant or a
         Beneficiary of a deceased Participant (in the case of a deceased
         Participant who did not begin to receive payment of his vested Account
         balance before his death) exceeds $3,500 ($5,000, effective September
         27, 1998) and the Participant or Beneficiary is eligible for a
         distribution pursuant to Article 7, 8 or 9, as applicable, the
         Participant or Beneficiary will receive payment of his Account as
         follows:

                           (1)      A married Participant will receive payment
                  of his Account in the form of a Qualified Joint and Survivor
                  Annuity, unless the Participant elects during the Applicable
                  Election Period (as hereinafter defined) not to receive
                  payments in this form and any required spousal consent is
                  obtained. An unmarried Participant will receive payment of his
                  Account in the form of a life annuity, unless the Participant
                  elects during the Applicable Election Period not to receive
                  payments in this form.

                                       29
<PAGE>

                           (2)      A Participant who makes a valid election not
                  to receive payment in the form described in Subparagraph (1)
                  above may elect to receive payment of his Account in one of
                  the forms listed below:

                                    (A)     a lump-sum payment in cash;

                                    (B)      payment in annual installments over
                           a period to be determined by the Participant or his
                           Beneficiary but not to exceed the life expectancy of
                           the Participant or the joint lives of the Participant
                           and his Beneficiary;

                                    (C)     a single life annuity; or

                                    (D)      a joint and survivor annuity with
                           or without a term certain; provided, however, that a
                           joint and survivor annuity optional form of benefit
                           shall not be available as a method of distribution
                           with respect to the Alternate Payee and his or her
                           subsequent spouse or to a Beneficiary and his or her
                           spouse.

                           (3)      For Plan Years beginning on or after
                  September 29, 2002, the determination of whether the
                  Participant's Account exceeds $5,000 shall be made without
                  taking into account any balance in the Participant's Rollover
                  Account.

                  (c)      If the Participant's Account is payable in the form
         of a life annuity, and the Participant dies before he begins to receive
         payments from the Fund, the Participant's spouse shall receive a
         "Qualified Preretirement Survivor Annuity." Notwithstanding the
         foregoing, the surviving spouse of a Participant who is entitled to
         receive a Qualified Preretirement Survivor Annuity may elect a lump sum
         payment prior to the date the annuity is purchased or distributions
         begin, unless the Participant makes an election during the Applicable
         Election Period not to receive the applicable annuity and his spouse
         consents to such election.

                  (d)      If an annuity is to be paid from the Plan, such
         annuity may be purchased with the Participant's Account from an
         insurance company designated by the Committee or its designee in
         writing to the insurance company and may be distributed to the
         Participant or his Beneficiary in full satisfaction of the benefits to
         which the Participant or his Beneficiary is entitled under the Plan.
         The amount of the annuity shall be the actuarial equivalent of the
         Participant's Account (reduced by any commissions or other costs
         charged by the insurance company) based on factors used by the
         insurance company from which the annuity is purchased.

                  (e)      Annuity Rules. The provisions of this Section shall
         apply only in the event the Participant receives payment of his Account
         in the form of an annuity described in Section 10.2(b).

                           (1)      The Plan Administrator shall furnish to the
                  Participant a written explanation of:

                                       30
<PAGE>

                                    (A)      the terms and conditions of the
                           Qualified Joint and Survivor Annuity and the
                           Qualified Preretirement Survivor Annuity;

                                    (B)      the Participant's right to make,
                           and the effect of, an election not to receive the
                           Qualified Joint and Survivor Annuity or the Qualified
                           Preretirement Survivor Annuity;

                                    (C)      the rights of the Participant's
                           spouse as described below; and

                                    (D)      the right to make and the effect of
                           an election pursuant to this paragraph.

                           (2)      In the case of a Qualified Joint and
                  Survivor Annuity, the written explanation shall be provided to
                  the Participant no less than thirty (30) days and no more than
                  ninety (90) days prior to the first date on which he is
                  entitled to commencement of payments from the Fund.
                  Notwithstanding the foregoing, a Participant may elect to
                  waive the requirement that the written explanation be provided
                  at least thirty (30) days prior to commencement of payments,
                  provided that the first payment from the Fund occurs more than
                  seven (7) days from the date the explanation is received by
                  the Participant. In the case of the Qualified Preretirement
                  Survivor Annuity, the written explanation shall be provided to
                  the Participant in whichever of the following periods ends
                  last:

                                    (A)      the period beginning with the first
                           day of the Plan Year in which the Participant attains
                           age 32 and ending with the close of the Plan Year
                           preceding the Plan Year in which the Participant
                           attains age 35;

                                    (B)      the period beginning one year
                           before and ending one year after the Employee first
                           becomes a Participant;

                                    (C)      the period beginning one year
                           before and ending one year after the provisions of
                           this Subsection apply to the Participant; or

                                    (D)      a reasonable period of time after
                           separation from service in the case of a Participant
                           who separates from service before attaining age 35.

                           (3)      The Participant may elect during the
                  Applicable Election Period not to receive the Qualified Joint
                  and Survivor Annuity or Qualified Preretirement Survivor
                  Annuity by execution and delivery to the Plan Administrator of
                  a form provided for that purpose by the Plan Administrator.
                  "Applicable Election Period" means, with respect to a
                  Qualified Joint and Survivor Annuity, the 90-day period ending
                  on the first date on which the Participant is entitled to
                  commencement of payment from the Fund. In the event the
                  Participant waives the minimum 30-day requirement for the
                  written explanation, the Applicable Election Period shall not
                  end before the period ending thirty (30) days after the
                  Participant receives the written explanation. Notwithstanding
                  the foregoing, if the Participant receives the written

                                       31
<PAGE>

                  explanation of the Qualified Joint and Survivor Annuity and
                  affirmatively elects a form of distribution, the payments from
                  the Fund may commence less than thirty (30) days after the
                  Participant receives the written explanation provided that the
                  Participant may revoke the affirmative distribution election
                  until the later of the time payments from the Fund are to
                  begin or the expiration of the 7-day period which begins on
                  the day after the Participant receives the written
                  explanation. With respect to a Qualified Preretirement
                  Survivor Annuity, the Applicable Election Period means the
                  period which begins on the first day of the Plan Year in which
                  the Participant attains age 35 and ends on the date of the
                  Participant's death.

                           (4)      In the case of a married Participant, no
                  election shall be effective unless:

                                    (A)      the spouse of the Participant
                           consents in writing to the election and the consent
                           acknowledges the effect of the election (including,
                           if applicable, the identity of any Beneficiary other
                           than the Participant's spouse and the alternate form
                           of payment) and is witnessed by a notary public, or

                                    (B)      it is established to the
                           satisfaction of the Plan Administrator that the
                           consent required pursuant to Subsection (A) of this
                           Section (4) may not be obtained because there is no
                           spouse, the spouse cannot be located, the Participant
                           has a court order indicating that he is legally
                           separated or has been abandoned (within the meaning
                           of local law) unless a qualified domestic relations
                           order provides otherwise, or of any other
                           circumstances as permitted by regulations promulgated
                           by the Department of the Treasury. If the spouse is
                           legally incompetent to give consent, consent by the
                           spouse's legal guardian shall be deemed to be consent
                           by the spouse.

                           (5)      Any consent by a spouse (or establishment
                  that the consent of a spouse may not be obtained) shall be
                  effective only with respect to that spouse. If an election is
                  made, the Participant's vested Account shall be paid in the
                  alternate form of payment set forth in Section 10.2(b) chosen
                  by the Participant by written instrument delivered to the Plan
                  Administrator. Any waiver of a Qualified Preretirement
                  Survivor Annuity made prior to the first day of the Plan Year
                  in which the Participant attains age 35 shall become invalid
                  as of the first day of the Plan Year in which the member
                  attains age 35 and a Qualified Preretirement Annuity shall be
                  provided, unless a new waiver is obtained. The Participant may
                  revoke any election not to receive payment in the form of a
                  Qualified Joint and Survivor Annuity at any time prior to
                  commencement of payments from the Fund, and may make a new
                  election at any time prior to the commencement of payments
                  from the Fund.

                                       32
<PAGE>

         10.3     Additional Distribution Rules

                  (a)      Except as specified in Subsections 10.1(a) and
         10.2(a) above, no distribution of the vested Account balance of a
         Participant will be made without his consent (and, where required, the
         consent of his spouse) before he reaches Normal Retirement Age.

                  (b)      Payment of a Participant's vested Account to the
         Participant will commence not later than sixty (60) days after the last
         day of the Plan Year in which falls the later of (1) the Participant
         reaching Normal Retirement Age, or (2) the Participant reaching a
         Retirement Date or becoming subject to a Disability while an Employee.
         However, a Participant may elect to delay his distribution to a later
         date (subject to Section 10.6). If the amount of the payment required
         to commence on the date determined under this Subsection cannot be
         ascertained by such date, or if it is not possible to make such payment
         on such date because the Plan Administrator has been unable to locate
         the Participant after making reasonable efforts to do so, a payment
         retroactive to such date may be made no later than sixty (60) days
         after the earliest date in which the amount of such payment can be
         ascertained for the date on which the Participant is located.

                  (c)      Payment of a Participant's Account will be made in
         cash. However, if the value of a Participant's Account exceeds the fair
         market value of one hundred (100) shares of class A common stock of the
         Primary Sponsor as of the date on which the distribution is made, a
         Participant or his designated Beneficiary may elect to receive payment
         of his Account in the form of such class A shares.

                  (d)      Payment of any portion of a Participant's Account
         (other than amounts attributable to the Participant's Employer Profit
         Sharing Account) to an Alternate Payee under Section 13.1 after the
         Alternative Payee is entitled to a distribution under Section 13.1 will
         be paid in the form of one lump sum payment during the Plan Quarter
         following the Plan Quarter in which the Alternate Payee becomes
         entitled to a distribution under Section 13.1 or, if later, the date on
         which the Alternate Payee consents to receive such distribution

         10.4     Adjustments for Income. Except for installment distributions,
Accounts shall not be adjusted for earnings or losses incurred after the
Valuation Date with respect to which the Account is valued for imminent payout
purposes coinciding with or preceding the date of distribution of the Account.
Except for those situations in which a Participant has elected, pursuant to
Section 5.9(d), to effect a transfer or Direct Rollover of a loan to another
plan, prior to distribution of an Account, the Account shall be reduced by the
amount necessary to satisfy the unpaid principal, accrued interest, and
penalties on any loan made to the Participant.

