TRANSCRYPT INTERNATIONAL INC, S-1/A, 1996-11-21

TRANSCRYPT INTERNATIONAL INC
S-1/A, 1996-11-21
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 1996

REGISTRATION NO. 333-14351

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

TRANSCRYPT INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 3663 47-0801192
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>

4800 NW 1ST STREET
LINCOLN, NEBRASKA 68521
(402) 474-4800

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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JOHN T. CONNOR
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
4800 NW 1ST STREET
LINCOLN, NEBRASKA 68521
(402) 474-4800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES TO:

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WILLIAM T. QUICKSILVER, ESQ. ANDREW L. BLAIR, JR., ESQ.
ALAN E. MORELLI, ESQ. SHERMAN & HOWARD, L.L.C.
ALLEN Z. SUSSMAN, ESQ. 633 17TH STREET, SUITE 3000
MANATT, PHELPS & PHILLIPS, LLP DENVER, COLORADO 80202
11355 WEST OLYMPIC BOULEVARD (303) 297-2900
LOS ANGELES, CALIFORNIA 90064
(310) 312-4000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED NOVEMBER 21, 1996

3,750,000 SHARES
LOGO
COMMON STOCK

Of the 3,750,000 shares of Common Stock offered hereby, 2,500,000 are being
sold by Transcrypt International, Inc. and 1,250,000 shares are being sold by
the Selling Stockholders. See "Principal and Selling Stockholders." The Company
will not receive any of the proceeds from the sale of shares by the Selling
Stockholders.

Prior to this offering, there has been no public market for the Common
Stock of the Company. It is currently estimated that the initial public offering
price for the Common Stock will be between $12.00 and $14.00 per share. See
"Underwriting" for information relating to the method of determining the initial
public offering price. The Company has applied for quotation of the Common Stock
on the Nasdaq National Market, subject to notice of issuance, under the symbol
"TRII."

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SEE "RISK FACTORS," BEGINNING ON PAGE 7, FOR A DISCUSSION OF CERTAIN
FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND PROCEEDS TO TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
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Per Share.......................... $ $ $ $
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Total(3)........................... $ $ $ $
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(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $725,000.

(3) The Selling Stockholders have granted the Underwriters a 30-day option to
purchase up to 562,500 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the total Price to Public, Underwriting Discounts and Commissions, Proceeds
to Company and Proceeds to Selling Stockholders will be $ ,
$ , $ and $ , respectively. See "Underwriting."

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The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by them and subject to the
right of the Underwriters to withdraw, cancel or modify such offer and to reject
orders in whole or in part. It is expected that delivery of shares of the Common
Stock will be made on or about , 1996.

DAIN BOSWORTH FURMAN SELZ

Incorporated

THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
[INSIDE FRONT COVER]

[TRANSCRYPT LOGO]

Using proprietary technology to bring information security to the expanding
voice and data communications markets.

[These
words Analog Scrambling Digital Encryption
printed
over Core Technologies
blue
arrow Signaling Technology Digital Technology
pointing
right]

[These
words 1978 1995 1997
connected Land Mobile Landline Data
by vertical Radio Telephone Security*
lines to Security Security
arrow]

1991 1996
Cellular Secure
Telephone Digital
Security Radio

* Currently under development

[Entire page is printed against a background image of a circuit board
containing integrated circuits, resistors and other electrical components.]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET,
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.

<PAGE> 4
[GATEFOLD]

[Transcrypt International logo] Transcrypt's information security products
include voice privacy for the land mobile
radio, cellular telephone and landline
markets and Transcrypt branded secure
cellular telephones and digital radios.

[Picture of [Picture of [Picture of [Picture of [Picture of
Motorola Motorola conventional Transcrypt Transcrypt
LMR and cellular telephone and branded Stealth 25
Transcrypt telephone and Transcrypt cellular Radio]
add-on Transcrypt external telephone]
device] add-on plug-in Digital
device] digital Radio
telephone
encryptor
device]

Land Mobile Transcrypt's
Radio Security Cellular Landline CryptoPhone
Telephone Telephone
Security Security

Providing Information Security Products to the World
[Picture of top of the world]
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Consolidated Financial Statements
and Notes thereto, included elsewhere in this Prospectus. Each prospective
investor is urged to read this Prospectus in its entirety. Unless otherwise
indicated, the information in this Prospectus (i) gives effect to a
1.3106311-for-1 stock split in the form of a stock dividend effected in November
1996 and (ii) assumes no exercise of the Underwriters' over-allotment option.
Unless the context otherwise provides, all references to "Transcrypt" or the
"Company" include Transcrypt International, Inc., its consolidated subsidiaries
and its predecessor entities. See "Glossary" for definitions of certain terms
used in this Prospectus.

THE COMPANY

The Company designs and manufactures information security products which
prevent unauthorized interception of sensitive voice and data communications.
The Company focuses on developing and providing information security products
for the land mobile radio ("LMR"), telephony and data security markets. The
Company's products are based on proprietary analog scrambling and digital
encryption technologies. The Company's core technologies offer a number of
significant benefits including high levels of information security and sound
quality, high-speed, real-time data transmission, low power consumption, small
size and cost effective manufacturing. The Company believes its expertise in
both analog and digital information security, including the ability to provide
"dual mode" analog and digital security in the same product, provides a
competitive advantage as communications products migrate from analog to digital
technology. Furthermore, the Company believes its core technological expertise
in analog scrambling and digital encryption enables it to bring new information
security products to market quickly with relatively low development costs.

Land Mobile Radio Products

The Company's principal market for wireless information security products
has historically been the LMR market. Land mobile radios consist of hand-held or
mobile (vehicle mounted) two-way radios commonly used by public safety workers
(e.g., police, fire and medical emergency personnel), businesses (e.g., fleet
operators, taxi dispatch, construction and other commercial users) and a wide
variety of United States and foreign government agencies. According to data
published by Motorola, Inc. ("Motorola"), the worldwide LMR installed base grew
to approximately 45 million units in 1995 from 33 million units in 1992. The
Company believes that demand for information security products in the LMR market
has grown in recent years due, in part, to increased awareness of eavesdropping
by members of the press, commercial competitors and criminals.

The Company's LMR product line has historically consisted of a variety of
add-on information security modules which can be installed in LMR products from
leading manufacturers, including Motorola, Ericsson, Inc. ("Ericsson") and E.F.
Johnson Co. Purchasers of the Company's information security products have
included federal government agencies, such as the Department of Defense, Federal
Bureau of Investigation, National Security Agency and White House Security,
public safety agencies, such as the Los Angeles and New York City Police
Departments, international customers, such as the London Metropolitan Police
Force (New Scotland Yard) and the Russian Ministries of Defense and Internal
Affairs, and a variety of commercial customers, such as Exxon Oil Co., Union
Pacific Railroad and Walt Disney Co.

In 1995, as a result of increasing frequency spectrum capacity constraints,
the Federal Communications Commission ("FCC") mandated that all new LMR
equipment utilize a more spectrally efficient, narrow-band (12.5 kHz)
transmission system, which will effectively require all LMR users to migrate to
digital LMR systems. In response to this mandate, the Association of Public
Safety Communications Officers, Inc. ("APCO") published an industry standard for
digital land mobile radios, known as "APCO 25," which was adopted by several
major LMR manufacturers, including Motorola, the leading LMR manufacturer. In
addition to meeting FCC requirements, the APCO 25 standard provides for
interoperability among different manufacturers' systems, backward compatibility
with existing analog LMRs and the ability to add advanced encryption features.
The Company believes that demand for APCO 25 compliant systems will increase as

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<PAGE> 6

LMR users upgrade or replace their existing systems. The Company developed and,
in September 1996, began shipping in commercial quantities a Transcrypt-branded,
hand-held digital LMR. This new product, known as the Stealth 25, can operate in
both digital and analog modes, is fully compatible with the APCO 25 standard,
contains the Company's information security technology and includes several
additional value-added features, such as remote disabling if the radio is lost
or stolen. Furthermore, Motorola has licensed to the Company certain technology
which enables the Stealth 25 to be backwardly compatible with the installed base
of LMRs that use Motorola's proprietary Smartnet(TM) trunking technology. The
Company intends to introduce additional products, including a vehicle-mounted
LMR, in the first quarter of 1997. The Company believes the development of the
APCO 25 standard and the anticipated migration from analog to digital technology
in the LMR market represents a significant market opportunity for its new LMR
products.

Telephony Products

The Company offers a variety of information security products for cellular
telephone systems, including add-on scrambling modules designed to be installed
into cellular telephones such as Motorola's MicroTAC(TM) and Elite(TM)
telephones. The Company also offers external plug-in scrambling devices for
wireline telephones and scrambling units which can be added to public telephone
switches or private branch exchange ("PBX") units. Additionally, in March 1996
the Company began shipping commercial quantities of a Transcrypt-branded
Motorola MicroTAC(TM) cellular telephone upgraded to include the Company's
advanced add-on scrambling modules. According to International Data Corporation,
the U.S. cellular telephone subscriber base is projected to grow from 40.4
million subscribers in 1996 to 56.9 million subscribers by 2000. The Company
believes that the demand for voice security products is growing with a
heightened public awareness of the unsecure nature of cellular telephone
communications. The Company believes that its expertise in both analog and
digital information security, including the ability to provide "dual mode"
analog and digital security in the same product, will provide a competitive
advantage as cellular telephone users migrate from analog to digital telephones.

Data Security Products

In 1997, the Company plans to develop and introduce data security products
based on its core digital encryption technology. The Company's initial products
are expected to include authentication and encryption/decryption products to
provide secure remote access to computer networks and secure facsimile
transmissions. The Company believes that the shift from mainframe to distributed
computing and the widespread proliferation of local-area networks, servers,
interconnected networks and the Internet, will continue to increase demand for
technologies which solve access and security issues. The Company believes that,
because its proposed data security products will be hardware-based, they will
complement software-based data security solutions and provide an added level of
security. In addition, the Company believes the real-time nature of its digital
encryption/decryption technology, made possible by its high-speed transmission
capabilities, will enable users to achieve secure transmissions without user
delays common in current systems.

The Company's objective is to maintain its position in the market for voice
security products used in LMRs and cellular telephones, while building on its
core technological competencies to enter new markets for secure voice and data
security products. The Company's strategy to accomplish this objective includes
developing new products based on existing core technologies, offering complete
secure products solutions, fostering key strategic relationships, such as the
Company's relationship with Motorola, and exploring strategic acquisitions.

The Company's predecessor was founded in 1978. In December 1991, an
investor group led by John T. Connor, the Company's Chairman and Chief Executive
Officer, acquired the Company's business. The Company's principal offices are
located at 4800 NW 1st Street, Lincoln, Nebraska 68521, and its telephone number
is (402) 474-4800.

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THE OFFERING

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Common Stock offered:
By the Company.................................. 2,500,000 shares
By the Selling Stockholders..................... 1,250,000 shares
Common Stock to be outstanding after the 9,283,078 shares
offering(1).....................................
Use of proceeds................................... For repayment of approximately $1.2
million of indebtedness, for working
capital and other general corporate
purposes and to support the Company's
business strategy, including enhancement
of the Company's sales and distribution
capabilities, expansion of manufacturing
facilities and potential acquisitions of,
or investments in, complementary
businesses, products or technologies.
Proposed Nasdaq National Market symbol............ TRII
</TABLE>

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(1) Excludes 716,916 shares of Common Stock reserved for issuance upon exercise
of options outstanding as of September 30, 1996 under the Company's stock
option plan at a weighted average exercise price of $1.81 per share and
325,000 shares issuable pursuant to options to be granted upon the
effectiveness of this offering at an exercise price equal to the initial
price to the public. See "Management -- 1996 Stock Incentive Plan."

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------- -----------------
1991(1) 1992 1993 1994 1995 1995 1996
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STATEMENTS OF INCOME (LOSS) DATA:
Revenues........................... $ 224 $4,974 $6,900 $9,155 $ 8,128 $ 5,358 $ 9,275
Gross profit....................... 145 3,738 5,284 6,254 5,145 3,091 6,389
Amortization of intangible
assets(2)........................ 89 1,100 1,092 1,092 1,093 829 819
Income (loss) from operations
before special compensation
expense.......................... (88) (453) 921 1,318 (1,201) (1,363) 1,326
Special compensation expense(3).... -- -- -- -- -- -- 5,568
Income (loss) from operations(4)... (88) (453) 921 1,318 (1,201) (1,363) (4,242)
Net income (loss)(4)............... $ (88) $ (596) $ 788 $1,207 $(1,338) $(1,458) $(2,563)
Pro forma provision (benefit) for
income taxes(5).................. (496) (541) (1,623)
Pro forma net loss(4).............. $ (841) $ (917) $(2,698)
Pro forma net loss per
share(4)(6)...................... $ (0.12) $ (0.13) $ (0.38)
Shares used to compute net loss per
share(6)......................... 7,013 7,013 7,013
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
ACTUAL AS ADJUSTED(7)
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BALANCE SHEET DATA:
Working capital...................................................... $ 2,139 $ 30,439
Total assets......................................................... 10,891 39,191
Long-term debt and capitalized lease obligations, net of current
portion............................................................ 1,510 855
Stockholders' equity................................................. 6,521 36,021
</TABLE>

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<PAGE> 8

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(2) Reflects the amortization of intangible assets related to the acquisition of
the Company's business in December 1991. These intangible assets will be
fully amortized as of November 30, 1996, and thus no such amortization
expense will be incurred subsequent to November 30, 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Amortization of Intangible Assets."

(3) Represents a non-recurring, non-cash compensation expense of $5.4 million
resulting from the vesting in September 1996 of 716,916 stock options for 10
executive officers and key employees of the Company at a weighted average
exercise price of $1.81 per share, and the accrual of a special compensation
expense of $210,000 in September 1996, which is payable to the Company's
Chief Executive Officer. See "Management -- 1996 Stock Incentive Plan" and
"Management -- Employment Agreements."

(4) Excluding the special compensation expense of $5.6 million, income (loss)
from operations, net income (loss), pro forma net income (loss) and pro
forma net income (loss) per share would have been $1.3 million, $1.2
million, $1.0 million and $0.15, respectively, for the nine-month period
ended September 30, 1996.

(5) Prior to June 30, 1996, the Company operated as a partnership. The pro forma
provision for income taxes reflects the provision for income taxes as if the
Company had been taxed as a Subchapter "C" corporation under the Internal
Revenue Code.

(6) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used to compute pro
forma net income (loss) per share.

(7) Adjusted to reflect the sale of the 2,500,000 shares of Common Stock offered
by the Company hereby at an assumed offering price of $13.00 per share (the
midpoint of the estimated range of the initial public offering price), after
deducting underwriting discounts and commissions and estimated offering
expenses, and the receipt and application of the net proceeds therefrom. See
"Use of Proceeds" and "Capitalization."

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RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully by prospective investors in evaluating
the Company and its business before purchasing any of the shares of Common Stock
offered hereby.

RELIANCE ON MOTOROLA

Motorola is the Company's largest customer and a key supplier. During the
nine months ended September 30, 1996, 16.1% (approximately $1.5 million) of the
Company's sales were to Motorola, and the Company purchased an aggregate of $1.0
million in Motorola components during such time for use in its products. The
Company has an agreement with Motorola for the sale of approximately $3.7
million of private-labeled analog socket scramblers through September 1997, of
which $1.5 million had been purchased as of September 30, 1996. In addition, the
Company relies on Motorola to provide MicroTAC(TM) cellular telephones for
resale by the Company as an upgraded, secure cellular telephone. Also, the
Company intends, from time to time, to bid for integrated LMR systems contracts,
which it intends to supply using its hand-held Stealth 25 radio along with
private-labeled base station and repeater equipment purchased from Motorola. The
Company's dependence on Motorola, both as a customer and supplier, is expected
to continue. The Company is also dependent on continuing access to certain
proprietary Motorola intellectual property used in its products. Although the
Company believes that its relationship with Motorola is good, there can be no
assurance that Motorola will continue to purchase products from or supply
components and technology to the Company on the scale or at the prices that it
now does. Internal decisions or allocations of resources within Motorola could
lead to reduced purchases of the Company's products or to the modification or
discontinuation of components used in the Company's products. In addition, the
Company may increasingly be perceived by Motorola as a competitor, which could
impact Motorola's willingness to do business with the Company. Although the
Company has certain contractual relationships with Motorola both as a customer
and a supplier, most of these agreements are subject to termination in certain
circumstances and expire by their terms within one to ten years. Any reduction
of the Company's contractual relations with Motorola or a decision by Motorola
to reduce purchases of the Company's products or to reduce or eliminate the
provision of components and technology to the Company would have a material
adverse effect on the Company. See "Business -- Motorola Relationship."

TRANSITION FROM ADD-ON TO STAND-ALONE WIRELESS SECURITY PRODUCTS

The Company believes that there has been, and will continue to be,
increasing demand for secure wireless communication devices, particularly in the
LMR and cellular telephone markets, and that in the future these markets will
migrate from analog to digital equipment, due primarily to increased bandwidth
capacity constraints and the perception that digital transmissions are more
secure than analog transmissions. The transition to digital communications could
lead to a decrease in demand for add-on analog security modules, which accounted
for approximately 83% of the Company's revenues in the first nine months of
1996. The Company has historically sold add-on products for use with LMRs and
cellular telephones manufactured by other, larger companies with widely
recognized brand names and established distribution networks. During the third
quarter of 1996, the Company introduced its first two stand-alone
Transcrypt-branded products and intends to develop and place increasing emphasis
on stand-alone products in the future. This represents a fundamental change in
the nature of the Company's products and necessitates the development of new
manufacturing and sales and marketing strategies and capabilities. To some
extent, it also places the Company in competition with larger corporations which
have historically been customers of, and suppliers of components for, the
Company's add-on products. There can be no assurance that the Company will be
successful in making the transition from add-on products to stand-alone products
or that its new position in the market will not cause other companies, with
which it has historically dealt, to discontinue or limit their dealings with the
Company. The inability of the Company to successfully make such transition,
including the failure to meet manufacturing demands or the need for additional
development, testing or refinement following new product introduction, or a
significant decrease in sales of the Company's existing add-on products during
such transition period, would have a material adverse effect on the Company. In
addition,

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although gross profits may increase in the future due to increased sales of the
Company's new stand-alone products, the stand-alone products generally carry
lower gross margins than add-on products. Therefore, to the extent that sales of
stand-alone products increase in the future relative to add-on product sales,
the Company's gross margins are likely to decline. See "Business -- The
Company's Strategy."

MANAGEMENT OF GROWTH

The Company has recently expanded and intends to continue to significantly
expand the scope of its operations and the products which it offers. Such
expansion has resulted and will continue to result in an expansion of the
Company's facilities and work force. This growth can be expected to place a
significant strain on the Company's financial, managerial and other resources.
To manage growth effectively, the Company will need to continue to improve and
upgrade its operational, financial and management information systems, and to
attract, train, motivate, manage and retain key executives and employees.

In the normal course of its business and in connection with its expansion
plans, the Company evaluates potential acquisitions of businesses, products and
technologies that could complement or expand the Company's information security
business. To date, the Company has not completed any acquisitions, although it
may do so in the future. If the Company were to identify an appropriate
acquisition candidate, there is no assurance that the Company would be able to
integrate the acquired business, products or technologies into the Company's
existing business and operations, or that the integration would not cause an
excessive diversion of management time and resources. See "Business -- The
Company's Strategy."

COMPETITION

The information security and wireless communications equipment industries,
and the LMR market segment in particular, are highly competitive. Competition in
the sale of stand-alone and digital products is more intense than for add-on and
analog products. Most of the Company's competitors or potential competitors have
significantly greater financial, managerial, technical and marketing resources
than the Company. In particular, Motorola holds a dominant position in the
market for wireless communication products, especially in the LMR and cellular
telephone market segments. Although the Company has no knowledge of any plans or
intentions by A. John Kuijvenhoven, the Company's founder, to compete with the
Company in the future, the non-compete agreement between the Company and Mr.
Kuijvenhoven, entered into at the time of the acquisition of the Company by the
current stockholders, expires on December 3, 1996. Accordingly, there can be no
assurance that the Company will be able to continue to compete effectively in
its markets, that competition will not intensify or that future competition will
not have a material adverse effect on the Company. See "Business -- Competition"
and "Certain Transactions."

RAPIDLY EVOLVING INDUSTRY

The market for analog and digital information security products is an
emerging market and can be expected to evolve rapidly in the future as a result
of changing technology, industry standards and customer requirements. The
Company's ability to compete effectively in this rapidly evolving industry will
depend upon its ability to anticipate and react to these changes in a timely
manner. The development of new technologies by existing or future competitors
may place the Company at a competitive disadvantage by rendering some or all of
the Company's existing or new products obsolete. The Company has invested
heavily in the introduction of LMR products that comply with the APCO 25
standard. The Company believes that the APCO 25 standard will be accepted in the
public safety and government markets. However, some manufacturers have adopted
and actively support other digital LMR transmission standards for the public
safety marketplace. The widespread acceptance of one or more other standards in
the public safety market would have a material adverse effect on the Company.
See "Business -- Competition."

RISKS ASSOCIATED WITH INTERNATIONAL SALES

International sales constituted approximately 57.3%, 71.4%, 57.3% and 39.0%
of the Company's revenues in the nine months ended September 30, 1996 and the
years ended December 31, 1995, 1994 and 1993,

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respectively. International sales are subject to a number of risks not found in
domestic sales, including unexpected changes in regulatory requirements, tariffs
and other trade barriers, political and economic instability in foreign markets,
difficulties in establishing foreign distribution channels, longer payment
cycles, uncertainty in the collection of accounts receivable, increased costs
associated with maintaining international marketing efforts and difficulties in
protecting intellectual property. Because most of the Company's foreign sales
are denominated in U.S. dollars, fluctuations in the value of international
currencies relative to the U.S. dollar may also affect the price,
competitiveness and profitability of the Company's products sold in
international markets. Furthermore, the uncertainty of monetary exchange values
has caused, and may in the future cause, some foreign customers to delay new
orders or delay payment for existing orders. The Company's products are subject
to export controls under U.S. law, which in some cases require the approval of
the National Security Agency and the Department of Commerce. To date, the
Company has been able to secure most required U.S. export licenses. There can be
no assurance, however, that such approvals will be available to the Company or
its products in the future in a timely manner or at all or that the federal
government will not revise its export policies or the list of products and
countries for which export approval is required. The Company's inability to
obtain required export approvals could adversely affect the Company's
international sales, which would have a material adverse effect on the Company.
In addition, foreign companies not subject to United States export restrictions
may have a competitive advantage in the international information security
market. Recently, President Clinton issued an Executive Order removing most
encryption products from the "munitions" list and transferring jurisdiction over
the export of such products from the Department of State to the Department of
Commerce. The Executive Order will allow the export of products featuring
digital encryption technology that previously could not be exported, which may
increase competition for international sales of the Company's analog scrambling
products. The Company cannot predict the impact of the Executive Order on the
international market for its products. See "Business -- Government Regulation
and Export Controls."

RELIANCE ON PUBLIC SECTOR MARKETS

Public safety agencies and other governmental entities comprise a
significant portion of the Company's current and anticipated customer base.
Because many governmental customers purchase through dealers, the Company cannot
determine the percentage of its products that are ultimately sold to
governmental agencies. However, the Company believes that domestic and
international governments are the end users of most of its products. As the
transition in the Company's product line from add-on to stand-alone products
progresses and as competition for such sales intensifies, the Company expects
that it will increasingly be subject to competitive bidding requirements for
sales to governmental customers, which can be expected to result in lower prices
and longer sales cycles. Such bidding procedures often include the posting of
bonds. Any inability by the Company to obtain requisite bonds would prevent the
Company from bidding on LMR systems contracts, which would have a material
adverse effect on the Company. See "Business -- Sales, Marketing and
Distribution."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent upon a number of key
employees, including members of senior management. The loss of the services of
one or more of these key employees could have a material adverse effect on the
Company. With the exception of policies covering John T. Connor and Jeffery L.
Fuller, the Company does not maintain any key-person life insurance policies.
The Company believes that its future success will depend in part on its ability
to attract, motivate and retain highly skilled technical, managerial and
marketing personnel. Competition for such personnel is intense and there can be
no assurance that the Company will successfully attract, motivate or retain such
personnel. See "Management."

DEPENDENCE ON SUPPLIERS

Most of the Company's current and proposed products require essential
electronic components supplied by outside vendors. Certain components may be
available from only one supplier and may occasionally be in short supply. For
example, in late 1993 and early 1994, there was a shortage of certain Motorola
surface-mount microprocessors, which resulted in a 47% increase in the cost of
these components over a period of approximately seven months. The Company's
inability to obtain key components could result in lost sales, the

9
<PAGE> 12

need to maintain excessive inventory levels and higher component costs, which
could increase the cost of producing the Company's products and result in a
material adverse effect on the Company.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company has experienced and expects to continue to experience quarterly
variations in revenues and net income as a result of many factors, including the
timing of customer orders, the timing of the introduction of new products,
general economic conditions and the timing and mix of product sales. Due to the
buying patterns of governmental customers, revenues for the first quarter tend
to be lower than revenues for the fourth quarter of the preceding year. In
addition, the Company's anticipated expansion will result in significant fixed
costs that will be recognized before any related revenues are realized, which
could adversely affect the Company's quarterly operating results. The Company
does not maintain a significant backlog and is dependent upon the receipt of
current customer orders. Any deferral of customer purchasing decisions or delays
in shipments can produce significant variations in the Company's quarterly
results. The impact of such decisions can be especially significant in the case
of government orders, which tend to be quite large. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Quarterly
Results of Operations."

REGULATORY ENVIRONMENT

Wireless communications and data encryption products are subject to
regulation by United States and foreign laws and international treaties. The
regulatory environment is inherently uncertain and changes in the regulatory
structure and laws and regulations can adversely affect the Company and its
customers. Such changes could make existing or planned products of the Company
obsolete or unsaleable in one or more markets, which would have a material
adverse effect on the Company. Recently, President Clinton issued an Executive
Order removing most encryption products from the "munitions" list and
transferring jurisdiction over the export of such products from the Department
of State to the Department of Commerce. See "-- Risks Associated with
International Sales" and "Business -- Government Regulation and Export
Controls."

LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS

The Company currently holds one patent and has filed applications for nine
additional patents since 1995. Although the Company assesses the advisability of
patenting any technological development, it has historically relied primarily on
copyright and trade secret law, as well as employee and third party
non-disclosure agreements, to protect its proprietary intellectual property and
rights. The protection afforded by such means is not as complete as patent
protection. In addition, the laws of some countries do not protect trade
secrets. The inability of the Company to preserve its proprietary intellectual
property and rights could have a material adverse effect on the Company. See
"Business -- Intellectual Property."

In addition, the information security and wireless communications
industries in which the Company sells its products are characterized by
substantial litigation regarding patent and other intellectual property rights.
The Company is not aware that its patents or the features or content of its
products wrongfully infringe on any valid intellectual property rights of
others. However, there can be no assurance that third parties will not assert
claims against the Company that result in litigation, which could result in
significant expense to the Company, diversion of management and other resources
and the discontinued usage and sale of certain processes and infringing
products.

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of this offering, the Company's existing stockholders will
own beneficially, in the aggregate, approximately 59.6% of the Company's
outstanding Common Stock (assuming no exercise of the Underwriters'
over-allotment option). These stockholders will have the ability to control the
outcome of all corporate actions requiring stockholder approval and the election
of the Company's directors. See "Principal and Selling Stockholders."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF SHARE PRICES

Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
after this offering or that the market price of the Common

10
<PAGE> 13

Stock will not decline below the initial public offering price. The initial
public offering price will be determined by negotiations between the Company and
the Underwriters. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price.

Market prices for securities of new companies in general, and technology
companies in particular, tend to be highly volatile. The trading price of the
Common Stock may fluctuate widely in response to quarterly variations in
operating results, announcements of technical innovations or new products by the
Company or companies in the same or closely related fields, changes in financial
estimates by securities analysts, the operating and stock price performance of
other companies that investors may deem comparable to the Company, general stock
market and economic conditions, and other events or factors which may be
unrelated to the operating performance of the Company.

DILUTION

Purchasers of shares of Common Stock in this offering will suffer immediate
and substantial dilution in the net tangible book value per share of Common
Stock of $9.14 per share, assuming an initial price of $13.00 per share (the
midpoint of the estimated range of the initial public offering price). See
"Dilution."

DIVIDENDS

No dividends have been paid on the Common Stock to date and the Company
does not anticipate paying dividends in the foreseeable future. See "Dividend
Policy."

UNALLOCATED NET PROCEEDS

The Company has not yet identified specific uses for the substantial
majority of the estimated net proceeds from this offering. Pending the
identification of such uses, the Company expects that it will invest the net
proceeds in short-term investment grade, interest-bearing instruments and use a
portion of the net proceeds for working capital, repayment of certain long-term
debt and general corporate purposes. The Company will have discretion in the use
and investment of such proceeds. See "Use of Proceeds."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
9,283,078 shares of Common Stock, of which the 2,500,000 shares offered hereby
by the Company and the 1,250,000 shares offered hereby by the Selling
Stockholders will, subject to certain exceptions, be freely tradable without
restriction or registration under the Securities Act of 1933, as amended (the
"Securities Act"). The remaining 5,533,078 shares of Common Stock are
"restricted" securities under the Securities Act, which the Company believes
must, under current law, be held until at least June 30, 1998. All of the
Company's existing stockholders have agreed not to sell any Common Stock for a
period of 180 days after this offering without the consent of Dain Bosworth
Incorporated. An aggregate of 1,200,000 shares of Common Stock have been
reserved for issuance under the Company's 1996 Stock Incentive Plan. As of
September 30, 1996, 716,916 shares of Common Stock were issuable upon exercise
of vested stock options granted by the Company prior to the date of this
Prospectus and 325,000 shares will be issuable pursuant to options to be granted
upon the effectiveness of this offering. In addition, the Company intends, as
soon as practicable after the consummation of this offering, to file a
registration statement on Form S-8 under the Securities Act covering the
1,200,000 shares of Common Stock reserved for issuance under the Company's 1996
Stock Incentive Plan. Future sales of a substantial number of shares of Common
Stock, or the perception that such sales could occur, could have a material
adverse effect on the prevailing market price for the Company's Common Stock.
See "Shares Eligible for Future Sale" and "Management -- 1996 Stock Incentive
Plan."

11
<PAGE> 14

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
2,500,000 shares of Common Stock offered by the Company in this offering are
estimated to be $29.5 million, based on an assumed offering price of $13.00 per
share (the midpoint of the estimated range of the initial public offering price
in this offering) and after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company. The Company will not
receive any proceeds from the sale of shares by the Selling Stockholders. See
"Principal and Selling Stockholders."

The Company intends to use approximately $1.2 million of the net proceeds
of this offering to repay the Company's indebtedness on certain term notes with
variable interest rates ranging from 8.25% to 8.75% as of September 30, 1996 and
maturities ranging between 1998 and 2000. The approximately $28.3 million of
remaining net proceeds are expected to be used for working capital and other
general corporate purposes and to support the Company's business strategy,
including enhancement of the Company's sales and distribution capabilities and
capital expenditures to expand the Company's manufacturing facilities. The
Company may also use a portion of the net proceeds to fund acquisitions of, or
investments in, complementary businesses, products or technologies. Although the
Company frequently reviews potential acquisition and investment opportunities,
there are no current plans or agreements with respect to any such transaction,
and no portion of the net proceeds has been allocated for any particular
acquisition or investment. The amounts actually expended by the Company for any
of these purposes may vary significantly depending on a number of factors,
including future revenue growth, the amount of cash generated by the Company's
operations and the progress of the Company's development efforts. Pending such
uses, the Company intends to invest the net proceeds of this offering in
short-term, investment-grade, interest-bearing securities.

DIVIDEND POLICY

Although the Company's predecessor, a limited partnership, had made
distributions primarily to cover its partners' attributed tax liabilities, the
Company, since its reorganization as a corporation in June 1996, has not
declared or paid any cash dividends on its capital stock. The Company currently
intends to retain earnings, if any, to support its growth strategy and does not
anticipate paying cash dividends in the foreseeable future. Payment of future
dividends, if any, will be at the discretion of the Company's Board of Directors
after taking into account various factors, including the Company's financial
condition, operating results, current and anticipated cash needs and plans for
expansion.

12
<PAGE> 15

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1996 and on an as-adjusted basis to reflect the sale of 2,500,000
shares of Common Stock offered by the Company hereby at an assumed offering
price of $13.00 per share (the midpoint of the estimated range of the initial
public offering price in this offering) and the application of estimated net
proceeds therefrom as described in "Use of Proceeds." This table should be read
in conjunction with the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Prospectus:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt and capitalized lease obligations, net of current
portion(1)........................................................... $ 1,510 $ 855
Stockholders' equity:
Preferred Stock, $0.01 par value, 3,000,000 shares authorized, none
issued and outstanding(2)......................................... -- --
Common Stock, $0.01 par value, 19,400,000 voting shares authorized,
6,565,536 issued and outstanding, actual; 600,000 non-voting
shares authorized, 217,542 issued and outstanding, actual;
9,065,536 voting shares issued and outstanding, as adjusted;
217,542 non-voting shares issued and outstanding, as
adjusted(2)....................................................... 52 93
Additional paid-in capital(3)........................................ 9,699 39,158
Retained deficit(3).................................................. (3,230) (3,230)
------- -------
Total stockholders' equity................................... 6,521 36,021
------- -------
Total capitalization................................................... $ 8,031 $36,876
======= =======
</TABLE>

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

(1) See Notes 6 and 7 of Notes to Consolidated Financial Statements.

(2) Shares issued and outstanding excludes 716,916 shares of Common Stock
reserved for issuance upon exercise of options outstanding as of September
30, 1996 under the Company's stock option plan at a weighted average
exercise price of $1.81 per share and 325,000 shares issuable pursuant to
options to be granted upon the effectiveness of this offering at an exercise
price equal to the initial price to the public. See "Management -- 1996
Stock Incentive Plan" and Note 13 of Notes to Consolidated Financial
Statements.

(3) Reflects a non-recurring, non-cash compensation expense of $5.4 million
resulting from the vesting in September 1996 of 716,916 stock options for 10
executive officers and key employees of the Company at a weighted average
exercise price of $1.81 per share, and the accrual of a special compensation
expense of $210,000 in September 1996, which is payable to the Company's
Chief Executive Officer. See "Management -- 1996 Stock Incentive Plan" and
"Management -- Employment Agreements."

13
<PAGE> 16

DILUTION

The net tangible book value of the Company as of September 30, 1996 was
$6.3 million or approximately $0.93 per share. Net tangible book value per share
is determined by dividing the Company's net tangible book value (total tangible
assets less total liabilities) by the shares of Common Stock outstanding. Net
tangible book value dilution per share represents the difference between the
amount per share paid by purchasers of shares of Common Stock in the offering
made hereby and the net tangible book value per share of Common Stock
immediately after completion of the offering. After giving effect to the sale by
the Company of 2,500,000 shares of Common Stock offered hereby at an assumed
offering price of $13.00 per share (the midpoint of the estimated range of the
initial public offering price in this offering) and the application of the
estimated net proceeds therefrom, the pro forma net tangible book value of the
Company as of September 30, 1996 would have been $35.8 million or $3.86 per
share. This represents an immediate increase in net tangible book value of $2.93
per share to existing stockholders and an immediate dilution in net tangible
book value of $9.14 per share to the purchasers of Common Stock in this
offering, as illustrated in the following table:

<TABLE>
<S> <C> <C>
Initial public offering price per share............................. $13.00
Net tangible book value per share as of September 30, 1996........ $0.93
Increase in net tangible book value per share attributable to new
investors...................................................... 2.93
Net tangible book value per share after offering.................... 3.86
Dilution per share to new investors................................. $ 9.14
</TABLE>

The foregoing table assumes no exercise of the Underwriters' over-allotment
option or of any outstanding stock options to purchase Common Stock of the
Company.

The following table sets forth, on a pro forma basis as of September 30,
1996, the difference in the number of shares purchased from the Company, the
total consideration paid and the average price per share paid by the Company's
existing stockholders and the new investors in this offering. The calculations
in this table with respect to shares of Common Stock to be purchased by new
investors in this offering reflect the assumed initial public offering price of
$13.00 per share before deducting the underwriting discounts and commissions.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)............... 6,783,078 73.1% $ 7,864,123 19.5% $ 1.16
New investors(1)....................... 2,500,000 26.9 32,500,000 80.5 13.00
--------- ----- ----------- ----- ------
Total........................ 9,283,078 100.0% $40,364,123 100.0% $ 4.35
========= ===== =========== ===== ======
</TABLE>

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

(1) Sales by the Selling Stockholders in this offering will reduce the number of
shares held by existing stockholders to 5,533,078, or 59.6% (or 53.5% if the
Underwriters' over-allotment option is exercised in full), of the total
number of shares of Common Stock to be outstanding after this offering, and
will increase the number of shares to be purchased by new investors to
3,750,000, or 40.4% (or 46.5% if the Underwriters' over-allotment option is
exercised in full) of the total shares of Common Stock to be outstanding.
See "Principal and Selling Stockholders."

The foregoing tables and calculations exclude 716,916 shares of Common
Stock issuable upon exercise of outstanding stock options as of September 30,
1996, with a weighted average exercise price of $1.81 per share. See
"Management -- 1996 Stock Incentive Plan" and Note 13 of Notes to Consolidated
Financial Statements.

14
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company is
qualified by reference to and should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and Management's Discussion
and Analysis of Financial Condition and Results of Operations included elsewhere
herein. The Consolidated Statements of Income (Loss) data for the years ended
December 31, 1993, 1994 and 1995 and the Consolidated Balance Sheet data as of
December 31, 1994 and 1995 are derived from, and are qualified by reference to,
the audited Consolidated Financial Statements of the Company included elsewhere
in this Prospectus. The Consolidated Statements of Income (Loss) data for the
year ended December 31, 1992 and the Consolidated Balance Sheet data as of
December 31, 1991, 1992 and 1993 are derived from audited financial statements
not included herein. The Consolidated Statements of Income (Loss) data for the
one-month period ended December 31, 1991 (the first fiscal period of the
Company's operations subsequent to the acquisition of the Company's business by
current stockholders) and for the nine-month periods ended September 30, 1995
and 1996, and the Consolidated Balance Sheet data as of September 30, 1996, are
derived from unaudited financial statements that include all adjustments
(consisting of normal recurring adjustments and accruals) that the Company
considers necessary for a fair presentation of the consolidated financial data
included herein, in accordance with generally accepted accounting principles.
The Consolidated Statement of Income (Loss) for the nine months ended September
30, 1996 is not necessarily indicative of the results for the entire fiscal
year.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------- ------------------
1991(1) 1992 1993 1994 1995 1995 1996
------- ------ ------ ------ ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME (LOSS) DATA:
Revenues.......................... $ 224 $4,974 $6,900 $9,155 $ 8,128 $ 5,358 $ 9,275
Cost of sales..................... 79 1,236 1,616 2,901 2,983 2,267 2,886
----- ------- ------- ------- ------- ------- --------
Gross profit...................... 145 3,738 5,284 6,254 5,145 3,091 6,389
Operating expenses:
Research and development........ 43 963 1,138 1,180 1,953 1,362 1,686
Sales and marketing............. 52 656 982 1,590 2,109 1,456 1,506
General and administrative...... 49 1,472 1,151 1,074 1,191 807 1,052
Amortization of intangible
assets(2).................... 89 1,100 1,092 1,092 1,093 829 819
Special compensation
expense(3)................... -- -- -- -- -- -- 5,568
----- ------- ------- ------- ------- ------- --------
Total operating expenses..... 233 4,191 4,363 4,936 6,346 4,454 10,631
----- ------- ------- ------- ------- ------- --------
Income (loss) from
operations(4)................... (88) (453) 921 1,318 (1,201) (1,363) (4,242)
Interest expense, net............. -- 143 133 111 137 95 79
Provision (benefit) for income
taxes(5)........................ -- -- -- -- -- -- (1,758)
----- ------- ------- ------- ------- ------- --------
Net income (loss)(4).............. $ (88) $ (596) $ 788 $1,207 $(1,338) $(1,458) $ (2,563)
===== ======= ======= ======= ======= ======= ========
Income (loss) before pro forma
taxes........................... $(1,338) $(1,458) $ (4,321)
Pro forma provision (benefit) for
income taxes(5)................. (497) (541) (1,623)
------- ------- --------
Pro forma net loss(4)............. $ (841) $ (917) $ (2,698)
======= ======= ========
Pro forma net loss per
share(4)(6)..................... $ (0.12) $ (0.13) $ (0.38)
======= ======= ========
Shares used to compute net loss
per share(6).................... 7,013 7,013 7,013
</TABLE>

15
<PAGE> 18

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------ SEPTEMBER 30,
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................ $ 53 $ 436 $1,726 $3,353 $1,684 $ 2,139
Total assets............................... 8,353 7,741 7,908 9,627 7,523 10,891
Long-term debt and capitalized lease
obligations, net of current portion...... 2,560 2,552 2,035 2,164 1,847 1,510
Stockholders' equity....................... 4,862 3,821 4,599 5,945 3,907 6,521
</TABLE>

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

(1) Reflects operations for the one-month period ended December 31, 1991, which
was the first fiscal period of the Company's operations after acquisition of
the Company's business by current stockholders.
(2) Reflects the amortization of intangible assets related to the acquisition of
the Company's business in December 1991. These intangible assets will be
fully amortized as of November 30, 1996, and thus no such amortization
expense will be incurred subsequent to November 30, 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Amortization of Intangible Assets."

(6) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used to compute pro
forma net income (loss) per share.

16
<PAGE> 19

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Prospectus, including the following Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ materially from the results discussed in the
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus. The following
discussion should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto appearing elsewhere herein.

OVERVIEW

The Company commenced operations in 1978 to manufacture and distribute
embedded voice privacy and specialized signaling add-on devices for LMR users.
In December 1991, an investor group led by John T. Connor, the Company's current
Chairman and Chief Executive Officer, acquired substantially all of the assets
of the Company and certain intellectual property rights held by the Company's
founders, creating intangible assets of approximately $5.5 million, which the
Company is amortizing on a straight-line basis over a 60-month period ending
November 30, 1996. Following the acquisition, management took steps to diversify
the Company's product lines and further exploit the Company's core competencies
in information security technologies.

In late 1993, the Company began marketing system-wide security upgrades to
large users of wireless communications, particularly foreign public safety and
government users. Primarily as a result of such sales to these foreign
customers, revenues in 1994 and 1995 generally increased while gross margins
were reduced by the lower unit prices associated with these larger orders. The
Company's gross margins were also negatively impacted during this period by a
worldwide shortage of surface-mount microprocessors of the type used in the
Company's add-on scrambling modules, which increased the Company's component
costs. In mid-1994, the Company began purchasing components from a large
electronics component distributor, which contributed to a gradual improvement in
the Company's access to such components and reduced component costs.

In order to take advantage of the growing demand for digital
communications, in 1993 the Company started to invest in digital product and
technology research and development. In September 1994, the Company began
developing an APCO 25 compliant hand-held digital LMR. In connection with the
development of this new product, the Company hired 11 additional technical
personnel to focus on basic digital research and product development. In order
to help finance these additional research and development expenditures, in
September 1994, the Company raised $1.0 million through the sale of additional
equity to its existing equityholders. As a result of these development efforts,
the Company introduced a digital landline telephone encryptor in October 1995
and an APCO 25 compliant digital hand-held radio in August 1996, and plans to
introduce additional digital products in 1997.

In 1995, the Company's growth was interrupted when the Company experienced
a reduction in annual revenues and profitability before amortization of
intangible assets. The Company believes that these results were primarily
attributable to management conflict over the future direction and control of the
Company, which led to a management restructuring commencing in the second
quarter of 1995 that resulted in the departure of five executive officers. The
Company believes that these factors diverted management attention from
day-to-day operations, which negatively impacted operating results, particularly
in the first half of 1995. In addition, the Company incurred direct expenditures
in 1995 of approximately $305,000 in severance payments and recruiting and
relocation costs for new executives in connection with the restructuring.

The Company has benefited and continues to benefit from state tax credits
arising from a 1993 agreement with the State of Nebraska, which results in
annual state income tax credits through 1999. In addition, the Company utilizes
its foreign sales corporation subsidiary located in Guam to exempt from income
taxation a portion of the Company's foreign sales income. See "Provision for
Income Taxes."

17
<PAGE> 20

RESULTS OF OPERATIONS

The following table sets forth certain Consolidated Statements of Income
(Loss) information as a percentage of revenues during the periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- ----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues....................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................. 23.4 31.7 36.7 42.3 31.1
----- ----- ----- ----- -----
Gross profit................................... 76.6 68.3 63.3 57.7 68.9
Operating expenses:
Research and development..................... 16.5 12.9 24.0 25.4 18.2
Sales and marketing.......................... 14.2 17.4 26.0 27.2 16.2
General and administrative................... 16.7 11.7 14.7 15.0 11.4
Amortization of intangible assets............ 15.8 11.9 13.4 15.5 8.8
Special compensation expense................. -- -- -- -- 60.0
----- ----- ----- ----- -----
Total operating expenses............. 63.2 53.9 78.1 83.1 114.6
Income (loss) from operations.................. 13.4 14.4 (14.8) (25.4) (45.7)
Interest expense, net.......................... 1.9 1.2 1.7 1.8 0.9
Provision (benefit) for income taxes........... -- -- -- -- (19.0)
----- ----- ----- ----- -----
Net income (loss).............................. 11.5% 13.2% (16.5)% (27.2)% (27.6)%
===== ===== ===== ===== =====
Income (loss) before pro forma income taxes.... (16.5) (27.2) (46.6)
Pro forma provision (benefit) for income
taxes........................................ (6.1) (10.1) (17.5)
----- ----- -----
Pro forma net loss............................. (10.4)% (17.1)% (29.1)%
===== ===== =====
</TABLE>

Revenues

The Company recognizes revenues upon shipment of products to its customers.
Revenues increased to $9.3 million in the nine months ended September 30, 1996
from $5.4 million in the nine months ended September 30, 1995. This increase was
attributable primarily to revenues during the 1996 period associated with
several large new sales contracts, including the commencement of shipments of
socket scramblers to Motorola. In addition, revenues for the nine months ended
September 30, 1995 were negatively impacted due to management conflicts over the
future direction and control of the Company, which led to a management
restructuring commencing in the second quarter of 1995 and resulted in the
departure of five senior executive officers.

Revenues declined to $8.1 million in 1995 from $9.2 million in 1994, due
primarily to lower sales volumes in the first half of 1995, which management
believes resulted primarily from the internal management conflicts discussed
above. Revenues increased to $9.2 million in 1994 from $6.9 million in 1993, due
primarily to several significant international orders in 1994.

International sales as a percentage of revenues were 57.3% and 65.2% during
the nine-month periods ended September 30, 1996 and 1995, respectively, and
71.4%, 57.3% and 39.0% in 1995, 1994 and 1993, respectively. The Company
believes that the proportion of international sales in 1995 was unusually high,
reflecting large sales to Egypt and Turkey and lower domestic sales. The Company
anticipates that international sales will continue to represent a significant
portion of revenues in the future, although domestic sales may increase as a
percentage of revenues in the future due to an increased marketing emphasis on
domestic sales, including scrambler sales to Motorola, and the introduction and
expanded marketing domestically of the Company's current and proposed digital
radio products in the remainder of 1996 and 1997.

18
<PAGE> 21

Gross Profit

Cost of sales includes materials, labor, depreciation and overhead costs
associated with the production of the Company's products, as well as shipping,
royalty and warranty product costs. Gross profit increased to $6.4 million in
the nine months ended September 30, 1996 from $3.1 million in the nine months
ended September 30, 1995. In addition, gross margin increased to 68.9% in the
nine months ended September 30, 1996 from 57.7% in the same period in 1995, due
primarily to greater revenues in the nine months ended September 30, 1996
without a comparable increase in fixed overhead costs. In addition, gross
margins were negatively impacted during the 1995 period due to the sale to
international customers of large system-wide security upgrades at reduced unit
prices. The Company began shipment of its first stand-alone products in
September 1996, which generally have lower gross margins than add-on products.
To the extent that sales of stand-alone products increase in the future relative
to add-on product sales, gross margins are likely to decline.

Gross profit was $5.1 million, $6.3 million and $5.3 million in 1995, 1994
and 1993, respectively. Gross margin declined to 63.3% in 1995 from 68.3% in
1994, due primarily to lower sales volumes during the first six months of 1995
without a comparable decline in fixed overhead costs. Gross margin declined to
68.3% in 1994 from 76.6% in 1993, due primarily to increased system-wide sales
to international customers at reduced unit prices and the shortage of
surface-mount microprocessors.

Research and Development

Research and development expenses consist primarily of the costs associated
with research and development personnel, materials and the depreciation of
research and development equipment and facilities. The Company expenses all
research and development costs as they are incurred. Research and development
expenses increased to $1.7 million in the nine months ended September 30, 1996
from $1.4 million in the same period in 1995. This increase was due primarily to
expenses related to the development of the Company's APCO 25 digital LMRs and
the related development of internal manufacturing capabilities for certain radio
components. Research and development expenses as a percentage of revenues
decreased to 18.2% from 25.4% over this period, due to greater revenues in the
nine months ended September 30, 1996. The Company anticipates that it will
continue to devote increased resources to research and development during the
remainder of 1996 and 1997.

Research and development expenses increased to $2.0 million in 1995 from
$1.2 million in 1994 and $1.1 million in 1993. These increases were due
primarily to the commencement of development of the Company's APCO 25 compliant
digital LMRs, which began in September 1994, and the expanded development of
telephone security product lines. Research and development expenses as a
percentage of revenues were 24.0%, 12.9% and 16.5% in 1995, 1994 and 1993,
respectively.

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and related
costs of sales personnel, including sales commissions and travel expenses, and
costs of advertising, public relations, seminars and trade show participation.
Sales and marketing expenses remained constant at $1.5 million in each of the
first nine months of 1996 and 1995. Sales and marketing expenses decreased as a
percentage of revenues to 16.2% during the nine months ended September 30, 1996
from 27.2% in the same period in 1995, due primarily to the increase in revenues
during the 1996 period. The Company expects to increase its sales and marketing
expenditures significantly during 1997 through the addition of direct sales and
marketing personnel, primarily to support the introduction of new products,
including digital radios.

Sales and marketing expenses increased to $2.1 million in 1995 from $1.6
million in 1994 and $982,000 in 1993. These increases were due primarily to an
increase in personnel and associated expenses relating to the development of
international markets and distribution channels. Sales and marketing expenses as
a percentage of revenues were 26.0%, 17.4% and 14.2% in 1995, 1994 and 1993,
respectively. The percentage increase from 1994 to 1995 was also due in part to
the Company's lower revenues in 1995.

