
<PAGE>




                            SUMMARY PLAN DESCRIPTION

                                     OF THE

                                  F5 LABS, INC.

                      401(k) PROFIT SHARING PLAN AND TRUST



                          As in Effect: January 1, 1998










                                  F5 Labs, Inc.
                                  200 First Avenue West, Suite 500
                                  Seattle, WA 98119

                                  EIN:  91-1714307
                                  Plan No. 001

                                                                  Page 76 of 97
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SECTION I.  INTRODUCTION.

WHY DOES THE EMPLOYER HAVE A 401(k) SAVINGS PLAN?

        F5 Labs, Inc. (the "Employer") has a 401(k) Savings Plan to help you
save for your retirement. The Plan was originally effective January 1, 1998.

        Please read this summary carefully. Its purpose is to explain how the
Plan works, how you qualify for and ultimately receive Plan benefits, what
benefits are available to you and what your rights are as a Plan participant.

        Because this is only a Plan summary, you may have questions or wish
additional information. To obtain further information about the Plan, please
contact any member of the Administrative Committee. The Administrative Committee
members are named in Section II of this booklet.

        This summary describes the Plan as of January 1, 1998. If the language
of this summary conflicts with the language of the Plan, the language of the
Plan will control.

SECTION II.  PLAN ADMINISTRATION.

        1. HOW IS THE PLAN ADMINISTERED?

        The Plan is administered by the Administrative Committee (the Plan
Administrator) selected by the Board of Directors of the Employer. The
Administrative Committee is responsible for arranging all services necessary to
operate the Plan, including accounting, legal and investment advisory services.
The Administrative Committee has the power in its sole discretion to manage and
operate the administration of the Plan, including interpreting the provisions of
the Plan, and making required administrative decisions regarding eligibility,
right to benefits and similar decisions.

        You will be advised of any changes in the names and addresses of the
members of the Administrative Committee. Currently, the members are Jeffrey S.
Hussey, Brian R. Dixon, and Steven Goldman. Inquiries to the Administrative
Committee should be addressed to Brian R. Dixon, 200 First Avenue West, Suite
500, Seattle, WA 98119. Telephone inquiries may be made by dialing (206)
505-0800 and asking for Brian R. Dixon.

        2. WHO IS THE PLAN SPONSOR?

        The sponsor of the Plan is F5 Labs, Inc.. The Employer's employer
identification number assigned by the Internal Revenue Service is 91-1714307.
The Plan Number is 001.

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        3. WHAT IS THE PLAN YEAR?

        The Plan Year is the 12-month period ending December 31. All records of
the Plan are maintained on this Plan Year.


SECTION III.  ELIGIBILITY.

        1. HOW DO I BECOME ELIGIBLE TO PARTICIPATE?

        To be eligible and to make tax-deferred 401(k) contributions, you must
be at least age 21 and be paid on a salaried basis. Hourly-paid employees are
not eligible to participate.

        You will become eligible for Employer Matching Contributions beginning
the first day of the month following completion of six (6) months of service.

        You will become eligible for Employer Discretionary Contributions
beginning in the calendar year following the year in which you complete six (6)
months of service. To share in Employer Discretionary Contributions, you
generally must also be employed as of the last day of the Plan Year. See Section
IV for further information.

        2. WHEN AM I ENROLLED IN THE PLAN?

        If you are en eligible employee on January 1, 1998, you will be
immediately enrolled as a Participant in the Plan on that date. Otherwise, you
will be enrolled as a Participant in the Plan on the first day of the month
which coincides with or follows your date of hire, or if later, your attainment
of age 21.

        3. IF I TERMINATE EMPLOYMENT AND AM REHIRED, DO I HAVE TO SATISFY THE
           ELIGIBILITY REQUIREMENTS AGAIN?

        If you terminate employment with the Employer after having been a Plan
Participant, you will become a Participant again on the first day of the month
coinciding with or following your rehire date as a salaried employee. There is
an exception to this rule. If at the time you terminate employment you are
entitled to no amount of your Employer Discretionary Contribution Account or
Employer Matching Contribution Account (your vested percentage under Section VII
is zero), then upon rehire you must complete the eligibility requirements for
Employer discretionary contributions and Employer discretionary matching
contributions again if the number of your consecutive one-year breaks in service
is five years or more. A one-year break in service is a Plan Year in which you
are credited with less than 501 Hours of Service. You may avoid a one-year break
in service if you are absent from work because of pregnancy, birth of a child,
placement of a child for adoption or caring for a child immediately after birth
or

                                                                  Page 78 of 97
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placement. You must provide the Administrative Committee with proof that the
absence was for one of these reasons.

SECTION IV.  EMPLOYER CONTRIBUTIONS.