         10.5     Direct Rollovers. Notwithstanding any provisions of the Plan
to the contrary that would otherwise limit a Distributee's election under this
Article 10, a Distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of a distribution pursuant to this
Section which is an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover so long as all
Eligible

                                       33
<PAGE>

Rollover Distributions to a Distributee for a calendar year total or are
expected to total at least $200 and, in the case of a Distributee who elects to
directly receive a portion of an Eligible Rollover Distribution and directly
roll the balance over to an Eligible Retirement Plan, the portion that is to be
directly rolled over totals at least $500. If the Eligible Rollover Distribution
is one to which Code Sections 401(a)(11) and 417 do not apply, such Eligible
Rollover Distribution may commence less than thirty (30) days after the notice
required under Treasury Regulations Section 1.411(a)-11(c) is given, provided
that:

                  (a)      the Plan Administrator clearly informs the
         Distributee that the Distributee has a right to a period of at least
         thirty (30) days after receiving the notice to consider the decision of
         whether or not to elect a distribution (and, if applicable, a
         particular distribution option), and

                  (b)      the Distributee, after receiving the notice,
         affirmatively elects a distribution.

         10.6     Required Minimum Distributions. Subject to Subsection (d)
below, and notwithstanding any other provisions of the Plan,

                  (a)      Prior to the death of a Participant, all retirement
         payments hereunder shall:

                           (1)      be distributed to the Participant not later
                  than the Required Beginning Date (as defined below), or

                           (2)      be distributed, commencing not later than
                  the Required Beginning Date -

                                    (A)      in accordance with regulations
                           prescribed by the Secretary of the Treasury, over the
                           life of the Participant or over the lives of the
                           Participant and his designated individual
                           Beneficiary, if any, or

                                    (B)      in accordance with regulations
                           prescribed by the Secretary of the Treasury, over a
                           period not extending beyond the life expectancy of
                           the Participant or the joint life and last survivor
                           expectancy of the Participant and his designated
                           individual Beneficiary, if any.

                  (b)      Death distributions.

                           (1)      If the distribution of a Participant's
                  retirement payments have begun in accordance with Subsection
                  (a)(2) of this Section, and the Participant dies before his
                  entire vested Account has been distributed to him, then the
                  remaining portion of his vested Account shall be distributed
                  in a lump sum at least as rapidly as under the method of
                  distribution being used under Subsection (a)(2) of this
                  Section as of the date of his death.

                                       34
<PAGE>

                           (2)      If a Participant dies before the
                  commencement of retirement payments hereunder, the entire
                  interest of the Participant shall be distributed in a lump sum
                  within five (5) years after his death.

                           (3)      If any portion of a Participant's vested
                  Account is payable to or for the benefit of the Participant's
                  designated individual Beneficiary and if such designated
                  individual Beneficiary is the Participant's surviving spouse,
                  then -

                                    (A)      the date on which the lump sum
                           distribution is required to made shall not be earlier
                           than the date on which the Participant would have
                           attained age 70 1/2, and

                                    (B)      if the surviving spouse dies before
                           the distribution to such spouse is made, this
                           Subsection (3) shall be applied as if the surviving
                           spouse were the Participant.

                  (c)      For purposes of this Section, the term Required
         Beginning Date means April 1 of the calendar year following the
         calendar year in which the Participant attains age 70 1/2.

                  (d)      With respect to determining the amount of the minimum
         required distributions under the Plan made in the 2002 calendar year,
         the Plan will apply the minimum distribution requirements of Code
         Section 401(a)(9) in accordance with the regulations under Code Section
         401(a)(9) that were proposed in January 2001, notwithstanding any
         provision of the Plan to the contrary. With respect to distributions
         under the Plan made in calendar years beginning on or after January 1,
         2003, the Plan will apply the minimum distribution requirements of Code
         Section 401(a)(9) in accordance with the final and proposed regulations
         under Code Section 401(a)(9) that were issued in April, 2002 ("2002
         Regulations"), notwithstanding anything in the Plan to the contrary.
         The use of the proposed portion of the 2002 Regulations shall continue
         in effect until the end of the last calendar year beginning before the
         effective date of final regulations under Code Section 401(a)(9) that
         supersede such proposed regulations or such other date as may be
         specified in guidance published by the Internal Revenue Service.

                                   ARTICLE 11
                           ADMINISTRATION OF THE PLAN

         11.1     Trust Agreement. The Primary Sponsor shall enter into one or
more Trust Agreements to establish one or more Trusts with the Trustee
designated by the Board of Directors for the management of the Fund, which Trust
Agreement(s) shall form a part of the Plan and is incorporated herein by
reference.

         11.2     Operation of the Plan Administrator. The Primary Sponsor shall
appoint a Plan Administrator. If an organization is appointed to serve as the
Plan Administrator, then the Plan Administrator may designate in writing one or
more persons who may act on behalf of the Plan

                                       35
<PAGE>

Administrator. If more than one person is so designated with respect to the same
administrative function, a majority of such persons shall constitute a quorum
for the transaction of business and shall have the full power to act on behalf
of the Plan Administrator. The Primary Sponsor shall have the right to remove
the Plan Administrator at any time by notice in writing. The Plan Administrator
may resign at any time by written notice of resignation to the Trustee and the
Primary Sponsor. Upon removal or resignation of the Plan Administrator, or in
the event of the dissolution of the Plan Administrator, the Primary Sponsor
shall appoint a successor.

         11.3     Fiduciary Responsibility.

                  (a)      The Plan Administrator, as a Named Fiduciary, may
         allocate its fiduciary responsibilities among Fiduciaries other than
         the Trustee, designated in writing by the Plan Administrator and may
         designate in writing persons other than the Trustee to carry out its
         fiduciary responsibilities under the Plan. The Plan Administrator may
         remove any person designated to carry out its fiduciary
         responsibilities under the Plan by notice in writing to such person.

                  (b)      The Plan Administrator and each other Fiduciary may
         employ persons to perform services and to render advice with regard to
         any of the Fiduciary's responsibilities under the Plan. Charges for all
         such services performed and advice rendered may be paid from the Fund
         to the extent permitted by ERISA.

                  (c)      Each Plan Sponsor shall indemnify and hold harmless
         each person constituting the Plan Administrator or the Investment
         Committee, except those individuals who are not a Plan Sponsor or an
         employee of a Plan Sponsor, if any, from and against any and all
         claims, losses, costs, expenses (including, without limitation,
         attorney's fees and court costs), damages, actions or causes of action
         arising from, on account of or in connection with the performance by
         such person of his duties in such capacity, other than such of the
         foregoing arising from, on account of or in connection with the willful
         neglect or willful misconduct of such person.

         11.4     Duties of the Plan Administrator.

                  (a)      The Plan Administrator shall advise the Trustee with
         respect to all payments under the terms of the Plan and shall direct
         the Trustee in writing to make such payments from the Fund; provided,
         however, in no event shall the Trustee make such payments if the
         Trustee has actual knowledge that such payments are contrary to the
         terms of the Plan and the Trust.

                  (b)      The Plan Administrator shall from time to time
         establish rules, not contrary to the provisions of the Plan and the
         Trust, for the administration of the Plan and the transaction of its
         business. All elections and designations under the Plan by a
         Participant or Beneficiary shall be made on forms prescribed by the
         Plan Administrator. The Plan Administrator shall have discretionary
         authority to construe the terms of the Plan and shall determine all
         questions arising in the administration, interpretation and application
         of the Plan, including, but not limited to, those concerning
         eligibility for benefits and it shall not act so as to discriminate in
         favor of any person. All

                                       36
<PAGE>

         determinations of the Plan Administrator shall be conclusive and
         binding on all Employees, Participants, Beneficiaries and Fiduciaries,
         subject to the provisions of the Plan and the Trust and subject to
         applicable law.

                  (c)      The Plan Administrator shall furnish Participants and
         Beneficiaries with all disclosures now or hereafter required by ERISA
         or the Code. The Plan Administrator shall file, as required, the
         various reports and disclosures concerning the Plan and its operations
         as required by ERISA and by the Code, and shall be solely responsible
         for establishing and maintaining all records of the Plan and the Trust.

                  (d)      The statement of specific duties for a Plan
         Administrator in this Section is not in derogation of any other duties
         which a Plan Administrator has under the provisions of the Plan or the
         Trust or under applicable law.

         11.5     Investment Manager. The Primary Sponsor may, by action in
writing provided to the Trustee, appoint an Investment Manager. Any Investment
Manager may be removed in the same manner in which appointed, and in the event
of any removal, the Investment Manager shall, as soon as possible, but in no
event more than thirty (30) days after notice of removal, turn over all assets
managed by it to the Trustee or to any successor Investment Manager appointed,
and shall make a full accounting to the Primary Sponsor with respect to all
assets managed by it since its appointment as an Investment Manager.

         11.6     Investment Committee. The Primary Sponsor may, by action in
writing certified by notice to the Trustee, appoint an Investment Committee. The
Primary Sponsor shall have the right to remove any person on the Investment
Committee at any time by notice in writing to such person. A person on the
Investment Committee may resign at any time by written notice of resignation to
the Primary Sponsor. Upon such removal or resignation, or in the event of the
death of a person on the Investment Committee, the Primary Sponsor may appoint a
successor. Until a successor has been appointed, the remaining persons on the
Investment Committee may continue to act as the Investment Committee.

         11.7     Action by a Plan Sponsor. Any action to be taken by a Plan
Sponsor shall be taken by persons duly authorized by the Plan Sponsor, except,
subject to Section 16.1, amendments to, termination of, or termination of a Plan
Sponsor participation in, the Plan or the Trust, or the determination of the
basis of any Plan Sponsor contributions, may be made only to the extent
authorized by written resolution or written direction of the board of directors
or appropriate governing body. Nothing herein shall be construed to prohibit the
board of directors or appropriate governing body from delegating to any officer
or other appropriate person of a Plan Sponsor the authority to take any such
actions as may be specified in such resolution or written direction.

                                   ARTICLE 12
                             CLAIM REVIEW PROCEDURE

         12.1     Notice of Denial. If a Participant or Beneficiary is denied a
claim for benefits under a Plan, the Plan Administrator shall provide to the
claimant written notice of the denial

                                       37
<PAGE>

within ninety (90) days after the Plan Administrator receives the claim, unless
special circumstances require an extension of time for processing the claim. If
such an extension of time for processing is required, written notice of the
extension shall be furnished to the claimant prior to the termination of the
initial 90-day period. In no event shall the extension exceed a period of ninety
(90) days from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Plan Administrator expects to render the final decision.

         12.2     Contents of Notice of Denial. If a Participant or Beneficiary
is denied a claim for benefits under a Plan, the Plan Administrator shall
provide to such claimant written notice of the denial which shall set forth:

                  (a)      the specific reasons for the denial;

                  (b)      specific references to the pertinent provisions of
         the Plan on which the denial is based;

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

                  (d)      an explanation of the Plan's claim review procedures,
         and the time limits applicable to such procedures, including a
         statement of the claimant's right to bring a civil action under
         Sections 502(a) of ERISA following an adverse benefit determination on
         review.

