COMMUNITY BANKS INC /PA/
COMMUNITY BANKS, INC. 401(K) PLAN
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>15
<FILENAME>ex_10-15.txt
<DESCRIPTION>COMMUNITY BANKS, INC. 401(K) PLAN
<TEXT>
                                                                   Exhibit 10.15

                              COMMUNITY BANKS, INC.

                                   401(K) PLAN









<PAGE>



                                TABLE OF CONTENTS


ARTICLE 1...............................................................-3-
DEFINITIONS.............................................................-3-
         1.1      ACP or ACP TEST.......................................-3-
         1.2      ACTUAL DEFERRAL PERCENTAGE TEST.......................-3-
         1.3      ADP or ADP TEST.......................................-4-
         1.4      ADMINISTRATOR.........................................-4-
         1.5      ADOPTING EMPLOYER.....................................-4-
         1.6      AFFILIATED EMPLOYER...................................-4-
         1.7      AGE...................................................-4-
         1.8      ANNIVERSARY DATE......................................-4-
         1.9      ANNUITY STARTING DATE.................................-5-
         1.10     AVERAGE CONTRIBUTION PERCENTAGE TEST..................-5-
         1.11     BENEFICIARY...........................................-7-
         1.12     BREAK IN SERVICE......................................-7-
         1.13     CODE..................................................-7-
         1.14     COMPENSATION..........................................-7-
         1.15     DISABILITY............................................-7-
         1.16     EARLY RETIREMENT AGE..................................-7-
         1.17     EARNED INCOME.........................................-7-
         1.18     ELECTIVE DEFERRAL.....................................-8-
         1.19     ELIGIBLE PARTICIPANT..................................-8-
         1.20     EMPLOYEE..............................................-8-
         1.21     EMPLOYER..............................................-8-
         1.22     FIDUCIARY.............................................-8-
         1.23     FISCAL YEAR...........................................-9-
         1.24     FORFEITURE............................................-9-
         1.25     HCE...................................................-9-
         1.26     HIGHLY COMPENSATED EMPLOYEE...........................-9-
         1.27     HOUR OF SERVICE.......................................-9-
         1.28     KEY EMPLOYEE..........................................-9-
         1.29     LEASED EMPLOYEE......................................-10-
         1.30     LIMITATION YEAR......................................-10-
         1.31     MATCHING CONTRIBUTION................................-10-
         1.32     MATERNITY OR PATERNITY LEAVE.........................-10-
         1.33     NHCE.................................................-10-
         1.34     NON-ELECTIVE CONTRIBUTIONS...........................-10-
         1.35     NON-HIGHLY COMPENSATED EMPLOYEE......................-10-
         1.36     NON-KEY EMPLOYEE.....................................-10-
         1.37     NORMAL RETIREMENT AGE................................-11-
         1.38     NORMAL RETIREMENT DATE...............................-11-
         1.39     OWNER-EMPLOYEE.......................................-11-
         1.40     PARTICIPANT..........................................-11-
         1.41     PARTICIPANT'S ACCOUNT................................-11-
         1.42     PERMISSIVE AGGREGATION GROUP.........................-11-
         1.43     PLAN.................................................-11-
         1.44     PLAN YEAR............................................-11-
         1.45     POLICY...............................................-11-
         1.46     QMAC.................................................-11-
         1.47     QNEC.................................................-11-
         1.48     QUALIFIED JOINT AND SURVIVOR ANNUITY.................-11-
         1.49     QUALIFIED MATCHING CONTRIBUTION......................-12-
         1.50     QUALIFIED NON-ELECTIVE CONTRIBUTIONS.................-12-
         1.51     QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.............-12-
         1.52     REQUIRED AGGREGATION GROUP...........................-12-
         1.53     REQUIRED BEGINNING DATE..............................-12-
         1.54     SECTION 415 COMPENSATION.............................-13-
         1.55     SELF-EMPLOYED INDIVIDUAL.............................-13-
         1.56     SHAREHOLDER-EMPLOYEE.................................-13-
         1.57     SUPER TOP HEAVY......................................-13-
         1.58     TERMINATION OF EMPLOYMENT............................-13-


<PAGE>



         1.59     TERMINATED PARTICIPANT...............................-14-
         1.60     TOP HEAVY............................................-14-
         1.61     TOP HEAVY MINIMUM ALLOCATION.........................-14-
         1.62     TOP HEAVY RATIO......................................-14-
         1.63     TRUSTEE..............................................-15-
         1.64     TRUST FUND...........................................-15-
         1.65     VALUATION DATE.......................................-15-
         1.66     VESTED AGGREGATE ACCOUNT.............................-15-
         1.67     VESTED INTEREST......................................-15-
         1.68     YEAR OF SERVICE......................................-15-

ARTICLE 2..............................................................-17-
PLAN PARTICIPATION.....................................................-17-
         2.1      ELIGIBILITY REQUIREMENTS.............................-17-
         2.2      ENTRY DATE...........................................-17-
         2.3      WAIVER OF PARTICIPATION..............................-18-
         2.4      CESSATION OF PARTICIPATION...........................-18-
         2.5      RESTRICTIONS ON OWNER-EMPLOYEES......................-18-

ARTICLE 3..............................................................-19-
CONTRIBUTIONS AND ALLOCATIONS..........................................-19-
         3.1      EMPLOYER CONTRIBUTIONS...............................-19-
         3.2      ALLOCATION OF EMPLOYER CONTRIBUTIONS.................-20-
         3.3      ALLOCATION OF EARNINGS AND LOSSES....................-21-
         3.4      ALLOCATION OF FORFEITURES............................-21-
         3.5      TOP HEAVY MINIMUM ALLOCATION.........................-22-
         3.6      FAILSAFE ALLOCATION..................................-22-
         3.7      ROLLOVERS............................................-23-

ARTICLE 4..............................................................-24-
PLAN BENEFITS..........................................................-24-
         4.1      BENEFIT UPON NORMAL OR EARLY RETIREMENT..............-24-
         4.2      BENEFIT UPON LATE RETIREMENT.........................-24-
         4.3      BENEFIT UPON DEATH...................................-24-
         4.4      BENEFIT UPON DISABILITY..............................-24-
         4.5      BENEFIT UPON TERMINATION.............................-24-
         4.6      DETERMINATION OF VESTED INTEREST.....................-24-

ARTICLE 5..............................................................-26-
DISTRIBUTION OF BENEFITS...............................................-26-
         5.1      BENEFIT UPON RETIREMENT..............................-26-
         5.2      BENEFIT UPON DEATH...................................-26-
         5.3      DISABILITY BENEFITS..................................-27-
         5.4      BENEFIT UPON TERMINATION.............................-28-
         5.5      CASH-OUT OF BENEFITS.................................-28-
         5.6      RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS..............-28-
         5.7      RESTORATION OF FORFEITED ACCOUNT BALANCE.............-29-
         5.8      SPOUSAL CONSENT REQUIREMENTS.........................-29-
         5.9      APPLICATION OF CODE SECTION 401(a)(9)................-31-
         5.10     STATUTORY COMMENCEMENT OF BENEFITS...................-31-
         5.11     DETERMINATION OF LIFE EXPECTANCIES...................-31-
         5.12     SEGREGATION OF BENEFIT BEFORE DISTRIBUTION...........-32-
         5.13     DISTRIBUTION IN EVENT OF LEGAL INCAPACITY............-32-
         5.14     DIRECT ROLLOVERS.....................................-32-
         5.15     DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS............-33-
         5.16     DISTRIBUTION OF EXCESS CONTRIBUTIONS.................-34-
         5.17     DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.......-35-
         5.18     FINANCIAL HARDSHIP DISTRIBUTIONS.....................-36-
         5.19     PROTECTED BENEFITS...................................-38-

ARTICLE 6..............................................................-39-
CODE SECTION 415 LIMITATIONS...........................................-39-
         6.1      MAXIMUM ANNUAL ADDITION..............................-39-
         6.2      ADJUSTMENTS TO MAXIMUM ANNUAL ADDITION...............-39-


<PAGE>



         6.3      MULTIPLE PLANS AND MULTIPLE EMPLOYERS................-40-
         6.4      MULTIPLE PLAN REDUCTION..............................-40-
         6.5      ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS............-41-

ARTICLE 7..............................................................-43-
DUTIES OF THE TRUSTEE..................................................-43-
         7.1      APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION.....-43-
         7.2      INVESTMENT ALTERNATIVES OF THE TRUSTEE...............-43-
         7.3      VALUATION OF THE TRUST FUND..........................-45-
         7.4      COMPENSATION AND EXPENSES............................-45-
         7.5      PAYMENTS FROM THE TRUST FUND.........................-45-
         7.6      PAYMENT OF TAXES.....................................-46-
         7.7      ACCOUNTS, RECORDS AND REPORTS........................-46-
         7.8      EMPLOYMENT OF AGENTS AND COUNSEL.....................-46-
         7.9      DIVISION OF DUTIES AND INDEMNIFICATION...............-46-
         7.10     APPOINTMENT OF INVESTMENT MANAGER....................-48-
         7.11     ASSIGNMENT AND ALIENATION OF BENEFITS................-48-
         7.12     EXCLUSIVE BENEFIT RULE...............................-48-
         7.13     PURCHASE OF INSURANCE................................-48-
         7.14     LOANS TO PARTICIPANTS................................-48-
         7.15     DIRECTED INVESTMENT ACCOUNTS.........................-50-

ARTICLE 8..............................................................-52-
DUTIES OF THE ADMINISTRATOR............................................-52-
         8.1      APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION.....-52-
         8.2      POWERS AND DUTIES OF THE ADMINISTRATOR...............-52-
         8.3      EMPLOYMENT OF AGENTS AND COUNSEL.....................-52-
         8.4      COMPENSATION AND EXPENSES............................-52-
         8.5      CLAIMS PROCEDURES....................................-52-
         8.6      QUALIFIED DOMESTIC RELATIONS ORDERS..................-53-

ARTICLE 9..............................................................-55-
AMENDMENT, TERMINATION AND MERGER......................................-55-
         9.1      AMENDMENT............................................-55-
         9.2      TERMINATION..........................................-55-
         9.3      MERGER OR CONSOLIDATION..............................-55-

ARTICLE 10.............................................................-56-
MISCELLANEOUS PROVISIONS...............................................-56-
         10.1     NO CONTRACT OF EMPLOYMENT............................-56-
         10.2     TITLE TO ASSETS......................................-56-
         10.3     QUALIFIED MILITARY SERVICE...........................-56-
         10.4     FIDUCIARIES AND BONDING..............................-56-
         10.5     SEVERABILITY OF PROVISIONS...........................-56-
         10.6     GENDER AND NUMBER....................................-56-
         10.7     HEADINGS AND SUBHEADINGS.............................-56-
         10.8     LEGAL ACTION.........................................-56-



<PAGE>



                              Community Banks, Inc.
                                   401(K) PLAN

     THIS  AGREEMENT  is made and entered  into this day of ,  -----------------
----------------------------------   -----  ,  between   COMMUNITY  BANKS,  INC.
(hereafter  called the Employer) and TERRY L.  BURROWES,  ------------  EDDIE L.
DUNKLEBARGER,  PATRICIA E. HOCH, SALLY J. LEAS, ERNEST L. LOWE and KATHY A. MULL
(hereafter called the Trustee).

     WHEREAS,  Peoples State Bank (the "Former Employer") originally established
a 401(k) profit sharing plan and trust with a cash or deferred arrangement,  the
Peoples State Bank Employees'  Profit Sharing Plan,  originally  effective as of
January 1, 1986 (the "Plan") to provide benefits to its eligible employees;

     WHEREAS,  the Former  Employer  amended and restated the Plan on January 1,
1993 to comply with changes in applicable law;

     WHEREAS,  the Employer  previously  merged the Peoples State Bank Employees
Stock Ownership Plan into the Plan, effective as of June 1, 1998;

     WHEREAS, as the result of a corporate transaction,  sponsorship of the Plan
was  transferred  to Community  Banks,  Inc. (the  "Employer"),  effective as of
January 1, 2000;

     WHEREAS,  the  Employer now desires to amend and restate the Plan to comply
with applicable changes in law (including the Uniformed Services  Employment and
Reemployment  Rights Act, the Small  Business Job  Protection  Act of 1996,  the
Taxpayer Relief Act of 1997, and the IRS Reform and Restructuring Act of 1998);

     WHEREAS,  in conjunction  with the amendment and restatement of the Plan to
comply with  applicable  changes in law, the Employer  also desires to merge the
Community  Banks,  N.A.  401(k)  Plan, a profit  sharing  plan of an  Affiliated
Employer, into the Plan, effective as of January 1, 2000;





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<PAGE>






     WHEREAS,  the Employer  desires to rename the Plan as the Community  Banks,
Inc. 401(k) Plan, effective as of January 1, 2000; and

     WHEREAS, in accordance with Section 9.1 of the Plan, the Employer maintains
the discretion to amend the Plan at any time.

     NOW  THEREFORE,  effective  as of January 1, 1997  (except  that those Plan
provisions  that do not relate to the new law changes  described above shall not
be effective until January 1, 2000) or such other effective date as specifically
set forth herein, the Employer and the Trustee hereby amend and restate the Plan
to read as follows:




                                       2
<PAGE>

                                    ARTICLE 1
                                   DEFINITIONS


     1.1  ACP  or  ACP  TEST:  The  term  ACP  means  the  Average  Contribution
          Percentage as defined in Section 1.10(e).  The term ACP Test means the
          Average Contribution Percentage Test.

     1.2  ACTUAL DEFERRAL  PERCENTAGE TEST: The term Actual Deferral  Percentage
          Test means one of the following tests for Elective Deferrals:  (a) the
          ADP for  Participants  who are HCEs in the current  Plan Year will not
          exceed the current Plan Year's ADP for  Participants  who are NHCEs in
          the  current  Plan  Year  multiplied  by  1.25;  or (b)  the  ADP  for
          Participants  who are HCEs for the  current  Plan Year will not exceed
          the  current  Plan  Year's ADP for  Participants  who are NHCEs in the
          current  Plan  Year  multiplied  by  2.0,  provided  that  the ADP for
          Participants who are HCEs in the current Plan Year does not exceed the
          ADP for  Participants  who are NHCEs in the current  Plan Year by more
          than 2 percentage points. The ADP Test will be determined as follows:

          (a)  Actual Deferral  Percentage:  The term Actual Deferral Percentage
               (ADP) means,  for a specified  group of  Participants  for a Plan
               Year,  the average of the ratios  calculated  separately for each
               Participant   in  such  group  of  (1)  the  amount  of  Employer
               contributions actually paid on behalf of such Participant for the
               Plan  Year to (2) the  Participant's  Compensation  for such Plan
               Year.  Employer  contributions  made on behalf of any Participant
               will include a Participant's Elective Deferrals, including Excess
               Elective   Deferrals  of  HCEs,  but  excluding  Excess  Elective
               Deferrals of NHCEs that arise solely from Elective Deferrals made
               to this Plan or any other plans  maintained  by this Employer and
               Elective  Deferrals  used  in the ACP  Test  if the  ADP  Test is
               satisfied  both  with and  without  exclusion  of these  Elective
               Deferrals.  Employer contributions for purposes of this paragraph
               will include all QNECs.  In computing ADPs, an Employee who would
               be a Participant  but for the failure to make Elective  Deferrals
               will be  treated as a  Participant  on whose  behalf no  Elective
               Deferrals are made.

          (b)  Highly  Compensated  Employees:  A  Participant  is a  HCE  for a
               particular  Plan Year if he or she meets the  definition of a HCE
               in  effect  for that Plan  Year.  A  Participant  is a NHCE for a
               particular Plan Year if he or she does not meet the definition of
               a HCE in effect for that Plan Year.  The ADP for any  Participant
               who is a HCE for  the  Plan  Year  and  who is  eligible  to have
               Elective  Deferrals  (and QNECs that are treated under  paragraph
               (a) as Elective Deferrals for purposes of the ADP Test) allocated
               to his or her accounts under two or more  arrangements  described
               in  Codess.401(k)  that are  maintained  by this Employer will be
               determined  as if such Elective  Deferrals  (and QNECs) were made
               under a single arrangement.  If a HCE participates in two or more
               cash or deferred arrangements that have different Plan Years, all
               cash or  deferred  arrangements  ending  with or within  the same
               calendar   year  will  be  treated   as  a  single   arrangement.
               Notwithstanding  the foregoing,  certain plans will be treated as
               separate if mandatorily  disaggregated  under  regulations  under
               Code ss.401(k).

          (c)  Other  Rules:  In  determining  the ADP  Test,  (1) if this  Plan
               satisfies the requirements of Code  ss.ss.401(k),  401(a)(4),  or
               410(b) only if aggregated with one or more other plans, or if one
               or more other plans satisfy such  requirements only if aggregated
               with this Plan,  then this section will be applied by determining
               the ADP of  Employees  as if all such plans  were a single  plan.
               Plans may be aggregated in order to satisfy Code  ss.401(k)  only
               if they  have the  same  Plan  Year and use the same ADP  testing
               method;  (2)  Elective  Deferrals,  QNECs and QMACs  must be made
               before  the  last  day of  the  twelve-month  period  immediately
               following the Plan




                                       3
<PAGE>




               Year  to  which  contributions  relate;  (3)  the  Employer  will
               maintain  records  sufficient to demonstrate  satisfaction of the
               ADP Test and the amount of QNECs  and/or QMACs used in such test;
               and (4) the determination and treatment of the ADP amounts of any
               Participant  will  satisfy  such  other  requirements  as  may be
               prescribed by the Secretary of the Treasury.

          (d)  Change To Prior  Year  Testing:  The  Employer  can only elect to
               change to prior year testing in accordance with the  requirements
               set  forth in  Notice  98-1  (or  superseding  guidance).  If the
               Employer does elect to change to prior year testing,  the ADP for
               NHCEs  for the  prior  year will be  determined  by  taking  into
               account  only (1)  Elective  Deferrals  for those NHCEs that were
               taken into  account for purposes of the ADP Test (and not the ACP
               Test) under the current year  testing  method for the prior year,
               and (2) QNECs that were  allocated to the accounts of those NHCEs
               for the prior year but that were not used to satisfy the ADP Test
               or the ACP Test under the  current  year  testing  method for the
               prior year.  Thus, if the Employer elects to change to prior year
               testing, the following contributions made for the prior year will
               be disregarded:  QNECs used to satisfy either the ADP Test or ACP
               Test under the current year testing  method for the prior testing
               year,  Elective  Deferrals taken into account for purposes of the
               ACP Test, and all QMACs.  These limitations on double counting do
               not apply for testing years beginning before January 1, 1999, and
               if the Plan  changes to prior year testing for the first time for
               the 1998 Plan Year, the ADP for NHCEs will be the same as for the
               1997 Plan Year.

     1.3  ADP or ADP TEST: The term ADP means the Actual Deferral  Percentage as
          defined in Section 1.2(a). The term ADP Test means the Actual Deferral
          Percentage Test.

     1.4  ADMINISTRATOR:  The  term  Administrator  means  the  Employer  unless
          another Administrator is appointed by the Employer.

     1.5  ADOPTING  EMPLOYER:  The term  Adopting  Employer  means any  business
          entity  which  adopts this Plan with the consent of the  Employer.  An
          Employee's  transfer to or from any Employer or Adopting Employer will
          not affect his or her  Participant's  Account balance,  total Years of
          Service and Years of Plan  Participation.  If the Adopting Employer is
          not an Affiliated  Employer,  the  Employees of the Adopting  Employer
          will be treated  separately  for purposes of allocating  contributions
          and  Forfeitures and for testing under Code  ss.401(a)(4),  ss.401(k),
          ss.401(m),  ss.410 and, if the Employer  and Adopting  Employer do not
          share   Employees,   ss.416.   An  Adopting   Employer  may  terminate
          participation  by delivering  written  notice to the Trustee.  If Plan
          assets which have been  allocated to the Employees of the  terminating
          Adopting  Employer are not  transferred  within a reasonable time to a
          successor  Trustee,  they will be  distributed to the Employees of the
          terminating Adopting Employer as if the Plan had been terminated under
          Section 9.2.

     1.6  AFFILIATED  EMPLOYER:  The term  Affiliated  Employer means any of the
          following of which the Employer is a part:  (1) a controlled  group of
          corporations  as defined in Code  ss.414(b);  (2) a trade or  business
          (whether  or  not  incorporated)   under  common  control  under  Code
          ss.414(c); (3) any organization (whether or not incorporated) which is
          a member of an affiliated service group under Code ss.414(m);  and (4)
          any other entity required to be aggregated under Code ss.414(o).

     1.7  AGE: The term Age means actual attained age.

     1.8  ANNIVERSARY DATE: The term Anniversary Date means December 31st.





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<PAGE>




     1.9  ANNUITY  STARTING DATE: The term Annuity Starting Date means the first
          day of the first period for which an amount is paid as an annuity, or,
          in the case of a benefit not payable as an annuity,  the first day all
          events have occurred  which entitle the  Participant  to such benefit.
          The  first  day of the  first  period  for  which a  benefit  is to be
          received  by reason  of  Disability  will be  treated  as the  Annuity
          Starting Date only if such benefit is not an auxiliary benefit.

     1.10 AVERAGE  CONTRIBUTION  PERCENTAGE TEST: The term Average  Contribution
          Percentage  Test (or ACP Test)  means one of the  following  tests for
          Matching  Contributions  and Employee  contributions:  (a) the ACP for
          Participants who are HCEs in the current Plan Year will not exceed the
          current Plan Year's ACP for  Participants who are NHCEs in the current
          Plan Year multiplied by 1.25; or (b) the ACP for  Participants who are
          HCEs in the current  Plan Year will not exceed the current Plan Year's
          ACP for Participants who are NHCEs in the current Plan Year multiplied
          by 2.0,  provided  that the ACP for  Participants  who are HCEs in the
          current  Plan Year does not  exceed the ACP for  Participants  who are
          NHCEs in current Plan Year by more than 2 percentage  points.  The ACP
          Test will be determined as follows:

          (a)  Multiple Use: If one or more HCEs  participate  in both a cash or
               deferred  arrangement  and in a plan  subject  to  the  ACP  Test
               maintained by the Employer,  and if the sum of the ADP and ACP of
               those HCEs subject to either or both tests  exceeds the Aggregate
               Limit,  then the ACP of those HCEs who also participate in a cash
               or deferred  arrangement  will be reduced in the manner described
               in  Section  5.17 of the Plan so that the limit is not  exceeded.
               The amount by which each HCE's Contribution  Percentage Amount is
               reduced will be treated as an Excess  Aggregate  Contribution  as
               defined  in  Section  5.17.  The ADP  and  the  ACP of  HCEs  are
               determined  after any  corrections  required to meet the ADP Test
               and the ACP Test and are deemed to be the maximum permitted under
               such  tests  for the Plan  Year.  Multiple  use does not occur if
               either  the ADP or the  ACP of the  HCEs  does  not  exceed  1.25
               multiplied by the ADP and the ACP of the NHCEs.

          (b)  Highly  Compensated  Employees:  A  Participant  is a  HCE  for a
               particular  Plan Year if he or she meets the  definition of a HCE
               in effect for that Plan Year;  and a Participant  is a NHCE for a
               particular Plan Year if he or she does not meet the definition of
               a HCE in effect for that Plan Year. The  Contribution  Percentage
               for any  Participant  who is a HCE and  who is  eligible  to have
               Contribution  Percentage  Amounts allocated to his or her account
               under  two  or  more  plans   described  in   Codess.401(a),   or
               arrangements  described in  Codess.401(k)  that are maintained by
               the  Employer,  will  be  determined  as if  the  total  of  such
               Contribution  Percentage  Amounts was made under each plan.  If a
               HCE  participates  in two or more cash or  deferred  arrangements
               that have different plan years, all cash or deferred arrangements
               ending with or within the same calendar year will be treated as a
               single arrangement.  Notwithstanding the foregoing, certain plans
               will be treated as separate if  mandatorily  disaggregated  under
               regulations under Codess.401(m).

          (c)  Other  Rules:  In  determining  the ACP  Test,  (1) if this  Plan
               satisfies the requirements of Code ss.401(m), Codess.401(a)(4) or
               Codess.410(b) only if aggregated with one or more other plans, or
               if one or more other  plans  satisfy  such  requirements  only if
               aggregated  with this Plan,  then this section will be applied by
               determining  the  Contribution  Percentage of Employees as if all
               such plans were a single plan.  Plans may be  aggregated in order
               to  satisfy  Codess.401(m)  only if they have the same Plan Year;
               (2) in determining the  Contribution  Percentage  test,  Employee
               contributions  are  considered to have been made in the Plan Year
               in which contributed to the Plan, and Matching  Contributions and
               QNECs  will be  considered  made for




                                       5
<PAGE>




               a Plan  Year if made no later  than  the end of the  twelve-month
               period beginning on the day after the close of the Plan Year; (3)
               the Employer will  maintain  records  sufficient  to  demonstrate
               satisfaction of the ACP Test and the amount of QNECs or QMACs, or
               both, used in such test; and (4)  thedetermination  and treatment
               of the  Contribution  Percentage of any Participant  will satisfy
               such other  requirements as may be prescribed by the Secretary of
               the Treasury.

          (d)  Aggregate  Limit:  The term Aggregate  Limit means the sum of (1)
               125% of the greater of the ADP of Participants  who are the NHCEs
               for the  current  Plan  Year or the ACP of  Participants  who are
               NHCEs subject to Code  ss.401(m) for the Plan Year beginning with
               or within the current  Plan Year of the CODA,  and (2) the lesser
               of 200% or two plus the  lesser of such ADP or ACP.  "Lesser"  is
               substituted for "greater" in (1) and "greater" is substituted for
               "lesser" after "two plus the" in (2) if a larger  Aggregate Limit
               would result.

          (e)  Definitions:  The term Average Contribution  Percentage means the
               average  of  the  Contribution   Percentages  of  the  "eligible"
               Participants in a group; the term  Contribution  Percentage means
               the  ratio  (expressed  as a  percentage)  of  the  Participant's
               Contribution Percentage Amounts to the Participant's Compensation
               for the Plan Year; and the term Contribution  Percentage  Amounts
               means the sum of Employee Contributions,  Matching Contributions,
               and QMACs (to the extent not taken into  account in the ADP Test)
               made on behalf of the Participant for the Plan Year. Contribution
               Percentage  Amounts will not include Matching  Contributions that
               are forfeited either to correct Excess Aggregate Contributions or
               because  the  contributions  to  which  they  relate  are  Excess
               Deferrals,    Excess    Contributions,    or   Excess   Aggregate
               Contributions.   The  Employer   will  include  as   Contribution
               Percentage Amounts all QNECs.

          (f)  "Eligible"   Participant:   For  purposes  of  this  Section,  an
               "eligible" Participant is any Employee who is eligible to make an
               Employee  Contribution,  or an Elective Deferral (if the Employer
               takes such  contributions  into account in the calculation of the
               Contribution  Percentage),  or to receive a Matching Contribution
               (including forfeitures) or a QMAC. If an Employee Contribution is
               required as a condition of Plan  participation,  any Employee who
               would be a Participant  if such Employee made such a contribution
               will be treated as an "eligible" Participant on behalf of whom no
               Employee  Contributions are made. An Employee  Contribution means
               any  contribution  made  to  the  Plan  by  or  on  behalf  of  a
               Participant that is included in the Participant's gross income in
               the year in which  made and that is  maintained  under a separate
               account to which earnings and losses are allocated.