        1. WHAT DOES THE EMPLOYER CONTRIBUTE?

        The Employer currently does not intend to make any contributions to the
Plan. However, the Plan provides for two types of Employer contributions which
the Board of Directors may, in its discretion, determine to make to the Plan.
You will be notified if the Employer intends to make contributions. The two
types of contributions are Employer Matching Contributions and Employer
Discretionary Contributions. To share in Employer Matching Contributions you
must contribute. To share in Employer Discretionary Contributions you are not
required to contribute.

        2. WHAT MUST I DO TO SHARE IN THE EMPLOYER DISCRETIONARY CONTRIBUTION?

        If you have met the eligibility requirements outlined in Section III and
you are employed on the last day of the Plan Year (December 31), you are an
"Active Participant" and you are entitled to share in the Employer Discretionary
Contribution for that Plan Year. In the Plan Year you die, retire, or are
permanently disabled, you will not be required to be employed on the last day of
the Plan Year to share in the Employer Discretionary Contribution. Employer
Discretionary Contributions will be allocated to your Employer Discretionary
Contribution Account in the trust fund.

        If Employer Discretionary Contributions are made, the Employer will
contribute the same percentage of compensation for all participants based on the
compensation they receive while they are participants.

        3. HOW ARE EMPLOYER MATCHING CONTRIBUTIONS MADE TO THE PLAN?

        Each year the Board of Directors will determine if F5 Labs, Inc. will
make an Employer Matching Contribution. If an Employer Matching Contribution is
made, the Board of Directors will also determine the maximum amount of the
Matching Contribution. You will be notified of the amount of the maximum
Employer Matching Contribution at the beginning of the year.

        The total of your 401(k) contributions, the Employer Matching
Contributions, Forfeitures, and any Employer Discretionary Contributions
allocated to your accounts for any Plan Year cannot exceed 25% of your
compensation or $30,000, if less. You will be notified if your contributions
exceed these limits. In addition, if you are a highly compensated employee, the
Administrative Committee may be required by law to reduce your Employer Matching
Contributions if the IRS limits on those contributions for highly compensated
employees are exceeded. The Administrative Committee will notify you if this
occurs.

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SECTION V.  EMPLOYEE CONTRIBUTIONS.

        1. WHAT ARE TAX-DEFERRED CONTRIBUTIONS?

        Tax-deferred 401(k) contributions are contributions you make by electing
to have a percentage of your compensation withheld from your pay and paid
directly to the Plan trust fund. These contributions reduce your current
compensation. Tax-deferred contributions are withheld before federal income
taxes are taken from your compensation. No federal income taxes on these
contributions are due until they are distributed to you from the Plan. Your
401(k) tax-deferred contributions are subject to Social Security tax in the year
you make the contributions.

         Your 401(k) tax-deferred contributions are deposited to your 401(k)
Tax-Deferred Contribution account in the plan trust fund.

             a. How Much Can I Contribute Through 401(k) Tax-Deferred
                Contributions?

         You may elect to contribute up to the percentage of compensation
established by the Administrative Committee, but not more than the dollar limit
set by law. For 1998, the dollar limit set by law is $10,000. These limits may
be adjusted annually. Additionally, it may be necessary to reduce these
contribution levels to comply with other applicable law. If this affects you,
you will be notified by the Administrative Committee.

         When you become a Plan participant, the Administrative Committee will
provide you with the instructions and any forms necessary to elect to make
tax-deferred contributions.

             b. Can I Change the Amount I Contribute Through Tax-Deferred
                Contributions?

         You may increase or decrease your 401(k) tax-deferred contributions as
of January 1 or July 1. For initial enrollments, a participant may enroll as of
the first day of the month following completion of the eligibility requirements.
An employee who does not elect to make 401(k) tax-deferred contributions when
first eligible may elect to begin making these contributions as of any January 1
or July 1.

         Your initial election and any change in your election must be received
by the Administrative Committee before the day on which it becomes effective.
You may revoke your election as to future 401(k) contributions as of the first
day of any subsequent pay period as long as the Administrative Committee
receives your revocation before its effective date. If you revoke your election,
you may not elect to begin 401(k) contributions again until the next January 1
or July 1 after your 401(k) contributions stop, provided you sign a new
agreement or provide instructions in another manner as provided by the
Administrative Committee before deferrals begin.

         If you terminate employment and are rehired, you may elect to begin
making 401(k) tax-

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deferred contributions again on the first of the month which follows your
date of rehire and thereafter on any January 1 or July 1.

         You may not elect to contribute more than $10,000 in 1999, and whatever
adjusted amount is permitted by law in each future calendar year. In addition to
this 401(k) contribution limit, strict limits are imposed by the Internal
Revenue Code on the amount of 401(k) contributions that may be made by highly
compensated employees. To meet these limits, the Administrative Committee may be
required to reduce the amount contributed by any highly compensated employee or
to repay any excess 401(k) contributions and earnings to a highly compensated
employee. If the Administrative Committee is required to repay any amount
contributed by a highly compensated employee, it will direct the Employer to pay
that amount from the Plan plus earnings on that amount in cash to the employee.