         12.3     Right to Review. After receiving written notice of the denial
of a claim or that a domestic relations order is a qualified domestic relations
order, a claimant or his representative shall be entitled to:

                  (a)      request a full and fair review of the denial of the
         claim or determination that a domestic relations order is a qualified
         domestic relations order by written application to the Plan
         Administrator;

                  (b)      request, free of charge, reasonable access to, and
         copies of, all documents, records, and other information relevant to
         the claim;

                  (c)      submit written comments, documents, records, and
         other information relating to the denied claim to the Plan
         Administrator; and

                  (d)      a review that takes into account all comments,
         documents, records, and other information submitted by the claimant
         relating to the claim, without regard to whether such information was
         submitted or considered in the initial benefit determination.

         12.4     Application for Review. If the claimant wishes such a review
of the decision denying his claim to benefits under the Plan or if a claimant
wishes to appeal a decision that a

                                       38
<PAGE>

domestic relations order is a qualified domestic relations order, the claimant
must deliver such written application to the Plan Administrator within sixty
(60) days after receiving written notice of the denial or notice that the
domestic relations order is a qualified domestic relations order. Delivery shall
be considered effective only upon actual receipt by the Plan Administrator.

         12.5     Hearing. Upon receiving such written application for review,
the Plan Administrator may schedule a hearing for purposes of reviewing the
claimant's claim, which hearing shall take place not more than thirty (30) days
from the date on which the Plan Administrator received such written application
for review.

         12.6     Notice of Hearing. At least ten (10) days prior to the
scheduled hearing, the claimant and his representative designated in writing by
him, if any, shall receive written notice of the date, time, and place of such
scheduled hearing. The claimant or his representative, if any, may request that
the hearing be rescheduled, for his convenience, on another reasonable date or
at another reasonable time or place.

         12.7     Counsel. All claimants requesting a review of the decision
denying their claim for benefits may employ counsel for purposes of the hearing.

         12.8     Decision on Review. No later than sixty (60) days following
the receipt of the written application for review, the Plan Administrator shall
submit its decision on the review in writing to the claimant and to his
representative, if any, unless the Plan Administrator determines that special
circumstances (such as the need to hold a hearing) require an extension of time,
to a day no later than one-hundred twenty (120) days after the date of receipt
of the written application for review. If the Plan Administrator determines that
the extension of time is required, the Plan Administrator shall furnish to the
claimant written notice of the extension before the expiration of the initial
sixty (60) day period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
Administrator expects to render its decision on the review. In the case of a
decision adverse to the claimant, the decision shall include:

                  (a)      specific reasons for the decision;

                  (b)      specific references to the pertinent provisions of
         the Plan on which the decision is based;

                  (c)      a statement that the claimant is entitled to receive,
         upon request and free of charge, reasonable access to, and copies of,
         all documents, records, and other information relevant to the
         claimant's claim for benefits; and

                  (d)      a statement of the claimant's right to bring an
         action under Section 502(a) of ERISA.

                                       39
<PAGE>

                                   ARTICLE 13
          ANTI-ALIENATION, INCOMPETENT DISTRIBUTEE & UNCLAIMED PAYMENTS

         13.1     Anti-Alienation. No benefit which shall be payable under the
Plan to any person shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the
same shall be void; and no such benefit shall in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or torts of any
person, nor shall it be subject to attachment or legal process for, or against,
such person, and the same shall not be recognized under the Plan, except to such
extent as may be required by law. Notwithstanding the above, this Section shall
not apply to a "qualified domestic relations order" (as defined in Code Section
414(p)), and benefits may be paid pursuant to the provisions of such an order.
The Plan Administrator shall develop procedures (in accordance with applicable
federal regulations) to determine whether a domestic relations order is
qualified, and, if so, the method and the procedures for complying therewith. In
addition, a distribution to an Alternate Payee shall be permitted if such
distribution is authorized by a qualified domestic relations order, but no
earlier than the date the affected Participant separates from service or reaches
the "earliest retirement age" (as defined in Code Section 414(p)), or upon the
death or Disability of the Alternate Payee. Any distribution made to an
Alternate Payee shall be made in accordance with the provisions of Article 10.

         13.2     Exception to Anti-Alienation. Notwithstanding any other
provision of the Plan, effective August 5, 1997, the benefit of a Participant
shall be subject to legal process and may be assigned, alienated or attached
pursuant to a court judgment or settlement provided:

                  (a)      such Participant is ordered or required to pay the
         Plan in accordance with the following:

                           (1)      a judgment or conviction for a crime
                  involving the Plan;

                           (2)      a civil judgment entered by a court in an
                  action brought in connection with a violation of part 4 of
                  subtitle B of Title I of ERISA; or

                           (3)      a settlement agreement between such
                  Participant and the Secretary of Labor, in connection with a
                  violation (or alleged violation) of part 4 of subtitle B of
                  Title I of ERISA by a fiduciary or any other person; and

                  (b)      the judgment, order, decree, or settlement agreement
         shall expressly provide for the offset of all or part of the amount
         ordered or required to be paid to the Plan against such Participant's
         benefits under the Plan.

         13.3     Minors and Incompetents. Whenever any benefit which shall be
payable under the Plan is to be paid to or for the benefit of any person who is
then a minor or determined to be incompetent by qualified medical advice, the
Plan Administrator need not require the appointment of a guardian or custodian,
but shall be authorized to cause the same to be paid over to the person having
custody of such minor or incompetent, or to cause the same to be paid to such
minor or incompetent without the intervention of a guardian or custodian, or to
cause the

                                       40
<PAGE>

same to be paid to a legal guardian or custodian of such minor or incompetent if
one has been appointed or to cause the same to be used for the benefit of such
minor or incompetent.

         13.4     Missing Participants. If the Plan Administrator cannot
ascertain the whereabouts of any Participant to whom a payment is due under the
Plan, the Plan Administrator may direct that the payment and all remaining
payments otherwise due to the Participant be cancelled on the records of the
Plan and the amount thereof applied as a forfeiture in accordance with Plan
provisions except that, in the event the Participant later notifies the Plan
Administrator of his whereabouts and requests the payments due to him under the
Plan, the forfeited amount shall be restored either from Trust income or by a
special contribution by the Plan Sponsor to the Plan, as determined by the Plan
Administrator, in an amount equal to the payment to be paid to the Participants.

                                   ARTICLE 14
                          PROHIBITION AGAINST DIVERSION

         At no time shall any part of the Fund be used for or diverted to
purposes other than the exclusive benefit of the Participants or their
Beneficiaries, subject, however, to the payment of all taxes and administrative
expenses and subject to the provisions of the Plan with respect to returns of
contributions. Expenses incurred in the administration of the Plan shall be paid
from the Trust, to the extent permitted by ERISA, unless such expenses are paid
by the Plan Sponsor; provided, further, that the Plan Sponsor may be reimbursed
by the Fund, to the extent permitted by ERISA, for Plan expenses originally paid
by the Plan Sponsor.

                                   ARTICLE 15
                              LIMITATION OF RIGHTS

         Participation in the Plan shall not give any Employee any right or
claim except to the extent that such right is specifically fixed under the terms
of the Plan. The adoption of the Plan and the Trust by any Plan Sponsor shall
not be construed to give any Employee a right to be continued in the employ of a
Plan Sponsor or as interfering with the right of a Plan Sponsor to terminate the
employment of any Employee at any time.

                                   ARTICLE 16
                       AMENDMENT TO OR TERMINATION OF THE
                               PLAN AND THE TRUST

         16.1     Right of Primary Sponsor to Amend or Terminate. The Primary
Sponsor reserves the right at any time to modify or amend or terminate the Plan
or the Trust in whole or in part; provided, however, that the Primary Sponsor
shall have no power to modify or amend the Plan in such manner as would cause or
permit any portion of the funds held under a Plan to be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or their
Beneficiaries, or as would cause or permit any portion of a fund held under the
Plan to become the property of a Plan Sponsor; and provided further, that the
duties or liabilities of the Trustee shall not be

                                       41
<PAGE>

increased without its written consent. No such modifications or amendments shall
have the effect of retroactively changing or depriving Participants or
Beneficiaries of rights already accrued under the Plan. No Plan Sponsor other
than the Primary Sponsor shall have the right to so modify, amend or terminate
the Plan or the Trust. Notwithstanding the foregoing, each Plan Sponsor may
terminate its own participation in the Plan and Trust pursuant to the Plan.

         16.2     Right of Plan Sponsor to Terminate Participation. Each Plan
Sponsor other than the Primary Sponsor shall have the right to terminate its
participation in the Plan and Trust by resolution of its board of directors or
other appropriate governing body and notice in writing to the Primary Sponsor
and the Trustee unless such termination would result in the disqualification of
the Plan or the Trust or would adversely affect the exempt status of the Plan or
the Trust as to any other Plan Sponsor. If contributions by or on behalf of a
Plan Sponsor are completely terminated, the Plan and Trust shall be deemed
terminated as to such Plan Sponsor. Any termination by a Plan Sponsor, shall not
be a termination as to any other Plan Sponsor.

         16.3     Plan Termination.

                  (a)      If the Plan is terminated by the Primary Sponsor or
         if contributions to the Trust should be permanently discontinued, it
         shall terminate as to all Plan Sponsors and the Fund shall be used,
         subject to the payment of expenses and taxes, for the benefit of
         Participants and Beneficiaries, and for no other purposes, and the
         Account of each affected Participant shall be fully vested and
         nonforfeitable, notwithstanding the provisions of the Section of the
         Plan which sets forth the vesting schedule.

                  (b)      In the event of the partial termination of the Plan,
         each affected Participant's Account shall be fully vested and
         nonforfeitable, notwithstanding the provisions of the Section of the
         Plan which sets forth the vesting schedule.

         16.4     Payments Upon Plan Termination. In the event of the
termination of the Plan or the Trust with respect to a Plan Sponsor, the
Accounts of the Participants with respect to the Plan as adopted by such Plan
Sponsor shall be distributed in accordance with the applicable distribution
provisions of the Plan pursuant to the instructions of the Plan Administrator;
provided that the Trustee shall not be required to make any distribution until
it receives a copy of an Internal Revenue Service determination letter to the
effect that the termination does not affect the qualified status of the Plan or
the exempt status of the Trust or, in the event that such letter is applied for
and is not issued, until the Trustee is reasonably satisfied that adequate
provision has been made for the payment of all taxes which may be due and owing
by the Trust.

         16.5     Plan Merger. In the case of any merger or consolidation of the
Plan with, or any transfer of the assets or liabilities of the Plan to, any
other plan qualified under Code Section 401, the terms of the merger,
consolidation or transfer shall be such that each Participant would receive (in
the event of termination of the Plan or its successor immediately thereafter) a
benefit which is no less than the benefit which the Participant would have
received in the event of termination of the Plan immediately before the merger,
consolidation or transfer.