          (g)  Change To Prior  Year  Testing:  The  Employer  can only elect to
               change to prior year testing in accordance with the  requirements
               set  forth in  Notice  98-1  (or  superseding  guidance).  If the
               Employer does elect to change to prior year testing,  the ACP for
               NHCEs  for the  prior  year will be  determined  by  taking  into
               account only (1) Voluntary Employee Contributions for those NHCEs
               for the prior  year,  and (2)  Matching  Contributions  for those
               NHCEs that were taken into  account for  purposes of the ACP Test
               (and not the ADP Test) under the current year testing  method for
               the prior year, and (3) QNECs that were allocated to the accounts
               of those  NHCEs  for the  prior  year  but that  were not used to
               satisfy  the ACP  Test or the ADP Test  under  the  current  year
               testing method for the prior year.  Thus, if the Employer  elects
               to change to prior year testing, the following contributions made
               for the prior  year will be  disregarded:  QNECs  used to satisfy
               either the ADP Test or ACP Test under the  current  year  testing
               method for the prior testing  year,  QMACs taken into account for
               purposes





                                       6
<PAGE>


               of the ADP Test, and all Elective Deferrals. These limitations on
               double counting do not apply for testing years  beginning  before
               January 1, 1999,  and if the Plan  changes to prior year  testing
               for the first time for the 1998 Plan Year, the ACP for NHCEs will
               be the same as for the 1997 Plan Year.

     1.11 BENEFICIARY:  The term Beneficiary  means the recipient  designated by
          the  Participant  to  receive  the  Plan  benefits  payable  upon  the
          Participant's   death.  Subject  to  the  provisions  of  Section  5.8
          regarding the rights of a Participant's  spouse,  each Participant may
          designate a Beneficiary on a form supplied by the  Administrator,  and
          may change or revoke that  designation  by filing  written notice with
          the  Administrator.  In the absence of a designation,  the Participant
          will be deemed to have designated the following Beneficiaries (if then
          living) in the following order: (1) his or her spouse,  (2) his or her
          children; and (3) his or her estate.

     1.12 BREAK IN SERVICE:  The term Break in Service  means a Plan Year during
          which an Employee does not complete more than 500 Hours of Service for
          reasons other than an authorized leave of absence, which is any period
          in which an  Employee  ceases  active  employment  because of illness,
          military service,  or any other reason approved by the Employer.  If a
          Plan Year is less than 12 months, the 500 Hours of Service requirement
          will be proportionately reduced.

     1.13 CODE:  The term  Code  means the  Internal  Revenue  Code of 1986,  as
          amended, and the regulations and rulings promulgated thereunder by the
          Internal Revenue Service.

     1.14 COMPENSATION:  The term Compensation means a Participant's Section 415
          Compensation  that is actually paid or made  available in gross income
          during  the  Plan  Year.  However,  Compensation  will not  include  a
          Participant's  reimbursements  or other  expenses  allowances,  fringe
          benefits (cash and noncash),  moving expenses,  deferred compensation,
          and welfare  benefits.  Compensation  used to determine  Plan benefits
          will not exceed $160,000, as adjusted under Code ss.401(a)(17). A cost
          of living  adjustment  in effect  for a calendar  year  applies to any
          period not exceeding 12 months over which  Compensation  is determined
          (determination   period)   beginning  in  such  calendar  year.  If  a
          determination  period is less than 12 months,  the  adjusted  $160,000
          limitation will be multiplied by a fraction, the numerator of which is
          the number of months in the determination  period, and the denominator
          of which is 12.  Compensation of an  Owner-Employee or a Self-Employed
          Individual  will  equal  Earned  Income  up to the  adjusted  $160,000
          limitation.

     1.15 DISABILITY:  The term Disability  means a physical or mental condition
          arising after an Employee has become a Participant which qualifies the
          Participant  for  benefits  under  an   Employer-sponsored   long-term
          disability plan which is  administered by an independent  third party.
          However,  notwithstanding the foregoing,  the term Disability will not
          include any  disability  arising from (1) chronic or excessive  use of
          intoxicants  or other  substances;  (2)  intentionally  self-inflicted
          injury  or  sickness;  (3)  an  unlawful  act  or  enterprise  by  the
          Participant; or (4) military service where the Participant is eligible
          to receive a government sponsored military disability pension.

     1.16 EARLY  RETIREMENT AGE: Early Retirement Age means the first day of any
          month coinciding with or following the date a Participant  reaches Age
          60 and completes 5 Years of Service.

     1.17 EARNED  INCOME:  The term Earned  Income means the net  earnings  from
          self-employment  in the trade or  business  with  respect to which the
          Plan is established, for which personal services of the individual are
          a material  income-producing  factor.  Net earnings will be determined
          without  regard  to





                                       7
<PAGE>


          items  not  included  in gross  income  and the  deductions  allocable
          thereto.  Net earnings will be reduced by deductible  contributions by
          the Employer to a qualified  retirement  plan.  Net  earnings  will be
          determined  with regard to the  deduction  allowed to the  Employer by
          Code ss.164(f) for taxable years beginning after December 31, 1989.

     1.18 ELECTIVE   DEFERRAL:   The  term  Elective  Deferrals  means  Employer
          contributions  made to the Plan at the election of the  Participant in
          lieu  of  cash  compensation,  and  will  include  contributions  made
          pursuant to a salary reduction  agreement or other deferral mechanism.
          In any taxable year, a Participant's  Elective  Deferral is the sum of
          all Employer contributions made on behalf of such Participant pursuant
          to  an  election  to  defer  under  any  qualified  cash  or  deferred
          arrangement under Code ss.401(k), any simplified employee pension cash
          or  deferred  arrangement  under Code  ss.402(h)(1)(B),  any  eligible
          deferred  compensation  plan  under Code  ss.457,  any plan under Code
          ss.501(c)(18), and any Employer contributions made for the purchase of
          an  annuity  contract  under  Code  ss.403(b)  pursuant  to  a  salary
          reduction agreement. Elective Deferrals will not include any deferrals
          properly distributed as excess Annual Additions under Section 6.5.

     1.19 ELIGIBLE   PARTICIPANT:   The  term  Eligible   Participant   means  a
          Participant   eligible   to  receive   an   allocation   of   Employer
          contributions (other than Matching Contributions) allocable for a Plan
          Year. Any  Participant  who is an Employee on the last day of the Plan
          Year will be an Eligible  Participant.  Any Participant who terminates
          employment with the Employer before the last day of the Plan Year will
          only be an Eligible  Participant for that Plan Year in accordance with
          the following provisions:

          (a)  Retiring  Participants:  A Participant who terminates  employment
               before the last day of the Plan Year because of retirement  after
               Normal or Early  Retirement  Age will be an Eligible  Participant
               regardless  of the  number of Hours of  Service  the  Participant
               completes during that Plan Year.

          (b)  Deceased  Participants:  A Participant who terminates  employment
               before the last day of the Plan Year  because of death will be an
               Eligible Participant regardless of the number of Hours of Service
               the Participant completes during that Plan Year.

          (c)  Disabled  Participants:  A Participant who terminates  employment
               before the last day of the Plan Year because of  Disability  will
               be an Eligible  Participant  regardless of the number of Hours of
               Service the Participant completes during that Plan Year.

          (d)  Terminated Participants:  A Participant who terminates before the
               last day of the Plan  Year for  reasons  other  than  retirement,
               death or Disability will be an Eligible  Participant if he or she
               completes at least 500 Hours of Service during that Plan Year.

     1.20 EMPLOYEE:  The term  Employee  means (1) any  person  employed  by the
          Employer  as an  employee;  (2) except  for  purposes  of  determining
          eligibility to participate in this Plan, any employee of an Affiliated
          Employer;  (3) any Self-Employed  Individual who derives Earned Income
          from the Employer; (4) any Owner-Employee; and (5) any Leased Employee
          who is not covered by a plan described in Code  ss.414(n)(5)  provided
          Leased Employees constitute more than 20% of the Employer's non-highly
          compensated workforce.

     1.21 EMPLOYER:  The term  Employer  means  Community  Banks,  Inc.  (or any
          successor thereto that sponsors this Plan) and any Adopting Employer.







                                       8
<PAGE>


     1.22 FIDUCIARY:  The term  Fiduciary  means any  individual or entity which
          exercises any  discretionary  authority or control over the management
          of the Plan or over the disposition of the assets of the Plan; renders
          investment  advice  for  a  fee  or  other  compensation   (direct  or
          indirect);  or has any discretionary  authority or responsibility over
          Plan administration.

     1.23 FISCAL YEAR: The term Fiscal Year means the Employer's accounting year
          beginning January 1st and ending December 31st.

     1.24 FORFEITURE:   The  term  Forfeiture   means  the  amount  by  which  a
          Participant's  Account balance exceeds his or her Vested Interest upon
          the  earlier  to  occur of (1) the date  the  Participant  receives  a
          distribution of his or her Vested  Interest  pursuant to Sections 5.4,
          5.5,  or 5.6;  or (2) the date the  Participant  incurs 5  consecutive
          Breaks in Service after Termination of Employment. No Forfeitures will
          occur  solely as a result of the  withdrawal  of a  Participant's  own
          contributions  to  the  Plan,  or  a  Participant's   transfer  to  an
          Affiliated  Employer or Adopting  Employer.  All  Forfeitures  will be
          allocated to the Forfeiture  Account  pending  allocation  pursuant to
          Section 3.4.

     1.25 HCE: The term HCE means a Highly Compensated Employee.

     1.26 HIGHLY COMPENSATED EMPLOYEE:  The term Highly Compensated Employee (or
          HCE) means,  for Plan Years  beginning  after  December 31, 1996,  any
          Employee (1) who during the Plan Year or the  look-back  year was a 5%
          owner as defined in Code  ss.416(i)(1);  or (2) who for the  look-back
          year had  Section  415  Compensation  in excess of $80,000 as adjusted
          under Code  ss.415(d)  (except that the base year will be the calendar
          quarter ending  September 30, 1996). The look-back year will be the 12
          month  period  immediately  preceding  the  Plan  Year for  which  the
          determination  is being  made.  The  determination  of who is a highly
          compensated  former Employee is based on the rules for determining HCE
          status as in effect for the Plan Year or the look-back  year for which
          the   determination  is  being  made,  in  accordance  with  temporary
          regulation ss.1.414(q)-1T,  A-4 and Notice 97-45. In determining if an
          Employee is a Highly Compensated  Employee for Plan Years beginning in
          1997,  amendments  to Code  ss.414(q)  are  treated as having  been in
          effect for Plan Years beginning in 1996.

     1.27 HOUR OF  SERVICE:  The term  Hour of  Service  means (a) each hour for
          which an Employee is paid, or entitled to payment, for the performance
          of duties for the Employer or an Affiliated Employer. These hours will
          be credited to the  Employee for the  computation  period in which the
          duties are performed; and (b) each hour for which an Employee is paid,
          or entitled to payment,  by the Employer or an Affiliated  Employer on
          account  of a period  of time  during  which no duties  are  performed
          (irrespective  of whether the employment  relationship has terminated)
          due to vacation,  holiday, illness, incapacity (including disability),
          layoff, jury duty, military duty or leave of absence. No more than 501
          hours will be credited  under this  Section for any single  continuous
          period  (whether  or not such  period  occurs in a single  computation
          period).  Hours under this  paragraph  will be calculated and credited
          pursuant to  ss.2530.200b-2  of the  Department  of Labor  Regulations
          which are incorporated herein by this reference; and (c) each hour for
          which back pay,  irrespective  of  mitigation  of  damages,  is either
          awarded or agreed to by the Employer or an  Affiliated  Employer.  The
          same hours will not be credited  both under section (a) or section (b)
          above and under this section (c). These hours will be credited for the
          computation period or periods to which the award or agreement pertains
          rather than the  computation  period in which the award,  agreement or
          payment  is  made.  In  determining  whether  a Break in  Service  for
          participation  and vesting has occurred in a  computation  period,  an
          individual on Maternity or Paternity  Leave will receive credit for up
          to 501  hours  which  would  otherwise  have  been  credited  to  such
          individual  but for such  absence,  or in any case in which such hours
          cannot be




                                       9
<PAGE>


          determined,  8 hours  per  day of such  absence.  Hours  credited  for
          Maternity  of  Paternity  Leave will be  credited  in the  computation
          period in which the absence  begins if the  crediting  is necessary to
          prevent a Break in Service in that period,  or in all other cases,  in
          the following computation period.

     1.28 KEY  EMPLOYEE:  The term  Key  Employee  means  any  Employee,  Former
          Employee, deceased Employee, or Beneficiary who at any time during the
          Plan  Year  containing  the  Determination  Date for the Plan  Year in
          question  or any of the prior 4 Plan  Years was (1) an  officer of the
          Employer whose Section 415  Compensation  exceeds 50% of the amount in
          effect  under  Code  ss.415(b)(1)(A),  except  that no more than fifty
          Employees  (or,  if  lesser,  the  greater  of  three  or  10%  of the
          Employees)  will  be  treated  as  officers;  (2)  an  owner  (or  was
          considered  an owner  under  Code  ss.318)  of one of the ten  largest
          interests in the Employer whose Section 415 Compensation  exceeds 100%
          of the dollar limitation in effect under Code ss.415(c)(1)(A),  but if
          two Employees own the same interest in the Employer, the Employee with
          the  greater  annual  Compensation  will be treated as owning a larger
          interest;  (3)  a  5%  owner  of  the  Employer  as  defined  in  Code
          ss.416(i)(1)(B)(i);  or (4) a 1% owner of the  Employer  as defined in
          Code ss.416(i)(1)(B)(ii) whose annual Section 415 Compensation is more
          than $150,000. For purposes of this Section,  Section 415 Compensation
          will  include  amounts  contributed  by the  Employer  on behalf of an
          Employee pursuant to a salary reduction agreement which are excludible
          from the Employee's gross income under Code ss.125, Code ss.402(e)(3),
          Code ss.402(h), or Code ss.403(b).

     1.29 LEASED EMPLOYEE:  The term Leased Employee means any person within the
          meaning of Code ss.414(n)(2) and Code ss.414(o) who is not an Employee
          of the Employer and who, pursuant to an agreement between the Employer
          and a leasing organization, has performed services for the Employer or
          for the Employer and related  persons as determined in accordance with
          Code  ss.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  and  control of the  Employer.  Contributions  or  benefits
          provided to a Leased  Employee by the leasing  organization  which are
          attributable to services performed for the Employer will be treated as
          provided by Employer.

     1.30 LIMITATION YEAR: The term Limitation Year means the Plan Year.

     1.31 MATCHING  CONTRIBUTION:   The  term  Matching  Contribution  means  an
          Employer  contribution made to this or any other defined  contribution
          plan on behalf of a  Participant  on  account  of  Voluntary  Employee
          Contributions   made  by  such   Participant,   or  on  account  of  a
          Participant's  Elective  Deferral,  under  a  Plan  maintained  by the
          Employer.

     1.32 MATERNITY OR PATERNITY  LEAVE:  The term Maternity or Paternity  Leave
          means that an Employee is absent from work  because of the  Employee's
          pregnancy; the birth of the Employee's child; the placement of a child
          with the Employee in connection with the adoption of such child by the
          Employee;  or the need to care for such  child for a period  beginning
          immediately  following  the child's  birth or  placement  as set forth
          above.

     1.33 NHCE: The term NHCE means a Non-Highly Compensated Employee.

     1.34 NON-ELECTIVE CONTRIBUTIONS: The term Non-Elective Contribution means a
          contribution  other  than  a  Matching  Contribution  or  a  Qualified
          Matching  Contribution  (1) that is made by the Employer,  (2) that is
          allocated to Participants'  Accounts, and (3) that the Participant may
          not elect to receive in cash until such  contributions are distributed
          from the Plan.






                                       10
<PAGE>


     1.35 NON-HIGHLY  COMPENSATED  EMPLOYEE:  The  term  Non-Highly  Compensated
          Employee means any Employee who is not a Highly Compensated Employee.

     1.36 NON-KEY EMPLOYEE:  The term Non-Key Employee means any Employee who is
          not a Key Employee,  including  former Key Employees.  For purposes of
          making  the  allocations  in Section  3.5,  Non-Key  Employee  means a
          Non-Key Employee who either is a Participant or would be a Participant
          but for the reasons set forth in Section 3.5(a).


     1.37 NORMAL RETIREMENT AGE: The term Normal Retirement Age means the date a
          Participant reaches Age 65. There is no mandatory retirement age.

     1.38 NORMAL  RETIREMENT  DATE:  The term Normal  Retirement  Date means the
          first  day of the  month  coinciding  with  or next  following  Normal
          Retirement Age.

     1.39 OWNER-EMPLOYEE:  The term  Owner-Employee  means (1) in the case of an
          Employer or Affiliated  Employer which is an  unincorporated  trade or
          business,  an individual who owns the entire interest in such Employer
          or  Affiliated  Employer;  and  (2)  in the  case  of an  Employer  or
          Affiliated  Employer  which is a  partnership,  an individual who owns
          more than 10% of either the capital interest or the profit interest in
          such Employer or Affiliated Employer.

     1.40 PARTICIPANT:  The term Participant  means any Employee who has met the
          eligibility and participation  requirements of the Plan.  However,  an
          individual  who  is no  longer  an  Employee  will  not  be  deemed  a
          Participant if his or her entire Plan benefit (1) is fully  guaranteed
          by an insurance company and is legally  enforceable at the sole choice
          of such  individual  against such insurance  company,  provided that a
          contract, policy, or certificate describing the benefits to which such
          individual  is  entitled  under  the  Plan  has  been  issued  to such
          individual; or (2) is paid in a lump sum distribution which represents
          such individual's entire interest in the Plan.

     1.41 PARTICIPANT'S  ACCOUNT:  The  term  Participant's  Account  means  the
          account  to which  is  credited  a  Participant's  share  of  Employer
          contributions,  Forfeitures  which are not used to pay  administrative
          expenses or to reduce Employer contributions, and earnings and losses.
          Each account will be divided into the following Employer  contribution
          sub-accounts:   Elective  Deferral  Account;   Matching   Contribution
          Account;   Qualified  Matching  Contribution   Account;   Non-Elective
          Contribution Account; and Qualified Non-Elective Contribution Account.

     1.42 PERMISSIVE  AGGREGATION  GROUP: The term Permissive  Aggregation Group
          means a Required  Aggregation  Group plus any Employer  plan(s)  which
          when considered as a group with the Required  Aggregation  Group would
          continue to satisfy Code ss.401(a)(4) and ss.410.

     1.43 PLAN:  The term Plan means this 401(k)  profit  sharing plan and trust
          agreement, which is named the Community Banks, Inc. 401(k) Plan.

     1.44 PLAN  YEAR:  The term  Plan  Year  means the  Plan's  accounting  year
          beginning January 1st and ending December 31st.

     1.45 POLICY:  The term Policy means an insurance policy or annuity contract
          purchased by the Plan.

     1.46 QMAC: The term QMAC means a Qualified Matching Contribution.

                                       11
<PAGE>

     1.47 QNEC: The term QNEC means a Qualified Non-Elective Contribution.

     1.48 QUALIFIED  JOINT AND SURVIVOR  ANNUITY:  The term Qualified  Joint and
          Survivor  Annuity  means  an  immediate  annuity  for the  life of the
          Participant with a survivor benefit for the life of the  Participant's
          spouse  which is not less than 50% nor more  than 100% of the  annuity
          payable during the joint lives of the  Participant  and his spouse and
          which  is the  amount  of  benefit  which  can be  purchased  with the
          Participant's  Vested Aggregate Account.  The survivor benefit will be
          50% unless a higher percentage is elected by the Participant.

     1.49 QUALIFIED   MATCHING   CONTRIBUTION:   The  term  Qualified   Matching
          Contribution  means a Matching  Contribution  that (1) is used for the
          purpose of satisfying  the ADP Test or the ACP Test; (2) a Participant
          may not elect to receive it in cash until  distributed  from the Plan;
          and  (3)  is  subject  to  the  distribution   and   nonforfeitability
          requirements of Code ss.401(k) when made to the Plan.

     1.50 QUALIFIED NON-ELECTIVE CONTRIBUTIONS:  The term Qualified Non-Elective
          Contribution means a contribution (other than a Matching  Contribution
          or a QMAC)  made by the  Employer  and  allocated  to a  Participant's
          Account  and that (1) is used for the  purpose of  satisfying  the ADP
          Test or the ACP Test;  (2) a  Participant  may not elect to receive in
          cash  until  distributed  from the  Plan;  and (3) is  subject  to the
          distribution and nonforfeitability requirements of Code ss.401(k) when
          made  to  the  Plan.  Qualified  Non-Elective   Contributions  may  be
          considered in  determining  the Top Heavy Minimum  Contribution  under
          Section  3.5.  In  lieu of  distributing  Excess  Contributions  under
          Section 5.16 or Excess Aggregate Contributions under Section 5.17, the
          Employer may make a Qualified  Non-Elective  Contribution on behalf of
          Participants  in an amount  sufficient  to satisfy the ADP Test and/or
          the ACP Test, to the extent permitted in Sections 1.2 and 1.10.

     1.51 QUALIFIED   PRERETIREMENT   SURVIVOR   ANNUITY:   The  term  Qualified
          Preretirement  Survivor  Annuity means a survivor annuity for the life
          of a deceased  Participant's  surviving  spouse  which is equal to the
          amount  of  benefit  which  can be  purchased  by 50% of the  deceased
          Participant's  Vested  Aggregate  Account  determined  at the  date of
          death. In determining a  Participant's  Vested  Aggregate  Account for
          purposes  of this  Section,  any  security  interest  held by the Plan
          because of a loan  outstanding to the  Participant  will be taken into
          consideration.

     1.52 REQUIRED  AGGREGATION GROUP: The term Required Aggregation Group means
          (1) each qualified deferred compensation Plan of the Employer in which
          at least one Key Employee  participates  or  participated  at any time
          during the  determination  period  (regardless of whether the plan has
          terminated); and (2) any other qualified deferred compensation plan of
          the  Employer  which  enables a plan  described in (1) to satisfy Code
          ss.401(a)(4) or ss.410.

     1.53 REQUIRED BEGINNING DATE: The term Required Beginning Date means, for a
          Participant who is not a 5% owner, and except as otherwise provided in
          paragraph  (c),  April 1st of the calendar year following the later of
          the  calendar  year  in  which  he or  she  reaches  Age 70 1/2 or the
          calendar  year  in  which  he  or  she  actually  retires;  and  for a
          Participant  who  is a 5%  owner,  April  1st  of  the  calendar  year
          following the calendar year in which he or she reaches Age 70 1/2.

          (a)  Definition  Of 5% Owner:  A  Participant  will be treated as a 5%
               owner  hereunder if such  Participant is a 5% owner as defined in
               Code  ss.416  at any time  during  the Plan Year  ending  with or
               within the calendar  year in which such owner reaches Age 70 1/2.
               Once  distributions  have begun to a 5% owner under this Section,
               they  must  continue  even if the  Participant  ceases to be a 5%
               owner in a subsequent year.

                                       12
<PAGE>

          (b)  Pre-retirement Age 70 1/2  Distributions:  The pre-retirement Age
               70  1/2distribution  option is only  eliminated  with  respect to
               Employees  who reach Age 70 1/2in or after a  calendar  year that
               begins after the later of December 31, 1998, or the adoption date
               of this amended Plan. The  pre-retirement  Age 70 1/2distribution
               option  is an  optional  form of  benefit  under  which  benefits
               payable  in  a  particular   distribution   form  (including  any
               modifications  that may be elected  after  benefit  commencement)
               commence  at a time  during  the period  that  begins on or after
               January 1st of the calendar year in which an Employee attains age
               70 1/2and ends April 1st of the  immediately  following  calendar
               year.

          (c)  Election To Defer  Distribution:  In order to defer  distribution
               until the calendar year  following the calendar year in which his
               or her retirement occurs, a Participant who is not a 5% owner who
               reaches  Age 70 1/2in  years  after 1995 must make an election to
               defer by April 1st of the  calendar  year  following  the year in
               which he or she reached Age 70 1/2(or by December 31, 1997 in the
               case of a Participant  who reached Age 70 1/2in 1996). If no such
               election  is  made,   the   Participant   will  begin   receiving
               distributions  by April 1st of the calendar  year  following  the
               year in which he or she  reaches  age 70 1/2(or by  December  31,
               1997 in the case of a Participant who reached Age 70 1/2in 1996).

          (d)  Election To Suspend Distribution: Any Participant who is not a 5%
               owner who  reaches Age 70 1/2 in years prior to 1997 may elect to
               stop  distributions  and  recommence by April 1st of the calendar
               year following the year in which the Participant  retires.  A new
               Annuity Starting Date will begin upon the benefit  recommencement
               date.

     1.54 SECTION 415  COMPENSATION:  The term Section 415 Compensation  means a
          Participant's Earned Income,  wages,  salaries,  fees for professional
          services and other  amounts  received for personal  services  actually
          rendered in the course of employment with the Employer maintaining the
          Plan  (including,  but not  limited  to,  commissions  paid  salesmen,
          compensation   for  services   based  on  a  percentage   of  profits,
          commissions on insurance premiums, tips and bonuses). However, Section
          415  Compensation  does not include (a)  Employer  contributions  to a
          deferred  compensation plan which are not includible in the Employee's
          gross  income for the taxable year in which  contributed,  or Employer
          contributions  under a simplified  employee pension plan to the extent
          such   contributions   are   deductible  by  the   Employee,   or  any
          distributions  from a  plan  of  deferred  compensation;  (b)  amounts
          realized from a non-qualified  stock option,  or when restricted stock
          (or property) held by the Employee either becomes freely  transferable
          or is no longer  subject  to a  substantial  risk of  forfeiture;  (c)
          amounts realized from the sale, exchange or other disposition of stock
          acquired under a qualified  stock option;  and (d) other amounts which
          receive  special tax benefits,  or  contributions  made by an Employer
          (whether  or not  under a  salary  reduction  agreement)  towards  the
          purchase of an annuity described in Code ss.403(b) (whether or not the
          amounts are  excludible  from the gross income of the  Employee).  For
          Limitation  Years  beginning  after  December  31,  1997,  Section 415
          Compensation  will include any  elective  deferrals as defined in Code
          ss.402(g)(3), and any amounts which are contributed or deferred at the
          election  of the  Participant  and which are not  includible  in gross
          income by reason of Code  ss.125 or ss.457.  For  purposes  of Section
          1.14,  Section 415  Compensation  will not exceed $160,000 as adjusted
          under Code ss.401(a)(17).

     1.55 SELF-EMPLOYED  INDIVIDUAL:  The term  Self-Employed  Individual  means
          anyone who owns an interest (other than stock) in the Employer and has
          Earned  Income for the Plan Year or who would  have had Earned  Income
          but for the fact the Employer had no net profits for the Plan Year.


                                       13
<PAGE>

     1.56 SHAREHOLDER-EMPLOYEE: The term Shareholder-Employee means, in the case
          of an  Employer or  Affiliated  Employer  which is an  electing  small
          business  corporation,  an individual who is an employee or officer of
          such electing small business corporation and owns, or is considered as
          owning within the meaning of Code ss.318(a)(1),  on any day during the
          taxable  year of such  corporation,  more  than 5% of the  outstanding
          stock of the corporation.

     1.57 SUPER TOP HEAVY:  The term Super Top Heavy  means the Top Heavy  Ratio
          exceeds 90%.

     1.58 TERMINATION OF EMPLOYMENT:  The term  Termination of Employment  means
          that a Participant has ceased to be an Employee for reasons other than
          retirement, death, or Disability.

     1.59 TERMINATED  PARTICIPANT:  The  term  Terminated  Participant  means  a
          Participant  who has ceased to be an Employee  for reasons  other than
          retirement, death or Disability.