        Your 401(k) tax-deferred contributions are 100% vested and
nonforfeitable at all times.

        2. MAY I MAKE ROLLOVER CONTRIBUTIONS TO THE PLAN?

        You may roll over a distribution from another qualified pension or
profit sharing plan to this Plan if certain conditions are met. You may roll
over an IRA account to this Plan if the IRA account holds only a distribution
from another qualified plan, and you have made no contributions to that IRA. An
ordinary IRA to which you contribute cannot be rolled over to this Plan. You
should consult a member of the Administrative Committee as to the conditions and
procedures for making a rollover contribution. The amount of any rollover
contribution will be invested along with the other assets of the Plan, but will
be held for you in a special rollover account and will be at all times 100%
vested (nonforfeitable).

        3. MAY I CONTRIBUTE TO AN IRA AND TO THE PLAN TOO?

        As described in this section, you may be able to use both an individual
retirement account (an "IRA") and the Plan in saving for your retirement.
However, there are differences to consider. The $2,000 maximum that limits the
amount of your annual IRA contribution does NOT apply to your pre-tax
contributions under the Plan. Instead, your pre-tax contributions are limited to
a percentage of your annual compensation determined by the Administrative
Committee or, if less, the indexed annual IRS maximum amount, which is $10,000
for 1998.

        As with an IRA, when you make pre-tax contributions to the Plan, you pay
no current federal income taxes on the contributions or on investment earnings.
But the Plan currently has an advantage over an IRA, I.E., if funds are paid
from the Plan after you retire or die, special tax benefits may be available.
IRA payments are always taxed at ordinary income rates (along with other taxable
income you receive in the same year).

        The following describes the IRA rules in effect beginning in 1998. For
more information on the tax rules regarding IRAs, please refer to Internal
Revenue Service Publication 590, "Individual Retirement Arrangements". IRS
Publication 590 is available free, by calling

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1-800-TAX-FORM (1-800-823-3676).

         As described in further detail below, your ability to make
contributions in the same tax year both to the Plan and to a tax-deductible IRA
depends on your income. Even if your income is above the allowable amount for
your own tax-deductible IRA contribution, your spouse may be able to make a
tax-deductible contribution to an IRA if he or she does not participate in an
employer-sponsored retirement plan. You may also be able to make a
non-deductible contribution to a "Roth IRA," in which the earnings are
permanently free from federal income tax if certain conditions are met.

         TAX-DEDUCTIBLE IRA CONTRIBUTIONS. Your ability to make a tax-deductible
IRA contribution and the allowable amount of that contribution depend upon your
income and your tax filing status.

         -        If your adjusted gross income (AGI) is BELOW a certain dollar
                  amount "threshold" (for 1998, $50,000 if married filing
                  jointly; $30,000 if single), you will be able to make the
                  maximum annual tax-deductible IRA contribution.

         -        If your AGI is ABOVE a certain dollar amount "ceiling" (for
                  1998, $60,000 if married filing jointly; $40,000 if single),
                  you will not be able to make any tax-deductible IRA
                  contribution.

         -        If your AGI is BETWEEN the dollar amount threshold and
                  ceiling, you will be able to make a tax-deductible IRA
                  contribution, but your contribution will be limited to a pro
                  rata portion of the maximum annual contribution amount.

         EXAMPLE: Jill is single and has an AGI of $35,000 in 1998. Because
$35,000 is between the $30,000 income threshold and the $40,000 income ceiling
for single taxpayers, Jill is entitled to make a tax-deductible IRA contribution
equal to a pro rata portion of the maximum contribution amount. For 1998, the
maximum tax-deductible contribution amount for an individual is $2,000. Based on
Jill's AGI, she is eligible to make up to one-half of the maximum tax-deductible
contribution, or $1,000.

         The income thresholds and ceilings are scheduled to increase gradually
over the next several years. By 2005, the income threshold for single taxpayers
will be $50,000, and the ceiling will be $60,000. By 2007, the income threshold
for married taxpayers filing jointly will be $80,000, and the ceiling will be
$100,000.

         TAX-DEDUCTIBLE IRA CONTRIBUTIONS FOR SPOUSES WHO DO NOT PARTICIPATE IN
AN EMPLOYER-SPONSORED RETIREMENT PLAN. If: (1) you are married; (2) your spouse
does not participate in an employer-sponsored retirement plan; and (3) your AGI
is below $150,000; your spouse will be able to make the maximum tax-deductible
IRA contribution for an individual (currently $2,000). Assuming the same facts
as above, except that your AGI is between

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$150,000 and $160,000, your spouse will be able to make a tax-deductible
contribution equal to a pro rata portion of the $2,000. If your AGI is over
$160,000, your spouse will not be able to make a tax-deductible IRA
contribution.