         16.6     Optional Benefits. Notwithstanding any other provision of the
Plan, an amendment to the Plan -

                                       42
<PAGE>

                  (a)      which eliminates or reduces an early retirement
         benefit, if any, or which eliminates or reduces a retirement-type
         subsidy (as defined in regulations issued by the Department of the
         Treasury), if any, or

                  (b)      which eliminates an optional form of benefit (except
         to the extent otherwise provided in Treasury Regulations)

shall not be effective with respect to benefits attributable to service before
the amendment is adopted. In the case of a retirement-type subsidy described in
Subsection (a) above, this Section shall be applicable only to a Participant who
satisfies, either before or after the amendment, the preamendment conditions for
the subsidy. This prohibition on the elimination of optional benefits shall not
apply to the elimination of optional forms of benefit which is permitted under
Code Section 411(d)(6) and Treasury Regulations Section 1.411(d)(6)-4.

                                   ARTICLE 17
                         ADOPTION OF PLAN BY AFFILIATES

         Any corporation or other business entity related to the Primary Sponsor
by function or operation and any Affiliate, if the corporation, business entity
or Affiliate is authorized to do so by written direction adopted by the Board of
Directors, may adopt the Plan and the related Trust by action of the board of
directors or other appropriate governing body of such corporation, business
entity or Affiliate. Any adoption shall be evidenced by certified copies of the
resolutions of the foregoing board of directors or governing body indicating the
adoption and by the execution of the Trust by the adopting corporation, or
business entity or Affiliate. The resolution shall state and define the
effective date of the adoption of the Plan by the Plan Sponsor and, for the
purpose of Code Section 415, the "limitation year" as to such Plan Sponsor.
Notwithstanding the foregoing, however, if the Plan and Trust as adopted by an
Affiliate or other corporation or business entity under the foregoing provisions
shall fail to receive the initial approval of the Internal Revenue Service as a
qualified Plan and Trust under Code Sections 401(a) and 501(a), any
contributions by the Affiliate or other corporation or business entity after
payment of all expenses will be returned to such Plan Sponsor free of any trust,
and the Plan and Trust shall terminate, as to the adopting Affiliate or other
corporation or business entity.

                                   ARTICLE 18
                    QUALIFICATION AND RETURN OF CONTRIBUTIONS

         18.1     Initial Qualification Failure. If the Plan and the related
Trust fail to receive the initial approval of the Internal Revenue Service as a
qualified plan and trust, within one (1) year after the date of denial of
qualification

                  (a)      the contribution of a Plan Sponsor after payment of
         all expenses will be returned to a Plan Sponsor free of the Plan and
         Trust,

                                       43
<PAGE>

                  (b)      contributions made by a Participant shall be returned
         to the Participant who made the contributions, and

                  (c)      the Plan and Trust shall thereupon terminate.

         18.2     Deductibility. All Plan Sponsor contributions to the Plan are
contingent upon deductibility. To the extent permitted by the Code and other
applicable laws and regulations thereunder, upon a Plan Sponsor's request, a
contribution which was made by reason of a mistake of fact or which was
nondeductible under Code Section 404, shall be returned to a Plan Sponsor within
one (1) year after the payment of the contribution, or the disallowance of the
deduction (to the extent disallowed), whichever is applicable. In the event of a
contribution which was made by reason of a mistake of fact or which was
nondeductible, the amount to be returned to the Plan Sponsor shall be the excess
of the contribution above the amount that would have been contributed had the
mistake of fact or the mistake in determining the deduction not occurred, less
any net loss attributable to the excess. Any net income attributable to the
excess shall not be returned to the Plan Sponsor. No return of any portion of
the excess shall be made to the Plan Sponsor if the return would cause the
balance in a Participant's Account to be less than the balance would have been
had the mistaken contribution not been made.

                                   ARTICLE 19
                      INCORPORATION OF SPECIAL LIMITATIONS

         Appendices A, B, and C to the Plan, attached hereto, are incorporated
by reference and the provisions of the same shall apply notwithstanding anything
to the contrary contained herein.

         IN WITNESS WHEREOF, the Primary Sponsor and the participating Plan
Sponsor have caused this indenture to be executed as of the date first above
written.

                                 INGLES MARKETS, INCORPORATED

                                 By:  /s/ Brenda S. Tudor
                                      -----------------------------------------
                                 Title: Vice President-Finance
                                        ---------------------------------------

                                 MILKCO, INC.

                                 By:  /s/ Charles L. Gaither
                                    -------------------------------------------
                                 Title: President
                                        ---------------------------------------

                                       44
<PAGE>

                                   APPENDIX A
                            LIMITATION ON ALLOCATIONS

                                   SECTION 1
                            LIMIT ON ANNUAL ADDITION

         (a)      For Plan Years beginning before September 29, 2002, the Annual
Addition for any Participant for any one Limitation Year may not exceed the
lesser of:

                  (i)      $30,000, as adjusted under Code Section 415(d); or

                  (ii)     twenty-five percent (25%) of the Participant's
         Compensation.

         (b)      For Plan Years beginning on or after September 29, 2002,
except to the extent permitted under Section 3.1(c) and Code Section 414(v), the
Annual Addition for any Participant for any one Limitation Year may not exceed
the lesser of:

                  (i)      $40,000, as adjusted for changes in the cost of
         living as provided in regulations issued by the Secretary of the
         Treasury; or

                  (ii)     one hundred percent (100%) of the Participant's
         Compensation.

                  (iii)    In the event a change in the Limitation Year results
         in a short limitation period, the amount in subsection (b)(i) of this
         Section shall be multiplied by a fraction, the numerator of which is
         the number of months (including fractions thereof) in the short
         limitation period and the denominator of which is twelve (12), for the
         short limitation period. For the Plan Year beginning September 29, 2002
         and ending December 31, 2002, the amount in Subsection (a) shall be
         equal to $10,111 ($40,000 multiplied by the fraction 3.0333/12).

                                   SECTION 2
                                   DEFINITIONS

         For the purposes of this Appendix A, the following definitions shall
apply:

         (a)      The term "Annual Addition" for any Participant means for any
Limitation Year, the sum of certain Plan Sponsor, Affiliate, and Participant
contributions, forfeitures, as determined in Code Section 415(c)(2) in effect
for that Limitation Year. Participant contributions shall be determined without
regard to Rollover Amounts, employee contributions to a simplified employee
pension which are excludable from gross income under Code Section 408(k)(6), and
catch-up contributions as described in Code Section 414(v).

                                      A-1
<PAGE>

         (b)      The term "Affiliate" shall have the same meaning as such term
is given in Section 1.2 except that the definition of Affiliate (within the
meaning of Code Sections 414(b) and (c)) shall be as modified by Code Section
415(h).

         (c)      For purposes of determining the Participant's Compensation
under this Appendix A, the definition in Section 1.12 shall apply, except that
the definition of Affiliate (within the meaning of Code Sections 414(b) and (c))
shall be modified by Code Section 415(h).

         (d)      For purposes of this Appendix A, the term "Limitation Year"
shall mean a Plan Year unless a Plan Sponsor elects, by adoption of a written
resolution, to use any other twelve month period adopted in accordance with
regulations issued by the Secretary of the Treasury. For the short Plan Year
beginning September 29, 2002 and ending December 31, 2002, the Limitation Year
shall be this short Plan Year.

                                   SECTION 3
                            COMBINED PLAN LIMITATION

         Effective until September 30, 2000, in the event that a Plan Sponsor or
an Affiliate maintains a defined benefit plan under which a Participant also
participates, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year for any Participant may not
exceed 1.0.

                  (a)      The Defined Benefit Plan Fraction for any Limitation
         Year is a fraction:

                           (i)      the numerator of which is the projected
                  annual benefit of the Participant under the defined benefit
                  plan (determined as of the close of such year); and

                           (ii)     the denominator of which is the lesser of

                                    (A)      the product of 1.25, multiplied by
                           the maximum annual benefit allowable under Code
                           Section 415(b)(1)(A), or

                                    (B)     the product of

                                            (I)      1.4, multiplied by

                                            (II)      the maximum amount which
                                    may be taken into account under Section
                                    415(b)(1)(B) of the Code with respect to the
                                    Participant under the defined benefit plan
                                    for the Limitation Year (determined as of
                                    the close of the Limitation Year).

                  (b)      The Defined Contribution Plan Fraction for any
         Limitation Year is a fraction:

                                      A-2
<PAGE>

                           (i)      the numerator of which is the sum of a
                  Participant's Annual Additions as of the close of the
                  Limitation Year; and

                           (ii)     the denominator of which is the sum of the
                  lesser of the following amounts determined for the Limitation
                  Year and for all prior Limitation Years during which the
                  Participant was employed by a Plan Sponsor or an Affiliate:

                                    (A)      the product of 1.25, multiplied by
                           the dollar limitation in effect under Code Section
                           415(c)(1)(A) for the Limitation Year (determined
                           without regard to Section 415(c)(6) of the Code); or

                                    (B)     the product of

                                            (I)      1.4, multiplied by

                                            (II)      the amount which may be
                                    taken into account under Code Section
                                    415(c)(1)(B) (or Code Section 415(c)(7), if
                                    applicable) with respect to the Participant
                                    for the Limitation Year.

                                   SECTION 4
                              AGGREGATION OF PLANS

          For purposes of applying the limitations of this Appendix A, all
defined contribution plans maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined contribution plan, and all defined
benefit plans now or previously maintained or deemed to be maintained by a Plan
Sponsor shall be treated as one defined benefit plan. In the event any of the
actions to be taken pursuant to Section 6 of this Appendix A or pursuant to any
language of similar import in another defined contribution plan are required to
be taken as a result of the annual additions of a Participant exceeding the
limitations set forth in Section 1 of this Appendix A, because of the
Participant's participation in more than one defined contribution plan, the
actions shall be taken first with regard to this Plan.

                                   SECTION 5
                      CORRECTION OF EXCESS ANNUAL ADDITIONS

                  (a)      An "Excess Annual Addition" shall be:

                           (i)      that amount allocated to a Participant's
                  Account in excess of the limitations set forth in Section 1
                  above, as a result of the allocation of forfeitures to the
                  Account of a Participant, a reasonable error in estimating the
                  Participant's Compensation, a reasonable error in determining
                  the amount of Elective Deferrals, or other similar
                  circumstances;

                           (ii)     that amount allocated to a Participant's
                  Account in excess of the limitations set forth in Section 3
                  above (after any reductions in the benefits or

                                      A-3
<PAGE>

                  Annual Additions in any other plan required to be aggregated
                  with this Plan under Section 5).