     1.60 TOP HEAVY:  The term Top Heavy means for any Plan Year beginning after
          December  31,  1983 (a) that the Top Heavy  Ratio  exceeds 60% and the
          Plan  is not  part  of a  Required  Aggregation  Group  or  Permissive
          Aggregation  Group;  or (b)  that  the  Plan is a part  of a  Required
          Aggregation  Group but not a Permissive  Aggregation Group and the Top
          Heavy Ratio for the group  exceeds 60%; or (c) that the Plan is a part
          of a Required Aggregation Group and a Permissive Aggregation Group and
          the Top Heavy Ratio for the Permissive Aggregation Group exceeds 60%.

     1.61 TOP HEAVY MINIMUM  ALLOCATION:  The term Top Heavy Minimum  Allocation
          means an  amount  equal to 3% of the  Section  415  Compensation  of a
          Non-Key  Employee  for the  applicable  Plan Year.  The term Top Heavy
          Extra  Minimum  Allocation  means an amount equal to 4% of the Section
          415 Compensation of a Non-Key Employee for the applicable Plan Year.

     1.62 TOP HEAVY RATIO: In determining if this Plan is Top Heavy or Super Top
          Heavy,  the Top Heavy Ratio will be determined in accordance  with the
          following provisions:

          (a)  Rule  1:  If  the   Employer   maintains   one  or  more  defined
               contribution  plans  (including  SEPs) and has not maintained any
               defined benefit plan which during the 5-year period ending on the
               Determination Date had accrued benefits,  the Top Heavy Ratio for
               this Plan alone or for the  Required  or  Permissive  Aggregation
               Group is a  fraction,  the  numerator  of which is the sum of the
               account  balances of all Key  Employees  as of the  Determination
               Date  (including any part of any account  balance  distributed in
               the 5-year  period  ending on the  Determination  Date),  and the
               denominator  of  which  is  the  sum  of  the  account   balances
               (including  any part of any account  balance  distributed  in the
               5-year period ending on the Determination  Date) determined under
               Codess.416 and the regulations thereunder. Both the numerator and
               the  denominator  of the Top Heavy  Ratio  will be  increased  to
               reflect   any   contribution   not   actually   made  as  of  the
               Determination Date but which is required to be taken into account
               under Code Sectionss.416 and the regulations thereunder.

          (b)  Rule  2:  If  the   Employer   maintains   one  or  more  defined
               contribution   plans   (including  SEPs)  and  maintains  or  has
               maintained  one or more  defined  benefit  plans which during the
               5-year  period  ending  on the  Determination  Date  has  had any
               accrued  benefits,  the  Top  Heavy  Ratio  for any  Required  or
               Permissive  Aggregation  Group is a fraction,  the  numerator  of
               which is the sum of account balances under the aggregated defined
               contribution plans for all Key Employees determined in accordance
               with  paragraph  (a)  above,  and the  present  value of  accrued
               benefits under the aggregated  defined  benefit plans for all Key
               Employees as of the


                                       14
<PAGE>


               Determination  Date,  and the  denominator of which is the sum of
               the account  balances under the aggregated  defined  contribution
               plans  for  all  Participants,   determined  in  accordance  with
               paragraph (a) above,  and the present  value of accrued  benefits
               under the aggregated  defined benefit plans for all  Participants
               as of the Determination Date, all determined under Codess.416 and
               the regulations thereunder.  The accrued benefits under a defined
               benefit plan in both the  numerator  and  denominator  of the Top
               Heavy Ratio are increased for any distribution made in the 5-year
               period ending on the Determination Date.

          (c)  Rule 3: For  purposes  of  paragraphs  (a) and (b),  the value of
               account  balances and the present value of accrued  benefits will
               be  determined  as of the most recent  Valuation  Date that falls
               within  or  ends  with  the   12-month   period   ending  on  the
               Determination  Date,  except as  provided  in Code ss.416 and the
               regulations  thereunder  for the first and second Plan Years of a
               defined benefit plan. The account  balances and accrued  benefits
               will  be  disregarded  for a  Participant  (1)  who  is not a Key
               Employee  but who was a Key  Employee  in a prior year or (2) who
               has not been  credited with at least one Hour of Service with any
               Employer  maintaining  the Plan at any  time  during  the  5-year
               period ending on the  Determination  Date. The calculation of the
               Top Heavy Ratio and the extent to which distributions, rollovers,
               and  transfers  are taken into account will be made in accordance
               with Code ss.416 and the regulations thereunder. When aggregating
               plans,  the value of the account  balances  and accrued  benefits
               will be calculated with reference to the Determination  Date that
               falls within the same  calendar  year.  The accrued  benefit of a
               Participant  other than a Key Employee will be  determined  under
               (1) the  method,  if any,  that  uniformly  applies  for  accrual
               purposes  under  all  defined  benefit  plans  maintained  by the
               Employer,  or (2)  effective as of the first Plan Year  beginning
               after  December 31, 1986, if there is no such method,  as if such
               benefit  accrued not more rapidly  than the slowest  accrual rate
               permitted  under  the  fractional  rule of Code  ss.411(b)(1)(C).
               Deductible employee  contributions will not be taken into account
               in determining the Top Heavy Ratio.

          (d)  Definition Of  Determination  Date: In determining  the Top Heavy
               Ratio,  the term  Determination  Date  means  the last day of the
               preceding  Plan  Year  except  for the  first  Plan Year when the
               Determination Date means the last day of such first Plan Year.

     1.63 TRUSTEE: The term Trustee means the persons or entity named as trustee
          or  trustees  in this  Plan  and any  successor  to  such  Trustee  or
          Trustees.

     1.64 TRUST FUND: The term Trust Fund or Trust means the assets of the Plan.

     1.65 VALUATION  DATE:  Except as  otherwise  provided  in  Section  1.62(c)
          regarding the Top Heavy Ratio,  the term Valuation Date means the date
          on which the Trustee  determines  the value of the Trust  Fund,  which
          must occur at least  annually  on the last day of each Plan Year.  The
          Administrator may also value the Trust Fund on such other dates deemed
          necessary by the  Administrator in a manner that does not discriminate
          in favor of HCEs.

     1.66 VESTED AGGREGATE  ACCOUNT:  The term Vested Aggregate  Account means a
          Participant's  Vested  Interest in the  aggregate  value of his or her
          Participant's   Account   and  any   accounts   attributable   to  the
          Participant's own Plan contributions (including rollovers).

     1.67 VESTED  INTEREST:  The  term  Vested  Interest  means a  Participant's
          nonforfeitable  percentage  in any  account  maintained  on his or her
          behalf by the Plan.  A  Participant's  Vested  Interest  in his or her
          Participant's  Account will be determined  in accordance  with Section
          4.6 of the Plan.

                                       15
<PAGE>

     1.68 YEAR OF SERVICE: The term Year of Service means a 12-consecutive month
          computation period in which an Employee completes for the Employer, an
          Affiliated  Employer  or an  Adopting  Employer  at least 500 Hours of
          Service for vesting  purposes under Section 4.6. An Employee will also
          receive  credit for all Years of Service with Tremont  National  Bank,
          Peoples Safe Deposit Bank, and Peoples Bank if crediting of such Years
          of Service does not cause the Plan to  discriminate in favor of Highly
          Compensated  Employees.  A Year  of  Service  will  be  determined  in
          accordance with the following provisions:

          (a)  Reemployment Before A Break In Service: For eligibility purposes,
               if a Participant  terminates  employment and is reemployed by the
               Employer before  incurring a Break in Service,  such  Participant
               will  continue  to  participate  in the Plan and earn  credit for
               Years of  Service  in the same  manner as if the  termination  of
               employment had not occurred.

          (b)  Reemployment After A Break In Service: For eligibility  purposes,
               if a  Participant  who does not have a Vested  Interest in his or
               her Participant's Account terminates employment but is reemployed
               by the  Employer  after a Break in Service  occurs,  such  former
               Participant's  Years of Service  before the Break in Service will
               not be  counted in  computing  his or her Years of Service if the
               number of  consecutive  Breaks in Service  equals or exceeds  the
               greater of five or the aggregate number of Years of Service.  The
               aggregate  number of Years of Service  will not include any Years
               of Service  previously  disregarded  hereunder by reason of prior
               Breaks in Service. If a former Participant's Years of Service are
               disregarded under this paragraph,  he or she will be treated as a
               new Employee for eligibility  purposes. If a former Participant's
               Years of Service  may not be  disregarded  under this  paragraph,
               then he or she will continue to  participate  in the Plan, or, if
               terminated, will participate immediately upon reemployment.  If a
               Participant who has a Vested Interest in his or her Participant's
               Account  terminates  employment but is reemployed by the Employer
               after a Break in Service  occurs,  such former  Participant  will
               become  a  Participant  in  the  Plan   immediately   upon  being
               reemployed by the Employer.

          (c)  Employees Under 2-Year Full And Immediate  Vesting:  If this Plan
               at any time (1)  provides in Section  2.1 that an  Employee  must
               complete 2 Years of Service  for  eligibility  purposes,  and (2)
               provides in Section 4.6 that an Employee  will have a 100% Vested
               Interest  in his or her  Participant's  Account  upon  becoming a
               Participant,  then the Years of Service of an Employee who incurs
               a Break in  Service  before  satisfying  such 2 Years of  Service
               eligibility  requirement  will  not be  counted  for  eligibility
               purposes.

          (d)  Vesting Computation Period: In determining a Participant's Vested
               Interest in his or her  Participant's  Account under Section 4.6,
               the  12-consecutive  month  computation  period  will be the Plan
               Year. If a former Participant is reemployed by the Employer after
               a Break in  Service  occurs,  such  former  Participant's  Vested
               Interest in his or her Participant's  Account will be computed as
               follows:  (1) Years of Service prior to the Break in Service will
               not be counted for  purposes of computing  his or her  post-break
               Vested Interest until the former Participant has completed a Year
               of Service  from the date of  reemployment;  (2) Years of Service
               after a former  Participant has incurred 5 consecutive  Breaks in
               Service will not be taken into account in determining  the Vested
               Interest in his or her Participant's Account which accrued before
               such 5 year period; and (3) if a former Participant does not have
               a Vested Interest in his or her Participant's  Account,  Years of
               Service before any period of  consecutive  Breaks in Service will
               not be taken into account if the number of consecutive Breaks in



                                       16
<PAGE>

               Service  within such period equals or exceeds the greater of 5 or
               the aggregate number of Years of Service before such period.



                                       17
<PAGE>




                                    ARTICLE 2
                               PLAN PARTICIPATION


     2.1  ELIGIBILITY  REQUIREMENTS:  Any Employee  who is not in an  ineligible
          class of  Employees  will be eligible to become a  Participant  in the
          Plan in accordance with the following provisions:

          (a)  Age And  Service  Requirement:  Anyone  who is a  Participant  on
               January 1, 2000 will  continue to  participate  in the Plan.  Any
               other  Employee  who is not a member  of an  ineligible  class of
               Employees  will be eligible  to enter the Plan as a  Participant,
               when he or she reaches Age 21 and completes 6 months of service.

          (b)  Ineligible  Classes Of  Employees:  All Employees are eligible to
               participate  in the  Plan  except  for the  following  ineligible
               classes of Employees:  (1) Employees whose employment is governed
               by  the  terms  of  a  collective  bargaining  agreement  between
               Employee  representatives  and the  Employer in which  retirement
               benefits were the subject of good faith  bargaining,  unless such
               collective   bargaining  agreement  expressly  provides  for  the
               inclusion of such  Employees  as  Participants  in the Plan;  (2)
               Employees  whose  Compensation  is  governed  by the  terms  of a
               collective bargaining agreement between Employee  representatives
               and the Employer in which retirement benefits were the subject of
               good  faith   bargaining,   unless  such  collective   bargaining
               agreement  expressly provides for the inclusion of such Employees
               as Participants  in the Plan; (3) Employees who are  non-resident
               aliens who do not  receive any earned  income  from the  Employer
               which  constitutes  income from sources within the United States;
               (4)  Leased  Employees;  and  (5)  Anyone  who is  deemed  by the
               Employer to be an independent contractor on his or her employment
               commencement  date and on the first day of each  subsequent  Plan
               Year.

          (c)  Participation By Ineligible Employees:  If an Employee who is not
               a member of the eligible  class of Employees  becomes a member of
               the eligible  class,  such Employee will  participate in the Plan
               immediately  if he or she  has  satisfied  the  minimum  age  and
               service   requirements   and  would  have  previously   become  a
               Participant  had he or she been a member of the  eligible  class.
               The  participation  of a  Participant  who becomes a member of an
               ineligible class will be suspended,  and such Participant will be
               entitled  to  an   allocation  of  Employer   contributions   and
               Forfeitures  for the Plan  Year  only to the  extent  of Hours of
               Service  completed  while  a  member  of  an  eligible  class  of
               Employees.  Upon returning to an eligible  class of Employees,  a
               suspended  Participant will immediately  participate again in the
               Plan.  The Vested  Interest of a  Participant  who ceases to be a
               member  of  an  eligible  class  will  continue  to  increase  in
               accordance with Section 4.6.

          (d)  Participation By Former  Participants:  A former Participant will
               again  become a  Participant  immediately  upon  returning to the
               employ  of the  Employer  as a  member  of an  eligible  class of
               Employees unless such former  Participant's  Years of Service may
               be  disregarded  by reason of prior Breaks in Service as provided
               in Section 1.68(c).

     2.2  ENTRY DATE: An Employee who has satisfied the eligibility requirements
          in Section  2.1 will enter the Plan as a  Participant  on the  January
          1st,  April 1st,  July 1st,  or October  1st which  coincides  or next
          follows the date on which he or she satisfies such requirements.





                                       18
<PAGE>






     2.3  WAIVER OF  PARTICIPATION:  A Participant may, with the written consent
          of both the Employer and the Participant's spouse, elect in writing to
          waive  participation  in the Plan for any Plan Year.  A waiver will be
          permitted  only  if it  does  not  adversely  affect  the  Plan's  tax
          qualified status. An election to waive participation in the Plan for a
          Plan Year will result in no  allocation of Employer  contributions  or
          Forfeitures  for that Plan Year.  If an Employee who has waived his or
          her  right to  become a  Participant  subsequently  elects to become a
          Participant,  the  period of  waiver  will be  considered  as Years of
          Service  under the Plan for  purposes of  determining  the  Employee's
          eligibility to  participate,  for  determining  the Employee's  Vested
          Interest  in his or her  Participant's  Account,  and for  determining
          eligibility for Normal or Early Retirement Age.

     2.4  CESSATION OF PARTICIPATION:  A Participant's  active  participation in
          the Plan will cease if the Participant incurs a Break in Service or on
          account of the  Participant's  death or  Disability,  or on account of
          retirement on or after reaching  Normal or Early  Retirement Age. Upon
          the occurrence of any such event, the benefits of such Participant, if
          any,  will be computed by the  Administrator  and  distributed  by the
          Trustee as hereinafter provided.

     2.5  RESTRICTIONS ON OWNER-EMPLOYEES:  If this Plan provides  contributions
          or benefits  for  Employees  some or all of whom are  Owner-Employees,
          such  contributions  or benefits can only be provided  with respect to
          the Earned  Income of such  Owner-Employee  which is derived  from the
          trade or business with respect to which the Plan is established.




                                       19
<PAGE>




                                    ARTICLE 3
                          CONTRIBUTIONS AND ALLOCATIONS


     3.1  EMPLOYER  CONTRIBUTIONS:  Each Plan Year, the Employer will contribute
          to the Plan such  amount as it may in its sole  discretion  determine,
          subject to the following provisions:

          (a)  Elective  Deferrals:  Effective January 1, 1993, each Participant
               may enter into a salary  reduction  agreement  as set forth below
               authorizing   the  Employer  to  withhold  a  percentage  of  the
               Participant's Compensation. The amount withheld will be deemed an
               Elective  Deferral which the Employer will contribute to the Plan
               on the Participant's behalf. Each Participant's Elective Deferral
               for any Plan Year will be determined as follows:

               (1)  Deferral  Percentage:  Each Participant may elect that up to
                    16% of his or her  Compensation  be  withheld as an Elective
                    Deferral,  but in no event may the dollar amount withheld be
                    more than $10,000 per calendar  year as adjusted  under Code
                    ss.402(g)(5).  Elective  Deferrals which exceed the adjusted
                    $10,000  limitation will be deemed Excess Elective Deferrals
                    and will be returned as set forth in Section 5.15.  Elective
                    Deferrals  must  satisfy one of the ADP Tests,  and Elective
                    Deferrals  which do not satisfy one of the ADP Tests will be
                    deemed  Excess  Contributions  and will be  returned  as set
                    forth in Section 5.16.

               (2)  Withdrawal  Of  Elective   Deferrals:   Elective   Deferrals
                    (exclusive  of the  earnings  thereon) can only be withdrawn
                    upon the  earlier  to occur of (1) the date the  Participant
                    incurs  a  Termination  of  Employment;  (2)  the  date  the
                    Participant  dies;  (3) the date the  Participant  suffers a
                    Disability;   (4)  the  date  an  event  described  in  Code
                    ss.401(k)(10)  occurs; (5) the date the Participant retires;
                    or (6) the date the  Participant  qualifies  for a financial
                    hardship distribution under Section 5.18.  Distribution will
                    be made in accordance with the provisions of Article 5.

               (3)  Salary Reduction Agreement: A Participant may, in accordance
                    with a  written  policy  established  by the  Administrator,
                    amend his or her salary  reduction  agreement  to change the
                    percentage  being withheld.  The Participant may also at any
                    time suspend or cancel his or her salary reduction agreement
                    upon reasonable written notice (not to exceed 30 days). If a
                    Participant  cancels or suspends his or her salary reduction
                    agreement,  the  Participant  will not be permitted to put a
                    new salary  reduction  agreement into effect until such time
                    as  set  forth  in the  written  policy  established  by the
                    Administrator.   If   necessary  to  insure  that  the  Plan
                    satisfies  the ADP  Test,  the  Employer  may also  amend or
                    terminate a  Participant's  salary  reduction  agreement  on
                    written notice to the Participant.

          (b)  Matching Contributions:  The Employer may contribute on behalf of
               each  Participant a Matching  Contribution  to be determined each
               year by the Employer.  Matching  Contributions made for each Plan
               Year must satisfy the ACP Test.  Matching  Contributions which do
               not  satisfy  the  ACP  Test  will  be  deemed  Excess  Aggregate
               Contributions  and will be returned as set forth in Section 5.17.
               The  Employer may elect to treat all or any portion of a Matching
               Contribution as a Qualified  Matching  Contribution to the extent
               necessary to satisfy the ACP Test.




                                       20
<PAGE>





          (c)  Non-Elective Contributions:  The Employer may make a Non-Elective
               Contribution in such an amount as determined by the Employer, and
               the  Employer  will convey such amount to the Trustee in writing.
               The Employer's  determination  of the amount of its  Non-Elective
               Contribution  will be binding on the Trustee,  the  Administrator
               and  all  Participants  and may not be  reviewed  in any  manner.
               However, (1) no Non-Elective  Contribution may exceed the maximum
               amount    deductible   under    Codess.404;    (2)   Non-Elective
               Contributions will be limited as required by Codess.415;  and (3)
               no Non-Elective Contribution will be made for any Participant who
               is not an Eligible Participant unless required by Section 3.5.

          (d)  Qualified Non-Elective Contributions: Subject to Notice 98-1, the
               Employer may, in lieu of distributing Excess Contributions as set
               forth in Section 5.16 or Excess  Aggregate  Contributions  as set
               forth in  Section  5.17,  elect to treat all of any  portion of a
               Non-Elective    Contribution   as   a   Qualified    Non-Elective
               Contribution  sufficient  to satisfy  the ADP Test and/or the ACP
               Test;  or the  Employer  elect to make a  Qualified  Non-elective
               Contribution  in an amount  sufficient  to  satisfy  the ADP Test
               and/or the ACP Test.

          (e)  Contribution For Mistakenly Excluded  Employees:  Notwithstanding
               paragraph  (c) to the contrary,  if an Employee  should have been
               included as a  Participant  but is  mistakenly  excluded  for any
               reason, the Employer will make a Non-Elective  Contribution equal
               to the sum of (1) the amount  which  would have been  contributed
               for such Employee, and (2) the amount of earnings that would have
               been credited to the excluded  Employee's  Participant's  Account
               but for the fact that the Employee was mistakenly excluded.  Such
               contributions will be made regardless of whether such amounts are
               ever deductible by the Employer.

          (f)  Refund Of  Contributions:  If the Plan fails to initially satisfy
               the qualification  requirements of Codess.401(a) and the Employer
               declines  to  amend  the  Plan  to  satisfy  such   requirements,
               contributions made prior to the date such qualification is denied
               must be  returned  to the  Employer  within 1 year of the date of
               such denial, but only if the application for the qualification is
               made by the time  prescribed by law for filing the Employer's tax
               return for the taxable  year in which the Plan is adopted,  or by
               such later date as the  Secretary of the Treasury may  prescribe.
               If a contribution  is  attributable in whole or in part to a good
               faith  mistake  of  fact,  including  a  good  faith  mistake  in
               determining its deductibility  under  Codess.404,  then an amount
               may be returned to the Employer equal to the excess of the amount
               contributed over the amount which would have been contributed had
               the  mistake  not  occurred.  Earnings  attributable  to any such
               excess contribution will not be returned, but losses attributable
               to the excess  contribution  will reduce the amount so  returned.
               Such  amount  will be  returned  within  1 year of the  date  the
               contribution  was made or the deduction  disallowed,  as the case
               may be.

     3.2  ALLOCATION  OF EMPLOYER  CONTRIBUTIONS:  Each  Eligible  Participant's
          share of the various  types of Employer  contributions  made under the
          Plan  will  be  allocated  to  his  or her  Participant's  Account  in
          accordance with the following provisions:

          (a)  Elective   Deferrals:   Each  Participant's   Elective  Deferrals
               contributed  under  Section  3.1(a)  will  be  allocated  to  the
               Participant's Elective Deferral Account.





                                       21
<PAGE>




          (b)  Matching   And   Qualified   Matching   Contributions:   Matching
               Contributions  will be  allocated  to an  Eligible  Participant's
               Matching  Contribution  Account;  and any Matching  Contributions
               that are  treated as  Qualified  Matching  Contributions  will be
               allocated  to  an  Eligible   Participant's   Qualified  Matching
               Contribution  Account.  Any  Participant  who  makes an  Elective
               Deferral  during  the Plan Year will  receive  an  allocation  of
               Matching  Contributions for the Plan Year regardless of any other
               allocation rules to the contrary.

          (c)  Non-Elective  Contributions:  Non-Elective  Contributions will be
               allocated  on  the  annual   Valuation   Date  to  each  Eligible
               Participant's Non-Elective Contribution Account in the ratio that
               the Compensation of each Eligible  Participant bears to the total
               Compensation of all Eligible Participants.

          (d)  Qualified  Non-Elective  Contributions:  QNECs,  and Non-Elective
               Contributions that are treated as QNECs, will be allocated to the
               QNEC Account of each Eligible  Participant  who is a NHCE for the
               Plan Year beginning with the one who has the lowest Compensation,
               and only to the extent  necessary  to satisfy  the ADP Test.  The
               amount so allocated for any such  Participant  will be the lesser
               of  the  amount  sufficient  to  satisfy  the  ADP  Test  or  the
               Participant's  maximum  Annual  Addition for the Plan Year as set
               forth in Section 6.1.

     3.3  ALLOCATION OF EARNINGS AND LOSSES: As of each Valuation Date, accounts
          which have not been  distributed  since the prior  Valuation Date will
          have the net income of the Trust Fund earned since the prior Valuation
          Date allocated  thereto as hereinafter set forth in this Section.  Net
          income is the net of any interest, dividends,  unrealized appreciation
          and depreciation, capital gains and losses, and investment expenses of
          the Trust Fund as determined on each Valuation Date.

          (a)  Non-Segregated Accounts:  Accounts which have not been segregated
               from the general Trust Fund for investment purposes will have net
               income  allocated  thereto  in the  ratio  that the value of each
               non-segregated  account  as  of  the  preceding  Valuation  Date,
               increased  by  the   allocation   of  one-half  of  any  Employer
               contributions  since the preceding  Valuation Date,  bears to the
               total value of all  non-segregated  accounts as of the  preceding
               Valuation  Date.  The  Forfeiture   Account  will  share  in  the
               allocation made under this paragraph.

          (b)  Segregated  Accounts And Policy  Dividends:  Accounts  which have
               been  segregated  from the  general  Trust  Fund  for  investment
               purposes,  including  Directed  Investment  Accounts  established
               under  Section  7.15 of the Plan,  will only have the net  income
               earned thereon  allocated  thereto.  Policy  dividends or credits
               will be allocated to the Participant's  Account for whose benefit
               the Policy is held.

     3.4  ALLOCATION OF FORFEITURES:  On each annual Valuation Date, any portion
          of  the   Forfeiture   Account   which   has  not  been  used  to  pay
          administrative  expenses  of the Plan will be  allocated  as  follows:
          Forfeitures  attributable to Matching  Contributions will be allocated
          to the Participant's Account of each Eligible Participant who receives
          an  allocation  of  Matching  Contributions  for the Plan  Year.  Such
          allocation  will be made in the ratio  that the  Compensation  of each
          Eligible  Participant who makes a Matching  Contribution  for the Plan
          Year   bears  to  the  total   Compensation   of  all  such   Eligible
          Participants.  Forfeitures attributable to Non-Elective  Contributions
          will be  allocated  to the  Participant's  Account  of  each  Eligible
          Participant who receives an allocation of  Non-Elective  Contributions
          for the Plan Year.  Such allocation will be made in the ratio that the
          Compensation  of each Eligible  Participant who receives an allocation
          of  Non-Elective  Contributions  for the Plan Year  bears to the total
          Compensation of all such Eligible Participants.





                                       22
<PAGE>




     3.5  TOP HEAVY MINIMUM ALLOCATION:  In any Top Heavy Plan Year in which the
          Employer  makes a  contribution  to the Plan,  each  eligible  Non-Key
          Employee will receive the Top Heavy  Minimum  Allocation in accordance
          with the following provisions:

          (a)  Who Must Receive Minimum Allocation: Except as otherwise provided
               in paragraph (b), the Top Heavy Minimum  Allocation  will be made
               for  each  eligible  Non-Key  Employee  who  is  employed  by the
               Employer  on the last day of the Plan Year,  including  those who
               have  failed  to  complete  a Year of  Service  and who have been
               excluded from becoming Participants in the Plan because (1) their
               Compensation  is less than a stated amount;  (2) they declined to
               make mandatory contributions (if required) to the Plan during the
               time they were considered to be Participants;  or (3) they failed
               to  make  an  elective   contribution  to  a  Codess.401(k)  plan
               maintained  by the  Employer.  However,  the  Top  Heavy  Minimum
               Allocation will not be required for any Non-Key Employee who also
               participates in an Employer sponsored money purchase pension plan
               or target benefit pension plan which provides a Top Heavy Minimum
               Allocation  to such Non-Key  Employee and which is included  with
               this Plan in a Required Aggregation Group.

          (b)  Lesser  Allocation   Allowed:  If  the  allocation  made  to  the
               Participant's Account of each Key Employee under Sections 3.2 and
               3.4, including Elective Deferrals allocated under Section 3.2(a),
               is less than 3% of each Key Employee's  Section 415 Compensation,
               and if this Plan is not required to be included in an Aggregation
               Group to enable a defined  benefit plan to meet the  requirements
               of Codess.401(a)(4) orss.410, the Employer's contribution will be
               reallocated  so the  Top  Heavy  Minimum  Allocation  made to the
               Participant's  Account of each eligible Non-Key Employee is equal
               to the largest percentage allocated to the Participant's  Account
               of a Key Employee.  Such percentage will be equal to the ratio of
               the sum of the Employer's  contribution and Forfeitures allocated
               on such Key  Employee's  behalf divided by his or her Section 415
               Compensation.