19
<PAGE> 22

General and Administrative

General and administrative expenses consist primarily of salaries and other
expenses associated with the Company's management, accounting, finance and
administrative functions. General and administrative expenses increased to $1.1
million in the nine months ended September 30, 1996 from $807,000 in the same
period in 1995. This increase was attributable primarily to expenses associated
with completing the restructuring of the senior management team begun in 1995,
including recruiting and relocation of several additional senior managers. The
Company expects to incur additional increases in general and administrative
expenses in 1997 due to costs associated with maintaining its status as a
publicly-held company and upgrades to the Company's management information
systems. General and administrative expenses as a percentage of revenues
decreased to 11.4% in the nine months ended September 30, 1996 from 15.0% in the
same period in 1995.

General and administrative expenses remained generally constant at $1.2
million, $1.1 million and $1.2 million in 1995, 1994 and 1993, respectively.
General and administrative expenses as a percentage of revenues were 14.7%,
11.7% and 16.7% in 1995, 1994 and 1993, respectively.

Amortization of Intangible Assets

Intangible assets consist primarily of the costs associated with the
acquisition of the Company's business in December 1991, including proprietary
technology licenses, non-competition agreements and goodwill. The Company is
amortizing these intangible assets on a straight-line basis over a 60-month
period ending November 30, 1996, which resulted in an amortization expense of
$1.1 million in each of 1995, 1994 and 1993, and approximately $820,000 in each
of the first nine months of 1996 and 1995. These intangible assets will be fully
amortized as of November 30, 1996, and thus no such amortization expense will be
incurred subsequent to November 30, 1996.

Special Compensation Expense

In September 1996, the Company incurred a non-recurring, non-cash
compensation expense of $5.4 million, resulting from the vesting in September
1996 of 716,916 stock options for 10 executive officers and key employees of the
Company at a weighted average exercise price of $1.81 per share, and a special
compensation expense of $210,000 payable to the Company's Chief Executive
Officer. Excluding the special compensation expense of $5.6 million, income
(loss) from operations, net income (loss), pro forma net income (loss) and pro
forma net income (loss) per share would have been $1.3 million, $1.2 million,
$1.0 million and $0.15, respectively, for the nine-month period ended September
30, 1996. See "Management -- 1996 Stock Incentive Plan" and
"Management -- Employment Agreements."

Interest Expense, Net

Net interest expense consists of interest expense, including amounts
payable on the Company's term loans, net of interest income, including interest
earned on cash and investable funds. Net interest expense remained relatively
constant at $80,000 in the nine months ended September 30, 1996, a decrease from
$94,000 in the same period in 1995. Net interest expense was $137,000, $111,000
and $134,000 in 1995, 1994 and 1993, respectively.

Provision for Income Taxes

Prior to June 1996, the Company was organized as a partnership, and
therefore was not subject to income taxation except to the extent that its
earnings were attributed to its partners. The Company's benefit for income taxes
subsequent to reorganization as a corporation for the three-month period ended
September 30, 1996 was $(1.8) million, primarily resulting from a deferred tax
benefit in connection with the stock option related special compensation expense
of $5.4 million.

The Company benefits from state tax credits arising from a 1993 agreement
with the State of Nebraska (the "Nebraska Agreement") to create at least 30 new
jobs and invest at least $3.0 million in new equipment prior to December 31,
1999. This agreement results in annual state income tax credits through 1999 of
ten percent of the purchase price of new equipment and a refund of Nebraska
sales taxes (currently at a rate of 6.5%) paid on purchases of new equipment
during each year and, beginning on January 1, 1996, a credit of five

20
<PAGE> 23

percent of the annual compensation paid to the new employees exceeding the base
year's aggregate compensation. Such credits amounted to $454,000 in the first
six months of 1996, of which $80,000 is currently available to the Company,
while the balance was accrued to the partners of the Company's predecessor
limited partnership. The Company believes that sufficient tax credits will be
available through the life of the Nebraska Agreement to offset the Company's
expected Nebraska state income tax liability during such period. In addition,
the Company utilizes its foreign sales corporation ("FSC") subsidiary located in
Guam to exempt from income taxation a portion of the Company's foreign sales
income.

Recently Issued Accounting Standards

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based
Compensation." SFAS No. 123 allows companies to continue the current method of
accounting for stock-based compensation plans under APB Opinion No. 25 or adopt
the fair value based method contained in SFAS No. 123. The Company plans to
continue to account for its stock-based compensation under APB Opinion No. 25.

21
<PAGE> 24

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain unaudited financial information in
dollars and as a percentage of revenues for the seven quarters ended September
30, 1996. In the opinion of the Company's management, this information has been
prepared on the same basis as the audited Consolidated Financial Statements
appearing elsewhere in this Prospectus and includes all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the unaudited
results set forth herein. The operating results for any quarter are not
necessarily indicative of results for any subsequent period or for the entire
fiscal year.

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1995 1996 1996 1996
--------- -------- ------------- ------------ --------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.................................. $ 1,460 $1,562 $ 2,336 $2,770 $ 2,580 $3,148 $ 3,547
Cost of sales............................. 646 761 859 716 911 939 1,036
------ ------ ------ ------ ------ ------ ------
Gross profit.............................. 814 801 1,477 2,054 1,669 2,209 2,511
Operating expenses:
Research and development................ 397 457 508 591 436 649 601
Sales and marketing..................... 509 411 535 654 431 404 671
General and administrative.............. 285 265 258 383 350 345 357
Amortization of intangible assets(1).... 273 280 277 263 276 270 273
Special compensation expense(2)......... -- -- -- -- -- -- 5,568
------ ------ ------ ------ ------ ------ ------
Total operating expenses.............. 1,464 1,413 1,578 1,891 1,493 1,668 7,470
------ ------ ------ ------ ------ ------ ------
Income (loss) from operations(3).......... (650) (612) (101) 163 176 541 (4,959)
Interest expense, net..................... 29 24 42 43 18 32 29
Provision for income taxes(4)............. -- -- -- -- -- -- (1,758)
------ ------ ------ ------ ------ ------ ------
Net income (loss)(3)...................... $ (679) $ (636) $ (143) $ 120 $ 158 $ 509 $(3,230)
====== ====== ====== ====== ====== ====== ======
Income (loss) before pro forma taxes...... $ (679) $ (636) $ (143) $ 120 $ 158 $ 509 $(4,988)
Pro forma provision (benefit) for income
taxes................................... (252) (236) (53) 45 38 97 (1,758)
------ ------ ------ ------ ------ ------ ------
Pro forma net income (loss)(3)............ $ (427) $ (400) $ (90) $ 75 $ 120 $ 412 $(3,230)
====== ====== ====== ====== ====== ====== ======
Pro forma net income (loss) per
share(3)(5)............................. $ (0.06) $(0.06) $ (0.01) $ 0.01 $ 0.02 $ 0.06 $ (0.46)
====== ====== ====== ====== ====== ====== ======
Shares used to compute net income (loss)
per share(5)............................ 7,013 7,013 7,013 7,013 7,013 7,013 7,013
====== ====== ====== ====== ====== ====== ======

AS A PERCENTAGE OF REVENUES
---------------------------------------------------------------------------------
Revenues.................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................. 44.3 48.7 36.8 25.9 35.3 29.8 29.2
------ ------ ------ ------ ------ ------ ------
Gross margin.............................. 55.7 51.3 63.2 74.1 64.7 70.2 70.8
Operating expenses:
Research and development................ 27.2 29.3 21.7 21.3 16.9 20.6 16.9
Sales and marketing..................... 34.8 26.3 23.0 23.6 16.7 12.8 18.9
General and administrative.............. 19.5 17.0 11.0 13.8 13.6 11.0 10.1
Amortization of intangible assets(1).... 18.7 17.9 11.8 9.5 10.7 8.6 7.7
Special compensation expense(2)......... -- -- -- -- -- -- 157.0
------ ------ ------ ------ ------ ------ ------
Total operating expenses.............. 100.2 90.5 67.5 68.2 57.9 53.0 210.6
------ ------ ------ ------ ------ ------ ------
Income (loss) from operations(3).......... (44.5) (39.2) (4.3) 5.9 6.8 17.2 (139.8)
Interest expense, net..................... 2.0 1.5 1.8 1.6 0.7 1.0 0.8
Provision for income taxes(4)............. -- -- -- -- -- -- (49.6)
------ ------ ------ ------ ------ ------ ------
Net income (loss)(3)...................... (46.5)% (40.7)% (6.1)% 4.3% 6.1% 16.2% (91.0)%
====== ====== ====== ====== ====== ====== ======
</TABLE>

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

(1) Reflects the amortization of intangible assets related to the acquisition of
the Company's business in December 1991. These intangible assets will be
fully amortized as of November 30, 1996, and thus no such amortization
expense will be incurred subsequent to November 30, 1996. See "-- Results of
Operations -- Amortization of Intangible Assets."

(2) Represents a non-recurring, non-cash compensation expense of $5.4 million
resulting from the vesting in September 1996 of 716,916 stock options for 10
executive officers and key employees of the Company at a weighted average
exercise price of $1.81 per share, and the accrual of a special compensation
expense of $210,000 in September 1996, which is payable to the Company's
Chief Executive Officer. See "Management -- 1996 Stock Incentive Plan" and
"Management -- Employment Agreements."

(3) Excluding the special compensation expense of $5.6 million, income (loss)
from operations, net income (loss), pro forma net income (loss) and pro
forma net income (loss) per share would have been $609,000, $541,000,
$541,000 and $0.08, respectively, for the three months ended September 30,
1996.

(4) Prior to June 30, 1996, the Company operated as a partnership. The pro forma
provision for income taxes reflects the provision for income taxes as if the
Company had been taxed as a Subchapter "C" corporation under the Internal
Revenue Code.

(5) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used to compute pro
forma net income (loss) per share.

22
<PAGE> 25

The Company historically has experienced, and in the future expects to
continue to experience, substantial variability in its revenues and
profitability from quarter to quarter. The level of revenues in a particular
quarter vary primarily based upon the timing of large purchase orders, due
principally to the seasonal nature of governmental budgeting processes and the
needs of competing budgetary concerns of its customers during the year. Other
factors which affect the level of revenues in a particular quarter include the
timing of the introduction of new products, general economic conditions, the
timing and mix of product sales and specific economic conditions in the
information security and wireless communications industries. In addition, due to
the buying patterns of the Company's federal and state agency customers,
revenues for the first quarter of the Company's fiscal year tend to be lower
than revenues for the fourth quarter of the preceding year. The Company believes
that its quarterly results are likely to vary for the foreseeable future. See
"Risk Factors -- Fluctuations in Quarterly Operating Results."

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations and met its capital requirements
primarily through cash flow generated from operations, short-term borrowings,
long-term debt and an additional capital investment from its investors. The
Company's operating activities generated cash of $1.4 million, $55,000, $2.9
million and $1.4 million in the nine months ended September 30, 1996 and in
1995, 1994 and 1993, respectively. Cash provided by operating activities in the
nine months ended September 30, 1996 consisted primarily of a net loss plus
depreciation and amortization and the special compensation expense and an
increase in accounts payable, offset in part by an increase in accounts
receivable, inventory and deferred tax assets. Cash provided by operating
activities in 1995 consisted primarily of a net loss plus depreciation and
amortization and an increase in accrued expenses, offset in part by an increase
in accounts receivable and a decrease in accounts payable. Cash provided by
operating activities in 1994 consisted primarily of net income plus depreciation
and amortization and a decrease in accrued expenses, offset in part by increases
in accounts receivable, inventory and prepaid and other assets.

The deferred tax assets totaling $1.9 million (which resulted primarily
from the stock option related special compensation expense of $5.4 million
incurred in September 1996) were 17.9% and 29.9% of total assets and
stockholders' equity, respectively, at September 30, 1996. Based on the current
level of taxable income, management believes that it is more likely than not
that future taxable income will be sufficient to fully utilize all deferred tax
assets recorded.

Cash used for investing activities is attributable primarily to capital
expenditures, which totaled $1.4 million, $1.3 million, $1.7 million and
$591,000 in the nine months ended September 30, 1996 and in 1995, 1994 and 1993,
respectively. Capital expenditures consisted primarily of computer and
networking equipment, office furniture and manufacturing equipment and, in 1994,
expenses related to the construction of the Company's Lincoln facility. In
August 1996, the Company began construction of a 21,000 square foot expansion of
its existing Lincoln facility at an estimated final cost of $1.0 million,
primarily to accommodate additional manufacturing capacity. The expansion is
expected to be completed in the first half of 1997. As of September 30, 1996,
the Company had no additional firm commitments for capital expenditures, but the
Company expects to purchase additional computer equipment and replace its
current management information system in 1997.

Financing activities have consisted primarily of borrowings under and
payments on an industrial development revenue bond issue (the "IDR") arranged
through the Nebraska Investment Finance Authority, two term notes, an
installment note secured by equipment and a bank line of credit. Additionally,
in September 1994, the Company received an additional $1.0 million equity
investment from existing investors to help the Company finance the development
of its APCO 25 digital radio project.

The IDR bears interest at a fixed rate of 6.25%, is non-amortizing and
matures in January 2004. At September 30, 1996, the outstanding principal amount
under the IDR was $850,000. Both of the term notes bear interest at the bank's
regional money market rate plus 0.5% (8.75% at September 30, 1996) and are
secured by substantially all of the Company's assets. One of the term notes had
a principal balance outstanding of $299,305 at September 30, 1996 and matures in
February 1998, while the other term note had a

23
<PAGE> 26

principal balance outstanding of $409,751 at September 30, 1996 and matures in
May 1999. The installment note is secured specifically by equipment and bears
interest at the bank's national prime rate plus 0.5% (8.25% at September 30,
1996). The installment note is payable in monthly installments and matures in
May 2000, and had outstanding $383,373 in principal amount at September 30,
1996. The bank line of credit provides for working capital advances not to
exceed $2.0 million, with specific advances calculated based upon a percentage
of eligible inventories and accounts receivable. Interest is payable monthly on
the bank line at the bank's money market rate (8.25% at September 30, 1996) and
is collateralized by substantially all of the Company's assets. The Company had
$623,000 of borrowings outstanding on the bank line of credit at October 31,
1996.

In November 1996, the Company obtained a $1.0 million construction loan to
fund the expansion of its existing Lincoln facility. Interest on the loan is
payable monthly at the bank's national money market rate plus 0.5% (8.75% at
inception), with the principal balance maturing in August 1997.

Prior to June 1996, the Company was organized as a partnership and, as
such, made distributions to its partners of $181,000, $700,000, $861,000 and
$360,000 in the six months ended June 30, 1996 and in 1995, 1994 and 1993,
respectively, primarily to cover its partners' attributed tax liabilities. The
Company currently intends to retain earnings, if any, to support its growth
strategy and does not anticipate paying cash dividends in the foreseeable
future.

The Company believes that cash generated from operations and the net
proceeds from the sale of Common Stock in this offering, together with the
Company's cash, cash equivalents and lines of credit will be sufficient to meet
its anticipated cash needs for working capital, capital expenditures and
business expansion plans at least through 1997.

24
<PAGE> 27

BUSINESS
GENERAL

The Company designs and manufactures information security products which
prevent unauthorized access to sensitive voice and data communications. The
Company focuses on developing and providing information security products for
telecommunications markets, including the land mobile radio, telephony and data
security markets. The Company's products are based on a wide range of
proprietary analog scrambling and digital encryption technologies. The Company's
core technologies offer a number of significant benefits including high levels
of information security and sound quality, high-speed, real-time data
transmission, low power consumption, small size and cost effective
manufacturing. The Company believes its expertise in both analog and digital
information security, including the ability to provide "dual mode" analog and
digital security in the same product, provides a competitive advantage as
communications products migrate from analog to digital technology. Furthermore,
the Company believes its core technological expertise in analog scrambling and
digital encryption enables it to bring new information security products to
market quickly with relatively low development costs.

INDUSTRY BACKGROUND

The electronic information security industry is generally comprised of
products designed to protect the transmission of voice and data communications
through both wireless and wireline mediums. Without such protection, many forms
of electronic communications, such as LMR and cellular telephone conversations
and remote data communications, are vulnerable to interception and theft.

Today's information security industry originated from the need to secure
sensitive wireless military communications. By the late 1970s, the availability,
quality and cost of information security devices had improved such that the use
of these devices by non-military governmental users (i.e., law enforcement,
fire, emergency medical and public safety personnel) and large commercial users
became economically and functionally feasible. Although a variety of
manufacturers introduced new products throughout this time period, Motorola
emerged as the leader in wireless voice communications and a developer of
limited analog information security products.

Initially, all electronic communications were transmitted in analog format.
Analog transmissions typically consist of a voice or other signal modulated
directly onto a continuous radio "carrier" wave. An analog transmission can be
made secure by "scrambling" or manipulating the original signal at the point of
transmission and reconstituting the original signal at the receiving end. By the
late 1980s, accelerating use of wireless communications devices, such as LMRs
and cellular telephones, resulted in increased demand for limited radio
spectrum. In response to this demand, and enabled by the low-cost availability
of digital signal processors ("DSPs"), electronics manufacturers developed
spectrally efficient (i.e., low-bandwidth) digital communications devices. In
digital communications, an analog signal is "digitized," or converted into a
series of discrete information "bits" in the form of ones and zeroes prior to
transmission. Digital transmissions can be made secure by a process known as
"encryption," which involves the use of a mathematical algorithm to rearrange
the bit-stream prior to transmission and a decoding algorithm to reconstitute
the transmitted information back into its original form at the receiving end.

The Company believes that the demand for voice security products is growing
due to a global increase in the use of wireless voice products and an increasing
public awareness of the security limitations of existing wireless products.
Wireless communication devices operate in specific, designated frequency bands,
and include cellular telephones, land mobile radios, pagers and the new personal
communication services devices. Relatively inexpensive radio scanners, available
from many consumer electronics stores, can intercept or be easily modified to
intercept most types of analog wireless voice transmissions. The Company
believes that public safety officers in particular, significant users of LMR
products, are concerned with the interception of their sensitive radio
conversations by eavesdroppers such as members of the press and criminals. In
addition, the recent interception and publication of the supposedly private
cellular telephone conversations of public figures, as well as the widespread
theft of cellular telephone services through telephone "cloning," has

25
<PAGE> 28

increased public awareness of the need for cellular security. As a result of
these factors, the Company believes that the demand for voice information
security products will continue to grow in the foreseeable future.

Land Mobile Radio Market

One of the earliest applications of information security technology outside
of the military was in protecting LMR voice communications. Land mobile radios
consist of hand-held or mobile (vehicle mounted) two-way radios commonly used by
public safety workers (e.g., police, fire and medical emergency personnel),
businesses (e.g., fleet operators, taxi dispatch, construction and other
commercial users) and a wide variety of United States and foreign government
agencies. A typical LMR system consists of one or more base control stations
networked with each other and with multiple mobile (vehicle-mounted) or
hand-held portable LMRs. According to data published by Motorola, the worldwide
LMR installed base grew to approximately 45 million units in 1995 from 33
million units in 1992.

As with all other major forms of wireless communications devices, LMRs
transmit information in either analog or digital format, although the
substantial majority of LMRs currently in use operate in analog format only. In
1995, as a result of increasing frequency spectrum capacity constraints, the FCC
mandated that all new LMR equipment utilize a more spectrally-efficient,
narrow-band (12.5 kHz) transmission system, which will effectively require all
LMR users to migrate to digital LMR systems. In response to this mandate, an
advisory body of the Association of Public Safety Communications Officers, Inc.
("APCO"), including a number of LMR manufacturers, recommended an industry
standard for digital LMR devices which would both meet the requirements of the
FCC mandate and provide solutions for several actual or potential problems which
increasingly troubled public safety LMR users. These problems included: (i) the
lack of interoperability, or the failure of existing systems to communicate with
other systems produced by the same or other manufacturers; (ii) the lack of
backwards compatibility between older analog LMR systems and the new proposed
digital LMR systems; and (iii) the interception of sensitive public safety
communications by third party eavesdroppers. As a result, the APCO advisory body
eventually promulgated an open standard for digital LMR products, which has come
to be known as the "APCO 25 standard."

In order to comply with the APCO 25 standard, a digital LMR system must
utilize a "common air interface" to achieve interoperability with other digital
systems, be compatible with existing analog LMR infrastructure and provide the
user with the ability to use advanced encryption technologies. Motorola, the
largest LMR manufacturer, played a significant role in the formulation of the
APCO 25 standard and has been a major proponent of its adoption by the LMR
public safety market. Certain competitive LMR system standards have been
proposed by other LMR manufacturers, primarily the "EDACS" standard proposed by
Ericsson. Ericsson's EDACS standard is based on time division multiple access
("TDMA") technology, compared with the APCO 25 frequency division multiple
access ("FDMA") technology. The Company believes that the APCO 25 standard is
the only "open" (i.e., non-proprietary) digital LMR transmission standard
currently in use or proposed.

Although public safety agencies are not required by the FCC or the APCO
body to purchase APCO 25 compliant LMR systems, or otherwise adopt the APCO 25
standard, the Company believes, based in part on specifications published or
proposed by certain public safety agencies seeking bids for LMR system
equipment, that APCO 25 compatibility is one of the key purchasing factors for
public safety LMR purchasers and that the demand for APCO 25 compliant LMR
systems will increase as LMR users upgrade their existing systems to comply with
the FCC mandate. On the federal level, in May 1996, the U.S. Air Force proposed
to adopt the APCO 25 standard as the mandatory LMR standard for all future Air
Force LMR requirements and acquisitions. Also, in March 1996, the U.S.
Department of the Interior announced a similar proposal to adopt the APCO 25
standard. Although there can be no assurance that these specific proposals will
be implemented, the Company believes that they reflect developing support for
the APCO 25 standard.

26
<PAGE> 29

Telephony Market

Since its inception in 1983, cellular telephone service has grown rapidly
and become available to most of the population of the United States. According
to International Data Corporation, the U.S. cellular subscriber base is
projected to grow from 40.4 million subscribers in 1996 to 56.9 million
subscribers by 2000. Cellular telephone subscribers and revenues have grown
rapidly in recent years. The increased volume has raised significant new
security and privacy issues and an increased sensitivity to the potential risks
involved in intercepted signals. Unprotected wireless transmissions generally
provide minimal or no security and allow eavesdropping by even casual listeners
with compatible scanners. The Company believes that growth in the cellular
telephony market, together with increasing awareness of the ease of interception
of cellular telephone calls, will lead to increasing demand for cellular
telephone voice security products.

Data Security Market

The Company believes that the demand for secure methods of transmitting
data electronically is growing and will continue to grow in the future. The
Company believes that during the past decade, the volume of sensitive,
proprietary information has grown significantly, along with the number of
reported incidents and severity of information theft and corporate espionage. In
addition, the shift from mainframe to distributed computing and the
proliferation of local-area networks ("LANs"), servers and interconnected LANs
or wide-area networks has raised significant new access and security issues.
While the client/server environment and availability of modem-based connections
has enabled information sharing from remote locations, the increased number of
access points into computer networks has generally made such networks
increasingly vulnerable. Individuals have been able to exploit system weaknesses
to gain unauthorized access to networks, data transmissions and individual
computers, and have at times used such access to alter or steal data or, in some
instances, to launch destructive attacks on stored information. The Company
expects that these factors will contribute to continued expansion in the data
security market.

THE COMPANY'S STRATEGY

The Company believes that its expertise in both analog and digital
information security, including the ability to provide "dual-mode" analog and
digital security in the same product, provides a competitive advantage as
communication products migrate from analog to digital technology. The Company's
objective is to maintain its position in the analog add-on market for wireless
voice security products used in land mobile radios and cellular telephones while
building on its core technological competencies to enter new markets for secure
voice and data security products. The Company's strategy to accomplish its
objective includes the following elements:

Develop New Products Based on Existing Core Technologies. The Company has
developed or has acquired the rights to core technologies for scrambling analog
and encrypting digital signals in a variety of ways, most of which can be
adapted readily to new applications. This enables the Company to bring new
products to market quickly and with relatively low development costs. For
example, in August 1996, the Company was one of the first manufacturers to offer
a hand-held APCO 25 compliant LMR, which was developed in part using the
Company's core technologies. The Company is currently developing a product to
provide secure data transmission using the encryption technology developed for
the APCO 25 LMR and the Company's landline encryption device (DME 9600). The
Company believes that its core technologies, its application of those
technologies and its ability to create new products efficiently have provided,
and will continue to provide, a competitive advantage in responding to emerging
markets for analog and digital information security.

Offer Complete Secure Product Solutions. Until recently, the Company's
products consisted primarily of devices designed to be added to communications
products produced by other manufacturers. The Company intends to expand its
product lines to include complete, stand-alone secure communications solutions.
The Company is developing a secure, APCO 25 compliant LMR system based on its
Stealth 25 hand-held LMR and using base stations and repeaters purchased on a
private-labeled basis from Motorola. The Company has also recently begun
providing Transcrypt-branded secure cellular telephones and Voice Privacy
Exchange

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<PAGE> 30

Units to a regional Bell operating company, which offers secure cellular service
in one metropolitan area. The Company believes that providing complete solutions
will allow it to compete for larger sales orders than can be obtained for add-on
products.

Foster Key Strategic Relationships. The Company has entered into and
intends to continue to develop key strategic relationships with regard to
distribution, marketing and technology licensing. The Company plans to enhance
existing and identify new distribution channels for its information security
products and recently introduced radio products. For example, in August 1995,
the Company entered into an agreement to provide a minimum of $3.7 million of
socket scrambler modules to Motorola for resale under Motorola's name. In
addition, the Company has licensed key technologies from companies such as
Motorola and Digital Voice Systems, Inc., which have enabled the Company to
integrate multiple advanced technologies into its add-on products and its
existing and proposed line of digital radios. For example, the Company has
licensed from Motorola the rights to use Motorola's proprietary analog trunking
technology (Smartnet(TM)) and certain proprietary Motorola digital encryption
algorithms in its LMR products, which the Company anticipates will allow it to
sell its products in additional markets. The Company believes that these and
future strategic relationships will be important to both the Company's new
product development and future growth.

Explore Strategic Acquisitions. The information security industry is
comprised primarily of a relatively small number of companies comparable in size
to the Company and several large competitors, such as Motorola and Ericsson. The
Company believes that, as the migration from analog to digital technology
progresses and the industry expands and evolves, there will be consolidation
among the current competitors. The Company intends to explore opportunities to
acquire businesses and technologies that will complement its products and core
technologies and expand its existing customer base and manufacturing capability.
However, the Company has no present understandings or agreements concerning any
such acquisitions and is not presently negotiating with respect to any such
matter. There is no assurance that the Company will be able to identify an
appropriate acquisition candidate or complete such an acquisition.

CORE TECHNOLOGIES

The Company first entered the information security market in 1978 with
simple, transistor-based add-on scrambling modules for use in analog LMRs
employing basic single-inversion scrambling techniques, which the Company
marketed primarily to public safety agencies and international governments.
Since that time, the Company has further developed and improved upon its core
information security technologies, including its copyrighted Crypto Voice
Plus(@) technology, which the Company believes provide high levels of
information security and sound quality, high (real-time) data transmission rates
and low power consumption. The Company believes that its core technologies
provide it with a competitive advantage in the information security marketplace.
The Company has implemented its core technologies into its scrambler modules, as
well as in other types of products within the Company's two major product
families, LMR Security and Telephony Security. Such core technologies currently
include the following methods, listed in ascending order of sophistication of
security technique: (i) frequency inversion (inverting or otherwise adjusting
the phase of a signal based on a consistent method); (ii) split-band
transmission (spreading a signal across multiple channels); (iii) rolling code
transmission (incrementally stepping codes); (iv) hopping code transmission
(randomly setting codes based upon an algorithm); (v) frequency hopping
transmission (changing broadcast frequencies multiple times per second based
upon an algorithm); and (vi) digital encryption (encoding a digital bit-stream
based upon a mathematical encryption algorithm).

The Company typically charges higher prices for devices featuring more
advanced levels of security. Therefore, the types of end users at each level of
security tend to vary based upon the importance of the information for which
security is desired. Typical users of the most basic form of scrambler, the
frequency inversion scrambler, include taxi dispatchers, other types of consumer
businesses and football and other sports teams that need to provide real-time
secure communications between players and coaches. Typical users for
medium-level security devices include commercial and industrial users and
international customers for which an export license has not been obtained.
High-level scrambling devices are used primarily by public safety agencies and
federal government personnel.

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PRODUCTS

Current Products

The following tables contain a summary of certain information concerning
the Company's current principal information security products, all of which have
been shipped in commercial quantities, except as otherwise indicated:

LAND MOBILE RADIO SECURITY PRODUCTS

<TABLE>
<CAPTION>
COMMERCIAL LATEST
PRODUCT DESCRIPTION/SECURITY LEVEL LIST PRICE INTRODUCTION UPDATE
- ----------------------------- ------------------------------ ------------ ---------------- ------------
<S> <C> <C> <C> <C>
MODULAR ADD-ON SCRAMBLERS
SC20-400 Scrambler Single inversion scrambler/LOW $124 December 1988 October 1996
SC20-410 Scrambler Rolling code scrambler/MED $249 September 1994 June 1996
SC20-430 Scrambler Hopping code scrambler/MED $399 September 1994 June 1996
SC20-460 Scrambler Hopping code scrambler/HIGH $535-599 April 1989 June 1996
SC20-480 Scrambler Hopping code w/synch/HIGH $599 April 1993 July 1996
SC20-500 Scrambler DSP-based scrambler/VERY HIGH $699 July 1996 August 1996
SOCKET SCRAMBLERS
Plug-in version of
350 OEM Scrambler SC20-460/HIGH $280 April 1996 August 1996
Plug-in version of
316 OEM Scrambler SC20-460/HIGH $200 July 1996* --
Plug-in version of
460 OEM Scrambler SC20-460/HIGH $280 July 1996 --
Plug-in version of
416 OEM Scrambler SC20-460/HIGH $275 August 1996 --
SIGNALING
TR20-200 Series RF signaling modules $59-399 May 1990 June 1996
TR20-800 Series Complex signaling modules $59-399 April 1991 June 1996
APCO 25 DIGITAL RADIO
Hand-held Stealth 25 Radio Digital radio/VERY HIGH $2,250-4,650 September 1996 --
</TABLE>

<TABLE>
<CAPTION>
TELEPHONY SECURITY PRODUCTS
COMMERCIAL LATEST
PRODUCT DESCRIPTION/SECURITY LEVEL LIST PRICE INTRODUCTION UPDATE
- ----------------------------- ------------------------------ ------------ ---------------- ------------
<S> <C> <C> <C> <C>
CELLULAR SCRAMBLERS
Mobile Scrambler-CX Hopping code scrambler/HIGH $250-380 March 1993 June 1996
MicroTAC Scrambler-PX Hopping code scrambler/HIGH $370-500 May 1994 January 1996
Secure Cellular Telephone Hopping code scrambler/HIGH $700-1,500 March 1996 --
DSP Scrambler GSU DSP-based scrambler/VERY HIGH $370-500 September 1996* --
Elite Scrambler DSP-based scrambler/VERY HIGH $800-1,000 October 1996* --
LANDLINE/DESKTOP SCRAMBLERS
Voice Privacy Exchange Unit PBX scrambler/HIGH $7,495 November 1993 June 1996
LX30-33X0 Landline scrambler/HIGH $740-925 December 1993 June 1996
TSU-LX40-33X0 Generic landline/HIGH $895 September 1996* --
DME 9600/9603 Landline encryptor/VERY HIGH $1,495-1,995 October 1995 June 1996
</TABLE>

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

* This product has been announced but not yet shipped in commercial quantities.

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As with all of the Company's information security products, the use of
scrambling equipment is required on both the transmitting and receiving sides of
communications in order to operate in secure mode. For example, in order to
achieve secure LMR communications, it would be necessary for both the
transmitting and receiving equipment, including hand-held and mobile devices and
base stations, to be equipped with one of the Company's scramblers, whether as
an add-on installation or in the form of one of the Company's complete LMRs. In
the Company's cellular telephony family, a scrambled cellular telephone may
communicate in secure mode only with another of the Company's secure cellular
telephones, a PBX interchange or cellular service provider that has installed
one of the Company's Voice Privacy Exchange Units, or a landline telephone
equipped with one of the Company's external desktop scrambling units. However,
all of the Company's products can be used in the clear, non-scrambled mode with
equipment that does not contain a Transcrypt security device.

LMR Security. The Company offers a variety of add-on LMR scrambling
products featuring the Company's different core technologies and varying levels
of security. Add-on scramblers are available in two packages, a modular package
consisting of a circuit board that is designed to be permanently soldered into
existing circuitry, and a socket package designed to be installed in sockets
with standard pin configurations installed by OEM manufacturers. Motorola
currently stocks and sells directly one of the Company's socket modules pursuant
to an August 1995 agreement with the Company. Other products sold by the Company
are compatible with sockets of other OEM manufacturers, including Icom America,
Inc. and Kenwood Radio. The Company also produces modules that add signaling
features to OEM radios, including "man-down" (emergency signal broadcast if
radio position becomes horizontal), "stun-kill" (disables lost or stolen radios
remotely) and "over-the-air reprogramming" (changes encryption and scrambling
codes remotely). Sales of LMR products accounted for approximately 76% and 80%
of total revenues in the nine months ended September 30, 1996 and in 1995,
respectively.

In August 1996, the Company introduced a hand-held digital LMR complying
with the APCO 25 "common air interface" standard and featuring the Company's
advanced core scrambling and digital encryption technologies. The Company
intends to introduce additional secure LMR models, including mobile radios, in
1997. All of the Company's APCO 25 compliant "dual-mode" digital radios are
expected to be compatible and fully interoperable with older analog radio
systems, as well as with Motorola's proprietary analog trunking technology
(Smartnet(TM)) and proprietary digital encryption algorithm. The Company
believes that such backward compatibility will allow early adopters of the APCO
25 standard, such as the federal government and many public safety agencies, the
ability to purchase new equipment without replacing entire older systems.

Telephony Security. The Company's add-on scramblers for cellular telephones
typically consist of a modular circuit board designed to be permanently soldered
into existing telephone circuitry. The add-on scrambler product line includes a
model designed specifically for Motorola's MicroTAC(TM) telephones as well as a
"generic" scrambler for use in a variety of OEM cellular telephone equipment and
featuring advanced digital signal processing technology. Additionally, the
Company has recently begun marketing a complete, Transcrypt-branded, Motorola
MicroTAC(TM) cellular telephone upgraded to include the Company's advanced
add-on scrambling modules. The Company believes that offering cellular telephone
security through a complete telephone product offers certain advantages to
add-on scrambler sales, such as presenting the customer with a single vendor,
overcoming customer resistance to surrendering their telephones during
installations and allowing the Company to market cellular security directly to
cellular service providers. The Company has recently begun providing
Transcrypt-branded secure cellular telephones and the Company's Voice Privacy
Exchange Units to a regional Bell operating company, which resells the
telephones to its customers in one metropolitan area and charges additional
monthly fees for secure service. In the area of landline telephone voice
security, the Company has, since 1995, produced landline scrambling and
encryption devices for installation between the handset and telephone base,
which have been purchased primarily by overseas government and corporate users.

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Products Under Development

Consistent with the Company's development efforts for its existing
products, the Company designs new products around common core scrambling and
encryption technologies utilizing common signal processing platforms and
circuitry. Using this approach, the Company can generally incorporate
improvements in core technologies into its new products more quickly and with
relatively lower development costs compared to developing entire products
separately. The following discussion contains a summary of the Company's
principal products under development. No assurance can be given that the Company
will be able to successfully develop any of these products or, if developed,
that any such products will be commercially viable or result in material sales
by the Company.

LMR Security. The Company plans to introduce in 1997 additional models of
its hand-held digital LMRs containing different features, as well as a line of
mobile (vehicle mounted) digital LMRs, all of which will comply with the APCO 25
standard. The Company also intends shortly thereafter to introduce hand-held and
mobile radios that transmit in analog format for the existing analog market. All
of these radios will contain as standard features the Company's voice scrambling
and/or digital encryption technology. Such radios will be compatible and fully
interoperable with older analog LMRs, and some of the radios will offer
compatibility with Motorola's proprietary analog trunking technology
(Smartnet(TM)) and Motorola's digital encryption algorithms. While the Company
is not planning on manufacturing LMR infrastructure, the Company expects that
base stations and repeaters will be available on a private label basis for
resale by the Company as part of an integrated system. The Company is also
developing a modular add-on LMR scrambler for use in OEM equipment that would
utilize the digital encryption algorithms licensed from Motorola. The Company's
analog radios, as well as its Smartnet(TM) compatible radio, are, as of the date
of this Prospectus, in the prototype and testing stage of development. The
remaining LMR security products under development are in the design and
experimentation stage.

Telephony Security. In March 1996, the Company began shipping in commercial
quantities a complete Transcrypt-branded Motorola MicroTAC(TM) cellular
telephone upgraded to include the Company's advanced add-on scrambling modules.
The Company intends to introduce, in 1997, a complete secure digital cellular
telephone featuring built-in digital encryption technology. The Company also
plans to introduce various other products in 1997, including a "T1" network
server capable of encryption/decryption for up to 24 simultaneous voice users, a
scrambling module, based on encryption technology, for cellular telephone users
and five new landline security products. Additionally, the Company intends to
introduce, in late 1996, a "generic" analog scrambling module incorporating
built-in digital signal processing techniques, which is expected to provide
improved voice quality with less need for customization. Such device would be
marketed primarily to buyers of premium priced cellular telephones, such as
Motorola's new Elite(TM) and StarTAC(TM) telephones. As of the date of this
Prospectus, the Company's "T1" network server and generic analog scrambling
module are in the final stages of product development, while the remaining
telephony security products under development are in the design and
experimentation stage.

Data Security. The Company's planned data security products are expected to
incorporate real-time, high-speed digital encryption techniques originally
developed for the Company's digital radio products and landline encryption
device (DME 9600). Future data security products are expected to consist of a
"T1" network server capable of performing high speed, real-time authentication
and encryption/decryption for up to 24 simultaneous computer users, an encrypted
landline modem, an encrypted cellular modem, an encrypted fax/modem PCMCIA card
and a desktop facsimile encryption device. The Company's data security products
are in the initial design and experimentation stage of development. The Company
plans to begin introducing these types of products in 1997.

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CUSTOMERS

The Company's customers use information security products in a variety of
situations involving differing security needs. For example, domestic and
international police forces typically have a medium to high need for security,
while military users which are often faced with hostile and determined threats,
and therefore typically have a high need for security. The following is a
representative list of purchasers, directly or through distributors, of the
Company's add-on information security products since 1991. Other than Motorola,
no customer accounted for more than 10% of aggregate sales during the nine
months ended September 30, 1996.

REPRESENTATIVE PURCHASERS

<TABLE>
<CAPTION>
STATE AND LOCAL PUBLIC SAFETY FEDERAL GOVERNMENT INTERNATIONAL
- -------------------------------------- ---------------------------------- ---------------------------------------
<S> <C> <C>
Arizona Department of Public Safety Air Force Australian Navy
California Department of Justice Army Brazilian Presidential Security
City of Carlsbad (New Mexico) Border Patrol Canadian Border Patrol
City of Seattle Customs Service Columbian Army
Delaware State Patrol Department of Agriculture Egyptian National Police
Livingston County Sheriff Department of Defense German National Police
(Louisiana) Department of Fish and Wildlife Hong Kong Police Force
Hennepin County Sheriff (Minnesota) Department of the Interior London Metropolitan Police Force
Iowa State Highway Patrol Department of the Treasury Polish Border Guard
Los Angeles Police Department Drug Enforcement Agency Polish National Police
Michigan State Police Federal Bureau of Investigation Portuguese National Police
Missouri State Patrol National Forest Service Royal Canadian Mounted Police
Nebraska State Patrol National Security Agency Russian Ministry of Defense
New York City Police Department Navy Russian Ministry of Internal Affairs
Oklahoma State Bureau of Narcotics Secret Service Swedish Customs
Oregon State Patrol White House Security Turkish National Police
Vernal Police Department (Utah) Vietnam Ministry of Interior

<CAPTION>
CELLULAR SERVICE PROVIDERS BUSINESS AND INDUSTRIAL LMR MANUFACTURERS MEDIA/ENTERTAINMENT
- ----------------------------- ------------------------------ -------------------- ---------------------------
<S> <C> <C> <C>
AirTouch B.F. Goodrich, Inc. Allied Signal Corp. ABC News
Communications, Inc. Conoco Inc. E.F. Johnson Co. Charlotte Observer
AT&T Corporation Exxon Oil Co. Ericsson, Inc. Time Warner Inc.
Bell Atlantic/NYNEX Harris Corporation Glenayre Co. Walt Disney Co.
Bell Mobility (Canada) Loral Terracom Icom America, Inc. Warner Bros. Entertainment
GTE MobileNet Service Marathon Oil Co. Kenwood Radio Corp.
GTE/Contel Cellular NEXTEL Corp. Maxon, Inc.
Midland
Furst Group Inc. Pillsbury Co. International
Sprint Corporation Rockwell International, Inc. Motorola, Inc.
Stanilite Pacific
Salomon Brothers Inc Ltd.
Shell Oil Co. SEA Inc.
Union Pacific Railroad Yaesu USA, Inc.
</TABLE>

MOTOROLA RELATIONSHIP

The Company depends to a large extent on a number of significant
relationships with Motorola. Motorola has been one of the Company's largest
customers since 1994, and the Company believes that Motorola is likely to
account for a significant portion of the Company's sales in the near future.
Sales to Motorola totaled $1.5 million in the first nine months of 1996,
$460,000 in 1995 and $2.0 million in 1994. Sales in 1996 consisted primarily of
Motorola-labeled LMR socket scrambling modules available for resale by Motorola
as an accessory to certain of Motorola's portable LMRs sold in North America. In
August 1995, the Company entered into a three-year supply agreement with
Motorola's Radio Products Americas Group to provide socket scrambler modules at
fixed prices in lots of 100 or more. Such agreement provides for minimum
purchases by

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<PAGE> 35

Motorola of $3.7 million of socket scrambler modules during the 18-month period
beginning on April 1, 1996 (of which $1.5 million had been purchased as of
September 30, 1996), after which the agreement terminates in August 1998 or is
otherwise terminable at will by either party upon 60 days' prior notice. By
providing these Motorola-branded socket scramblers to Motorola in volume
pursuant to a fixed-price agreement, the Company believes that it has helped
Motorola to round out its product offerings. The Company is currently seeking to
expand internationally the territories in which socket scrambling modules and
other information security products will be distributed under this type of
agreement.

Motorola is also a key manufacturer of electronic components used by the
Company, including microprocessors used in most of the Company's scramblers,
which are supplied to the Company through an electronics wholesaler. In
addition, Motorola has agreed to sell to the Company, at fixed prices and upon
the Company's request, radio frequency ("RF") platforms for use in various
products. Purchases by the Company of Motorola components totaled approximately
$1.0 million in the first nine months of 1996 and $726,000 in 1995. Furthermore,
pursuant to a product sales agreement executed in June 1996 with Motorola,
Motorola has agreed to sell to the Company, upon the Company's request, original
equipment cellular telephones and related accessories from Motorola's
MicroTAC(TM) line, which the Company intends to resell equipped with the
Company's DSP-based encryption devices and labeled with the Transcrypt logo.
Such agreement specifies fixed prices for purchases of such equipment, and its
original term expires on December 31, 1997, after which it is terminable at will
by either party upon 30 days' prior notice. The Company has, as of September 30,
1996, purchased $46,000 in cellular telephones from Motorola pursuant to such
agreement.

The Company has obtained from Motorola a royalty-bearing, irrevocable,
non-exclusive, worldwide license (the "IPR License") to manufacture products
containing certain proprietary LMR and digital encryption technology that the
Company believes will be important to the success of certain of the Company's
existing and proposed APCO 25 compliant LMR products. The IPR License includes
rights to use Motorola's proprietary analog trunking technology (Smartnet(TM))
and certain Motorola digital encryption algorithms in LMR products. The digital
encryption technology may also be incorporated into certain other information
security products. The IPR License was obtained initially in August 1994 and was
amended to cover a broader range of products in June 1996. The IPR License
provides for minimum royalty payments and per unit payments in amounts which the
Company believes are standard for the LMR industry. The Company believes that
LMR products containing analog trunking and backward compatibility to analog
devices will be necessary for customers to migrate to digital radios while
avoiding replacing all analog radios simultaneously. In addition, the Company
believes that the incorporation of Motorola's digital encryption algorithms will
be important in marketing its products to federal agencies, many of which use
Motorola equipment.

In addition to the direct benefits of the IPR License to the Company's APCO
25 development efforts, the Company believes that sales of its APCO 25 digital
LMR products have been, and expects that such sales will in the foreseeable
future be, substantially dependent upon Motorola's dominant position as a market
leader in the APCO 25 marketplace. Motorola is the largest manufacturer of APCO
25 compliant LMR products and has been the principal public supporter of the
APCO 25 digital transmission standard for the LMR market. Any reduction in such
support could lead to reduced demand for APCO 25 compliant LMR systems
generally. Additionally, the Company is currently negotiating with Motorola to
purchase from Motorola base station, repeater and other LMR infrastructure
components, in order to market such items under the Transcrypt brand name in
fulfilling systems contract requirements.

SALES, MARKETING AND DISTRIBUTION

The Company sells its products domestically through six sales managers.
Add-on products are sold domestically primarily to distributors, OEMs and
self-servicing end users, while complete radio products are sold domestically
primarily to end users. The Company is actively seeking to hire an additional
eight sales persons for radio sales in the United States, and the Company also
intends to market its radio and other complete products to its existing add-on
customer base.

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<PAGE> 36

The Company conducts international sales through four sales managers, each
of whom focuses on specific regions of the world outside of the United States.
The majority of international sales are made by the sales managers in
conjunction with a Company-authorized distributor, which typically provides a
local contact and arranges for technical training in foreign countries.
International sales accounted for 57.3%, 71.4%, 57.3% and 39.0% of the Company's
revenues in the nine months ended September 30, 1996 and in 1995, 1994 and 1993,
respectively. International sales have been, in most cases, denominated in U.S.
dollars, and the Company seeks to reduce the risks of payment in foreign sales
by obtaining advance payment and confirmed, irrevocable letters of credit. See
"Risk Factors -- Risks Associated with International Sales."

The Company distributes its add-on information security products to both
end users in the LMR and telephony markets and to distributors, such as LMR
dealers, that resell the Company's products to end users. In 1995, sales of
information security products to distributors totaled approximately 80% of
aggregate domestic sales and 76% of aggregate international sales. To date, the
Company has sold its self-branded, complete, analog secure cellular telephone
primarily through distributors and cellular service resellers, and the Company
intends in the future to also sell such analog cellular telephone and the
digital version through cellular service providers.

To date, sales to public safety agencies and other governmental entities
have comprised a significant portion of the Company's total sales. Such sales
often involve competitive, open bidding characteristic of public sector
procurement programs. Under the Company's plan to sell stand-alone communication
devices, such as LMR units, to such types of customers, the Company will likely
be required to increase its participation in public bidding and procurement
processes. Among other requirements, suppliers of LMR units in quantity are
often required by public sector end-users issuing requests for bids to supply a
bond from an approved surety company at the time that the bid is submitted and
at the time that the contract is awarded. The availability of such bonds is
limited by a number of factors, including the applicant's financial condition
and operating results, the applicant's record for completing similar systems
contracts in the past and the extent to which the applicant has bonds in place
for other projects.

The Company's basic marketing strategy has been to increase market
awareness of the need for information security products and to convey the
technical capabilities of the Company's products. The Company conducts
promotions through a mix of print advertising, trade shows, direct mail
campaigns, press releases, technical articles, white paper publication, periodic
newsletters, training and presentation material, and distribution of
demonstration and loaner equipment, which are sometimes coordinated with product
launches and trade shows.

The Company provides toll-free telephone access for technical and other
calls, 24-hour voicemail and 24-hour emergency pager contact for customers with
technical or other problems. Product training, which includes classes, seminars
and video programs, is available at both the customer's site and the Company's
Lincoln facility. The Company offers a standard warranty on all products, which
covers parts and labor for a period of one year from purchase, with an extended
warranty service option available at an additional cost.

The Company installs, for a fee, all models of the Company's scrambler
modules into customers' LMRs and telephones. During the first nine months of
1996, the Company performed installations in approximately eight percent of
total units sold. Scrambler modules not installed by the Company are generally
installed by local radio and cellular telephone dealers. The Company documents
installation instructions for its products in OEM devices ("application notes"),
and has developed application notes for more than 2,000 OEM products, including
almost all commercially available two-way radio models sold worldwide.

INTELLECTUAL PROPERTY

The Company presently holds seven registered copyrights, which cover
software containing algorithms for frequency hopping, scrambling and signaling
technologies for LMR and cellular telephony, and one domestic patent, which
covers continuous synchronization methods used in analog scrambling products.
The Company has also applied for nine additional domestic patents relating to
high-end scrambling techniques and methods of integrating after-market devices,
such as the Company's modules, into OEM products. These patent applications were
the result of the Company's expanded intellectual property program, which is
intended to

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<PAGE> 37

enhance the patent protection afforded the Company's new and advanced
intellectual property rights. The Company also holds three registered trademarks
related to the "Transcrypt" name and product names.

In addition to copyright and patent laws, the Company relies on trade
secret law and employee and third-party non-disclosure agreements to protect its
proprietary intellectual property rights. Furthermore, the Company designs its
information security devices to render the underlying software and processes
difficult to reverse engineer, providing an additional level of protection.

RESEARCH AND DEVELOPMENT

Since December 1991, the Company has invested approximately $7.0 million in
internal research and development related to its proprietary advances in
information security products. Between December 31, 1995 and September 30, 1996,
the Company increased research and development staffing to 31 individuals,
including 24 engineers, from 22 individuals, including 18 engineers. Research
and development personnel have expertise in various fields, including
cryptography, analog hardware, digital hardware, object-oriented software, RF
design and mechanical design. The research and development staff designs and
develops products incorporating digital signal processing, voice coding
(including improved multi-band excitation), encryption, spectral manipulation
and rotation, systems simulation and mixed signal scrambling. In 1995 and 1996,
the Company's research and development efforts increased significantly, as the
Company commenced development of APCO 25 compliant digital LMRs and expanded
development of secure telephony products. As a result, research and development
expenses increased to $2.0 million in 1995 from $1.2 million in 1994, and
management expects that such expenses will be approximately $2.3 million in
1996. In order to facilitate the Company's new product line development plans,
research and development staffing has been augmented with additional expertise
in the areas of data networking, communications systems software, RF design,
mechanical design, cryptography and digital signal processing. The Company
believes that its research and development efforts have been, and continue to
be, sufficient to support planned new products lines and enhancements to
existing product lines. Based on current projections, management expects to
continue to increase the Company's research and development staff, primarily in
the areas of radio, signal processing and digital logic development.