         ROTH IRAS. For tax years beginning after 1997, a new type of IRA called
a "Roth IRA" is available. While contributions to a Roth IRA are not
tax-deductible (regardless of your income), the earnings on your contributions
are permanently free from federal income tax if certain conditions are met.

         You may make a contribution to a Roth IRA if your income falls within
certain limits:

         -        If you are single, you may make the maximum annual
                  contribution to a Roth IRA if your adjusted gross income (AGI)
                  is less than $95,000. The maximum contribution amount is
                  phased-out if your AGI is between $95,000 and $110,000. You
                  may not make any contribution if your AGI is above $110,000.

         -        If you are married filing jointly, you and your spouse may
                  make the maximum annual contribution to a Roth IRA if your AGI
                  is less than $150,000. The maximum contribution amount is
                  phased-out if your AGI is between $150,000 and $160,000. You
                  may not make any contribution if your AGI is above $160,000.

         In the event of a "qualified distribution" from a Roth IRA, the entire
amount of the distribution is exempt from federal income tax, including the
portion attributable to investment earnings on which you have never paid any
taxes. To be considered a "qualified distribution," the distribution may not be
made before the end of the five tax year period beginning with the first tax
year in which a contribution was made. Additionally, the distribution must be:

         (1)      made on or after the date on which you attain age 59 1/2;

         (2)      made to your beneficiary (or to your estate) after your death;

         (3)      attributable to your qualifying disability; or

         (4)      used for a qualified first-time home purchase (up to a
                  lifetime maximum aggregate amount of $10,000).

         Your combined contributions to all IRAs (tax-deductible, Roth, and
other non-tax-deductible IRAs) may not exceed the annual IRA $2,000 contribution
maximum. Unlike other kinds of IRAs, contributions to Roth IRAs may be made
after the age of 70 1/2 and are not subject to the mandatory age 70 1/2
distribution rules.

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                                                           Exhibit Index Page 7
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SECTION VI.  WITHDRAWAL OF CONTRIBUTIONS.

         1.       MAY I WITHDRAW THE EMPLOYER'S CONTRIBUTIONS TO THE PLAN?

         You do not have the right to withdraw the Employer Discretionary
Contributions or Employer Matching Contributions to the Plan on your behalf.
The Employer's contributions and the earnings thereon will only be
distributed to you or your beneficiary in the event of your death,
disability, termination of employment or retirement. You may, however, elect
to receive your Plan benefits after age 65 even if you are still working.
(See Section X, Distribution of Benefits).

         2. MAY I WITHDRAW MY 401(k) TAX-DEFERRED CONTRIBUTIONS TO THE PLAN?

         Amounts in your 401(k) Tax-Deferred Contribution Account under the Plan
may not be distributed to you earlier than your retirement, death, disability,
termination of employment, attainment of age 59 1/2, or hardship.

         The Administrative Committee has established a program for hardship
withdrawals and the method for determining whether a participant is entitled
to a distribution by reason of hardship. A hardship exists if a Participant
has an immediate and heavy financial need, and no other financial resources
to meet that need. Hardship is limited to:

               a. Uninsured medical expenses (described in Internal Revenue Code
Section 213(d)) that have already been incurred by the Participant, or the
Participant's dependents, or expenses that have not already been incurred, but
which must be prepaid in order to allow those persons to obtain medical
treatment;

               b. Purchase of a principal residence of the Participant
(excluding mortgage or loan payments);

               c. Tuition, room and board, and related educational fees of
post-secondary education for the next twelve months for the Participant, spouse,
children or dependents, including graduate school and any approved trade or
technical school;

               d. Payment to prevent eviction of the Participant from his
principal residence, or foreclosure on the mortgage of the Participant's
principal residence.

         Hardship withdrawals made prior to your attainment of age 59 1/2 will
be subject to a 10% penalty tax unless the hardship withdrawal is applied to pay
deductible medical expenses. In addition, a hardship withdrawal may not include
income earned on your 401(k) contributions. A hardship withdrawal may include
the amount necessary to pay taxes and penalties on the hardship distribution.


                                                                  Page 84 of 97
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<PAGE>

SECTION VII.  INVESTMENTS.

         1.       HOW ARE CONTRIBUTIONS INVESTED?

         The Employer Discretionary Contributions, Employer Matching
Contributions, and Tax-Deferred Contributions are placed in the Plan trust fund.
Brian R. Dixon is currently the Plan Trustee.

         What you will ultimately receive under the Plan depends in great part
upon the investment performance of the assets of the trust. While the Employer
believes the assets will appreciate in value, there are no guarantees in this
regard.

         You determine how your contributions are to be invested. You have the
choice of establishing an individual brokerage account with a brokerage firm
selected by the Administrative Committee or selecting from among mutual funds
offered by the Plan. Employer contributions will be invested in the same manner
in which you direct the investment of your contributions.