          (c)  Participation   In  Multiple   Plans:   If  a  Non-Key   Employee
               participates  in this Plan and in a defined  benefit plan that is
               part of a Top Heavy Required  Aggregation  Group, the minimum Top
               Heavy benefit will be provided by this Plan as a 5% allocation in
               lieu of any other allocations provided in this Section. A Non-Key
               Employee who only  participates in this Plan will not receive the
               Top Heavy Extra Minimum Allocation.

     3.6  FAILSAFE  ALLOCATION:  For any Plan  Year in which  the Plan  fails to
          benefit  at least 70% of Non-  Highly  Compensated  Employees  who are
          eligible  to  participate  in the Plan,  or in which the Plan fails to
          benefit a  percentage  of  Non-Highly  Compensated  Employees  who are
          eligible  to  participate  in the  Plan  that is at  least  70% of the
          percentage of Highly Compensated Employees who benefit under the Plan,
          an additional Employer contribution may be made and allocated first to
          that  group  of  Employees  who  were  Participants  but not  Eligible
          Participants  for the Plan Year;  next to that group of Employees  who
          have not satisfied the eligibility  requirements of Section 2.1(a) and
          are not members of an  ineligible  class of  Employees as set forth in
          Section  2.1(b);  and  then to that  group of  Employees  who have not
          satisfied  the  eligibility  requirements  of  Section  2.1(a) and are
          members of a non-statutory  ineligible class of Employees as set forth
          in Section 2.1(b).  Within each group,  individuals  will be ranked by
          service,  and the  individuals  receiving an allocation  will be those
          with the  highest  number of Hours of  Service  during  the Plan Year.
          Allocations  will be  made  under  this  Section  only  to the  extent
          necessary  to  insure  that  the  Plan  satisfies  one  of  the  ratio
          percentage  tests  set  forth  in  Code  ss.ss.410(b)(1)(A)  or (B) as
          described above.





                                       23
<PAGE>




     3.7  ROLLOVERS:  With  the  consent  of the  Administrator,  any  Employee,
          regardless of whether such  Employee has become a  Participant  in the
          Plan, may transfer  amounts to this Plan from another  qualified plan.
          Such  transferred  amounts are hereafter called  Rollovers.  Rollovers
          will be  allocated to a Rollover  Account in which the  Employee  will
          have a 100%  Vested  Interest.  Except for the  portion a  Participant
          self-directs  under Section  7.15,  the  Administrator  may choose for
          investment   purposes  to  either  segregate  Rollover  Accounts  into
          separate  interest  bearing  accounts or to invest them as part of the
          general  Trust  Fund,  in which case such  accounts  will share in the
          allocation  of earnings  and losses  under  Section  3.3(a).  Rollover
          Accounts will be administered as follows:

          (a)  Definition  Of  Rollover:   The  term   Rollover   means  amounts
               transferred  to this Plan (1) in a trustee  to  trustee  transfer
               from another qualified plan; (2) from another qualified plan as a
               lump sum  distribution  eligible for tax free rollover  treatment
               and which is transferred  by the  Participant to this Plan within
               60  days  following  his  receipt  thereof;  (3)  from a  conduit
               individual  retirement  account if the only assets  therein  were
               previously  distributed to the  Participant by another  qualified
               plan as a lump sum distribution which was eligible for a tax free
               rollover  within 60 days of receipt  thereof and earnings on said
               assets;  or (4)  from a  conduit  individual  retirement  account
               meeting the  requirements of subparagraph  (3) and transferred to
               this Plan within 60 days of receipt thereof.

          (b)  Withdrawal  Of  Rollovers:  An Employee  may  withdraw all or any
               portion  of his or her  Rollover  Account  at any  time  prior to
               becoming a  Participant  in the Plan,  but once an  Employee  has
               become a Participant, withdrawal can only be made at such time as
               the  Employee  is  entitled  to a  distribution  of  his  or  her
               Participant's  Account  under the  provisions  of  Article 4. Any
               amount withdrawn  cannot be redeposited to the Rollover  Account.
               However,  amounts which constitute or are treated as constituting
               elective     contributions     as    defined    in     regulation
               ss.1.401(k)-1(g)(3)  and which were transferred to this Plan in a
               trustee to trustee transfer from another  qualified plan may only
               be  withdrawn in  accordance  with the  limitations  set forth in
               regulationss.1.401(k)-1(d).  All withdrawal requests must contain
               the Employee's address,  social security number,  birth date, and
               the  amount of the  withdrawal.  A Rollover  withdrawal  will not
               prevent an Employee from accruing any future benefit attributable
               to  Employer  contributions.  An  Employee's  request  to  make a
               Rollover  withdrawal must satisfy the applicable  spousal consent
               requirements set forth in Section 5.8 of the Plan.





                                       24
<PAGE>




                                    ARTICLE 4
                                  PLAN BENEFITS


     4.1  BENEFIT UPON NORMAL OR EARLY  RETIREMENT:  Every  Participant  who has
          reached Normal or Early Retirement Age and retires will be entitled to
          receive his or her Vested Aggregate  Account balance  determined as of
          the  most  recent   Valuation  Date  coinciding  with  or  immediately
          preceding  the  date  of  distribution.   Distribution  will  made  in
          accordance with Section 5.1.

     4.2  BENEFIT UPON LATE RETIREMENT:  A Participant who has reached Normal or
          Early  Retirement  Age may elect to remain  employed  and  retire at a
          later date. Such  Participant will continue to participate in the Plan
          and  his  or  her  Participant's  Account  will  continue  to  receive
          allocations under Article 3 until the Participant  actually retires. A
          Participant  who elects late  retirement may at any time (1) choose to
          have distributed  prior to actual retirement all or part of his or her
          Vested  Aggregate  Account  balance  determined  as of the most recent
          Valuation Date  coinciding  with or immediately  preceding the date of
          distribution;  or (2)  choose to have such  Vested  Aggregate  Account
          balance transferred to another qualified retirement plan maintained by
          the Employer. Upon actual retirement, the Participant will be entitled
          to  his  or  her   undistributed   Vested  Aggregate  Account  balance
          determined as of the most recent  Valuation  Date  coinciding  with or
          immediately  preceding the date of distribution.  Distribution will be
          made in accordance with Section 5.1.

     4.3  BENEFIT  UPON  DEATH:  Upon  the  death  of  a  Participant  prior  to
          Termination  of  Employment,   or  upon  the  death  of  a  Terminated
          Participant  prior  to  distribution  of his or her  Vested  Aggregate
          Account,  his or her Beneficiary will be entitled to the Participant's
          Vested  Aggregate  Account  balance  determined  as of the most recent
          Valuation Date  coinciding  with or immediately  preceding the date of
          distribution.  If any  Beneficiary  who is  living  on the date of the
          Participant's  death  dies  prior to  receiving  his or her the entire
          death  benefit,  the  remaining  portion of such death benefit will be
          paid in a lump sum to the  estate of such  deceased  Beneficiary.  The
          Administrator's  determination  that a Participant has died and that a
          particular  person  has a right to  receive  a death  benefit  will be
          final. Distribution will be made in accordance with Section 5.2.

     4.4  BENEFIT UPON DISABILITY:  If a Participant  suffers a Disability prior
          to Termination of Employment, or if a Terminated Participant suffers a
          Disability  prior  to  distribution  of his or  her  Vested  Aggregate
          Account,  he or she will be  entitled  to his or her Vested  Aggregate
          Account  balance  determined  as of the  most  recent  Valuation  Date
          coinciding  with or  immediately  preceding the date of  distribution.
          Distribution will be made in accordance with Section 5.3.

     4.5  BENEFIT UPON  TERMINATION:  A Participant  who incurs a Termination of
          Employment  will be  entitled to his or her Vested  Aggregate  Account
          balance  as of the  most  recent  Valuation  Date  coinciding  with or
          immediately  preceding  the date of  distribution.  Distribution  to a
          Terminated  Participant who does not die prior to such distribution or
          who does not suffer a Disability  prior to such  distribution  will be
          made in accordance with Section 5.4.

     4.6  DETERMINATION OF VESTED INTEREST:  A Participant's  Vested Interest in
          his or her Participant's Account will be determined in accordance with
          the following provisions:

          (a)  100% Vesting Upon Retirement,  Death Or Disability: A Participant
               will have a 100%  Vested  Interest in his  Participant's  Account
               upon reaching Normal or Early Retirement Age prior to Termination
               of Employment, or upon death or Disability prior to that date.





                                       25
<PAGE>




          (b)  Vesting  Prior To  Retirement,  Death Or  Disability:  Except  as
               otherwise provided in paragraph (a) above, a Participant's Vested
               Interest in his or her  Participant's  Account at any given time,
               including  Termination  of  Employment  prior to  Normal or Early
               Retirement  Age,  death  or  Disability,  will be  determined  in
               accordance  with  the  following:   (1)  a  Participant's  Vested
               Interest  in  all  Elective  Deferrals,  Matching  Contributions,
               Qualified  Matching   Contributions  and  Qualified  Non-Elective
               Contributions  that  are  allocated  to his or her  Participant's
               Account  will be 100% upon  entry  into the Plan and at all times
               thereafter;  and  (2) a  Participant's  Vested  Interest  in  all
               Non-Elective  Contributions  that  are  allocated  to  his or her
               Participant's  Account will be determined by the vesting schedule
               which  immediately  follows this paragraph based on the number of
               Years of Service the  Participant  has  completed  on the date of
               determination.

                        Years Of Service         Vested Interest
                               1 . . . . . . . . .     20%
                               2 . . . . . . . . .     40%
                               3 . . . . . . . . .     60%
                               4 . . . . . . . . .     80%
                               5 . . . . . . . . .    100%

          (c)  Amendments To Vesting Schedule: No Plan amendment may directly or
               indirectly reduce a Participant's Vested Interest.  If the Plan's
               vesting schedule is amended,  any Participant with at least three
               Years of  Service  may,  by  filing a  written  request  with the
               Administrator  60 days  after the  latest of (1) the  amendment's
               adoption date,  (2) the  amendment's  effective  date, or (3) the
               date the  Participant  receives  written notice of the amendment,
               elect to have the  Vested  Interest  in his or her  Participant's
               Account  computed by the vesting  schedule in effect prior to the
               amendment.  A Participant who fails to make such an election will
               have his or her Vested Interest  computed under the new schedule.
               However,  notwithstanding the foregoing,  a Participant's  Vested
               Interest  in his or her  Participant's  Account  will not be less
               than it was as of the later of  January  1, 2000 or the date this
               amended Plan is actually adopted by the Employer.

          (d)  Accounts  attributable  to  Peoples  State Bank  Employees  Stock
               Ownership Plan:  Notwithstanding the foregoing, to the extent any
               portion of a  Participant's  Account is  attributable  to amounts
               transferred from the Peoples State Bank Employees Stock Ownership
               Plan,  such portion of the  Participant's  Account shall be fully
               vested.






                                       26
<PAGE>




                                    ARTICLE 5
                            DISTRIBUTION OF BENEFITS


     5.1  BENEFIT UPON  RETIREMENT:  Unless a cash-out occurs under Section 5.5,
          the  retirement  benefit a  Participant  is entitled to receive  under
          Section 4.1 or 4.2 will be distributed as follows:

          (a)  Form Of Distribution: Unless otherwise elected under Section 5.8,
               a  Participant's  retirement  benefit  will be  distributed  as a
               Qualified  Joint  and  Survivor  Annuity  if the  Participant  is
               married on the Annuity Starting Date and has not died before such
               date.  If the  Participant  is unmarried on the Annuity  Starting
               Date  and  has not  died  before  such  date,  the  Participant's
               retirement benefit will be distributed as a life annuity.

          (b)  Optional Forms Of  Distribution:  If a Participant  elects not to
               receive  the form of benefit  described  in  paragraph  (a),  the
               Participant  may  elect  to have  his or her  retirement  benefit
               distributed  (1) in one lump sum in cash or  property;  or (2) in
               monthly, quarterly,  semi-annual or annual cash installments over
               a period  certain that does not extend  beyond the  Participant's
               life,  or beyond the lives of the  Participant  and a  designated
               Beneficiary  (or beyond the life expectancy of the Participant or
               the joint and last survivor  expectancy of the  Participant and a
               designated Beneficiary,  in which event the lump sum value of the
               benefit will either be segregated and separately  invested by the
               Trustee,  or it will be  invested  in a  nontransferable  annuity
               providing for installment payments.

          (c)  Time  Of  Distribution:  Distribution  will be  made  under  this
               Section within a reasonable time after the  Participant's  actual
               retirement  date,  or within a  reasonable  time after the date a
               Participant who elects late retirement under Section 4.2 requests
               payment,   but   distribution   must  begin  no  later  than  the
               Participant's Required Beginning Date.

     5.2  BENEFIT UPON DEATH:  Unless a cash-out  occurs under  Section 5.5, the
          death  benefit a deceased  Participant's  Beneficiary  is  entitled to
          receive under Section 4.3 will be distributed as follows:

          (a)  Non-Spouse  Beneficiary:  A non-spouse  Beneficiary  may elect to
               have any death  benefit such  Beneficiary  is entitled to receive
               distributed  by one of the following  methods  unless a different
               method has been chosen by the Participant: (1) in one lump sum in
               cash or property;  or (2) in monthly,  quarterly,  semi-annual or
               annual  cash  installments  over a period  certain  that does not
               extend  beyond  the life of the  Beneficiary  (or beyond the life
               expectancy of the Beneficiary), in which event the lump sum value
               of the benefit will either be segregated and separately  invested
               by the  Trustee,  or it will  be  invested  in a  nontransferable
               annuity providing for installment payments.  Distribution will be
               made within a reasonable time after the death of the Participant;
               but  distribution  of a lump sum must be made by December 31st of
               the calendar year which contains the 5th  anniversary of the date
               of the  Participant's  death, or installments must begin no later
               than December 31st of the calendar year immediately following the
               calendar year in which the Participant died.

          (b)  Surviving   Spouse:   Notwithstanding   any   other   Beneficiary
               designation made by a Participant, if a Participant is married on
               the date of his or her death and dies before the Annuity Starting
               Date, the  Participant's  surviving spouse will receive a minimum
               death  benefit  as a  Qualified  Preretirement  Survivor  Annuity
               unless such  annuity has been waived in  accordance  with Section
               5.8. The surviving  spouse may elect to have any death benefit to



                                       27
<PAGE>

               which he or she is entitled  distributed  by one of the following
               methods  unless  a  different  method  has  been  chosen  by  the
               Participant:  (1) in one lump sum in cash or property;  or (2) in
               monthly, quarterly, semi- annual or annual cash installments over
               a period  certain  that does not  extend  beyond  the life of the
               surviving  spouse or beyond the life  expectancy of the surviving
               spouse,  in which  event the lump sum value of the  benefit  will
               either be segregated and separately  invested by the Trustee,  or
               it will be invested in a  nontransferable  annuity  providing for
               installment payments.

          (c)  Time Of Distribution To A Surviving Spouse:  The surviving spouse
               may (1)  elect to have any  death  benefit  to which he or she is
               entitled  distributed within a reasonable time after the death of
               the Participant;  or (2) elect to defer distribution of the death
               benefit,  but  distribution  may not be deferred  beyond December
               31st of the calendar year in which the deceased Participant would
               have attained Age 70 1/2.

          (d)  Death Of Surviving  Spouse  Before  Distribution  Begins:  If the
               surviving   spouse  dies   before   distribution   begins,   then
               distribution  will be made as if the  surviving  spouse  were the
               Participant.  Distribution will be considered as having commenced
               when the deceased  Participant  would have reached Age 70 1/2even
               if payments  have been made to the  surviving  spouse before that
               date.  However, if distribution to the surviving spouse commences
               in the form of an  irrevocable  annuity  over a period  permitted
               under  paragraph (b) before the deceased  Participant  would have
               reached Age 70 1/2,  distribution  will be  considered  as having
               begun on the actual annuity commencement date.

          (e)  Participants  In Pay  Status:  If a  Participant  who has started
               receiving  distribution  of his or her  retirement  benefit  dies
               before the entire  benefit has been  distributed,  the balance of
               the benefit will be distributed to the Participant's  Beneficiary
               at least as  rapidly as under the  method of  distribution  being
               used on the date of the Participant's death.

     5.3  DISABILITY  BENEFITS:  Unless a cash-out occurs under Section 5.5, the
          Disability  benefit a Participant is entitled to receive under Section
          4.4 will be distributed as follows:

          (a)  Form Of Distribution: Unless otherwise elected under Section 5.8,
               a  Participant's  Disability  benefit  will be  distributed  as a
               Qualified  Joint  and  Survivor  Annuity  if the  Participant  is
               married on the Annuity Starting Date and has not died before such
               date.  If the  Participant  is unmarried on the Annuity  Starting
               Date  and  has not  died  before  such  date,  the  Participant's
               Disability benefit will be distributed as a life annuity.

          (b)  Optional Forms Of  Distribution:  If a Participant  elects not to
               receive  the form of benefit  described  in  paragraph  (a),  the
               Participant  may  elect  to have  his or her  Disability  benefit
               distributed  (1) in one lump sum in cash or  property;  or (2) in
               monthly, quarterly,  semi-annual or annual cash installments over
               a period  certain that does not extend  beyond the  Participant's
               life,  or beyond the lives of the  Participant  and a  designated
               Beneficiary  (or beyond the life expectancy of the Participant or
               the joint and last survivor  expectancy of the  Participant and a
               designated Beneficiary), in which event the lump sum value of the
               benefit will either be segregated and separately  invested by the
               Trustee,  or it will be  invested  in a  nontransferable  annuity
               providing for installment payments.

                                       28
<PAGE>

          (c)  Time  Of  Distribution:  Distribution  will be  made  under  this
               Section  within a  reasonable  time  after  the date on which the
               Participant  suffers the Disability,  but distribution must begin
               no later than the Participant's Required Beginning Date.

     5.4  BENEFIT UPON  TERMINATION:  Unless a cash-out occurs under Section 5.5
          or a prior  distribution  has been made under  Section  5.2 or Section
          5.3, the benefit a Terminated Participant is entitled to receive under
          Section 4.5 will be distributed as follows:

          (a)  Form Of Distribution: Unless otherwise elected under Section 5.8,
               a  Terminated  Participant's  benefit  will be  distributed  as a
               Qualified   Joint  and   Survivor   Annuity  if  the   Terminated
               Participant  is married on the Annuity  Starting Date and has not
               died before such date. If the Terminated Participant is unmarried
               on the Annuity  Starting  Date and has not died before such date,
               his or her benefit will be distributed as a life annuity.

          (b)  Optional  Forms  Of  Distribution:  If a  Terminated  Participant
               elects not to receive the form of benefit  described in paragraph
               (a),  the  Terminated  Participant  may  elect to have his or her
               benefit  distributed (1) in one lump sum in cash or property;  or
               (2)  in  monthly,   quarterly,   semi-   annual  or  annual  cash
               installments  over a period  certain that does not extend  beyond
               the  Participant's  life, or beyond the lives of the  Participant
               and a designated  Beneficiary  (or beyond the life  expectancy of
               the Participant or the joint and last survivor  expectancy of the
               Participant  and a  designated  Beneficiary),  in which event the
               lump sum  value of the  benefit  will  either be  segregated  and
               separately  invested by the Trustee,  or it will be invested in a
               nontransferable annuity providing for installment payments.

          (c)  Time  Of  Distribution:  Distribution  will be  made  under  this
               Section  within a reasonable  time after the last day of the Plan
               Year in which Termination of Employment  occurs, but distribution
               must begin no later than the Required Beginning Date.

     5.5  CASH-OUT OF BENEFITS: If the lump sum value of a Participant's benefit
          does not exceed $5,000,  the  Administrator may distribute the benefit
          in a lump sum without a  Participant's  consent as soon as practicable
          after a Participant becomes eligible for a distribution  thereof,  but
          distribution  must  occur no later  than  the date the  benefit  would
          otherwise be  distributable  under the terms of the Plan. That portion
          of a  Participant's  Account  which is not a Vested  Interest  will be
          treated as a  Forfeiture,  and if such Vested  Interest is zero on the
          date of distribution,  a Participant will be deemed to have received a
          distribution of such Vested Interest.

     5.6  RESTRICTIONS  ON IMMEDIATE  DISTRIBUTIONS:  If the lump sum value of a
          Participant's   benefit   exceeds   (or  at  the  time  of  any  prior
          distribution   exceeded)  $5,000,   and  the  benefit  is  immediately
          distributable, the benefit may only be distributed with the consent of
          a  Participant  and a  Participant's  spouse in  accordance  with this
          Section. That portion of a Participant's Account which is not a Vested
          Interest will be treated as a Forfeiture.

          (a)  Definition Of Immediately Distributable:  A Participant's benefit
               is immediately  distributable if any part of the benefit could be
               distributed to the  Participant (or the  Participant's  surviving
               spouse) before the Participant  reaches (or would have reached if
               not  deceased) the later of his or her Normal  Retirement  Age or
               Age 62.

                                       29
<PAGE>

          (b)  Consent  Requirements:  The  consent of the  Participant  and the
               Participant's  spouse  (or where  either the  Participant  or the
               Participant's  spouse has died, the survivor) to any benefit that
               is immediately  distributable  must be obtained in writing within
               the 90-day period ending on the Annuity  Starting Date.  However,
               (1) only the  Participant  need consent to the  distribution of a
               Qualified  Joint  and  Survivor  Annuity  while  the  benefit  is
               immediately  distributable;  and (2) neither the  Participant nor
               the  Participant's  spouse  will  be  required  to  consent  to a
               distribution  that is required by Code ss.401(a)(9) or ss.415. If
               this  Plan upon  termination  does not  offer an  annuity  option
               (purchased  from  a  commercial  provider)  and  if  neither  the
               Employer nor an Affiliated  Employer  maintains  another  defined
               contribution  plan other than an employee  stock  ownership  plan
               (ESOP)  as  defined  in  Code  ss.4975(e)(7),  the  Participant's
               benefit will, without the Participant's  consent,  be distributed
               to the  Participant.  If the Employer or an  Affiliated  Employer
               does maintain  another  defined  contribution  plan other than an
               ESOP, the Participant's  benefit will,  without the Participant's
               consent, be transferred to the other plan if the Participant does
               not consent to an immediate  distribution under the terms of this
               Section.

          (c)  Notification  Requirements:  The  Administrator  must  notify the
               Participant  and the  Participant's  spouse of the right to defer
               any  distribution  until the  benefit  is no  longer  immediately
               distributable. Notification will include a general explanation of
               the material  features and relative  values of the optional forms
               of  benefit  available  under  the  Plan in a manner  that  would
               satisfy the notice requirements of Codess.417(a)(3);  and will be
               provided  no less than 30 days or more than 90 days  prior to the
               Annuity Starting Date. Distribution of the benefit may begin less
               than  30  days  before  the  Annuity  Starting  Date  if (1)  the
               Administrator   clearly   informs   the   Participant   that  the
               Participant  has a right  to a period  of at least 30 days  after
               receiving the required  notification  to consider the decision of
               whether to waive the Qualified Joint and Survivor  Annuity and to
               consent to another form of  distribution;  (2) the Participant is
               permitted to revoke an affirmative distribution election at least
               until the Annuity  Starting Date, or, if later, at any time prior
               to the  expiration  of the 7 day period that begins the day after
               the  explanation of the Qualified  Joint and Survivor  Annuity is
               provided to the  Participant;  (3) the Annuity  Starting  Date is
               after the date that the  explanation  of the Qualified  Joint and
               Survivor  Annuity is provided to the Participant (but the Annuity
               Starting  Date  may be  before  the  date  that  any  affirmative
               distribution elections are made by the Participant and before the
               date).

     5.7  RESTORATION  OF FORFEITED  ACCOUNT  BALANCE:  If a Participant  with a
          partially  Vested  Interest  in  his  or  her  Participant's   Account
          terminates  employment with the Employer and receives (or is deemed to
          have  received)  a  distribution  of such  Vested  Interest,  and such
          Participant  is  subsequently  reemployed by the  Employer,  then such
          Participant's  Account  balance  will be restored to the amount on the
          date of distribution  if the  Participant  repays to the Plan the full
          amount  of  the  distribution   which  was  attributable  to  Employer
          contributions  before the  earlier of 5 years  after the first date on
          which the  Participant is  subsequently  reemployed by the Employer or
          the date on which  the  Participant  incurs 5  consecutive  Breaks  in
          Service  following the date of  distribution.  If a Participant  whose
          Vested Interest in his or her Participant's  Account is zero is deemed
          to have received a distribution  of such Vested Interest from the Plan
          before the date on which the Participant  incurs 5 consecutive  Breaks
          in Service,  upon reemployment with the Employer,  such  Participant's
          Account balance which is attributable to Employer  contributions  will
          be restored to the amount on the date of the deemed distribution.

                                       30
<PAGE>

     5.8  SPOUSAL CONSENT REQUIREMENTS:  A married Participant's election not to
          receive a Qualified  Joint and Survivor  Annuity  (QJSA) under Section
          5.1 or a Qualified Preretirement Survivor Annuity (QPSA) under Section
          5.2,  or an  unmarried  Participant's  election  not to receive a life
          annuity  under  Section  5.1,  must  be made in  accordance  with  the
          following provisions:

          (a)  Election Not To Receive A QJSA: A married Participant's  election
               not to receive a  Qualified  Joint and  Survivor  Annuity,  or an
               unmarried  Participant's  election not to receive a life annuity,
               must be in writing  and must be made  during  the  90-day  period
               ending on the Annuity Starting Date. Such election may be revoked
               in writing and a new election  made at any time and any number of
               times during the election period.

          (b)  Election Not To Receive A QPSA: A married Participant's  election
               not to receive a Qualified Preretirement Survivor Annuity must be
               in writing and must be made during an election  period  beginning
               on the  first  day of the  Plan  Year in  which  the  Participant
               reaches  Age 35 and ending on the date of his or her  death.  The
               election may be revoked in writing and a new election made at any
               time and any  number  of times  during  the  election  period.  A
               Terminated  Participant's  election period  concerning his or her
               Vested  Aggregate  Account before his termination  will not begin
               later than such date.

          (c)  Special  Pre-Age 35 QPSA Election:  A Participant who has not yet
               reached Age 35 as of the end of any current  Plan Year may make a
               special  election  not  to  receive  a  Qualified   Preretirement
               Survivor  Annuity  for the period  beginning  on the date of such
               election  and  ending  on the first day of the Plan Year in which
               such Participant  reaches Age 35. This election will not be valid
               unless the Participant  receives the same written  explanation of
               the  Qualified  Preretirement  Survivor  Annuity as  described in
               paragraph (d) below.  Qualified  Preretirement  Survivor  Annuity
               coverage will be automatically  reinstated as of the first day of
               the Plan Year in which the  Participant  reaches  Age 35. Any new
               election  on or  after  such  date  will be  subject  to the full
               requirements of this Section 5.8.