MANUFACTURING AND SUPPLIERS

The Company manufactures all of its products at its facility in Lincoln,
Nebraska, mostly from commercially available subassemblies, parts and
components, such as integrated circuits, printed circuit boards, and plastic and
metal parts, manufactured by the Company and by outside suppliers. Certain items
manufactured by suppliers are made to the Company's specific design criteria.
The Company's manufacturing processes utilize principles that conform to ISO
9001 standards, for which the Company received full certification in December
1995. In August 1996, the Company began construction of a 21,000 square foot
expansion to its existing Lincoln, Nebraska facility to house mostly
manufacturing and related functions, which the Company anticipates will be
completed in the first half of 1997. See "-- Properties."

The Company obtains most of its electronic parts and components from one
principal distributor, Arrow/Schwebber Electronics Group. The Company believes
that concentrating its purchases through one principal distributor lowers the
Company's procurement costs and enhances its ability to control the quality of
these components and subassemblies. The distributor stores several months'
supply of basic components, such as resistors, capacitors and connectors,
on-site at the Company's manufacturing location on a consignment basis, reducing
the Company's inventory maintenance costs. Additionally, certain high-end
subassemblies, such as RF boards for use in complete LMR units manufactured by
the Company, are expected to be purchased from other manufacturers such as
Motorola. See "Risk Factors -- Dependence on Suppliers."

GOVERNMENT REGULATION AND EXPORT CONTROLS

The Company's information security products are subject to export
restrictions administered by the National Security Agency, the Department of
State and the Department of Commerce, which permit the export of encryption
products only with the required level of export license. U.S. export laws also
prohibit the

35
<PAGE> 38

export of encryption products to a number of specified hostile countries.
Although to date the Company has been able to secure most required U.S. export
licenses, including for export to 105 countries since 1978, there can be no
assurance that the Company will continue to be able to secure such licenses in a
timely manner in the future or at all. Based on the Company's prior experience
in securing export approvals, the Company believes that it maintains good
relations with federal government agencies with jurisdiction over its products.
Additionally, in certain foreign countries, the Company's distributors are
required to secure licenses or formal permission before encryption products can
be imported.

The Company's radio and cellular telephone products are subject to FCC
regulations and regulations of the telecommunications regulatory authority in
each country where the Company sells its products. These regulations are in the
form of general approval to sell products within a given country for operation
in a given frequency band, one-time equipment certification, and, at times,
local approval for installation. In the United States, all Transcrypt wireless
products are subject to FCC Part 15 rules on unlicensed spread spectrum
operation. In those countries that have accepted certain worldwide standards,
such as the FCC rulings or those from the European Telecommunications Standards
Institute, the Company has not experienced significant regulatory issues in
bringing its products to market. Approval in these markets involves retaining
local testing agencies to verify specific product compliance. However, many
developing countries, including certain markets in Asia, have not fully
developed or have no frequency allocation, equipment certification or
telecommunications regulatory standards.

Recently, the Clinton administration and the Congress have reviewed federal
export control policies related to encryption control products. On November 15,
1996, President Clinton issued an Executive Order altering the federal
government's policies governing the export of encryption products, such as those
currently offered and proposed to be offered by the Company. The Executive Order
shifts jurisdiction for export controls on, and licensing of, encryption
technology from the Department of State to the Department of Commerce and
removes from the "munitions" list most encryption products. In addition, the
Executive Order establishes a key management control program, under which a
third party would hold "keys" to unlock encrypted information for legitimate law
enforcement and national security needs. As a result of the Executive Order,
products featuring digital encryption technology that had not previously been
exportable can now be exported, which may increase competition for international
sales of the Company's analog scrambling products. During the 104th Congress,
legislation was introduced in the House and Senate to ease export controls on
encryption products, but the Congressional sponsors of the legislation opposed
the key management component of the Administration's plan. Legislation to
address export controls on encryption products is expected to be introduced when
the 105th Congress convenes. Management cannot predict whether such legislation
will be enacted, what form it will take or how the Executive Order or any such
legislation will impact international sales of the Company's products.

The FCC, through the Public Safety Wireless Advisory Committee, is
considering regulatory measures to facilitate a transition by public safety
agencies to a more competitive, innovative environment so that the agencies may
gain access to higher quality transmission, emerging technologies, and broader
services, including interoperability. As part of this process, the FCC is
reviewing the current use of the public safety wireless spectrum, reallocation
of additional spectrum for public safety use, and use of commercial service
providers for additional public safety capacity. This FCC process could affect
products manufactured by the Company. Management cannot predict the outcome of
the FCC review or any specific changes in the spectrum or FCC policies, or any
potential effect on the Company's sales.

COMPETITION

The markets for information security and LMR products are highly
competitive. Significant competitive factors in these markets include product
quality and performance, including the effectiveness of security features and
the quality of the resulting voice or data signal, the development of new
products and features, price, name recognition and the quality and experience of
sales, marketing and service personnel. A number of companies currently offer
add-on scramblers for LMRs that compete with the Company's add-on information
security products, including Selectone Corp., Midian Electronics Inc. and MX-COM
Inc. Also, Motorola and Ericsson offer high-end, proprietary digital encryption
for their LMR products. Motorola and Transcrypt are

36
<PAGE> 39

believed to be the only current suppliers of APCO 25 LMR products as of the date
of this Prospectus. Other anticipated manufacturers of digital LMRs include E.F.
Johnson Co., Garmin Industries, Relm Communications, Midland Systems and
Stanilite Pacific Ltd., all of which have announced intentions to produce hand-
held, mobile and/or infrastructure products meeting the APCO 25 standard. In
addition, Ericsson has actively opposed the APCO 25 standard and has promoted
its "EDACS" system as an alternative standard for the public safety marketplace.
Cycomm International Inc./Privaphone and Motorola offer add-on security products
for cellular telephones. Competitors to the Company's secure landline telephone
products include AT&T Corporation/Datatek, Motorola, Cycomm International Inc.
and Cylink Corporation.

Competition in the data security market is dynamic and growing, as new
companies seek to provide solutions to network and Internet data security. There
are a number of different approaches to data security, including "firewall"
protection, privilege control, data encryption and user identification and
authentication. The Company expects that its planned data security products will
feature mostly data encryption and user authentication features. Competitors in
the data security market include Check Point Software Technologies Ltd., Cylink
Corporation, Secure Computing Corporation, Trusted Information Systems, Inc.,
Raptor Systems, Inc. and Sun Microsystems, Inc., all of which provide firewall
solutions. ActivCard Inc., CryptoCard Inc., Digital Pathways, Inc., Security
Dynamics Technologies, Inc., Vasco Corporation and Racal Electronics, Inc.
provide remote authentication products.

Many of the Company's competitors have substantially greater financial,
technical, marketing, distribution and other resources, greater name recognition
and longer standing relationships with customers than the Company. Competitors
with greater financial resources are better able to engage in sustained price
reductions in order to gain market share. Any period of sustained price
reductions would have a material adverse effect on the Company's financial
condition and results of operations. There can be no assurance that the Company
will be able to compete successfully in the future or that competitive pressures
will not materially and adversely affect the Company's financial condition and
results of operations.

BACKLOG

The Company presently ships only a small amount of products against
backlog, due to the typically short manufacturing cycle of the Company's
products. As a result, backlog amounts have historically been immaterial to the
Company, and the Company does not believe that backlog figures are necessarily
indicative of actual sales for future periods. However, to the extent that LMR
sales increase as a percentage of the Company's revenues, backlog may increase
due to the generally longer manufacturing cycle time required of its digital LMR
products.

PROPERTIES

The Company conducts its business primarily through a 22,500 square foot
two-story administrative and manufacturing facility located at 4800 NW 1st
Street, Lincoln, Nebraska, 68521, which is located in the University of Nebraska
Technology Park. The Company owns this facility and approximately 10 acres of
surrounding land and, in August 1996, began construction of a 21,000 square foot
expansion to its existing Lincoln facility primarily to house additional
manufacturing and related functions, which the Company anticipates will be
completed in the first half of 1997. The Company believes that its current and
planned facilities are adequate to meet its present and immediately foreseeable
needs.

LEGAL PROCEEDINGS

From time to time, the Company is involved in certain legal proceedings
arising in the normal course of its business. Management believes that the
outcome of these matters will not have a material adverse effect on the Company.

EMPLOYEES

At September 30, 1996, the Company had 83.5 full-time equivalent employees,
substantially all of whom are employed at the Company's Lincoln, Nebraska
facility. None of the Company's employees are covered by a collective bargaining
agreement. Management believes its employee relations are good.

37
<PAGE> 40

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
the date of this Prospectus are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
------------------------------- --- --------------------------------------------------------
<S> <C> <C>
John T. Connor(1).............. 52 Chairman of the Board and Chief Executive Officer
Jeffery L. Fuller(1)........... 43 President, Chief Operating Officer and Director
Eric M. Clausen................ 39 Senior Vice President of Business Development
C. Eric Baumann................ 31 Vice President of Sales and Distribution
Randal P. Hansen............... 33 Vice President of Finance and Chief Financial Officer
Michael P. Wallace............. 35 Vice President of Operations
Joel K. Young.................. 32 Vice President of Engineering
Terry L. Fairfield(1)(2)....... 47 Director (Vice Chairman of the Board of Directors)
Thomas R. Larsen(3)............ 52 Director
Harold S. Myers(1)(3).......... 65 Director (Vice Chairman of the Board of Directors)
Thomas C. Smith(3)............. 51 Director
Thomas R. Thomsen(2)........... 61 Director
Winston J. Wade(2)............. 57 Director
</TABLE>

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

(1) Member of the Executive Committee.

(2) Member of the Compensation Committee.

(3) Member of the Audit Committee.

JOHN T. CONNOR led the investor group which purchased the Company from its
founder in 1991. Mr. Connor has served as Chief Executive Officer and Chairman
of the Board of Directors of the Company since December 1991. From 1969 to June
1991, he held numerous senior management positions with Deloitte & Touche LLP,
an international accounting, tax and consulting firm, and its predecessor firm,
Touche Ross & Co., including National Director of Tax, Associate Managing
Partner, Mid-Atlantic Regional Managing Partner and a member of the management
committee and Board of Directors.

JEFFERY L. FULLER has served as the Company's President and Chief Operating
Officer since July 1995 and has served as a director since July 1996. Mr. Fuller
has served for over 20 years in managerial positions at various wireless
communications product manufacturers, including Motorola, General Electric
Mobile Radio Communications, Inc. and Icom America, Inc. From January 1990 to
July 1995, he held several management positions with E.F. Johnson Co., a
manufacturer and distributor of wireless communication products, serving most
recently as Vice President North American Sales and executive officer in charge
of the North American business unit.

ERIC M. CLAUSEN was appointed the Company's Senior Vice President of
Business Development in November 1996. From June 1993 to November 1996, he held
sales positions with Ericsson, a manufacturer and distributor of wireless
communication products, serving most recently as Network Systems Manager,
Private Radio Systems Division. From 1981 to June 1993, he held various sales,
marketing, project management and business planning positions with Motorola,
serving most recently as Business Planning Manager, Network Services Division.

C. ERIC BAUMANN has served as the Company's Vice President of Sales and
Distribution since November 1996, and from January to November 1996 served as
Vice President of Sales and Marketing. From November 1995 to January 1996, he
served as the Vice President of Sales. From January 1990 to November 1995, he
held numerous positions at E.F. Johnson Co., a manufacturer and distributor of
wireless communication products, serving most recently as Director North
American Sales and Telemetry.

38
<PAGE> 41

RANDAL P. HANSEN joined the Company as Vice President of Finance and Chief
Financial Officer in August 1996. From January 1986 to August 1996, he held
numerous positions with KPMG Peat Marwick LLP, an international public
accounting firm, serving most recently as an Senior Audit Manager. Mr. Hansen is
a licensed Certified Public Accountant.

MICHAEL P. WALLACE joined the Company as Vice President of Operations in
February 1994. From December 1989 to February 1994, he served as the Electric
Card Assembly and Test Engineering Manager of Scientific Atlanta Inc., a
manufacturer and distributor of broadband communications products.

JOEL K. YOUNG joined the Company as Vice President of Engineering in
February 1996. From 1986 to January 1996, he held numerous positions with the
former AT&T Bell Laboratories, a telecommunications research company, and
specialized in signaling, network implementation and voice processing. He served
most recently as District Manager, AT&T Business Communication Services. Mr.
Young has been awarded five patents on various telecommunications systems and
techniques.

TERRY L. FAIRFIELD has served as a director of the Company since December
1991. Since 1987, he has served as President and Chief Executive Officer of the
University of Nebraska Foundation, a nonprofit corporation. Mr. Fairfield also
serves as a director of Aliant Communications Inc., a Nasdaq NMS listed, public
telecommunications company.

THOMAS R. LARSEN has served as a director of the Company since October 1995
and was originally appointed director as a representative of John Kuijvenhoven
and affiliates, principal stockholders of the Company. Mr. Larsen has been a
certified public accountant since 1975 and is currently President and Chief
Executive Officer of Larsen, Bryant & Porter, CPAs, P.C., a public accounting,
tax and consulting firm. Mr. Larsen is also a director of Smith Hayes Trust,
Inc., a mutual fund management company.

HAROLD S. MYERS has served as a director of the Company since December
1991. Since 1958, he has been the President of United Security Bancorporation, a
one bank holding company and Chairman of the Board of Directors of Security
National Bank, Superior, Nebraska.

THOMAS C. SMITH has served as a director of the Company since October 1995
and was originally appointed director as a representative of the Farm Bureau
Insurance Company, a principal stockholder of the Company. Since December 1985,
he has been Chairman of the Board of Directors and President of Consolidated
Investment Corporation, the parent company of Smith Hayes Financial Services
Corporation, a financial services firm, and Conley Smith Inc., a registered
investment advisor. Mr. Smith is the chairman of both subsidiaries and President
of Smith Hayes Financial Services Corporation. He is also a director of the
Nebraska Research and Development Authority and First Mid-America Finance
Corporation.

THOMAS R. THOMSEN has served as a director of the Company since July 1995.
Since August 1995, he has served as Chairman of the Board of Directors and Chief
Executive Officer of Lithium Technology Corporation ("LTC"), a public company
that manufactures rechargeable batteries. Mr. Thomsen has served as a director
of LTC since February 1995. In January 1990, Mr. Thomsen retired as President of
AT&T Technologies, after holding numerous senior management positions including
director of Sandia Labs, Lucent Technologies and Oliveti Inc. Mr. Thomsen also
serves as a director of the University of Nebraska Technology Park.

WINSTON J. WADE has served as a director of the Company since July 1996.
Since February 1996, he has served as managing director of BPL U.S. West
Cellular. From November 1990 to February 1996, he held numerous management
positions with U.S. West Communications, serving most recently as Vice President
of Network Operations. Mr. Wade also serves as a director of the University of
Nebraska Foundation.

Beginning on the date following the effectiveness of this offering, the
Board of Directors will be divided into three classes, each of whose members
will serve for a staggered three-year term. The Class I directors, Class II
directors and Class III directors will serve until the annual meeting of the
Company's stockholders to be held in 1997, 1998 and 1999, respectively, and
until their respective successors are duly elected and have qualified or until
their earlier resignation or removal. Upon effectiveness of this offering, the
Board will consist of two Class I directors (Messrs. Larsen and Wade), three
Class II directors (Messrs. Fuller, Thomsen and

39
<PAGE> 42

Smith) and three Class III directors (Messrs. Connor, Fairfield and Myers).
Executive officers of the Company are appointed by the Board of Directors and
serve at the discretion of the Board. There are no familial relationships
between any of the directors or executive officers of the Company.

BOARD COMMITTEES

The Board of Directors has three committees: an Audit Committee, a
Compensation Committee and an Executive Committee. The Audit Committee,
comprised of Messrs. Myers, Smith and Larsen, oversees actions taken by the
Company's independent auditors and reviews the Company's internal accounting
controls. The Compensation Committee, comprised of Messrs. Fairfield, Thomsen
and Wade, is responsible for determining the Company's compensation policies and
administering the Company's compensation plans and 1996 Stock Incentive Plan.
The Compensation Committee also reviews the compensation levels of the Company's
employees and makes recommendations to the Board regarding changes in
compensation. The Executive Committee, comprised of Messrs. Connor, Fuller,
Fairfield and Myers, has the power to act on behalf of the Board of Directors on
matters pertaining to the day-to-day operations of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors consists of Messrs.
Fairfield, Thomsen and Wade, none of whom has been or is an officer or employee
of the Company. No interlocking relationship exists between any member of the
Compensation Committee and any member of any other company's board of directors
or compensation committee.

DIRECTOR COMPENSATION

The members of the Company's Board of Directors are reimbursed for
out-of-pocket and travel expenses incurred in attending Board meetings. After
consummation of this offering, the Company will pay to each director who is not
employed by the Company, subject to a limitation of $5,000 plus expenses per
calendar year, $1,000 for each board meeting attended and $400 for each
committee meeting attended. In addition, each director not employed by the
Company will receive an option to purchase up to 5,000 shares of the Common
Stock of the Company upon completion of this offering. Such options will have an
exercise price equal to the initial public offering price in this offering, will
vest in annual installments over a five year period and will have a term of ten
years.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Certificate of Incorporation contains provisions that limit
the liability of its directors for monetary damages arising from a breach of
their fiduciary duty as directors to the fullest extent permitted by Delaware
law. Such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission.

The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including
circumstances in which indemnification is otherwise discretionary under Delaware
law. The Company has also entered into indemnification agreements with its
directors and officers. The indemnification agreements may require the Company,
among other things, to indemnify its directors and officers against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature) and to advance their expenses incurred as a result of any proceedings
against them as to which they could be indemnified.

At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

40
<PAGE> 43

EXECUTIVE COMPENSATION

The following table shows the compensation earned by or paid to, for
services rendered in 1995, the Company's Chief Executive Officer and the only
other executive officer who received cash compensation in excess of $100,000 in
such year (collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(S) SALARY BONUS STOCK OPTIONS COMPENSATION
- --------------------------------------------- -------- ------- ------------- ------------
<S> <C> <C> <C> <C>
John T. Connor............................... $169,808 $86,830(1) -- $ 4,760(2)
Chairman of the Board and
Chief Executive Officer
Jeffery L. Fuller............................ 66,346(3) 14,840 163,829 25,066(4)
President, Chief Operating
Officer and Director
</TABLE>

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

(1) Consists of $16,830 for services rendered in the 1995 fiscal year and a
$70,000 bonus. See Note 11 of Notes to Consolidated Financial Statements.

(2) Consists of a contribution to the Company's 401(k) Profit Sharing & Savings
Plan by the Company on behalf of Mr. Connor and personal use of a
Company-owned automobile.

(3) Represents salary at the rate of $150,000 per year beginning in July 1995.

(4) Consists of $24,834 in reimbursements for relocation expenses and $232 for
personal use of a Company-owned automobile.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning options granted to
the Named Executive Officers during 1995.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL
NUMBER OF TOTAL RATE OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION -----------------------
NAME GRANTED IN 1995 SHARE DATE 5% 10%
- -------------------------------- --------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jeffery L. Fuller............... 163,829(1) 80.64% $ 3.05 06/02/05 $1,339,405 $3,394,316
</TABLE>

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

(1) The indicated number of options were originally granted by the Company's
predecessor under the terms of the 1992 Partnership Interest Option Plan and
were subsequently converted into options to purchase shares of Common Stock
in the Company under the 1996 Stock Incentive Plan. See "-- 1996 Stock
Incentive Plan."

(2) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock, compounded annually over a
ten-year period and assuming a market value of the Common Stock on the date
of grant of the assumed initial public offering price per share in this
offering of $13.00. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the Common Stock will
appreciate at any particular rate or at all in future years.

1996 STOCK INCENTIVE PLAN

Effective as of September 6, 1996, the Company established the 1996 Stock
Incentive Plan (the "Plan"), in order to enable the Company to attract, retain
and motivate its employees, non-employee directors and independent contractors
by providing for or increasing the proprietary interests of such employees, non-

41
<PAGE> 44

employee directors and independent contractors in the Company. The Company's
stockholders approved the Plan on September 18, 1996. Any person, including any
director of the Company, who is an employee of the Company or any of its
subsidiaries (an "Employee"), and any nonemployee director (a "Non-Employee
Director") or independent contractor of the Company (an "Independent
Contractor," or, together with the Employees and the Non-Employee Directors, the
"Eligible Persons") is eligible to be considered for the issuance of (i) shares
of Common Stock, $0.01 par value per share, of the Company or of any other class
of security of the Company which is convertible into shares of the Company's
Common Stock ("Shares") or (ii) a right or interest with an exercise or
conversion privilege at a price related to the Common Stock or with a value
derived from the value of the Common Stock, which right or interest may, but
need not, constitute a "Derivative Security," as such term is defined in Rule
16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such Rule may be amended from time to time.

Effective as of June 30, 1996, the Company converted from a limited
partnership form of organization to a Subchapter "C" corporation (the
"Reorganization"). Pursuant to the Reorganization, the Company assumed all of
the outstanding options (the "Partnership Options") to acquire limited
partnership interests in the Company's predecessor (the "Partnership"), which
were granted pursuant to the terms of the Partnership's 1992 Partnership
Interest Option Plan (the "Partnership Option Plan"), with each Partnership
Option becoming an option to acquire the same number of shares of Common Stock
of the Company at the same exercise price and on the same terms and conditions
as set forth in the Partnership Option Agreement entered into with the optionee.
As a result of this arrangement, the Company issued an aggregate of 716,916
options under the Plan in the Reorganization in exchange for Partnership
Options, all of which are vested.

Grants made pursuant to the Plan are not restricted to any specified form
or structure and may include, without limitation, sales or bonuses of stock,
restricted stock, stock options, reload stock options, stock purchase warrants,
other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom
stock, dividend equivalents, performance units or performance shares, and a
grant made pursuant to the Plan may consist of one such security or benefit, or
two or more of them in tandem or in the alternative.

With certain exceptions regarding "performance based compensation" as
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the aggregate number of Shares which may be granted to any one
Eligible Person shall not exceed 400,000.

Subject to certain adjustment provisions under the Plan, the aggregate
number of Shares issued and issuable pursuant to all incentive stock options
granted under the Plan shall not exceed 1,200,000. Such maximum number does not
include the number of Shares subject to the unexercised portion of any incentive
stock option granted under the Plan that expires or is terminated. As of
September 30, 1996, there were outstanding options to purchase 716,916 shares of
Common Stock with a weighted average exercise price of $1.81 per share. The
Company intends to grant, prior to the effective date of this offering, stock
options for an additional 325,000 shares, including 5,000 shares to each of the
six Non-Employee Directors, with an exercise price equal to the price per share
in this offering.

The Plan will be administered by one or more committees of the Board of
Directors (any such committee, the "Committee") or, if no Committee is
designated by the Board of Directors, the Plan shall be administered by the
Board of Directors and all references herein to the Committee shall refer to the
Board of Directors. The Committee shall consist of (i) two or more directors,
each of whom is a "non-employee director" (as such term is defined in Rule 16b-3
promulgated under the Exchange Act, as such Rule may be amended from time to
time), (ii) with respect to any grant that is intended to qualify as
"performance based compensation" under Section 162(m) of the Code, the Committee
shall consist of two or more directors, each of whom is an "outside director"
(as such term is defined under Section 162(m) of the Code), and (iii) with
respect to any other grant, the Committee shall consist of one or more directors
(any of whom also may be an Eligible Person who has been granted or is eligible
to be granted Shares under the Plan).

Subject to the provisions of the Plan, the Committee is authorized to
determine which persons are Eligible Persons and to which of such Eligible
Persons, if any, and when Shares, options or other performance awards shall be
granted, the terms and conditions of any grant, including the number of Shares
subject thereto

42
<PAGE> 45

and the circumstances under which the award will become exercisable or vested or
are forfeited or expire. The Committee is also authorized to interpret and
construe the Plan and adopt, amend and rescind rules and regulations relating to
administration of the Plan.

The Plan provides that unless otherwise provided by the Committee in the
written agreement evidencing the award, the terms of any stock option granted
under the Plan shall provide (i) that the exercise price thereof shall not be
less than 100% of the market value of a share of Common Stock on the date the
option is granted, (ii) that the term of such option shall be ten years from the
date of grant, (iii) that, upon an Employee ceasing to be employed by the
Company for any reason other than death or disability, or a Non-Employee
Director ceasing to be a Non-Employee Director of the Company, an option shall
not become exercisable to an extent greater than it could have been exercised on
the date the Employee's employment by the Company, or the Non-Employee
Director's incumbency, as the case may be, ceased, and (iv) that the option
shall expire ninety (90) days after the Employee ceases to be employed with the
Company or a Non-Employee Director ceases to be a Non-Employee Director of the
Company.

Pursuant to the Plan, the Committee is permitted to allow or require the
recipient of any award under the Plan, including any Eligible Person who is a
director or officer of the Company, to pay the purchase price of the Shares or
other property issuable pursuant to such award, or such recipient's tax
withholding obligation with respect to such issuance, or both, in whole or in
part, by any one or more of the following means: the delivery of cash; the
delivery of other property deemed acceptable by the Committee; the delivery of
previously owned shares of capital stock of the Company (including "pyramiding")
or other property; a reduction in the amount of Shares or other property
otherwise issuable pursuant to such award; or the delivery of a promissory note
of the Eligible Person or of a third party, the terms and conditions of which
shall be determined by the Committee.

If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, unless the terms of such transaction shall
provide otherwise, the Committee shall make appropriate and proportionate
adjustments in (i) the number and type of shares or other securities or cash or
other property that may be acquired pursuant to awards theretofore granted under
this Plan and the exercise or settlement price of such awards, and (ii) the
maximum number and type of shares or other securities that may be issued
pursuant to such awards thereafter granted under this Plan. The foregoing
adjustments shall be applied to any awards or Incentive Stock Options only to
the extent permitted by Sections 162(m) and 422 of the Code, respectively.

Pursuant to the Plan, the Board of Directors may amend or terminate the
Plan at any time and in any manner; provided, however, that no such amendment or
termination shall deprive the recipient of any award theretofore granted under
this Plan, without the consent of such recipient, of any of his or her rights
thereunder or with respect thereto; provided, further, that if an amendment to
the Plan would affect the Plan's compliance with Rule 16b-3 under the Exchange
Act or Section 422 or 162(m) or other applicable provisions of the Code, the
amendment shall be approved by the Company's stockholders to the extent required
to comply with Rule 16b-3 under the Exchange Act, Sections 422 and 162(m) of the
Code, or other applicable provisions of or rules under the Code.

EMPLOYMENT AGREEMENTS

The Company entered into an employment agreement with John T. Connor, the
Company's Chairman and Chief Executive Officer, for a two-year term beginning
July 18, 1996. The agreement sets forth a base salary of $180,000 per year and
provides for an annual bonus to be determined by the Board of Directors. The
agreement provides for certain benefits to Mr. Connor, including paid vacations,
pension benefits, qualified profit-sharing plans, employee group insurance and
disability insurance. The agreement also provides for special compensation in
the amount of $210,000, to be paid to Mr. Connor at least 15 days prior to the

43
<PAGE> 46

projected completion date of this offering. The agreement includes a Noncompete
Agreement, which is effective during the term of the agreement.

The Company entered into an employment agreement with Jeffery L. Fuller,
the Company's President and Chief Operating Officer, for a two-year term
beginning July 18, 1996. The agreement sets forth a base salary of $165,000 per
year and provides for an annual bonus in an amount to be determined by the Board
of Directors, provided the Company meets or exceeds certain performance
objectives provided to the Board of Directors. Mr. Fuller is entitled, at a
minimum, to receive a bonus of 20% of his annual salary if the Company meets its
annual sales goals and an additional 20% if the Company meets its annual profit
goals. The agreement also provides for certain benefits to Mr. Fuller, including
paid vacations, pension benefits, qualified profit-sharing plans, employee group
insurance and disability insurance. The agreement includes a Noncompete
Agreement, which is effective during the term of the agreement.

On September 30, 1996, Company entered into employment agreements with C.
Eric Baumann, Michael P. Wallace and Joel K. Young, each of whom is a Company
Vice President. The agreements set forth base salaries and provide for annual
bonuses to be determined by the Board of Directors, and provide for certain
benefits, including paid vacations, pension benefits, qualified profit-sharing
plans, employee group insurance and disability insurance. The term of each such
agreement continues for two years, unless otherwise terminated pursuant to the
terms of the agreements. Each of these individuals has entered into a Noncompete
Agreement effective during the term of each individual's employment agreement.

401(k) PROFIT SHARING & SAVINGS PLAN

In July 1992, the Company established the Transcrypt International
Employees Profit Sharing & Savings Plan (the "Benefit Plan"). The Benefit Plan
consists of a 401(k) eligible savings plan, which is intended to comply with
Sections 401(a) and 401(k) of the Code and the applicable provisions of the
Employee Retirement Income Security Act of 1974, and a profit sharing plan.
Amounts contributed to the Benefit Plan are held under a trust intended to be
exempt from income tax pursuant to Section 501(a) of the Code. Employees of the
Company that have completed at least one year of service are eligible to
participate in the profit sharing plan and employees that have completed six
months of service are eligible to participate in the 401(k) eligible savings
plan. Participating employees are entitled to make pre-tax contributions to
their 401(k) accounts, subject to certain maximum annual limits imposed by law
($9,500 in 1996), and certain other limitations. The Company may elect to make a
discretionary contribution to the Benefit Plan each year. Employees are always
fully vested in their own contributions, and the Company's contributions vest in
participating employees over a six-year period at 20% per year beginning in the
second year. Distributions generally are payable in a lump-sum after retirement,
disability or death and, in certain circumstances, upon termination of
employment with the Company for other reasons. The Company has accrued
contributions to the Benefit Plan (including the 401(k) eligible savings plan
and profit sharing plan) of $65,450 in the nine months ended September 30, 1996
and paid $40,500 in 1995.

44
<PAGE> 47

CERTAIN TRANSACTIONS

In 1991, the Company entered into a number of agreements with A. John and
Yvonne Kuijvenhoven, who are currently principal stockholders of the Company, in
connection with the acquisition of the Company's business and certain
intellectual property held by the Kuijvenhovens. Under a Purchase Agreement
dated December 3, 1991, the Company agreed to pay $340,000 annually, payable in
equal monthly installments, to John Kuijvenhoven in consideration for the
Kuijvenhovens' agreement not to compete against the Company for a period of five
years ending December 31, 1996. The Company paid the last payment due under this
agreement in August 1996, and the Company does not expect the non-compete
agreement to be renewed past December 1996. As security for the non-compete
agreement, the Company entered into a Security and Pledge Agreement dated
December 3, 1991, which was released by the Kuijvenhovens in October 1996,
granting to the Kuijvenhovens a security interest in real property located in
Lancaster, Nebraska owned by the Company. The Company also granted to the
Kuijvenhovens a security interest in its Digital Radio APCO 25 technology,
pursuant to a Security and Pledge Agreement dated August 8, 1994. The Company
believes that it has fully performed its obligations under the Purchase
Agreement and the 1994 Security and Pledge Agreement was released in November
1996.

On January 15, 1994, the Company borrowed from the Nebraska Investment
Finance Authority ("NIFA") $850,000 in proceeds through the issuance of
Industrial Development Revenue Bonds, Series 1994, issued pursuant to a Trust
Indenture by and between NIFA and Norwest Bank of Nebraska, N.A., as trustee. In
connection with the borrowing, the Company executed a non-amortizing promissory
note under which the principal is due in a balloon payment in January 2004. The
note bears interest at a rate of 6.25% per annum, with interest due quarterly on
July 15, October 15, January 15 and April 15 of each year. The note is secured
by a Deed of Trust and Construction Security Agreement from the Company to the
trustee. The Company has used the proceeds from the NIFA borrowing to finance
the construction of its existing Lincoln facility. The bonds were privately
placed with Security National Bank of Superior, which is owned and controlled by
certain stockholders of the Company, including Harold S. Myers, David C. Myers
and Steven Wright. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

In November 1993, the Company entered into a transaction with the
University of Nebraska Foundation ("UNF") in which the Company sold its then
existing facility to UNF and purchased from UNF approximately 10 acres of land
in the University of Nebraska Technology Park, which is being developed by UNF.
In the transaction, the Company transferred land and improvements valued at
$525,000 to UNF and received from UNF $450,000 in cash and land valued at
$75,000. The Company has since constructed its current headquarters and
manufacturing facility on the land acquired from UNF. The value of the property
sold by the Company in the transaction was based upon an appraisal. The Company
believes that the price it paid for the land acquired in the transaction was
approximately equal to UNF's cost, and that such price was favorable to the
Company as a result of UNF's desire to induce the Company to become the first
technology company to locate in the University of Nebraska Technology Park. UNF
owns 15.6% of the outstanding Common Stock of the Company and Terry L.
Fairfield, President and Chief Executive Officer of UNF, is a director of the
Company. The determination of the values used in this transaction was made for
the Company by Mr. Connor.

45
<PAGE> 48

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
September 30, 1996 and as adjusted to reflect the sale of shares offered
pursuant to this Prospectus, by (i) each person (or group of affiliated persons)
known by the Company to be the beneficial owner of more than five percent of the
Company's Common Stock, (ii) each director, (iii) each Named Executive Officer,
(iv) all executive officers and directors as a group, and (v) each Selling
Stockholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED SHARES BENEFICIALLY
PRIOR TO OWNED
OFFERING(1)(2) NUMBER OF AFTER OFFERING(1)(2)(3)
-------------------- SHARES ------------------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER PERCENT
- -------------------------------------------- ---------- ------- ---------- -------------- -------
<S> <C> <C> <C> <C> <C>
John T. Connor(4)........................... 1,945,785 27.1% 1,945,785 20.1%
2504 Ridge Road
Lincoln, Nebraska 68512
Janice K. Connor(5)......................... 1,556,528 22.9 1,556,528 16.8
2504 Ridge Road
Lincoln, Nebraska 68512
Farm Bureau Insurance Company............... 1,265,279 18.7 347,222(6) 918,057 9.9
5400 University Avenue
Des Moines, Iowa 50265
University of Nebraska Foundation........... 1,056,622 15.6 1,056,622 11.4
1111 Lincoln Mall, Suite 200
P.O. Box 82555
Lincoln, Nebraska 68501-2555
John Kuijvenhoven and affiliates(7)......... 1,090,704 16.1 902,778(6) 187,926 2.0
P.O. Box 5917
Lincoln, Nebraska 68505
First Commerce Bancshares, Inc.(8).......... 681,692 10.0 681,692 7.3
NBC Center, 3rd Floor
13th & O Streets
Lincoln, Nebraska 68508
Harold S. Myers(9).......................... 791,281 11.7 791,281 8.5
635 South 14th Street, Suite 320
Lincoln, Nebraska 68508
The Security Mutual Life Insurance
Company................................... 340,972 5.0 340,972 3.7
200 Centennial Mall North
Lincoln, Nebraska 68508
Jeffery L. Fuller(10)....................... 163,829 2.4 163,829 1.7
Thomas R. Larsen............................ -- -- -- --
Terry L. Fairfield(11)...................... -- -- -- --
Thomas C. Smith............................. -- -- -- --
Thomas R. Thomsen(10)....................... 6,553 * 6,553 *
Winston J. Wade(10)(12)..................... 6,553 * 6,553 *
All executive officers and directors as a
group (12 persons)........................ 3,012,299 44.4% 3,012,299 32.4%
</TABLE>

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

* Less than 1%.

(1) Shares of Common Stock issuable upon exercise of stock options currently
exercisable, or exercisable within 60 days of the date of this offering,
are deemed outstanding for computing the percentage of the person or entity
holding such securities but are not outstanding for computing the
percentage of any other person or entity. Except as indicated by footnote,
and subject to community property laws where applicable, the persons named
in the table above have sole voting and investment power, if any, with
respect to all shares of Common Stock shown as beneficially owned by them.

46
<PAGE> 49

(2) Percentage ownership is based on 6,783,078 shares of Common Stock
outstanding prior to this offering and 9,283,078 shares of Common Stock
outstanding after this offering.

(3) Assumes that the Underwriters' over-allotment option is not exercised.

(4) Includes 714,033 shares held of record by Janice K. Connor and 95,358
shares held by or in trust for other members of the Connor family, of which
Mr. Connor disclaims beneficial ownership, and 389,257 shares issuable upon
the exercise of stock options that are exercisable within 60 days of the
date of this Prospectus.

(5) Includes 747,137 shares held of record by John T. Connor and 95,358 shares
held by or in trust for other members of the Connor family, of which Mrs.
Connor disclaims beneficial ownership.

(6) Does not include shares which may be sold to cover over-allotments, if any.
The Farm Bureau Insurance Company has granted the Underwriters a 30-day
option to purchase an additional 374,573 shares of Common Stock, and the
Kuijvenhoven group has granted the Underwriters a 30-day option to purchase
its remaining 187,926 shares of Common Stock, in each case solely to cover
the Underwriters' over-allotments, if any.

(7) Beneficial stock ownership amounts prior to the offering include 341,415
shares held by Mr. Kuijvenhoven and 272,676 shares held by Q.E. Dot, Inc.
Mr. Kuijvenhoven is President of Q.E. Dot, Inc., and may be deemed to share
voting and investment powers with respect to this entity but disclaims
beneficial ownership of shares held by Q.E. Dot, Inc., except to the extent
Mr. Kuijvenhoven has a pecuniary interest. Includes 476,613 shares held by
members of the Kuijvenhoven family, for which Mr. Kuijvenhoven disclaims
beneficial ownership.

(8) Shares of Common Stock owned by First Commerce Bancshares, Inc. include
217,542 shares of Non-Voting Common Stock. Pursuant to the Company's
Certificate of Incorporation, upon the disposition of the Non-Voting Common
Stock by First Commerce Bancshares, Inc., voting rights will be restored to
these shares. See "Description of Capital Stock."

(9) Includes 391,299 shares held by Harold S. Myers and 71,949 shares held by
the Harold S. Myers III Trust, for which Mr. Myers is the Trustee. Mr.
Myers disclaims beneficial ownership of the shares held by the Harold S.
Myers III Trust, except to the extent Mr. Myers has a pecuniary interest.
Includes 328,033 shares held by or in trust for members of the Myers
family, of which Mr. Myers disclaims beneficial ownership.

(10) Consists of shares issuable upon the exercise of stock options that are
exercisable within 60 days of the date of this Prospectus.

(11) Does not include shares held by the University of Nebraska Foundation, of
which Mr. Fairfield serves as President and Chief Executive Officer.

(12) Does not include shares held by the University of Nebraska Foundation, of
which Mr. Wade serves as director.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, $0.01 par value, and 3,000,000 shares of Preferred Stock, $0.01
par value. At September 30, 1996, there were 6,783,078 shares of Common Stock
outstanding, held of record by 21 stockholders.

COMMON STOCK

Holders of Common Stock (other than the Non-Voting Common Stock) are
entitled to one vote per share in all matters to be voted on by the
stockholders. Subject to preferences that may be applicable to any Preferred
Stock outstanding at the time, holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of the Company's liabilities and the liquidation
preference, if any, of any outstanding shares of Preferred Stock. Holders of

47
<PAGE> 50

Common Stock have no preemptive rights and no rights to convert their Common
Stock into any other securities, and there are no redemption provisions with
respect to such shares. All of the outstanding shares of Common Stock are fully
paid and non-assessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future. Of the 20,000,000 shares of Common Stock
authorized by the Company's Certificate of Incorporation, 600,000 shares have
been authorized for issuance as Non-Voting Common Stock, of which 217,542 shares
were outstanding at September 30, 1996. All of the shares of Non-Voting Common
Stock were issued to a bank holding company which is restricted from owning more
than five percent of the voting Common Stock of the Company. Pursuant to the
Company's Certificate of Incorporation, upon the disposition of the outstanding
Non-Voting Common Stock by such stockholder, its subsidiaries or affiliates, or
any of their successors, the voting rights will be restored to these shares.

PREFERRED STOCK

The Board of Directors has the authority, without any further vote or
action by the stockholders, to issue up to 3,000,000 shares of Preferred Stock
from time to time in one or more series, to establish the number of shares to be
included in each such series, to fix the designations, preferences, limitations
and relative, participating, optional or other special rights and qualifications
or restrictions of the shares of each series, and to determine the voting
powers, if any of, such shares. The issuance of Preferred Stock could adversely
affect, among other things, the rights of existing stockholders or could delay
or prevent a change in control of the Company without further action by the
stockholders. The issuance of Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of Common Stock. In
addition, any such issuance could have the effect of delaying, deferring or
preventing a change in control of the Company and could make the removal of the
present management of the Company more difficult. The Company has no current
plans to issue any Preferred Stock.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

Certain provisions of Delaware law and the Company's Certificate of
Incorporation could make more difficult the acquisition of the Company by means
of a tender offer, a proxy contest or otherwise and the removal of incumbent
officers and directors. These provisions are expected to discourage certain
types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of the Company to first negotiate
with the Company. The Company believes that the benefits of increased protection
of the Company's potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure the Company
outweigh the disadvantages of discouraging such proposals because, among other
things, negotiation of such proposals could result in an improvement of their
terms.

The Company will be subject to the provisions of Section 203 of the
Delaware law. In general, this section prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date that the person became
an interested stockholder unless (with certain exceptions) the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the stockholder. Generally, an "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years prior, did own) 15% or more of the corporation's voting
stock. This provision may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the stockholders.

The Company's Certificate of Incorporation provides that, beginning on the
date following the effectiveness of this offering, the Board of Directors will
be divided into three classes, with staggered three-year terms. As a result,
only one class of directors will be elected at each annual meeting of
stockholders of the Company, with the other classes continuing for the remainder
of their three-year terms. The classification of the Board of Directors makes it
more difficult for the Company's stockholders to replace the Board of Directors,
as well as for another party to obtain control of the Company by replacing the
Board of Directors. Since the Board of

48
<PAGE> 51

Directors has the power to retain and discharge officers of the Company, these
provisions could also make it more difficult for existing stockholders or
another party to effect a change in management. In addition, beginning on the
date following the effectiveness of this offering, the Company will not have
cumulative voting rights in the election of its directors and, accordingly,
holders of more than 50% of the shares voting will be able to elect all of the
directors as each class of directors' terms expires. See "Risk
Factors -- Control by Existing Stockholders."

The Company's Certificate of Incorporation provides that stockholder action
can be taken only at an annual or special meeting of stockholders and may not be
taken by written consent. The Certificate of Incorporation provides that special
meetings of stockholders can be called only by the Company's Board of Directors,
Chairman of the Board, President or Chief Executive Officer, or at the written
request of holders of not less than 25% of the voting shares. The Bylaws set
forth an advance notice procedure with regard to the nomination, other than by
or at the direction of the Board of Directors, of candidates for election as
directors and with regard to business to be brought before an annual meeting of
stockholders of the Company. The Company's Certificate of Incorporation provides
that the Board of Directors is authorized to amend the Bylaws only by the
affirmative vote of 60% or more of the entire Board of Directors, and the
Company's stockholders may amend the Bylaws only upon the affirmative vote of
the holders of 75% or more of the voting shares. In addition, the Company's
Certificate of Incorporation provides that certain articles of the Certificate
of Incorporation may be amended only upon the affirmative vote of the holders of
75% or more of the voting shares, including articles containing provisions
dealing with, among other things: (i) the ability of the Board of Directors to
establish a rights plan without specific approval of the stockholders; (ii) the
aforementioned voting requirements for amending the Bylaws; (iii) the size and
classification of the Board of Directors; (iv) the directors' indemnification
contained in the Certificate of Incorporation; (v) the duty of care of the
directors set forth in the Certificate of Incorporation; and (vi) the denial of
cumulative voting and stockholder action by written consent and the procedures
for calling special meetings.

Additionally, the Certificate of Incorporation authorizes the Board of
Directors to create and issue rights to purchase shares of the Company's
authorized but unissued capital stock or other securities. The Board is
authorized to determine, with respect to such rights, (i) the initial exercise
price; (ii) period for exercise; (iii) adjustment provisions in the event of a
business combination, reorganization or other transaction; (iv) redemption
provisions; and (v) provisions which deny exercise privileges to rights holders
who own at least a specified percentage of the outstanding capital stock of the
Company or which cause such rights to become void. The Board has not created or
issued any such rights and has no present intention to do so.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is Norwest
Bank Minnesota, N.A.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the Common Stock of
the Company. Future sales of substantial amounts of Common Stock in the public
market could adversely affect market prices prevailing from time to time. As
described below, no currently outstanding shares of Common Stock or shares
issuable pursuant to stock options issued by the Company, other than the
1,250,000 shares offered hereby by the Selling Stockholders (1,812,500 shares
assuming the Underwriters' over-allotment option is exercised in full), will be
available for sale shortly after this offering because of certain contractual
restrictions on resale and the restrictions of the Securities Act. Sales of
substantial amounts of Common Stock of the Company in the public market could
adversely affect the prevailing market price and the ability of the Company to
raise equity capital in the future.

Upon completion of this offering, the Company will have outstanding
9,283,078 shares of Common Stock, assuming no exercise of options granted under
the Company's 1996 Stock Incentive Plan. Of these shares, the 2,500,000 shares
offered hereby by the Company and the 1,250,000 shares offered hereby by the
Selling Stockholders (1,812,500 shares assuming the Underwriters' over-allotment
option is exercised in full) will be freely tradeable without restriction under
the Securities Act, unless purchased by "affiliates" of the

49
<PAGE> 52

Company, as that term is defined for purposes of Rule 144 promulgated under the
Securities Act (i.e., directors, officers and 10% or greater stockholders). The
remaining 5,533,078 shares of Common Stock are "restricted" securities under the
Securities Act (the "Restricted Shares"), of which 3,404,437 shares are deemed
to be held by "affiliates" of the Company.

None of the Restricted Shares (currently 5,533,078 shares) may be sold in
the public market unless registered under the Securities Act or upon
qualification under an exemption from registration under Rules 144 or 701
promulgated under the Securities Act. Under Rule 144 as currently in effect, any
person (or persons whose shares are aggregated), including an affiliate of the
Company, who has beneficially owned Restricted Shares for at least two years
(including in certain circumstances the holding period of a prior owner except
an affiliate), and any person who is an affiliate of the Company whose shares
are not restricted securities, is entitled to sell within any three-month period
a number of shares that does not exceed the greater of (i) one percent of the
number of shares of Common Stock then outstanding (approximately 92,831 shares
immediately following this offering), or (ii) the average weekly trading volume
of the Common Stock during the four calendar weeks preceding the filing of a
Form 144 with respect to such sale. The Company believes, under interpretations
of Rules 144 and 145 under the Securities Act, that the holding period
(currently two years) applicable to 5,464,913 of the Restricted Shares began on
June 30, 1996, while the holding period applicable to the remaining 68,165 of
the Restricted Shares began on September 30, 1996.

Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about the Company. Under Rule 144(k), a person who is not deemed to have been an
affiliate of the Company at any time during the 90 days preceding a sale, and
who has beneficially owned the shares proposed to be sold for at least three
years (including the holding period of any prior owner except an affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Subject to the contractual "lock-up" agreements discussed below, the
Company intends, after consummation of this offering, to enter into a
Registration Rights Agreement with each holder of Restricted Shares, entitling
each holder to certain rights with respect to the registration of such shares
under the Securities Act. Under such Registration Rights Agreement, if the
Company proposed to register any of its securities under the Securities Act
(except for a registration on Forms S-4 or S-8 or involving an issuance related
to a business combination), either for its own account or the account of other
securityholders, the holders of the Restricted Shares will be entitled to notice
of such registration and will be entitled to include their shares therein;
provided, however, among other conditions, that the underwriters of such
offering will have the right, subject to certain limitations, to limit the
number of such shares included in any such registration.

As of September 30, 1996, 716,916 shares of Common Stock were issuable upon
the exercise of vested stock options under the Company's 1996 Stock Incentive
Plan and 325,000 shares will be issuable pursuant to options to be granted upon
the effectiveness of this offering. An aggregate of 1,200,000 shares of Common
Stock have been reserved for issuance under the Company's 1996 Stock Incentive
Plan. In addition, the Company intends, as soon as practicable after the
consummation of this offering, to file a registration statement on Form S-8
under the Securities Act covering the 1,200,000 shares of Common Stock reserved
for issuance under the Company's 1996 Stock Incentive Plan. Such registration
statement will become effective automatically upon filing. Accordingly, shares
registered under such registration statement will, subject to Rule 144 volume
limitations applicable to affiliates of the Company and the lock-up agreements
described below, be available for sale in the open market, subject to applicable
vesting restrictions on stock options.

All existing stockholders and all holders of stock options issued by the
Company have entered into contractual "lock-up" agreements providing that they
will not offer, sell, pledge, contract to sell, grant any option to purchase or
otherwise dispose of any Common Stock, nor any options, warrants or other
securities convertible into or exercisable or exchangeable for Common Stock,
whether now owned or hereafter acquired, or in any manner transfer all or a
portion of the economic consequences associated with their ownership of the
Common Stock of the Company, for 180 days after the effective date of this
offering, without the prior written consent of Dain Bosworth Incorporated. As a
result of these contractual restrictions, shares subject to lock-up agreements
will not be saleable until the agreements expire.

50
<PAGE> 53

UNDERWRITING

Subject to the terms and conditions contained in an underwriting agreement
(the "Underwriting Agreement"), the underwriters named below (the
"Underwriters"), for which Dain Bosworth Incorporated and Furman Selz LLC are
acting as representatives (the "Representatives"), have severally agreed to
purchase from the Company and the Selling Stockholders the shares of Common
Stock offered hereby. Each Underwriter will purchase the number of shares set
forth opposite its name below, and will purchase such shares at the price to
public, less the underwriting discounts and commissions set forth on the cover
page of this Prospectus.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------ ---------
<S> <C>
Dain Bosworth Incorporated........................................
Furman Selz LLC...................................................

---------
Total................................................... 3,750,000
=========
</TABLE>

The Underwriting Agreement provides that the Underwriters' obligations are
subject to conditions precedent and that the Underwriters are committed to
purchase all shares of Common Stock offered hereby (other than those covered by
the over-allotment option described below) if the Underwriters purchase any
shares. The Representatives have advised the Company and the Selling
Stockholders that the several Underwriters may offer the shares of Common Stock
directly to the public at the price to public set forth on the cover page of
this Prospectus and to certain dealers at the price to public less a concession
not exceeding $ per share. The Underwriters may allow, and such dealers
may re-allow, a concession not exceeding $ per share to other dealers.
After the shares of Common Stock are released for sale to the public, the
Representatives may change the initial price to public and other selling terms.

The Selling Stockholders have granted to the Underwriters an option,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 1,250,000 additional shares of the Common Stock at the price to
public, less the underwriting discounts and commissions set forth on the cover
page of this Prospectus. See footnote 6 to the table under "Principal and
Selling Stockholders."