         2.       HOW DO I SHARE IN THE RETURN ON INVESTMENTS?

         Since you direct the investment of your contributions (and Employer
contributions), the ultimate return which you receive will be dependent upon how
you manage your accounts. Mutual funds are valued daily and the values are
reported in the financial pages of publications such as the WALL STREET JOURNAL.

         3.       YOUR EXERCISE OF CONTROL OVER YOUR ACCOUNT.

         Under the terms of the Plan, you are entitled to give investment
instructions to the Administrative Committee who is obligated to comply with
these instructions concerning the investment of your plan assets. On request,
you are entitled to written confirmation regarding the carrying out of these
instructions. You may change your instructions during the time periods
established by the Committee by providing written notice or using other means as
designated by the Committee. Currently, these changes may be made on a quarterly
basis.

         Upon request to the Administrative Committee, you may receive
additional information including the following which will be based on the latest
information available:

            -     A description of the annual operating expenses of
                  each of the investment alternatives offered under the
                  Plan (I.E., investment management fees, trustees
                  fees, administrative fees and transaction costs)
                  which are charged to your account expressed as a
                  percentage of average net assets.

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            -     Copies of any prospectuses, financial statements and
                  reports or other materials relating to the investment
                  alternatives available under the Plan to the extent
                  provided the Plan Administrator.

            -     A list of the assets comprised in the portfolio of
                  each fund, the value of each asset and the percentage
                  of the overall fund which it represents. With respect
                  to an asset which is a fixed rate investment
                  contract, the name of the bank or insurance company
                  issuing the contract, the term of the contract and
                  the rate of return under the contract.

            -     Current information about the value of the shares or
                  units in mutual funds offered under the Plan together
                  with current investment performance information
                  determined net of expenses.

            -     Information concerning the value of shares or units in your
                  account.

         This Plan is intended to constitute a Plan described in Section 404(c)
of the Employee Retirement Income Security Act and Title 29 of the Code of
Federal Regulations Section 2550.404(c)-1. It is intended that the fiduciaries
of the Plan (I.E., the Trustee, Employer and Administrative Committee) will be
relieved of liability for any loss occurring as the direct and necessary result
of your investment instructions.

SECTION VIII.  VESTING.

         1.       WHEN ARE MY BENEFITS VESTED?

         You are not immediately entitled to the Employer contributions credited
to your Employer Discretionary Contribution and Employer Matching Contribution
Accounts under the Plan. Your vested and nonforfeitable right to the amount in
your Employer Discretionary Contribution and Employer Matching Contribution
Accounts is determined by your Years of Service. Years of Service are Plan years
in which you are credited with at least 1,000 Hours of Service, including Years
of Service performed for the Employer before the inception of the Plan.

         You complete a Year of Service for vesting purposes when you complete
1,000 Hours of Service during the Plan Year. You receive credit for one Hour of
Service for each hour you are paid by the Employer for work you perform. You
also receive credit for one Hour of Service for time you are paid by the
Employer for reasons other than work (such as vacation, illness or disability)
up to a maximum of 501 hours for any continuous period. If you are a salaried

                                                                  Page 86 of 97
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employee and you work one or more hours during a calendar month, you will
receive credit for 190 Hours of Service for that month.

         All of your Years of Service with F5 Labs, including those performed
before the Plan began on January 1, 1998, are counted for vesting purposes under
the Plan.

         If you terminate employment before the end of the Plan Year, and are
credited with 1,000 Hours of Service for that Plan Year, you will receive credit
for that Plan Year for vesting purposes.

         After you have completed four (4) Years of Service, all of your
Employer Discretionary Contribution and Employer Matching Contribution Accounts
will be 100% vested. Here is how the vesting schedule works:

<TABLE>
<CAPTION>
                                                          PERCENTAGE
                                                          NONFORFEITABLE
         YEARS OF SERVICE                                  (VESTED)
<S>                                                       <C>

Completion of 1 Year of Service                                0%
Completion of 2 Years of Service                              50%
Completion of 3 Years of Service                              75%
Completion of 4 Years of Service                             100%
</TABLE>

         The amount, if any, in your 401(k) Tax-Deferred Contribution Account is
always 100% vested and nonforfeitable.

         The amount in your Employer Discretionary Contribution and Employer
Matching Contribution Accounts will become 100% vested and nonforfeitable
regardless of the above vesting schedule if you die, become permanently and
totally disabled, or reach the Plan's normal retirement age (age 65). In
addition, in the event that the Plan should be terminated by the Employer, your
accounts would become 100% vested and nonforfeitable.

         EXAMPLE. Joe has been a Participant has three (3) Years of Service for
vesting purposes. His Employer Discretionary Contribution and Employer Matching
Contribution Account balances under the Plan have a combined value of $4,000. If
Joe terminates employment, he will receive 75% of this amount, or $3,000. Joe
will also receive the balance of his 401(k) Tax-Deferred Contribution Account.