          (d)  Required Written  Explanation Of QJSA Or QPSA: In connection with
               an  election  not to  receive  a  Qualified  Joint  and  Survivor
               Annuity, the Administrator will, no less than 30 days and no more
               than 90 days prior to the  Annuity  Starting  Date,  provide  the
               Participant   with  a  written   explanation  of  the  terms  and
               conditions  of the  Qualified  Joint and  Survivor  Annuity;  the
               Participant's  right to make (and the effect of) an  election  to
               waive the Qualified Joint and Survivor Annuity; the rights of the
               Participant's  spouse; and the right of the Participant to revoke
               such election  (and the effect  thereof).  In connection  with an
               election  not  to  receive  a  Qualified  Preretirement  Survivor
               Annuity,  the Administrator  will provide each Participant within
               the Applicable  Period as defined in paragraph (e) with a written
               explanation of the Qualified  Preretirement  Survivor  Annuity in
               such  terms  and in such  manner  as would be  comparable  to the
               written explanation  applicable to a Qualified Joint and Survivor
               Annuity as set forth in this paragraph.

          (e)  Applicable  Period:  The  Applicable  Period for a Participant is
               whichever  of the  following  periods  ends last:  (1) 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;  (2) a  reasonable  period  after  the  individual  becomes


                                       31
<PAGE>

               a   Participant;   (3)   a   reasonable   period   ending   after
               Codess.401(a)(11)  ceases to apply to the  Participant;  or (4) a
               reasonable period ending after  Codess.417(a)(5)  ceases to apply
               with respect to the Participant.  For purposes of this paragraph,
               a  reasonable  period  means  the  end of  the  two  year  period
               beginning one year prior to the date the applicable event occurs,
               and ending one year after that date.

          (f)  Participants  Who  Terminate  Before  Age  35:  In the  case of a
               Participant  who separates  from service  before the Plan Year in
               which the  Participant  reaches Age 35, the notice required under
               paragraph  (d)  will  be  provided  within  the two  year  period
               beginning  one year prior to  separation  from service and ending
               one year  after  separation  from  service.  If such  Participant
               thereafter   returns  to  employment   with  the  Employer,   the
               Applicable Period for such Participant will be redetermined.

          (g)  Elections Must Have Spousal Consent: A Participant's election not
               to  receive  a  Qualified   Joint  and  Survivor   Annuity  or  a
               Participant's  election not to receive a Qualified  Preretirement
               Survivor   Annuity   will  not  be   effective   (1)  unless  the
               Participant's  spouse  consents in writing to the  election;  (2)
               unless the election designates a specific Beneficiary (or form of
               benefit) which may not be changed without spousal consent (or the
               consent  of the  spouse  expressly  permits  designations  by the
               Participant  without any requirement of further spousal consent);
               and (3) unless the spouse's  consent  acknowledges  the effect of
               the election and is  witnessed by the  Administrator  or a notary
               public.

          (h)  Additional  Requirements  For  Spousal  Consent:  Notwithstanding
               paragraph  (g), a spouse's  consent will not be required if there
               is no spouse or if the spouse cannot be located,  or if there are
               other  circumstances  (as set  forth in the Code)  present  which
               preclude the necessity of such spouse's consent. Any consent by a
               Participant's  spouse (or  establishment  that consent  cannot be
               obtained) will be effective  only with respect to such spouse.  A
               consent that permits  designations by the Participant without any
               requirement  of further  consent by the spouse  must  acknowledge
               that the  spouse  has the right to limit  consent  to a  specific
               Beneficiary, and a specific form of benefit where applicable, and
               that the spouse  voluntarily  elects to relinquish either or both
               of such rights. A revocation of a prior election may be made by a
               Participant  without the spouse's  consent at any time before the
               commencement of benefits. No consent obtained under paragraph (g)
               will be valid  unless  the  Participant  has  received  notice as
               provided in paragraph (d).

     5.9  APPLICATION OF CODE SECTION  401(a)(9):  All distributions  made under
          the terms of the Plan will be determined  and made in accordance  with
          the regulations issued under Code ss.401(a)(9),  including the minimum
          distribution    incidental    benefit    requirement   of   regulation
          ss.1.401(a)(9)-2,  and any  provisions in this Plan which reflect Code
          ss.401(a)(9)   will  override  any  distribution   options  which  are
          inconsistent with such Code section and regulations.

     5.10 STATUTORY  COMMENCEMENT OF BENEFITS:  Unless the Participant otherwise
          elects,  distribution of a  Participant's  benefit must begin no later
          than the 60th day  after  the  latest of the close of the Plan Year in
          which the  Participant  (1)  reaches  the  earlier of Age 65 or Normal
          Retirement  Age;  (2)  reaches  the 10th  anniversary  of the year the
          Participant  commenced Plan  participation;  or (3) terminates service
          with the  Employer.  However,  the  failure of a  Participant  and the
          Participant's  spouse to consent to a distribution  while a benefit is
          immediately distributable within the meaning of


                                       32
<PAGE>

          Section  5.6  above  will  be  deemed  to  be  an  election  to  defer
          commencement  of payment of any  benefit  sufficient  to satisfy  this
          Section.  In addition,  if this Plan provides for early retirement,  a
          Participant who satisfied the service requirement for early retirement
          prior to Termination of Employment  will be entitled to receive his or
          her Vested Aggregate Account balance, if any, upon satisfaction of the
          age requirement for early retirement.

     5.11 DETERMINATION  OF  LIFE  EXPECTANCIES:   If  a  Participant's   Vested
          Aggregate Account is distributed through other than the purchase of an
          immediate  annuity,  the  applicable  calendar  year will be the First
          Distribution   Calendar   Year  and,  if  life   expectancy  is  being
          recalculated,  each  succeeding  calendar  year.  If annuity  payments
          commence before the Required  Beginning Date, the applicable  calendar
          year is the year such payments  commence.  If  distribution  is in the
          form of an immediate annuity  purchased after the Participant's  death
          with the Participant's  remaining  interest,  the applicable  calendar
          year is the year of purchase.  For  purposes of Section 5.2,  payments
          will  be  calculated  by use  of the  return  multiples  specified  in
          regulation  ss.1.72-9.  Life  expectancy of a surviving  spouse may be
          recalculated annually, but in the case of any other Beneficiary,  life
          expectancy  will be calculated at the time payment first commences and
          payments  for any  12-consecutive  month  period will be based on such
          life expectancy minus the number of whole years that have passed since
          distribution  commenced.  The First Distribution Calendar Year is, for
          distributions  beginning before the Participant's  death, the calendar
          year   immediately   preceding  the  calendar  year   containing   the
          Participant's  Required  Beginning Date. For  distributions  beginning
          after the death of a Participant, the First Distribution Calendar Year
          is the  calendar  year in which  distributions  are  required to begin
          under Section 5.2.

     5.12 SEGREGATION OF BENEFIT BEFORE  DISTRIBUTION:  As of the Valuation Date
          coinciding  with or next  following the date a Participant  terminates
          employment with the Employer for any reason,  the Administrator  will,
          until a distribution is made to the  Participant or the  Participant's
          Beneficiary  in  accordance  with  Sections 5.1, 5.2, 5.3, 5.4 or 5.5,
          direct the Trustee in a uniform nondiscriminatory manner to either (1)
          invest the Participant's  Vested Aggregate Account balance  determined
          as of such Valuation Date in a separate  interest bearing account;  or
          (2) leave the  Participant's  Vested Aggregate Account balance as part
          of the general  Trust Fund,  in which case such  account will share in
          the allocation of earnings and losses under Section 3.3(a).

     5.13 DISTRIBUTION IN EVENT OF LEGAL  INCAPACITY:  If any person entitled to
          benefits (the  "Payee")  suffers from a Disability or is under a legal
          incapacity,  payments may be made in one or more of the following ways
          as directed by the  Administrator:  (a) to the Payee directly;  (b) to
          the guardian or legal  representative of the Payee's person or estate;
          (c) to a  relative  of the  Payee,  to be  expended  for  the  Payee's
          benefit;  or (d) to the custodian of the Payee under any Uniform Gifts
          to Minors  Act.  The  Administrator's  determination  of  minority  or
          incapacity will be final.

     5.14 DIRECT  ROLLOVERS:  A distributee  may elect to have any portion of an
          eligible rollover distribution paid directly to an eligible retirement
          plan  specified by the  distributee in a direct  rollover,  which is a
          payment by the Plan to the eligible  retirement  plan specified by the
          distributee.

          (a)  Eligible Rollover Distribution: An eligible rollover distribution
               is any  distribution  of all or any portion of the balance to the
               credit  of the  distributee,  except  that an  eligible  rollover
               distribution  does not include any distribution  that is one of a
               series  of  substantially   equal  periodic  payments  (not  less
               frequently than annually) made for the life (or life  expectancy)
               of


                                       33
<PAGE>

          the distributee or for 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  Codess.401(a)(9),  the portion of
          any  distribution  that is not includible in gross income  (determined
          without regard to the exclusion for net unrealized  appreciation  with
          respect to employer securities); and, effective as of January 1, 2000,
          the  portion  of any  hardship  distribution  made  to a  Participant,
          pursuant to Section 5.18, attributable to elective deferrals.

          (b)  Eligible  Retirement  Plan:  An  eligible  retirement  plan is an
               individual  retirement  account  described in Code ss.408(a),  an
               individual  retirement  annuity  described in Code ss.408(b),  an
               annuity plan described in Code  ss.403(a),  or a qualified  trust
               described  in Code  ss.401(a),  that  accepts  the  distributee's
               eligible  rollover  distribution.  However,  in  the  case  of an
               eligible  rollover  distribution  to  the  surviving  spouse,  an
               eligible  retirement plan is an individual  retirement account or
               individual retirement annuity.

          (c)  Definition  Of  Distributee:  For  purposes  of this  Section,  a
               distributee includes an Employee or former Employee. In addition,
               an  Employee's  or  former  Employee's  Surviving  Spouse  and an
               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 ss.414(p),  are  distributees  with regard to the
               interest of the Spouse or former Spouse.

     5.15 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS:  Excess Elective Deferrals,
          plus  any  income  and  minus  any  loss  allocable  thereto,  will be
          distributed  no later  than  April  15th to any  Participant  to whose
          account  Excess  Elective  Deferrals  were allocated for the preceding
          year and who claims Excess  Elective  Deferrals for such taxable year.
          Distribution of Excess Elective Deferrals will made in accordance with
          the following provisions:

          (a)  Assignment Of Excess Elective Deferrals: A Participant may assign
               to this Plan any Excess Elective  Deferrals made during a taxable
               year of the  Participant  by notifying  the  Administrator  on or
               before April 15th of the amount of the Excess Elective  Deferrals
               to be  assigned  to the  Plan.  A  Participant  will be deemed to
               notify the  Administrator  of any Excess Elective  Deferrals that
               arise by taking into account only those  Elective  Deferrals made
               to this Plan and any other plans of the Employer.

          (b)  Definition Of Excess Elective Deferrals: The term Excess Elective
               Deferrals  means  Elective  Deferrals  that are  includible  in a
               Participant's gross income under Codess.402(g) to the extent such
               Participant's  Elective  Deferrals  for a taxable year exceed the
               dollar  limitation  under  such  Code  Section.  Excess  Elective
               Deferrals will be treated as Annual  Additions  under Section 6.1
               of the Plan,  unless such amounts are  distributed  no later than
               the first  April 15th  following  the close of the  Participant's
               taxable year.  Excess  Elective  Deferrals  that are  distributed
               after April 15th are includible in the Participant's gross income
               in the taxable  year in which  deferred  and the taxable  year in
               which distributed.

          (c)  Determination Of Income Or Loss:  Excess Elective  Deferrals will
               be  adjusted  for  any  income  or  loss  up to  the  end  of the
               Participant's   taxable  year  and,  at  the  discretion  of  the
               Administrator,  may be adjusted for income or loss up to the date
               of distribution.  The period between the end of the Participant's
               taxable year and the date of distribution  will be referred to as
               the gap period,  and any income earned  therein will be allocated
               at the discretion of the  Administrator  applied  consistently to
               all  Participants  and to all  corrective  distributions  for the



                                       34
<PAGE>

               taxable  year.  The income or loss  allocable to a  Participant's
               Excess Elective Deferrals will be the amount determined by either
               the  method in  subparagraph  (1) or  subparagraph  (2) plus,  if
               applicable the amount determined in subparagraph (3):

               (1)  The  amount  determined  by  multiplying  the income or loss
                    allocable  to his  Elective  Deferrals  for the taxable year
                    (and the gap period) by a fraction,  the  numerator of which
                    is the Participant's  Excess Elective Deferrals for the year
                    and  the  denominator  of  which  is (A)  the  Participant's
                    Account balance attributable to Elective Deferrals as of the
                    beginning  of  the  Participant's   taxable  year  plus  any
                    Elective  Deferrals  allocated to the Participant's  Account
                    during such taxable year and the gap period,  if applicable,
                    or (B) solely with respect to taxable years beginning before
                    January  1,  1992,   the   Participant's   Account   balance
                    attributable  to  Elective  Deferrals  as of the  end of the
                    Participant's   taxable  year,   reduced  by  any  gain  and
                    increased by any loss  allocable  thereto during the taxable
                    year; or

               (2)  The amount determined by any reasonable method of allocating
                    income or loss to Excess Elective  Deferrals for the taxable
                    year and for the gap period  provided the method used is the
                    same  method  used by this  Plan for  allocating  income  or
                    losses to Participant's Accounts; and

               (3)  10% of the amount  determined  under (1)  multiplied  by the
                    number of whole months between the end of the  Participant's
                    taxable year and the distribution  date,  counting the month
                    of distribution if it occurs after the 15th of such month.

     5.16 DISTRIBUTION OF EXCESS CONTRIBUTIONS:  Excess Contributions,  plus any
          income and minus any loss  allocable  thereto,  will be distributed no
          later  than the last day of each  Plan Year to  Participants  to whose
          accounts such Excess  Contributions  were  allocated for the preceding
          Plan Year. The amount of Excess  Contributions to be distributed under
          this  Section  will be reduced  by the  amount of any Excess  Elective
          Deferrals previously distributed to the Participant under Section 5.15
          for the  Participant's  taxable  year  ending  with or within the Plan
          Year.  Distribution of Excess Contributions will be made in accordance
          with the following provisions:

          (a)  Allocation To Highly Compensated Employees:  Excess Contributions
               will be  allocated  to the  HCEs  with  the  largest  amounts  of
               Employer  contributions taken into account in calculating the ADP
               Test  for the  year in  which  the  Excess  Contributions  arose,
               beginning  with the HCE with the largest  amount of such Employer
               contributions  and  continuing in descending  order until all the
               Excess  Contributions  have been  allocated.  For purposes of the
               preceding  sentence,  the "largest  amount" is  determined  after
               distribution of any Excess  Contributions.  If excess amounts are
               distributed  more than 2 1/2months after the last day of the Plan
               Year in which they arose, a 10% excise tax will be imposed on the
               Employer.   Excess   Contributions  will  be  treated  as  Annual
               Additions under Section 6.1.

          (b)  Definition Of Excess Contributions: The term Excess Contributions
               means  with  respect  to any  Plan  Year  the  excess  of (a) the
               aggregate  amount of Employer  contributions  actually taken into
               account in computing  the ADP Test of  Participants  who are HCEs
               for  such  Plan  Year,  over  (b)  the  maximum  amount  of  such
               contributions  permitted by the ADP Test  (determined by reducing
               contributions  made on  behalf  of  Participants  who are HCEs in
               order  of  their  ADPs,   beginning  with  the  highest  of  such
               percentages).

                                       35
<PAGE>

          (c)  Determination  Of Income Or Loss:  Excess  Contributions  will be
               adjusted  for any  income  or loss up to the end of the Plan Year
               and, at the discretion of the Administrator,  may be adjusted for
               income or loss up to the date of  distribution.  The  period,  if
               any,   between  the  end  of  the  Plan  Year  and  the  date  of
               distribution  will be referred  to as gap period,  and any income
               earned   therein  will  be   allocated  at  the   Administrator's
               discretion  applied  consistently to all  Participants and to all
               corrective  distributions  made for the Plan Year.  The income or
               loss allocable to each Participant's Excess Contributions will be
               the amount determined by either the method in subparagraph (1) or
               subparagraph (2) plus, if applicable, the amount determined under
               subparagraph (3), as follows:

               (1)  The  amount  determined  by  multiplying  the income or loss
                    allocable  to  his  or  her  Elective   Deferrals   (and  if
                    applicable,  QNECs and/or  QMACs) for the Plan Year (and the
                    gap period,  if applicable) by a fraction,  the numerator of
                    which is the Participant's Excess Contributions for the year
                    and  the  denominator  of  which  is (A)  the  Participant's
                    Account balance  attributable to Elective  Deferrals (and if
                    applicable,  QNECs  and/or QMAC that are included in the ADP
                    test) as of the beginning of the Plan Year plus any Elective
                    Deferrals  (and if  applicable,  QNECs and/or QMACs that are
                    included  in the  ADP  test)  allocated  to the  Participant
                    during such Plan Year and the gap period, if applicable,  or
                    (B)  solely  with  respect to Plan  Years  beginning  before
                    January  1,  1992,   the   Participant's   Account   balance
                    attributable to Elective Deferrals (and if applicable, QNECs
                    and/or  QMACs that are  included  in the ADP Test) as of the
                    end of the Plan Year  reduced by any gain and  increased  by
                    any loss allocable thereto during the Plan Year; or

               (2)  The amount determined by any reasonable method of allocating
                    income or loss to the Participant's  Elective Deferrals (and
                    if applicable, QNECs and/or QMACS) for the Plan Year and for
                    the gap period  provided  the method used is the same method
                    used  for  allocating  income  or  losses  to  Participants'
                    Accounts; and

               (3)  10% of the amount  determined  under (1)  multiplied  by the
                    number of whole months  between the end of the Plan Year and
                    the distribution date, counting the month of distribution if
                    it occurs after the 15th of such month.

          (d)  Accounting For Excess Contributions: Excess Contributions will be
               distributed from the Participant's  Elective Deferral sub-account
               and QMAC sub-account in proportion to the Participant's  Elective
               Deferrals  and QMACs (to the extent used in the ADP Test) for the
               Plan Year.  Excess  Contributions  will be  distributed  from the
               Participant's  QNEC  sub-account  only to the  extent  the Excess
               Contributions  exceed the balance in the  Participant's  Elective
               Deferral sub-account and QMAC sub-account.

     5.17 DISTRIBUTION  OF  EXCESS  AGGREGATE  CONTRIBUTIONS:  Excess  Aggregate
          Contributions,  plus any income and minus any loss allocable  thereto,
          will be forfeited, if forfeitable, or if not forfeitable,  distributed
          no later than the last day of each Plan Year to  Participants to whose
          Accounts such  contributions  were  allocated  for the preceding  Plan
          Year.  Distribution of Excess Aggregate  Contributions will be made in
          accordance with the following provisions:

          (a)  Allocation  To Highly  Compensated  Employees:  Excess  Aggregate
               Contributions  will be  allocated  to the HCEs  with the  largest
               Contribution Percentage Amounts taken into account in calculating
               the ACP Test for the year in which the  excess  arose,  beginning
               with  the HCE


                                       36
<PAGE>

               with the largest amount of such Contribution  Percentage  Amounts
               and continuing in descending order until all the Excess Aggregate
               Contributions have been allocated.  For purposes of the preceding
               sentence,  the "largest amount" is determined after  distribution
               of  any  Excess  Aggregate  Contributions.  If  Excess  Aggregate
               Contributions  are  distributed  more than 2 1/2 months after the
               last day of the Plan Year in which they  arose,  a 10% excise tax
               will be imposed on the Employer  with  respect to those  amounts.
               Excess  Aggregate   Contributions   will  be  treated  as  Annual
               Additions under Section 6.1.

          (b)  Forfeitures  Of Excess  Aggregate  Contributions:  Forfeitures of
               Excess Aggregate Contributions will be allocated (after all other
               Forfeitures)  to the Matching  Contribution  sub- account of each
               Participant  who  is  a  NHCE  who  made  Elective  Deferrals  or
               Voluntary  Employee  Contributions  in the ratio  which each such
               Participant's  Compensation  for the Plan Year bears to the total
               Compensation of all such Participants for such Plan Year.

          (c)  Excess   Aggregate   Contribution:   The  term  Excess  Aggregate
               Contribution  means, with respect to any Plan Year, the excess of
               (1) the  aggregate  Contribution  Percentage  Amounts  taken into
               account in computing the numerator of the Contribution Percentage
               actually  made on  behalf of  Participants  who are HCEs for such
               Plan Year, over (2) the maximum  Contribution  Percentage Amounts
               permitted by the ACP Test  (determined by reducing  contributions
               made on  behalf  of  Participants  who are HCEs in order of their
               Contribution  Percentage  Amounts  beginning  with the highest of
               such  percentages).  Such  determination will be made after first
               determining Excess Elective Deferrals and then determining Excess
               Contributions.   The  terms   Actual   Contribution   Percentage,
               Contribution  Percentage and Contribution  Percentage  Amount are
               defined in Section 1.10 of the Plan.

          (d)  Determination Of Income:  Excess Aggregate  Contributions will be
               adjusted  for any  income  or loss up to the end of the Plan Year
               and, at the discretion of the Administrator,  may be adjusted for
               income or loss up to the date of distribution. The period between
               the end of the Plan  Year and the  date of  distribution  will be
               referred to as the gap period,  and any income  earned during the
               gap  period  will  be   allocated  at  the   discretion   of  the
               Administrator applied consistently to all Participants and to all
               corrective  distributions  for the Plan Year.  The income or loss
               allocable to a Participant's Excess Aggregate  Contributions will
               be the amount determined by either the method in subparagraph (1)
               or subparagraph  (2) plus, if applicable,  the amount  determined
               under subparagraph (3):

               (1)  The  amount  determined  by  multiplying  the income or loss
                    allocable to his Voluntary Employee Contributions,  Matching
                    Contributions  (if not used in the ADP Test),  QNECs and, to
                    the extent applicable,  Elective Deferrals for the Plan Year
                    (and the gap  period,  if  applicable)  by a  fraction,  the
                    numerator of which is such  Participant's  Excess  Aggregate
                    Contributions  for the year and the  denominator of which is
                    (A) the  Participant's  Account  balance(s)  attributable to
                    Contribution  Percentage  Amounts as of the beginning of the
                    Plan  Year,  plus any  additional  amounts  attributable  to
                    Contribution Percentage Amounts allocated to the Participant
                    during such Plan Year and the gap period, if applicable,  or
                    (B)  solely  with  respect to Plan  Years  beginning  before
                    January  1,  1992,   the   Participant's   Account   balance
                    attributable  to Contribution  Percentage  Amounts as of the
                    end of the Plan Year,  reduced by any gain and  increased by
                    any loss allocable thereto during the Plan Year; or

                                       37
<PAGE>

               (2)  The amount determined by any reasonable method of allocating
                    income or loss to the Participant's Voluntary Contributions,
                    Matching  Contributions  and QNECs for the Plan Year and for
                    the gap period,  if applicable,  provided the method used is
                    the same  one  used  for  allocating  income  or  losses  to
                    Participants' Accounts; and

               (3)  10% of the amount  determined  under (1)  multiplied  by the
                    number of whole months  between the end of the Plan Year and
                    the distribution date, counting the month of distribution if
                    it occurs after the 15th of such month.

          (e)  Accounting For Excess Aggregate  Contributions:  Excess Aggregate
               Contributions  will  be  forfeited  if  forfeitable,  or  will be
               distributed on a pro-rata basis from the Participant's  Voluntary
               Employee Contribution Account,  Matching Contribution sub-account
               and QMAC sub-account,  and if applicable,  from the Participant's
               QNEC sub-account or the Elective Deferral sub-account, or both.

     5.18 FINANCIAL HARDSHIP DISTRIBUTIONS: A Participant may request in writing
          to the  Administrator  that  up to 100%  of the  Participant's  Vested
          Interest  in his or  her  Elective  Deferral  Account  (including  any
          earnings  credited  thereto as of the end of the last Plan Year ending
          before July 1, 1989),  Matching  Contribution Account and Non-Elective
          Contribution  Account as of the Valuation Date  immediately  preceding
          such request be  distributed  because of the  Participant's  financial
          hardship, subject to the following provisions:

          (a)  Amount And Form Of Distribution: The maximum amount distributable
               cannot  exceed  the amount  required  to  relieve  the  financial
               hardship,  including amounts necessary to pay any federal,  state
               or local  income  taxes or penalties  reasonably  anticipated  to
               result from the distribution.  A hardship  distribution will only
               be made in a lump sum provided the Participant's  spouse, if any,
               consents to the distribution in accordance with Section 5.8.

          (b)  Definition Of Financial  Hardship:  Financial  hardship  means an
               immediate and heavy  financial  need that the  Participant  lacks
               available  resources to satisfy.  For purposes of this Plan,  the
               following financial needs will be considered immediate and heavy:
               (1)   payment  of  medical   expenses   within  the   meaning  of
               Codess.213(d) that are incurred by the Participant, his spouse or
               his children; (2) the purchase (excluding mortgage payments) of a
               principal  residence for the Participant;  (3) payment of tuition
               and  related   educational   fees  for  the  next  12  months  of
               post-secondary  education for the Participant,  the Participant's
               spouse or the Participant's children; (4) the need to prevent the
               eviction of the Participant  from his or her principal  residence
               or  foreclosure  on the mortgage of the  Participant's  principal
               residence;  (5) payment of funeral  expenses  for a member of the
               Participant's  family;  or (6)  any  other  immediate  and  heavy
               financial  need as determined by the  Administrator  in a uniform
               nondiscriminatory manner.

          (c)  Participant's  Written   Representations:   Except  as  otherwise
               provided in paragraph  (d), a hardship  distribution  can only be
               made to the extent a Participant's  financial  hardship cannot be
               satisfied  from  other  resources  reasonably  available  to  the
               Participant,  as determined by the  Administrator on the basis of
               all relevant facts and circumstances.  However, the Administrator
               may treat a  distribution  as  necessary  to satisfy a  financial
               hardship if the Administrator, in the absence of actual knowledge
               to  the   contrary,   relies  upon  the   Participant's   written
               representation that the financial hardship cannot be relieved (1)
               through  reimbursement or compensation by insurance or otherwise;
               (2) by liquidation  of the  Participant's  assets,  to


                                       38
<PAGE>

               the extent such  liquidation  would not itself  cause a financial
               hardship;   (3)  by  cessation  of  the  Participant's   Elective
               Deferrals or Voluntary Employee Contributions to the Plan; or (4)
               by other  distributions  or nontaxable  (at the time of the loan)
               loans from any other  Employer-maintained plans or from any other
               employer,  or by borrowing from commercial  sources on reasonable
               commercial terms.

          (d)  Safe Harbor Deemed Distributions:  If a Participant elects not to
               comply with the written representation  requirements set forth in
               paragraph (c) with respect to a distribution  made for one of the
               reasons set forth in paragraphs (b)(1), (2), (3) or (4), then any
               such  distribution  will be deemed to be  necessary  to satisfy a
               financial   hardship  if  the   Participant   has   obtained  all
               distributions  (other than financial hardship  distributions) and
               all  nontaxable   loans  currently   available  under  all  plans
               maintained  by the  Employer.  Furthermore,  by  electing  not to
               comply with the  requirements  of paragraph (c), the  Participant
               cannot   make   Elective   Deferrals   and   Voluntary   Employee
               Contributions  to this Plan or any other plan  maintained  by the
               Employer  for at least 12 months  after  receipt of the  hardship
               distribution;  and for the Participant's taxable year immediately
               following  the taxable  year of the  hardship  distribution,  the
               Participant  cannot make  Elective  Deferrals to this Plan or any
               other plan maintained by the Employer in excess of the applicable
               limit under  Codess.402(g)(5)  for such taxable  year,  minus the
               amount  of such  Participant's  Elective  Deferrals  made for the
               taxable year in which the  financial  hardship  distribution  was
               made.