The Underwriting Agreement provides that the Company, the Selling
Stockholders and the Underwriters will indemnify each other against certain
liabilities, including liabilities under the Act, in connection with this
offering.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

The Company and all of its current stockholders, directors and executive
officers have agreed not to offer, sell, pledge, grant an option to purchase or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the date of this Prospectus (the "Lockup Period") without the prior written
consent of Dain Bosworth Incorporated. This restriction does not prevent the
Company from granting options under the Stock Plans or issuing unregistered
securities in a merger, consolidation, acquisition, joint venture or other
arrangement as long as those securities are not registered under the Securities
Act prior to the end of the 180-day period.

The Representatives have reserved up to 150,000 of the shares of Common
Stock offered hereby for sale to directors and principal stockholders of the
Company (including their affiliated entities) and other persons identified by
the Company who have expressed an interest in purchasing shares of Common Stock.
To the extent shares are purchased by such persons, the number of shares
available for sale to the public will be reduced. Any such purchases will be
made at the initial public offering price to the public and on the same

51
<PAGE> 54

terms and conditions as will be initially offered by the Representatives to
others in this offering. The directors and principal stockholders (including
their affiliated entities) purchasing such shares have agreed not to offer,
sell, pledge, grant an option to purchase or otherwise dispose of any shares of
Common Stock during the 180-day Lockup Period.

Prior to this offering, there has been no public market for the Common
Stock. The price to public will be determined by agreement among the Company,
the Selling Stockholders and the Representatives. In determining the price to
public, the Company, the Selling Stockholders and the Representatives will
consider, among other things, the history of and prospects for the industry in
which the Company operates, past and present operations and earnings of the
Company and the trend of such earnings, the qualifications of the Company's
management, the general condition of the securities markets at the time of this
offering and the market prices for other publicly-traded companies.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Manatt, Phelps & Phillips, LLP, Los Angeles, California. Certain
legal matters will be passed upon for the Underwriters by Sherman & Howard,
L.L.C., Denver, Colorado.

EXPERTS

The financial statements as of December 31, 1994 and 1995 and for each of
the three years in the period ended December 31, 1995 included in this
Prospectus have been audited by Coopers & Lybrand L.L.P., independent auditors,
as stated in their report, which is included herein, and have been so included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement," which term shall include all amendments, exhibits, annexes and
schedules thereto) pursuant to the Securities Act, including the rules and
regulations promulgated thereunder, with respect to the shares of Common Stock
offered hereby. This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. All of these documents
may be inspected without charge at the public reference facilities maintained by
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such materials may be obtained from the Public Reference Section of
the Commission located at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission maintains a World Wide Web site
at http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company.

The Company intends to furnish to its stockholders annual reports
containing consolidated financial statements audited by its independent
accountants and quarterly reports for the first three quarters of each fiscal
year containing unaudited financial information.

52
<PAGE> 55

GLOSSARY

The following terms appearing in this Prospectus have the meanings
specified below:

Analog transmission. Wireless or wireline communication consisting of a
voice or other non-digital signal transmitted as-is or modulated directly onto a
continuous "carrier" radio wave.

APCO. Association of Public Safety Communications Officers, Inc.

APCO 25 Standard. Transmission standard for digital land mobile radio
communications endorsed by APCO and specifying a common air interface. See
"Business -- Industry Background -- Land Mobile Radio Market."

Common air interface. A communications protocol specified in the APCO 25
Standard allowing interoperability among APCO 25 compliant systems from the same
or different manufacturers.

Digital Transmission. Wireless or wireline transmission of discrete
information "bits" in the form of ones and zeroes. An analog signal such as a
voice can be converted to digital format prior to transmission, transmitted
digitally, and reconstituted as an analog signal at the receiving end.

DSP. Digital Signal Processor, an electronic microprocessor that
manipulates and processes digital signals for communications and other purposes.

Encryption. Securing a digital transmission through the use of a
mathematical encoding algorithm which rearranges a digital bit-stream prior to
transmission and a decoding algorithm which reconstitutes the transmitted
digital information to its original form at the receiving end.

FCC. United States Federal Communications Commission.

FDMA. Frequency Division Multiple Access, a method for dividing frequency
spectrum into smaller units to increase capacity.

Frequency hopping. A method of scrambling transmissions which involves
changing transmission frequencies many times per second based upon an algorithm.

Frequency inversion. A method of scrambling transmissions which involves
inverting or otherwise adjusting the phase of a signal based on a consistent
method.

Hopping code. A method of scrambling transmissions which involves changing
transmission codes many times per second based upon an algorithm.

Interoperability. The ability of radio equipment to communicate with other
systems produced by the same or different manufacturers.

LANs. Local Area Computer Networks.

LMR. Land Mobile Radios, which consist of hand-held or mobile (vehicle
mounted) two-way radios commonly used by public safety workers (e.g., police,
fire and medical emergency personnel), businesses (e.g., fleet operators, taxi
dispatch, construction and other commercial users) and a wide variety of United
States and foreign governmental agencies.

OEM. Original equipment manufacturer.

PBX. Private Branch Exchange, a standard telephone switch which connects
telephones located at the customer's premises to the telephone network.

PCMCIA. An industry standard for plug-in cards for use in personal
computers developed by the Personal Computer Memory Card International
Association.

RF. Radio frequency.

53
<PAGE> 56

Rolling code. A method of scrambling transmissions which involves changing
transmission codes incrementally many times per second.

Scrambling. Securing an analog transmission by manipulating the original
signal at the point of transmission and reconstituting the original signal at
the receiving end. Methods of analog scrambling include frequency hopping,
frequency inversion, hopping code, rolling code and split-band.

Split-band. A method of scrambling transmissions which involves spreading
a signal across multiple channels or frequencies.

TDMA. Time Division Multiple Access, a method for allocating usage on a
single channel by interspersing communications of multiple users.

54
<PAGE> 57

TRANSCRYPT INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Income (Loss).............................................. F-4
Consolidated Statements of Stockholders' Equity....................................... F-5
Consolidated Statements of Cash Flows................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 58

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors
Transcrypt International, Inc.

We have audited the accompanying consolidated balance sheets of Transcrypt
International, Ltd. (the Predecessor) as of December 31, 1994 and 1995, and the
related consolidated statements of income (loss), stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Transcrypt
International, Ltd. as of December 31, 1994 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

700 Cornhusker Plaza
Lincoln, Nebraska
February 23, 1996

F-2
<PAGE> 59

TRANSCRYPT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1994 AND 1995 AND SEPTEMBER 30, 1996

ASSETS

<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
------------ ------------ -------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.................................... $2,135,460 $ 291,712 $ --
Accounts receivable, net of allowance for doubtful accounts
of $188,014, $181,659 and $363,169 in 1994, 1995 and 1996
respectively.............................................. 1,251,877 1,923,441 2,833,714
Receivable -- officers, employees and affiliate.............. 53,501 57,791 37,335
Inventory, net............................................... 1,251,996 1,119,763 1,689,175
Prepaid expenses............................................. 177,822 60,323 207,386
Deferred tax assets.......................................... -- -- 232,325
---------- ---------- -----------
Total current assets................................. 4,870,656 3,453,030 4,999,935
Property, plant and equipment, at cost net of accumulated
depreciation................................................. 2,661,702 3,066,740 3,961,057
Deferred tax assets............................................ -- -- 1,715,540
Intangible assets, net of accumulated amortization............. 2,094,636 1,002,860 214,719
---------- ---------- -----------
$9,626,994 $7,522,630 $ 10,891,251
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft............................................... $ -- $ -- $ 153,834
Revolving line of credit..................................... -- -- 64,000
Current portion of capitalized lease obligations............. 14,276 15,570 14,103
Current portion of long-term debt............................ 301,377 412,656 437,804
Current portion of obligations under non-compete
agreements................................................ 340,000 340,000 --
Accounts payable............................................. 279,717 176,496 681,334
Income taxes payable......................................... -- -- 154,326
Accrued expenses............................................. 416,002 767,246 1,353,378
Deferred revenue............................................. 153,018 56,814 1,759
Due to related parties....................................... 13,738 489 --
---------- ---------- -----------
Total current liabilities............................ 1,518,128 1,769,271 2,860,538
---------- ---------- -----------
Capitalized lease obligations, net of current portion.......... 30,882 15,099 4,995
Long-term debt, net of current portion......................... 1,793,480 1,831,493 1,504,625
Obligations under non-compete agreements, net of current
portion...................................................... 340,000 -- --
---------- ---------- -----------
2,164,362 1,846,592 1,509,620
---------- ---------- -----------
Commitments and contingencies (Note 11)
Stockholders' equity:
Partners' capital............................................ 5,944,504 3,906,767 --
Common stock ($.01 par value; 19,400,000 voting shares
authorized, 6,565,536 issued and outstanding; 600,000
non-voting shares authorized, 217,542 issued and
outstanding) (Note 17).................................... -- -- 51,754
Additional paid-in capital................................... -- -- 9,699,458
Retained deficit............................................. -- -- (3,230,119)
---------- ---------- -----------
5,944,504 3,906,767 6,521,093
---------- ---------- -----------
$9,626,994 $7,522,630 $ 10,891,251
========== ========== ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE> 60

TRANSCRYPT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

The accompanying notes are an integral part of the consolidated financial
statements.

F-4
<PAGE> 61

TRANSCRYPT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED PARTNERS'
UNITS SHARES STOCK CAPITAL DEFICIT CAPITAL TOTAL
----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992....... 4,727,842 -- $ -- $ -- $ -- $ 3,821,442 $ 3,821,442
Additional investment.......... 247,592 -- -- -- -- 350,000 350,000
Distributions.................. -- -- -- -- -- (360,003) (360,003)
Net income..................... -- -- -- -- -- 787,752 787,752
---------- --------- ------- --------- ---------- ---------- ----------
Balance, December 31, 1993....... 4,975,434 -- -- -- -- 4,599,191 4,599,191
Additional investment.......... 200,000 -- -- -- -- 1,000,007 1,000,007
Distributions.................. -- -- -- -- -- (861,482) (861,482)
Net income..................... -- -- -- -- -- 1,206,788 1,206,788
---------- --------- ------- --------- ---------- ---------- ----------
Balance, December 31, 1994....... 5,175,434 -- -- -- -- 5,944,504 5,944,504
Distributions.................. -- -- -- -- -- (699,997) (699,997)
Net loss....................... -- -- -- -- -- (1,337,740) (1,337,740)
---------- --------- ------- --------- ---------- ---------- ----------
Balance, December 31, 1995....... 5,175,434 -- -- -- -- 3,906,767 3,906,767
Distributions.................. -- -- -- -- -- (181,001) (181,001)
Net income (loss).............. -- -- -- -- (3,230,119) 667,196 (2,562,923)
Issuance of stock in exchange
for units of the
Predecessor.................. (5,175,434) 6,783,078 51,754 4,341,208 -- (4,392,962) --
Special compensation-options
issued....................... -- -- -- 5,358,250 -- -- 5,358,250
---------- --------- ------- --------- ---------- ---------- ----------
Balance, September 30, 1996
(unaudited).................... -- 6,783,078 $ 51,754 $9,699,458 $(3,230,119) $ -- $ 6,521,093
========== ========= ======= ========= ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-5
<PAGE> 62

TRANSCRYPT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

<TABLE>
<CAPTION>
NINE MONTH NINE MONTH
PERIOD ENDED PERIOD ENDED
YEAR ENDED YEAR ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, DECEMBER 31, 1995 1996
1993 1994 1995 -------------- --------------
------------- ------------- ------------- (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................ $ 787,752 $ 1,206,788 $(1,337,740) $ (1,457,621) $ (2,562,923)
----------- ----------- ----------- ----------- -----------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Special compensation expense............... -- -- -- -- 5,358,250
Depreciation............................... 275,697 350,188 532,288 349,905 509,086
Amortization............................... 1,091,761 1,092,426 1,092,680 829,335 819,287
Loss (gain) on sale of fixed assets........ 14,894 42,449 (2,446) (1,223) 5,682
Provision for warranties, bad debts and
inventory reserve........................ 422,598 314,589 195,824 115,524 211,869
Deferred tax provision..................... -- -- -- -- (1,947,865)
Changes in:
Accounts receivable...................... (403,078) (63,090) (672,929) 179,619 (1,102,977)
Related party receivables................ (58,164) 44,571 (4,290) (198,336) 19,456
Inventory................................ (897,875) (174,916) 82,850 61,822 (565,225)
Prepaid expenses and other assets........ (14,885) (125,026) 117,499 46,423 (147,063)
Accounts payable......................... 4,213 23,122 (103,221) (137,767) 496,722
Income taxes payable..................... -- -- -- -- 154,326
Accrued expenses......................... 145,622 195,147 264,010 247,169 176,098
Related party payables................... (63,677) (12,328) (13,249) 79,643 (489)
Deferred revenue......................... 116,260 (35,394) (96,204) 205,325 (55,055)
----------- ----------- ----------- ----------- -----------
Total adjustments..................... 633,366 1,651,738 1,392,812 1,777,439 3,932,102
----------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities.......................... 1,421,118 2,858,526 55,072 319,818 1,369,179
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Issue notes receivable....................... (25,000) (1,833) (11,846) -- --
Payments received on note receivable......... 5,000 5,000 10,394 -- --
Proceeds from sale of fixed assets........... 3,860 591,084 37,089 19,800 26,725
Purchase of fixed assets..................... (233,561) (1,992,017) (1,029,471) (822,589) (1,039,786)
Increase in patents and trademarks........... (1,625) (2,993) (904) -- (31,371)
Payments under non-compete agreement......... (340,000) (340,000) (340,000) (255,000) (340,000)
----------- ----------- ----------- ----------- -----------
Net cash used in investing
activities.......................... (591,326) (1,740,759) (1,334,738) (1,057,789) (1,384,432)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on term loan and operating line of
credit..................................... 1,279,580 2,363,000 1,016,000 500,000 64,000
Payments on term loan and operating line of
credit..................................... (1,731,226) (1,743,792) (866,708) (248,384) (301,720)
Principal payments on capitalized leases..... (14,042) (13,648) (13,377) (11,019) (11,572)
Proceeds from issuance of partnership
interests.................................. 350,000 1,000,007 -- -- --
Partnership distributions paid............... (360,003) (861,482) (699,997) (699,997) (181,001)
Bank overdraft............................... (80,493) -- -- -- 153,834
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities................ (556,184) 744,085 (564,082) (459,400) (276,459)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents.................................. 273,608 1,861,852 (1,843,748) (1,197,371) (291,712)
Cash and cash equivalents, beginning of
period....................................... -- 273,608 2,135,460 2,135,460 291,712
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents, end of period....... $ 273,608 $ 2,135,460 $ 291,712 $ 938,089 $ --
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.............................. $ 140,082 $ 137,481 $ 190,403 $ 136,420 $ 109,874
Income taxes paid.......................... $ -- $ -- $ -- $ -- $ 35,000
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-6
<PAGE> 63

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of significant accounting policies followed in
the preparation of these financial statements. Certain prior period amounts have
been reclassified to conform to the current period presentation.

(a) Organization:

Transcrypt International, LTD. (the "Predecessor") is a limited partnership
formed in 1991 composed of the general partner, Transcrypt International, Inc.
(a Nebraska corporation) and various limited partners. One percent of the
profits or losses is allocated to the general partner and the remaining 99% is
allocated to the limited partners based on their respective units of partnership
interest.

Effective June 30, 1996, the assets and liabilities of the partnership were
merged tax-free into a Delaware corporation, Transcrypt International, Inc. (the
"Company"). Each respective partnership unit was converted pro rata into common
shares of the Company.

The Company is engaged in the design, manufacture and marketing of
information security products for the land mobile radio and cellular telephone
markets. The Company markets its products to customers world-wide.

(b) Principles of Consolidation:

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All significant intercompany accounts and
transactions have been eliminated in the consolidation.

The Company considers all highly liquid investments with original
maturities less than 90 days as cash equivalents. The Company places its
temporary cash investments with high credit qualified financial institutions.

(d) Inventory:

Inventory is recorded at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) method.

(e) Property, Plant and Equipment:

Property, plant and equipment are recorded at cost. The Company's policy is
to capitalize expenditures for major improvements and to charge to operating
expenses the cost of current maintenance and repairs. Depreciation is computed
on the straight line method over the estimated useful lives of the assets. The
cost and related accumulated depreciation of assets retired or otherwise
disposed of are eliminated from the respective accounts at the time of
disposition. Any resulting gain or loss is included in current operating
results. For the year ended December 31, 1994, $28,776 of interest expense was
capitalized.

(f) Intangible Assets:

Intangibles are carried at cost less applicable amortization. Provision for
amortization of intangible assets is based upon the estimated useful lives of
the related assets and is computed using the straight line method. All
intangible assets are being amortized over five years. Management reviews
intangible assets whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be fully recoverable.

F-7
<PAGE> 64

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(g) Income Taxes:

The partnership as an entity is not subject to Federal or state income
taxes. Any tax liabilities arising from the Predecessor's operations are the
direct responsibility of the individual partners. Deferred tax assets and
liabilities are determined based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates and
laws applicable to the years in which the differences are expected to reverse.

(h) Pro Forma Provision for Income Taxes:

The pro forma provision for income taxes reflects the provision for income
taxes as if the Company had been taxed as a C Corporation under the Internal
Revenue Code for the entire period presented.

(i) Revenue Recognition:

Revenues are recorded when products are shipped or services are rendered.
Costs associated with the installation and servicing of equipment are charged to
expense as incurred and allowances are provided for returns. The Company defers
income for prepayments of significant initial engineering costs which are
components of the selling price of certain products sold. Also included in
deferred revenue are prepayments from foreign customers for which goods cannot
be shipped until certain export regulations are met.

(j) Export Sales:

A significant portion of the Company's sales are made to customers outside
of the United States. Export sales are recorded and settled in U.S. dollars and
are generally shipped against prepayments or backed by irrevocable letters of
credit confirmed by U.S. banks. Total export sales by geographic area were as
follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Europe.................................... $ 947,334 $2,580,236 $2,464,164
Middle East............................... 1,740,666 1,691,605 2,275,620
Latin America............................. -- 978,159 1,060,216
---------- ---------- ----------
$2,688,000 $5,250,000 $5,800,000
========== ========== ==========
</TABLE>

(k) Warranty Costs:

The Company provides for warranty costs based on estimated future
expenditures that will be incurred under product guarantees and warranties
presently in force.

(l) Pro Forma Net Income (Loss) Per Share:

Pro forma net income (loss) per share is computed on the basis of the
weighted average number of partnership interest units outstanding during the
year converted into common shares on a one to one ratio, adjusted for a stock
dividend and including common stock equivalents (see Note 17).

<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED
DECEMBER SEPTEMBER SEPTEMBER
31, 30, 30,
1995 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Common stock............................... 6,783,078 6,783,078 6,783,078
Common stock equivalents -- stock
options.................................. 229,673 229,673 229,673
--------- --------- ---------
7,012,751 7,012,751 7,012,751
========= ========= =========
</TABLE>

F-8
<PAGE> 65

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 83, options to purchase common stock granted with exercise prices below the
assumed initial public offering price per share during the 12 months preceding
the date of the initial filing of the Registration Statement are included in the
calculation of common equivalent shares, using the treasury stock method, as if
they were outstanding for all periods presented.

(m) Management Estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect carrying amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of financial statement
dates, as well as the reported revenues and expenses for the years then ended.
Actual results may differ from management's estimates.

(n) Unaudited Information:

The financial information for the period as of September 30, 1995 and 1996
and the nine months then ended has been prepared by the Company and is
unaudited. In the opinion of management, the accompanying unaudited financial
information contains all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial position of
the Company and its Predecessor at September 30, 1996 and the results of their
operations and their cash flows for the nine month period ended September 30,
1995 and 1996. The consolidated statement of loss and consolidated statement of
cash flows for the nine month period ended September 30, 1996 reflects the
combined operating results of the Predecessor for the period January 1, 1996 to
June 30, 1996 and the Company for the period July 1, 1996 to September 30, 1996.

2. INVENTORY:

The following is a summary of inventory at December 31, 1994 and 1995 and
September 30, 1996:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials and supplies, net of
reserve for obsolescence of $33,562,
$82,041 and $79,057 in 1994, 1995 and
1996, respectively................... $ 657,027 $ 879,587 $1,053,256
Work in process........................ 300,676 101,092 375,633
Finished goods......................... 294,293 139,084 260,286
---------- ---------- ----------
$1,251,996 $1,119,763 $1,689,175
========== ========== ==========
</TABLE>

3. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consists of the following at December 31,
1994 and 1995:

F-9
<PAGE> 66

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Land................................................ $ 150,000 $ 150,000
Building............................................ 1,289,452 1,302,388
Equipment........................................... 1,467,713 2,325,690
Leased equipment.................................... 74,329 74,329
Automobiles......................................... 58,232 64,647
Furniture and fixtures.............................. 345,802 371,160
--------- ---------
3,385,528 4,288,214
Less accumulated depreciation.................. 723,826 1,221,474
--------- ---------
$2,661,702 $3,066,740
========= =========
</TABLE>

4. INTANGIBLE ASSETS:

Intangible assets consist of the following at December 31, 1994 and 1995:

<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Proprietary technology.............................. $3,355,630 $3,355,630
Non-compete agreements.............................. 1,700,000 1,700,000
Goodwill............................................ 290,516 290,516
Organization costs.................................. 116,910 116,910
Patents and trademarks.............................. 4,618 5,522
--------- ---------
5,467,674 5,468,578
Less accumulated amortization.................. 3,373,038 4,465,718
--------- ---------
$2,094,636 $1,002,860
========= =========
</TABLE>

5. REVOLVING LINE OF CREDIT:

The Company has a revolving line of credit not to exceed $2,000,000
calculated using a specified borrowing base of eligible inventories and accounts
receivable. Interest is payable monthly at a regional bank's national money
market rate. The line is collateralized by substantially all the Company's
assets.

6. CAPITALIZED LEASE OBLIGATIONS:

Future minimum lease payments under capitalized lease obligations at
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
1996............................................................... $17,289
1997............................................................... 15,846
-------
Total minimum obligations.......................................... 33,135
Less amount representing interest.................................. 2,466
-------
Present value of net minimum obligations........................... 30,669
Less current portion............................................... 15,570
-------
Long-term portion.................................................. $15,099
=======
</TABLE>

F-10
<PAGE> 67

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. LONG-TERM DEBT:

Long-term debt at December 31, 1994 and 1995 consists of the following:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Term note payable to bank due in monthly installments
of $18,141 including interest at 7.75% beginning in
March 1993 until March 1996 when it can be adjusted
from time to time to a specified rate of a regional
bank. Principal is due in full in February 1998. The
note is collateralized by essentially all the assets
of the Company in addition to the personal
guarantees of certain shareholders.................. $613,123 $437,358
Term note payable to bank due in monthly installments
of $14,231 including interest at 8% beginning June
1994 until May 1996, when it can be adjusted to
one-percent above a specified rate of a regional
bank from time to time. Principal is due in full in
May 1999. The note is collateralized by essentially
all the assets of the Company in addition to
personal guarantees of certain shareholders......... 631,734 507,653
Installment note for equipment purchase payable to
bank due in monthly installments of $10,506
including daily adjusted interest at a specified
rate above the prime rate (8.5% at December 31,
1995). The note is collateralized by specific
equipment purchased with proceeds as well as
inventory and other equipment. The note is
guaranteed by a shareholder......................... $ -- $ 449,138
Industrial development revenue bonds payable to bank
with quarterly interest only payments beginning
April 15, 1994 at 6.25% with principal due on
January 15, 2004. This note is collateralized by a
deed of trust....................................... 850,000 850,000
----------- -----------
2,094,857 2,244,149
Less current portion.................................. 301,377 412,656
----------- -----------
$1,793,480 $1,831,493
========= =========
</TABLE>

Maturities on long-term debt are summarized as follows:

<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1996............................................................. $ 412,656
1997............................................................. 447,973
1998............................................................. 303,590
1999............................................................. 182,900
2000............................................................. 47,030
Thereafter....................................................... 850,000
----------
$2,244,149
=========
</TABLE>

The agreements of the term note payable and the bank note payable discussed
in Note 5 require, among other things, that the Company maintain certain levels
of working capital, net worth and debt-to-equity ratios and limit capital
expenditures, investments, other indebtedness, distributions, mergers and
acquisitions.

8. OBLIGATIONS UNDER NON-COMPETE AGREEMENTS:

In connection with the purchase of the net assets of Transcrypt
International, Incorporated in 1991, the Company entered into non-compete
agreements with the former owners which call for the Company to pay a

F-11
<PAGE> 68

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

total of $1,700,000 in consideration for the former owners' agreement not to
compete for a period of five years. As of December 31, 1995, the remaining
payments are payable in 1996 and amount to $340,000.

9. DEFERRED INCOME TAXES:

The components of the provision (benefit) for income taxes for the period
ending September 30, 1996 are as follows:

<TABLE>
<S> <C>
Current......................................................... $ 189,326
Deferred........................................................ (1,947,865)
-----------
$(1,758,539)
==========
</TABLE>

The entire provision is comprised of federal taxes, as no state taxes are
expected to be paid as a result of various state incentive tax credits for which
the Company has qualified.

The Company's tax provision effective tax rate on pretax income (loss)
differs from U.S. federal statutory tax rate as follows:

<TABLE>
<S> <C> <C>
U.S. federal tax at statutory tax rate................ $(1,469,297) (34.00)%
Income taxable directly to partners of the
Predecessor......................................... (226,847) (5.25)
Benefit of foreign sales corporation.................. (89,048) (2.06)
Other................................................. 26,653 0.62
----------- ------
$(1,758,539) (40.69)%
========== ======
</TABLE>

Temporary differences between the financial statement carrying amounts and
tax bases of assets and liabilities that give rise to deferred income taxes at
September 30, 1996 relate to the following:

<TABLE>
<S> <C>
Deferred tax assets:
Special compensation expense................................... $1,821,805
Allowance for bad debts........................................ 65,492
Reserves for warranties and inventory obsolescence............. 41,172
Difference between tax and book liability accruals............. 127,166
----------
2,055,635
----------
Deferred tax liabilities:
Difference between tax and book depreciation................... 106,265
Difference between tax and book liability accruals............. 1,505
----------
107,770
----------
Net deferred asset............................................... $1,947,865
=========
</TABLE>

10. ACCRUED EXPENSES:

Accrued expenses consist of the following:

F-12
<PAGE> 69

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
------------ ------------ -------------
<S> <C> <C> <C>
Payroll and bonuses.................. $ 38,930 $151,130 $ 212,900
Accrued licensing costs.............. -- -- 400,000
Warranty reserve..................... 47,221 64,455 73,039
Commissions.......................... 33,513 265,440 132,661
Special compensation expense......... -- -- 210,000
Other expenses....................... 296,338 286,221 324,778
-------- -------- ----------
$416,002 $767,246 $ 1,353,378
======== ======== ==========
</TABLE>

11. COMMITMENTS AND CONTINGENCIES:

The Company has agreed to pay fees totaling $350,000 to its chairman and
chief executive officer for initiating the purchase of the net assets of
Transcrypt International, Incorporated in 1991. Payment is contingent upon the
original limited partners receiving capital distributions equal to their
original capital contributions or upon the approval of the Board of Directors of
the Company for the sale of equity interests in the Company to the public.
Payments of $70,000 have been made as of December 31, 1995 and an additional
payment of $70,000 was approved and paid during February 1996. These payments
were accounted for as a bonus and the officer has waived rights to receive fees
to the extent of such payments. Also see Note 17.

In the normal course of its business activities, the Company is required
under a contract with foreign governmental authorities to provide letters of
credit that may be drawn upon if the Company fails to perform under their
contracts. The letters of credit, which expire on various dates in 1996, have a
total undrawn balance of $139,081 at December 31, 1995.

The Company is involved in certain disputes as part of the ordinary course
of its business. Management believes that the ultimate resolution of these
disputes will not have a material adverse effect on its financial position,
results of operations or cash flows.

12. RELATED PARTY TRANSACTIONS:

The Company, its partners and other related parties have participated in
various related party transactions. Amounts due to and from related parties are
as set forth in the balance sheet.

The remainder of amounts due to and from related parties primarily
represent amounts due to the general partner and sales commissions (which were
insignificant) due to a wholly-owned subsidiary of the general partner net of
administrative expenses paid on behalf of the subsidiary.

13. OPTION PLAN:

In January 1992, the Board of Directors approved a 1992 Partnership
Interest Option Plan which provides for the granting of up to 1,297,525 units of
non-qualified interest options to certain officers and key employees. Under the
Plan, the exercise price for the options will be the fair market value at the
date of grant as determined by the Board of Directors. Options granted under the
Plan are fully vested and generally become exercisable at the discretion of a
committee designated by the Board to administer the plan, however no options
shall be exercisable until the Board of Directors declare distributions that
will cause the original investors to have received a return of their initial
investment in the Company plus a 20% cumulative annual return on their
investment.

The committee shall also determine the term of each option granted, which
will in no event exceed ten years from the date of grant. Information with
respect to interest options under the above plan is as follows:

F-13
<PAGE> 70

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Units under option, at beginning of year.............. 908,267 961,348
Granted............................................... 53,081 27,523
Exercised............................................. -- --
Canceled or forfeited................................. -- (572,090)
-------- --------
Units under option, at end of year.................... 961,348 416,781
======== ========
Price of options granted.............................. $ 3.05 $ 3.05
Price of options outstanding.......................... $ .76-3.05 $ .76-3.05
</TABLE>

No units were exercisable at December 31, 1995. 880,744 units were
available for future grants under the 1992 agreement. Of the available units,
300,135 have been reserved for issuance contingent upon future employment or
attainment of specified criteria by the grantees.

Effective June 30, 1996, the unit options were converted to stock options
on a one to one ratio. Notwithstanding the restrictions stated above, the issued
options automatically become exercisable and the reserved options become
issuable, fully vested and exercisable if the Company successfully completes an
initial public offering. Also see Note 17.

14. BENEFIT PLANS:

The Company has a profit sharing plan which covers substantially all
employees. Contribution levels are determined by the Board of Directors
annually. Profit sharing expense approximated $30,000, $45,000 and $27,500 for
the years ended December 31, 1993, 1994 and 1995, respectively.

The Company also has a 401(k) plan which covers substantially all
employees. Participants may contribute up to 10% of their annual compensation
and the Company makes matching contributions of 25% of the amount contributed by
participants. Contributions may not exceed the maximum allowable by law. Company
contributions approximated $8,000, $11,000 and $13,000 for the years ended
December 31, 1993, 1994 and 1995, respectively.

15. SALES TO MAJOR CUSTOMERS:

Sales to major customers totaling over $200,000 each were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Percent of total sales.................... 30% 49% 44%
Number of major customers................. 3 6 7
Individual customers representing 10% or
more of consolidated sales in each year:
Motorola -- Poland...................... -- $2,044,350 --
Ministry of Interior -- Egypt........... $1,622,452 -- $849,134
</TABLE>

16. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying amounts of all financial instruments in the consolidated
balance sheets approximate fair values.

F-14
<PAGE> 71

TRANSCRYPT INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17. OTHER MATTERS:

On September 30, 1996, the Board of Directors and the shareholders approved
an increase in the Company's authorized common shares from 10 million to 20
million shares. On November 18, 1996, the Company declared a 1.3106311-for-1
stock split in the form of a stock dividend. All share and per share information
has been restated to reflect the split.

The Board of Directors approved the payment of the remaining $210,000 fees
for initiating the 1991 purchase of the net assets of Transcrypt International,
Incorporated on September 30, 1996. These fees are included in special
compensation expense in the consolidated statements of operations (see Note 11).
The Board of Directors also approved granting of all reserved options and full
vesting of 716,916 stock options of outstanding stock options on September 30,
1996 (see Note 13). The vesting resulted in a special compensation charge of
$5,358,250 (before related tax benefits of $1,821,805) in the quarter ending
September 30, 1996.

F-15
<PAGE> 72

[Inside Back Cover]

[Picture of Transcrypt Stealth 25 land mobile radio, Motorola cellular
telephone and land mobile radio, Kenwood land mobile radio and hats,
plaques and insignias of various domestic and foreign governmental
agencies that use Transcrypt products, all against the background of a
globe.]

Providing Information Security Worldwide

[Transcrypt International logo]

4800 NW 1st Street * Lincoln, NE 68521
800-894-2615 * 402-474-4800 * Fax 402-474-4858

Transcrypt Sells Stand-alone Products and
Add-on Devices for Use with Equipment
Manufactured by Others

<PAGE> 73

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, COMMON
STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use Of Proceeds....................... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion And Analysis
Of Financial Condition And Results
Of Operations....................... 17
Business.............................. 25
Management............................ 38
Certain Transactions.................. 45
Principal and Selling Stockholders.... 46
Description Of Capital Stock.......... 47
Shares Eligible for Future Sale....... 49
Underwriting.......................... 51
Legal Matters......................... 52
Experts............................... 52
Additional Information................ 52
Glossary.............................. 53
Index To Consolidated Financial
Statements.......................... F-1
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS
IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
3,750,000 SHARES

LOGO
COMMON STOCK
---------------------
PROSPECTUS
---------------------

DAIN BOSWORTH
Incorporated

FURMAN SELZ

, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 74

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth estimates of those costs and expenses to be
incurred by the Registrant in connection with the offering of the securities
being registered hereby, all of which are estimated except for the SEC
registration, NASD and Nasdaq National Market application fees.

<TABLE>
<S> <C>
SEC registration fee.............................................. $ 18,296
NASD fee.......................................................... 6,540
Nasdaq National Market application fee............................ 40,700
Blue Sky filing fees and expenses................................. 10,000
Printing and engraving expenses................................... 100,000
Legal fees and expenses........................................... 340,000
Accounting fees and expenses...................................... 75,000
Registrar and transfer agent fees................................. 5,000
Miscellaneous..................................................... 129,464
------
Total........................................................... $725,000
======
</TABLE>

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

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Delaware law, the directors and officers of the Registrant are
entitled, under certain circumstances, to be indemnified by the Registrant
against all expenses and liabilities incurred or imposed upon them as a result
of suits brought against them as such directors and officers, if they act in
good faith and in a manner they reasonably believe to be in or not opposed to
the best interests of the Registrant, and, with respect to any criminal action
or proceeding, have no reasonable cause to believe their conduct was unlawful,
except that no indemnification shall be made against expenses in respect of any
claim, issue or matter as to which they shall have been adjudged to be liable to
the Registrant, unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, they
are fairly and reasonably entitled to be indemnified for such expenses which
such court shall deem proper. Any such indemnification may be made by the
Registrant only as authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is proper because
the indemnitee has met the applicable statutory standard of conduct.

Article Eight of the Registrant's Second Amended and Restated Certificate
of Incorporation, as amended, provides that a director shall not be liable to
the Registrant or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under the Delaware statutory provisions making
directors personally liable for unlawful dividends or unlawful stock repurchases
or redemptions or (iv) for any transaction from which the director derived an
improper personal benefit.

The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law. The Company has
also entered into indemnification agreements with its directors and officers.
The indemnification agreements may require the Company, among other things, to
indemnify its directors and officers against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature) and to advance
their expenses incurred as a result of any proceedings against them as to which
they could be indemnified.

II-1
<PAGE> 75

The Registrant maintains a standard policy of officers' and directors'
liability insurance.

The Underwriting Agreement, a copy of which is filed as Exhibit 1.1 hereto,
provides for the indemnification of directors, officers, employees, agents and
controlling persons of the Registrant by the Underwriters under certain
circumstances.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

(a) In connection with the merger of Transcrypt International, Ltd., a
Nebraska limited partnership (the "Partnership"), with and into the Registrant
effective June 30, 1996, pursuant to an Agreement of Merger between the
Partnership and the Registrant, the Registrant issued, in a transaction that was
not registered under the Securities Act of 1933, as amended (the "Act"),
5,175,434 (pre-split) shares of its Common Stock, $0.01 par value, as
consideration for the merger.

In connection with the merger of Transcrypt International, Inc., a Nebraska
corporation ("Transcrypt Nebraska"), the former general partner of the
Partnership, with and into the Registrant effective September 30, 1996, pursuant
to an Agreement of Merger between Transcrypt Nebraska and the Registrant, the
Registrant issued, in a transaction that was not registered under the Act,
52,010 shares of its Common Stock, $0.01 par value, as consideration for the
merger.

(b) In September 1994, the Partnership issued 200,000 limited partnership
units for $5.00 per unit, or aggregate consideration of $1,000,000, to certain
of the limited partners of the Partnership.

The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Act in reliance upon
Section 4(2) of the Securities Act as transactions by an issuer not involving
any public offering. Appropriate legends were affixed to the securities issued
in connection with such transactions.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.
3.1* Second Amended and Restated Certificate of Incorporation of the Registrant,
filed on September 30, 1996 with the Secretary of State of the State of
Delaware.
3.2* Amended and Restated Bylaws of the Registrant.
3.3* Certificate of Merger of Transcrypt International, Ltd., a Nebraska limited
partnership, with and into the Registrant, filed on June 28, 1996 with the
Secretary of State of the State of Delaware.
3.4 Certificate of Merger of Transcrypt International, Inc., a Nebraska
corporation, with and into the Registrant, filed on September 30, 1996 with
the Secretary of State of the State of Delaware.
4.1 Specimen Certificate for Common Stock.
5.1** Opinion of Manatt, Phelps & Phillips, LLP.
10.1* Employment Agreement between the Registrant and John T. Connor dated as of
September 10, 1996.
10.2* Employment Agreement between the Registrant and Jeffery L. Fuller dated as of
July 18, 1996.
10.3* Form of Employment Agreement between the Registrant and C. Eric Baumann,
Michael P. Wallace and Joel K. Young.
10.4* Form of 1996 Stock Incentive Plan, together with forms of non-qualified stock
option agreements.
10.5 Form of Indemnification Agreement between the Registrant and each executive
officer and director of the Registrant.
</TABLE>

II-2
<PAGE> 76

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------------------------------------------------------------------------
<S> <C>
10.6* License Agreement for APCO Project 25 Compliant Product between Motorola,
Inc. and the Registrant dated as of August 2, 1994.
10.7*** Amendment, dated as of June 28, 1996, to License Agreement for APCO Project
25 Compliant Product between Motorola, Inc. and the Registrant dated as of
August 2, 1994.
10.8* OEM Agreement between Motorola, Inc. and the Registrant dated as of August 2,
1994.
10.9*** Amendment, dated as of July 15, 1996, to OEM Agreement between Motorola, Inc.
and the Registrant dated as of August 2, 1994.
10.10*** Private Label/Supplier Agreement for Analog Scrambling Modules between
Motorola, Inc. and the Registrant dated as of August 8, 1995.
10.11*** Motorola Cellular Subscriber Products Sales Agreement, dated as of June 13,
1996, by and between Motorola, Inc. and the Registrant.
10.12* License Agreement for APCO Fed Project 25 Algorithm between Digital Voice
Systems, Inc. and the Registrant, dated as of August 14, 1995.
10.13* Consigned Inventory Agreement between Arrow/Schweber Electronics Group and
the Registrant, dated as of June 22, 1994.
10.14* Nebraska Investment Finance Authority $850,000 Industrial Revenue Bond
(Transcrypt International, Ltd. Project), Series 1994, dated as of January
15, 1994, and Note.
10.15* Trust Indenture, dated as of January 15, 1994, for $850,000 Industrial
Revenue Bond (Transcrypt International, Ltd. Project), Series 1994, between
Nebraska Investment Finance Authority as Issuer and Norwest Bank Nebraska,
N.A. as Trustee.
10.16* Loan Agreement, dated as of January 15, 1994, for $850,000 Industrial Revenue
Bond (Transcrypt International, Ltd. Project), Series 1994, between Nebraska
Investment Finance Authority as Issuer and the Registrant.
10.17* Amended and Restated Loan Agreement, dated as of May 18, 1994, by and between
Norwest Bank Nebraska, N.A., and the Registrant.
10.18* First Amendment, dated as of June 1, 1995, to Amended and Restated Loan
Agreement, dated as of May 18, 1994, by and between Norwest Bank Nebraska,
N.A., and the Registrant.
10.19* Second Amendment, dated as of April 10, 1996, to Amended and Restated Loan
Agreement, dated as of May 18, 1994, by and between Norwest Bank Nebraska,
N.A., and the Registrant.
10.20* Promissory Note, dated as of May 11, 1995, between West Gate Bank and the
Registrant.
10.21* Noncompete Agreement, dated as of December 3, 1991, between John Kuijvenhoven
and the Registrant.
10.22* Security and Pledge Agreement, dated as of December 3, 1991, by and among
John Kuijvenhoven, Yvonne Kuijvenhoven and the Registrant.
10.23* Security and Pledge Agreement, dated as of August 8, 1994, by and among John
Kuijvenhoven, Yvonne Kuijvenhoven and the Registrant.
10.24 Form of Adoption Agreement for Nonstandardized 401(k) Profit Sharing Plan.
10.25 Defined Contribution Master Plan and Trust Agreement of Norwest Bank
Nebraska, N.A., Master Plan Sponsor.
10.26 Third Amendment, dated as of October 22, 1996, to Amended and Restated Loan
Agreement, dated as of May 18, 1994, by and between Norwest Bank Nebraska,
N.A., and the Registrant, together with Modification of Note.
10.27 Fourth Amendment, dated as of November 19, 1996, to Amended and Restated Loan
Agreement, dated as of May 18, 1994, by and between Norwest Bank Nebraska,
N.A., and the Registrant, together with Commercial Installment Note, dated
November 19, 1996.
</TABLE>

II-3
<PAGE> 77

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------------------------------------------------------------------------
<S> <C>
11.1* Statement re: Computation of Per Share Earnings (see page S-3).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2** Consent of Manatt, Phelps & Phillips, LLP (included in Exhibit 5.1).
23.3 Consent of International Data Corporation
24.1* Power of Attorney.
27.1* Financial Data Schedule.
</TABLE>

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

* Previously filed.

** To be filed by amendment.

*** Previously filed and confidential treatment requested for certain portions.

(b) FINANCIAL STATEMENT SCHEDULES:

Schedule III -- Valuation and Qualifying Accounts and Reserves

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide the underwriters in
this offering (the "Underwriters") at the closing specified in the applicable
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriters to permit prompt delivery to each
purchaser.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions referenced in Item 14 of this Registration Statement
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The undersigned Registrant hereby undertakes:

(1) That for the purposes of determining any liability under the Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) That for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 78

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Lincoln, Nebraska, on this 21st day of November, 1996.

TRANSCRYPT INTERNATIONAL, INC.

By: /s/ JOHN T. CONNOR

------------------------------------
John T. Connor
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- ------------------
<C> <S> <C>
* JOHN T. CONNOR Chief Executive Officer and November 21, 1996
- --------------------------------------------- Director (Principal
John T. Connor Executive Officer)
* RANDAL P. HANSEN Vice President of Finance November 21, 1996
- --------------------------------------------- and Chief Financial
Randal P. Hansen Officer (Principal
Financial and Accounting
Officer)
* TERRY L. FAIRFIELD Director November 21, 1996
- ---------------------------------------------
Terry L. Fairfield
* JEFFERY L. FULLER Director November 21, 1996
- ---------------------------------------------
Jeffery L. Fuller
* HAROLD S. MYERS Director November 21, 1996
- ---------------------------------------------
Harold S. Myers
* THOMAS C. SMITH Director November 21, 1996
- ---------------------------------------------
Thomas C. Smith
* THOMAS R. THOMSEN Director November 21, 1996
- ---------------------------------------------
Thomas R. Thomsen
*By: /s/ JOHN T. CONNOR
- ---------------------------------------------
John T. Connor
Attorney-in-Fact
</TABLE>

II-5
<PAGE> 79

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints John T. Connor and Randal P.
Hansen, and each of them acting individually, as his attorney-in-fact, each with
full power of substitution, for him in any and all capacities, to sign any and
all amendments to this Registration Statement, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney to any and all amendments
to said Registration Statement.

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- ------------------
<C> <S> <C>
/s/ THOMAS R. LARSEN Director November 21, 1996
- ---------------------------------------------
Thomas R. Larsen

/s/ WINSTON S. WADE Director November 21, 1996
- ---------------------------------------------
Winston S. Wade
</TABLE>

II-6
<PAGE> 80
REPORT OF INDEPENDENT ACCOUNTANTS

In connection with our audits of the consolidated financial statements of
Transcrypt International, Inc. as of December 31, 1994 and 1995, and for each of
the three years in the period ended December 31, 1995, which financial
statements are included in the Prospectus, we have also audited the financial
statement schedule listed in Item 16 herein.

In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.

COOPERS & LYBRAND L.L.P.

Lincoln, Nebraska
February 23, 1996

S-1
<PAGE> 81

SCHEDULE III -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING EXPENSES TO OTHER DEDUCTIONS AT END
DESCRIPTION OF PERIOD (PROVISIONS) ACCOUNTS (WRITE-OFFS) OF PERIOD
- --------------------------------------------- ---------- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Allowance for Bad Debts for the:
Year Ended December 31, 1993............... $ 20,000 $217,829 $ 0 $168,856 $ 68,973
Year Ended December 31, 1994............... 68,973 139,059 0 20,018 188,014
Year Ended December 31, 1995............... 188,014 94,285 0 100,640 181,659
-
------ ------- ------- -------
Inventory Obsolescence Reserves for the:
Year Ended December 31, 1993............... $ 0 $184,769 $ 0 $177,803 $ 6,966
Year Ended December 31, 1994............... 6,966 168,309 0 134,747 33,562
Year Ended December 31, 1995............... 33,562 61,495 0 13,016 82,041
-
------ ------- ------- -------
</TABLE>

S-2
<PAGE> 82

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ---------------------------------------------------------------------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement........................................
3.1* Second Amended and Restated Certificate of Incorporation of the
Registrant, filed on September 30, 1996 with the Secretary of State of
the State of Delaware.................................................
3.2* Amended and Restated Bylaws of the Registrant.........................
3.3* Certificate of Merger of Transcrypt International, Ltd., a Nebraska
limited partnership, with and into the Registrant, filed on June 28,
1996 with the Secretary of State of the State of Delaware.............
3.4 Certificate of Merger of Transcrypt International, Inc., a Nebraska
corporation, with and into the Registrant, filed on September 30, 1996
with the Secretary of State of the State of Delaware..................
4.1 Specimen Certificate for Common Stock.................................
5.1** Opinion of Manatt, Phelps & Phillips, LLP.............................
10.1* Employment Agreement between the Registrant and John T. Connor dated
as of September 10, 1996..............................................
10.2* Employment Agreement between the Registrant and Jeffery L. Fuller
dated as of July 18, 1996.............................................
10.3* Form of Employment Agreement between the Registrant and C. Eric
Baumann, Michael P. Wallace and Joel K. Young.........................
10.4* Form of 1996 Stock Incentive Plan, together with forms of
non-qualified stock option agreements.................................
10.5 Form of Indemnification Agreement between the Registrant and each
executive officer and director of the Registrant......................
10.6* License Agreement for APCO Project 25 Compliant Product between
Motorola, Inc. and the Registrant dated as of August 2, 1994..........
10.7*** Amendment, dated as of June 28, 1996, to License Agreement for APCO
Project 25 Compliant Product between Motorola, Inc. and the Registrant
dated as of August 2, 1994............................................
10.8* OEM Agreement between Motorola, Inc. and the Registrant dated as of
August 2, 1994........................................................
10.9*** Amendment, dated as of July 15, 1996, to OEM Agreement between
Motorola, Inc. and the Registrant dated as of August 2, 1994..........
10.10*** Private Label/Supplier Agreement for Analog Scrambling Modules between
Motorola, Inc. and the Registrant dated as of August 8, 1995..........
10.11*** Motorola Cellular Subscriber Products Sales Agreement, dated as of
June 13, 1996, by and between Motorola, Inc. and the Registrant.......
10.12* License Agreement for APCO Fed Project 25 Algorithm between Digital
Voice Systems, Inc. and the Registrant, dated as of August 14, 1995...
10.13* Consigned Inventory Agreement between Arrow/Schweber Electronics Group
and the Registrant, dated as of June 22, 1994.........................
10.14* Nebraska Investment Finance Authority $850,000 Industrial Revenue Bond
(Transcrypt International, Ltd. Project), Series 1994, dated as of
January 15, 1994, and Note............................................
</TABLE>

<PAGE> 83

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ---------------------------------------------------------------------- ------------
<C> <S> <C>
10.15* Trust Indenture, dated as of January 15, 1994, for $850,000 Industrial
Revenue Bond (Transcrypt International, Ltd. Project), Series 1994,
between Nebraska Investment Finance Authority as Issuer and Norwest
Bank Nebraska, N.A. as Trustee........................................
10.16* Loan Agreement, dated as of January 15, 1994, for $850,000 Industrial
Revenue Bond (Transcrypt International, Ltd. Project), Series 1994,
between Nebraska Investment Finance Authority as Issuer and the
Registrant............................................................
10.17* Amended and Restated Loan Agreement, dated as of May 18, 1994, by and
between Norwest Bank Nebraska, N.A., and the Registrant...............
10.18* First Amendment, dated as of June 1, 1995, to Amended and Restated
Loan Agreement, dated as of May 18, 1994, by and between Norwest Bank
Nebraska, N.A., and the Registrant....................................
10.19* Second Amendment, dated as of April 10, 1996, to Amended and Restated
Loan Agreement, dated as of May 18, 1994, by and between Norwest Bank
Nebraska, N.A., and the Registrant....................................
10.20* Promissory Note, dated as of May 11, 1995, between West Gate Bank and
the Registrant........................................................
10.21* Noncompete Agreement, dated as of December 3, 1991, between John
Kuijvenhoven and the Registrant.......................................
10.22* Security and Pledge Agreement, dated as of December 3, 1991, by and
among John Kuijvenhoven, Yvonne Kuijvenhoven and the Registrant.......
10.23* Security and Pledge Agreement, dated as of August 8, 1994, by and
among John Kuijvenhoven, Yvonne Kuijvenhoven and the Registrant.......
10.24 Form of Adoption Agreement for Nonstandardized 401(k) Profit Sharing
Plan..................................................................
10.25 Defined Contribution Master Plan and Trust Agreement of Norwest Bank
Nebraska, N.A., Master Plan Sponsor...................................
10.26 Third Amendment, dated as of October 22, 1996, to Amended and Restated
Loan Agreement, dated as of May 18, 1994, by and between Norwest Bank
Nebraska, N.A., and the Registrant, together with Modification of
Note..................................................................
10.27 Fourth Amendment, dated as of November 19, 1996, to Amended and
Restated Loan Agreement, dated as of May 18, 1994, by and between
Norwest Bank Nebraska, N.A., and the Registrant, together with
Commercial Installment Note, dated November 19, 1996..................
11.1* Statement re: Computation of Per Share Earnings (see page S-3)........
23.1 Consent of Coopers & Lybrand L.L.P....................................
23.2** Consent of Manatt, Phelps & Phillips, LLP (included in Exhibit 5.1)...
23.3 Consent of International Data Corporation.............................
24.1* Power of Attorney. ...................................................
27.1* Financial Data Schedule...............................................
</TABLE>

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

* Previously filed.