         2.      WHAT HAPPENS TO AMOUNTS THAT ARE FORFEITED BY THE PARTICIPANTS?

         On each Anniversary Date, December 31, nonvested amounts in the
Employer Contribution and Employer Matching Contribution Accounts of terminated
employees are forfeited. There are two circumstances that result in a forfeiture
of benefits.

                                                                  Page 87 of 97
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                  (1) FIVE YEAR BREAK IN SERVICE. If you terminate employment
before completing two (2) Years of Service and your vested 401(k) Tax-Deferred
Contribution Account is more than $5,000, and you elect NOT to receive a
distribution of your vested benefits, you will not forfeit your Employer
Discretionary and Employer Matching Contribution Accounts, which will be 0%
vested, until you incur a five (5) consecutive one-year break in service. A
one-year break in service occurs each Plan Year in which you complete less than
501 Hours of Service.

                  (2) CASH-OUT OF BENEFITS. If you terminate employment and your
vested benefits are LESS than $5,000, you will receive a distribution of your
vested benefits in a single lump sum payment as soon as administratively
feasible. If you have less than two (2) Years of Service for vesting purposes
when you terminate, and your 401(k) Tax-Deferred Contribution Account is less
than $5,000, you will receive such account and forfeit the nonvested benefits in
your Employer Discretionary Contribution and Employer Matching Contribution
Accounts on the December 31 coinciding with or following your date of
termination. If you are rehired before incurring five consecutive Breaks in
Service, your nonvested forfeited benefits will be reinstated.

         Forfeited amounts do not go back to the Employer. Rather, amounts
forfeited on December 31 are used first to reinstate any previously forfeited
amounts that are required to be reinstated in rehired Participants' Plan
accounts, and then to make Employer contributions for the Plan Year.

         3.       WHAT HAPPENS IF I AM REHIRED?

         If you are rehired AFTER you have five consecutive one-year breaks in
service, your nonvested benefits will be permanently forfeited. If you are
rehired BEFORE you incur five consecutive one-year breaks in service, and you
received your vested benefits when you terminated employment, the nonvested
amount in your Employer Contribution Accounts which you previously forfeited
will be reinstated.

         EXAMPLE. On December 31, 1998, Marilyn has been a Participant in the
Plan for one (1) year and has one (1) Year of Service for vesting purposes. Her
Employer Discretionary Contribution Account and Employer Matching Contribution
Account balances under the Plan are $1,000. Her 401(k) Tax-Deferred Contribution
Account balance is $3,000. If Marilyn terminates employment on December 31,
1998, she will receive her $3,000 in her 401(k) Tax-Deferred Contribution
Account. However, in accordance with the Plan's vesting schedule, she will not
receive her Employer Discretionary and Employer Matching Contribution Accounts,
because she is 0% vested in these accounts. The Employer Contribution Accounts
will be forfeited on December 31, 1998. If Marilyn is rehired before she has
five consecutive one-year breaks in service, the $1,000 she forfeited will be
reinstated.

         Whether or not you have forfeited any balance in your Employer
Discretionary and Employer Matching Contribution Accounts, your prior Years of
Service credited for vesting

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purposes will be reinstated when you complete a Year of Service. THERE IS AN
EXCEPTION TO THIS RULE. If at the time you terminate employment you are
entitled to no amount of your Employer Discretionary Contribution Account and
Employer Matching Contribution Account (your vested percentage is zero), you
will lose credit for your past service if you had at least five (5)
consecutive one-year breaks in service, and your consecutive one-year breaks
in service are at least equal to your Years of Service prior to the break.

         EXAMPLE. Assume you leave the employ of the Employer after completing
one (1) Year of Service and you are 0% vested in your Employer Discretionary and
Employer Matching Contribution Accounts. If you are rehired seven (7) years
later, you will lose your prior service credit because none of your benefits
were vested (I.E., you were 0% vested when you quit), you have incurred more
than five consecutive one-year breaks in service, and your number of consecutive
one-year breaks in service, which is seven (7), is greater than your Years of
Service before you terminated, which is one (1).

SECTION IX.  BENEFICIARY DESIGNATION.

HOW DO I DESIGNATE A BENEFICIARY TO RECEIVE MY BENEFITS IN THE EVENT OF MY
DEATH?

         You may designate a beneficiary or beneficiaries, who are persons who
will receive any benefits payable at your death. If you are married and you do
not designate a beneficiary, the benefits will be payable to your spouse. If you
are married, and your designated beneficiary is to be someone other than your
spouse, your spouse must consent to the designation. Your spouse's consent must
be on a form provided by the Administrative Committee and must be witnessed by a
notary public or a member of the Administrative Committee. The beneficiary may
be changed at any time by written designation filed with the Administrative
Committee. If you don't name a beneficiary or if the beneficiary you name is not
alive, the amount in your accounts will be paid to your surviving spouse, or if
none, as provided in the Plan. Your beneficiary may be changed at any time by
written designation filed with the Administrative Committee.

SECTION X.  DISTRIBUTION OF BENEFITS.