          (e)  Restriction On Certain  Transferred  Assets:  Notwithstanding any
               provision   in  this  Section  to  the   contrary,   no  hardship
               distribution  can be made  under  this  Section  with  respect to
               benefits attributable to assets (including post-transfer earnings
               thereon) and liabilities that are transferred, within the meaning
               of Code ss.414(l),  from a money purchase  pension plan qualified
               under Code  ss.401(a)  to this Plan  (other  than any  portion of
               those assets and liabilities  attributable to Voluntary  Employee
               Contributions).

          (f)  Participants  Who Are Not 100% Vested:  If a distribution is made
               under this Section at a time when the Participant has less than a
               100%  Vested  Interest  in his or her  Non-Elective  Contribution
               sub-account  and such Vested  Interest may  increase,  a separate
               account will be established  for the  Participant's  Non-Elective
               Contribution sub-account balance at the time of distribution, and
               at any relevant  time the  Participant's  Vested  Interest in the
               separate  account will be equal to an amount ("X")  determined by
               the formula X = P[(AB+(R x  D))-(RxD)].  In applying the formula,
               "P" is the Vested  Interest  at the  relevant  time,  "AB" is the
               respective  account  balance  at the  relevant  time,  "D" is the
               amount  of  the  distribution,  and  "R"  is  the  ratio  of  the
               respective account balance at the relevant time to the respective
               account balance after distribution.

     5.19 PROTECTED BENEFITS:  In addition to the distribution options contained
          in this Article 5 and any other  provision of the Plan, any portion of
          a Participant's  Account  attributable to amounts  transferred  from a
          tax-qualified  plan  through a plan  merger or a  "trustee-to-trustee"
          transfer of assets may, at the  election of the such  Participant,  be
          distributed  in  accordance  with the  provisions  of such  merged  or
          transferee plan to the extent  required by Code Section  411(d)(6) and
          the regulations thereunder.





                                       39
<PAGE>




                                    ARTICLE 6
                          CODE SECTION 415 LIMITATIONS


     6.1  MAXIMUM ANNUAL  ADDITION:  The maximum Annual  Addition (as defined in
          paragraph  (c)  below)  made  to  a  Participant's   various  accounts
          maintained  under the Plan for any  Limitation  Year  beginning  after
          December 31, 1986 will not exceed the lesser of the Dollar  Limitation
          set forth in Section 6.1(a) or the  Compensation  Limitation set forth
          in Section 6.1(b), as follows:

          (a)  Dollar Limitation:  The Dollar Limitation is $30,000, as annually
               adjusted by the  Secretary  of the  Treasury in  accordance  with
               Codess.415(d).

          (b)  Compensation Limitation: The Compensation Limitation is an amount
               equal to 25% of the  Participant's  Section 415  Compensation for
               the Limitation Year.  However,  this limitation will not apply to
               any contribution  made for medical benefits within the meaning of
               Code  ss.401(h)  or  Code  ss.419A(f)(2)  after  separation  from
               service which is otherwise  treated as an Annual  Addition  under
               Code ss.415(l)(1) or Code ss.419A(d)(2).

          (c)  Annual Additions:  The term Annual Additions means the sum of the
               following  amounts  credited to a  Participant's  Account for the
               Limitation  Year:  (1)  Employer   contributions;   (2)  Employee
               contributions;  (3)  Forfeitures;  (4) amounts  allocated,  after
               March 31, 1984, to an individual  medical account,  as defined in
               Codess.415(l)(2),  which is part of a  pension  or  annuity  plan
               maintained  by  the  Employer;   and  (5)  amounts  derived  from
               contributions paid or accrued after December 31, 1985, in taxable
               years  ending  after  such  date,   which  are   attributable  to
               post-retirement  medical  benefits,  allocated  to  the  separate
               account of a key employee, as defined in Codess.419A(d)(3), under
               a welfare  fund, as defined in  Codess.419(e),  maintained by the
               Employer.  Notwithstanding the foregoing,  a Participant's Annual
               Additions do not include his or her rollovers,  loan  repayments,
               repayments of prior Plan distributions or prior  distributions of
               mandatory  contributions,  direct transfers of contributions from
               another  plan  to  this  Plan,  deductible   contributions  to  a
               simplified   employee  pension  plan,  or  voluntary   deductible
               contributions.

     6.2  ADJUSTMENTS TO MAXIMUM ANNUAL ADDITION:  In applying the limitation on
          Annual  Additions set forth in Section 6.1, the following  adjustments
          must be made:

          (a)  Short  Limitation  Year:  In a  Limitation  Year of less  than 12
               months,  the Defined  Contribution  Dollar  Limitation in Section
               6.1(a) will be adjusted by  multiplying  it by the ratio that the
               number of months in the short Limitation Year bears to 12.

          (b)  Plans  With  Different   Anniversary   Dates:  If  a  Participant
               participates in multiple defined  contribution plans sponsored by
               the Employer which have different  Anniversary Dates, the maximum
               Annual  Addition  in this  Plan for the  Limitation  Year will be
               reduced by the Annual  Additions  credited  to the  Participant's
               accounts  in  the  other  defined  contribution  plans  for  such
               Limitation Year.

          (c)  Plans  With  The  Same   Anniversary   Date:   If  a  Participant
               participates in multiple defined  contribution plans sponsored by
               the Employer which have the same  Anniversary  Date,  then (1) if
               only one of the plans is subject to Code ss.412, Annual Additions
               will first be credited to the Participant's  accounts in the plan
               subject; and (2) if none of the plans are subject to Code


                                       40
<PAGE>

               ss.412,  the  maximum  Annual  Addition  in this Plan for a given
               Limitation  Year will equal the product of (A) the maximum Annual
               Addition  for  such   Limitation  Year  minus  any  other  Annual
               Additions  previously  credited  to  the  Participant's  account,
               multiplied by the ratio that the Annual  Additions which would be
               credited to a Participant's  accounts hereunder without regard to
               the limitations in Section 6.1 bears to the Annual  Additions for
               all plans described in this paragraph.

     6.3  MULTIPLE  PLANS AND  MULTIPLE  EMPLOYERS:  All defined  benefit  plans
          (whether  terminated  or not) of the  Employer  will be treated as one
          defined  benefit plan,  and all defined  contribution  plans  (whether
          terminated  or not) of the  Employer  will be treated  as one  defined
          contribution  plan.  In addition,  all  Affiliated  Employers  will be
          considered a single employer.

     6.4  MULTIPLE PLAN REDUCTION:  For Plan Years  beginning  before January 1,
          2000,  if an Employee  is, or has been, a  Participant  in one or more
          Employer-sponsored   defined   benefit   plans  and  in  one  or  more
          Employer-sponsored  defined contribution plans, the sum of the defined
          benefit plan fraction and the defined  contribution  plan fraction for
          any Limitation Year may not exceed 1.0,  determined in accordance with
          the following:

          (a)  Defined  Benefit  Fraction:  The  Defined  Benefit  Fraction is a
               fraction which has as its numerator the  Participant's  Projected
               Annual Benefits determined as of the close of the Limitation Year
               and which has as its denominator the lesser of 125% of the dollar
               limitation for the Limitation Year determined under Codess.415(b)
               andss.415(d),  or 140% of the  amount  which  may be  taken  into
               account  under  Codess.415(b)(1)(B)  for  such  Limitation  Year.
               Notwithstanding  the foregoing,  with respect to anyone who was a
               Participant  as of the  first day of the  first  Limitation  Year
               beginning after December 31, 1986, in one or more defined benefit
               plans  maintained by the Employer  which were in existence on May
               6, 1986, the denominator of the defined benefit fraction will not
               be less than 125% of the Current Accrued Benefit.

          (b)  Definitions:  As used  in  paragraph  (a)  above,  (1)  the  term
               Projected  Annual Benefits means the annual benefits payable to a
               Participant  under all defined benefit plans (whether  terminated
               or    not)    of    the    Employer    as    determined     under
               regulationss.1.415-7(b)(3);  and (2)  the  term  Current  Accrued
               Benefit  means a  Participant's  accrued  benefit under a defined
               benefit plan, determined as if the Participant had separated from
               service  as of the close of the last  Limitation  Year  beginning
               before  January  1, 1987,  when  expressed  as an annual  benefit
               within  the  meaning  of   Codess.415(b)(2).   In  determining  a
               Participant's  Current Accrued Benefit,  the  Administrator  will
               disregard  any  changes in the terms and  conditions  of the Plan
               after May 5, 1986,  and any cost of living  adjustment  occurring
               after May 5, 1986. The Current  Accrued Benefit will only be used
               as set forth above if the defined benefit plans  individually and
               in the aggregate satisfied the requirements of Codess.415 for all
               Limitation Years beginning before January 1, 1987.

          (c)  Defined Contribution  Fraction: The Defined Contribution Fraction
               is a  fraction  the  numerator  of which is the sum of the Annual
               Additions  to the  Participant's  Account  under all the  defined
               contribution plans (whether  terminated or not) maintained by the
               Employer for the current Limitation Year and all prior Limitation
               Years  (including  the  Annual  Additions   attributable  to  the
               Participant's   non-deductible   contributions  to  all  Employer
               maintained defined benefit plans,  whether terminated or not, and
               the Annual  Additions  attributable to all welfare benefit funds,
               as defined in Codess.419(e),  and individual medical accounts, as
               defined


                                       41
<PAGE>

               in  Code  ss.415(l)(2)  maintained  by  the  Employer),  and  the
               denominator of which is the sum of the maximum  aggregate amounts
               for the current  Limitation Year and all prior  Limitation  Years
               the Employee was employed by the Employer  (regardless of whether
               a defined contribution plan was maintained by the Employer).  The
               maximum  permissible  aggregate  amount in any Limitation Year is
               the lesser of (1) 125% of the dollar limitation in effect in Code
               ss.415(c)(1)(A)  for  such  Limitation  Year  determined  without
               regard  to  Code   ss.415(c)(6)   and  adjusted  per   regulation
               ss.1.415-7(d)(1)   and   Notice   83-10,   or  (2)   35%  of  the
               Participant's Section 415 Compensation.

          (d)  Transition Rule For Denominator:  For defined  contribution plans
               in effect on or before July 1, 1982, the  Administrator may elect
               for any  Limitation  Year ending after December 31, 1982 that the
               denominator  will  be the  product  of the  denominator  for  the
               Limitation Year ending in 1982 determined under the law in effect
               for such Limitation Year,  multiplied by the Transition Fraction,
               which is a  fraction  which has as its  numerator  the  lesser of
               $51,875 or 1.4 multiplied by 25% of the Participant's Section 415
               Compensation  for the Plan Year ending in 1981,  and which has as
               its denominator the lesser of $41,500 or 25% of the Participant's
               Section 415 Compensation for the Plan Year ending in 1981. In any
               Top  Heavy  Limitation  Year,  $41,500  will be  substituted  for
               $51,875 in determining  the Transition  Fraction unless the Extra
               Minimum  Allocation is being  provided in Section 3.5. In a Super
               Top Heavy Plan  Year,  $41,500  will  always be  substituted  for
               $51,875.

          (e)  Adjustment Of Fraction:  If an Employee was a  Participant  as of
               the end of the first day of the first  Limitation  Year beginning
               after December 31, 1986 in one or more defined contribution plans
               maintained  by the  Employer  which were in  existence  on May 6,
               1986, the numerator of the defined contribution  fraction will be
               adjusted if the sum of such defined contribution fraction and the
               defined  benefit  fraction would  otherwise  exceed 1.0 under the
               terms of this Plan. Under the adjustment,  an amount equal to the
               product of the excess of the sum of the defined benefit  fraction
               and the defined contribution  fraction over 1.0 multiplied by the
               denominator  of  the  defined   contribution   fraction  will  be
               permanently   subtracted   from  the  numerator  of  the  defined
               contribution  fraction.  The adjustment will be calculated  using
               the fractions as they would be computed as of the end of the last
               Limitation  Year beginning  before January 1, 1987,  disregarding
               any  changes in the terms and  conditions  of the Plan made after
               May 5, 1986,  but using the Codess.415  limitation  applicable to
               the first Limitation Year beginning on or after January 1, 1987.

          (f)  Top Heavy Adjustments To Multiple Plan Fraction: In any Top Heavy
               Limitation  Year,  100% will be substituted for 125% in paragraph
               (a) and paragraph (c) above unless (1) a 7.5% allocation is being
               provided to Non-Key  Employees  in Section  3.5, or (2) a Non-Key
               Employee is being  provided  with a  retirement  benefit  under a
               defined  benefit  plan that is equal to 3% of his or her  average
               monthly Section 415 Compensation. However, in any Super Top Heavy
               Limitation  Year, 100% will be substituted for 125% in any event.
               If the 100%  limitation  is exceeded for any  Participant  in any
               Limitation  Year, then (1) the  Participant's  accrued benefit in
               the defined  benefit  plan will not be  increased;  (2) no Annual
               Additions  may be credited to the  Participant's  accounts  under
               this   Plan;   and  (3)  the   Participant   may  not   make  any
               contributions,  whether  voluntary or mandatory,  to this Plan or
               any other Employer  sponsored  qualified plan. 6.5 ADJUSTMENT FOR
               EXCESSIVE ANNUAL ADDITIONS: If an allocation of Forfeitures or an
               error in  calculating  a  Participant's  Compensation  causes the
               Annual  Additions  allocated  to such  Participant's  Account  to
               exceed the maximum set forth in Section 6.1,  such  Participant's
               Account  will be  adjusted  as  follows  in order to reduce  such
               excess:

     6.5  ADJUSTMENT  FOR  EXCESSIVE  ANNUAL  ADDITIONS:  If  an  allocation  of
          Forfeitures  or an error in calculating a  Participant's  Compensation
          causes the Annual Additions allocated to such


                                       42
<PAGE>

          Participant's  Account to exceed the maximum set forth in Section 6.1,
          such  Participant's  Account  will be  adjusted as follows in order to
          reduce such excess:

          (a)  Return Of Elective  Deferrals  And  Employee  Contributions:  The
               Administrator  will return any Elective Deferrals and/or Employee
               contributions  (whether such Employee contributions are voluntary
               or  mandatory),  and will  distribute the gains  attributable  to
               those Elective  Deferrals and/or Employee  contributions,  to the
               extent that such return or  distribution  would reduce the excess
               amount in the Participant's Account.

          (b)  Reallocation   In  The   Current   Year:   After  the  return  of
               contributions   and  the   distribution  of  gains  specified  in
               paragraph  (a) have been  made,  and prior to the  creation  of a
               Section 415 Suspense Account as set forth in paragraph (c) below,
               any excess will be reallocated in accordance  with Section 3.2 to
               all  Participants  who have not yet attained their maximum Annual
               Addition.  If  necessary,   the  Administrator  will  repeat  the
               reallocation  until all  Participants  have reached their maximum
               Annual Addition.

          (c)  Remaining  Excess:  If  an  excess  amount  still  remains  in  a
               Participant's Account, then (1) if the Participant is employed by
               the Employer at the end of the Limitation Year, the Administrator
               will hold the excess in the Section 415 Suspense  Account and use
               it to reduce Employer contributions  (including any allocation of
               Forfeitures)  for the next  Limitation  Year (and each succeeding
               Limitation Year if necessary) for the Participant; and (2) if the
               Participant  is not  employed  by the  Employer  at the  end of a
               Limitation  Year,  the  excess  may  not  be  distributed  to the
               Participant  but  will be held  unallocated  in the  Section  415
               Suspense  Account  and  will be used to  reduce  future  Employer
               contributions  (including the allocation of Forfeitures)  for all
               remaining  Participants  in the  next  Limitation  Year  and each
               succeeding Limitation Year if necessary.

          (d)  Earnings,  Losses And  Reallocation:  If the Section 415 Suspense
               Account is in  existence  at any time  during a  Limitation  Year
               pursuant to this Section,  it will not share in the allocation of
               the  earnings  or losses of the Trust  Fund.  If the  Section 415
               Suspense  Account is in existence at any time during a particular
               Limitation  Year,  all amounts in such  account must be allocated
               and  reallocated to  Participants'  Accounts  before any Employer
               contributions  or any Employee  contributions  may be made to the
               Plan for that Limitation Year.  Excess amounts in the Section 415
               Suspense Account may not be distributed to Participants or former
               Participants.




                                       43
<PAGE>




                                    ARTICLE 7
                              DUTIES OF THE TRUSTEE


     7.1  APPOINTMENT,  RESIGNATION, REMOVAL AND SUCCESSION: This Plan will have
          one  or  more  individual   Trustees,  a  corporate  Trustee,  or  any
          combination thereof, appointed as follows:

          (a)  Appointment  Of Trustee:  Each  Trustee  will be appointed by the
               Employer  and will serve  until its  successor  has been named or
               until such Trustee's resignation,  death, incapacity, or removal,
               in which event the Employer  will name a successor  Trustee.  The
               term  Trustee  will  include  the  original  and  any   successor
               Trustees.

          (b)  Resignation  Of  Trustee:  A  Trustee  may  resign at any time by
               giving 30 days written notice in advance to the Employer,  unless
               such notice is waived by the Employer.  The Employer may remove a
               Trustee by giving such Trustee 30 days written notice in advance.
               Such removal may be with or without cause.

          (c)  Successor  Trustee:  Each  successor  Trustee will succeed to the
               title to the Trust by accepting his appointment in writing and by
               filing such written  acceptance  with the former  Trustee and the
               Employer.  The former Trustee,  upon receipt of such  acceptance,
               will execute all documents and perform all acts necessary to vest
               the Trust Fund's  title of record in any  successor  Trustee.  No
               successor  Trustee  will  be  personally  liable  for  any act or
               failure to act of any predecessor Trustee.

          (d)  Merger Of Corporate Trustee: If any corporate Trustee,  before or
               after  qualification,  changes its name,  consolidates  or merges
               with another corporation, or otherwise reorganizes, any resulting
               corporation  which  succeeds  to the  fiduciary  business of such
               Trustee will become a Trustee hereunder in lieu of such corporate
               Trustee.

     7.2  INVESTMENT ALTERNATIVES OF THE TRUSTEE: The Trustees will implement an
          investment program based on the Employer's  investment  objectives and
          the Employee  Retirement  Income  Security Act of 1974. In addition to
          powers given by law, the Trustee may:

          (a)  Property:  Invest  the  Trust  Fund  in  any  form  of  property,
               including  common and  preferred  stocks,  exchange  covered call
               options,  bonds, money market instruments,  mutual funds, savings
               accounts,  certificates  of deposit,  Treasury  bills,  insurance
               policies  and  contracts,  or in  any  other  property,  real  or
               personal,  foreign or domestic,  having a ready market  including
               securities issued by an institutional Trustee and/or affiliate of
               the institutional  Trustee.  The Trustee may invest on margin. An
               institutional Trustee may invest in its own deposits if they bear
               a  reasonable  interest  rate.  The Trustee  may retain,  manage,
               operate,  repair, improve and mortgage or lease for any period on
               such  terms  as it  deems  proper  any real  estate  or  personal
               property held by the Trustee, including the power to demolish any
               building or other  improvements in whole or part. The Trustee may
               erect  buildings or other  improvements,  make leases that extend
               beyond the term of this  Trust,  and  foreclose,  extend,  renew,
               assign,  release or partially release and discharge  mortgages or
               other liens.

          (b)  Pooled  Funds:  The Trustee may  transfer any assets of the Trust
               Fund to a collective  trust  established to permit the pooling of
               funds of separate pension and profit-sharing  trusts provided the
               Internal  Revenue Service has ruled such  collective  trust to be
               qualified  under


                                       44
<PAGE>

               Code ss.401(a) and exempt under Code ss.501(a) (or the applicable
               corresponding provision of any other Revenue Act) or to any other
               common,  collective,  or commingled  trust fund which has been or
               may hereafter be established and maintained by the Trustee and/or
               affiliates  of an  institutional  Trustee.  Such  commingling  of
               assets  of the Fund  with  assets  of other  qualified  trusts is
               specifically  authorized,  and to the extent of the investment of
               the Trust Fund in such a group or collective  trust, the terms of
               the instrument establishing the group or collective trust will be
               a part hereof as though set forth herein.

          (c)  Employer  Stock:  The  Trustee  may  invest the Trust Fund in the
               common stock, debt  obligations,  or any other security issued by
               the  Employer  or by an  affiliate  of the  Employer  within  the
               limitations  provided  under  Sections 406, 407, and 408 of ERISA
               provided that such  investment  does not  constitute a prohibited
               transaction  under Code Section 4975.  Any such  investment  will
               only be made upon  written  direction of the Employer who will be
               solely responsible for the propriety of such investment.

          (d)  Cash  Reserves:  The  Trustee  may  retain in cash as much of the
               Trust Fund as the  Trustee  may deem  advisable  to  satisfy  the
               liquidity  needs of the Plan and to deposit  any cash held in the
               Trust Fund in a bank account  without  liability  for the highest
               rate of interest available.  If a bank is acting as Trustee, such
               Trustee is specifically  given authority to invest in deposits of
               such Trustee.  The Trustee may also hold cash  un-invested at any
               time and from time to time and in such  amount or to such  extent
               as the Trustee deems prudent,  and the Trustee will not be liable
               for any losses which may be incurred as the result of the failure
               to invest same, except to the extent provided herein or in ERISA.

          (e)  Reorganizations  Etc:  The  Trustee  may  join in or  oppose  the
               reorganization,  recapitalization,  consolidation, sale or merger
               of  corporations  or  properties,  upon such terms as the Trustee
               deems wise.

          (f)  Registration of Securities:  The Trustee may cause any securities
               or other  property to be  registered in the Trustee's own name or
               in the name of the  Trustee's  nominee or nominees,  and may hold
               any  investments  in bearer form,  but the records of the Trustee
               will at all times show all such  investments as part of the Trust
               Fund.

          (g)  Proxies:  The Trustee may vote  proxies and if  appropriate  pass
               them on to any  investment  manager  which may have  directed the
               investment in the equity giving rise to the proxy.

          (h)  Ownership  Rights:  The Trustee may exercise all ownership rights
               with respect to any assets held in the Trust Fund.

          (i)  Other  Investments:  The  Trustee  may accept and retain for such
               time as the  Trustee  deems  advisable  any  securities  or other
               property  received or  acquired  as Trustee,  whether or not such
               securities or property would normally be purchased as investments
               hereunder.

          (j)  Key  Man  Insurance:   The  Trustee,  with  the  consent  of  the
               Administrator, may purchase insurance Policies on the life of any
               Participant   whose  employment  is  deemed  to  be  key  to  the
               Employer's  financial  success.  Such  key man  Policies  will be
               deemed to be an  investment of the Trust Fund and will be payable
               to the Trust Fund as the  beneficiary  thereof.  The  Trustee may
               exercise any and all rights granted under such Policies.



                                       45
<PAGE>

          (k)  Loans To The Trust:  The  Trustee  may borrow or raise  money for
               purposes  of the Plan in such  amounts,  and upon such  terms and
               conditions,  as the Trustee deems  advisable;  and for any sum so
               borrowed, the Trustee may issue a promissory note as Trustee, and
               secure repayment of the loan by pledging all, or any part, of the
               Trust Fund as collateral.  No person lending money to the Trustee
               will be bound to see to the  application  of the money lent or to
               inquire into the validity or propriety of any borrowing.

          (l)  Agreements  With  Banks:  The Trustee may with the consent of the
               Employer  and upon such  terms as they in their  discretion  deem
               necessary,  enter into an agreement  with a bank or trust company
               providing  for (a) the  deposit  of all or part of the  funds and
               property  of the Trust with such bank or trust  company,  (b) the
               appointment  of such  bank  or  trust  company  as the  agent  or
               custodian  of the  Trustees for  investment  purposes,  with such
               discretion in investing and reinvesting the funds of the Trust as
               the Trustees deem it necessary or desirable to delegate.

          (m)  Litigation:  The  Trustee  may  begin,  maintain,  or defend  any
               litigation necessary in connection with the administration of the
               Plan,  except that the Trustee will not be obliged or required to
               do so unless indemnified to its satisfaction.

          (n)  Claims, Debts or Damages: The Trustee may settle,  compromise, or
               submit to arbitration any claims,  debts, or damages due or owing
               to or from the Plan.

          (o)  Miscellaneous:  The Trustee may do all such acts and exercise all
               such rights,  although not specifically  mentioned herein, as the
               Trustee  deems  necessary  to carry out the purposes of the Plan.
               The  Trustee  will  not be  restricted  to  securities  or  other
               property of the character expressly  authorized by applicable law
               for  trust  investments,  subject  to the  requirement  that  the
               Trustee discharge his duties with the care, skill,  prudence, and
               diligence,  under  the  circumstances  then  prevailing,  that  a
               prudent  man acting in a like  capacity  and  familiar  with such
               matters  would use in the  conduct  of an  enterprise  of similar
               character and with similar aims by  diversifying  the investments
               to  minimize  the  risks  of  large   losses   unless  under  the
               circumstances it is clearly prudent not to do so.

     7.3  VALUATION OF THE TRUST FUND: On each Valuation  Date, the Trustee will
          determine  the net worth of the Trust  Fund.  The value of  marketable
          investments will be determined using the most recent price quoted on a
          national securities exchange or over-the-counter  market. The value of
          non-marketable  investments  will  be  determined  periodically  by an
          independent third-party appraiser as required by law, and the Trustees
          will have no responsibility for the valuation of such assets.

     7.4  COMPENSATION AND EXPENSES: The Trustee,  either from the Trust Fund or
          from the Employer, will be reimbursed for all of its expenses and will
          be paid reasonable  compensation as agreed upon from time to time with
          the  Employer;  but no  person  who  receives  full-time  pay from the
          Employer  will receive any fees for services to the Plan as Trustee or
          in any other capacity. Expenses will be paid by each Adopting Employer
          in the ratio  that each  Adopting  Employer's  Participants'  Accounts
          bears to the total of all the  Participants'  Accounts  maintained  by
          this Plan.

     7.5  PAYMENTS  FROM THE TRUST FUND:  The Trustee will pay Plan benefits and
          other payments as the Administrator directs, and except as provided by
          ERISA,  the Trustee will not be responsible  for the propriety of such
          payments. Any payment made to a Participant,  or a Participant's legal
          representative or Beneficiary in accordance with the terms of the Plan
          will, to the extent of such



                                       46
<PAGE>

          payment,  be in full  satisfaction  of all claims arising  against the
          Trust, the Trustee, the Employer,  and the Administrator.  Any payment
          or  distribution  made from the Trust is  contingent  on the recipient
          executing   a  receipt  and  release   acceptable   to  the   Trustee,
          Administrator, or Employer.

     7.6  PAYMENT OF TAXES:  The  Trustee  will pay all taxes of the Trust Fund,
          including  property,  income,  transfer  and other  taxes which may be
          levied or assessed  upon or in respect of the Trust Fund or any money,
          property or securities  forming a part of the Trust Fund.  The Trustee
          may withhold from  distributions  to any payee such sum as the Trustee
          may reasonably  estimate as necessary to cover federal and state taxes
          for which the  Trustee may be liable,  which are, or may be,  assessed
          with regard to the amount distributable to such payee. Prior to making
          any payment,  the Trustee may require such releases or other documents
          from any lawful taxing  authority and may require such  indemnity from
          any payee or distributee as the Trustee deems necessary.