** To be filed by amendment.

*** Previously filed and confidential treatment requested for certain portions.

<PAGE> 1
EXHIBIT 1.1

DRAFT -- NOVEMBER 20, 1996

3,750,000 SHARES

TRANSCRYPT INTERNATIONAL, INC.

COMMON STOCK
PAR VALUE $.01 PER SHARE

UNDERWRITING AGREEMENT

______________, 1996

Dain Bosworth Incorporated
Furman Selz LLC
As Representatives of the several Underwriters
c/o Dain Bosworth Incorporated
Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402

Ladies and Gentlemen:

Transcrypt International, Inc., a Delaware corporation (the
"Company"), and the stockholders of the Company named in Schedule B hereto (the
"Selling Shareholders") propose, subject to the terms and conditions stated
herein, to issue and sell, or to sell, as the case may be, to the several
Underwriters named in Schedule A hereto (the "Underwriters"), for which you are
acting as representatives (the "Representatives"), an aggregate of 3,750,000
shares (the "Firm Shares") of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), including 2,500,000 shares to be sold by the
Company and 1,250,000 shares to be sold by the Selling Shareholders. The Selling
Shareholders also propose, subject to the terms and conditions stated herein, to
issue and sell, or to sell, as the case may be, to the Underwriters, at their
election, up to an aggregate of 562,500 shares of Common Stock (the "Option
Shares"). The Firm Shares and the Option Shares are herein collectively called
the "Shares."

The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-14351) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the "Act"). The
registration statement, as amended at the time it was declared effective,
including the information (if any) deemed to be part thereof pursuant to Rule
430A under the Act is herein referred to as the "Registration Statement." The
form of prospectus first filed by the Company with the Commission pursuant to
Rules 424(b) and 430A under the Act is referred to herein as the
<PAGE> 2
"Prospectus." Each preliminary prospectus included in the Registration Statement
prior to the time it becomes effective or filed with the Commission pursuant to
Rule 424(a) under the Act is referred to herein as a "Preliminary Prospectus."
Copies of the Registration Statement, including all exhibits and schedules
thereto, any amendments thereto and all Preliminary Prospectuses have been
delivered to you.

The Company and the Selling Shareholders hereby confirm their
respective agreements with respect to the purchase of the Shares by the
Underwriters as follows:

1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

(a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:

(i) The Registration Statement has been declared
effective under the Act, and no post-effective amendment to
the Registration Statement has been filed with the SEC as of
the date of this Agreement. No stop order suspending the
effectiveness of the Registration Statement under the Act has
been issued and no proceeding for that purpose has been
instituted or threatened by the Commission.

(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and
each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission
promulgated thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, the Company
makes no representation or warranty as to information
contained in or omitted in reliance upon, and in conformity
with, written information furnished to the Company by or on
behalf of any Underwriter through the Representatives
expressly for use in the preparation thereof.

(iii) The Registration Statement conforms, and the
Prospectus and any amendments or supplements thereto will
conform, in all material respects to the requirements of the
Act and the rules and regulations thereunder. Neither the
Registration Statement nor any amendment thereto, and neither
the Prospectus nor any supplement thereto, contains or will
contain, as the case may be, any untrue statement of a
material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
Company makes no representation or warranty as to information
contained in or omitted from the Registration Statement or the
Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information

- 2 -
<PAGE> 3
furnished to the Company by or on behalf of any Underwriter
through the Representatives, expressly for use in the
preparation thereof.

(iv) The Company has been duly organized, is validly
existing as a corporation in good standing under the laws of
the State of Delaware, has the corporate power and authority
to own or lease its properties and conduct its business as
described in the Prospectus, and is duly qualified to transact
business in all jurisdictions in which the conduct of its
business or its ownership or leasing of property requires such
qualification and the failure so to qualify would have a
material adverse effect on the business or condition,
financial or otherwise, of the Company, taken as a whole.

(v) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own or
lease its properties and conduct its business as described in
the Prospectus, and is duly qualified to transact business in
all jurisdictions in which the conduct of its business or its
ownership or leasing of property requires such qualification
and the failure so to qualify would have a material adverse
effect on the business or condition, financial or otherwise,
of the Company and its subsidiaries, taken as a whole. All
outstanding shares of capital stock of each of the
subsidiaries of the Company have been duly authorized and
validly issued, are fully paid and non-assessable, and are
owned, directly or indirectly, by the Company free and clear
of all liens, encumbrances and security interests. No options,
warrants or other rights to purchase, agreements or other
obligations to issue, or other rights to convert any
obligations into, shares of capital stock or ownership
interests in any of the subsidiaries of the Company are
outstanding.

(vi) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid and nonassessable. All offers and sales by the
Company of outstanding shares of capital stock and other
securities of the Company, prior to the date hereof, were made
in compliance with the Act and all applicable state securities
or blue sky laws. The Shares to be issued and sold by the
Company to the Underwriters pursuant to this Agreement have
been duly authorized and, when issued and paid for as
contemplated herein, will be validly issued, fully paid and
nonassessable. The Option Shares are validly issued, fully
paid and nonassessable. Except as otherwise stated or
described in the Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of
capital stock of the Company pursuant to the Company's
Certificate of Incorporation, Bylaws or any agreement or other
instrument to which the Company is a party or by which the
Company is bound. Neither the filing of the Registration
Statement nor the offering or the sale of the Shares as
contemplated by this Agreement gives rise to any rights for,
or

- 3 -
<PAGE> 4
relating to, the registration of any shares of capital stock
or other securities of the Company, except such rights which
have been validly waived or satisfied. Except as described in
the Prospectus, there are no outstanding options, warrants,
agreements, contracts or other rights to purchase or acquire
from the Company any shares of its capital stock. The Company
has the authorized and outstanding capital stock as set forth
under the heading "Capitalization" in the Prospectus. The
outstanding capital stock of the Company, including the
Shares, conforms, and the Shares to be issued by the Company
to the Underwriters will conform, to the description thereof
contained in the Prospectus.

(vii) The financial statements, together with the
related notes and schedules as set forth in the Registration
Statement and Prospectus, present fairly the consolidated
financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the
basis stated in the Registration Statement at the indicated
dates and for the indicated periods. Such financial statements
have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the
periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made,
except as otherwise stated therein. The summary and selected
financial data of the Company included in the Registration
Statement present fairly the information shown therein on the
basis stated in the Registration Statement and have been
compiled on a basis consistent with the financial statements
presented therein.

(viii) There is no action or proceeding pending or,
to the knowledge of the Company, threatened or contemplated
against the Company or any of its subsidiaries before any
court or administrative or regulatory agency which, if
determined adversely to the Company or any of its
subsidiaries, would, individually or in the aggregate, result
in a material adverse change in the business or condition
(financial or otherwise), results of operations, stockholders'
equity or prospects of the Company and its subsidiaries, taken
as a whole, except as set forth in the Registration Statement.

(ix) The Company has good and marketable title to all
properties and assets reflected as owned in the financial
statements hereinabove described (or as described as owned in
the Prospectus), in each case free and clear of all liens,
encumbrances and defects, except such as are described in the
Prospectus or do not substantially affect the value of such
properties and assets and do not materially interfere with the
use made and proposed to be made of such properties and assets
by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries
are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.

- 4 -
<PAGE> 5
(x) Since the respective dates as of which
information is given in the Registration Statement, as it may
be amended or supplemented, (A) there has not been any
material adverse change, or any development reasonably likely
to result in a material adverse change, in or affecting the
condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole, or the business affairs,
management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries,
taken as a whole, whether or not occurring in the ordinary
course of business, (B) there has not been any transaction not
in the ordinary course of business entered into by the Company
or any of its subsidiaries which is material to the Company
and its subsidiaries, taken as a whole, other than
transactions described or contemplated in the Registration
Statement, (C) the Company and its subsidiaries have not
incurred any material liabilities or obligations, which are
not in the ordinary course of business or which are reasonably
likely to result in a material reduction in the future
earnings of the Company and its subsidiaries, (D) the Company
and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties
from fire, flood, windstorm, accident or other calamity,
whether or not covered by insurance, (E) there has not been
any change in the capital stock of the Company (other than
upon the exercise of options and warrants described in the
Registration Statement), or any material increase in the
short-term or long-term debt (including capitalized lease
obligations) of the Company and its subsidiaries taken as a
whole, (F) there has not been any declaration or payment of
any dividends or any distributions of any kind with respect to
the capital stock of the Company other than any dividends or
distributions described or contemplated in the Registration
Statement, or (G) there has not been any issuance of warrants,
options, convertible securities or other rights to purchase or
acquire capital stock of the Company and its subsidiaries,
except as described in the Registration Statement.

(xi) Neither the Company nor any of its subsidiaries
is in violation of, or in default under, its Certificate of
Incorporation or Bylaws, or any statute, or any rule,
regulation, order, judgment, decree or authorization of any
court or governmental or administrative agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties, or any indenture, mortgage, deed of
trust, loan agreement, lease, franchise, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them are
bound or to which any property or assets of the Company or any
of its subsidiaries is subject, which violation or default
would have a material adverse effect on the business,
condition (financial or otherwise), results of operations,
stockholders' equity or prospects of the Company and its
subsidiaries taken as a whole.

(xii) The issuance and sale of the Shares by the
Company and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions contemplated herein will not violate any
provision of the Certificate of Incorporation or Bylaws of the
Company or any of its

- 5 -
<PAGE> 6
subsidiaries or any statute or any order, judgment, decree,
rule, regulation or authorization of any court or governmental
or administrative agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties,
and will not conflict with, result in a breach or violation
of, or constitute, either by itself or upon notice or passage
of time or both, a default under any indenture, mortgage, deed
of trust, loan agreement, lease, franchise, license or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any property or assets of
the Company or any of its subsidiaries is subject. No
approval, consent, order, authorization, designation,
declaration or filing by or with any court or governmental
agency or body is required for the execution and delivery by
the Company of this Agreement and the consummation of the
transactions herein contemplated, except as may be required
under the Act or any state securities or blue sky laws.

(xiii) The Company and each of its subsidiaries holds
and is operating in material compliance with all material
licenses, approvals, certificates and permits from
governmental and regulatory authorities, foreign and domestic,
which are necessary to the conduct of its business as
described in the Prospectus.

(xiv) The Company has the power and authority to
enter into this Agreement and to authorize, issue and sell the
Shares it will sell hereunder as contemplated hereby. This
Agreement has been duly and validly authorized, executed and
delivered by the Company.

(xv) Coopers & Lybrand L.L.P., which has certified
certain of the financial statements filed with the Commission
as part of the Registration Statement, are independent public
accountants as required by the Act and the rules and
regulations thereunder.

(xvi) The Company has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to cause or
result in, stabilization or manipulation of the price of the
Common Stock to facilitate the sale of the Shares.

(xvii) The Company's registration statement pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), has been declared effective by
the Commission; and the Shares have been approved for
designation upon notice of issuance on the Nasdaq National
Market under the symbol "TRII."

(xviii) The Company has obtained and delivered to the
Representatives written agreements, in form and substance
satisfactory to the Representatives, of each of its directors,
executive officers and shareholders that no offer, sale,
assignment,

- 6 -
<PAGE> 7
transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of any Common Stock or other
capital stock of the Company will be made for a period of 180
days after the date of the Prospectus, directly or indirectly,
by such holder otherwise than hereunder or with the prior
written consent of Dain Bosworth Incorporated.

(ixx) The Company has not distributed and will not
distribute any prospectus or other offering material in
connection with the offering and sale of the Shares other than
any Preliminary Prospectus or the Prospectus or other
materials permitted by the Act to be distributed by the
Company.

(xx) The Company is in material compliance with all
provisions of Florida Statutes Section 517.075 (Chapter
92-198, laws of Florida). [The Company does not do any
business, directly or indirectly, with the government of Cuba
or with any person or entity located in Cuba.]

(xxi) The Company and its subsidiaries have filed all
federal, state, local and foreign tax returns or reports
required to be filed, and have paid in full all taxes
indicated by said returns or reports and all assessments
received by it or any of them to the extent that such taxes
have become due and payable, except where the Company and its
subsidiaries are contesting in good faith such taxes and
assessments or the amounts involved are not material to the
Company.

(xxii) The Company and each of its subsidiaries owns
or licenses all material patents, patent applications,
trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets and other similar rights
necessary for the conduct of its business as described in the
Prospectus. The Company has no knowledge of any infringement
by it or its subsidiaries of any patents, patent applications,
trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of
others, and neither the Company nor any of its subsidiaries
has received any notice or claim of conflict with the asserted
rights of others with respect any of the foregoing.

(xxiii) The Company is not, and upon completion of
the sale of Shares contemplated hereby will not be, required
to register as an "investment company" under the Investment
Company Act of 1940, as amended.

(xxiv) The Company maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for

- 7 -
<PAGE> 8
assets; (C) access to records is permitted only in accordance
with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

(xxv) Other than as contemplated by this Agreement
and as disclosed in the Registration Statement, the Company
has not incurred any liability for any finder's or broker's
fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby.

(b) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel to the Underwriters shall be deemed
to be a representation and warranty of the Company to each Underwriter as to the
matters covered thereby.

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING
SHAREHOLDERS.

(a) Each Selling Shareholder severally represents and warrants
to, and covenants and agrees with, each of the Underwriters and the Company
that:

(i) Such Selling Shareholder has duly executed and
delivered a Power of Attorney (the "Power of Attorney"),
appointing Thomas R. Larsen and Terry L. Fairfield and each of
them, as attorney-in-fact (the "Attorneys-In-Fact") with full
power and authority to execute and deliver this Agreement on
behalf of such Selling Shareholder, to authorize the delivery
of the Shares to be sold by the Selling Shareholder hereunder,
and otherwise to act on behalf of such Selling Shareholder in
connection with the transactions contemplated by this
Agreement.

(ii) Such Selling Shareholder has duly executed and
delivered a Custody Agreement (the "Custody Agreement") with
Norwest Bank Minnesota, N.A., as Custodian, pursuant to which
certificates in negotiable form for the Shares to be sold by
such Selling Shareholder hereunder have been placed in custody
for delivery under this Agreement.

(iii) Such Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of
Attorney and the Custody Agreement, and to sell, assign,
transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder; and all consents, approvals,
authorizations and orders necessary for the execution and
delivery by such Selling Shareholder of this Agreement, the
Power of Attorney and the Custody Agreement, and for the sale
and delivery of the Shares to be sold by such Selling
Shareholder hereunder, have been obtained, except such as may
be required by any state securities or blue sky laws.

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<PAGE> 9
(iv) Such Selling Shareholder has, and at the Closing
Date and the Option Closing Date, as the case may be (as such
dates are hereinafter defined), will have good and valid title
to the Firm Shares and the Option Shares, respectively, to be
sold by such Selling Shareholder hereunder, free of any liens,
encumbrances, security interests, equities or claims
whatsoever; and upon delivery of and payment for such Firm
Shares and Option Shares pursuant to this Agreement, good and
valid title thereto, free of any liens, encumbrances, security
interests, equities or claims whatsoever, will be transferred
to the several Underwriters.

(v) The consummation by such Selling Shareholder of
the transactions herein contemplated and the fulfillment by
such Selling Shareholder of the terms hereof will not conflict
with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any will,
mortgage, deed of trust, loan agreement or other agreement,
instrument or obligation to which such Selling Shareholder is
a party or to which any of the property or assets of such
Selling Shareholder is subject, except for such agreements,
instruments or obligations for which consents have been
obtained, nor will such actions result in any violations of
the provisions of the charter or by-laws if such Selling
Shareholder is a corporation, the partnership agreement,
certificate or articles if the Selling Shareholder is a
partnership, or any statute, rule, regulation or order
applicable to such Selling Shareholder of any court or of any
regulatory body or administrative agency or other governmental
body having jurisdiction over such Selling Shareholder.

(vi) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to, or
which has constituted, or which might reasonably be expected
to cause or result in, stabilization or manipulation of the
price of the Common Stock.

(vii) To the extent that any statements or omissions
made in the Registration Statement, any Preliminary Prospectus
thereof, the Prospectus or any amendment or supplement thereto
are made in reliance upon and in conformity with written
information with respect to such Selling Shareholder furnished
to the Company by such Selling Shareholder expressly for use
therein, such Preliminary Prospectus and the Registration
Statement did not, and the Prospectus and any further
amendments or supplements to the Registration Statement and
the Prospectus will not, when they become effective or are
filed with the Commission, as the case may be, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading.

(viii) Such Selling Shareholder will not offer to
sell, sell, transfer, assign or otherwise dispose of any
Common Stock or other capital stock of the Company,

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<PAGE> 10
directly or indirectly, for a period of 180 days after the
date of the Prospectus, otherwise than hereunder or with the
written consent of Dain Bosworth Incorporated.

(ix) Such Selling Shareholder does not have knowledge
or any reason to believe that the Registration Statement or
the Prospectus (or any amendment or supplement thereto)
contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading, it
being understood that such Selling Shareholder has not made
any independent investigation concerning the facts stated in
or omitted from the Registration Statement or the Prospectus.

(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, each of the
Selling Shareholders agrees to deliver to you prior to or at the Closing Date a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).

(c) Each of the Selling Shareholders specifically agrees that
the Shares represented by the certificates held in custody for such Selling
Shareholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder, and that the arrangements made by such Selling
Shareholder for such custody and the appointment by such Selling Shareholder of
the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable.
Each of the Selling Shareholders specifically agrees that the obligations of the
Selling Shareholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling Shareholder or, in
the case of an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of a
corporation or partnership, by the dissolution of such corporation or
partnership, or by the occurrence of any other event. If any individual Selling
Shareholder or any such executor or trustee should die or become incapacitated,
or if any such estate or trust should be terminated, or if any such corporation
or partnership should be dissolved, or if any other such event should occur
before the delivery of the Shares hereunder, certificates representing the
Shares shall be delivered by or on behalf of the Selling Shareholders in
accordance with the terms and conditions of this Agreement and of the Custody
Agreement, and actions taken by the Attorneys-in-Fact pursuant to the Powers of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or not the
Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of
such death, incapacity, termination, dissolution or other event.

(d) Any certificate signed by or on behalf of any Selling
Shareholder and delivered to the Representatives or to counsel to the
Underwriters shall be deemed to be a representation and warranty of such Selling
Shareholder to each Underwriter as to the matters covered thereby.

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<PAGE> 11
3. PURCHASE, SALE AND DELIVERY OF SHARES.

On the basis of the representations, warranties and covenants
contained herein, and subject to the terms and conditions herein set forth, the
Company and each Selling Shareholder agrees, severally and not jointly, to sell
to each Underwriter and each Underwriter agrees, severally and not jointly, to
purchase from the Company and each Selling Shareholder, at a price of $_______
per share, the number of Firm Shares (to be adjusted by you to eliminate
fractional shares) determined by multiplying the aggregate number of Firm Shares
to be sold by the Company and each of the Selling Shareholders, as set forth
opposite their respective names in Schedule B hereto, by a fraction, the
numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
A hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all the Underwriters from the Company and the Selling
Shareholders hereunder.

In addition, on the basis of the representations, warranties
and covenants herein contained and subject to the terms and conditions herein
set forth, the Selling Shareholders, as and to the extent indicated in Schedule
B hereto, hereby grant, severally and not jointly, to the several Underwriters
an option to purchase at their election up to an aggregate of 562,500 Option
Shares at the same price per share as set forth for the Firm Shares in the
paragraph above, for the sole purpose of covering overallotments in the sale of
the Firm Shares. The option granted hereby may be exercised in whole or in part,
but only once, and at any time upon written notice given within 30 days after
the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company, the Attorneys-in-Fact and the Custodian setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option and the time and date at which certificates are to be
delivered. [Any such election to purchase Option Shares shall be made as set
forth in Schedule B hereto.] If any Option Shares are purchased, each
Underwriter agrees, severally and not jointly, to purchase that portion of the
number of Option Shares as to which such election shall have been exercised
(subject to adjustment to eliminate fractional shares) determined by multiplying
such number of Option Shares by a fraction the numerator of which is the maximum
number of Option Shares which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule A hereto and the
denominator of which is the maximum number of Option Shares which all of the
Underwriters are entitled to purchase hereunder. The time and date at which
certificates for Option Shares are to be delivered shall be determined by the
Representatives but shall not be earlier than two or later than ten full
business days after the exercise of such option, and shall not in any event be
prior to the Closing Date. If the date of exercise of the option is three or
more full days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date.

Certificates in definitive form for the Shares to be purchased
by each Underwriter hereunder, and in such denominations and registered in such
names as Dain Bosworth Incorporated may request upon at least forty-eight hours'
prior notice to the Company, shall be delivered by or on behalf of the Company
and the Selling Shareholders to you for the account of such Underwriter at such
time and place as shall hereafter be designated by the Representatives, against
payment by

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<PAGE> 12
such Underwriter or on its behalf of the purchase price therefor by wire
transfer of immediately available funds to such accounts as the Company and the
Custodian shall have designated to the Representatives in writing at least two
business days preceding the Closing Date. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, ____ a.m. Minneapolis time,
at the offices of _____________________________________, on _____, 1996, or such
other time and date as you and the Company may agree upon in writing, such time
and date being herein referred to as the "Closing Date," and, with respect to
the Option Shares, at the time and on the date specified by you in the written
notice given by you of the Underwriters' election to purchase the Option Shares,
or such other time and date as you and the Company may agree upon in writing,
such time and date being referred to herein as the "Option Closing Date." Such
certificates will be made available for checking and packaging at least
twenty-four hours prior to the Closing Date or the Option Closing Date, as the
case may be, at a location as may be designated by you.

4. OFFERING BY UNDERWRITERS.

It is understood that the several Underwriters propose to make
a public offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 3 hereof, the Underwriters will offer such
Option Shares to the public on the foregoing terms.

It is understood that 150,000 Firm Shares will initially be
reserved by the several Underwriters for offer and sale upon the terms and
conditions set forth in the Prospectus to directors and principal stockholders
(including their affiliated entities) and other persons identified by the
Company who have heretofore delivered to you offers or indications of interest
to purchase Firm Shares in form satisfactory to you, and that any allocation of
such Firm Shares among such persons will be made in accordance with timely
directions received by you from the Company, provided that under no
circumstances will you or any Underwriter be liable to the Company or any such
person for any action taken or omitted in good faith which results in the
failure to consummate such offering to such persons. It is further understood
that any of such Firm Shares which are not purchased by such persons will be
offered by the Underwriters to the public upon the terms and conditions set
forth in the Prospectus.

5. COVENANTS OF THE COMPANY.

The Company covenants and agrees with the several Underwriters
that:

(a) The Company will prepare and timely file with the
Commission under Rule 424(b) under the Act a Prospectus containing information
previously omitted at the time of effectiveness of the Registration Statement in
reliance on Rule 430A under the Act, and will not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
and as to which

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<PAGE> 13
the Representatives shall have objected in writing promptly after reasonable
notice thereof or which is not in compliance with the Act or the rules and
regulations thereunder.

(b) The Company will advise the Representatives promptly of
any request of the Commission for amendment of the Registration Statement or for
any supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or threatening of any proceedings for that purpose, and the Company
will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus or suspending such
qualification and to obtain as soon as possible the lifting thereof, if issued.

(c) The Company will cooperate with you and your counsel in
order to qualify or register the Shares for sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated in
writing and to continue such qualifications in effect for so long as the
Representatives may reasonably request for distribution of the Shares (or obtain
exemptions from the application of such laws), provided that the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction where it is not now so qualified or
required to file such a consent. The Company will, from time to time, prepare
and file such statements, reports and other documents as are or may be required.

(d) The Company will furnish the Underwriters with as many
copies of any Preliminary Prospectus as the Representatives may reasonably
request and, during the period when delivery of a prospectus is required under
the Act, the Company will furnish the Underwriters with as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representatives may, from time to time, reasonably request. The Company will
deliver to the Representatives, at or before the Closing Date, two signed copies
of the Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Representatives such number of copies
of the Registration Statement, without exhibits, and of all amendments thereto,
as the Representatives may reasonably request.

(e) If, during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer, any event shall occur as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or if
for any other reason it shall be necessary at any time to amend or supplement
the Prospectus to comply with any law, the Company promptly will prepare and
file with the Commission an appropriate amendment to the Registration Statement
or supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein in
light of the circumstances existing when it is so delivered, not misleading, or
so that the Prospectus will comply with law. In case any Underwriter is required
to deliver a prospectus in connection with sales of any Shares at any time

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<PAGE> 14
nine months or more after the effective date of the Registration Statement, upon
the request of the Representatives but at the expense of such Underwriter, the
Company will prepare and deliver to such Underwriter as many copies as the
Representatives may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act.

(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 thereunder and will advise you in
writing when such statement has been so made available.

(g) The Company will, for such period up to five years from
the Closing Date, deliver to the Representatives copies of its annual report and
copies of all other documents, reports and information furnished by the Company
to its security holders or filed with any securities exchange pursuant to the
requirements of such exchange or with the Commission pursuant to the Act or the
Exchange Act. The Company will deliver to the Representatives similar reports
with respect to significant subsidiaries, as that term is defined in the rules
and regulations under the Act, which are not consolidated in the Company's
financial statements.

(h) No offering, sale or other disposition of any Common Stock
or other capital stock of the Company, or warrants, options, convertible
securities or other rights to acquire such Common Stock or other capital stock
(other than pursuant to employee stock option plans and, outstanding options as
disclosed in the Prospectus and other than securities issued in connection with
any merger, consolidation, acquisition of stock or assets, joint venture or
other business combination or arrangement which are not effectively registered
under the Act for at least 180 days after the date of this Agreement) will be
made for a period of 180 days after the date of this Agreement, directly or
indirectly, by the Company otherwise than hereunder or with the prior written
consent of the Representatives.

(i) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
purposes set forth under "Use of Proceeds" in the Prospectus.

(j) The Company will use its best efforts to maintain the
designation of the Common Stock on the Nasdaq National Market.

(k) The Company will file with the Commission such reports on
Form SR as may be required pursuant to Rule 463 under the Act.

6. COSTS AND EXPENSES.

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<PAGE> 15
The Company will pay (directly or by reimbursement) all costs,
expenses and fees incident to the performance of the obligations of the Company
under this Agreement, including, without limiting the generality of the
foregoing, the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company; the cost of preparing, printing and
filing of the Registration Statement, Preliminary Prospectuses and the
Prospectus and any amendments and supplements thereto and the printing, mailing
and delivery to the Underwriters and dealers of copies thereof and of this
Agreement, the Agreement Among Underwriters, any Selected Dealers Agreement, the
Underwriters' Selling Memorandum, the Invitation Letter, the Power of Attorney,
the Blue Sky Memorandum and any supplements or amendments thereto (excluding,
except as provided below, fees and expenses of counsel to the Underwriters); the
filing fees of the Commission; the filing fees and expenses (including legal
fees and disbursements of counsel for the Underwriters) incident to securing any
required review by the NASD of the terms of the sale of the Shares; listing
fees, if any, transfer taxes and the expenses, including the reasonable fees and
disbursements of counsel for the Underwriters incurred in connection with the
qualification of the Shares under state securities or Blue Sky laws; the fees
and expenses incurred in connection with the designation of the Shares on the
Nasdaq National Market; the costs of preparing stock certificates; the costs and
fees of any registrar or transfer agent and all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 6. In addition, the Company will pay
all travel and lodging expenses incurred by management of the Company in
connection with any informational "road show" meetings held in connection with
the offering and will also pay for the preparation of all materials used in
connection with such meetings. The Selling Shareholders will pay the fees and
expenses of any separate counsel retained by them in connection with the
transactions contemplated hereby and any other costs incurred by them in
performing their obligations hereunder. The Company and the Selling Shareholders
shall not be required to pay for any of the Underwriters' expenses (other than
those related to qualification of the Shares under state securities or Blue Sky
laws and those incident to securing any required review by the NASD of the terms
of the sale of the shares which shall be paid by the Company as provided above)
except that, if this Agreement shall not be consummated because the conditions
in Section 7 hereof are not satisfied, or because this Agreement is terminated
by the Representatives pursuant to Section 11(b) hereof, or by reason of any
failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on their respective parts to
be performed, unless such failure to satisfy said condition or to comply with
said terms shall be due to the default or omission of any Underwriter, then the
Company shall promptly upon request by the Representatives reimburse the several
Underwriters for all out-of-pocket accountable expenses, including reasonable
fees and disbursements of counsel, incurred in connection with investigating,
marketing and proposing to market the Shares or in contemplation of performing
their obligations hereunder; but the Company shall not in any event be liable to
any of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Shares. If the Company is required to pay
the expenses of the Underwriters under the preceding sentence as a result of any
failure, refusal or inability on the part of any Selling Shareholder to perform
any undertaking or satisfy any condition of this Agreement or to comply with any
of the

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<PAGE> 16
terms hereof on its part to be performed, the Company shall be entitled to
collect the amount so paid from such Selling Shareholder.

7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.

The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date, are subject to the condition that all representations and
warranties of the Company and the Selling Shareholders contained herein are true
and correct, at and as of the Closing Date or the Option Closing Date, as the
case may be, the condition that the Company and the Selling Shareholders shall
have performed all of their respective covenants and obligations hereunder and
to the following additional conditions:

(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, or any part thereof shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the reasonable
satisfaction of the Representatives.

(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of Manatt,
Phelps & Phillips, LLP, counsel for the Company, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters, to the
effect that:

(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with corporate power and
authority to own or lease its properties and conduct its
business as described in the Prospectus.

(ii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or
lease its properties and conduct its business as described in
the Prospectus. The outstanding shares of capital stock of
each such subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable and are owned of
record and, to the knowledge of such counsel, beneficially, by
the Company, free and clear of all liens, encumbrances and
security interests known to such counsel, other than security
interests specifically disclosed in the Prospectus. To the
knowledge of such counsel, no options, warrants or other
rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into any shares of
capital stock or ownership interests in each such subsidiary
are outstanding.

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<PAGE> 17
(iii) The Company has authorized and outstanding
capital stock as described in the Prospectus. The outstanding
shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and
nonassessable. The form of certificate for the Shares is in
due and proper form and complies with all applicable statutory
requirements. The Shares to be issued and sold by the Company
pursuant to this Agreement have been duly authorized and, when
issued and paid for as contemplated herein, will be validly
issued, fully paid and nonassessable. Holders of the capital
stock of the Company are not entitled to preemptive rights to
subscribe to any additional shares of the Company's capital
stock under the Company's Certificate of Incorporation or
Bylaws. To the knowledge of such counsel, there are no other
similar subscription rights of shareholders of the Company, or
of holders of warrants, options, convertible securities or
other rights to acquire shares of capital stock of the
Company, with respect to any of the Shares or the issue and
sale thereof. To the knowledge of such counsel, no rights to
register outstanding shares of the Company's capital stock, or
shares issuable upon the exercise of outstanding warrants,
options, convertible securities or other rights to acquire
shares of such capital stock, exist which have not been
validly exercised or waived with respect to the Registration
Statement. The capital stock of the Company, including the
Shares, conforms in all material respects to the description
thereof contained in the Prospectus.

(iv) The Registration Statement has become effective
under the Act and, to the knowledge of such counsel, no stop
order proceedings with respect thereto have been instituted or
are pending or threatened by the Commission.

(v) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the
rules and regulations thereunder (except that such counsel
need express no opinion as to the financial statements and
other financial information included therein).

(vi) The statements (A) in the Prospectus under the
captions "Risk Factors - Shares Eligible for Future Sale,"
"Business - Government Regulation and Export Controls,"
"Description of Capital Stock," and "Shares Eligible for
Future Sale" and (B) in the Registration Statement in Item 15,
insofar as such statements constitute a summary of matters of
law, are accurate summaries and fairly present the information
called for with respect to such matters.

(vii) Such counsel does not know of any contracts,
agreements, documents or instruments required to be filed as
exhibits to the Registration Statement, or described in the
Registration Statement or the Prospectus which are not so
filed, or described as required; and insofar as any statements
in the Registration Statement or the Prospectus constitute
summaries of any contract, agreement, document or

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<PAGE> 18
instrument to which the Company is a party, such statements
are accurate summaries and fairly present the information
called for with respect to such matters.

(viii) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or
administrative body or regulatory agency, to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or Prospectus and are not so described, or statutes
or regulations that are required to be described in the
Registration Statement or the Prospectus that are not so
described.

(ix) The execution and delivery of this Agreement and
the consummation of the transactions herein contemplated do
not and will not conflict with or result in a violation of or
default under the Certificate of Incorporation or Bylaws of
the Company or any of its subsidiaries, or under any statute,
permit, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its
subsidiaries or any of their properties (except that such
counsel need express no opinion regarding any Blue Sky or
other state securities laws), or under any lease, contract,
indenture, mortgage, loan agreement or other agreement or
other instrument or obligation known to such counsel to which
the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which
any property or assets of the Company or any of its
subsidiaries is subject, except such agreements, instruments
or obligations with respect to which valid consents or waivers
have been obtained by the Company or any of its subsidiaries.

(x) The Company has the corporate power and authority
to enter into this Agreement and to authorize, issue and sell
the Shares as contemplated hereby. This Agreement has been
duly and validly authorized, executed and delivered by the
Company.

(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in
connection with the execution and delivery of this Agreement
and the consummation of the transactions herein contemplated
(other than as may be required by state securities and blue
sky laws and by the NASD, as to which such counsel need
express no opinion) except such as have been obtained or made,
specifying the same.

(xii) The Company is not, and immediately upon
completion of the sale of Shares contemplated hereby will not
be, required to register as an "investment company" under the
Investment Company Act of 1940, as amended.

-18-
<PAGE> 19
Such counsel shall also state that on the basis of such counsel's review and
participation in conferences in connection with the preparation of the
Registration Statement and the Prospectus, such counsel has no reason to believe
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the Closing Date or the Option
Closing Date, as the case may be, (other than the financial statements and other
financial information therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to the Closing Date or the
Option Closing Date, as the case may be, (other than the financial statements
and other financial information therein, as to which such counsel need express
no opinion) contained an untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that, as of the
Closing Date or the Option Closing Date, as the case may be, either the
Registration Statement or the Prospectus or any further amendment or supplement
thereto made by the Company prior to the Closing Date or the Option Closing
Date, as the case may be, (other than the financial statements and financial
information therein, as to which such counsel need express no opinion) contains
an untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and they do not know of any amendment to
the Registration Statement required to be filed.

In rendering the above opinions, counsel may rely as to factual matters
upon the representations of the Company contained in this Agreement and upon
certificates of officers of the Company and of public officials.

(c) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of counsel for
each of the Selling Shareholders, which counsel shall be reasonably acceptable
to the Representatives, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters, to the effect that:

(i) A Power of Attorney and a Custody Agreement have
been duly executed and delivered by such Selling Shareholder
and are the valid and binding agreements of such Selling
Shareholder.

(ii) This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling
Shareholder.

(iii) The sale of the Shares to be sold by such
Selling Shareholder hereunder and the compliance by such
Selling Shareholder with all of the provisions of this
Agreement, the Power of Attorney and the Custody Agreement,
and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute a
default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or

-19-
<PAGE> 20
other agreement or instrument known to such counsel to which
such Selling Shareholder is a party or by which such Selling
Shareholder is bound or to which any of the property or assets
of such Selling Shareholder is subject, nor will such action
result in any violation of the provisions of the
organizational documents of such Selling Shareholder if such
Selling Shareholder is a corporation or partnership, or any
order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over such
Selling Shareholder or the property of such Selling
Shareholder.

(iv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by such
Selling Shareholder hereunder, except such consents,
approvals, authorizations or orders as have been validly
obtained and are in full force and effect, such as have been
obtained under the Act and such as may be required under the
state securities or blue sky laws in connection with the
purchase and distribution of such Shares by the Underwriters.

(v) Such Selling Shareholder has full right, power
and authority to sell, assign, transfer and deliver the Shares
to be sold by such Selling Shareholder hereunder.

(vi) Good and valid title to the Shares being sold by
such Selling Shareholder, free and clear of any claims, liens,
encumbrances, security interests or other adverse claims, has
been transferred to each of the several Underwriters who have
purchased such Shares in good faith and without notice of any
such claim, lien, encumbrance, security interest or other
adverse claim within the meaning of the Uniform Commercial
Code.

In rendering the opinions described above, counsel for each of
the Selling Shareholders may rely, as to matters of fact with respect to such
Selling Shareholder, upon the representations of such Selling Shareholder
contained in this Agreement, the Power of Attorney and the Custody Agreement.

(d) The Representatives shall have received from Sherman &
Howard, L.L.C., counsel for the Underwriters, an opinion dated the Closing Date
or the Option Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Shares, the Registration
Statement, the Prospectus, and other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters.

(e) The Representatives shall have received on each of the
date hereof, the Closing Date and the Option Closing Date, as the case may be, a
signed letter, dated as of the date

-20-
<PAGE> 21
hereof, the Closing Date or the Option Closing Date, as the case may be, in form
and substance satisfactory to the Representatives of Coopers & Lybrand, L.L.P.,
to the effect that they are independent public accountants with respect to the
Company within the meaning of the Act and the related rules and regulations and
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.

(f) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date or the Option Closing Date, as the case may be,
there shall not have been any change or any development involving a reasonably
foreseeable change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in your reasonable judgment, is material and adverse to the Company and
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at the Closing Date or the Option Closing
Date, as the case may be, on the terms and in the manner contemplated in the
Prospectus.

(g) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the chief executive officer and the chief financial officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:

(i) The Prospectus was filed with the Commission
pursuant to Rule 424(b) within the applicable period
prescribed for such filing by the rules and regulations under
the Act and in accordance with Section 5(a) of this Agreement;
no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose
have been initiated or are, to his knowledge, threatened by
the Commission.

(ii) The representations and warranties of the
Company set forth in Section 1 of this Agreement are true and
correct at and as of the Closing Date or the Option Closing
Date, as the case may be, and the Company has performed all of
its obligations under this Agreement to be performed at or
prior to the Closing Date or the Option Closing Date, as the
case may be.

(h) The Representatives shall have received on the Closing
Date or the Option Date, as the case may be, a certificate of the Selling
Shareholders pursuant to which the Selling Shareholders certify that their
representations and warranties set forth in this Agreement are true and correct
at and as of the Closing Date or the Option Date, as the case may be, and that
they have performed all of their obligations under this Agreement to be
performed at or prior to the Closing Date or the Option Closing Date, as the
case may be.

-21-
<PAGE> 22
(i) The Company and the Selling Shareholders shall have
furnished to the Representatives such further certificates and documents as the
Representatives may reasonably have requested.

The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects reasonably satisfactory to the Representatives and
Sherman & Howard, L.L.C., counsel for the Underwriters.

If any of the conditions hereinabove provided for in this
Section 7 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date or the Option Closing Date, as
the case may be. In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 6
and 8 hereof).

8. INDEMNIFICATION.

(a) The Company agrees to indemnify and hold harmless each
Underwriter, each officer and director thereof, and each person, if any, who
controls any Underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities to which such Underwriter or such persons may
became subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus, including any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not misleading
in light of the circumstances under which they were made, or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Common Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, and will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made in the
Registration Statement, any Preliminary Prospectus or the Prospectus, including
any amendments or supplements thereto, in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein; and provided, further, that the
Company shall not be liable in the case of any matter covered by clause (iii)
above to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such losses, claims, damages or liabilities resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct.

-22-
<PAGE> 23
(b) Each of the Selling Shareholders, severally in proportion
to the number of Shares to be sold by such Selling Shareholder hereunder, agrees
to indemnify and hold harmless each Underwriter, each officer and director
thereof, and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages, or liabilities to which
such Underwriter or such persons may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus or the Prospectus, including
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, but only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon and
conformity with written information furnished to the Company by such Selling
Shareholders for use therein, and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that no Selling Shareholder shall be required to pay amounts for
indemnification, including expenses, which exceed the aggregate net proceeds
received by such Selling Shareholder from the sale of Shares to the
Underwriters; and further provided that the Selling Shareholders shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission, made in the Registration Statement,
any Preliminary Prospectus or the Prospectus, including any amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein.

(c) Each Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement, each Selling Shareholder and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of the Act,
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, Selling Shareholder or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, Selling Shareholder or controlling person in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that each Underwriter will be liable
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission has been made in the

-23-
<PAGE> 24
Registration Statement, any Preliminary Prospectus, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein.

(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 8, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a), (b) or (c) or contribution
provided for in Section 8(e) shall be available with respect to a proceeding to
any party who shall fail to give notice of such proceeding as provided in this
Section 8(d) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party otherwise than on account of the provisions of
Section 8(a), (b), (c) or (d). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay promptly as incurred the reasonable fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties which are different from
or additional to those available to the indemnifying party. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm at any time for all such indemnified
parties. Such firm shall be designated in writing by the Representatives and
shall be reasonably satisfactory to the Company in the case of parties
indemnified pursuant to Section 8(a) or (b) and shall be designated in writing
by the Company and shall be reasonably satisfactory to the Representatives in
the case of parties indemnified pursuant to Section 8(c). The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment.

(e) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a), (b) or (c) above in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to

-24-
<PAGE> 25
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling Shareholders
bears to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 8(e) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereto) referred to above in this Section 8(e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(e), no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter; and no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(e) to contribute are several in proportion to their respective
underwriting obligations and not joint.

(f) The obligations of the Company and the Selling
Shareholders under this Section 8 shall be in addition to any liability which
the Company and the Selling Shareholders may otherwise have, and the obligations
of the Underwriters under this Section 8 shall be in addition to any liability
which the Underwriters may otherwise have.

-25-
<PAGE> 26
9. DEFAULT BY UNDERWRITERS.

If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company or a Selling
Shareholder), you, as Representatives of the Underwriters, shall use your best
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company and the Selling
Shareholders such amounts as may be agreed upon, and upon the terms set forth
herein, of the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as Representatives, shall not have procured such other Underwriters,
or any others, to purchase the Firm Shares or Option Shares, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of Shares with respect to which such default shall occur
does not exceed 10% of the Firm Shares or Option Shares, as the case may be,
covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective numbers of Firm Shares or Option Shares, as the
case may be, which they are obligated to purchase hereunder, to purchase the
Firm Shares or Option Shares, as the case may be, which such defaulting
Underwriter or Underwriters failed to purchase, or (b) if the aggregate number
of shares of Firm Shares or Option Shares, as the case may be, with respect to
which such default shall occur exceeds 10% of the Firm Shares or Option Shares,
as the case may be, covered hereby, the Company and the Selling Shareholders or
you as the Representatives of the Underwriters will have the right, by written
notice given within the next 36-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company and the Selling Shareholders except for expenses
to be borne by the Company, the Selling Shareholders and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof. In the event of a default by any Underwriter or Underwriters,
as set forth in this Section 9, the Closing Date or Option Closing Date, as the
case may be, may be postponed for such period, not exceeding seven days, as you,
as Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.

10. NOTICES.

All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters, to Dain Bosworth Incorporated,
Dain Bosworth Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402, Attn:
Thomas D. Heule, Managing Director, and _______________________________, Attn:
______________ with a copy to Andrew L. Blair, Jr., Esq., Sherman & Howard,
L.L.C., 633 Seventeenth Street, Suite 3000, Denver, Colorado 80202; if to the
Company, to Transcrypt International, Inc., 4800 NW 1st Street, Lincoln,
Nebraska 68521, Attention: John T. Connor, Chief Executive Officer, with a copy
to William Quicksilver, Esq.,

-26-
<PAGE> 27
Manatt, Phelps & Phillips, LLP, 11355 West Olympic Boulevard, Los Angeles,
California 90064; and if to the Selling Shareholders, to
________________________, with a copy to __________________, and
__________________, with a copy to _______________________.

11. TERMINATION.

This Agreement may be terminated by you by notice to the
Company and the Selling Shareholders as follows:

(a) at any time prior to the earlier of (i) the time the
Shares are released by you for sale by notice to the Underwriters or (ii) 4:00
p.m., Minneapolis time, on the first business day following the later of the
date on which the Registration Statement becomes effective or the date of this
Agreement;

(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change in or affecting the condition, financial or otherwise, of the Company
taken as a whole or the business affairs, management, financial position,
shareholders' equity or results of operations of the Company taken as a whole,
whether or not arising in the ordinary course of business, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency after the
date hereof or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets of
the United States would, in your reasonable judgment, make the offering or
delivery of the Shares impracticable or inadvisable, (iii) suspension of trading
in securities on the New York Stock Exchange or the American Stock Exchange or
limitation on prices (other than limitations on hours or numbers of days of
trading) for securities on either such Exchange, or a halt or suspension of
trading in securities generally which are quoted on Nasdaq National Market
System, or (iv) declaration of a banking moratorium by either federal or New
York State authorities; or

This Agreement also may be terminated by you, by notice to the
Company, as to any obligation of the Underwriters to purchase the Option Shares,
upon the occurrence at any time prior to the Option Closing Date of any of the
events described in subparagraph (b) above or as provided in Sections 6 and 8 of
this Agreement.

12. WRITTEN INFORMATION.

For all purposes under this Agreement (including, without
limitation, Section 1, Section 2, Section 3 and Section 8 hereof), the Company
and the Selling Shareholders understand and agree with each of the Underwriters
that the following constitutes the only written information furnished to the
Company by or through the Representatives specifically for use in preparation of

-27-
<PAGE> 28
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto: (i) the per share "Price to Public" and per
share "Underwriting Discounts and Commissions" set forth on the cover page of
the Prospectus, (ii) the information relating to stabilization set forth in the
last paragraph on page two of the Preliminary Prospectus and the Prospectus, and
(iii) the information set forth in the first, second, fifth, seventh and eighth
(insofar as the information therein concerns the Underwriters) paragraphs under
the caption "Underwriting" in the Preliminary Prospectus and the Prospectus.

13. SUCCESSORS.

This Agreement has been and is made solely for the benefit of
and shall be binding upon the Underwriters, the Company, the Selling
Shareholders and their respective successors, executors, administrators, heirs
and assigns, and the officers, directors and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares merely because
of such purchase.

14. MISCELLANEOUS.

The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers or the Selling Shareholders and (c) delivery of and
payment for the Shares under this Agreement.

Each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable under any
applicable law or rule in any jurisdiction, such provision will be ineffective
only to the extent of such invalidity, illegality or unenforceability in such
jurisdiction or any provision hereof in any other jurisdiction

This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota.

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<PAGE> 29

If the foregoing letter is in accordance with your
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Company, the Selling Shareholders and the several Underwriters in accordance
with its terms.

Very truly yours,

TRANSCRYPT INTERNATIONAL, INC.

By:
---------------------------------------
John T. Connor
Chairman and Chief Executive Officer

SELLING SHAREHOLDERS
LISTED ON SCHEDULE B

By:
---------------------------------------
Attorney-in-Fact

The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written.

DAIN BOSWORTH INCORPORATED
FURMAN SELZ LLC
As Representatives of the several Underwriters

By Dain Bosworth Incorporated

By:
---------------------------------
Its:
---------------------------------

- 29 -
<PAGE> 30
SCHEDULE A

SCHEDULE OF UNDERWRITERS

<TABLE>
<CAPTION>
Number of Firm Maximum Number
Underwriter Shares to be Purchased of Option Shares
----------- ---------------------- ----------------

<S> <C> <C>
Dain Bosworth Incorporated....................................

Furman Selz LLC ..............................................

[Names of Underwriters by Grouping]...........................

Total...................................
3,750,000 562,500
========= =======
</TABLE>

- 30 -
<PAGE> 31
SCHEDULE B

<TABLE>
<CAPTION>
Number of Maximum Number
Seller Firm Share of Option Shares*
------ ---------- -----------------

<S> <C> <C>
Transcrypt International, Inc........................................ 2,500,000 --

Selling Shareholders:

Farm Bureau Insurance Company.................................... 347,222 374,573

[Kuijvenhoven Group]............................................. 902,778 187,927
---------- -------

Total.......................................... 3,750,000 562,500
========== =======
</TABLE>

- ----------

*If the Underwriters elect to purchase some, but less than all, of the Option
Shares, the Option Shares to be purchased shall be as follows:
_______________________________________.

- 31 -

<PAGE> 1
Exhibit 3.4

State of Delaware

Office of Secretary of State PAGE 1
----------------------------

I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:

TRANSCRYPT-INTERNATIONAL, INC. A NEBRASKA CORPORATION, WITH AND INTO
"TRANSCRYPT INTERNATIONAL, INC." UNDER THE NAME OF TRANSCRYPT INTERNATIONAL,
INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE THIRTIETH DAY OF SEPTEMBER,
A.D. 1996 AT 9 O'CLOCK A.M.

A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.

/s/ Edward J. Freel
[SEAL OF DELAWARE] ------------------------------
Edward J. Freel,
Secretary of State

2571388 B100M AUTHENTICATION: 8158842

960284266 DATE: 10-23-96

<PAGE> 2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATION
FILED 09:00 AM 09/30/1996
960284266-2571388

CERTIFICATE OF MERGER

TRANSCRYPT INTERNATIONAL, INC., A NEBRASKA CORPORATION

WITH AND INTO

TRANSCRYPT INTERNATIONAL, INC., A DELAWARE CORPORATION

This certificate is prepared pursuant to Section 252 of the General
Corporation Law of the State of Delaware.

It is hereby certified that:

1. The constituent business corporations participating in the merger
herein certified are: (i) Transcrypt International, Inc., which is incorporated
under the laws of the State of Nebraska ("NebCorp"), and (ii) Transcrypt
International, Inc., which is incorporated under the laws of the State of
Delaware ("DelCorp").

2. The Agreement and Plan of Merger, dated May 29, 1996, providing
for the merger of NebCorp with and into DelCorp (the "Merger Agreement") has
been approved, adopted, certified, executed and acknowledged by DelCorp in
accordance with provisions of Section 252 of the General Corporation Law of the
State of Delaware. In addition, the Merger Agreement has been approved,
adopted, certified, executed and acknowledged by NebCorp in accordance with
provisions of the Business Corporation Act of the State of Nebraska.

3. The name of the surviving corporation in the merger herein certified
is Transcrpyt International, Inc., which will continue its existence as said
surviving corporation upon the effective date of said merger pursuant to the
provisions of the General Corporation Law of the State of Delaware.