         1.       WHEN DO I RECEIVE RETIREMENT BENEFITS?

         Normally, you will receive your vested Plan benefits upon your
retirement when you reach age 65 (the Plan's normal retirement age). You may
receive your benefits earlier if you are permanently disabled, die, or terminate
employment.

         If you retire on or after age 65, payment of your benefit will be made
as described in Section XI. If you do not wish to receive your vested Plan
benefits and their value exceeds $5,000, the Plan permits you to elect to defer
the payment of your Plan benefits to a date later than your retirement date. You
will be provided forms on which to make this election and, prior to receiving
your benefits, you may change your election at any time. You must begin
receiving your retirement benefits no later than April 1 of the taxable year
following the year in which you

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reach age 70 1/2.

         If you work past age 65, you may elect to receive your Plan benefits.
You will continue to share in any Employer Discretionary Contributions and
Employer Matching Contributions and may continue to elect 401(k) tax-deferred
contributions.

         2.       WHAT HAPPENS IF I DIE?

         If you die, any amounts in your account(s) will be paid to your
beneficiary.

         3.       WHAT HAPPENS IF I TERMINATE EMPLOYMENT?

         If you terminate employment prior to normal retirement and your vested
benefit is $5,000 or less, you will receive that amount in a single payment. You
will receive that distribution within a reasonable time after the end of the
Plan Year in which you terminate employment. If your vested Plan benefit is more
than $5,000, you will receive that amount when you reach age 65, unless you
elect to receive your vested benefit when you terminate employment or on any
later date. You must begin receiving your vested Plan benefits upon the later of
your termination of employment or the April 1 of the tax year following the year
in which you attain age 70 1/2.

         If you terminate employment prior to age 55, the distribution will be
subject to a 10% income tax penalty on early withdrawals unless you are
permanently disabled or unless your distribution is rolled over or transferred
to an IRA or another qualified pension or profit sharing plan. If you terminate
employment after age 55 and elect to receive a distribution of your benefits
after age 55, the distribution will not be subject to the 10% tax penalty.

         4.       WHAT HAPPENS IF I AM DISABLED?

         In the event of mental or physical disability, which renders you
incapable of performing the ordinary duties of your job, you may receive your
benefits under the Plan regardless of age. Payment will begin as soon as
possible after the Administrative Committee determines you are disabled and you
elect to receive payment.

         5.       WHAT HAPPENS IF I DIVORCE?

         Benefits provided under this Plan are for you and your beneficiary.
Your benefits cannot be assigned to someone else in order to settle a debt.
However, the Plan will pay amounts to a former spouse or to a child as ordered
by a court pursuant to the terms of a Qualified Domestic Relations Order. If the
Administrative Committee receives an Order that relates to you, they will notify
you immediately.

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SECTION XI.  FORM OF DISTRIBUTION.

IN WHAT FORM WILL MY BENEFITS BE PAID?

         When you retire, terminate employment, or become permanently disabled,
you will receive the vested amount in your account in a single lump sum payment.

         If you die BEFORE your benefits begin, your beneficiary will receive
the vested amount in your accounts in a single lump sum payment. Payment must be
made within one year after the date of your death if your beneficiary is not
your spouse. If your beneficiary is your spouse, your spouse may elect to defer
payments until a date no later than the date you would have attained age 70 1/2.

SECTION XII.  TOP-HEAVY PROVISIONS.

         1.       WHAT IS A TOP-HEAVY PLAN?

         The Plan will be top-heavy if more than 60% of the account balances
under the Plan belong to key employees. Key employees of the Employer are
certain highly compensated officers and certain owners of the Employer.

         2.       WHAT HAPPENS IF THE PLAN IS TOP-HEAVY?

         The Plan is not currently top-heavy. If the Plan becomes top-heavy, the
Employer may be required to make a contribution on your behalf equal to a
minimum of 3% of your compensation during the Plan Year even if you do not
complete 1,000 Hours of Service in the Plan Year. The Administrative Committee
will advise you if the Plan becomes top-heavy.

SECTION XIII.  TERMINATION OF THE PLAN.

WHAT HAPPENS IF THE PLAN TERMINATES?

         The Employer expects to continue the Plan indefinitely but reserves the
right to terminate it or to amend it. If the Plan is terminated, you will become
100% vested in your Employer Discretionary Contribution Account and Employer
Matching Contribution Account. All of the assets of the Plan will be used to pay
benefits to participants. No part of the assets will be returned to the
Employer.

SECTION XIV.  RIGHTS OF PARTICIPANTS.

         1.       TO WHOM SHOULD LEGAL NOTICES BE ADDRESSED?

         Legal notices should be directed to Brian R. Dixon, whose address is
printed on the front

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of this booklet. However, service of legal process may also be made upon any
Plan Trustee or any member of the Administrative Committee.