     7.7  ACCOUNTS,  RECORDS AND REPORTS: The Trustee will keep accurate records
          reflecting  its  administration  of the Trust  Fund and will make such
          records available to the Employer for review and audit. Within 90 days
          after  each Plan  Year,  and  within  90 days  after  its  removal  or
          resignation,  the Trustee will file with the Employer an accounting of
          its  administration of the Trust Fund during such year or from the end
          of the preceding Plan Year to the date of removal or resignation. Such
          accounting will include a statement of cash receipts and disbursements
          since the date of its last  accounting  and will contain an asset list
          showing the fair market value of investments held in the Trust Fund as
          of the end of the Plan  Year as  determined  under  Section  7.3.  The
          Employer will review the accounting and will notify the Trustee in the
          event of its  disapproval of the report within 90 days,  providing the
          Trustee  with a  written  description  of the items in  question.  The
          Trustees  will have 60 days to  provide  the  Employer  with a written
          explanation   of  the  items  in  question.   If  the  Employer  again
          disapproves  of the report,  the Trustee will file its accounting in a
          court of competent jurisdiction for audit and adjudication.

     7.8  EMPLOYMENT OF AGENTS AND COUNSEL:  The Trustee may employ such agents,
          counsel,  consultants,  or service companies as it deems necessary and
          may pay their reasonable  expenses and compensation.  The Trustee will
          not be liable for any action  taken or omitted by the  Trustee in good
          faith  pursuant to the advice of such agents and  counsel.  Any agent,
          counsel,  consultant,  service  company  and/or  its  successors  will
          exercise  no   discretionary   authority   over   investments  or  the
          disposition  of Trust  assets,  and their  services and duties will be
          ministerial  only and will be to provide  the Plan with  those  things
          required  by law or by  the  terms  of the  Plan  without  in any  way
          exercising any fiduciary  authority or responsibility  under the Plan.
          The duties of a third party  administrator  will be to  safe-keep  the
          individual  records for all  Participants  and to prepare all required
          actuarial  services and disclosure  forms under the supervision of the
          Administrator  and any Fiduciaries of the Plan. It is expressly stated
          that the third party administrator's  services are only ministerial in
          nature  and  that  under  no  circumstances   will  such  third  party
          administrator  exercise any  discretionary  authority  whatsoever over
          Plan Participants, Plan investments, or Plan benefits.

     7.9  DIVISION OF DUTIES AND INDEMNIFICATION: The division of duties and the
          indemnification  of the  Trustees of this Plan will be governed by the
          following provisions:

          (a)  No Guarantee  Against Loss:  The Trustees will have the authority
               and  discretion  to manage  and  control  the Fund to the  extent
               provided in this instrument, but do not guarantee the Fund in any
               manner against investment loss or depreciation in asset value, or
               guarantee  the adequacy of the Fund to meet and  discharge all or
               any liabilities of the Plan.  Furthermore,  the Trustees will not
               be liable for the making,  retention or sale of any investment or



                                       47
<PAGE>

               reinvestment  made by it, as herein provided,  or for any loss to
               or  diminution of the Fund, or for any other loss or damage which
               may result from the discharge of its duties hereunder,  except to
               the extent it is  judicially  determined  that the Trustees  have
               failed to exercise the care, skill,  prudence and diligence under
               the circumstances then prevailing that a prudent person acting in
               a like  capacity and familiar  with such matters would use in the
               conduct of an enterprise of a like character and like aims.

          (b)  Representations  Of The Employer:  The Employer warrants that all
               directions issued to the Trustees by it or the Plan Administrator
               will be in accordance with the terms of the Plan and not contrary
               to the provisions of the Employee  Retirement Income Security Act
               of 1974 and the regulations issued thereunder.

          (c)  Directions By Others: The Trustees will not be answerable for any
               action taken pursuant to any direction,  consent, certificate, or
               other  paper or  document  on the belief that the same is genuine
               and signed by the proper person.  All directions by the Employer,
               a Participant or the Plan Administrator  will be in writing.  The
               Plan  Administrator  will  deliver to the  Trustees  certificates
               evidencing the individual or individuals authorized to act as the
               Administrator and will deliver to the Trustees specimens of their
               signatures.

          (d)  Duties  And  Obligations  Limited  By The Plan:  The  duties  and
               obligations  of the Trustees  will be limited to those  expressly
               imposed upon it by this Plan or  subsequently  agreed upon by the
               parties.  Responsibility for administrative duties required under
               the Plan or applicable  law not expressly  imposed upon or agreed
               to by the  Trustees,  will rest solely with the Employer and with
               the Administrator.

          (e)  Indemnification Of Trustees: The Trustees will be indemnified and
               saved  harmless  by the  Employer  from and  against  any and all
               liability to which the Trustees may be  subjected,  including all
               expenses  reasonably  incurred in its defense,  for any action or
               failure to act resulting from compliance with the instructions of
               the  Employer,  the  employees  or  agents of the  Employer,  the
               Administrator,  or any other  Fiduciary to the Plan,  and for any
               liability   arising  from  the  actions  or  non-actions  of  any
               predecessor  Trustees or  Fiduciary or other  Fiduciaries  of the
               Plan.

          (f)  Trustees  Not  Responsible  For  Application  Of  Payments:   The
               Trustees will not be responsible  in any way for the  application
               of any payments it is directed to make or for the adequacy of the
               Fund to meet and  discharge  any and all  liabilities  under  the
               Plan.

          (g)  Multiple  Trustees:  If more than one Trustee is  appointed,  any
               single  Trustee  may act  independently  in  undertaking  any act
               and/or  transaction  on behalf of the Trust  unless the  Trustees
               have  agreed by a  majority  of their  number  that a  particular
               action must be approved by a majority of their  number  before it
               can be undertaken.

          (h)  Limitation Of Liability: No Trustee will be liable for the act of
               any other  Trustee or Fiduciary  unless the Trustee has knowledge
               of such act.

          (i)  Trustees As Participants Or  Beneficiaries:  Trustees will not be
               prevented  from  receiving  any  benefits  to  which  they may be
               entitled as Participants or Beneficiaries in the Plan, so long as
               the benefits are computed and paid on a basis which is consistent
               with the terms of the Plan as applied  to all other  Participants
               and Beneficiaries.

                                       48
<PAGE>

          (j)  No  Self-Dealing:  The Trustees will not (1) deal with the assets
               of the Trust Fund in their own interest or for their own account;
               (2) in their  individual  or in any  other  capacity,  act in any
               transaction  involving  the  Trust  Fund on behalf of a party (or
               represent a party) whose  interests  are adverse to the interests
               of the Plan, or its Participants or Beneficiaries; or (3) receive
               any  consideration for their own personal accounts from any party
               dealing with the Plan in connection with a transaction  involving
               assets of the Trust Fund.

     7.10 APPOINTMENT  OF  INVESTMENT  MANAGER:   The  Trustee  may  appoint  an
          Investment  Manager to manage and control the investment of all or any
          portion of the Trust Fund. Each  Investment  Manager will be either an
          investment  advisor  registered  under the Investment  Advisors Act of
          1940; a bank as defined in that Act; or an insurance company qualified
          to manage, acquire or dispose of any asset of the Trust under the laws
          of more than one state.  An  Investment  Manager will  acknowledge  in
          writing  that it is a Fiduciary  of the Plan.  The Trustee  will enter
          into an agreement  with the Investment  Manager  specifying the duties
          and compensation of the Investment  Manager and further specifying any
          other terms and conditions under which the Investment  Manager will be
          retained. The Trustee will not be liable for any act or omission of an
          Investment Manager, and will not be liable for following the advice of
          an  Investment  Manager  with  respect to any duties  delegated by the
          Trustee to the Investment Manager.  The Trustee will have the power to
          determine  the  portion  of the  Plan's  assets  to be  invested  by a
          designated  Investment Manager and to establish investment  objectives
          and guidelines for the Investment Manager to follow.

     7.11 ASSIGNMENT  AND  ALIENATION  OF BENEFITS:  Except as may  otherwise be
          permitted  under  Code  ss.401(a)(13)(C),   or  as  may  otherwise  be
          permitted  under a Qualified  Domestic  Relations Order as provided in
          Section  8.6, or as may  otherwise  be  permitted  under  Section 7.14
          relating to loans to  Participants,  no right or claim to, or interest
          in, any part of the Trust  Fund,  or any  payment  therefrom,  will be
          assignable,  transferable,  or  subject  to  sale,  mortgage,  pledge,
          hypothecation,  commutation,  anticipation,  garnishment,  attachment,
          execution,  or levy of any kind,  and the Trustees  will not recognize
          any attempt to assign, transfer, sell, mortgage, pledge,  hypothecate,
          commute, or anticipate the same, except to the extent required by law.

     7.12 EXCLUSIVE BENEFIT RULE: All  contributions  made by the Employer or an
          Affiliated  Employer to the Trust Fund will be used for the  exclusive
          benefit of the  Participants  who are  Employees  of the  Employer  or
          Affiliated  Employer and for their  Beneficiaries and will not be used
          for nor diverted to any other purpose  except the payment of the costs
          of  maintaining  the  Plan.  All  contributions  made  by an  Adopting
          Employer  who is not an  Affiliated  Employer  will  be  used  for the
          exclusive  benefit  of  the  Participants  who  are  Employees  of the
          Adopting Employer and for their Beneficiaries and will not be used for
          nor diverted to any other  purpose  except the payment of the Adopting
          Employers'  proportionate  costs of  maintaining  the Plan pursuant to
          Section 7.4.

     7.13 PURCHASE OF INSURANCE:  The purchase of insurance Policies on the life
          of a Participant,  other than key man insurance  under Section 7.2(j),
          is not currently permitted in this Plan.

     7.14 LOANS TO PARTICIPANTS: The Employer, in accordance with a written loan
          procedure  established  by the  Employer,  may permit loans to be made
          from  the  Trust  Fund  to  Participants   and   Beneficiaries   on  a
          non-discriminatory   basis.  If  made  available,   a  Participant  or
          Beneficiary  may make  application to the  Administrator  requesting a
          loan.  The  Administrator  will  have the sole  right  to  approve  or
          disapprove the application  provided that loans will be made available
          to all Participants on a reasonably  equivalent  basis. All loans must
          be evidenced  by a legally  enforceable  agreement  (which may include
          more than one  document) set forth in writing or in such other form as
          may be


                                       49
<PAGE>

          approved  by the  Internal  Revenue  Service,  and the  terms  of such
          agreement  must  specify  the  amount  and term of the  loan,  and the
          repayment  schedule.  Loans  will  not be  made  available  to  Highly
          Compensated  Employees  in an  amount  greater  than the  amount  made
          available  to  other  Employees,  and  no  loan  will  be  made  to  a
          Participant who is an Owner-Employee or a Shareholder-Employee  except
          to the extent such loan is treated as a prohibited  transaction  under
          Code  ss.4975.  Subject to the loan  procedure,  loans will be made in
          accordance with the following:

          (a)  Minimum Loan And Maximum  Loan:  No loan will be less than $1,000
               or, when added to the  outstanding  balance of all other loans to
               the Participant, will exceed the lesser of (1) $50,000 reduced by
               the excess,  if any,  of the  Participant's  highest  outstanding
               balance  of loans  during  the  1-year  period  ending on the day
               before  the loan was  made,  over the  Participant's  outstanding
               balance of loans on the day the loan was made; or (2) one-half of
               the Participant's Vested Aggregate Account.

          (b)  Aggregation  Of  Loans:   For  purposes  of  the  limitations  in
               paragraph (a) above, all loans from all plans of the Employer and
               Affiliated Employers will be aggregated.  An assignment or pledge
               of any  portion of the  Participant's  Vested  Aggregate  Account
               balance,  and a loan,  pledge,  or assignment with respect to any
               insurance contract purchased under the Plan, will be treated as a
               loan under this Section.

          (c)  Loans Must Bear Reasonable  Interest:  Any loan granted hereunder
               must  bear  interest  at  a  rate   reasonable  at  the  time  of
               application,  considering  the  purpose  of the loan and the rate
               being  charged by  representative  commercial  banks in the local
               area for a similar loan,  unless the  Administrator  sets forth a
               different  method for determining loan interest rates in its loan
               procedures  such as using the prime rate or some other rate based
               on the prime rate.  The loan  agreement will also provide for the
               payment of principal  and interest not less than  quarterly.  The
               interest  earned by the Trust on any loan granted  hereunder will
               be credited directly to the individual Participant's Account.

          (d)  Loans Must Be Secured:  If a  Participant's  loan  application is
               approved by the Administrator,  such Participant will be required
               to execute a note, a loan  agreement  and an assignment of his or
               her Vested  Aggregate  Account as  collateral  for the loan.  The
               Participant must obtain the consent of his or her spouse, if any,
               within  the  90  day  period  before  the  Participant's   Vested
               Aggregate Account is used as security for the loan. A new consent
               is  required  if the  Vested  Aggregate  Account  is used for any
               renegotiation,  extension, renewal or other revision of the loan,
               including any increase in the amount thereof. The consent must be
               written,  must  acknowledge  the effect of the loan,  and must be
               witnessed by a notary public or the  Administrator.  Such consent
               will thereafter be binding with respect to the consenting  Spouse
               or any subsequent Spouse.

          (e)  Terms Of  Repayment:  The term of a loan will not  exceed 5 years
               except in the case of a loan for the  purpose  of  acquiring  any
               house,  apartment,  condominium,  or  mobile  home (not used on a
               transient  basis)  which  is  used  or  is to be  used  within  a
               reasonable  time as the principal  residence of the  Participant.
               The  term  of a loan  will  be  determined  by the  Administrator
               considering   the  maturity   dates   quoted  by   representative
               commercial   banks  in  the  local  area  for  a  similar   loan.
               Notwithstanding  the  foregoing,  however,  loans  made  prior to
               January 1, 1987 which are used to acquire, construct, reconstruct
               or substantially  rehabilitate any dwelling unit which,  within a
               reasonable  period of time is to be used  (determined at the time
               the loan is made) as a principal  residence of the Participant or
               a



                                       50
<PAGE>

               member   of  his  or   her   family   within   the   meaning   of
               Codess.267(c)(4)  may  provide  for  periodic  repayment  over  a
               reasonable period of time that may exceed 5 years.  Additionally,
               loans  made prior to January  1, 1987 may  provide  for  periodic
               payments which are made less  frequently than quarterly and which
               do  not   necessarily   result   in   level   amortization.   The
               Administrator  may  allow a grace  period  for the  making of any
               required  installment  payment, but any such period cannot extend
               beyond  the  last  day  of the  calendar  quarter  following  the
               calendar quarter in which the required installment was due.

          (f)  Suspension Of Installment Payments: Loan installment payments may
               be  suspended  as  permitted  under  Codess.414(u)(4)   effective
               December 12, 1994. Installment payments may also be suspended for
               a period not longer than one year in which the  Participant is on
               a leave of absence, either without pay 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. However,  even if payments are suspended due to a leave
               of  absence,  the loan must  still be repaid by the  latest  date
               permitted  under the original  terms of the loan and the payments
               due after the leave ends (or, if earlier, after the first year of
               the  leave)  must  not be less  than  those  required  under  the
               original terms of the loan.

          (g)  Repayment  Of  Loan  Before   Distribution   Of  Benefit:   If  a
               Participant has received a loan from the Plan and the Participant
               or the  Participant's  Beneficiary  is entitled to a payment from
               the Trust  Fund  before the loan is repaid in full,  the  Trustee
               will offset at the time of  distribution  the unpaid loan balance
               (including  accrued interest) from the total amount otherwise due
               to the Participant or Beneficiary. If a valid spousal consent has
               been   obtained   pursuant   to   paragraph   (d)   above,   then
               notwithstanding  any other provision of this Plan, the portion of
               the  Participant's  Vested  Aggregate  Account used as a security
               interest for a loan will be taken into account in determining the
               amount of the  Vested  Aggregate  Account  payable at the time of
               death or  distribution,  but only if the  reduction  is used as a
               repayment  of the loan.  If less  than 100% of the  Participant's
               Vested  Aggregate  Account  (determined  without  regard  to  the
               preceding  sentence)  is payable to the  Participant's  surviving
               spouse,  then such Vested  Aggregate  Account will be adjusted by
               first reducing the Vested Aggregate  Account by the amount of the
               security used as repayment of the loan, and then  determining the
               benefit payable to the surviving spouse.

          (h)  Immediate Repayment: A Participant's loan will become immediately
               due and payable if the Participant fails to make principal and/or
               interest payments for two successive  calendar quarters.  In such
               event, the  Administrator  will reduce the  Participant's  Vested
               Aggregate Account by the remaining  principal and interest of the
               loan, and such reduction will  constitute a  distributable  event
               (to  the  extent  of  the  reduction)  under  the  Plan.  If  the
               Participant's  Vested  Aggregate  Account is less than the amount
               due, the Administrator  will take whatever steps are necessary to
               collect the balance due from the Participant.

     7.15 DIRECTED  INVESTMENT  ACCOUNTS:  If  agreed  to by  the  Trustees  and
          approved  by the  Employer,  Participants  will be given the option to
          direct  the  investment  of all or a  portion  of their  Participant's
          Account  (and  any  Rollover   Contributions  and  Voluntary  Employee
          Contributions) into a directed,  or segregated  investment selected by
          the Participant;  or among alternative investment funds established as
          part of the overall Fund. Such  alternative  investment  funds will be
          under  the  full   control  of  the   management   of  the   Trustees.
          Alternatively,  if  investments  outside  the  Trustees'  control  are
          allowed,  Participants  may not  direct  that  investments  be made in
          collectibles,  other than U.S.  Government  gold and silver coins.  In
          this connection, a Participant's right to direct the investment of


                                       51
<PAGE>

          his  or  her  own  Rollover   Contributions  and  Voluntary   Employee
          Contributions  will apply only to the  selection of the desired  fund.
          The following rules will apply to the administration of such funds and
          to the handling of Participants' investment directions:

          (a)  Investment   Form:   Eligible   Participants   will  complete  an
               investment designation form stating the percentage to be invested
               in or transferred  to or from the available  funds. A Participant
               may  change  his or  her  investment  election  by  filing  a new
               investment  designation  form with the Employer or the Employer's
               designee.  Such change will be  effective no later than the first
               day of  the  next  Election  Period.  Election  Periods  will  be
               established  at the  discretion  of the Employer but in any event
               will occur no less  frequently than once in every 12-month period
               or, at the  discretion  of the Employer and the Trustee,  once in
               every  3-month or 6-month  period or at such other more  frequent
               time which is uniformly  available as  determined by the Employer
               and the Trustee.

          (b)  Transfers  Between Funds: A Participant may elect to transfer all
               or  part  of his or her  account  balance  in one or  more of the
               investment  funds from one investment fund to another  investment
               fund by filing an investment  designation  form with the Employer
               or   with   the   Employer's   designee   within   a   reasonable
               administrative  period  prior to the next  Election  Period.  The
               funds  will  be  transferred  by the  Trustee  or the  Employer's
               designee as soon as practicable prior to, or by the start of, the
               new Election Period.

          (c)  Administrator Responsibility:  The Plan Administrator or the Plan
               Administrator's  designee will be responsible  when  transmitting
               Employer and Employee  contributions to show the dollar amount to
               be credited to each investment fund for each Participant.

          (d)  No Administrator Liability:  Except as otherwise provided herein,
               neither the Trustee,  nor the  Employer,  nor any Plan  fiduciary
               will be liable to the Participant or his or her Beneficiaries for
               any loss  resulting  from action  taken at the  direction  of the
               Participant.

          (e)  Adoption  Of  Procedures:  All  investment  designations  by Plan
               Participants are to be made in accordance with such procedures as
               the Employer may adopt. At the discretion of the Employer and the
               Trustees,  such procedures will permit sufficient selection among
               investment   alternatives   to  satisfy  the  provisions  of  DOL
               regulation ss.2550.404(c)-1.




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<PAGE>




                                    ARTICLE 8
                           DUTIES OF THE ADMINISTRATOR


     8.1  APPOINTMENT,  RESIGNATION,  REMOVAL AND SUCCESSION: Each Administrator
          appointed by the Employer will continue until his death,  resignation,
          or removal by the Employer, and any Administrator may resign by giving
          30 days written  notice to the  Employer.  If an  Administrator  dies,
          resigns,  or is  removed  by  the  Employer,  his  successor  will  be
          appointed as promptly as possible,  and such  appointment  will become
          effective  upon its acceptance in writing by such  successor.  Pending
          the  appointment  and acceptance of any successor  Administrator,  any
          then acting or remaining Administrator will have full power to act.

     8.2  POWERS AND DUTIES OF THE  ADMINISTRATOR:  The powers and duties of the
          Administrator   will  include  (a)  appointing  the  Plan's  attorney,
          accountant, actuary, or any other party needed to administer the Plan;
          (b)  directing  the Trustees  with respect to payments  from the Trust
          Fund; (c) communicating with Employees  regarding their  participation
          and  benefits  under the Plan,  including  the  administration  of all
          claims  procedures;  (d)  filing  any  returns  and  reports  with the
          Internal   Revenue   Service,   Department  of  Labor,  or  any  other
          governmental   agency;  (e)  reviewing  and  approving  any  financial
          reports,  investment  reviews,  or other reports prepared by any party
          under (a) above;  (f)  establishing  a funding  policy and  investment
          objectives  consistent  with the purposes of the Plan and the Employee
          Retirement  Income  Security  Act of  1974;  and  (g)  construing  and
          resolving  any question of Plan  interpretation.  The  Administrator's
          interpretation of Plan provisions,  including eligibility and benefits
          under the Plan,  is final,  and unless it can be shown to be arbitrary
          and  capricious  will not be subject to "de novo" review.  If there is
          more than one Administrator,  the Administrators may delegate specific
          responsibilities among themselves,  including the authority to execute
          documents unless the Employer  revokes such  delegation.  The Employer
          and  Trustee  will be notified  in writing of any such  delegation  of
          responsibilities,  and  the  Trustee  thereafter  may  rely  upon  any
          documents executed by the appropriate Administrator.

     8.3  EMPLOYMENT OF AGENTS AND COUNSEL:  The  Administrator may appoint such
          actuaries, accountants,  custodians, counsel, agents, consultants, and
          other persons  deemed  necessary or desirable in  connection  with the
          administration  and  operation  of the Plan.  The  actions of any such
          third parties will be subject to the limitations  described in Section
          7.8 of the Plan; and no such third parties will be given any authority
          or discretion concerning the management and operation of the Plan that
          would cause them to become Fiduciaries of the Plan.

     8.4  COMPENSATION  AND  EXPENSES:   The   Administrator  may  receive  such
          compensation   as  agreed   upon   between   the   Employer   and  the
          Administrator, provided that any person who already receives full-time
          pay from the  Employer  may not receive  any fees for  services to the
          Plan as  Administrator  or in any other  capacity.  In  addition,  the
          Employer   will  pay  all   reasonable   expenses   incurred   by  the
          Administrator in the performance of its duties under this Plan. If the
          Employer  fails to pay such  expenses,  the Trustee will reimburse the
          Administrator  out of the Trust  Fund.  Expenses  will be paid by each
          Adopting   Employer  in  the  ratio  that  each  Adopting   Employer's
          Participants'  Accounts  bears to the  total of all the  Participants'
          Accounts maintained by this Plan.

     8.5  CLAIMS PROCEDURES:  Upon retirement,  death, Disability or Termination
          of Employment,  the Participant or  representative of such Participant
          may  make  application  to the  Administrator  requesting  payment  of
          benefits  due and the  manner  of  payment,  in  accordance  with  the
          following:





                                       53
<PAGE>




          (a)  Automatic  Payment If No  Application  Is Made: If no application
               for  benefits is made and no cash-out  of benefits  occurs  under
               Section  5.5,  the   Administrator   will   automatically  pay  a
               Participant's  Vested Aggregate  Account balance in the form that
               does  not  require   spousal  consent  no  later  than  the  time
               prescribed in Section 5.10.

          (b)  Denial Of Claim:  If an  application  for  benefits is made,  the
               Administrator  will  accept,  reject,  or modify such request and
               will notify the Participant in writing setting forth the response
               of the  Administrator and in the case of a denial or modification
               the  Administrator  will (1) state the specific reason or reasons
               for the denial,  (2) provide specific reference to pertinent Plan
               provisions   on  which  the  denial  is  based,   (3)  provide  a
               description of any additional  material or information  necessary
               for the  Participant or his  representative  to perfect the claim
               and an  explanation  of  why  such  material  or  information  is
               necessary,  and (4) explain the Plan's claim review  procedure as
               contained herein.

          (c)  Review  Procedure:  In the  event  the  request  is  rejected  or
               modified,  the  Participant or his  representative  may within 60
               days following  receipt by the Participant or  representative  of
               such  rejection  or  modification,  submit a written  request for
               review by the Plan Administrator of its initial decision.  Within
               60 days following such request for review, the Plan Administrator
               will render its final  decision in writing to the  Participant or
               representative stating specific reasons for such decision. If the
               Participant  or  representative  is not  satisfied  with the Plan
               Administrator's final decision, the Participant or representative
               can   institute  an  action  in  a  federal  court  of  competent
               jurisdiction;  for this  purpose,  process would be served on the
               Plan Administrator.

     8.6  QUALIFIED  DOMESTIC  RELATIONS ORDERS: A Qualified  Domestic Relations
          Order, or QDRO, is a signed domestic relations order issued by a State
          Court which  creates,  recognizes or assigns to an alternate  payee(s)
          the right to receive all or part of a Participant's  Plan benefit.  An
          alternate payee is a Spouse,  former Spouse, child, or other dependent
          of a Participant  who is treated as a Beneficiary  under the Plan as a
          result of the QDRO.  The  Administrator  will  determine if a domestic
          relations order is a Qualified Domestic Relations Order as follows:

          (a)  Administrator's   Determination:   Promptly  upon  receipt  of  a
               domestic  relations  order,  the  Administrator  will  notify the
               Participant and any alternate payee(s) named in the order of such
               receipt,  and will include a copy of this  Section 8.6.  Within a
               reasonable  time after  receipt  of the  order,  not to exceed 60
               days, the  Administrator  will make a determination as to whether
               or not the order is a QDRO as defined in Code  ss.414(p) and will
               promptly  notify the  Participant  and any alternate  payee(s) in
               writing of the determination.

          (b)  Specific  Requirements Of QDRO: In order for a domestic relations
               order  to be a  QDRO,  it  must  specifically  state  all  of the
               following:  (1) the name and last known mailing  address (if any)
               of the  Participant  and of each  alternate  payee covered by the
               order.  However, if the QDRO does not specify the current mailing
               address  of  the  alternate  payee,  but  the  Administrator  has
               independent  knowledge  of that  address,  the QDRO will still be
               valid;  (2) the dollar amount or percentage of the  Participant's
               benefit to be paid by the Plan to each  alternate  payee,  or the
               manner in which the amount or percentage will be determined;  (3)
               the number of payments or period for which the order applies; and
               (4) the specific plan (by name) to which the order  applies.  The
               domestic relations order will not be deemed a




                                       54
<PAGE>




               QDRO if it  requires  the  Plan to  provide  any  type or form of
               benefit,  or any option not already  provided for in the Plan, or
               increased  benefits,  or benefits in excess of the  Participant's
               Vested  Interest,  or payment of benefits to an  alternate  payee
               which are  required to be paid to another  alternate  payee under
               another QDRO.

          (c)  Disputed  Orders:  If there is a  question  as  whether  or not a
               domestic  relations order is a QDRO, there will be a delay in any
               payout to any payee including the  Participant,  until the status
               is resolved.  In such event, the Administrator will segregate the
               amount that would have been payable to the alternate  payee(s) if
               the order had been deemed a QDRO. If the order is not  determined
               to be a QDRO, or the status is not resolved (for example,  it has
               been sent back to the Court for  clarification  or  modification)
               within 18 months  beginning with the date the first payment would
               have to be made under the order, the  Administrator  will pay the
               segregated  amounts plus interest to the person(s) who would have
               been  entitled  to the  benefits  had there  been no order.  If a
               determination  as to the  Qualified  status  of the order is made
               after the 18-month period, then the order will only be applied on
               a prospective basis. If the order is determined to be a QDRO, the
               Participant  and  alternate   payee(s)  will  again  be  notified
               promptly  after  such  determination.  Once an order is  deemed a
               QDRO, the  Administrator  will pay to the alternate  payee(s) all
               the amounts due under the QDRO, including segregated amounts plus
               interest  which  may  have  accrued  during a  dispute  as to the
               order's qualification.