4. The certificate of incorporation of DelCorp shall be the certificate
of incorporation of the surviving corporation.

5. The executed Merger Agreement between the aforesaid constituent
corporations is on file at the principal place of business of the aforesaid
surviving corporation, the address of which is 4800 NW First, Lincoln, Nebraska
68521. A copy of the Merger Agreement will be furnished by DelCorp, on request
and without cost, to any stockholder of DelCorp or NebCorp.

<PAGE> 3
6. The authorized capital stock of NebCorp, which is incorporated
under the laws of the State of Nebraska, consists of 1,000 shares of common
stock, par value $1.00 per share. Immediately prior to the effectiveness of the
merger herein certified, 995 shares of such common stock were outstanding. Upon
the effectiveness of the merger herein certified, no shares of such common
stock will be outstanding.

7. The Merger Agreement between the aforesaid constituent
corporations provides that the merger herein certified shall become effective on
September 30, 1996.

Dated: September 30, 1996.

TRANSCRYPT INTERNATIONAL, INC.,
a Nebraska corporation

By /s/ John T. Connor
----------------------------------
John T. Connor, Chairman and Chief
Executive Officer

Attest:

/s/ Rebecca L. Meyer-Schultz
- -----------------------------------
Rebecca L. Meyer-Schultz, Secretary

TRANSCRYPT INTERNATIONAL, INC.,
a Delaware corporation

By /s/ John T. Connor
----------------------------------
John T. Connor, Chairman and Chief
Executive Officer

Attest:

/s/ Rebecca L. Meyer-Schultz
- -----------------------------------
Rebecca L. Meyer-Schultz, Secretary

A-2
<PAGE> 4
STATE OF NEBRASKA )
) SS.
COUNTY OF LANCASTER )

The foregoing instrument was acknowledged before me this 30th day of
September, 1996, by John T. Connor and Rebecca L. Meyer-Schultz of Transcrypt
International, Inc., a Nebraska corporation, on behalf of such corporation.

- -------------------------------- /s/ Tricia McKinnon
GENERAL NOTARY-State of Nebraska -------------------------------
TRICIA McKINNON Notary Public
My Comm. Exp. Aug. 29, 1999
- --------------------------------

STATE OF NEBRASKA )
) SS.
COUNTY OF LANCASTER )

The foregoing instrument was acknowledged before me this 30th day of
September, 1996, by John T. Connor and Rebecca L. Meyer-Schultz of Transcrypt
International, Inc., a Delaware corporation, on behalf of such corporation.

A-3
<PAGE> 5
STATE OF NEBRASKA

[PICTURE OF STATE FLAG]

United States of America, ) Department of State
State of Nebraska ) ss. Lincoln, Nebraska

I, Scott Moore, Secretary of State of the State of Nebraska do hereby
certify;

the attached is a true and correct copy of Articles of Merger of

TRANSCRYPT INTERNATIONAL, INC.

a Nebraska corporation, with registered office located in Lincoln,
Nebraska, merging into

TRANSCRYPT INTERNATIONAL, INC.

a Delaware corporation, not qualified in Nebraska, as filed in this
office on September 30, 1996.

In Testimony Whereof, I have hereunto set my hand and
affixed the Great Seal of the State
of Nebraska on September 30
[GREAT SEAL OF THE in the year of our Lord, one thousand
STATE OF NEBRASKA] nine hundred and ninety-six.

/s/ Scott Moore
SECRETARY OF STATE
<PAGE> 6
STATE OF NEBRASKA
SECRETARY'S OFFICE SS.
Received and filed for
record and recorded on
film roll 016-21 at page 422

[Illegible]
--------------------------------
Secretary of State

By Ch 70.00 pd 216 pm
-----------------------------
ARTICLES OF MERGER
OF
TRANSCRYPT INTERNATIONAL, INC., A NEBRASKA CORPORATION
INTO
TRANSCRYPT INTERNATIONAL, INC., A DELAWARE CORPORATION

Pursuant to the provisions of Section 21-20,134 of the Nebraska
Business Corporation Act, Transcrypt International, Inc., a Nebraska
corporation ("NebCorp") and Transcrypt International, Inc., a Delaware
corporation ("DelCorp") hereby adopt the following Articles of Merger:

ARTICLE I

The Agreement and Plan of Merger, dated May 29, 1996 (the "Merger
Agreement") attached hereto as Exhibit 1 has been approved in the manner
prescribed by the Nebraska Business Corporation Act.

ARTICLE II

As to each corporation the stockholders of which were required to vote
thereon, the number of shares outstanding and the number of shares voted for
and against the Merger Agreement are:

<TABLE>
<CAPTION>
Number of Number of Number of
Shares Shares Shares
Name of Corporation Outstanding Voted For Voted Against
------------------- ----------- --------- -------------
<S> <C> <C> <C>
Transcrypt International, Inc. a
Nebraska Corporation
Voting Common 942 942 0
Nonvoting Common 53 53 0

Transcrypt International, Inc., a
Delaware Corporation 1 1 0
</TABLE>

ARTICLE III

DelCorp, as the surviving corporation, agrees that it may be served
with process within or without the State of Nebraska in any proceeding in the
courts of the State of Nebraska for the enforcement of any obligation of
NebCorp and in any proceeding for the enforcement of the rights of a dissenting
stockholder of NebCorp against DelCorp and DelCorp hereby irrevocably appoints
the Secretary of State of the State of Nebraska as its agent to accept service
of process in an action for the enforcement of payment of any such obligation
or amount. DelCorp specifies 4800 NE First, Lincoln, Nebraska 68521 as the
address to which a copy of such
<PAGE> 7
process shall be mailed by the Secretary of State of the State of Nebraska,
unless it shall hereafter designate in writing to such Secretary of State a
different address for such purpose, in which case a copy of such process shall
be mailed to the last address so designated.

ARTICLE IV

The Merger Agreement shall become effective on September 30, 1996.

DelCorp will promptly pay to dissenting stockholders of NebCorp the
amount, if any, to which they will be entitled under the Nebraska Business
Corporation Act with respect to the rights of dissenting shareholders.

DATED this 30th day of September, 1996.

TRANSCRYPT INTERNATIONAL, INC.,
a Nebraska corporation

By /s/ John T. Connor
-----------------------------------
John T. Connor, Chairman and Chief
Executive Officer

Attest:

By /s/ Rebecca L. Meyer-Schultz
---------------------------------
Rebecca L. Meyer-Schultz,
Secretary

TRANSCRYPT INTERNATIONAL, INC.,
a Delaware corporation

By /s/ John T. Connor
-----------------------------------
John T. Connor, Chairman and Chief
Executive Officer

Attest:

By /s/ Rebecca L. Meyer-Schultz
---------------------------------
Rebecca L. Meyer-Schultz,
Secretary

B-2
<PAGE> 8
STATE OF NEBRASKA )
) SS.
COUNTY OF LANCASTER )

STATE OF NEBRASKA )
) SS.
COUNTY OF LANCASTER )

B-3
<PAGE> 9
EXHIBIT 1

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this "Agreement") is entered into as
of the 29th day of May, 1996 by and between Transcrypt International, Inc., a
Nebraska corporation whose principal office is located at 4800 NW First,
Lincoln, Nebraska 68521 ("NebCorp"), and Transcrypt International, Inc. a
Delaware corporation whose principal office is located at 4800 NW First,
Lincoln, Nebraska 68521 ("DelCorp").

WHEREAS, NebCorp is a corporation duly organized and existing under the
laws of Nebraska, having been incorporated on October 3, 1991 and having filed
Restated and Amended Articles of Incorporation on December 2, 1991 and Articles
of Amendment on December 5, 1991, with authorized capital stock of 1,000 shares
of common stock, par value $1.00 per share, of which 995 shares are issued and
outstanding; and

WHEREAS, DelCorp is a corporation duly organized and existing under the
laws of Delaware, having been incorporated on December 13, 1995 with authorized
capital stock of 10,000,000 shares of common stock, par value $0.01 per share
(the "Common Stock"), of which 9,700,000 shares are voting Common Stock, of
which one share is issued and outstanding, and of which 300,000 shares are
nonvoting Common Stock, of which no shares are issued and outstanding; and

WHEREAS, pursuant to Section 21-20, 134 of the Nebraska Business
Corporation Act and Section 253 of the Delaware General Corporation Law,
NebCorp and DelCorp agree to merge upon the terms and conditions set forth
herein, with DelCorp as the surviving corporation; and

WHEREAS, it is the intent of the parties to this Agreement that the
transaction contemplated hereby will constitute a reorganization under the
provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), which will be treated as a complete liquidation within
the meaning of Section 332(a) of the Code, whereby (i) NebCorp will merge with
and into DelCorp pursuant to a statutory merger under the applicable laws of
Nebraska and Delaware, (ii) DelCorp will be the surviving corporation pursuant
to the merger and (iii) NebCorp and DelCorp will be parties to a reorganization
within the meaning of Section 368(b) of the Code and this Agreement shall
constitute the plan of reorganization;

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and undertakings of the parties set
forth below, the parties agree as follows:

Section 1. The Merger. At the effective time, the separate existence
of NebCorp shall cease and NebCorp shall be merged with and into DelCorp, which
shall continue its corporate existence and be the corporation surviving the
merger (the "Merger"). Consummation of the
<PAGE> 10
Merger shall be effected by the filing of a Certificate of Ownership and Merger
(the "Merger Certificate") in the State of Delaware and the Articles of Merger
in the State of Nebraska, in substantially the forms attached hereto as
Exhibits A and B, respectively. The Merger shall become effective in accordance
with the laws of the States of Delaware and Nebraska on September 30, 1996.

Section 2. Governing Laws. The laws that shall govern DelCorp as the
surviving corporation are the laws of the State of Delaware.

Section 3. Certificate of Incorporation and Bylaws. (a) The
certificate of incorporation of DelCorp at the effective time of the Merger
shall become and continue to be the certificate of incorporation of DelCorp as
the surviving corporation until altered or amended as provided therein and by
law.

(b) The bylaws of DelCorp at the effective time of the Merger shall
become and continue to be the bylaws of DelCorp as the surviving corporation
until altered or amended in accordance with the provisions thereof.

Section 4. Directors and Officers. The directors and officers of
DelCorp at the effective time of the Merger shall become and continue to be the
directors and officers of DelCorp as the surviving corporation until their
respective successors are chosen in the manner set forth in the bylaws of
DelCorp.

Section 5. Annual Meeting of Stockholders. The first annual meeting
of the stockholders of DelCorp as the surviving corporation after the effective
time of the Merger shall be the next annual meeting provided by the bylaws of
DelCorp as the surviving corporation.

Section 6. Terms of Conversion of Shares. Upon the effective time of
the Merger, by virtue of the Merger and without any action on the part of the
parties, each share of NebCorp's common stock outstanding immediately prior
to the effective time of the Merger shall be cancelled and extinguished and
NebCorp shall be merged with and into DelCorp. Shareholders of NebCorp shall
each receive 52.27135678 shares of DelCorp's Common Stock for each share of
cancelled NebCorp stock, rounded up or down to the nearest whole share. Any
shares of DelCorp's Common Stock which are held by NebCorp at the effective
time of the Merger shall be cancelled and extinguished.

Section 7. Rights and Liabilities. At the effective time of the
Merger, DelCorp shall succeed to, without other transfer, and shall possess and
enjoy, all the rights, privileges, powers and franchises both of a public and a
private nature and be subject to all the restrictions, disabilities and duties
of NebCorp; and all rights, privileges, powers and franchises of NebCorp and
all property, real, personal and mixed, and all debts due to NebCorp on
whatever account, for stock subscriptions as well as for all other things in
action or belonging to NebCorp, shall be vested in DelCorp; and all property,
rights, privileges, powers, franchises and interests shall be thereafter as
effectually the property of DelCorp as they were of NebCorp, and the title to
any real estate vested by deed or otherwise in NebCorp shall not revert or be
in any way

2
<PAGE> 11
impaired by reason of the Merger; provided, however, that all rights of
creditors and all liens upon any property of NebCorp shall be preserved
unimpaired, and all debts, liabilities and duties of NebCorp shall thenceforth
attach to DelCorp and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by DelCorp.

Section 8. Service of Process. DelCorp, as the surviving corporation,
agrees that it may be served with process within or without the State of
Nebraska in any proceeding in the courts of the State of Nebraska for the
enforcement of any obligation of NebCorp and in any proceeding for the
enforcement of the rights of a dissenting stockholder of NebCorp against DelCorp
and DelCorp hereby irrevocably appoints the Secretary of State of the State of
Nebraska as its agent to accept service of process in an action for the
enforcement of payment of any such obligation or amount. DelCorp specifies 4800
NW First, Lincoln, Nebraska 68521 as the address to which a copy of such process
shall be mailed by the Secretary of State of the State of Nebraska, unless it
shall hereafter designate in writing to such Secretary of State a different
address for such purpose, in which case a copy of such process shall be mailed
to the last address so designated.

Section 9. Conditions to Merger. The obligation of DelCorp and of
NebCorp to consummate the transactions contemplated hereby shall be subject to:

(a) the approval hereof by the holder of the outstanding share
of voting Common Stock of DelCorp; and

(b) the approval hereof by the holders of at least two-thirds
majorities of the outstanding voting common stock of NebCorp and the
outstanding nonvoting common stock of NebCorp.

Section 10. Dissenting Stockholders. DelCorp agrees to pay dissenting
stockholders of NebCorp the amount, if any, to which they will be entitled
under the Nebraska Business Corporation Act with respect to the rights of
dissenting stockholders.

Section 11. Signatures. This Agreement shall be signed by a duly
authorized officer of the parties and attested by the secretary or an assistant
secretary under the corporate seal of the parties.

Section 12. Termination. This Agreement may be terminated by the mutual
consent of the boards of directors of the parties at any time prior to the
effective time of the Merger as specified in Section 1.

Section 13. Further Assurances. NebCorp agrees that from time to time,
as and when requested by DelCorp or by its successors or assigns, it will
execute and deliver, or cause to be executed and delivered, all such deeds and
other instruments, and will take or cause to be taken such further or other
action, as DelCorp may deem necessary or desirable in order to more fully vest
in and confirm to DelCorp title to and possession of all said property, rights,
privileges, powers and franchises and otherwise to carry out the intent and
purposes of this Agreement.

3
<PAGE> 12
IN WITNESS WHEREOF, this Agreement has been duly authorized, executed
and delivered by the parties on the date first set forth above.

TRANSCRYPT INTERNATIONAL, INC.,
a Nebraska corporation

By ____________________________________
John T. Connor, Chairman and Chief
Executive Officer
Attest:

_____________________________
Rebecca L. Meyer-Schultz,
Secretary

TRANSCRYPT INTERNATIONAL, INC.,
a Delaware corporation

By ____________________________________
John T. Connor, Chairman and Chief
Executive Officer

Attest:

_____________________________
Rebecca L. Meyer-Schultz,
Secretary

<PAGE> 1
EXHIBIT 4.1

DESCRIPTION OF SPECIMEN STOCK CERTIFICATE OF REGISTRANT

The face of the stock certificate has a border which is a continuous intricate
design all the way around. The upper left and right corners contain a different
irregular shaped wavy round design. In the center of the face at the top is a
decorative arch. Below the decorative arch is the company name in logo fashion.
Below the company logo in the center of the certificate is a light shaded
rectangle in which the words "THIS CERTIFIES THAT" and "is the record holder
of," which appears in black ink, and the word "SPECIMEN" which appear stamped in
red ink. The word "SPECIMEN" is also stamped within the border at the bottom on
either side of the corporate seal. The border, upper left and right corners and
the decorative arch are all in purple ink, the company logo is in black and
blue ink and the rest of the text is in black ink.

The following is the text which appears in black on the face of the stock
certificate starting in the upper lefthand corner and moving left to right and
down:

COMMON STOCK COMMON STOCK
INCORPORATED UNDER THE LAWS OF CUSIP 89363A 10 1
THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE, OF
TRANSCRYPT INTERNATIONAL, INC.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
shall not be valid until countersigned and registered by the Transfer Agent and
Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

Dated

/s/ SIG /s/ SIG

TREASURER AND CORPORATE SECRETARY CHAIRMAN AND CHIEF EXECUTIVE
OFFICER

CORPORATE SEAL

COUNTERSIGNED AND REGISTERED:
NORWEST BANK MINNESOTA, N.A.
TRANSFER AGENT AND REGISTRAR

BY
<PAGE> 2
AUTHORIZED SIGNATURE

The following is the text in black ink which appears on the reverse of the stock
certificate starting in the upper left hand corner and moving left to right and
down:

The Corporation shall furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation's Secretary at the principal office of the Corporation.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in
common

UNIF GIFT MIN ACT -- _________Custodian__________
(Cust) (Minor)

under Uniform Gifts to Minors

Act______________________
(State)

UNIF TRF MIN ACT -- _________Custodian (until age ______)
_____________ under Uniform Transfers
(Minor)

to Minors Act _____________________
(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, _________________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
[BOX]

_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________ Shares of the common stock represented
by the within Certificate, and do hereby irrevocably constitute and appoint
_______________________ Attorney to transfer the said stock on the books of the
within named Corporation with full power of
<PAGE> 3
substitution in the premises.

Dated _________________________________

X_____________________________________
(SIGNATURE)
X_____________________________________
(SIGNATURE)

NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.

AFFIX MEDALLION SIGNATURE GUARANTEE IMPRINT BELOW

ABOVE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION SUCH AS
A SECURITIES BROKER/DEALER, COMMERCIAL BANK & TRUST COMPANY, SAVINGS AND LOAN
ASSOCIATION OR A CREDIT UNION PARTICIPATING IN A MEDALLION PROGRAM APPROVED BY
THE SECURITIES TRANSFER ASSOCIATION, INC.

<PAGE> 1
EXHIBIT 10.5

TRANSCRYPT INTERNATIONAL, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is effective as
of this ____ day of ________________, by and between Transcrypt International,
Inc., a Delaware corporation (the "Company"), and _____________ ("Indemnitee").

WHEREAS, the Company and Indemnitee recognize the continued
difficulty in obtaining liability insurance for its directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of such
insurance and the general reductions in the coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize
increases in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited;

WHEREAS, Indemnitee does not regard the current protection
available as adequate under the present circumstances, and the Indemnitee and
other directors, officers, employees, agents and fiduciaries of the Company may
not be willing to continue to serve in such capacities without additional
protection;

WHEREAS, the Company desires to attract and retain the
services of highly qualified individuals, such as Indemnitee, to serve the
Company and, in part, in order to induce Indemnitee to continue to provide
services to the Company, wishes to provide for the indemnification and advancing
of expenses to Indemnitee to the maximum extent permitted by law; and

WHEREAS, in view of the considerations set forth above, the
Company desires that effective on the date first set forth above, Indemnitee
shall be indemnified by the Company as set forth herein.

NOW, THEREFORE, the Company and Indemnitee hereby agree as
follows:

1. Indemnification.

(a) Indemnification of Expenses. The Company shall
indemnify Indemnitee to the fullest extent permitted by law if Indemnitee was or
is or becomes a party to or witness or other participant in, or is threatened to
be made a party to or witness or other participant in, any threatened, pending
or completed action, suit, proceeding or alternative dispute resolution
mechanism, or any hearing, inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter, a "Claim") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company, or is or was serving at the request
of the

1
<PAGE> 2
Company as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action or inaction on the part of Indemnitee while serving in such
capacity (hereinafter, an "Indemnifiable Event") against any and all expenses
(including attorneys' fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in, any such action, suit, proceeding, alternative dispute
resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on the
Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement (collectively, hereinafter, "Expenses"), including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses. Such payment of Expenses shall be made by the Company as soon
as practicable but in any event no later than five (5) days after written demand
by Indemnitee therefor is presented to the Company.

(b) Reviewing Party. Notwithstanding the foregoing,
(i) the obligations of the Company under Section 1(a) shall be subject to the
condition that the Reviewing Party (as described in Section 10(f) hereof) shall
not have determined (in a written opinion, in any case in which the Independent
Legal Counsel referred to in Section 1(c) hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an advance payment of Expenses to Indemnitee
pursuant to Section 2(a) (an "Expense Advance") shall be subject to the
condition that, if, when and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore paid;
provided, however, that if Indemnitee has commenced or thereafter commences
legal proceedings in a court of competent jurisdiction to secure a determination
that Indemnitee should be indemnified under applicable law, any determination
made by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee shall not
be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to
reimburse the Company for any Expense Advance shall be unsecured and no interest
shall be charged thereon. If there has not been a Change in Control (as defined
in Section 10(c) hereof), the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other than a Change
in Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), the
Reviewing Party shall be the Independent Legal Counsel referred to in Section
1(c) hereof. If there has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would not be permitted
to be indemnified in whole or in part under applicable law, Indemnitee shall
have the right to commence litigation seeking an initial determination by the
court or challenging any such determination by the Reviewing Party or any aspect
thereof, including the legal or factual bases therefor, and the Company hereby
consents to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and binding
on the Company and Indemnitee.

2
<PAGE> 3
(c) Change in Control. The Company agrees that if
there is a Change in Control of the Company (other than a Change in Control
which has been approved by a majority of the Company's Board of Directors who
were directors immediately prior to such Change in Control) then with respect to
all matters thereafter arising concerning the rights of Indemnitee to payments
of Expenses and Expense Advances under this Agreement or any other agreement or
under the Company's Certificate of Incorporation or Bylaws as now or hereafter
in effect, Independent Legal Counsel (as defined in Section 10(d) hereof) shall
be selected by Indemnitee and approved by the Company (which approval shall not
be unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.

(d) Mandatory Payment of Expenses. Notwithstanding
any other provision of this Agreement other than Section 9 hereof, to the extent
that Indemnitee has been successful on the merits or otherwise, including,
without limitation, the dismissal of an action without prejudice, in defense of
any action, suit, proceeding, inquiry or investigation referred to in Section
(1)(a) hereof or in the defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against all Expenses incurred by Indemnitee in
connection therewith.

2. Expenses; Indemnification Procedure.

(a) Advancement of Expenses. The Company shall
advance all Expenses incurred by Indemnitee. The advances to be made hereunder
shall be paid by the Company to Indemnitee as soon as practicable but in any
event no later than five (5) days after written demand by Indemnitee therefor to
the Company.

(b) Notice/Cooperation by Indemnitee. Indemnitee
shall, as a condition precedent to Indemnitee's right to be indemnified under
this Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.

(c) No Presumptions; Burden of Proof. For purposes of
this Agreement, the termination of any Claim by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law. In addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular

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<PAGE> 4
standard of conduct or had any particular belief, nor an actual determination by
the Reviewing Party that Indemnitee has not met such standard of conduct or did
not have such belief, prior to the commencement of legal proceedings by
Indemnitee to secure a judicial determination that Indemnitee should be
indemnified under applicable law, shall be a defense to Indemnitee's claim or
create a presumption that Indemnitee has not met any particular standard of
conduct or did not have any particular belief. In connection with any
determination by the Reviewing Party or otherwise as to whether the Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.

(d) Notice to Insurers. If, at the time of the
receipt by the Company of a notice of a Claim pursuant to Section 2(b) hereof,
the Company has liability insurance in effect which may cover such Claim, the
Company shall give prompt notice of the commencement of such Claim to the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such action, suit, proceeding, inquiry or investigation in accordance
with the terms of such policies.

(e) Selection of Counsel. In the event the Company
shall be obligated hereunder to pay the Expenses of any Claim the Company, if
appropriate, shall be entitled to assume the defense of such Claim with counsel
approved by Indemnitee, upon the delivery to Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same Claim; provided
that, (i) Indemnitee shall have the right to employ Indemnitee's counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of counsel by
Indemnitee has been previously authorized by the Company, (B) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not continue to retain such counsel to defend such Claim, then the fees
and expenses of Indemnitee's counsel shall be at the expense of the Company.

3. Additional Indemnification Rights; Nonexclusivity.

(a) Scope. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect

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<PAGE> 5
on this Agreement or the parties' rights and obligations hereunder except as set
forth in Section 8(a) hereof.

(b) Nonexclusivity. The indemnification provided by
this Agreement shall be in addition to any rights to which Indemnitee may be
entitled under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified capacity even though
Indemnitee may have ceased to serve in such capacity.

4. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any Claim made
against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, Certificate of Incorporation, Bylaw or
otherwise) of the amounts otherwise indemnifiable hereunder.

5. Partial Indemnification. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6. Mutual Acknowledgment. Both the Company and Indemnitee
acknowledge that in certain instances, Federal law or applicable public policy
may prohibit the Company from indemnifying its directors, officers, employees,
agents or fiduciaries under this Agreement or otherwise. Indemnitee understands
and acknowledges that the Company has undertaken or may be required in the
future to undertake with the Securities and Exchange Commission to submit the
question of indemnification to a court in certain circumstances for a
determination of the Company's right under public policy to indemnify
Indemnitee.

7. Liability Insurance. To the extent the Company maintains
liability insurance applicable to directors, officers, employees, agents or
fiduciaries, Indemnitee shall be covered by such policies in such a manner as to
provide Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if Indemnitee is a director; or of
the Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

8. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

(a) Excluded Action or Omissions. To indemnify Indemnitee
for acts, omissions or transactions from which Indemnitee may not be relieved of
liability under applicable law.

(b) Claims Initiated by Indemnitee. To indemnify or advance
expenses to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of

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<PAGE> 6
defense, except (i) with respect to actions or proceedings brought to establish
or enforce a right to indemnification under this Agreement or any other
agreement or insurance policy or under the Company's Certificate of
Incorporation or Bylaws now or hereafter in effect relating to Claims for
Indemnifiable Events, (ii) in specific cases if the Board of Directors has
approved the initiation or bringing of such Claim, or (iii) as otherwise as
required under Section 145 of the Delaware General Corporation Law, regardless
of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.

(c) Lack of Good Faith. To indemnify Indemnitee for any
expenses incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

(d) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.

9. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

10. Construction of Certain Phrases.

(a) For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees,
agents or fiduciaries, so that if Indemnitee is or was a director, officer,
employee, agent or fiduciary of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, Indemnitee shall stand in the
same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer, employee, agent or fiduciary of the
Company which imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary with respect to

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<PAGE> 7
an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.

(c) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than 20% of the total voting power represented by
the Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total voting
power represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all of substantially all of the
Company's assets.

(d) For purposes of this Agreement, "Independent Legal
Counsel" shall mean an attorney or firm of attorneys, selected in accordance
with the provisions of Section 1(c) hereof, who shall not have otherwise
performed services for the Company or Indemnitee within the last three years
(other than with respect to matters concerning the rights of Indemnitee under
this Agreement, or of other indemnitees under similar indemnity agreements).

(e) For purposes of this Agreement, a "Potential Change in
Control" shall be deemed to have occurred if: (i) the Company enters into an
agreement, the consummation of which would result in the occurrence of a Change
in Control, (ii) any person (including the Company) publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a Change in Control, or (iii) any person, other than a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
acting in such capacity or a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company's then outstanding Voting
Securities, increases his beneficial ownership of such securities by five
percentage

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<PAGE> 8
points (5%) or more over the percentage so owned by such person; or (iv) the
Board of Directors adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.

(f) For purposes of this Agreement, a "Reviewing Party"
shall mean any appropriate person or body consisting or a member or members of
the Company's Board of Directors or any other person or body appointed by the
Board of Directors who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.

(g) For purposes of this Agreement, "Voting Securities"
shall mean any securities of the Company that vote generally in the election of
directors.

11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original.

12. Binding Effect; Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director or officer of the Company or of any other enterprise at the Company's
request.

13. Attorneys' Fees. In the event that any action is
instituted by Indemnitee under this Agreement or under any liability insurance
policies maintained by the Company to enforce or interpret any of the terms
hereof or thereof, Indemnitee shall be entitled to be paid all Expenses incurred
by Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action a court
of competent jurisdiction over such action determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the advancement of Expenses with respect to such action,
unless as a part of such action a court having jurisdiction over such action
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.

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<PAGE> 9
14. Notice. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given (i) if delivered by hand and signed for by the party addressed, on the
date of such delivery, or (ii) if mailed by domestic certified or registered
mail with postage prepaid, on the third business day after the date postmarked.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.

15. Consent to Jurisdiction. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement and agree that any action instituted
under this Agreement shall be commenced, prosecuted and continued only in the
Court of Chancery of the State of Delaware in and for New Castle County, which
shall be the exclusive and only proper forum for adjudicating such a claim.

16. Severability. The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted by
law. Furthermore, to the fullest extent possible, the provisions of this
Agreement (including, without limitations, each portion of this Agreement
containing any provision held to be invalid, void or otherwise unenforceable,
that is not itself invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, illegal or
unenforceable.

17. Choice of Law. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, as applied to contracts between Delaware residents, entered into and
to be performed entirely within the State of Delaware, without regard to the
conflict of laws principles thereof.

18. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required and
shall do all acts that may be necessary to secure such rights and to enable the
Company effectively to bring suit to enforce such rights.

19. Amendment and Termination. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless it is in
writing signed by both the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.

20. Integration and Entire Agreement. This Agreement sets
forth the entire understanding between the parties hereto and supersedes and
merges all previous written and oral negotiations, commitments, understandings
and agreements relating to the subject matter hereof between the parties hereto.

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<PAGE> 10
21. No Construction as Employment Agreement. Nothing contained
in this Agreement shall be construed as giving Indemnitee any right to be
retained in the employ of the Company or any of its subsidiaries.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

TRANSCRYPT INTERNATIONAL, INC.
4000 NW 1st Street
Lincoln, Nebraska 68521

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

-----------------------------------
Print Name and Title

AGREED TO AND ACCEPTED

INDEMNITEE:

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

- -----------------------------------
Print Name and Title of Indemnitee

- -----------------------------------
Print Address of Indemnitee

<PAGE> 1

EXHIBIT 10.24

ADOPTION AGREEMENT #006
NONSTANDARDIZED CODE SECTION 401(k) PROFIT SHARING PLAN

The undersigned, TRANSCRYPT INTERNATIONAL, LTD. ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the NORWEST BANK NEBRASKA, N.A. Defined Contribution Master Plan (basic plan
document #02) by adopting the accompanying Plan and Trust in full as if the
Employer were a signatory to that Agreement. The Employer makes the following
elections granted under the provisions of the Master Plan.

ARTICLE I
DEFINITIONS

1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))

[X] (a) A discretionary Trustee. See Section 10.03[A] of the Plan.

(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan.
[Note: The Employer may not elect Option (b) if a Custodian executes
the Adoption Agreement.]

1.03 PLAN. The name of the Plan as adopted by the Employer is
TRANSCRYPT INTERNATIONAL EMPLOYEES PROFIT SHARING & SAVINGS PLAN.

1.07 EMPLOYEE. The following Employees are not eligible to
participate in the Plan: (Choose (a) or at least one of (b) through (g)

[X] (a) No exclusions.

[ ] (b) Collective bargaining employees (as defined in Section 1.07 of the
Plan). [Note: If the Employer excludes union employees from the Plan,
the Employer must be able to provide evidence that retirement benefits
were the subject of good faith bargaining.]

[ ] (c) Nonresident aliens who do not receive any earned income (as
defined in Code Section 911(d)(2))from the Employer which constitutes
United States source income (as defined in Code Section 861(a)(3)).

[ ] (d) Commission Salesmen.

[ ] (e) Any Employee compensated on a salaried basis.

[ ] (f) Any Employee compensated on an hourly basis.

[ ] (g) (Specify) .

LEASED EMPLOYEES. Any Leased Employee treated as an Employee under Section
1.31 of the Plan, is: (Choose (h) or (i))

[X] (h) Not eligible to participate in the Plan.

[ ] (i) Eligible to participate in the Plan, unless excluded by reason of
an exclusion classification elected under this Adoption Agreement
Section 1.07.

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<PAGE> 2
RELATED EMPLOYERS. If any member of the Employer's related group (as defined
in Section 1.30 of the Plan) executes a Participation Agreement to this
Adoption Agreement, such member's Employees are eligible to participate in this
Plan, unless excluded by reason of an exclusion classification elected under
this Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))

[X] (j) No other related group member's Employees are eligible to
participate in the Plan.

[ ] (k) The following nonparticipating related group member's Employees
are eligible to participate in the Plan unless excluded by
reason of an exclusion classification elected under this
Adoption Agreement Section 1.07:______________________________.

1.12 COMPENSATION.

TREATMENT OF ELECTIVE CONTRIBUTIONS. (Choose (a) or (b))

[X] (a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.

(b) "Compensation" does not include elective contributions.

MODIFICATIONS TO COMPENSATION DEFINITION. (Choose (c) or at least one of (d)
through (i))

[ ] (c) No modifications other than as elected under Options (a) or
(b).

[ ] (d) The Plan excludes Compensation in excess of $_________.

[ ] (e) In lieu of the definition in Section 1.12 of the Plan,
Compensation means any earnings reportable as W-2 wages for
Federal income tax withholding purposes, subject to any other
election under this Adoption Agreement Section 1.12.

[X] (f) The Plan excludes bonuses.

[X] (g) The Plan excludes overtime.

[X] (h) The Plan excludes Commissions.

[ ] (i) Compensation will not include Compensation from a related
employer (as defined in Section 1.30 of the Plan) that has not
executed a Participation Agreement in this Plan unless,
pursuant to Adoption Agreement Section 1.07, the Employees of
that related employer are eligible to participate in this Plan.

[ ] (j) (Specify) ____________________________________.

If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.

SPECIAL DEFINITION FOR MATCHING CONTRIBUTIONS. "Compensation" for purposes
of any matching contribution formula under Article III means: (Choose (k)
or (l) only if applicable)

[X] (k) Compensation as defined in this Adoption Agreement
Section 1.12.

[ ] (1) (Specify)

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<PAGE> 3
SPECIAL DEFINITION FOR SALARY REDUCTION CONTRIBUTIONS. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (m) or at least one of (n) or (o), if applicable)

[ ] (m) No exceptions.

[X] (n) If the Employee makes elective contributions to another plan
maintained by the Employer, the Advisory Committee will determine the
amount of the Employee's salary reduction contribution for the
withholding period: (Choose (1) or (2))

[ ] (1) After the reduction for such period of elective
contributions to the other plan(s).

[X] (2) Prior to the reduction for such period of elective
contributions to the other plan(s).

[X] (o) (Specify) Compensation shall not include bonuses, overtime. or
commissions.

1.17 PLAN YEAR/LIMITATION YEAR.

PLAN YEAR. Plan Year means: (Choose (a) or (b))

[X] (a) The 12 consecutive month period ending every December 31.

[ ] (b) (Specify) .

LIMITATION YEAR. The Limitation Year is: (Choose (c) or (d))

[X] (c) The Plan Year.

(d) The 12 consecutive month period ending every .

1.18 EFFECTIVE DATE.

NEW PLAN. The "Effective Date" of the Plan is .

RESTATED PLAN. The restated Effective Date is July 1. 1992.

This Plan is a substitution and amendment of an existing retirement plan(s)
originally established July 1, 1992. [Note: See the Effective Date Addendum.]

1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))

[X] (a) The actual method.

[ ] (b) The _ equivalency method, except:

[ ] (1) No exceptions.

[ ] (2) The actual method applies for purposes of: (Choose at
least one)

[ ] (i) Participation under Article II.

[ ] (ii) Vesting under Article V.

[ ] (iii) Accrual of benefits under Section 3.06.

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<PAGE> 4
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]

1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section 1.29 of the Plan,
the Plan credits Service with the following predecessor employer(s): Transcrypt
International, Inc.; Transcrypt Development, Inc.; and Transcrypt
Communications, Inc. Service with the designated predecessor employer(s)
applies: (Choose at least one of (a) or (b); (c) is available only in addition
to (a) or (b))

[X] (a) For purposes of participation under Article II.

[X] (b) For purposes of vesting under Article V.

[ ] (c) Except the following Service:______________________________.

[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]

1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in
the Plan and also participates in a plan maintained by the leasing
organization: (Choose (a) or (b))

[ ] (a) The Advisory Committee will determine the Leased Employee"s
allocation of Employer contributions under Article III without taking
into account the Leased Employee"s allocation, if any, under the
leasing organization's plan.

[X] (b) The Advisory Committee will reduce a Leased Employee's allocation
of Employer nonelective contributions (other than designated qualified
nonelective contributions) under this Plan by the Leased Employee"s
allocation under the leasing organization's plan, but only to the
extent that allocation is attributable to the Leased Employee's
service provided to the Employer. The leasing organization's plan:

[X] (1) Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan,
irrespective of whether the safe harbor exception applies.

[ ] (2) Must satisfy the features and, if a defined benefit
plan, the method of reduction described in an addendum to this
Adoption Agreement, numbered 1.31.

ARTICLE II
EMPLOYEE PARTICIPANTS

2.01 ELIGIBILITY.

ELIGIBILITY CONDITIONS. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions: (Choose (a) or (b) or both; (c)
is optional as an additional election)

[X] (a) Attainment of age 21 (specify age. not exceeding 21).

[X] (b) Service requirement. (Choose one of (1) through (3))

[X] (1) One Year of Service.

[ ] (2) __ months (not exceeding 12) following the
Employee's Employment Commencement Date.

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<PAGE> 5
[ ] (3) One Hour of Service.

[ ] (c) Special requirements for non-401(k) portion of plan. (Make
elections under (1) and under (2))

(1) The requirements of this Option (c) apply to participation in:
(Choose at least one of (i) through (iii))

[ ] (i) The allocation of Employer nonelective
contributions and Participant forfeitures.

[ ] (ii) The allocation of Employer matching
contributions (including forfeitures allocated as
matching contributions).

[ ] (iii) The allocation of Employer qualified
nonelective contributions.

(2) For participation in the allocations described in (1), the
eligibility conditions are: (Choose at least one of (i)
through (iv))

[ ] (i) ______ (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section
2.03(A) of the Plan) if the requirement is two Years of
Service.

[ ] (ii) _____ months (not exceeding 24) following the
Employee's Employment Commencement Date.

[ ] (iii) One Hour of Service.

[ ] (iv) Attainment of age __ (Specify age not
exceeding 21).

PLAN ENTRY DATE. "Plan Entry Date" means the Effective Date and: (Choose (d),
(e) or (f))

[ ] (d) Semi-annual Entry Dates. The first day of the Plan Year and
the first day of the seventh month of the Plan Year.

[ ] (e) The first day of the Plan Year.

[X] (f) (Specify entry dates) The first day of the Plan Year, the
first day of the fourth month of the Plan Year, the first day of the
seventh month of the Plan Year, and the first day of the tenth month
of the Plan Year.

TIME OF PARTICIPATION. An Employee will become a Participant (and, if
applicable, will participate in the allocations described in Option (c)(1)),
unless excluded under Adoption Agreement Section 1.07, on the Plan Entry Date
(if employed on that date): (Choose (g), (h) or (i))

[X] (g) immediately following

[ ] (h) immediately preceding

[ ] (i) nearest

the date the Employee completes the eligibility conditions described in Options
(a) and (b) (or in Option (c)(2) if applicable) of this Adoption Agreement
Section 2.01. [Note: The Employer must coordinate the selection of (g), (h) or
(i) with the "Plan Entry Date" selection in (d), (e) or (f). Unless otherwise
excluded under Section 1.07, the Employee must become a Participant by the
earlier of: (1) the first day of the Plan Year beginning after the date the
Employee completes the age and service requirements of Code Section 410(a); or
(2) 6 months after the date the Employee completes those requirements.]

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<PAGE> 6
DUAL ELIGIBILITY. The eligibility conditions of this Section 2.01 apply to:
(Choose (j) or (k))

[ ] (j) All Employees of the Employer, except: (Choose (1) or (2))

[ ] (1) No exceptions.

[ ] (2) Employees who are Participants in the Plan as of the
Effective Date.

[X] (k) Solely to an Employee employed by the Employer after July 1, 1992.
If the Employee was employed by the Employer on or before the
specified date, the Employee will become a Participant: (Choose (1),
(2) or (3))

[ ] (1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age __ (not to exceed
21).

[ ] (2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. If the restated
Plan required more than one Year of Service to participate,
the eligibility condition under this Option (2) for
participation in the Code Section 401 (k) arrangement under
this Plan is one Year of Service for Plan Years beginning
after December 31, 1988. [For restated plans only]

[X] (3) (Specify) On the latest of the Effective Date or his
Employment Commencement Date.

2.02 YEAR OF SERVICE - PARTICIPATION.

HOURS OF SERVICE. An Employee must complete: (Choose (a) or (b))

[X] (a) 1,000 Hours of Service

[ ] (b) _____ Hours of Service

during an eligibility computation period to receive credit for a Year of
Service. [Note: The Hours of Service requirement may not exceed 1,000.]

ELIGIBILITY COMPUTATION PERIOD. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))

[X] (c) The 12 consecutive month period beginning with each anniversary of
an Employee's Employment Commencement Date.

[ ] (d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.

2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the Plan: (Choose (a) or (b))

[X] (a) Does not apply to the Employer"s Plan.

[ ] (b) Applies to the Employer"s Plan.

2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))

[X] (a) Does not permit an eligible Employee or a Participant to elect
not to participate.

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<PAGE> 7
[ ] (b) Does permit an eligible Employee or a Participant to elect
not to participate in accordance with Section 2.06 and
with the following rules: (Complete (1), (2), (3) and (4))

(1) An election is effective for a Plan Year if filed no later
than______________________________

(2) An election not to participate must be effective for at least
_____Plan Year(s).

(3) Following a re-election to participate, the Employee or
Participant:

[ ] (i) May not again elect not to participate for any
subsequent Plan Year.

[ ] (ii) May again elect not to participate, but not earlier
than the __ Plan Year following the Plan Year in which the re-
election First was effective.

(4) (Specify)______________[Insert "N/A" if no other rules apply].

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

3.01 AMOUNT.

PART 1. [OPTIONS (A) THROUGH (G)] AMOUNT OF EMPLOYER'S CONTRIBUTION. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01. (Choose any combination of (a), (b), (c) and (d), or choose (e))

[X] (a) DEFERRAL CONTRIBUTIONS (CODE Section 401(k) ARRANGEMENT).
(Choose (1) or (2) or both)

[X] (1) Salary reduction arrangement. The Employer must contribute
the amount by which the Participants have reduced their
Compensation for the Plan Year, pursuant to their salary
reduction agreements on file with the Advisory Committee. A
reference in the Plan to salary reduction contributions is a
reference to these amounts.

[ ] (2) Cash or deferred arrangement. The Employer will contribute
on behalf of each Participant the portion of the Participant's
proportionate share of the cash or deferred contribution which
he has not elected to receive in cash. See Section 14.02 of
the Plan. The Employer's cash or deferred contribution is the
amount the Employer may from time to time deem advisable which
the Employer designates as a cash or deferred contribution
prior to making that contribution to the Trust.

[X] (b) MATCHING CONTRIBUTIONS. The Employer will make matching
contributions in accordance with the formula(s) elected in Part II of
this Adoption Agreement Section 3.01.

[ ] (c) DESIGNATED QUALIFIED NONELECTIVE CONTRIBUTIONS. The Employer, in
its sole discretion, may contribute an amount which it designates as a
qualified nonelective contribution.

[X] (d) NONELECTIVE CONTRIBUTIONS. (Choose any combination of (1) through
(4))

[X] (1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem advisable.

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<PAGE> 8
[ ] (2) The amount (or additional amount) the Employer may
from time to time deem advisable, separately determined for
each of the following classifications of Participants: (Choose
(i) or (ii))

[ ] (i) Nonhighly Compensated Employees and Highly
Compensated Employees.

[ ] (ii) (Specify classifications)___________________

Under this Option (2), the Advisory Committee will
allocate the amount contributed for each Participant
classification in accordance with Part II of Adoption
Agreement Section 3.04, as if the Participants in that
classification were the only Participants in the Plan.

[ ] (3) _____% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for which it
makes the contribution. [Note: The percentage selected may not
exceed 15%.]

[ ] (4) _____% of Net Profits but not more than $___________.

[ ] (e) FROZEN PLAN. This Plan is a frozen Plan effective________. The
Employer will not contribute to the Plan with respect to any period
following the stated date.

NET PROFITS. The Employer: (Choose (f) or (g))

[X] (f) Need not have Net Profits to make its annual contribution
under this Plan.

[ ] (g) Must have current or accumulated Net Profits exceeding $__ to
make the following contributions: (Choose at least one)

[ ] (1) Cash or deferred contributions described in Option
(a)(2).

[ ] (2) Matching contributions described in Option (b),
except:___________________.

[ ] (3) Qualified nonelective contributions described in
Option (c).

[ ] (4) Nonelective contributions described in Option (d).

The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. The term "Net Profits" specifically
excludes N/A. [Note: Enter "N/A" if no exclusions apply.]

If the Employer requires Net Profits for matching contributions and the
Employer does not have sufficient Net Profits under Option (g), it will reduce
the matching contribution under a fixed formula on a prorata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) execute this
Adoption Agreement, each participating member will determine Net Profits
separately but will not apply this reduction unless, after combining the
separately determined Net Profits, the aggregate Net Profits are insufficient
to satisfy the matching contribution liability. "Net Profits" includes both
current and accumulated Net Profits.

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<PAGE> 9
PART II [OPTIONS (h) THROUGH (j)] MATCHING CONTRIBUTION FORMULA. [Note: If the
Employer elected Option (b), complete Options (h), (i) and (j).

[X] (h) AMOUNT OF MATCHING CONTRIBUTIONS. For each Plan Year, the
Employer's matching contribution is: (Choose any combination of (1),
(2), (3), (4) and (5))

[X] (1) An amount equal to 25% of each Participant's eligible
contributions for the Plan Year.

[ ] (2) An amount equal to _____% of each Participant's first tier
of eligible contributions for the Plan Year, plus the following
matching percentage(s) for the following subsequent tiers of
eligible contributions for the Plan __________________________.

[X] (3) Discretionary formula.

[X] (i) An amount (or additional amount) equal to a
matching percentage the Employer from time to time may
deem advisable of the Participant's eligible
contributions for the Plan Year.

[ ] (ii) An amount (or additional amount) equal to a
matching percentage the Employer from time to time may
deem advisable of each tier of the Participant's
eligible contributions for the Plan Year.

[ ] (4) An amount equal to the following percentage of each
Participant's eligible contributions for the Plan Year, based
on the Participant's Years of Service:

Number of Years of Service Matching Percentage

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

The Advisory Committee will apply this formula by determining Years of
Service as follows:______________________________.

[ ] (5) A Participant's matching contributions may not:
(Choose (i) or (ii))

[ ] (i) Exceed______________________________.

[ ] (ii) Be less than_______________________.

RELATED EMPLOYERS. If two or more related employers (as defined in
Section 1.30) contribute to this Plan, the related employers may elect
different matching contribution formulas by attaching to the Adoption
Agreement a separately completed copy of this Part II. Note: Separate
matching contribution formulas create separate current benefit
structures that must satisfy the minimum participation test of Code
Section 401(a)(26).]

[X] (i) DEFINITION OF ELIGIBLE CONTRIBUTIONS. Subject to the requirements
of Option(j), the term "eligible contributions" means: (Choose any
combination of (1) through (3))

[X] (1) Salary reduction contributions.

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<PAGE> 10
[ ] (2) Cash or deferred contributions (including any part of
the Participant's proportionate share of the cash or deferred
contribution which the Employer defers without the
Participant's election).

[ ] (3) Participant mandatory contributions, as designated in
Adoption Agreement Section 4.01. See Section 14.04 of the Plan.

[X] (j) AMOUNT OF ELIGIBLE CONTRIBUTIONS TAKEN INTO ACCOUNT. When
determining a Participant's eligible contributions taken into account
under the matching contributions formula(s), the following rules
apply. (Choose any combination of (1) through (4))

[ ] (1) The Advisory Committee will take into account all
eligible contributions credited for the Plan Year.

[X] (2) The Advisory Committee will disregard eligible
contributions exceeding $4000 for the Plan Year, except that
the Advisory Committee shall take into account all eligible
contributions credited for the Plan Year for the Purpose of
allocating any discretionary matching contribution under
Adoption Agreement Section 3.01 (h) (3) (i).

[ ] (3) The Advisory Committee will treat as the first tier of
eligible contributions, an amount not
exceeding: __________________________.

The subsequent tiers of eligible contributions
are:_________________________________.

[ ] (4) (Specify) _______________________.

PART III. [OPTIONS (k) AND (l)]. SPECIAL RULES FOR CODE SECTION 401(k)
ARRANGEMENT. (Choose (k) or (l), or both, as applicable

[X] (k) SALARY REDUCTION AGREEMENTS. The following rules and
restrictions apply to an Employee's salary reduction agreement: (Make
a selection under (1), (2), (3) and (4))

(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii) or (iii))

[ ] (i) No maximum limitation other than as provided
in the Plan.

[X] (ii) May not exceed 10% of Compensation for the Plan
Year, subject to the annual additions limitation
described in Part 2 of Article III and the 402(g)
limitation described in Section 14.07 of the Plan.

[ ] (iii) Based on percentages of Compensation must
equal at least______________________________.

(2) An Employee may revoke, on a prospective basis, a salary
reduction agreement: (Choose (i), (ii), (iii) or (iv))

[ ] (i) Once during any Plan Year but not later
than______________________________of the Plan Year.

[X] (ii) As of any Plan Entry Date.

[ ] (iii) As of the first day of any month.

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<PAGE> 11
[ ] (iv) (Specify, but must be at least once per Plan
Year) ________________.

(3) An Employee who revokes his salary reduction agreement may
file a new salary reduction agreement with an effective date: (Choose
(i), (ii), (iii) or (iv))

[ ] (i) No earlier than the first day of the next
Plan Year.

[X] (ii) As of any subsequent Plan Entry Date.

[ ] (iii) As of the first day of any month subsequent
to the month
in which he revoked an Agreement.

[ ] (iv) Specify, but must be at least once per Plan Year
following the Plan Year of revocation) _______________.

(4) A Participant may increase or may decrease, on a prospective
basis, his salary reduction percentage or dollar amount: (Choose (i),
(ii), (iii) or (iv))

[ ] (i) As of the beginning of each payroll period.

[ ] (ii) As of the first day of each month.

[X] (iii) As of any Plan Entry Date.

[ ] (iv) (Specify, but must permit an increase or a
decrease at least once per Plan Year) _________________.

[ ] (l) CASH OR DEFERRED CONTRIBUTIONS. For each Plan Year for which
the Employer makes a designated cash or deferred contribution, a
Participant may elect to receive directly in cash not more than the
following portion (or, if less, the 402(g) limitation described in
Section 14.07 of the Plan) of his proportionate share of that cash or
deferred contribution: (Choose (1) or (2))

[ ] (1) All or any portion.

[ ] (2) _____________________________%.

3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions in accordance with Section 14.06
and the elections under this Adoption Agreement Section 3.04.

PART I. [OPTIONS (A) THROUGH (D)]. SPECIAL ACCOUNTING ELECTIONS. (Choose
whichever elections are applicable to the Employer's Plan)

[X] (a) MATCHING CONTRIBUTIONS ACCOUNT. The Advisory Committee will
allocate matching contributions to a Participant's: (Choose (1) or
(2); (3) is available only in addition to (1))

[X] (1) Regular Matching Contributions Account.