         2.       IF I BELIEVE I AM ENTITLED TO PLAN BENEFITS, WHAT SHOULD I DO?

         If you are entitled to benefits under the Plan, you need not make a
claim to the Administrative Committee in order to receive your benefits.
However, if you disagree with the information or computations in connection with
any of your benefits, you may make claim to the Administrative Committee. This
claim should be in the form of a letter stating why you disagree and should
include all facts and information you want the Administrative Committee to
consider. You will be advised of the acceptance or rejection of your claim
within 90 days after your claim is received, unless special circumstances
require an extension of time for processing the claim. If the Administrative
Committee requires an extension, written notice of the extension will be
furnished to you prior to the end of the initial 90-day period. The extension
will not exceed an additional period of 90 days. The extension notice from the
Administrative Committee will state the special circumstances requiring the
extension of time and the date by which the Administrative Committee expects to
make a final decision.

         In the event your claim is denied, it must be denied in writing and the
denial must state in detail the specific reasons for the denial, the specific
Plan provisions upon which the denial is based, any additional material or
information which you may provide which would entitle you to the benefits you
claim, and an explanation of why such material or information is necessary. The
notice of denial must also explain the steps to be taken if you or your
beneficiary wish to submit a claim for review. If notice of denial of your
initial claim is not furnished within the time period allowed above, your claim
will be deemed denied and you may proceed to request a review of your denied
claim. If you choose to submit a claim for review by the Administrative
Committee, then within 60 days after the date your claim is denied, you or your
authorized representative must make a written request to the Administrative
Committee for review. Your request for review of your denied claim should
include a statement of the reasons your claim should be allowed. You or your
representative may examine any documents the Administrative Committee has in its
files and will use in reaching a decision, and you may also submit additional
written comments to the Administrative Committee which support your claim.

         The Administrative Committee will advise you of its decision in writing
within 60 days following receipt of your request for review, unless special
circumstances require an extension of time for processing. If an extension is
necessary, a decision will be made as soon as possible, but not later than 120
days after the Administrative Committee receives your request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension and the Administrative Committee's reasons for
needing more time will be furnished to you prior to the commencement of the
extension. The decision on review will be in writing and will include specific
reasons for the decision, as well as specific references to the plan provisions
upon which the decision is based. The Administrative Committee has the absolute
discretion to decide all issues of fact and/or law. The decision of the
Administrative Committee will be final


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and will be subject to no further appeal or review. Any decision of the
Administrative Committee that is not an abuse of discretion must be upheld by
a court of law.

         3.       ARE MY BENEFITS INSURED BY THE FEDERAL GOVERNMENT?

         Because this is a defined contribution profit sharing plan, your
benefits are not insured by the Pension Benefit Guaranty Corporation (PBGC), an
agency of the federal government. The PBGC does not require or provide insurance
for the Plan.

         4.       WHAT ARE MY RIGHTS UNDER ERISA?

         This statement of ERISA rights is required by federal law and
regulation. As a participant in the Employer's Plan, you are entitled to certain
rights and protections under the Employee Retirement Income Security Act of 1974
(ERISA). ERISA provides that all Plan participants shall be entitled to:

                  1. Examine, without charge, at the Employer's office and at
other locations, such as worksites, all Plan documents, including insurance
contracts, collective bargaining agreements and copies of all documents filed by
the Plan with the U.S. Department of Labor, such as annual reports and Plan
descriptions.

                  2. Obtain copies of all Plan documents and other Plan
information upon written request to the Committee. The Committee may make a
reasonable charge for the copies.

                  3. Receive a summary of the Plan's annual financial report.
The Committee is required by law to furnish each participant with a copy of this
summary financial report.

                  4. Obtain a statement of your total plan benefits (your
account balance) and your vested plan benefits, if any, or if you have no vested
benefits, a statement of how many more years you will have to work to have a
vested right to plan benefits. This statement must be requested in writing and
is not required to be given more than once a year. The Plan must provide the
statement free of charge.

         In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including your employer or any other person, may fire you
or otherwise discriminate against you in any way to prevent you from obtaining a
Plan benefit or exercising your rights under ERISA. If your claim for a Plan
benefit is denied in whole or in part, you must receive a written explanation of
the reason for the denial. You have the right to have the Plan review and
reconsider your claim. Under ERISA, there are steps you can take to enforce the
above rights. For instance, if you request materials from the Plan and do not
receive them within 30 days, you may file suit in a federal court. In such a
case, the court

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<PAGE>

may require the Committee to provide the materials and pay you
up to $110 a day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the Committee. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the Plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay these costs
and fees, for example, if it finds your claim is frivolous. If you have any
questions about your plan, you should contact the Committee. If you have any
questions about this statement or about your rights under ERISA, you should
contact the nearest office of the Pension and Welfare Benefits Administration,
U.S. Department of Labor, listed in your telephone directory or the Division of
Technical Assistance and Inquiries, Pension and Welfare Benefits Administration,
U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.

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