          (d)  Payment Prior To Termination  Of  Employment:  A QDRO may provide
               for the payment of benefits to an alternative  payee prior to the
               time a  Participant  has  terminated  employment.  Further,  such
               payment can be made even if the affected  Participant has not yet
               reached  the  Earliest  Retirement  Age.  For  purposes  of  this
               paragraph,  the term Earliest Retirement Age means the earlier of
               (1)  the  date  on  which  the   Participant  is  entitled  to  a
               distribution  under this  Plan,  or (2) the later of (i) the date
               the  Participant  attains  age 50, or (ii) the  earliest  date on
               which the Participant  could receive  benefits under this Plan if
               the Participant terminated employment with the Employer.

          (e)  Effect Of QDRO On Survivor Annuity Requirements:  Notwithstanding
               Section 5.1 and 5.2 to the  contrary,  a  Participant's  benefits
               which are payable from the Plan in the form of either a Qualified
               Joint and Survivor Annuity or a Qualified  Preretirement Survivor
               Annuity  need  not be  paid  in such  form  if  such  payment  is
               inconsistent  with,  or has  been  modified  by,  the  terms of a
               Qualified Domestic Relations Order.




                                       55
<PAGE>




                                    ARTICLE 9
                        AMENDMENT, TERMINATION AND MERGER


     9.1  AMENDMENT:  The Employer,  by action of its board of  directors,  will
          have the right to amend the Plan at any time if the amendment complies
          with the following requirements:

          (a)  General  Requirements:  Amendments  must be in writing and cannot
               (1) increase the responsibilities of the Trustee or Administrator
               without   written   consent;   (2)  deprive  any  Participant  or
               Beneficiary of Plan benefits to which he or she is entitled;  (3)
               decrease the amount of any  Participant's  Account balance except
               as permitted under  Codess.412(c)(8);  (4) permit any part of the
               Trust Fund to be used for or diverted to purposes  other than the
               exclusive  benefit  of the  Participants  or their  Beneficiaries
               except as required to pay taxes and administration  expenses,  or
               cause or permit  any  portion  of the Trust  Fund to revert to or
               become the property of the Employer; or (5) eliminate or reduce a
               retirement-type  subsidy,  or an early retirement  benefit, or an
               optional form of benefit with respect to benefits attributable to
               service  before the amendment.  In the case of a  retirement-type
               subsidy,  this  provision  will  apply  only  with  respect  to a
               Participant  who satisfies the  pre-amendment  conditions for the
               subsidy either before or after the amendment.

          (b)  Certain  Corrective  Amendments:  For purposes of satisfying  the
               minimum    coverage    requirements   of    Codess.410(b),    the
               nondiscriminatory     amount     requirement     of    regulation
               ss.1.401(a)(4)-1(b)(2),  or the nondiscriminatory  plan amendment
               requirement  of regulation  ss.1.401(a)(4)-1(b)(4),  a corrective
               amendment may  retroactively  increase  allocations for Employees
               who  benefited   under  the  Plan  during  the  Plan  Year  being
               corrected,  or may grant  allocations  to  Employees  who did not
               benefit under the Plan during the Plan Year being  corrected.  In
               addition, to satisfy the  nondiscriminatory  current availability
               requirement of regulationss.1.401(a)(4)-4(b) for benefits, rights
               or features, a corrective amendment may make a benefit,  right or
               feature  available  to Employees  to whom it was  previously  not
               available.  A corrective amendment will not be taken into account
               prior  to the  date  of its  adoption  unless  it  satisfies  the
               applicable requirements of  regulationss.1.401(a)(4)-11(g)(3)(ii)
               through  (vii),  including the  requirement  that, in order to be
               effective for the preceding  Plan Year,  such  amendment  must be
               adopted by the 15th day of the 10th month  after the close of the
               preceding Plan Year.

     9.2  TERMINATION: The Employer at any time can terminate the Plan and Trust
          in  whole  or in  part by  filing  written  notice  thereof  with  the
          Administrator and Trustee or by completely discontinuing contributions
          to the Plan.  Upon  termination of the Plan, the Trustee will continue
          to  administer  the  Trust  until  distribution  has been  made to the
          Participants,    which    distribution   must   occur   as   soon   as
          administratively  feasible after the termination of the Plan, and must
          be made in  accordance  with the  provisions of Article 5 of the Plan.
          Upon termination of the Plan (whether partial or complete),  or upon a
          complete  discontinuance of contributions to the Plan, any Participant
          who is affected by such  termination  will have a 100% Vested Interest
          in his Participant's Account.

     9.3  MERGER  OR  CONSOLIDATION:  This  Plan and  Trust may not be merged or
          consolidated  with,  nor  may  any of its  assets  or  liabilities  be
          transferred  to, any other plan,  unless the benefits  payable to each
          Participant if the Plan was terminated  immediately  after such action
          would  be  equal  to or  greater  than  the  benefits  to  which  such
          Participant  would have been entitled if this Plan had been terminated
          immediately before such action.




                                       56
<PAGE>




                                   ARTICLE 10
                            MISCELLANEOUS PROVISIONS


     10.1 NO  CONTRACT  OF  EMPLOYMENT:  Except as  otherwise  provided  by law,
          neither the establishment of this Plan, any modification  hereto,  the
          creation of any fund or account, nor the payment of any benefits, will
          be  construed as giving any  Participant  or other person any legal or
          equitable  rights  against  the  Employer,  any  officer  or  Employee
          thereof, or the Trustee, except as herein provided.  Further, under no
          circumstances  will the  terms of  employment  of any  Participant  be
          modified or otherwise affected by this Plan.

     10.2 TITLE TO ASSETS: No Participant or Beneficiary will have any right to,
          or any  interest  in,  any assets of the Trust  upon  separation  from
          service with the Employer,  Affiliated Employer, or Adopting Employer,
          except as otherwise provided by the terms of the Plan.

     10.3 QUALIFIED MILITARY SERVICE: Notwithstanding any provision of this Plan
          to the contrary, effective December 12, 1994, contributions,  benefits
          and service credit with respect to qualified  military service will be
          provided in accordance with Code ss.414(u).

     10.4 FIDUCIARIES  AND BONDING:  The Fiduciaries of this Plan will have only
          those  powers  and  duties  which  are   specifically   given  to  the
          Fiduciaries under the terms of this Plan. In addition, every Fiduciary
          other than a bank, an insurance company, or a Fiduciary of an Employer
          which has no  common-law  employees,  will be bonded in an amount  not
          less  than  10%  of  the  amount  of  funds  under  such   Fiduciary's
          supervision,  but such bond will not be less than  $1,000 or more than
          $500,000.  The bond will  provide  protection  to the Plan against any
          loss for acts of fraud or dishonesty by a Fiduciary acting alone or in
          concert  with  others.  The cost of such  bond will be an  expense  of
          either the Employer or the Trust, at the election of the Employer.

     10.5 SEVERABILITY  OF PROVISIONS:  If any Plan provision is held invalid or
          unenforceable, such invalidity or unenforceability will not affect any
          other  provision  of this Plan,  and this Plan will be  construed  and
          enforced as if such provision had not been included.

     10.6 GENDER  AND  NUMBER:  Words  used  in the  masculine  gender  will  be
          construed  as though  they were  also used in the  feminine  or neuter
          gender where  applicable,  and words used in the singular form will be
          construed  as though  they were also  used in the  plural  form  where
          applicable.

     10.7 HEADINGS AND  SUBHEADINGS:  Headings and  subheadings are inserted for
          convenience of reference. They constitute no part of this Plan and are
          not to be considered in its construction.

     10.8 LEGAL ACTION:  In any claim,  suit or proceeding  concerning  the Plan
          and/or   Trust   which  is  brought   against   the   Trustee  or  the
          Administrator,  this Plan and Trust  will be  construed  and  enforced
          according to the laws of the state in which the Employer maintains its
          principal  place of business,  to the extent that is not  preempted by
          the provisions of ERISA.  Furthermore,  unless otherwise prohibited by
          law,  either the Employer or the Trust,  in the sole discretion of the
          Employer,  will reimburse the Trustee and/or the Administrator for all
          costs,  attorneys  fees and other  expenses  associated  with any such
          claim, suit or proceeding.





                                       57
<PAGE>




         IN WITNESS WHEREOF, this Plan and Trust have been executed by the
Employer and the Trustees on the day, month and year set forth on page 1 of this
Agreement.



                                               COMMUNITY BANKS, INC.



                                               By /s/ Anthony N. Leo
                                                 -------------------------------
                                                      Anthony N. Leo EVP


                                               TRUSTEES


                                                /s/ Terry L. Burrows
                                               ---------------------------------
                                               Terry L. Burrows


                                                /s/ Eddie L. Dunklebarger
                                               ---------------------------------
                                               Eddie L. Dunklebarger


                                                /s/ Patricia E. Hoch
                                               ---------------------------------
                                               Patricia E. Hoch


                                                /s/ Sally J. Leas
                                               ---------------------------------
                                               Sally J. Leas


                                                /s/ Ernest L. Lowe
                                               ---------------------------------
                                               Ernest L. Lowe


                                                /s/ Kathy A. Mull
                                               ---------------------------------
                                               Kathy A. Mull









                                       58
<PAGE>







                      CERTIFICATE OF CORPORATE RESOLUTIONS

                                       OF

                              COMMUNITY BANKS, INC.



The undersigned Secretary of Community Banks, Inc. (the "Corporation") certifies
that the following  resolutions  were adopted by the Corporation on the 11th day
of  December,  1999,  and that  these  resolutions  have not  been  modified  or
rescinded as of the date this certificate is executed.

          Resolved,  that the  Corporation  hereby  assumes  sponsorship  of the
          Peoples State Bank  Employees'  Profit  Sharing Plan (the  "Plan"),  a
          tax-qualified  profit sharing plan with a cash or deferred arrangement
          previously  sponsored  and  maintained by Peoples State Bank, a wholly
          owned subsidiary of the Corporation, effective as of January 1, 2000;

          Resolved,  that  the  Corporation  hereby  re-names  the  Plan  as the
          Community Banks, Inc. 401(k) Plan, effective as of January 1, 2000;

          Resolved, that the Corporation hereby merges the Community Banks, N.A.
          401(k) Plan (the "Community  Plan"),  a  tax-qualified  profit sharing
          plan with a cash or deferred arrangement,  into the Plan, effective as
          of January 1, 2000;

          Resolved,  that the Corporation  hereby authorizes Peoples States Bank
          and  Community  Banks,   N.A.,   wholly  owned   subsidiaries  of  the
          Corporation,  to adopt the Plan as Adopting Employers (as that term is
          defined in the Plan) on behalf of their eligible employees,  effective
          as of January 1, 2000;

          Resolved,  that the Corporation hereby amends and restates the Plan to
          comply  with  changes in  applicable  laws,  including  the  Uniformed
          Services  Employment and  Reemployment  Rights Act, the Small Business
          Job Protection  Act of 1996, the Taxpayer  Relief Act of 1997, and the
          IRS Reform and Restructuring  Act of 1998,  effective as of January 1,
          1997,  and amends and restates the Plan to make certain  other changes
          effective as of January 1, 2000; and

          Resolved, that the officers of the Corporation and their delegates are
          authorized  to take any actions as may be necessary  to implement  the
          foregoing  resolutions  and  that  the  Corporation  hereby  ratifies,
          confirms,  and approves any and all actions  previously  taken by such
          officers or their  delegates  as though a  resolution  or  certificate
          authorizing  such  action(s) had been duly adopted by the  Corporation
          prior to the time such action was taken.


THIS CERTIFICATE is hereby executed this 16th day of December, 1999.


                                                     /s/ Patricia E. Hoch
                                                     ---------------------------
                                                     Corporate Secretary


<PAGE>



                      CERTIFICATE OF CORPORATE RESOLUTIONS

                                       OF

                        PEOPLES STATE BANK OF EAST BERLIN



The undersigned  Secretary of Peoples State Bank (the  "Corporation")  certifies
that the following  resolutions  were adopted by the Corporation on the 21st day
of  December,  1999,  and that  these  resolutions  have not  been  modified  or
rescinded as of the date this certificate is executed.

          Resolved,  that the Corporation  hereby  transfers  sponsorship of the
          Peoples State Bank  Employees'  Profit  Sharing Plan (the  "Plan"),  a
          tax-qualified  profit sharing plan with a cash or deferred arrangement
          to Community  Banks,  Inc., the corporate  parent of the  Corporation,
          effective as of January 1, 2000;

          Resolved, that the Corporation hereby adopts the Plan on behalf of its
          eligible employees and becomes an "Adopting Employer" (as that term is
          defined in the Plan), effective as of January 1, 2000;

          Resolved, that the officers of the Corporation and their delegates are
          authorized  to take any actions as may be necessary  to implement  the
          foregoing  resolutions  and  that  the  Corporation  hereby  ratifies,
          confirms,  and approves any and all actions  previously  taken by such
          officers or their  delegates  as though a  resolution  or  certificate
          authorizing  such  action(s) had been duly adopted by the  Corporation
          prior to the time such action was taken.


THIS CERTIFICATE is hereby executed this 21st day of December, 1999.


                                                  /s/ Sally J. Leas
                                                  ------------------------------
                                                  Secretary




<PAGE>



Amendment # 1                                                       July 1, 2001

     1.68 YEAR OF SERVICE: The term Year of Service means a 12-consecutive month
          computation period in which an Employee completes for the Employer, an
          Affiliated  Employer  or an  Adopting  Employer  at least 500 Hours of
          Service for vesting  purposes under Section 4.6. An Employee will also
          receive  credit for all Years of Service with Tremont  National  Bank,
          Peoples Safe Deposit Bank, Peoples Bank, and The Sentinel Agency, Inc.
          if the  crediting  of such Years of Service does not cause the Plan to
          discriminate  in  favor of  Highly  Compensated  Employees.  A Year of
          Service  will  be  determined   in   accordance   with  the  following
          provisions:

          (a)  Reemployment Before A Break In Service: For eligibility purposes,
               if a Participant  terminates  employment and is reemployed by the
               Employer before  incurring a Break in Service,  such  Participant
               will  continue  to  participate  in the Plan and earn  credit for
               Years of  Service  in the same  manner as if the  termination  of
               employment had not occurred.

          (b)  Reemployment After A Break In Service: For eligibility  purposes,
               if a  Participant  who does not have a Vested  Interest in his or
               her Participant's Account terminates employment but is reemployed
               by the  Employer  after a Break in Service  occurs,  such  former
               Participant's  Years of Service  before the Break in Service will
               not be  counted in  computing  his or her Years of Service if the
               number of  consecutive  Breaks in Service  equals or exceeds  the
               greater of five or the aggregate number of Years of Service.  The
               aggregate  number of Years of Service  will not include any Years
               of Service  previously  disregarded  hereunder by reason of prior
               Breaks in Service. If a former Participant's Years of Service are
               disregarded under this paragraph,  he or she will be treated as a
               new Employee for eligibility  purposes. If a former Participant's
               Years of Service  may not be  disregarded  under this  paragraph,
               then he or she will continue to  participate  in the Plan, or, if
               terminated, will participate immediately upon reemployment.  If a
               Participant who has a Vested Interest in his or her Participant's
               Account  terminates  employment but is reemployed by the Employer
               after a Break in Service  occurs,  such former  Participant  will
               become  a  Participant  in  the  Plan   immediately   upon  being
               reemployed by the Employer.

          (c)  Employees Under 2-Year Full And Immediate  Vesting:  If this Plan
               at any time (1)  provides in Section  2.1 that an  Employee  must
               complete 2 Years of Service  for  eligibility  purposes,  and (2)
               provides in Section 4.6 that an Employee  will have a 100% Vested
               Interest  in his or her  Participant's  Account  upon  becoming a
               Participant,  then the Years of Service of an Employee who incurs
               a Break in  Service  before  satisfying  such 2 Years of  Service
               eligibility  requirement  will  not be  counted  for  eligibility
               purposes.

          (d)  Vesting Computation Period: In determining a Participant's Vested
               Interest in his or her  Participant's  Account under Section 4.6,
               the  12-consecutive  month  computation  period  will be the Plan
               Year. If a former Participant is reemployed by the Employer after
               a Break in  Service  occurs,  such  former  Participant's  Vested
               Interest in his or her Participant's  Account will be computed as
               follows:  (1) Years of Service prior to the Break in Service will
               not be counted for  purposes of computing  his or her  post-break
               Vested Interest until the former Participant has completed a Year
               of Service  from the date of  reemployment;  (2) Years of Service
               after a former  Participant has incurred 5 consecutive  Breaks in
               Service will not be taken into account in determining  the Vested
               Interest in his or her Participant's Account which accrued before
               such 5 year period; and (3) if a former Participant does not have
               a Vested Interest in his or her Participant's  Account,  Years of
               Service before any period of  consecutive  Breaks in Service will
               not be taken into account if the number of consecutive  Breaks in
               Service  within such period equals or exceeds the greater of 5 or
               the aggregate number of Years of Service before such period.


<PAGE>


AMENDMENT # 2                                                    JANUARY 1, 2002

     1.68 YEAR OF SERVICE: The term Year of Service means a 12-consecutive month
          computation period in which an Employee completes for the Employer, an
          Affiliated  Employer or an Adopting  Employer (a) at least 1,000 Hours
          of Service for  eligibility  purposes  under  Section  2.1; and (b) at
          least 500 Hours of Service for vesting  purposes under Section 4.6. An
          Employee  will  also  receive  credit  for all Years of  Service  with
          Tremont  National Bank,  Peoples Safe Deposit Bank,  Peoples Bank, The
          Sentinel  Agency,  Inc.,  and Glen Rock State Bank if the crediting of
          such Years of Service does not cause the Plan to discriminate in favor
          of Highly Compensated  Employees. A Year of Service will be determined
          in accordance with the following provisions:

          (a)  Reemployment Before A Break In Service: For eligibility purposes,
               if a Participant  terminates  employment and is reemployed by the
               Employer before  incurring a Break in Service,  such  Participant
               will  continue  to  participate  in the Plan and earn  credit for
               Years of  Service  in the same  manner as if the  termination  of
               employment had not occurred.

          (b)  Reemployment After A Break In Service: For eligibility  purposes,
               if a  Participant  who does not have a Vested  Interest in his or
               her Participant's Account terminates employment but is reemployed
               by the  Employer  after a Break in Service  occurs,  such  former
               Participant's  Years of Service  before the Break in Service will
               not be  counted in  computing  his or her Years of Service if the
               number of  consecutive  Breaks in Service  equals or exceeds  the
               greater of five or the aggregate number of Years of Service.  The
               aggregate  number of Years of Service  will not include any Years
               of Service  previously  disregarded  hereunder by reason of prior
               Breaks in Service. If a former Participant's Years of Service are
               disregarded under this paragraph,  he or she will be treated as a
               new Employee for eligibility  purposes. If a former Participant's
               Years of Service  may not be  disregarded  under this  paragraph,
               then he or she will continue to  participate  in the Plan, or, if
               terminated, will participate immediately upon reemployment.  If a
               Participant who has a Vested Interest in his or her Participant's
               Account  terminates  employment but is reemployed by the Employer
               after a Break in Service  occurs,  such former  Participant  will
               become  a  Participant  in  the  Plan   immediately   upon  being
               reemployed by the Employer.

          (c)  Employees Under 2-Year Full And Immediate  Vesting:  If this Plan
               at any time (1)  provides in Section  2.1 that an  Employee  must
               complete 2 Years of Service  for  eligibility  purposes,  and (2)
               provides in Section 4.6 that an Employee  will have a 100% Vested
               Interest  in his or her  Participant's  Account  upon  becoming a
               Participant,  then the Years of Service of an Employee who incurs
               a Break in  Service  before  satisfying  such 2 Years of  Service
               eligibility  requirement  will  not be  counted  for  eligibility
               purposes.

          (d)  Vesting Computation Period: In determining a Participant's Vested
               Interest in his or her  Participant's  Account under Section 4.6,
               the  12-consecutive  month  computation  period  will be the Plan
               Year. If a former Participant is reemployed by the Employer after
               a Break in  Service  occurs,  such  former  Participant's  Vested
               Interest in his or her Participant's  Account will be computed as
               follows:  (1) Years of Service prior to the Break in Service will
               not be counted for  purposes of computing  his or her  post-break
               Vested Interest until the former Participant has completed a Year
               of Service  from the date of  reemployment;  (2) Years of Service
               after a former  Participant has incurred 5 consecutive  Breaks in
               Service will not be taken into account in determining  the Vested
               Interest in his or her Participant's Account which accrued before
               such 5 year period; and (3) if a former Participant does not have
               a Vested Interest in his or her Participant's  Account,  Years of
               Service before any period of  consecutive  Breaks in Service will
               not be taken into account if the number of consecutive  Breaks in
               Service  within such period equals or exceeds the greater of 5 or
               the aggregate number of Years of Service before such period.


<PAGE>


AMENDMENT # 2                                                    JANUARY 1, 2002

     4.6  DETERMINATION OF VESTED INTEREST:  A Participant's  Vested Interest in
          his or her Participant's Account will be determined in accordance with
          the following provisions:

          (a)  100% Vesting Upon Retirement,  Death Or Disability: A Participant
               will have a 100%  Vested  Interest in his  Participant's  Account
               upon reaching Normal or Early Retirement Age prior to Termination
               of Employment, or upon death or Disability prior to that date.

          (b)  Vesting  Prior To  Retirement,  Death Or  Disability:  Except  as
               otherwise provided in paragraph (a) above, a Participant's Vested
               Interest in his or her  Participant's  Account at any given time,
               including  Termination  of  Employment  prior to  Normal or Early
               Retirement  Age,  death  or  Disability,  will be  determined  in
               accordance  with  the  following:   (1)  a  Participant's  Vested
               Interest  in  all  Elective  Deferrals,  Matching  Contributions,
               Qualified  Matching   Contributions  and  Qualified  Non-Elective
               Contributions  that  are  allocated  to his or her  Participant's
               Account  will be 100% upon  entry  into the Plan and at all times
               thereafter;  and  (2) a  Participant's  Vested  Interest  in  all
               Non-Elective  Contributions  that  are  allocated  to  his or her
               Participant's  Account will be determined by the vesting schedule
               which  immediately  follows this paragraph based on the number of
               Years of Service the  Participant  has  completed  on the date of
               determination.

                       Years Of Service                Vested Interest
                             1 . . . . . . . . . . . . .      20%
                             2 . . . . . . . . . . . . .      40%
                             3 . . . . . . . . . . . . .      60%
                             4 . . . . . . . . . . . . .      80%
                             5 . . . . . . . . . . . . .     100%

          (c)  Amendments To Vesting Schedule: No Plan amendment may directly or
               indirectly reduce a Participant's Vested Interest.  If the Plan's
               vesting schedule is amended,  any Participant with at least three
               Years of  Service  may,  by  filing a  written  request  with the
               Administrator  60 days  after the  latest of (1) the  amendment's
               adoption date,  (2) the  amendment's  effective  date, or (3) the
               date the  Participant  receives  written notice of the amendment,
               elect to have the  Vested  Interest  in his or her  Participant's
               Account  computed by the vesting  schedule in effect prior to the
               amendment.  A Participant who fails to make such an election will
               have his or her Vested Interest  computed under the new schedule.
               However,  notwithstanding the foregoing,  a Participant's  Vested
               Interest  in his or her  Participant's  Account  will not be less
               than it was as of the later of  January  1, 2000 or the date this
               amended Plan is actually adopted by the Employer.

          (d)  Accounts  attributable  to  Peoples  State Bank  Employees  Stock
               Ownership Plan:  Notwithstanding the foregoing, to the extent any
               portion of a  Participant's  Account is  attributable  to amounts
               transferred from the Peoples State Bank Employees Stock Ownership
               Plan,  such portion of the  Participant's  Account shall be fully
               vested.

          (a)  Accounts   attributable   to  Glen  Rock   State   401(k)   Plan:
               Notwithstanding  the  foregoing,  to the extent any  portion of a
               Participant's Account is attributable to amounts transferred from
               the Glen Rock State Bank  401(k)  Plan,  and is not fully  vested
               under the terms of such plan,  such portion of the  Participant's
               Account  shall  be  vested  in  accordance   with  the  generally
               applicable terms of this Section 4.6.


<PAGE>


AMENDMENT # 2                                                   JANUARY 1, 2002

     5.20 PRE-RETIREMENT DISTRIBUTIONS: A Participant who has reached Age 59 1/2
          may request in writing that the Administrator distribute up to 100% of
          the  Participant's  Elective  Deferral  Account within 60 days of such
          written  request.  Distribution  will be made  in a lump  sum  payment
          provided  the   Participant's   spouse,   if  any,   consents  to  the
          distribution   in  accordance   with  Section  5.8.  In  addition,   a
          Participant  who  satisfies  the  requirements  in  paragraph  (a) may
          request in writing to the  Administrator  that  within 60 days of such
          request up to 100% of the Participant's  Vested Interest in his or her
          Non- Elective  Contribution Account and Matching  Contribution Account
          be distributed, subject to the following provisions:

          (a)  Eligibility  Requirements:  On  the  date  of  distribution,  the
               portion of the Participant's  Account being distributed must have
               accumulated  for at least  two  consecutive  Plan  Years,  or the
               Participant  must  have  completed  at  least  5  Years  of  Plan
               Participation.  The Participant must also have reached Age 59 1/2
               and must also have a 100%  Vested  Interest  in the amount  being
               distributed.

         (b)      Amount And Form Of Distribution: The maximum amount of
                  Non-Elective Contributions and Matching Contributions
                  distributable hereunder is the Participant's Vested Interest
                  in his or her Non-Elective Contribution Account and Matching
                  Contribution Account as of the Valuation Date which coincides
                  with or immediately precedes the date of distribution.
                  Distribution will be made in a lump sum payment provided the
                  Participant's spouse, if any, consents to the distribution in
                  accordance with the provisions of Section 5.8.

          (c)  Restriction On Certain  Transferred  Assets:  Notwithstanding any
               provision  in this  Section to the  contrary,  no  pre-retirement
               distribution  can be made  under  this  Section  with  respect to
               benefits attributable to assets (including post-transfer earnings
               thereon) and liabilities that are transferred, within the meaning
               of Code ss.414(l),  from a money purchase  pension plan qualified
               under Code  ss.401(a)  to this Plan  (other  than any  portion of
               those assets and liabilities  attributable to Voluntary  Employee
               Contributions).

          (d)  Participants  Who Are Not 100% Vested:  If a distribution is made
               under this Section at a time when the Participant has less than a
               100%  Vested  Interest in the  sub-account  from which all of any
               part of the pre-retirement  distribution is made, and such Vested
               Interest may increase, a separate account will be established for
               such sub-account at the time of distribution, and at any relevant
               time the  Participant's  Vested Interest in the separate  account
               will be equal to an amount  ("X")  determined  by the formula X =
               P[(AB+(R x D))-(RxD)]. In applying the formula, "P" is the Vested
               Interest at the relevant  time,  "AB" is the  respective  account
               balance  at  the  relevant   time,  "D"  is  the  amount  of  the
               distribution,  and "R" is the  ratio  of the  respective  account
               balance at the relevant time to the  respective  account  balance
               after distribution.






</TEXT>
</DOCUMENT>