                  (b)      A Participant's Annual Addition shall be reduced by
         distributing to the Participant the lesser of :

                           (i)      the amount of the Excess Annual Addition, or

                           (ii)     the contributions made by the Plan Sponsor
                  on behalf of the Participant pursuant to Section 3.1 with
                  respect to which no contribution is made under Section 3.2;

                  (c)      If further reduction is necessary, the Participant's
         Annual Addition shall be further reduced by distributing to the
         Participant an amount equal to contributions made by the Plan Sponsor
         on behalf of the Participant pursuant to Section 3.1 and contributions
         of the Plan Sponsor thereon pursuant to Section 3.2 (including
         forfeitures) shall be reduced in the amount of the remaining excess.
         The amount of the reduction under Section 3.1 shall be distributed to
         the Participant. The amount of the reduction under Section 3.2 shall be
         reallocated to the Employer Match Accounts of Participants who are not
         affected by the limitation in the same proportion as the contribution
         of the Plan Sponsor for the year is allocated under Section 3.2 to the
         Accounts of such Participants;

                  (d)      If further reduction is necessary, contributions made
         by the Plan Sponsor on behalf of the Participant pursuant to Section
         3.3 shall be reduced in the amount of the remaining excess. The amount
         of the reduction shall be reallocated to the Accounts of Participants
         who are not affected by the limitations in the same proportion as the
         contribution of the Plan Sponsor for the year is allocated under
         Section 3.3 to the Accounts of such Participants; and

                  (e)      If further reduction is necessary, forfeitures
         allocated to the Participant's Account shall be reduced by the amount
         of the remaining excess. The amount of the reduction shall be
         reallocated to the Employer Profit Sharing Accounts of Participants who
         are not affected by the limitations in the same proportions as the
         contributions of the Plan Sponsor for the Plan Year are allocated to
         the Employer Profit Sharing Accounts of such Participants;

                  (f)      If the contribution of the Plan Sponsor and
         forfeitures would cause the annual additions to exceed the limitations
         set forth herein with respect to all Participants under the Plan, the
         portion of such contribution and forfeitures in excess of the
         limitations shall be segregated in a suspense account. While the
         suspense account is maintained, (i) no Plan Sponsor contributions under
         the Plan shall be made which would be precluded by this Appendix A,
         (ii) income, gains and loses of the Fund shall not be allocated to such
         suspense account and (iii) amounts in the suspense account shall be
         allocated in subsequent Limitation Years as Plan Sponsor contributions
         and forfeitures under the Plan as of each Valuation Date on which Plan
         Sponsor contributions may be allocated for each such Limitation Year
         until the suspense account is exhausted. In the

                                      A-4
<PAGE>

         event of the termination of the Plan, the amounts in the suspense
         account shall be returned to the Plan Sponsor to the extent that such
         amounts may not then be allocated to Participants' Accounts.

                  (g)      Notwithstanding anything contained in the Plan to the
         contrary, the Plan Administrator may modify the provisions of this
         Section 6 with respect to reduction of the Participant's accounts in
         accordance with such procedures as the Plan Administrator may establish
         with respect to catch-up contributions described in Code Section
         414(v).

                                      A-5
<PAGE>

                                   APPENDIX B
                              TOP-HEAVY PROVISIONS

                                   SECTION 1
                                   DEFINITIONS

         As used in this Appendix B, the following words shall have the
following meanings:

                  (a)      "Determination Date" means, with respect to any Plan
         Year, the last day of the preceding Plan Year, or, in the case of the
         first Plan Year, means the last day of the first Plan Year.

                  (b)      "Key Employee" means an Employee or former Employee
         (including a Beneficiary of a Key Employee or former Key Employee) who
         at any time during the Plan Year containing the Determination Date or,
         for Plan Years beginning before September 29, 2002, any of the four (4)
         preceding Plan Years:

                           (i)      Was at any time an includible officer of the
                  Plan Sponsor or of any Affiliate. Includible officers include:

                                    (A)      For Plan Years beginning before
                           September 29, 2002, any officer whose Compensation
                           was greater than fifty percent (50%) of the amount in
                           effect under Code Section 415(b)(1)(A) for the
                           calendar year in which the Plan Year ends.

                                    (B)      For Plan Years beginning on or
                           after September 29, 2002, any officer whose
                           Compensation was greater than $130,000 (adjusted for
                           changes in the cost of living as provided in
                           regulations issued by the Secretary of the Treasury
                           for Plan Years beginning after December 31, 2002)..

                                    (C)      For all Plan Years under this
                           Appendix B, the term "officer" means an
                           administrative executive in regular and continual
                           service to the Plan Sponsor or Affiliate; provided,
                           however, that in no event shall the number of
                           officers exceed the lesser of:

                                            (I)      fifty (50) Employees; or

                                            (II)      the greater of three (3)
                                    Employees or ten percent (10%) of the number
                                    of Employees during the Plan Year, with any
                                    non-integer being increased to the next
                                    integer.

                           If for any year no officer of the Plan Sponsor is an
                  includible officer, the highest paid officer of the Plan
                  Sponsor for the Plan Year shall be considered an officer for
                  purposes of this Subparagraph (b)(i);

                                      B-1
<PAGE>

                           (ii)     For Plan Years beginning before September
                  29, 2002, one of the ten (10) Employees owning both (A) more
                  than one-half percent (1/2%) of the outstanding stock of the
                  Plan Sponsor or an Affiliate, more than one-half percent
                  (1/2%) of the total combined voting power of all stock of the
                  Plan Sponsor or an Affiliate, or more than one-half percent
                  (1/2%) of the capital or profits interest in the Plan Sponsor
                  or an Affiliate, and (B) the largest percentage ownership
                  interests in the Plan Sponsor or any of its Affiliates, and
                  whose Compensation is equal to or greater than the amount in
                  effect under Section l(a) of Appendix A to the Plan for the
                  calendar year in which the Determination Date falls; or

                           (iii)    An owner of more than five percent (5%) of
                  the outstanding stock of the Plan Sponsor or an Affiliate or
                  more than five percent (5%) of the total combined voting power
                  of all stock of the Plan Sponsor or an Affiliate; or

                           (iv)     An owner of more than one percent (1%) of
                  the outstanding stock of the Plan Sponsor or an Affiliate or
                  more than one percent (1%) of the total combined voting power
                  of all stock of the Plan Sponsor or an Affiliate, and who in
                  such Plan Year had Compensation from the Plan Sponsor and all
                  of its Affiliates of more than $150,000.

         Employees other than Key Employees are sometimes referred to in this
Appendix B, as "non-key employees."

                  (c)      "Required Aggregation Group" means:

                           (i)      each plan of the Plan Sponsor and its
                  Affiliates which qualifies under Code Section 401 (a) in which
                  a Key Employee is a participant, and

                           (ii)     each other plan of the Plan Sponsor and its
                  Affiliates which qualifies under Code Section 401 (a) and
                  which enables any plan described in Subsection (a) of this
                  Section to meet the requirements of Section 401(a)(4) or 410
                  of the Code.

                  (d)      (i)       "Top-Heavy" means:

                                    (A)      if the Plan is not included in a
                           Required Aggregation Group, the Plan's condition in a
                           Plan Year for which, as of the Determination Date:

                                             (I)      the present value of the
                                    cumulative Accounts (excluding Catch-Up
                                    Contributions for the current Plan Year)
                                    under the Plan for all Key Employees exceeds
                                    sixty percent (60%) of the present value of
                                    the cumulative Accounts (excluding Catch-Up
                                    Contributions for the current Plan Year)
                                    under the Plan for all Participants; and

                                      B-2
<PAGE>

                                            (II)      the Plan, when included in
                                    every potential combination, if any, with
                                    any or all of:

                                                     (aa)     any Required
                                             Aggregation Group, and

                                                     (bb)     any plan of the
                                             Plan Sponsor which is not part of
                                             any Required Aggregation Group and
                                             which qualifies under Code Section
                                             401 (a)

                                    is part of a Top-Heavy Group (as defined in
                                    Paragraph (ii) of this Subsection); and

                                    (B)      if the Plan is included in a
                           Required Aggregation Group, the Plan's condition in a
                           Plan Year for which, as of the Determination Date:

                                             (I)      the Required Aggregation
                                    Group is a Top-Heavy Group (as defined in
                                    Paragraph (2) of this Subsection); and

                                            (II)      the Required Aggregation
                                    Group, when included in every potential
                                    combination, if any, with any or all of the
                                    plans of the Plan Sponsor and its Affiliates
                                    which are not part of the Required
                                    Aggregation Group and which qualify under
                                    Code Section 401(a), is part of a Top-Heavy
                                    Group (as defined in Paragraph (2) of this
                                    Subsection).

                                    (C)      For purposes of Subparagraphs (A)
                           (II) and (B)(II) of this Paragraph (i), any
                           combination of plans must satisfy the requirements of
                           Sections 401(a)(4) and 410 of the Code.

                           (ii)     A group shall be deemed to be a Top-Heavy
                           Group if:

                                    (A)      the sum, as of the Determination
                           Date, of the present value of the cumulative accrued
                           benefits for all Key Employees under all plans
                           included in such group exceeds

                                    (B)      sixty percent (60%) of a similar
                           sum determined for all participants in such plans.

                           (iii)    (A)      For purposes of this Section, the
                           present value of the accrued benefit for any
                           participant in a defined contribution plan as of any
                           Determination Date or last day of a plan year shall
                           be the sum of:

                                            (I)       as to any defined
                                    contribution plan other than a simplified
                                    employee pension, the account balance as of
                                    the most recent valuation date occurring
                                    within the plan year ending on the
                                    Determination Date or last day of a plan
                                    year, and

                                      B-3
<PAGE>

                                            (II)     as to any simplified
                                    employee pension, the aggregate employer
                                    contributions, and

                                            (III)     an adjustment for
                                    contributions due as of the Determination
                                    Date or last day of a plan year.

                           In the case of a plan that is not subject to the
                           minimum funding requirements of Code Section 412, the
                           adjustment in Clause (III) of this Subparagraph (A)
                           shall be the amount of any contributions actually
                           made after the valuation date but on or before the
                           Determination Date or last day of the plan year to
                           the extent not included under Clause (I) or (II) of
                           this Subparagraph (A); provided, however, that in the
                           first plan year of the plan, the adjustment in Clause
                           (III) of this Subparagraph (A) shall also reflect the
                           amount of any contributions made thereafter that are
                           allocated as of a date in such first plan year. In
                           the case of a plan that is subject to the minimum
                           funding requirements, the account balance in Clause
                           (I) and the aggregate contributions in Clause (II) of
                           this Subparagraph (A) shall include contributions
                           that would be allocated as of a date not later than
                           the Determination Date or last day of a plan year,
                           even though those amounts are not yet required to be
                           contributed, and the adjustment in Clause (III) of
                           this Subparagraph (A) shall be the amount of any
                           contribution actually made (or due to be made) after
                           the valuation date but before the expiration of the
                           extended payment period in Code Section 412(c)(10) to
                           the extent not included under Clause (I) or (II) of
                           this Subparagraph (A).