[ ] (2) Qualified Matching Contributions Account.

[ ] (3) Except, matching contributions under Option(s) ____ of
Adoption Agreement Section 3.01 are allocable to the Qualified
Matching Contributions Account.

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<PAGE> 12
[X] (b) SPECIAL ALLOCATION DATES FOR SALARY REDUCTION CONTRIBUTIONS. The
Advisory Committee will allocate salary reduction contributions as of
the Accounting Date and as of the following additional allocation
dates: The last day of the third month of the Plan Year, the last day
of the sixth month of the Plan Year, and the last day of the ninth
month of the Plan Year.

[X] (c) SPECIAL ALLOCATION DATES FOR MATCHING CONTRIBUTIONS. The Advisory
Committee will allocate matching contributions as of the Accounting
Date and as of the following additional allocation dates: The last day
of the third month of the Plan Year, the last day of the sixth month
of the Plan Year, and the last day of the ninth month of the Plan
Year.

[ ] (d) DESIGNATED QUALIFIED NONELECTIVE CONTRIBUTIONS - DEFINITION OF
PARTICIPANT. For purposes of allocating the designated qualified
nonelective contribution, "Participant" means: (Choose (1), (2) or
(3))

[ ] (1) All Participants.

[ ] (2) Participants who are Nonhighly Compensated Employees
for the Plan Year.

[ ] (3) (Specify) _________________________.

PART II. METHOD OF ALLOCATION - NONELECTIVE CONTRIBUTION. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Section 3.04. If the
Employer elects Option (e)(2), Option (g)(2) or Option (h), for the first 3% of
Compensation allocated to all Participants, "Compensation" does not include any
exclusions elected under Adoption Agreement Section 1.12 (other than the
exclusion of elective contributions), and the Advisory Committee must take into
account the Participant's Compensation for the entire Plan Year. (Choose an
allocation method under (e), (f), (g) or (h); (i) is mandatory if the Employer
elects (f), (g) or (h); (j) is optional in addition to any other election.)

[X] (e) NONINTEGRATED ALLOCATION FORMULA. (Choose (1) or (2))

[ ] (1) The Advisory Committee will allocate the annual
nonelective contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for the Plan Year.

[X] (2) The Advisory Committee will allocate the annual
nonelective contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for the Plan Year. For
purposes of this Option (2), "Participant" means, in addition
to a Participant who satisfies the requirements of Section
3.06 for the Plan Year, any other Participant entitled to a
top heavy minimum allocation under Section 3.04(B), but such
Participant's allocation will not exceed 3% of his
Compensation for the Plan Year.

[ ] (f) TWO-TIERED INTEGRATED ALLOCATION FORMULA - MAXIMUM DISPARITY.
First, the Advisory Committee will allocate the annual Employer
nonelective contributions in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to the
total Compensation plus Excess Compensation of all Participants for
the Plan Year. The allocation under this paragraph, as a percentage
of each Participant's Compensation plus Excess Compensation, must not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under
the Maximum Disparity Table following Option (i).

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<PAGE> 13
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.

[ ] (g) THREE-TIERED INTEGRATED ALLOCATION FORMULA. First, the
Advisory Committee will allocate the annual Employer nonelective
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Compensation may not exceed the
applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (i). Solely for purposes of the
allocation in this first paragraph, "Participant" means, in addition
to a Participant who satisfies the requirements of Section 3.06 for
the Plan Year: (Choose (1) or (2))

[ ] (1) No other Participant.

[ ] (2) Any other Participant entitled to a top heavy minimum
allocation under Section 3.04(B), but such Participant's
allocation under this Option (g) will not exceed 3% of his
Compensation for the Plan Year.

As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Excess
Compensation, may not exceed the allocation percentage in the first
paragraph.

Finally, the Advisory Committee will allocate any remaining
nonelective contributions in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.

[ ] (h) FOUR-TIERED INTEGRATED ALLOCATION FORMULA. First, the
Advisory Committee will allocate the annual Employer nonelective
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year, but not exceeding 3% of each Participant's
Compensation. Solely for purposes of this first tier allocation, a
"Participant" means, in addition to any Participant who satisfies the
requirements of Section 3.06 for the Plan Year, any other Participant
entitled to a top heavy minimum allocation under Section 3.04(B) of
the Plan.

As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding
3% of each Participant's Excess Compensation.

As a third tier allocation, the Advisory Committee will allocate the
annual Employer contributions in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year
bears to the total Compensation plus Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph,
as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (2.7%, 2.4% or
1.3%) listed under the Maximum Disparity Table following Option (i).

The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.

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<PAGE> 14
[ ] (i) EXCESS COMPENSATION. For purposes of Option (f), (g) or (h),
"Excess Compensation" means Compensation in excess of the following
Integration Level: (Choose (1) or (2))

[ ] (1) ____ %(not exceeding 100%) of the taxable wage base,as
determined under Section 230 of the Social Security Act, in
effect on the first day of the Plan Year. (Choose any
combination of (i) and (ii) or choose (iii))

[ ] (i) Rounded to ___ (but not exceeding the taxable wage
base).

[ ] (ii) But not greater than $_____.

[ ] (iii) Without any further adjustment or limitation.

[ ] (2) $_____ [Note: Not exceeding the taxable wage base for
the Plan Year in which this Adoption Agreement first
is effective.]

MAXIMUM DISPARITY TABLE. For purposes of Options (f), (g) and (h), the
applicable percentage is:

<TABLE>
<CAPTION>
Integration Level (as Applicable Percentages for Applicable Percentages
Percentage of taxable wage base) Option (f) or Option (g) for Option (h)
<S> <C> <C>
100% 5.7% 2.7%

More than 80% but less than 100% 5.4% 2.4%

More than 20% (but not less than
$10,001) and not more than 80% 4.3% 1.3%

20% (or $10,000, if greater) or less 5.7% 2.7%
</TABLE>

[ ] (j) ALLOCATION OFFSET. The Advisory Committee will reduce a
Participant's allocation otherwise made under Part II of this Section
3.04 by the Participant's allocation under the following qualified
plan(s) maintained by the Employer:______________________________.

The Advisory Committee will determine this allocation reduction:
(Choose (1) or (2))

[ ] (1) By treating the term "nonelective contribution" as
including all amounts paid or accrued by the Employer during
the Plan Year to the qualified plan(s) referenced under this
Option (j). If a Participant under this Plan also
participates in that other plan, the Advisory Committee will
treat the amount the Employer contributes for or during a Plan
Year on behalf of a particular Participant under such other
plan as an amount allocated under this Plan to that
Participant's Account for that Plan Year. The Advisory
Committee will make the computation of allocation required
under the immediately preceding sentence before making any
allocation of nonelective contributions under this Section
3.04.

[ ] (2) In accordance with the formula provided in an addendum
to this Adoption Agreement, numbered 3.04(j).

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<PAGE> 15
TOP HEAVY MINIMUM ALLOCATION - METHOD OF COMPLIANCE. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum
allocation to which he is entitled under Section 3.04(B): (Choose (k) or (1))

[X] (k) The Employer will make any necessary additional contribution to
the Participant's Account, as described in Section 3.04(B)(7)(a) of
the Plan.

[ ] (l) The Employer will satisfy the top heavy minimum allocation under
the following plan(s) it maintains:____________________________.
However, the Employer will make any necessary additional contribution
to satisfy the top heavy minimum allocation for an Employee covered
only under this Plan and not under the other plan(s) designated in
this Option (1). See Section 3.04(B)(7)(b) of the Plan.

If the Employer maintains another plan, the Employer may provide in an
addendum to this Adoption Agreement, numbered Section 3.04, any modifications
to the Plan necessary to satisfy the top heavy requirements under Code Section
416.

RELATED EMPLOYERS. If two or more related employers (as defined in Section
1.30) contribute to this Plan, the Advisory Committee must allocate all
Employer nonelective contributions (and forfeitures treated as nonelective
contributions) to each Participant in the Plan, in accordance with the
elections in this Adoption Agreement Section 3.04: (Choose (m) or (n))

[X] (m) Without regard to which contributing related group member employs
the Participant.

[ ] (n) Only to the Participants directly employed by the contributing
Employer. If a Participant receives Compensation from more than one
contributing Employer, the Advisory Committee will determine the
allocations under this Adoption Agreement Section 3.04 by prorating
among the participating Employers the Participant's Compensation and,
if applicable, the Participant's Integration Level under Option (i).

3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation
required under Sections 5.04 or 9.14, the Advisory Committee will allocate a
Participant forfeiture in accordance with Section 3.04: (Choose (a) or (b): (c)
and (d) are optional in addition to (a) or (b))

[X] (a) As an Employer nonelective contribution for the Plan Year in which
the forfeiture occurs, as if the Participant forfeiture were an
additional nonelective contribution for that Plan Year.

[ ] (b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (Choose (1) or (2))

[ ] (1) in which the forfeiture occurs.

[ ] (2) immediately following the Plan Year in which the
forfeiture occurs.

[X] (c) To the extent attributable to matching contributions: (Choose
(1), (2) or (3))

[ ] (1) In the manner elected under Options (a) or (b).

[X] (2) First to reduce Employer matching contributions for
the Plan Year: (Choose (i) or (ii))

[X] (i) in which the forfeiture occurs,

15
<PAGE> 16
[ ] (ii) immediately following the Plan Year in which the
forfeiture occurs,

then as elected in Options (a) or (b).

[ ] (3) As a discretionary matching contribution for the Plan
Year in which the forfeiture occurs, in lieu of the manner
elected under Options (a) or (b).

[ ] (d) First to reduce the Plan's ordinary and necessary
administrative expenses for the Plan Year and then will allocate any
remaining forfeitures in the manner described in Options (a), (b) or
(c), whichever applies. If the Employer elects Option (c), the
forfeitures used to reduce Plan expenses: (Choose (1) or (2))

[ ] (1) relate proportionately to forfeitures described in
Option (C) and to forfeitures described in Options (a) or (b).

[ ] (2) relate first to forfeitures described in Option _____.

ALLOCATION OF FORFEITED EXCESS AGGREGATE CONTRIBUTIONS. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))

[X] (e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))

[ ] (1) in which the forfeiture occurs.

[X] (2) immediately following the Plan Year in which the
forfeiture occurs.

[ ] (f) As Employer discretionary matching contributions for the Plan
Year in which forfeited, except the Advisory Committee will not
allocate these forfeitures to the Highly Compensated Employees who
incurred the forfeitures.

[ ] (g) In accordance with Options (a) through (d), whichever applies,
except the Advisory Committee will not allocate these forfeitures
under Option (a) or under Option (c)(3) to the Highly Compensated
Employees who incurred the forfeitures.

3.06 ACCRUAL OF BENEFIT.

COMPENSATION TAKEN INTO ACCOUNT. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any cash or deferred contribution, designated qualified nonelective
contribution or nonelective contribution by taking into account: (Choose (a) or
(b))

[X] (a) The Employee's Compensation for the entire Plan Year.

[ ] (b) The Employee's Compensation for the portion of the Plan Year
in which the Employee actually is a Participant in the Plan.

16
<PAGE> 17
ACCRUAL REQUIREMENTS. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of cash or deferred
contributions, matching contributions, designated qualified nonelective
contributions, nonelective contributions and Participant forfeitures, if any,
for the Plan Year, a Participant must satisfy the conditions described in the
following elections: (Choose (c) or at least one of (d) through (f))

[ ] (c) SAFE HARBOR RULE. If the Participant is employed by the
Employer on the last day of the Plan Year, the Participant must
complete at least one Hour of Service for that Plan Year. If the
Participant is not employed by the Employer on the last day of the
Plan Year, the Participant must complete at least 501 Hours of Service
during the Plan Year.

[X] (d) HOURS OF SERVICE CONDITION. The Participant must complete the
following minimum number of Hours of Service during the Plan Year:
(Choose at least one of (1) through (5))

[X] (1) 1,000 Hours of Service.

[ ] (2) (Specify, but the number of Hours of Service may not
exceed 1,000) _________________________________________.

[ ] (3) No Hour of Service requirement if the Participant
terminates employment during the Plan Year on account of:
(Choose (i), (ii) or (iii))

[ ] (i) Death.

[ ] (ii) Disability.

[ ] (iii) Attainment of Normal Retirement Age in the
current Plan Year or in a prior Plan Year.

[ ] (4) ____ Hours of Service (not exceeding 1,000) if the
Participant terminates employment with the Employer during
the Plan Year, subject to any election in Option (3).

[ ] (5) No Hour of Service requirement for an allocation of
the following contributions:________________________________
____________________________________________________________
________________________________.

[ ] (e) EMPLOYMENT CONDITION. The Participant must be employed by the
Employer on the last day of the Plan Year, irrespective of whether he
satisfies any Hours of Service condition under Option (d), with the
following exceptions: (Choose (1) or at least one of (2) through (5))

[ ] (1) No exceptions.

[ ] (2) Termination of employment because of death.

[ ] (3) Termination of employment because of disability.

[ ] (4) Termination of employment following attainment of
Normal Retirement Age.

[ ] (5) No employment condition for the following
contributions:____________________________.

[ ] (f) (Specify other conditions, if applicable):______________________
_______________________________________.

17
<PAGE> 18
SUSPENSION OF ACCRUAL REQUIREMENTS. The suspension of accrual requirements of
Section 3.06(E) of the Plan: (Choose (g), (h) or (i))

[X] (g) Applies to the Employer's Plan.

[ ] (h) Does not apply to the Employer's Plan.

[ ] (i) Applies in modified form to the Employer's Plan, as described
in an addendum to this Adoption Agreement, numbered Section 3.06(E).

SPECIAL ACCRUAL REQUIREMENTS FOR MATCHING CONTRIBUTIONS. If the Plan allocates
matching contributions on two or more allocation dates for a Plan Year, the
Advisory Committee, unless otherwise specified in Option (1), will apply any
Hours of Service condition by dividing the required Hours of Service on a
prorata basis to the allocation periods included in that Plan Year.
Furthermore, a Participant who satisfies the conditions described in this
Adoption Agreement Section 3.06 will receive an allocation of matching
contributions (and forfeitures treated as matching contributions) only if the
Participant satisfies the following additional condition(s): (Choose (j) or
at least one of (k) or (1))

[ ] (j) No additional conditions.

[ ] (k) The Participant is not a Highly Compensated Employee for the
Plan Year. This Option (k) applies to: (Choose (1) or (2))

[ ] (1) All matching contributions.

[ ] (2) Matching contributions described in Option(s) _____ of
Adoption Agreement Section 3.01.

[X] (l) (Specify) No additional conditions. The Advisory Committee
will not apply the Hours of Service Condition by dividing the required
Hours of Service on a prorata basis to the allocation periods included
in that Plan Year.

3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section
3.15 apply, the Excess Amount attributed to this Plan equals: (Choose (a), (b)
or (c))

[ ] (a) The product of:

(i) the total Excess Amount allocated as of such date
(including any amount which the Advisory Committee would have
allocated but for the limitations of Code Section 415), times

(ii) the ratio of (1) the amount allocated to the
Participant as of such date under this Plan divided by (2) the
total amount allocated as of such date under all qualified
defined contribution plans (determined without regard to the
limitations of Code Section 415).

[X] (b) The total Excess Amount.

[ ] (C) None of the Excess Amount.

3.18 DEFINED BENEFIT PLAN LIMITATION.

APPLICATION OF LIMITATION. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))

[X] (a) Does not apply to the Employer's Plan because the Employer
does not maintain and never has maintained a defined benefit plan
covering any Participant in this Plan.

18
<PAGE> 19
[ ] (b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will reduce:
(Choose (1) or (2))

[ ] (1) The Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.

[ ] (2) Its contribution or allocation on behalf of the
Participant to the defined contribution plan under which the
Participant participates and then, if necessary, the
Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.

[Note: If the Employer selects (a). the remaining options in this Section
3.18 do not apply to the Employer's Plan-1

COORDINATION WITH TOP HEAVY MINIMUM ALLOCATION. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the
Plan with the following modifications: (Choose (c) or at least one of (d) or
(e))

[ ] (c) No modifications.

[ ] (d) For Non-Key Employees participating only in this Plan, the top
heavy minimum allocation is the minimum allocation described in
Section 3.04(B) determined by substituting % (not less than 4%) for
"3%," except: (Choose (i) or (ii))

[ ] (i) No exceptions.

[ ] (ii) Plan Years in which the top heavy ratio exceeds 90%.

[ ] (e) For Non-Key Employees also participating in the defined
benefit plan, the top heavy minimum is: (Choose (1) or (2))

[ ] (1) 5% of Compensation (as determined under Section
3.04(B) or the Plan) irrespective of the contribution rate of
any Key Employee, except: (Choose (i) or (ii))

[ ] (i) No exceptions.

[ ] (ii) Substituting "7-1/2%" for "5%" if the top
heavy ratio does not exceed 90%.

[ ] (2) 0%. [Note: The Employer may not select this option
(2) unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code Section 416 for these
Non-Key Employees.]

ACTUARIAL ASSUMPTIONS FOR TOP HEAVY CALCULATION. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and
mortality assumptions to value accrued benefits under a defined benefit
plan:______________________________

If the elections under this Section 33.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code Section
416, the Employer must provide the appropriate provisions in an addendum to
this Adoption Agreement.

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<PAGE> 20
ARTICLE IV
PARTICIPANT CONTRIBUTIONS

4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or
(b); (c) is available only with (b))

[X] (a) Does not permit Participant nondeductible contributions.

[ ] (b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.

[ ] (c) The following portion of the Participant's nondeductible
contributions for the Plan Year are mandatory contributions under
Option (i)(3) of Adoption Agreement Section 3.01: (Choose (1) or (2))

[ ] (1) The amount which is not less than:___________________

[ ] (2) The amount which is not greater than:________________

ALLOCATION DATES. The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates: (Choose (d) or (e))

[ ] (d) No other allocation dates.

[ ] (e) (Specify)

As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (e), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.

4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. Subject
to the restrictions of Article VI, the following distribution options apply to
a Participant's Mandatory Contributions Account, if any, prior to his
Separation from Service: (Choose (a) or at least one of (b) through (d))

[ ] (a) No distribution options prior to Separation from Service.

[ ] (b) The same distribution options applicable to the Deferral
Contributions Account prior to the Participant"s Separation from
Service, as elected in Adoption Agreement Section 6.03.

[ ] (c) Until he retires, the Participant has a continuing election to
receive all or any portion of his Mandatory Contributions Account if.
(Choose (1) or at least one of (2) through (4))

[ ] (1) No conditions.

[ ] (2) The mandatory contributions have accumulated for at
least ___ Plan Years since the Plan Year for which contributed.

[ ] (3) The Participant suspends making nondeductible
contributions for a period of months.

[ ] (4) (Specify)

[ ] (d) (Specify)

20
<PAGE> 21
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING

5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))

[X] (a) 65 [State age, but may not exceed age 65].

[ ] (b) The later of the date the Participant attains __ years of age or
the __ anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan. The age selected
may not exceed age 65 and the anniversary selected may not exceed the
5th.]

5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under
Section 5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))

[ ] (a) Does not apply.

[X] (b) Applies to death.

[X] (c) Applies to disability.

5.03 VESTING SCHEDULE.

DEFERRAL CONTRIBUTIONS ACCOUNT/QUALIFIED MATCHING CONTRIBUTIONS
ACCOUNT/QUALIFIED NONELECTIVE CONTRIBUTIONS ACCOUNT/MANDATORY CONTRIBUTIONS
ACCOUNT. A Participant has a 100% Nonforfeitable interest at all times in his
Deferral Contributions Account, his Qualified Matching Contributions Account,
his Qualified Nonelective Contributions Account and in his Mandatory
Contributions Account.

REGULAR MATCHING CONTRIBUTIONS ACCOUNT/EMPLOYER CONTRIBUTIONS ACCOUNT. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b), (c) and (d) are available only as additional options)

[ ] (a) Immediate vesting. 100% Nonforfeitable at all times. [Note:
The Employer must elect Option (a) if the eligibility
conditions under Adoption Agreement Section 2.01 Cc) require 2
years of service or more than 12 months of employment]

[X] (b) Graduated Vesting Schedules.

TOP HEAVY SCHEDULE NON TOP HEAVY SCHEDULE
(MANDATORY) (OPTIONAL)

Years of Nonforfeitable Years of Nonforfeitable
Service Percentage Service Percentage
----------- --------------- ---------- --------------
<S> <C> <C>
Less than 1 0% Less than 1 %
1 0% 1 %
2 20% 2 %
3 40% 3 %
4 60% 4 %
5 80% 5 %
6 or more 100% 6 %
7 or more 100%

</TABLE>

21
<PAGE> 22
[ ] (c) Special vesting election for Regular Matching Contributions
Account. In lieu of the election under Options (a) or (b), the
Employer elects the following vesting schedule for a Participant's
Regular Matching Contributions Account: (Choose (1) or (2))

[ ] (1) 100% Nonforfeitable at all times.

[ ] (2) In accordance with the vesting schedule described in
the addendum to this Adoption Agreement, numbered 5.03(c).
[Note: If the Employer elects this Option (c)(2), the addendum
must designate the applicable vesting schedule(s) using the
same format as used in Option (b).]

[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code Section 416. The Employer, at its option, may
complete a Non Top Heavy Schedule. The Non Top Heavy Schedule must satisfy
Code Section 411(a)(2). Also see Section 7.05 of the Plan.]

[ ] (d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (Choose (1) or (2))

[ ] (1) Only in a Plan Year for which the Plan is top heavy.

[ ] (2) In the Plan Year for which the Plan first is top
heavy and then in all subsequent Plan Years. [Note: The
Employer may not elect Option (d) unless it has completed a
Non Top Heavy Schedule.]

MINIMUM VESTING. (Choose (e) or (f))

[X] (e) The Plan does not apply a minimum vesting rule.

[ ] (f) A Participant's Nonforfeitable Accrued Benefit will never be
less than the lesser of $________ or his entire Accrued Benefit, even
if the application of a graduated vesting schedule under Options (b)
or (c) would result in a smaller Nonforfeitable Accrued Benefit.

LIFE INSURANCE INVESTMENTS. The Participant's Accrued Benefit attributable to
insurance contracts purchased on his behalf under Article XI is: (Choose (g) or
(h))

[X] (g) Subject to the vesting election under Options (a), (b) or (c).

[ ] (h) 100% Nonforfeitable at all times, irrespective of the vesting
election under Options (b) or (c)(2).

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described
in Section 5.04(C) of the Plan: (Choose (a) or (b))

[ ] (a) Does not apply.

[X] (b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has
a Deferral Contributions Account.

22
<PAGE> 23
5.06 YEAR OF SERVICE - VESTING.

VESTING COMPUTATION PERIOD. The Plan measures a Year of Service on the basis
of the following 12 consecutive month periods: (Choose (a) or (b))

[X] (a) Plan Years.

[ ] (b) Employment Years. An Employment Year is the 12 consecutive
month period measured from the Employee's Employment Commencement Date
and each successive 12 consecutive month period measured from each
anniversary of that Employment Commencement Date.

HOURS OF SERVICE. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (Choose (c) or (d))

[X] (c) 1,000 Hours of Service.

[ ] (d) __________ Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer
specifically excludes the following Years of Service: (Choose (a) or at least
one of (b) through (e))

[X] (a) None other than as specified in Section 5.08(a) of the Plan.

[ ] (b) Any Year of Service before the Participant attained the
age of ___ [Note: The age selected may not exceed age 18.]

[ ] (c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.

[ ] (d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or
the aggregate number of the Years of Service prior to the Break. This
exception applies only if the Participant is 0% vested in his Accrued
Benefit derived from Employer contributions at the time he has a Break
in Service. Furthermore, the aggregate number of Years of Service
before a Break in Service do not include any Years of Service not
required to be taken into account under this exception by reason of
any prior Break in Service.

[ ] (e) Any Year of Service earned prior to the effective date of
ERISA if the Plan would have disregarded that Year of Service on
account of an Employee's Separation from Service under a Plan
provision in effect and adopted before January 1, 1974.

ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS

Code Section 411(d)(6) Protected Benefits. The elections under this Article VI
may not eliminate Code Section 411(d)(6) protected benefits. To the extent the
elections would eliminate a Code Section 411(d)(6) protected benefit, see
Section 13.02 of the Plan. Furthermore, if the elections liberalize the
optional forms of benefit under the Plan, the more liberal options apply on the
later of the adoption date or the Effective Date of this Adoption Agreement.

23
<PAGE> 24
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.

DISTRIBUTION DATE. A distribution date under the Plan means the 60th day of
each valuation Period. [Note: The Employer must specify the appropriate
date(s). The specified distribution dates primarily establish annuity starting
dates and the notice and consent periods prescribed by the Plan. The Plan
allows the Trustee an administratively practicable period of time to make the
actual distribution relating to a particular distribution date.]

NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c),
(d) or (e))

[ ]
(a) __________________________________________________________________
____________________________________________________ of the_______Plan
Year beginning after the Participant's Separation from Service.

[X] (b) Any distribution date in the First valuation period following the
Participant's Separation from Service.

[ ] (c) ________________________________________________________________
____________________________________________________ of the Plan Year
after the Participant incurs ___ Break(s) in Service (as defined in
Article V).

[ ] (d) ______________________________following the Participant's
attainment of Normal Retirement Age, but not earlier than ____ days
following his Separation from Service.

[ ] (e) (Specify) ______________________________________________________
___________________.

NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500. See the elections under Section
6.03.

DISABILITY. The distribution date, subject to Section 6.01(A)(3), is: (Choose
(f), (g) or (h))

[ ] (f) _________________________________________________________________
____________________________________________________ after the
Participant terminates employment because of disability.

[X] (g) The same as if the Participant had terminated employment without
disability.

[ ] (h) (Specify) ______________________________________________________
___________________.

HARDSHIP. (Choose (i) or (j))

[X] (i) The Plan does not permit a hardship distribution to a Participant
who has separated from Service.

[ ] (j) The Plan permits a hardship distribution to a Participant who has
separated from Service in accordance with the hardship distribution
policy stated in: (Choose (1), (2) or (3))

[ ] (1) Section 6.01(A)(4) of the Plan.

[ ] (2) Section 14.11 of the Plan.

[ ] (3) The addendum to this Adoption Agreement, numbered Section
6.01.

24
<PAGE> 25
DEFAULT ON A LOAN. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))

[X] (k) Treats the default as a distributable event. The Trustee, at
the time of the default, will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable
Accrued Benefit. To the extent the loan is attributable to the
Participant's Deferral Contributions Account, Qualified Matching
Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued
Benefit unless the Participant has separated from Service or unless
the Participant has attained age 59-1/2.

[ ] (l) Does not treat the default as a distributable event. When an
otherwise distributable event first occurs pursuant to Section 6.01 or
Section 6.03 of the Plan, the Trustee will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default
(plus accrued interest) or the Plan's security interest in that
Nonforfeitable Accrued Benefit.

[ ] (m) (Specify)_________________________________________________________
_________________________________________________.

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee
will apply Section 6.02 of the Plan with the following modifications: (Choose
(a) or at least one of (b), (c), (d) and (e))

[X] (a) No modifications.

[ ] (b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available:
_______________________________________________________________________
______________________________________________________________.

[ ] (c) An installment distribution: (Choose (1) or at least one of (2)
or (3))

[ ] (1) Is not available under the Plan.

[ ] (2) May not exceed the lesser of___________years or the
maximum period permitted under Section 6.02.

[ ] (3) (Specify)__________________________________________________
_____________.

[ ] (d) The Plan permits the following annuity options:___________________
_______________________________________________________________________
_________________________.

Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See
Section 6.04(E). [Note: The Employer may specify additional annuity
options in an addendum to this Adoption Agreement, numbered 6.02(d).]

[ ] (e) If the Plan invests in qualifying Employer securities, as
described in Section 10.03(F), a Participant eligible to elect
distribution under Section 6.03 may elect to receive that distribution
in Employer securities only in accordance with the provisions of the
addendum to this Adoption Agreement, numbered 6.02(e).

25
<PAGE> 26
6.03 BENEFIT PAYMENT ELECTIONS.

PARTICIPANT ELECTIONS AFTER SEPARATION FROM SERVICE. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may
elect to commence distribution of his Nonforfeitable Accrued Benefit:
(Choose at least one of (a) through (c)

[ ] (a) As of any distribution date, but not earlier than
_______________ of the ___________ Plan Year beginning after the
Participant's Separation from Service.

[X] (b) As of the following date(s): (Choose at least one of Options
(1) through (6))

[X] (1) Any distribution date after the close of the Plan Year in
which the Participant attains Normal Retirement Age.

[ ] (2) Any distribution date following his Separation from
Service with the Employer.

[ ] (3) Any distribution date in the _____ Plan Year(s)
beginning after his Separation from Service.

[ ] (4) Any distribution date in the Plan Year after the
Participant incurs ______ Break(s) in Service (as defined in
Article V).

[ ] (5) Any distribution date following attainment of age
________ and completion of at least _______ Years of Service
(as defined in Article V).

[X] (6) (Specify) Any distribution date in the first valuation
period beginning after separation from service.

(c)
(Specify)_____________________________________________________
______________________________________________________________
_____________________________.

The distribution events described in the election(s) made under
Options (a), (b) or (c) apply equally to all Accounts maintained for the
Participant unless otherwise specified in Option (c).

PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE - REGULAR MATCHING
CONTRIBUTIONS ACCOUNT AND EMPLOYER CONTRIBUTIONS ACCOUNT. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (d) or at least one of
(e) through (h))

[X] (d) No distribution options prior to Separation from Service.

[ ] (e) Attainment of Specified Age. Until he retires, the
Participant has a continuing election to receive all or any portion of
his Nonforfeitable interest in these Accounts after he attains:
(Choose (1) or (2))

[ ] (1) Normal Retirement Age.

[ ] (2)_______years of age and is at least ____% vested in these
Accounts. [Note: If the percentage is less than 100%. see the
special vesting formula in Section 5.03.]

26
<PAGE> 27
[ ] (f) After a Participant has participated in the Plan for a period
of not less than __ years and he is 100% vested in these Accounts,
until he retires, the Participant has a continuing election to
receive all or any portion of the Accounts. [Note: The number in the
blank space may not be less than 5.]

[ ] (g) Hardship. A Participant may elect a hardship distribution
prior to his Separation from Service in accordance with the hardship
distribution policy: (Choose (1), (2) or (3), (4) is available only as
an additional option)

[ ] (1) Under Section 6.01(A)(4) of the Plan.

[ ] (2) Under Section 14.11 of the Plan.

[ ] (3) Provided in the addendum to this Adoption Agreement,
numbered Section 6.03.

[ ] (4) In no event may a Participant receive a hardship
distribution before he is at least % vested in these Accounts.
[Note: If the percentage in the blank is less than 100%, see
the special vesting formula in Section 5.03.]

[ ] (h) (Specify)_________________________________________________________
__________________________.

[Note: The Employer may use an addendum, numbered 6.03. to provide additional
language authorized by Options (b)(6), (c), (g)(3) or (h) of this Adoption
Agreement Section 6.03.]

PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE - DEFERRAL CONTRIBUTIONS
ACCOUNT, QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT AND QUALIFIED NONELECTIVE
CONTRIBUTIONS ACCOUNT. Subject to the restrictions of Article VI, the
following distribution options apply to a Participant's Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account prior to his Separation from Service: (Choose (i) or at
least one of (j) through (l))

[ ] (i) No distribution options prior to Separation from Service.

[X] (j) Until he retires, the Participant has a continuing election to
receive all or any portion of these Accounts after he attains: (Choose
(1) or (2))

[ ] (1) The later of Normal Retirement Age or age 59 1/2.

[X] (2) Age 59.5 (at least 59 1/2).

[X] (k) Hardship. A Participant, prior to this Separation from Service,
may elect a hardship distribution from his Deferral Contributions
Account in accordance with the hardship distribution policy under
Section 14.11 of the Plan.

[ ] (1) (Specify)__________________________________________________________
___________. [Note: option (1) may not permit in service distributions
prior to age 59 1/2 (other than hardship) and may not modify the
hardship policy described in Section 14.11.]

27
<PAGE> 28
SALE OF TRADE OR BUSINESS/SUBSIDIARY. If the Employer sells substantially all
of the assets (within the meaning of Code Section 409(d)(2)) used in a trade or
business or sells a subsidiary (within the meaning of Code Section 409(d)(3)), a
Participant who continues employment with the acquiring corporation is eligible
for distribution from his Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contributions Account: (Choose
(m) or (n))

[X] (m) Only as described in this Adoption Agreement Section 6.03 for
distributions prior to Separation from Service.

[ ] (n) As if he has a Separation from Service. After March 31, 1988, a
distribution authorized solely by reason of this Option (n) must
constitute a lump sum distribution, determined in a manner consistent
with Code Section 401(k)(10) and the applicable Treasury regulations.

6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))

[X] (a) Apply only to a Participant described in Section 6.04(E) of
the Plan (relating to the profit sharing exception to the joint and
survivor requirements).

[ ] (b) Apply to all Participants.

ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS

9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution
(other than a distribution from a segregated Account and other than a
corrective distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of
the Plan) occurs more than 90 days after the most recent valuation date, the
distribution will include interest at: (Choose (a), (b) or ((c)

[X] (a) 0% per annum. [Note: The percentage may equal 0%.]

[ ] (b) The 90 day Treasury bill rate in effect at the beginning of
the current valuation period.

[ ] (c) (Specify)______________________________________________________.

9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS.
Pursuant to Section 14.12, to determine the allocation of net income, gain or
loss: (Complete only those items, if any, which are applicable to the
Employer's Plan)

[X] (a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3), (4) or (5)).

[ ] (1) Apply Section 9.11 without modification.

[ ] (2) Use the segregated account approach described in Section
14.12.

[ ] (3) Use the weighted average method described in Section
14.12, based on a ______ weighting period.

[X] (4) Treat as part of the relevant Account at the beginning of
the valuation period 50% of the salary reduction
contributions: (Choose (i) or (ii))

[X] (i) made during that valuation period.

28
<PAGE> 29
[ ] (ii) made by the following specified
time:________________________________________________

[ ] (5) Apply the allocation method described in the addendum
to this Adoption Agreement numbered 9.11(a).

[X] (b) For matching contributions, the Advisory Committee will: (Choose
(1), (2), (3) or (4)).

[ ] (1) Apply Section 9.11 without modification.

[ ] (2) Use the weighted average method described in Section
14.12, based on a ______ weighting period.

[X] (3) Treat as part of the relevant Account at the beginning of
the valuation period 50% of the matching contributions
allocated during the valuation period.

[ ] (4) Apply the allocation method described in the addendum
to this Adoption Agreement numbered 9.11(b).

[ ] (c) For Participant nondeductible contributions, the Advisory
Committee will: (Choose (1), (2), (3), (4) or (5))

[ ] (1) Apply Section 9.11 without modification.

[ ] (2) Use the segregated account approach described in
Section 14.12.

[ ] (3) Use the weighted average method described in Section
14.12, based on a ______ weighting period.

[ ] (4) Treat as part of the relevant Account at the
beginning of the valuation period __% of the Participant
nondeductible contributions: (Choose (i) or (ii))

[ ] (i) made during that valuation period.

[ ] (ii) made by the following specified time: _______.

[ ] (5) Apply the allocation method described in the addendum
to this Adoption Agreement numbered 9.11(c).

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.03 INVESTMENT POWERS. Pursuant to Section 10.03[F] of the Plan,
the aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))

[X] (a) May not exceed 10% of Plan assets.

[ ] (b) May not exceed ______% of Plan assets. [Note: The percentage may
not exceed 100%.]

10.14 VALUATION OF TRUST. In addition to each Accounting Date, the
Trustee must value the Trust Fund on the following valuation date(s): (Choose
(a) or (b))

[ ] (a) No other mandatory valuation dates.

29
<PAGE> 30

[X] (b) (Specify) The last day of the third month of the Plan Year, the
last day of the sixth month of the Plan Year, and the last day of the
ninth month of the Plan Year.

30
<PAGE> 31
EFFECTIVE DATE ADDENDUM

(Restated Plans Only)

The Employer must complete this addendum only if the restated
Effective Date specified in Adoption Agreement Section 1.18 is different than
the restated effective date for at least one of the provisions listed in this
addendum. In lieu of the restated Effective Date in Adoption Agreement Section
1.18, the following special effective dates apply: (Choose whichever elections
apply)

[ ] (a) COMPENSATION DEFINITION. The Compensation definition of
Section 1.12 (other than the $200,000 limitation) is effective for
Plan Years beginning after ____________. [Note: May not be effective
later than the first day of the first Plan Year beginning after the
Employer executes this Adoption Agreement to restate the Plan for the
Tax Reform Act of 1986, if applicable.]

[ ] (b) ELIGIBILITY CONDITIONS. The eligibility conditions specified
in Adoption Agreement Section 2.01 are effective for Plan Years
beginning after _________________.

[ ] (c) SUSPENSION OF YEARS OF SERVICE. The suspension of Years of
Service rule elected under Adoption Agreement Section 2.03 is
effective for Plan Years beginning after ________________.

[ ] (d) CONTRIBUTION/ALLOCATION FORMULA. The contribution formula
elected under Adoption Agreement Section 3.01 and the method of
allocation elected under Adoption Agreement Section 3.04 is effective
for Plan Years beginning after __________________.

[X] (e) ACCRUAL REQUIREMENTS. The accrual requirements of Section 3.06
are effective for Plan Years beginning after December 31, 1993.

[ ] (f) EMPLOYMENT CONDITION. The employment condition of Section 3.06
is effective for Plan Years beginning after _________________.

[ ] (g) ELIMINATION OF NET PROFITS. The requirement for the Employer
not to have net profits to contribute to this Plan is effective for
Plan Years beginning after _______________. [Note: The date specified
may not be earlier than December 31, 1985.]

[ ] (h) VESTING SCHEDULE. The vesting schedule elected under Adoption
Agreement Section 5.03 is effective for Plan Years beginning after
________________.

[ ] (i) ALLOCATION OF EARNINGS. The special allocation provisions
elected under Adoption Agreement Section 9.11 are effective for Plan
Years beginning after______________________________.

(j) (Specify)

For Plan Years prior to the special Effective Date, the terms of the
Plan prior to its restatement under this Adoption Agreement will control for
purposes of the designated provisions. A special Effective Date may not result
in the delay of a Plan provision beyond the permissible Effective Date under
any applicable law requirements.

31
<PAGE> 32
Execution Page

The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this
Plan and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this 11th day of April,
1994.

Name and EIN of Employer: TRANSCRIPT INTERNATIONAL, LTD. 47-0750919

Signed:_________________________________________________________________________

Name(s) of Trustee: NORWEST BANK NEBRASKA, N.A.

Signed:
_______________________________________________________________________
_______________________________________________________________________

Name of Custodian:______________________________________________________________

Signed:_________________________________________________________________________

[Note: A Trustee is mandatory, but a Custodian is optional. See Section 10.03
of the Plan.]

PLAN NUMBER. The 3-digit plan number the Employer assigns to this Plan for
ERISA reporting purposes (Form 5500 Series) is: 001.

USE OF ADOPTION AGREEMENT. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.

MASTER PLAN SPONSOR. The Master Plan Sponsor identified on the first page of
the basic plan document will notify all adopting employers of any amendment of
this Master Plan or of any abandonment or discontinuance by the Master Plan
Sponsor of its maintenance of this Master Plan. For inquiries regarding the
adoption of the Master Plan, the Master Plan Sponsor's intended meaning of any
plan provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: P.O. BOX 1768, GRAND ISLAND, NEBRASKA 68802 308-389-4227.

RELIANCE ON OPINION LETTER. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.

32
<PAGE> 33
PARTICIPATION AGREEMENT
FOR PARTICIPATION BY RELATED GROUP MEMBERS (PLAN SECTION 1.30)

The undersigned Employer, by executing this Participation Agreement,
elects to become a Participating Employer in the Plan identified in Section
1.03 of the accompanying Adoption Agreement, as if the Participating Employer
were a signatory to that Agreement. The Participating Employer accepts, and
agrees to be bound by, all of the elections granted under the provisions of the
Master Plan as made by TRANSCRYPT INTERNATIONAL, LTD., the Signatory Employer
to the Execution Page of the Adoption Agreement.

1. The Effective Date of the undersigned Employer's participation
in the designated Plan is: July 1, 1992.

2. The undersigned Employer's adoption of this Plan constitutes:

[ ] (a) The adoption of a new plan by the Participating Employer.

[X] (b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as Transcrypt International
Employees Profit Sharing & Savings Plan, and having an original
effective date of July 1, 1992.

Dated this 11th day of April, 1994.

Name of Participating Employer: Transcrypt
International, Inc.

Signed:

Participating Employer's EIN: 47-0750877

ACCEPTANCE BY THE SIGNATORY EMPLOYER TO THE EXECUTION PAGE OF THE ADOPTION
AGREEMENT AND BY THE TRUSTEE.

Name of Signatory Employer: TRANSCRYPT
INTERNATIONAL, LTD.

Accepted: 4-11-94 Signed: [SIG]
[Date] ---------------------------

Name(s) of Trustee: NORWEST BANK
NEBRASKA. N.A.

Accepted: 4-27-94 Signed: [SIG]
[Date] ---------------------------

[Note: Each participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]

33
<PAGE> 34
PARTICIPATION AGREEMENT
FOR PARTICIPATION BY RELATED GROUP MEMBERS (PLAN SECTION 1.30)

1. The Effective Date of the undersigned Employer's participation
in the designated Plan is: July 1, 1992.

2. The undersigned Employer's adoption of this Plan constitutes:

[ ] (a) The adoption of a new plan by the Participating Employer.

Dated this 11th day of April, 1994

Name of Participating Employer: Transcrypt
International-Washington, Inc.

Signed: [SIG]
-------------------------------------

Participating Employer's EIN: 54-1644781

ACCEPTANCE BY THE SIGNATORY EMPLOYER TO THE EXECUTION PAGE OF THE ADOPTION
AGREEMENT AND BY THE TRUSTEE.

Name of Signatory Employer: TRANSCRYPT
INTERNATIONAL, LTD.

Accepted: 4-11-94
[Date] Signed: [SIG]
-------------------------------------

Name(s) of Trustee: NORWEST BANK NEBRASKA,
N.A.

Accepted: 4-27-94
[Date] Signed: [SIG]
-------------------------------------

[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]

34
<PAGE> 35
AMENDMENT OF
TRANSCRYPT INTERNATIONAL EMPLOYEES
PROFIT SHARING & SAVINGS PLAN

This amendment is made to the Transcrypt International Employees Profit Sharing
& Savings Plan ("Plan"), by and between Transcrypt International, Ltd.,
Transcrypt International. Inc., and Transcrypt International Washington, Inc.
and Norwest Bank Nebraska, N.A., Trustee.

Section 2.01 (a), (b), and (c) of the Adoption Agreement for the Plan shall be
amended, and as amended, shall read as follows:

2.01 ELIGIBILITY

ELIGIBILITY CONDITIONS. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions (Choose (a) or (b) or both: (c) is
optional as an additional election)

[x] (a) Attainment of age 21 (specify age, not exceeding 21).

[x] (b) Service requirement. (Choose one of (1) through (3))

[ ] (1) One Year of Service.

[x] (2) Six months (not exceeding 12) following the Employee's
Employment Commencement Date.

[ ] (3) One Hour of Service.

[x] (c) Special requirements for non-401(k) portion of plan. (Make
elections under (1) and under (2))

(1) The requirements of this Option (c) apply to participation in:
(Choose at least one of (i) through (iii))

[x] (i) The allocation of Employer nonelective contributions and
Participant forfeitures.

[x] (ii) The allocation of Employer matching contributions
(including forfeitures allocated as matching contributions).

[ ] (iii) The allocation of Employer qualified nonelective
contributions.

(2) For participation in the allocations described in (1), the
eligibility conditions are: (Choose at least one of (i)
through (iv))

[x] (i) One (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section 2.03(A)
of the Plan) if the requirement is two Years of Service.

[ ] (ii)_____ months (not exceeding 24) following the Employee's
Employment Commencement Date.

[ ] (iii) One Hour of Service

<PAGE> 36
[x] (iv) Attainment of age 21 (Specify age. not exceeding 21).

In all other respects, the Plan shall be unaltered by this amendment and shall
remain in full force and effect.

The effective date of this amendment of the Adoption Agreement shall be January
1, 1996.

IN WITNESS WHEREOF, Transcrypt International, Ltd., Transcrypt International
Inc., and Transcrypt International-Washington, Inc. have executed this
amendment this 30th day of April, 1996.

TRANSCRYPT INTERNATIONAL, LTD.

By: [SIG]
---------------------------------
Its Chairman
------------------------------

TRANSCRYPT INTERNATIONAL, INC.

By: [SIG]
---------------------------------
Its Chairman
------------------------------

TRANSCRYPT INTERNATIONAL-WASHINGTON, INC.