                                    (B)      For purposes of this Subsection,
                           the present value of the accrued benefit for any
                           participant in a defined benefit plan as of any
                           Determination Date or last day of a plan year must be
                           determined as of the most recent valuation date which
                           is within a 12-month period ending on the
                           Determination Date or last day of a plan year as if
                           such participant terminated as of such valuation
                           date; provided, however, that in the first plan year
                           of a plan, the present value of the accrued benefit
                           for a current participant must be determined either
                           (I) as if the participant terminated service as of
                           the Determination Date or last day of a plan year or
                           (II) as if the participant terminated service as of
                           such valuation date, but taking into account the
                           estimated accrued benefit as of the Determination
                           Date or last day of a plan year. For purposes of this
                           Subparagraph (B), the valuation date must be the same
                           valuation date used for computing plan costs for
                           minimum funding, regardless of whether a valuation is
                           performed that year. The actuarial assumptions
                           utilized in calculating the present value of the
                           accrued benefit for any participant in a defined
                           benefit plan for purposes of this Subparagraph (B)
                           shall be established by the Plan Administrator after
                           consultation with the actuary for the plan, and shall
                           be reasonable in the aggregate and shall comport with
                           the requirements set forth by the Internal Revenue
                           Service in Q&A T-26 and T-27 of Regulation Section
                           1.416-1.

                                      B-4
<PAGE>

                                    (C)      For purposes of determining the
                           present value of the cumulative accrued benefit under
                           a plan for any participant in accordance with this
                           Subsection, the present value shall be increased by
                           the aggregate distributions made with respect to the
                           participant (including distributions paid on account
                           of death to the extent they do not exceed the present
                           value of the cumulative accrued benefit existing
                           immediately prior to death) under each plan being
                           considered, and under any terminated plan which if it
                           had not been terminated would have been in a Required
                           Aggregation Group with the Plan, during the 5-year
                           period (or, for Plan Years beginning on or after
                           September 29, 2002, one-year period) ending on the
                           Determination Date or last day of the plan year that
                           falls within the calendar year in which the
                           Determination Date falls. For Plan Years beginning
                           after September 29, 2002, in the case of a
                           distribution made with respect to a Participant for a
                           reason other than separation from service, death, or
                           disability, this provision shall be applied by
                           substituting a 5-year period for the one-year period.

                                    (D)      For purposes of this Paragraph
                           (iii), participant contributions which are deductible
                           as "qualified retirement contributions" within the
                           meaning of Code Section 219 or any successor, as
                           adjusted to reflect income, gains, losses, and other
                           credits or charges attributable thereto, shall not be
                           considered to be part of the accrued benefits under
                           any plan.

                                    (E)      For purposes of this Paragraph
                           (iii), if any employee is not a Key Employee with
                           respect to any plan for any plan year, but such
                           employee was a Key Employee with respect to such plan
                           for any prior plan year, any accrued benefit for such
                           employee shall not be taken into account.

                                    (F)      For purposes of this Paragraph
                           (iii), if any employee has not performed any service
                           for any Plan Sponsor or Affiliate maintaining the
                           plan during the five-year period (or, for Plan Years
                           beginning on or after September 29, 2002, the
                           one-year period) ending on the Determination Date,
                           any accrued benefit for that employee shall not be
                           taken into account.

                                    (G)      (I)      In the case of an
                                    "unrelated rollover" (as defined below)
                                    between plans which qualify under Code
                                    Section 401(a), (a) the plan providing the
                                    distribution shall count the distribution as
                                    a distribution under Subparagraph (C) of
                                    this Paragraph (iii), and (b) the plan
                                    accepting the distribution shall not
                                    consider the distribution part of the
                                    accrued benefit under this Section; and

                                            (II)      in the case of a "related
                                    rollover" (as defined below) between plans
                                    which qualify under Code Section 401(a), the
                                    plan

                                      B-5
<PAGE>

                                    providing the distribution shall not count
                                    the distribution as a distribution under
                                    Subparagraph (C) of this Paragraph (iii),
                                    and the plan accepting the distribution
                                    shall consider the distribution part of the
                                    accrued benefit under this Section.

                                    For purposes of this Subparagraph (G), an
                                    "unrelated rollover" is a rollover as
                                    defined in Code Section 402(c)(4) or
                                    408(d)(3) or a plan-to-plan transfer which
                                    is both initiated by the participant and
                                    made from a plan maintained by one employer
                                    to a plan maintained by another employer
                                    where the employers are not Affiliates. For
                                    purposes of this Subparagraph (G), a
                                    "related rollover" is a rollover as defined
                                    in Code Section 402(c)(4) or 408(d)(3) or a
                                    plan-to-plan transfer which is either not
                                    initiated by the participant or made to a
                                    plan maintained by the employer or an
                                    Affiliate.

                                   SECTION 2
                             TOP-HEAVY CONTRIBUTION

                  (a)      Notwithstanding anything contained in the Plan to the
         contrary, except as otherwise provided in Subsection (b) of this
         Section, in any Plan Year during which the Plan is Top-Heavy,
         allocations of Plan Sponsor contributions and forfeitures for the Plan
         Year for the Account of each Participant who is not a Key Employee and
         who has not separated from service with the Plan Sponsor prior to the
         end of the Plan Year shall not be less than three percent (3%) of the
         Participant's Compensation. For purposes of this Subsection, an
         allocation to a Participant's Account resulting from any Plan Sponsor
         contribution attributable to a salary reduction or similar arrangement
         shall not be taken into account.

                  (b)      (i)      The percentage referred to in Subsection (a)
                  of this Section for any Plan Year shall not exceed the
                  percentage at which allocations are made or required to be
                  made under the Plan for the Plan Year for the Key Employee for
                  whom the percentage is highest for the Plan Year. For purposes
                  of this Paragraph, an allocation to the Account of a Key
                  Employee resulting from any Plan Sponsor contribution
                  attributable to a salary reduction or similar agreement shall
                  be taken into account, but an allocation that constitutes a
                  Catch-Up Contribution shall not be taken into account.

                           (ii)     For purposes of this Subsection (b), all
                  defined contribution plans which are members of a Required
                  Aggregation Group shall be treated as part of the Plan.

                           (iii)    This Subsection (b) shall not apply to any
                  plan which is a member of a Required Aggregation Group if the
                  plan enables a defined benefit plan which is a member of the
                  Required Aggregation Group to meet the requirements of Code
                  Section 401(a)(4) or 410.

                                      B-6
<PAGE>

                           (iv)     If the Plan Sponsor maintains a defined
                  benefit plan which is qualified under Code Section 401(a) and
                  which would be Top-Heavy within the meaning of the Plan for
                  its plan year ending within or coincident with the Plan Year,
                  no allocation shall be made pursuant to Subsection (a) of this
                  Section on behalf of any Participant who participates in the
                  defined benefit plan and acquires a year of service within the
                  meaning of paragraphs (4), (5) and (6) of Code Section 411(a)
                  under the defined benefit plan for the plan year, if the
                  defined benefit plan provides generally that the accrued
                  benefit of the Participant when expressed as an annual
                  retirement benefit shall not, when expressed as a percentage
                  of the Participant's Compensation, be less than the lesser of
                  (A) two percent (2%) multiplied by the number of such years of
                  service in plan years during which such plan was Top-Heavy, or
                  (B) twenty percent (20%).

                                   SECTION 3
                            COMBINED PLAN LIMITATION

         Effective until September 30, 2000, in any limitation year (as defined
in Section 4 of Appendix A to the Plan) which contains any portion of a Plan
Year in which the Plan is Top-Heavy, the number "1.0" shall be substituted for
the number "1.25" in Section 3 of Appendix A to the Plan.

                                   SECTION 4
                           TOP-HEAVY VESTING SCHEDULE

         Notwithstanding anything contained in the Plan to the contrary, in any
Plan Year during which the Plan is Top-Heavy, a Participant's interest in his
Account shall not vest at any rate which is slower than the following schedule,
effective as of the first day of that Plan Year:

<TABLE>
<CAPTION>
                       Full Years of                          Percentage
                      Vesting Service                           Vested
                      ---------------                           ------
                      <S>                                     <C>
                        Less than 2                                0%
                             2                                    20%
                             3                                    40%
                             4                                    60%
                             5                                    80%
                         6 or more                                100%
</TABLE>

The Schedule set forth above in this Section 4 shall be inapplicable to a
Participant who has failed to perform an Hour of Service after the Determination
Date on which the Plan has become Top-Heavy. When the Plan ceases to be
Top-Heavy, the Schedule set forth above in this Section 4 shall cease to apply;
provided however, that the provisions of the Section dealing with changes in the
vesting schedule shall apply.

                                      B-7
<PAGE>

                                   APPENDIX C
                         SPECIAL NONDISCRIMINATION RULES

                                    SECTION 1
                                   DEFINITIONS

As used in this Appendix, the following words shall have the following meanings:

         (a)      "Actual Deferral Percentage" shall mean the percentage as
determined in Section 2(b) below.

         (b)      "Actual Contribution Percentage" shall mean the percentage as
determined in Section 5(b) below.

         (c)      "Eligible Participant" means a Participant who is an Employee
during the Plan Year.

         (d)      "Highly Compensated Eligible Participant" means any Eligible
Participant who is a Highly Compensated Employee.

         (e)      "Matching Contribution" means any contribution made by a Plan
Sponsor to the Employer Matching Contribution Account and any other
contributions made to a plan by a Plan Sponsor or an Affiliate on behalf of an
Employee on account of a contribution made by the Employee or on account of an
Elective Deferral.

         (f)      "Qualified Matching Contributions" means Matching
Contributions of the Plan Sponsor or an Affiliate that are immediately
nonforfeitable when made, and which may not be distributed, except upon one of
the events described under Code Section 401(k)(2)(B) and the regulations
thereunder. Such contributions, if made to the Plan, shall be allocated as
described in this Appendix C to the QMAC/QNEC Account for each affected
Participant.

         (g)      "Qualified Nonelective Contributions" means contributions of
the Plan Sponsor or an Affiliate, other than Matching Contributions or Elective
Deferrals that are immediately nonforfeitable when made, and which may not be
distributed, except upon one of the events described under Code Section
401(k)(2)(B) and the regulations thereunder. Such contributions, if made to the
Plan, shall be allocated as described in this Appendix C to the QMAC/QNEC
Account for each affected Participant.

                                    SECTION 2
                         ACTUAL DEFERRAL PERCENTAGE TEST

         (a)      In addition to any other limitations set forth in the Plan,
for each Plan Year, one of the following tests must be satisfied:

                  (i)      The 125 Percent Test. The Actual Deferral Percentage
         for the Highly Compensated Eligible Participants for the Plan Year must
         not be more than the Actual

<PAGE>

         Deferral Percentage for all other Eligible Participants for the Plan
         Year, multiplied by 1.25.

                  (ii)     The Two Times Test. The Actual Deferral Percentage
         for the Highly Compensated Eligible Participants for the Plan Year must
         not be more than the lesser of:

                           (A)      the Actual Deferral Percentage for all other
                  Eligible Participants for the Plan Year plus two (2)
                  percentage points; or

                           (B)      the Actual Deferral Percentage for all other
                  Eligible Participants for the Plan Year, multiplied by two
                  (2).

         (b)      The "Actual Deferral Percentage" for a group of Eligible
Participants is equal to the average of the ratios, calculated separately for
each Eligible Participant in such group, of the Deferral Amounts contributed by
the Plan Sponsor on behalf of the Eligible Participant for the Plan Year to the
Compensation of the Eligible Participant for the Plan Year. For purposes of this
calculation:

                  (i)      the Deferral Amounts for Eligible Participants who
         are not Highly Compensated Eligible Participants that are in excess of
         the maximum amount permitted under Code Section 401(a)(30) (e.g.,
         $11,000 for the 2002 calendar year) shall not be taken into account;
         and

                  (ii)     at the election of the Plan Administrator, all or
         part of the Qualified Matching Contributions and Qualified Nonelective
         Contributions made under the Plan may be treated as Deferral Amounts,
         subject to the limitations of Treasury Regulation Section
         1.401(k)-1(b)(5) and any other applicable regulations promulgated by
         the Secretary of the Treasury.

                                    SECTION 3
              DETERMINATION AND CORRECTION OF EXCESS CONTRIBUTIONS

         (a)      If the Deferral Amounts contributed on behalf of the Highly
Compensated Eligible Participants exceed the amount permitted under the Actual
Deferral Percentage test for any Plan Year, such excess amounts shall be
considered to be "Excess Contributions." The Plan Sponsor will determine the
amount of Excess Contributions under Subparagraph (b) below and will determine
what share of the Excess Contributions is attributable to each Highly
Compensated Eligible Participant under Subparagraph (c) below. The Plan Sponsor
may then implement one or more of the corrective actions discussed in
Subparagraphs (d) and (e) below to resolve the failure of the Actual Deferral
Percentage test so that it is considered to be passed for the Plan Year.

         (b)      Determination of Total Excess Contributions. For purposes of
this Section 3, "Total Excess Contributions" means, with respect to a Plan Year,
the excess of:

<PAGE>

                  (i)      the aggregate amount of Deferral Amounts contributed
         by a Plan Sponsor on behalf of Highly Compensated Eligible Participants
         for the Plan Year, over

                  (ii)     the maximum amount of Deferral Amounts permitted
         under Section 2 of this Appendix C for the Plan Year, which shall be
         determined by reducing the Deferral Amounts contributed on behalf of
         Highly Compensated Eligible Participants in order of the actual
         deferral percentages beginning with the highest of such percentages.

         (c)      Allocation of Total Excess Contributions Among Highly
Compensated Eligible Participants. The Excess Contribution for any Plan Year
attributable to a given Highly Compensated Eligible Participant (for purposes of
distribution under Subsection (d) below) shall be determined by the Plan Sponsor
as follows:

                  (i)      The Deferral Amounts allocated to the Highly
         Compensated Eligible Participant with the highest dollar amount of
         Deferral Amounts for the Plan Year shall be reduced by the amount
         required to cause that Highly Compensated Eligible Participant's
         remaining Deferral Amounts for the Plan Year to be equal to the dollar
         amount of the Deferral Amounts allocated to the Highly Compensated
         Eligible Participant with the next highest dollar amount of Deferral
         Amounts for the Plan Year. This amount is then the Excess Contribution
         attributable to such Highly Compensated Eligible Participant with the
         highest dollar amount of Deferral Amounts which shall be distributed
         under subparagraph (d) below, unless a smaller reduction equals the
         total Excess Contributions.

                  (ii)     If the total amount determined under Paragraph (i) of
         this Section 3(c) is less than the total Excess Contributions, the
         procedure in Paragraph (i) shall be successively repeated with the
         Highly Compensated Eligible Participant who has the next highest dollar
         amount of Deferral Amounts for the Plan Year, and continuing as
         required until the total dollar amount allocated to the Highly
         Compensated Eligible Participants is equal to the total Excess
         Contributions attributable to Highly Compensated Eligible Participants.

         (d)      Distribution of Excess Contributions.

                  (i)      To the extent permitted by regulations issued by the
         Secretary of the Treasury, the Plan Sponsor may distribute the Total
         Excess Contributions determined in Subparagraphs (b) and (c) above,
         plus the income or loss thereon, to the Highly Compensated Eligible
         Participants to whom such Excess Contributions were allocated. The
         income or loss attributable to the Excess Contributions shall be
         determined in a manner similar to that described in Section 4.2 of the
         Plan.

                  (ii)     The Excess Contributions to be distributed under
         subparagraph (i) above shall be reduced by Deferral Amounts previously
         distributed for the taxable year ending in the same Plan Year, and
         shall also be reduced by Deferral Amounts previously distributed for
         the Plan Year beginning in such taxable year, and by any excess
         Elective Deferrals as determined pursuant to Plan Section 3.1
         previously distributed to the Participant for the Participant's taxable
         year ending with or within the Plan Year.

<PAGE>

                  (iii)    Effective for Plan Years beginning on or before
         September 29, 2002, if the multiple use of the Two Times Test of
         Sections 2(a)(ii) and 5(a)(ii) of this Appendix C, pursuant to Treasury
         Regulations section 1.401(m)-2, as promulgated by the Secretary of the
         Treasury, requires a corrective distribution such distribution shall be
         made pursuant to this Section 3, and not Section 6, of this Appendix C.

                  (iv)     Any Matching Contribution that was based on the
         portion of the Deferral Amount that is distributed under this Section
         as an Excess Contribution shall be forfeited upon such distribution.

         If a distribution of the Excess Deferral Amounts attributable to the
Highly Compensated Eligible Participants is made in accordance with this
Subsection (d), the limitations in Section 2 of this Appendix C shall be treated
as being met regardless of whether the Actual Deferral Percentage, if
recalculated after such distributions, would have satisfied the requirements of
Section 2.

         (e)      Contribution of Qualified Nonelective Contributions or
Qualified Matching Contributions. Not later than twelve (12) months after the
end of the Plan Year, the Plan Sponsor may make a special Qualified Nonelective
Contribution or Qualified Matching Contribution on behalf of all or certain
Eligible Participants who are not Highly Compensated Eligible Participants in an
amount sufficient to satisfy (or to prevent an anticipated failure of) the
Actual Deferral Percentage test. Such contribution shall be allocated to the
Participant's QMAC/QNEC Account in one of the following manners, as elected by
the Plan Sponsor the time the Qualified Nonelective Contribution or Qualified
Matching Contribution is made, until Actual Deferral Percentage test is
satisfied, or until such Eligible Participant who is not a Highly Compensated
Eligible Participant has received his maximum Annual Addition as described in
Section 1 of Appendix A:

                  (i)      Per Capita: under this method, the Qualified
         Nonelective Contribution is allocated to the QMAC/QNEC Account of each
         Eligible Participant who is not a Highly Compensated Eligible
         Participant who is employed with the Plan Sponsor or an Affiliate on
         the last day of the Plan Year in an equal amount.

                  (ii)     Pro-Rata to Compensation: under this method, the
         Qualified Nonelective Contribution is allocated to the QMAC/QNEC
         Account of each Eligible Participant who is not a Highly Compensated
         Eligible Participant who is employed with the Plan Sponsor or an
         Affiliate on the last day of the Plan Year in the same ratio that such
         Eligible Participant's Compensation for such Plan Year bears to the
         total Compensation of all such Eligible Participants for such Plan
         Year.

                  (iii)    Pro-Rata to Deferrals: This method is used for
         Qualified Matching Contributions. Under this method, the Qualified
         Matching Contribution is allocated to the QMAC/QNEC Account of each
         Eligible Participant who is not a Highly Compensated Eligible
         Participant who is employed with the Plan Sponsor or an Affiliate on
         the last day of the Plan Year in the same ratio that such Eligible
         Participant's Deferral Amounts for such Plan Year bears to the total
         Deferral Amounts of all such Eligible Participants for such Plan Year.

<PAGE>

                  (iv)     Bottom-Up: under this method, the Qualified
         Nonelective Contribution is allocated first to the QMAC/QNEC Account of
         the Eligible Participant who is not a Highly Compensated Eligible
         Participant, whose Compensation for such Plan Year is the least of all
         such Participants, and who is employed on the last day of the Plan
         Year, in an amount equal to the lesser of: (A) the maximum amount which
         will allow the Annual Additions to the Eligible Participant's Account
         to remain within the limits of Section 1 of Appendix A; or (B) such
         percentage of Compensation as the Employer shall designate. Once such
         maximum allocation has been made to the QMAC/QNEC Account of such
         Participant, this process shall be repeated with regard to the
         QMAC/QNEC Account of successive Eligible Participants who are not
         Highly Compensated Eligible Participants who are employed with a Plan
         Sponsor or an Affiliate on the last day of the Plan Year, in the order
         of increasing Compensation, until the entire Qualified Nonelective
         Contribution has been allocated. If more than one such Eligible
         Participant has Compensation for the Plan Year of a given amount, the
         Qualified Nonelective Contribution shall be allocated among all such
         Eligible Participants with equal Compensation in alphabetical order
         (last name first, then first name, then middle name) until either all
         such Eligible Participants with equal Compensation have received the
         appropriate Qualified Nonelective Contribution or the entire Qualified
         Nonelective Contribution has been allocated.

         Notwithstanding the foregoing, nothing in this Section shall be deemed
to prevent a Plan Sponsor, in the event of an uncorrected failure of the Actual
Deferral Percentage test, from taking any corrective measures available pursuant
to Plan Section 3.8 above.

                                    SECTION 4
              PLAN ADMINISTRATOR TO MONITOR AND MAINTAIN COMPLIANCE

         The Plan Administrator shall have the responsibility of monitoring the
Plan's compliance with the limitations of this Appendix C and shall have the
power to take all steps it deems necessary or appropriate to ensure compliance,
including, without limitation, restricting the amount which Highly Compensated
Eligible Participants can elect to have contributed pursuant to Plan Section
3.1(a). Any actions taken by the Plan Administrator pursuant to this Section 4
shall be pursuant to non-discriminatory procedures consistently applied.

                                    SECTION 5
                       ACTUAL CONTRIBUTION PERCENTAGE TEST

         (a)      In addition to any other limitations set forth in the Plan,
Matching Contributions under the Plan and the amount of nondeductible employee
contributions under the Plan, for each Plan Year must satisfy one of the
following tests:

                  (i)      The 125 Percent Test. The Actual Contribution
         Percentage for Highly Compensated Eligible Participants for the Plan
         Year must not exceed one hundred twenty-five percent (125%) of the
         Actual Contribution Percentage for all other Eligible Participants for
         the Plan Year; or

<PAGE>

                  (ii)     The Two Times Test. The Actual Contribution
         Percentage for Highly Compensated Eligible Participants for the Plan
         Year must not exceed the lesser of:

                           (A)      two hundred percent (200%) of the Actual
                  Contribution Percentage for all other Eligible Participants
                  for the Plan Year, and

                           (B)      the Actual Contribution Percentage for all
                  other Eligible Participants for the Plan Year plus two (2)
                  percentage points.

         (b)      Notwithstanding the foregoing, for purposes of this Section 5,
the terms Highly Compensated Eligible Participant and Eligible Participant shall
not include any Participant who is not eligible to receive a Matching
Contribution under the provisions of the Plan, other than as a result of the
Participant failing to contribute to the Plan or failing to have an Elective
Deferral contributed to the Plan on the Participant's behalf.

         (c)      Notwithstanding the foregoing, if Qualified Matching
Contributions are taken into account for purposes of applying the Actual
Deferral Percentage test, they shall not be taken into account under this
Section 5.

         (d)      In applying the above tests, the Plan Administrator shall
comply with any regulations promulgated by the Secretary of the Treasury which
prevent or restrict the use of the Two Times Test for purposes of passing both
the Actual Deferral Percentage test and the Actual Contribution Percentage test.

         (e)      The "Actual Contribution Percentage" for a group of Eligible
Participants is equal to the average of the ratios, calculated separately for
each Participant, of (A) to (B), where (A) is the amount of Matching
Contributions under the Plan (excluding Qualified Matching Contributions which
are used to apply the test set forth in Section 2 of this Appendix C or Matching
Contributions which are used to satisfy the minimum required contributions to
the Accounts of Eligible Participants who are not Key Employees pursuant to
Section 1 of Appendix B to the Plan) and nondeductible employee contributions
made under the Plan for the Eligible Participant for the Plan Year, and where
(B) is the Compensation of the Eligible Participant for the Plan Year. Except to
the extent limited by Treasury Regulation Section 1.401(m)-l(b)(5) and any other
applicable regulations promulgated by the Secretary of the Treasury, a Plan
Sponsor may elect to treat Deferral Amounts and Qualified Nonelective
Contributions as Matching Contributions for purpose of determining the Actual
Contribution Percentage, provided the Deferral Amounts, excluding those treated
as Matching Contributions, satisfy the test set forth in Section 2 of Appendix
C.

<PAGE>

                                    SECTION 6
      DETERMINATION AND CORRECTION OF EXCESS AGGREGATE CONTRIBUTION AMOUNTS

         (a)      If either:

                  (i)      the Matching Contributions and, if taken into account
         under Section 5 of this Appendix C, the Deferral Amounts, Qualified
         Nonelective Contributions, and/or Qualified Matching Contributions made
         on behalf of Highly Compensated Eligible Participants, or

                  (ii)     the nondeductible employee contributions made by
         Highly Compensated Eligible Participants

exceed the amount permitted under the Actual Contribution Percentage test for
any Plan Year, such excess amounts shall be considered to be "Excess Aggregate
Contributions." The Plan Sponsor will determine the amount of Excess Aggregate
Contributions under subparagraph (b) below, and will determine what share of the
Excess Aggregate Contributions is attributable to each Highly Compensated
Eligible Participant under Subparagraph (c) below. The Plan Sponsor may then
implement one or more of the corrective actions discussed in Subparagraphs (d)
and (e) below to resolve the failure of the Actual Contribution Percentage test
so that it is considered to be passed for the Plan Year.

         (b)      Determination of Total Excess Aggregate Contributions. For
purposes of this Section 6, with respect to any Plan Year, "Total Excess
Aggregate Contributions" means the excess of:

                  (i)      the aggregate amount of the Matching Contributions,
         nondeductible employee contributions, any Qualified Nonelective
         Contributions or Qualified Matching Contributions, and, if taken into
         account under Section 5 of this Appendix C, the Deferral Amounts
         (excluding Catch-Up Contributions) actually made on behalf of Highly
         Compensated Eligible Participants for the Plan Year, over

                  (ii)     the maximum amount of contributions permitted under
         the limitations of Section 5 of this Appendix C, determined by reducing
         contributions made on behalf of Highly Compensated Eligible
         Participants in order of their contribution percentages, beginning with
         the highest of such percentages.

         The determination of the Total Excess Aggregate Contributions under
this Section 6 shall be made after first determining the excess Elective
Deferrals under Section 3.1(b) of the Plan and then determining the Excess
Contributions under Section 3 of this Appendix C.

         (c)      Allocation of Total Excess Aggregate Contributions Among
Highly Compensated Eligible Participants. The Excess Aggregate Contributions for
any Plan Year allocable to a given Highly Compensated Eligible Participant (for
purposes of distribution under Subsection (d) below) shall be determined by the
Plan Sponsor as follows:

<PAGE>

                  (i)      The Matching Contributions and nondeductible employee
         contributions allocated to the Highly Compensated Eligible Participant
         with the highest dollar amount of such contributions for the Plan Year
         shall be reduced by the amount required to cause that Highly
         Compensated Eligible Participant's remaining Matching Contributions and
         nondeductible employee contributions for the Plan Year to be equal to
         the dollar amount of such contributions allocated to the Highly
         Compensated Eligible Participant with the next highest dollar amount of
         Matching Contributions and nondeductible employee contributions for the
         Plan Year. This amount is then the Excess Aggregate Contributions
         attributable to such Highly Compensated Eligible Participant with the
         highest dollar amount of Matching Contributions and nondeductible
         employee contributions that shall be distributed or forfeited, unless a
         smaller reduction equals the total Excess Aggregate Contributions.

                  (ii)     If the total amount distributed under Paragraph (i)
         is less than the total Excess Aggregate Contributions, the procedure in
         Paragraph (i) shall be successively repeated with the Highly
         Compensated Eligible Participant who has the next highest dollar amount
         of Matching Contributions and nondeductible employee contributions for
         the Plan Year, and continuing as required until the total dollar amount
         of Matching Contributions and nondeductible employee contributions
         allocated to the Highly Compensated Eligible Participants is equal to
         the total Excess Aggregate Contributions attributable to Highly
         Compensated Eligible Participants.

         (d)      Distribution or Forfeiture of Excess Aggregate Contributions

                  (i)      Before the end of the Plan Year following the Plan
         Year for which the Total Excess Aggregate Contributions were made, the
         amount of the Total Excess Aggregate Contributions attributable to the
         Plan for the Plan Year, as adjusted to reflect any income, gain, or
         loss attributable to such contributions shall be distributed or, if the
         Excess Aggregate Contributions are forfeitable, forfeited.

                  (ii)     The distribution or forfeiture for any given Highly
         Compensated Eligible Participant shall be equal to the amount of the
         Excess Aggregate Contribution that was allocated to such Participant
         under Subsection (c) above. Such amount shall first be attributed to
         nondeductible employee contributions made by the Participant during the
         Plan Year for which no corresponding Plan Sponsor contribution is made,
         second to any remaining nondeductible employee contributions made by
         the Participant during the Plan Year, and third to any Matching
         Contributions thereon.

                  (iii)    The income allocable to an Excess Aggregate
         Contribution shall be determined in a manner similar to that described
         in Section 4.2 of the Plan.

                  (iv)     If a Participant who is to receive a distribution or
         forfeiture of his nondeductible employee contributions or Matching
         Contributions for the year is a participant in another plan or plans
         maintained by the Plan Sponsor in which Excess Aggregate Contributions
         for a Plan Year are held, each such plan shall distribute or forfeit a
         pro-rata share of each class of contribution based on the respective
         amounts of a class of contributions made to each plan during the Plan
         Year.

<PAGE>

                  (v)      The distribution of Excess Aggregate Contributions
         shall be made without regard to any other provision in the Plan.

                  (vi)     Effective for Plan Years beginning before September
         29, 2002, if the multiple use of the Two Times Test requires a
         corrective distribution pursuant to Treasury Regulation Section
         1.401(m)-2, such distribution shall be made pursuant to Section 3 of
         this Appendix C and not this Section 6.

                  (vii)    Excess Aggregate Contributions, including forfeited
         Matching Contributions, shall be treated as Plan Sponsor contributions
         for purposes of Code sections 404 and 415, even if they are distributed
         from the Plan. Forfeited Matching Contributions that are reallocated to
         Participants' Accounts shall be treated as Annual Additions under
         Appendix A for the Participants to whose Accounts they are allocated,
         and for the Participants from whose Accounts they are forfeited.

         If a distribution or forfeiture of the total Excess Aggregate
Contributions is made in accordance with this Section 6(d), the limitations in
Section 5 of this Appendix C shall be treated as being met regardless of whether
the Actual Contribution Percentage, if recalculated after such distributions,
would have satisfied the requirements of Section 5.

         (e)      Contribution of Qualified Nonelective Contributions or
Qualified Matching Contributions. Not later than twelve (12) months after the
end of the Plan Year, the Plan Sponsor may make a special Qualified Nonelective
Contribution or a Qualified Matching Contribution on behalf of Eligible
Participants who are not Highly Compensated Eligible Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Subsection 5 above. Such contribution shall be allocated to the
QMAC/QNEC Account of one or more Eligible Participants who are not Highly
Compensated Eligible Participants in one of the methods described in Subsection
3(e) above, as elected by the Plan Sponsor at the time the Qualified Nonelective
Contribution or Qualified Matching Contribution is made.

         Notwithstanding the foregoing, nothing in this Section shall be deemed
to prevent a Plan Sponsor, in the event of an uncorrected failure of the Actual
Contribution Percentage Test, from taking any corrective measures available
pursuant to Plan Section 3.8 above.

                                    SECTION 7
                                 MULTIPLE PLANS

         Except to the extent limited by rules promulgated by the Secretary of
the Treasury, if a Highly Compensated Eligible Participant is a participant in
any other plan of the Plan Sponsor or any Affiliate which includes Matching
Contributions, deferrals under a cash or deferred arrangement pursuant to Code
Section 401(k), or nondeductible employee contributions, any contributions made
by or on behalf of the Participant to the other plan shall be allocated with the
same class of contributions under the Plan for purposes of determining the
Actual Deferral Percentage and Actual Contribution Percentage under the Plan;
provided, however, contributions that are made under an "employee stock
ownership plan" (within the meaning of Code Section

<PAGE>

4975(e)(7)) shall not be combined with contributions under any plan which is not
an employee stock ownership plan (within the meaning of Code Section
4975(e)(7)).

         Except to the extent limited by rules promulgated by the Secretary of
the Treasury, if the Plan and any other plans which include Matching
Contributions, deferrals under a cash or deferred arrangement pursuant to Code
Section 401(k), or nondeductible employee contributions are considered as one
plan for purposes of Code Section 401(a)(4) and 410(b)(1), any contributions
under the other plans shall be allocated with the same class of contributions
under the Plan for purposes of determining the Actual Contribution Percentage
and Actual Deferral Percentage under the Plan; provided, however, contributions
that are made under an "employee stock ownership plan" (within the meaning of
Code Section 4975(e)(7)) shall not be combined with contributions under any plan
which is not an employee stock ownership plan (within the meaning of Code
Section 4975(e)(7)).

                                    SECTION 8
                ALTERNATIVE METHOD FOR NONDISCRIMINATION TESTING

         Effective January 1, 1999, notwithstanding any other provision in this
Appendix C to the contrary, to the extent otherwise applicable, the limitations
expressed in this Appendix C shall not apply with respect to those Plan Years in
which the Plan satisfies the requirements of Code Sections 401(k)(11) and/or
401(k)(12).

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]