By: [SIG]
---------------------------------
Its Chairman
------------------------------

Accepted by:

NORWEST BANK NEBRASKA, N.A., Trustee

By: [SIG]
---------------------------------
Its Trust Officer

<PAGE> 1

EXHIBIT 10.25

NORWEST BANK NEBRASKA, NA.
DEFINED CONTRIBUTION MASTER PLAN
AND
TRUST AGREEMENT

<PAGE> 2
Defined Contribution Master Plan

TABLE OF CONTENTS

ALPHABETICAL LISTING OF DEFINITIONS. . . . . . . . . . . . . . . iii

ARTICLE I, DEFINITIONS
1.01 Employer . . . . . . . . . . . . . . . . . . 1.01
1.02 Trustee . . . . . . . . . . . . . . . . . . 1.01
1.03 Plan . . . . . . . . . . . . . . . . . . . . 1.01
1.04 Adoption Agreement . . . . . . . . . . . . . 1.01
1.05 Plan Administrator . . . . . . . . . . . . . 1.01
1.06 Advisory Committee . . . . . . . . . . . . . 1.02
1.07 Employee . . . . . . . . . . . . . . . . . . 1.02
1.08 Self-Employed Individual/
Owner-Employee . . . . . . . . . . . . . . . 1.02
1.09 Highly Compensated Employee . . . . . . . . 1.02
1.10 Participant . . . . . . . . . . . . . . . . 1.03
1.11 Beneficiary . . . . . . . . . . . . . . . . 1.03
1.12 Compensation . . . . . . . . . . . . . . . . 1.03
1.13 Earned Income . . . . . . . . . . . . . . . 1.05
1.14 Account . . . . . . . . . . . . . . . . . . 1.05
1.15 Accrued Benefit . . . . . . . . . . . . . . 1.05
1.16 Nonforfeitable . . . . . . . . . . . . . . . 1.05
1.17 Plan Year/Limitation. Year . . . . . . . . . 1.05
1.18 Effective Date . . . . . . . . . . . . . . . 1.05
1.19 Plan Entry Date . . . . . . . . . . . . . . 1.05
1.20 Accounting Date . . . . . . . . . . . . . . 1.05
1.21 Trust . . . . . . . . . . . . . . . . . . . 1.05
1.22 Trust Fund . . . . . . . . . . . . . . . . . 1.05
1.23 Nontransferable Annuity . . . . . . . . . . 1.05
1.24 ERISA . . . . . . . . . . . . . . . . . . . 1.05
1.25 Code . . . . . . . . . . . . . . . . . . . . 1.05
1.26 Service . . . . . . . . . . . . . . . . . . 1.05
1.27 Hour of Service . . . . . . . . . . . . . . 1.05
1.28 Disability . . . . . . . . . . . . . . . . . 1.07
1.29 Service for Predecessor Employer . . . . . . 1.07
1.30 Related Employers . . . . . . . . . . . . . 1.07
1.31 Leased Employees . . . . . . . . . . . . . . 1.08
1.32 Special Rules for Owner-Employees . . . . . 1.08
1.33 Determination of Top Heavy Status . . . . . 1.09
1.34 Paired Plans . . . . . . . . . . . . . . . . 1.10

ARTICLE II, EMPLOYEE PARTICIPANTS
2.01 Eligibility . . . . . . . . . . . . . . . . 2.01
2.02 Year of Service - Participation . . . . . . 2.01
2.03 Break in Service - Participation . . . . . . 2.01
2.04 Participation upon Re-emplment . . . . . . . 2.01
2.05 Change in Employee Status . . . . . . . . . 2.02
2.06 Election Not to Participate . . . . . . . . 2.02

ARTICLE III, EMPLOYER CONTRIBUTIONS AND
FORFEITURES
3.01 Amount . . . . . . . . . . . . . . . . . . . 3.01
3.02 Determination of Contribution . . . . . . . 3.01
3.03 Time of Payment of Contribution . . . . . . 3.01
3.04 Contribution Allocation. . . . . . . . . . . 3.01
3.05 Forfeiture Allocation . . . . . . . . . . . 3.03
3.06 Accrual of Benefit . . . . . . . . . . . . . 3.03
3.07 - 3.16 Limitations on Allocations . . . . . 3.05
3.17 Special Allocation Limitation . . . . . . . 3.07
3.18 Defined Benefit Plan Limitation . . . . . . 3.07
3.19 Definitions - Article III . . . . . . . . . 3.07

ARTICLE IV, PARTICIPANT CONTRIBUTIONS
4.01 Participant Nondeductible Contributions. . . 4.01
4.02 Participant Deductible Contributions . . . . 4.01
4.03 Participant Rollover Contributions . . . . 4.01
4.04 Participant Contribution - Forfeitability . 4.02
4.05 Participant Contribution
-Withdrawal/Distribution . . . . . . . . . . 4.02
4.06 Participant Contribution
-Accrued Benefit . . . . . . . . . . . . . . 4.02
ARTICLE V, TERMINATION OF SERVICE
PARTICIPANT VESTING
5.01 Normal Retirement Age . . . . . . . . . . . 5.01
5.02 Participant Disability or Death . . . . . . 5.01
5.03 Vesting Schedule . . . . . . . . . . . . . . 5.01
5.04 Cash-out Distributions to Partially-
Vested Participants/Restoration of
Forfeited Accrued Benefit . . . . . . . . . 5.01
5.05 Segregated Account for Repaid Amount . . . . 5.02
5.06 Year of Service - Vesting . . . . . . . . . 5.03
5.07 Break in Service - Vesting . . . . . . . . . 5.03
5.08 Included Years of Service - Vesting . . . . 5.03
5.09 Forfeiture Occurs . . . . . . . . . . . . . 5.03

ARTICLE VI, TIME AND METHOD OF PAYMENT
OF BENEFITS
6.01 Time of Payment of Accrued Benefit . . . . . 6.01
6.02 Method of Payment of Accrued Benefit . . . . 6.02
6.03 Benefit Payment Elections . . . . . . . . . 6.04
6.04 Annuity Distributions to Participants
and Surviving Spouses . . . . . . . . . . . 6.06
6.05 Waiver Election - Qualified Joint and
Survivor Annuity . . . . . . . . . . . . . . 6.07
6.06 Waiver Election - Preretirement Survivor
Annuity . . . . . . . . . . . . . . . . . . 6.08
6.07 Distributions Under Domestic
Relations Orders . . . . . . . . . . . . . . 6.08

ARTICLE VII, EMPLOYER ADMINISTRATIVE
PROVISIONS

7.01 Information to Committee . . . . . . . . . . 7.01
7.02 No Liability . . . . . . . . . . . . . . . . 7.01
7.03 Indemnity of Certain Fiduciaries . . . . . . 7.01
7.04 Employer Direction of Investment . . . . . . 7.01
7.05 Amendment to Vesting Schedule . . . . . . . 7.01

ARTICLE VIII, PARTICIPANT ADMINISTRATIVE
PROVISIONS

8.01 Beneficiary Designation . . . . . . . . . . 8.01
8.02 No Beneficiary Designation/Death
of Beneficiary . . . . . . . . . . . . . . . 8.01
8.03 Personal Data to Committee . . . . . . . . . 8.02

i
<PAGE> 3
Defined Contribution Master Plan

8.04 Address for Notification . . . . . . . . . . 8.02
8.05 Assignment or Alienation . . . . . . . . . . 8.02
8.06 Notice of Change in Terms . . . . . . . . . 8.02
8.07 Litigation Against the Trust . . . . . . . . 8.02
8.08 Information Available . . . . . . . . . . . 8.02
8.09 Appeal Procedure for Denial of Benefits . . 8.02
8.10 Participant Direction of Investment . . . . 8.03

ARTICLE IX, ADVISORY COMMITTEE - DUTIES
WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.01 Members' Compensation, Expenses . . . . . . 9.01
9.02 Term . . . . . . . . . . . . . . . . . . . . 9.01
9.03 Powers . . . . . . . . . . . . . . . . . . . 9.01
9.04 General . . . . . . . . . . . . . . . . . . 9.01
9.05 Funding Policy . . . . . . . . . . . . . . . 9.02
9.06 Manner of Action . . . . . . . . . . . . . . 9.02
9.07 Authorized Representative . . . . . . . . . 9.02
9.08 Interested Member . . . . . . . . . . . . . 9.02
9.09 Individual Accounts . . . . . . . . . . . . 9.02
9.10 Value of Participant's Accrued Benefit . . . 9.02
9.11 Allocation and Distribution of
Net Income Gain or Loss . . . . . . . . . . 9.03
9.12 Individual Statement . . . . . . . . . . . . 9.03
9.13 Account Charged . . . . . . . . . . . . . . 9.04
9.14 Unclaimed Account Procedure . . . . . . . . 9.04

ARTICLE X, TRUSTEE AND CUSTODIAN, POWERS
AND DUTIES
10.01 Acceptance . . . . . . . . . . . . . . . . . 10.01
10.02 Receipt of Contributions . . . . . . . . . . 10.01
10.03 Investment Powers . . . . . . . . . . . . . 10.01
10.04 Records and Statements . . . . . . . . . . . 10.06
10.05 Fees and Expenses from Fund . . . . . . . . 10.06
10.06 Parties to Litigation . . . . . . . . . . . 10.06
10.07 Professional Agents . . . . . . . . . . . . 10.06
10.08 Distribution of Cash or Property . . . . . . 10.06
10.09 Distribution Directions . . . . . . . . . . 10.06
10.10 Third Party/Multiple Trustees . . . . . . . 10.06
10.11 Resignation . . . . . . . . . . . . . . . . 10.07
10.12 Removal . . . . . . . . . . . . . . . . . . 10.07
10.13 Interim Duties and Successor Trustee . . . . 10.07
10.14 Valuation of Trust . . . . . . . . . . . . . 10.07
10.15 Limitation on Liability -
If Investment Manager, Ancillary Trustee
or Independent Fiduciary Appointed . . . . . 10.07
10.16 Investment in Group Trust Fund . . . . . . . 10.07
10.17 Appointment of Ancillary Trustee or
Independent Fiduciary . . . . . . . . . . . 10.08

ARTICLE XI, PROVISIONS RELATING TO INSURANCE
AND INSURANCE COMPANY
11.01 Insurance Benefit . . . . . . . . . . . . . 11.01
11.02 Limitation on Life Insurance
Protection . . . . . . . . . . . . . . . . . 11.01
11.03 Definitions . . . . . . . . . . . . . . . . 11.02
11.04 Dividend Plan . . . . . . . . . . . . . . . 11.02
11.05 Insurance Company Not a Party
to Agreement . . . . . . . . . . . . . . . . 11.03
11.0.6 Insurance Company Not Responsible
for Trustee's Actions . . . . . . . . . . . 11.03
11.07 Insurance Company Reliance on
Trustee's Signature . . . . . . . . . . . . 11.03
11.08 Acquittance . . . . . . . . . . . . . . . . 11.03
11.09 Duties of Insurance Company . . . . . . . . 11.03

ARTICLE XII, MISCELLANEOUS
12.01 Evidence . . . . . . . . . . . . . . . . . . 12.01
12.02 No Responsibility for Employer
Action . . . . . . . . . . . . . . . . . . . 12.01
12.03 Fiduciaries Not Insurers . . . . . . . . . . 12.01
12.04 Waiver of Notice . . . . . . . . . . . . . . 12.01
12.05 Successors . . . . . . . . . . . . . . . . . 12.01
12.06 Word Usage . . . . . . . . . . . . . . . . . 12.01
12.07 State Law . . . . . . . . . . . . . . . . . 12.01
12.08 Employer's Right to Participate . . . . . . 12.01
12.09 Employment Not Guaranteed . . . . . . . . . 12.02

ARTICLE XIII, EXCLUSIVE BENEFIT, AMENDMENT,
TERMINATION

13.01 Exclusive Benefit . . . . . . . . . . . . . 13.01
13.02 Amendment by Employer . . . . . . . . . . . 13.01
13.03 Amendment by Master Plan Sponsor . . . . . . 13.02
13.04 Discontinuance . . . . . . . . . . . . . . . 13.02
13.05 Full Vesting on Termination . . . . . . . . 13.02
13.06 Merger/Direct Transfer . . . . . . . . . . . 13.02
13.07 Termination . . . . . . . . . . . . . . . . 13.03

ARTICLE XIV, CODE SECTION 401(k) AND CODE SECTION 401(m)
ARRANGEMENT'S

14.01 Application . . . . . . . . . . . . . . . . 14.01
14.02 Code Section 401(k) Arrangement . . . . . . 14.01
14.03 Definitions . . . . . . . . . . . . . . . . 14.01
14.04 Matching Contributions/
Employee Contributions . . . . . . . . . . . 14.03
14.05 Time of Payment of
Contributions . . . . . . . . . . . . . . . 14.03
14.06 Special Allocation Provisions-
Deferral Contributions, Matching
Contributions and Qualified
Nonelective Contributions . . . . . . . . . 14.04
14.07 Annual Elective Deferral
Limitation . . . . . . . . . . . . . . . . . 14.05
14.08 Actual Deferral Percentage
("ADP")Test . . . . . . . . . . . . . . . . 14.06
14.09 Nondiscrimination Rules for Employer
Matching Contributions/Participant
Nondeductible Contributions . . . . . . . . 14.08
14.10 Multiple Use Limitation . . . . . . . . . . 14.10
14.11 Distribution Restrictions . . . . . . . . . 14.10
14.12 Special Allocation Rules . . . . . . . . . . 14.11

ii
<PAGE> 4
Defined Contribution Master Plan

ALPHABETICAL LISTING OF DEFINITIONS

Plan Definition Section Reference
(Page Number)

100% Limitation . . . . . . . . . . . . . . . . . . . . 3.19(1) (3.10)
Account . . . . . . . . . . . . . . . . . . . . . . . . . 1.14 (1.05)
Accounting Date . . . . . . . . . . . . . . . . . . . . . 1.20 (1.05)
Accrued Benefit . . . . . . . . . . . . . . . . . . . . . 1.15 (1.05)
Actual Deferral Percentage ("ADP") Test. . . . . . . . . 14.08 (14.06)
Adoption Agreement . . . . . . . . . . . . . . . . . . . 1.04 (1.01)
Advisory Committee . . . . . . . . . . . . . . . . . . . 1.06 (1.02)
Annual Addition . . . . . . . . . . . . . . . . . . . 3.19(a) (3.07)
Average Contribution Percentage Test . . . . . . . . . 14.09 (14.08)
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . 1.11 (1.03)
Break in Service for Eligibility Purposes . . . . . . . . 2.03 (2.01)
Break in Service for Vesting Purposes . . . . . . . . . . 5.07 (5.03)
Cash-out Distribution . . . . . . . . . . . . . . . . . . 5.04 (5.01)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25 (1.06)
Code Section 411(d)(6) Protected Benefits . . . . . . . 13.02 (13.01)
Compensation . . . . . . . . . . . . . . . . . . . . . . 1.12 (1.03)
Compensation for Code Section 401(k) Purposes . . . . 14.03(f) (14.02)
Compensation for Code Section 415 Purposes . . . . . 3.19(b) (3.08)
Compensation for Top Heavy Purposes. . . . . . . . 1-33(B)(3) (1.09)
Contract(s) . . . . . . . . . . . . . . . . . . . . . 11.03(c) (11.02)
Custodian Designation . . . . . . . . . . . . . . . . 10.03[B] (10.03)
Deemed Cash-out Rule . . . . . . . . . . . . . . . . . 5.04(C) (5.02)
Deferral Contributions . . . . . . . . . . . . . . . 14.03(g) (14.02)
Deferral Contributions Account . . . . . . . . . . . 14.06(A) (14.04)
Defined Benefit Plan . . . . . . . . . . . . . . . . . 3.19(i) (3.09)
Defined Benefit Plan Fraction . . . . . . . . . . . . . 3.19(j) (3.09)
Defined Contribution Plan . . . . . . . . . . . . . . . 3.19(h) (3.08)
Defined Contribution Plan Fraction . . . . . . . . . 3.19(k) (3.09)
Determination Date . . . . . . . . . . . . . . . . 1-33(B)(7) (1.10)
Disability . . . . . . . . . . . . . . . . . . . . . . . 1.28 (1.07)
Distribution Date . . . . . . . . . . . . . . . . . . . . 6.01 (6.01)
Distribution Restrictions . . . . . . . . . . . . . . 14.03(m) (14.03)
Earned Income . . . . . . . . . . . . . . . . . . . . . . 1.13 (1.05)
Effective Date . . . . . . . . . . . . . . . . . . . . . 1.18 (1.05)
Elective Deferrals . . . . . . . . . . . . . . . . . 14.03(h) (14.02)
Elective Transfer . . . . . . . . . . . . . . . . . 13.06.(A) (13.03)
Eligible Employee . . . . . . . . . . . . . . . . . . 14.03(c) (14.02)
Employee . . . . . . . . . . . . . . . . . . . . . . . . 1.07 (1.02)
Employee Contributions . . . . . . . . . . . . . . . 14.03(n) (14.03)
Employer . . . . . . . . . . . . . . . . . . . . . . . . 1.01 (1.01)
Employer Contribution Account . . . . . . . . . . . . . 14.06 (14.04)
Employer for Code Section 415 Purposes . . . . . . . . 3.19(c) (3.08)
Employer for Top Heavy Purposes . . . . . . . . . . 1-33(B)(6) (1.10)
Employment Commencement Date . . . . . . . . . . . . . . 2.02 (2.01)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 1.24 (1.06)
Excess Aggregate Contributions . . . . . . . . . . . 14.09(D) (14.09)
Excess Amount . . . . . . . . . . . . . . . . . . . . . 3.19(d) (3.08)
Excess Contributions . . . . . . . . . . . . . . . . . 14.08 (14.07)
Exempt Participant . . . . . . . . . . . . . . . . . . . 8.01 (8.01)
Forfeiture Break in Service . . . . . . . . . . . . . . . 5.08 (5.03)
Group Trust Fund . . . . . . . . . . . . . . . . . . . 10.16 (10.07)
Hardship . . . . . . . . . . . . . . . . . . . . . 6.01(A)(4) (6.01)
Hardship for Code Section 401(k) Purposes . . . . . . 14.11(A) (14.11)
Highly Compensated Employee . . . . . . . . . . . . . . . 1.09 (1.02)
Highly Compensated Group . . . . . . . . . . . . . . 14.03(d) (14.02)
Hour of Service . . . . . . . . . . . . . . . . . . . . . 1.27 (1.06)
Incidental Insurance Benefits . . . . . . . . . . . . 11.01(A) (11.01)
Insurable Participant . . . . . . . . . . . . . . . . 11.03(d) (11.02)
Investment Manager . . . . . . . . . . . . . . . . . . 9.04(i) (9.01)
Issuing Insurance Company . . . . . . . . . . . . . . 11.03(b) (11.02)
Joint and Survivor Annuuity . . . . . . . . . . . . . 6.04 (A) (6.06)
Key Employee . . . . . . . . . . . . . . . . . . . 1.33(B)(1) (1.09)
Leased Employees . . . . . . . . . . . . . . . . . . . . . 1.31(1.08)
Limitation Year . . . . . . . . . . . 1.17 and 3.19(e) (1.05 and 3.08)
Loan Policy . . . . . . . . . . . . . . . . . . . . . 9.04 (A) (9.02)
Mandatory Contributions . . . . . . . . . . . . . . 14.04 (A) (14.03)
Mandatory Contributions Account . . . . . . . . . . . 14.04(A) (14.03)
Master or Prototype Plan . . . . . . . . . . . . . . . 3.19(f) (3.08)
Matching Contributions . . . . . . . . . . . . . . . 1.03(i) (14.02)
Maximum Permissible Amount . . . . . . . . . . . . . . 3.19(g) (3.08)
Minimum Distribution Incidental Benefit . . . . . . . 6.02(A) (6.03)
Multiple Use Limitation . . . . . . . . . . . . . . . . 14.10 (14.10)
Named Fiduciary . . . . . . . . . . . . . . . . . . . 10.03[D] (10.05)
Nonelective Contributions . . . . . . . . . . . . . . 14.03(j) (14.02)
Nonforfeitable . . . . . . . . . . . . . . . . . . . . . 1.16 (1.05)
Nonhighly Compensated Employee . . . . . . . . . . . 14.03(b) (14.02)
Nonhighly Compensated Group . . . . . . . . . . . . . 14.03(e) (14.02)
Non-Key Employee . . . . . . . . . . . . . . . . . 1.33(B)(2) (1.09)
Nontransferable Annuity . . . . . . . . . . . . . . . . . 1.23 (1.05)
Normal Retirement Age . . . . . . . . . . . . . . . . . . 5.01 (5.01)
Owner-Employee . . . . . . . . . . . . . . . . . . . . . 1.08 (1.02)
Paired Plans . . . . . . . . . . . . . . . . . . . . . . 1.34 (1.10)
Participant . . . . . . . . . . . . . . . . . . . . . . . 1.10 (1.03)
Participant Deductible Contributions . . . . . . . . . . 4.02 (4.01)
Participant Forfeiture . . . . . . . . . . . . . . . . . 3.05 (3.03)
Participant Loans . . . . . . . . . . . . . . . . . . 10.03[E] (10.04)
Participant Nondeductible Contributions . . . . . . . . . 4.01 (4.01)
Permissive Aggregation Group . . . . . . . . . . . 1-33(B)(5) (1.10)
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03 (1.01)
Plan Administrator . . . . . . . . . . . . . . . . . . . 1.05 (1.01)
Plan Entry Date . . . . . . . . . . . . . . . . . . . . . 1.19 (1.05)
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . 1.17 (1.05)
Policy . . . . . . . . . . . . . . . . . . . . . . . 11.03(a) (11.02)
Predecessor Employer . . . . . . . . . . . . . . . . . . 1.29 (1.07)
Preretirement Survivor Annuity . . . . . . . . . . . 6.04 (B) (6.06)
Qualified Domestic Relations Order . . . . . . . . . . . 6.07 (6.08)
Qualified Matching Contributions . . . . . . . . . . 14.03(k) (14.02)
Qualified Nonelective Contributions . . . . . . . . . 14.03(l) (14.03)
Qualifying Employer Real Property . . . . . . . . . . 10.03[F] (10.05)
Qualifying Employer Securities . . . . . . . . . . . 10.03[F] (10.05)

iii
<PAGE> 5

Defined Contribution Master Plan

Plan Definition Section Reference
(Page Number)

Related Employers . . . . . . . . . . . . . . . . . . . . . 130 (1.07)
Required Aggregation Group . . . . . . . . . . . . . 133(B)(4) (1.09)
Required Beginning Date . . . . . . . . . . . . . . . . 6.01(B) (6.02)
Rollover Contributions . . . . . . . . . . . . . . . . . 4.03 (4.01)
Self-Employed Individual . . . . . . . . . . . . . . . . 1.08 (1.02)
Service . . . . . . . . . . . . . . . . . . . . . . . . . 1.26 (1.06)
Term Life Insurance Contract . . . . . . . . . . . . . 11.03 (11.02)
Top Heavy Minimum Allocation . . . . . . . . . . . . 3.04(B) (3.01)
Top Heavy Ratio . . . . . . . . . . . . . . . . . . . . . 1.33 (1.09)
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 1.21 (1-05)
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 1.02 (1.01)
Trustee Designation . . . . . . . . . . . . . . . . . 10.03[A] (10.01)
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 1.22 (1.05)
Weighted Average Allocation Method . . . . . . . . . . 14.12 (14.11)
Year of Service for Eligibility Purposes . . . . . . . . 2.02 (2.01)
Year of Service for Vesting Purposes . . . . . . . . . . 5.06 (5.03)

* * * * * * * * * * * * * * *

iv
<PAGE> 6
NORWEST BANK NEBRASKA, NA.
DEFINED CONTRIBUTION MASTER PLAN AND TRUST AGREEMENT
BASIC PLAN DOCUMENT #01

Norwest Bank Nebraska, N.A., in its capacity as Master Plan Sponsor,
establishes this Master Plan intended to conform to and qualify under Section
401 and Section 501 of the Internal Revenue Code of 1986, as amended. An
Employer establishes a Plan and Trust under this Master Plan by executing an
Adoption Agreement. If the Employer adopts this Plan as a restated Plan in
substitution for, and in amendment of, an existing plan, the provisions of this
Plan, as a restated Plan, apply solely to an Employee whose employment with the
Employer terminates on or after the restated Effective Date of the Employer's
Plan. If an Employee's employment with the Employer terminates prior to the
restated Effective Date, that Employee is entitled to benefits under the Plan
as the Plan existed on the date of the Employee's termination of employment.

ARTICLE I
DEFINITIONS

1.01 "Employer" means each employer who adopts this Plan by
executing an Adoption Agreement.

1.02 "Trustee" means the person or persons who as Trustee execute
the Employer's Adoption Agreement, or any successor in office who in writing
accepts the position of Trustee. The Employer must designate in its Adoption
Agreement whether the Trustee will administer the Trust as a discretionary
Trustee or as a nondiscretionary Trustee. If a person acts as a discretionary
Trustee, the Employer also may appoint a Custodian. See Article X. If the
Master Plan Sponsor is a bank, savings and loan, credit union or similar
financial institution, a person other than the Master Plan Sponsor (or its
affiliate) may not serve as Trustee or as Custodian of the Employer's Plan
without the written consent of the Master Plan Sponsor.

1.03 "Plan" means the retirement plan established or continued by
the Employer in the form of this Agreement, including the Adoption Agreement
under which the Employer has elected to participate in this Master Plan. The
Employer must designate the name of the Plan in its Adoption Agreement. An
Employer may execute more than one Adoption Agreement offered under this Master
Plan, each of which will constitute a separate Plan and Trust established or
continued by that Employer. The Plan and the Trust created by each adopting
Employer is a separate Plan and a separate Trust, independent from the plan and
the trust of any other employer adopting this Master Plan. All section
references within the Plan are Plan section references unless the context
clearly indicates otherwise.

1.04 "Adoption Agreement" means the document executed by each
Employer adopting this Master Plan. The terms of this Master Plan as modified
by the terms of an adopting Employer's Adoption Agreement constitute a separate
Plan and Trust to be construed as a single Agreement. Each elective provision
of the Adoption Agreement corresponds by section reference to the section of
the Plan which grants the election. Each Adoption Agreement offered under this
Master Plan is either a Nonstandardized Plan or a Standardized Plan, as
identified in the preamble to that Adoption Agreement. The provisions of this
Master Plan apply equally to Nonstandardized Plans and to Standardized Plans
unless otherwise specified.

1.05 "Plan Administrator" is the Employer unless the Employer
designates another person to hold the position of Plan Administrator. In
addition to his other duties, the Plan Administrator has full responsibility
for compliance with the reporting and disclosure rules under ERISA as respects
this Agreement.

1.06 "Advisory Committee" means the Employer's Advisory Committee
as from time to time constituted.

1.01
<PAGE> 7
Defined Contribution Master Plan

1.07 "Employee" means any employee (including a Self-Employed
Individual) of the Employer. The Employer must specify in its Adoption
Agreement any Employee, or class of Employees, not eligible to participate in
the Plan. If the Employer elects to exclude collective bargaining employees,
the exclusion applies to any employee of the Employer included in a unit of
employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or
more employers unless the collective bargaining agreement requires the employee
to be included within the Plan. The term "employee representatives" does not
include any organization more than half the members of which are owners,
officers, or executives of the Employer.

1.08 "Self-Employed Individual/Owner-Employee." "Self-Employed
Individual" means an individual who has Earned Income (or who would have had
Earned Income but for the fact that the trade or business did not have net
earnings) for the taxable year from the trade or business for which the Plan is
established. "Owner-Employee" means a Self-Employed Individual who is the sole
proprietor in the case of a sole proprietorship. If the Employer is a
partnership, "Owner-Employee" means a Self-Employed Individual who is a partner
and owns more than 10% of either the capital or profits interest of the
partnership.

1.09 "Highly Compensated Employee" means an Employee who, during
the Plan Year or during the preceding 12-month period:

(a) is a more than 5% owner of the Employer (applying the
constructive ownership rules of Code Section 318, and applying the
principles of Code Section 318, for an unincorporated entity);

(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);

(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is part of
the top-paid 20% group of employees (based on Compensation for the
relevant year); or

(d) has Compensation in excess of 50% of the dollar amount
prescribed in Code Section 415(b)(1)(A) (relating to defined benefit
plans) and is an officer of the Employer.

If the Employee satisfies the definition in clause (b), (c) or (d) in
the Plan Year but does not satisfy clause (b), (c) or (d) during the preceding
12-month period and does not satisfy clause (a) in either period, the Employee
is a Highly Compensated Employee only if he is one of the 100 most highly
compensated Employees for the Plan Year. The number of officers taken into
account under clause (d) will not exceed the greater of 3 or 10% of the total
number (after application of the Code Section 414(q) exclusions) of Employees,
but no more than 50 officers. If no Employee satisfies the Compensation
requirement in clause (d) for the relevant year, the Advisory Committee will
treat the highest paid officer as satisfying clause (d) for that year.

For purposes of this Section 1.09, "Compensation" means Compensation
as defined in Section 1.12, except any exclusions from Compensation elected in
the Employer's Adoption Agreement Section 1.12 do not apply, and Compensation
must include "elective contributions" (as defined in Section 1.12). The
Advisory Committee must make the determination of who is a Highly Compensated
Employee, including the determinations of the number and identity of the top
paid 20% group, the top 100 paid Employees, the number of officers includible
in clause (d) and the relevant Compensation, consistent with Code Section
414(q) and regulations issued under that Code section. The Employer may make a
calendar year election to determine the Highly Compensated Employees for the
Plan Year, as prescribed by Treasury regulations. A calendar year election
must apply to all

1.02
<PAGE> 8
Defined Contribution Master Plan

plans and arrangements of the Employer. For purposes of applying any
nondiscrimination test required under the Plan or under the Code, in a manner
consistent with applicable Treasury regulations, the Advisory Committee will
treat a Highly Compensated Employee and all family members (a spouse, a lineal
ascendant or descendant, or a spouse of a lineal ascendant or descendant) as a
single Highly Compensated Employee, but only if the Highly Compensated Employee
is a more than 5% owner or is one of the 10 Highly Compensated Employees with
the greatest Compensation for the Plan Year. This aggregation rule applies to
a family member even if that family member is a Highly Compensated Employee
without family aggregation.

The term "Highly Compensated Employee" also includes any former
Employee who separated from Service (or has a deemed Separation from Service,
as determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
55th birthday. If the former Employee's Separation from Service occurred prior
to January 1, 1987, he is a Highly Compensated Employee only if he satisfied
clause (a) of this Section 1.09 or received Compensation in excess of $50,000
during: (1) the year of his Separation from Service (or the prior year); or (2)
any year ending after his 54th birthday.

1.10 "Participant" is an Employee who is eligible to be and becomes
a Participant in accordance with the provisions of Section 2.01.

1.11 "Beneficiary" is a person designated by a Participant who is
or may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the Plan until
the Trustee has fully distributed his benefit to him. A Beneficiary's right to
(and the Plan Administrator's, the Advisory Committee's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until he first becomes entitled to receive a benefit under the Plan.

1.12 "Compensation" means, except as provided in the Employer's
Adoption Agreement, the Participant's Earned Income, wages, salaries, fees for
professional service 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 on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses). The Employer must elect in its Adoption Agreement
whether to include elective contributions in the definition of Compensation.
"Elective contributions" are amounts excludible from the Employee's gross income
under Code Sections 125, 402(a)(8), 402(h) or 403(b), and contributed by the
Employer, at the Employee's election, to a Code Section 401(k) arrangement, a
Simplified Employee Pension, cafeteria plan or tax-sheltered annuity. The term
"Compensation" does not include:

(a) Employer contributions (other than "elective contributions,"
if includible in the definition of Compensation under Section 1.12 of
the Employer's Adoption Agreement) to a plan of deferred compensation
to the extent the contributions are not included in the gross income
of the Employee for the taxable year in which contributed, on behalf
of an Employee to a Simplified Employee Pension Plan to the extent
such contributions are excludible from the Employee's gross income,
and any distributions from a plan of deferred compensation, regardless
of whether such amounts are includible in the gross income of the
Employee when distributed.

(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an 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 stock option described in Part 11,
Subchapter 6, Chapter 1 of the Code.

1.03
<PAGE> 9

Defined Contribution Master Plan

(d) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that
the premiums are not includible in the gross income of the Employee),
or contributions made by an Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
excludible from the gross income of the Employee), other than
"elective contributions," if elected in the Employer's Adoption
Agreement.

Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.12, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into account
only Compensation actually paid for the relevant period. A Compensation
payment includes Compensation by the Employer through another person under the
common paymaster provisions in Code Sections 3121 and 3306.

(A) LIMITATIONS ON COMPENSATION.

(1) COMPENSATION DOLLAR LIMITATION. For any Plan Year beginning
after December 31, 1988, the Advisory Committee must take into account only the
first $200,000 (or beginning January 1, 1990, such larger amount as the
Commissioner of Internal Revenue may prescribe) of any Participant's
Compensation. For any Plan Year beginning prior to January 1, 1989, this
$200,000 limitation (but not the family aggregation requirement described in
the next paragraph) applies only if the Plan is top heavy for such Plan Year or
operates as a deemed top heavy plan for such Plan Year.

(2) APPLICATION OF COMPENSATION LIMITATION TO CERTAIN FAMILY
MEMBERS. The $200,000 Compensation limitation applies to the combined
Compensation of the Employee and of any family member aggregated with the
Employee under Section 1.09 who is either (i) the Employee's spouse; or (ii)
the Employee's lineal descendant under the age of 19. If, for a Plan Year, the
combined Compensation of the Employee and such family members who are
Participants entitled to an allocation for that Plan Year exceeds the $200,000
(or adjusted) limitation, "Compensation" for each such Participant, for
purposes of the contribution and allocation provisions of Article III, means
his Adjusted Compensation. Adjusted Compensation is the amount which bears the
same ratio to the $200,000 (or adjusted) limitation as the affected
Participant's Compensation (without regard to the $200,000 Compensation
limitation) bears to the combined Compensation of all the affected Participants
in the family unit. If the Plan uses permitted disparity, the Advisory
Committee must determine the integration level of each affected family member
Participant prior to the proration of the $200,000 Compensation limitation, but
the combined integration level of the affected Participants may not exceed
$200,000 (or the adjusted limitation). The combined Excess Compensation of the
affected Participants in the family unit may not exceed $200,000 (or the
adjusted limitation) minus the affected Participants' combined integration
level (as determined under the preceding sentence). If the combined Excess
Compensation exceeds this limitation, the Advisory Committee will prorate the
Excess Compensation limitation among the affected Participants in the family
unit in proportion to each such individual's Adjusted Compensation minus his
integration level. If the Employer's Plan is a Nonstandardized Plan, the
Employer may elect to use a different method in determining the Adjusted
Compensation of the affected Participants by specifying that method in an
addendum to the Adoption Agreement, numbered Section 1.12.

(B) NONDISCRIMINATION. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.12, except: (1) the Employer may
elect to include or to exclude elective contributions, irrespective of the
Employer's election in its Adoption Agreement regarding elective contributions;
and (2) the

1.04
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Defined Contribution Master Plan

Employer will not give effect to any elections made in the "modifications to
Compensation definition" section of Adoption Agreement Section 1.12. The
Employer's election described in clause (1) must be consistent and uniform with
respect to all Employees and all plans of the Employer for any particular Plan
Year. If the Employer's Plan is a Nonstandardized Plan, the Employer,
irrespective of clause (2), may elect to exclude from this nondiscrimination
definition of Compensation any items of Compensation excludible under Code
Section 414(s) and the applicable Treasury regulations, provided such adjusted
definition conforms to the nondiscrimination requirements of those regulations.

1.13 "Earned Income" means net earnings from self-employment in the
trade or business with respect to which the Employer has established the Plan,
provided personal services of the individual are a material income producing
factor. The Advisory Committee will determine net earnings without regard to
items excluded from gross income and the deductions allocable to those items.
The Advisory Committee will determine net earnings after the deduction allowed
to the Self-Employed Individual for all contributions made by the Employer to a
qualified plan and, for Plan Years beginning after December 31, 1989, the
deduction allowed to the Self-Employed under Code Section 164(f) for
self-employment taxes.

1.14 "Account" means the separate account(s) which the Advisory
Committee or the Trustee maintains for a Participant under the Employer's Plan.

1.15 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.

1.16 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the Participant's
Accrued Benefit.

1.17 "Plan Year" means the fiscal year of the Plan, the consecutive
month period specified in the Employer's Adoption Agreement. The Employer's
Adoption Agreement also must specify the "Limitation Year" applicable to the
Limitations on allocations described in Article III. If the Employer maintains
Paired Plans, each Plan must have the same Plan Year.

1.18 "Effective Date" of this Plan is the date specified in the
Employer's Adoption Agreement.

1.19 "Plan Entry Date" means the date(s) specified in Section 2.01
of the Employer's Adoption Agreement.

1.20 "Accounting Date" is the last day of an Employer's Plan Year.
Unless otherwise specified in the Plan, the Advisory Committee will make all
Plan allocations for a particular Plan Year as of the Accounting Date of that
Plan Year.

1.21 "Trust" means the separate Trust created under the Employer's
Plan.

1.22 "Trust Fund" means all property of every kind held or acquired
by the Employer's Plan, other than incidental benefit insurance contracts.

1.23 "Nontransferable Annuity" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Plan distributes an
annuity contract, the contract must be a Nontransferable Annuity.

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

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Defined Contribution Master Plan

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

1.26 "Service" means any period of time the Employee is in the
employ of the Employer, including any period the Employee is on an unpaid leave
of absence authorized by the Employer under a uniform, nondiscriminatory policy
applicable to all Employees. "Separation from Service" means the Employee no
longer has an employment relationship with the Employer maintaining this Plan.

1.27 "Hour of Service" means:

(a) Each Hour of Service for which the Employer, either directly
or indirectly, pays an Employee, or for which the Employee is entitled
to payment, for the performance of duties. The Advisory Committee
credits Hours of Service under this paragraph (a) to the Employee for
the computation period in which the Employee performs the duties,
irrespective of when paid;

(b) Each Hour of Service for back pay, irrespective of mitigation
of damages, to which the Employer has agreed or for which the Employee
has received an award. The Advisory Committee credits Hours of
Service under this paragraph (b) to the Employee for the computation
period(s) to which the award or the agreement pertains rather than for
the computation period in which the award, agreement or payment is
made; and

(c) Each Hour of Service for which the Employer, either directly
or indirectly, pays an Employee, or for which the Employee is entitled
to payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties
during a computation period, such as leave of absence, vacation,
holiday, sick leave, illness, incapacity (including disability),
layoff, jury duty or military duty. The Advisory Committee will
credit no more than 501 Hours of Service under this paragraph (c) to
an Employee on account of any single continuous period during which
the Employee does not perform any duties (whether or not such period
occurs during a single computation period). The Advisory Committee
credits Hours of Service under this paragraph (c) in accordance with
the rules of paragraphs (b) and (c) of Labor Reg. Section 2530.200b-2,
which the Plan, by this reference, specifically incorporates in full
within this paragraph (c).

The Advisory Committee will not credit an Hour of Service under more
than one of the above paragraphs. A computation period for purposes of this
Section 1.27 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service. The Advisory Committee
will resolve any ambiguity with respect to the crediting of an Hour of Service
in favor of the Employee.

(A) METHOD OF CREDITING HOURS OF SERVICE. The Employer must elect in its
Adoption Agreement the method the Advisory Committee will use in crediting an
Employee with Hours of Service. For purposes of the Plan, "actual" method
means the determination of Hours of Service from records of hours worked and
hours for which the Employer makes payment or for which payment is due from the
Employer. If the Employer elects to apply an "equivalency" method, for each
equivalency period for which the Advisory Committee would credit the Employee
with at least one Hour of Service, the Advisory Committee will credit the
Employee with: (i) 10 Hours of Service for a daily equivalency; (ii) 45 Hours
of Service for a weekly equivalency; (iii) 95 Hours of Service for a
semimonthly payroll period equivalency; and (iv) 190 Hours of Service for a
monthly equivalency.

(B) MATERNITY/PATERNITY LEAVE. Solely for purposes of determining whether
the Employee incurs a Break in Service under any provision of this Plan, the
Advisory Committee must credit Hours of Service during an Employee's unpaid
absence period due to maternity or paternity leave. The Advisory Committee
considers an Employee on maternity or paternity leave if the Employee's absence
is due to the Employee's pregnancy, the birth of the Employee's child, the
placement with

1.06
<PAGE> 12
Defined Contribution Master Plan

the Employee of an adopted child, or the care of the Employee's child
immediately following the child's birth or placement. The Advisory Committee
credits Hours of Service under this paragraph on the basis of the number of
Hours of Service the Employee would receive if he were paid during the absence
period or, if the Advisory Committee cannot determine the number of Hours of
Service the Employee would receive, on the basis of 8 hours per day during the
absence period. The Advisory Committee will credit only the number (not
exceeding 501) of Hours of Service necessary to prevent an Employee's Break in
Service. The Advisory Committee credits all Hours of Service described in this
paragraph to the computation period in which the absence period begins or, if
the Employee does not need these Hours of Service to prevent a Break in Service
in the computation period in which his absence period begins, the Advisory
Committee credits these Hours of Service to the immediately following
computation period.

1.28 "Disability" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial gainful
activity) for an indefinite period which the Advisory Committee considers will
be of long continued duration. A Participant also is disabled if he incurs the
permanent loss or loss of use of a member or function of the body, or is
permanently disfigured, and incurs a Separation from Service. The Plan
considers a Participant disabled on the date the Advisory Committee determines
the Participant satisfies the definition of disability. The Advisory Committee
may require a Participant to submit to a physical examination in order to
confirm disability. The Advisory Committee will apply the provisions of this
Section 1.28 in a nondiscriminatory, consistent and uniform manner. If the
Employer's Plan is a Nonstandardized Plan, the Employer may provide an
alternate definition of disability in an addendum to its Adoption Agreement,
numbered Section 1.28.

1.29 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains
the plan of a predecessor employer, the Plan treats service of the Employee
with the predecessor employer as service with the Employer. If the Employer
does not maintain the plan of a predecessor employer, the Plan does not credit
service with the predecessor employer, unless the Employer identifies the
predecessor in its Adoption Agreement and specifies the purposes for which the
Plan will credit service with that predecessor employer.

1.30 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code Section 414(b)), trades or businesses (whether
or not incorporated) which are under common control (as defined in Code Section
414(c)) or an affiliated service group (as defined in Code Section 414(m) or in
Code Section 414(o)). If the Employer is a member of a related group, the term
"Employer" includes the related group members for purposes of crediting Hours
of Service, determining Years of Service and Breaks in Service under Articles
II and V, applying the Participation Test and the Coverage Test under Section
3.06(E), applying the limitations on allocations in Part 2 of Article III,
applying the top heavy rules and the minimum allocation requirements of Article
III, the definitions of Employee, Highly Compensated Employee, Compensation and
Leased Employee, and for any other purpose required by the applicable Code
section or by a Plan provision. However, an Employer may contribute to the
Plan only by being a signatory to the Execution Page of the Adoption Agreement
or to a Participation Agreement to the Employer's Adoption Agreement. If one
or more of the Employer's related group members become Participating Employers
by executing a Participation Agreement to the Employer's Adoption Agreement,
the term "Employer" includes the participating related group members for all
purposes of the Plan, and "Plan Administrator" means the Employer that is the
signatory to the Execution Page of the Adoption Agreement.

If the Employer's Plan is a Standardized Plan, all Employees of the
Employer or of any member of the Employer's related group, are eligible to
participate in the Plan, irrespective of whether the related group member
directly employing the Employee is a Participating Employer. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in Section 1.07 of
its Adoption Agreement, whether the Employees of related group members that are
not Participating

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Defined Contribution Master Plan

Employers are eligible to participate in the Plan. Under a Nonstandardized
Plan, the Employer may elect to exclude from the definition of "Compensation"
for allocation purposes any Compensation received from a related employer that
has not executed a Participation Agreement and whose Employees are not eligible
to participate in the Plan.

1.31 LEASED EMPLOYEES. The Plan treats a Leased Employee as an
Employee of the Employer. A Leased Employee is an individual (who otherwise is
not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the Employer (or
for the Employer and any persons related to the Employer within the meaning of
Code Section 144(a)(3)) on a substantially full time basis for at least one
year and who performs services historically performed by employees in the
Employer's business field. If a Leased Employee is treated as an Employee by
reason of this Section 1.31 of the Plan, "Compensation" includes Compensation
from the leasing organization which is attributable to services performed for
the Employer.

(A) SAFE HARBOR PLAN EXCEPTION. The Plan does not treat a Leased Employee
as an Employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or less
of the Employer's Employees (other than Highly Compensated Employees) are
Leased Employees. A safe harbor plan is a money purchase pension plan
providing immediate participation, full and immediate vesting, and a
nonintegrated contribution formula equal to at least 10% of the employee's
compensation without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the 10% contribution on
the basis of compensation as defined in Code Section 415(c)(3) plus elective
contributions (as defined in Section 1.12).

(B) OTHER REQUIREMENTS. The Advisory Committee must apply this Section
1.31 in a manner consistent with Code Sections 414(n) and 414(o) and the
regulations issued under those Code sections. The Employer must specify in the
Adoption Agreement the manner in which the Plan will determine the allocation
of Employer contributions and Participant forfeitures an behalf of a
Participant if the Participant is a Leased Employee covered by a plan
maintained by the leasing organization.

1.32 SPECIAL RULES FOR OWNER-EMPLOYEES. The following special
provisions and restrictions apply to Owner-Employees:

(a) If the Plan provides contributions or benefits for an
Owner-Employee or for a group of Owner-Employees who controls the trade or
business with respect to which this Plan is established and the
Owner-Employee or Owner-Employees also control as Owner-Employees one or
more other trades or businesses, plans must exist or be established with
respect to all the controlled trades or businesses so that when the plans
are combined they form a single plan which satisfies the requirements of
Code Section 401(a) and Code Section 401(d) with respect to the employees
of the controlled trades or businesses.

(b) The Plan excludes an Owner-Employee or group of
Owner-Employees if the Owner-Employee or group of Owner-Employees controls
any other trade or business, unless the employees of the other controlled
trade or business participate in a plan which satisfies the requirements
of Code Section 401(a) and Code Section 401(d). The other qualified plan
must provide contributions and benefits which are not less favorable than
the contributions and benefits provided for the Owner-Employee or group of
Owner-Employees under this Plan, or if an Owner-Employee is covered under
another qualified plan as an Owner-Employee, then the plan established
with respect to the trade or business he does control must provide
contributions or benefits as favorable as those provided under the most
favorable plan of the trade or business he does not control. If the
exclusion of this paragraph (b) applies and the Employer's Plan is a
Standardized Plan, the Employer may not participate or continue to
participate in this Master Plan and the Employer's Plan becomes an
individually-designed plan for purposes of qualification reliance.

1.08
<PAGE> 14
Defined Contribution Master Plan

(c) For purposes of paragraphs (a) and (b) of this Section 1.32,
an Owner-Employee or group of Owner-Employees controls a trade or
business if the Owner-Employee or Owner-Employees together (1) own the
entire interest in an unincorporated trade or business, or (2) in the
case of a partnership, own more than 50% of either the capital
interest or the profits interest in the partnership.

1.33 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a Plan
Year if the top heavy ratio as of the Determination Date exceeds 60%. The top
heavy ratio is a fraction, the numerator of which is the sum of the present
value of Accrued Benefits of all Key Employees as of the Determination Date and
the denominator of which is a similar sum determined for all Employees. The
Advisory Committee must include in the top heavy ratio, as part of the present
value of Accrued Benefits, any contribution not made as of the Determination
Date but includible under Code Section 416 and the applicable Treasury
regulations, and distributions made within the Determination Period. The
Advisory Committee must calculate the top heavy ratio by disregarding the
Accrued Benefit (and distributions, if any, of the Accrued Benefit) of any
Non-Key Employee who was formerly a Key Employee, and by disregarding the
Accrued Benefit (including distributions, if any, of the Accrued Benefit) of an
individual who has not received credit for at least one Hour of Service with
the Employer during the Determination Period. The Advisory Committee must
calculate the top heavy ratio, including the extent to which it must take into
account distributions, rollovers and transfers, in accordance with Code Section
416 and the regulations under that Code section.

If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is
terminated, this Plan is top heavy only if it is part of the Required
Aggregation Group, and the top heavy ratio for the Required Aggregation Group
and for the Permissive Aggregation Group, if any, each exceeds 60%. The
Advisory Committee will calculate the top heavy ratio in the same manner as
required by the first paragraph of this Section 1.33, taking into account all
plans within the Aggregation Group. To the extent the Advisory Committee must
take into account distributions to a Participant, the Advisory Committee must
include distributions from a terminated plan which would have been part of the
Required Aggregation Group if it were in existence on the Determination Date.
The Advisory Committee will calculate the present value of accrued benefits
under defined benefit plans or simplified employee pension plans included
within the group in accordance with the terms of those plans, Code Section 416
and the regulations under that Code section. If a Participant in a defined
benefit plan is a Non-Key Employee, the Advisory Committee will determine his
accrued benefit under the accrual method, if any, which is applicable uniformly
to all defined benefit plans maintained by the Employer or, if there is no
uniform method, in accordance with the slowest accrual rate permitted under the
fractional rule accrual method described in Code Section 411(b)(1)(C). If the
Employer maintains a defined benefit plan, the Employer must specify in
Adoption Agreement Section 3.18 the actuarial assumptions (interest and
mortality only) the Advisory Committee will use to calculate the present value
of benefits from a defined benefit plan. If an aggregated plan does not have a
valuation date coinciding with the Determination Date, the Advisory Committee
must value the Accrued Benefits in the aggregated plan as of the most recent
valuation date falling within the twelve-month period ending on the
Determination Date, except as Code Section 416 and applicable Treasury
regulations require for the first and second plan year of a defined benefit
plan. The Advisory Committee will calculate the top heavy ratio with reference
to the Determination Dates that fall within the same calendar year.

(A) STANDARDIZED PLAN. If the Employer's Plan is a Standardized Plan, the
Plan operates as a deemed top heavy plan in all Plan Years, except, if the
Standardized Plan includes a Code Section 401(k) arrangement, the Employer may
elect to apply the top heavy requirements only in Plan Years for which the Plan
actually is top heavy. Under a deemed top heavy plan, the Advisory Committee
need not determine whether the Plan actually is top heavy. However, if the
Employer, in Adoption

1.09
<PAGE> 15

Defined Contribution Master Plan

Agreement Section 3.18, elects to override the 100% limitation, the Advisory
Committee will need to determine whether a deemed top heavy Plan's top heavy
ratio for a Plan Year exceeds 90%.

(B) DEFINITIONS. For purposes of applying the provisions of this Section
1.33:

(1) "Key Employee" means, as of any Determination Date, any
Employee or former Employee (or Beneficiary of such Employee) who, for
any Plan Year in the Determination Period: (i) has Compensation in
excess of 50% of the dollar amount prescribed in Code Section
415(b)(1)(A) (relating to defined benefit plans) and is an officer of
the Employer; (ii) has Compensation in excess of the dollar amount
prescribed in Code Section 415(c)(1)(A) (relating to defined
contribution plans) and is one of the Employees owning the ten largest
interests in the Employer; (iii) is a more than 5% owner of the
Employer; or (iv) is a more than 1% owner of the Employer and has
Compensation of more than $150,000. The constructive ownership rules
of Code Section 318 (or the principles of that section, in the case of
an unincorporated Employer,) will apply to determine ownership in the
Employer. The number of officers taken into account under clause (i)
will not exceed the greater of 3 or 10% of the total number (after
application of the Code Section 414(q) exclusions) of Employees, but
no more than 50 officers. The Advisory Committee will make the
determination of who is a Key Employee in accordance with Code Section
416(i)(1) and the regulations under that Code section.

(2) "Non-Key Employee" is an employee who does not meet the
definition of Key Employee.

(3) "Compensation" means Compensation as determined under Section
1.09 for purposes of identifying Highly Compensated Employees.

(4) "Required Aggregation Group" means: (i) each qualified plan of
the Employer in which at least one Key Employee participates at any
time during the Determination Period; and (ii) any other qualified
plan of the Employer which enables a plan described in clause (i) to
meet the requirements of Code Section 401(a)(4) or of Code Section
410.

(5) "Permissive Aggregation Group" is the Required Aggregation
Group plus any other qualified plans maintained by the Employer, but
only if such group would satisfy in the aggregate the requirements of
Code Section 401(a)(4) and of Code Section 410. The Advisory
Committee will determine the Permissive Aggregation Group.

(6) "Employer" means the Employer that adopts this Plan and any
related employers described in Section 1.30.

(7) "Determination Date" for any Plan Year is the Accounting Date
of the preceding Plan Year or, in the case of the first Plan Year of
the Plan, the Accounting Date of that Plan Year. The "Determination
Period" is the 5 year period ending on the Determination Date.

1.34 "Paired Plans" means the Employer has adopted two Standardized
Plan Adoption Agreements offered with this Master Plan, one Adoption Agreement
being a Paired Profit Sharing Plan and one Adoption Agreement being a Paired
Pension Plan. A Paired Profit Sharing Plan may include a Code Section 401(k)
arrangement. A Paired Pension Plan must be a money purchase pension plan or a
target benefit pension plan. Paired Plans must be the subject of a favorable
opinion letter issued by the National Office of the Internal Revenue Service.
This Master Plan does not pair any of its Standardized Plan Adoption Agreements
with Standardized Plan Adoption Agreements under a defined benefit master plan.

* * * * * * * * * * * * * * * *

1.10
<PAGE> 16

Defined Contribution Master Plan

ARTICLE II
EMPLOYEE PARTICIPANTS

2.01 ELIGIBILITY. Each Employee becomes a Participant in the Plan
in accordance with the participation option selected by the Employer in its
Adoption Agreement. If this Plan is a restated Plan, each Employee who was a
Participant in the Plan on the day before the Effective Date continues as a
Participant in the Plan, irrespective of whether he satisfies the participation
conditions in the restated Plan, unless otherwise provided in the Employer's
Adoption Agreement.

2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an
Employee's participation in the Plan under Adoption Agreement Section 2.01, the
Plan takes into account all of his Years of Service with the Employer, except
as provided in Section 2.03. "Year of Service" means an eligibility computation
period during which the Employee completes not less than the number of Hours of
Service specified in the Employer's Adoption Agreement. The initial
eligibility computation period is the first 12 consecutive month period
measured from the Employment Commencement Date. The Plan measures succeeding
eligibility computation periods in accordance with the option selected by the
Employer in its Adoption Agreement. If the Employer elects to measure
subsequent periods on a Plan Year basis, an Employee who receives credit for
the required number of Hours of Service during the initial eligibility
computation period and during the first applicable Plan Year will receive
credit for two Years of Service under Article II. "Employment Commencement
Date" means the date on which the Employee first performs an Hour of Service
for the Employer. If the Employer elects a service condition under Adoption
Agreement Section 2.01 based on months, the Plan does not apply any Hour of
Service requirement after the completion of the first Hour of Service.

2.03 BREAK IN SERVICE - PARTICIPATION. An Employee incurs a "Break
in Service" if during any 12 consecutive month period he does not complete more
than 500 Hours of Service with the Employer. The "12 consecutive month period"
under this Section 2.03 is the same 12 consecutive month period for which the
Plan measures "Years of Service" under Section 2.02.

(A) 2-YEAR ELIGIBILITY. If the Employer elects a 2 years of service
condition for eligibility purposes under Adoption Agreement Section 2.01, the
Plan treats an Employee who incurs a one year Break in Service and who has
never become a Participant as a new Employee on the date he first performs an
Hour of Service for the Employer after the Break in Service.

(B) SUSPENSION OF YEARS OF SERVICE. The Employer must elect in its
Adoption Agreement whether a Participant will incur a suspension of Years of
Service after incurring a one year Break in Service. If this rule applies
under the Employer's Plan, the Plan disregards a Participant's Years of Service
(as defined in Section 2.02) earned prior to a Break in Service until the
Participant completes another Year of Service and the Plan suspends the
Participant's participation in the Plan. If the Participant completes a Year
of Service following his Break in Service, the Plan restores that Participant's
pre-Break Years of Service (and the Participant resumes active participation in
the Plan) retroactively to the first day of the computation period in which the
Participant earns the first post-Break Year of Service. The initial
computation period under this Section 2.03(B) is the 12 consecutive month
period measured from the date the Participant first receives credit for an Hour
of Service following the one year Break in Service period. The Plan measures
any subsequent periods, if necessary, in a manner consistent with the
computation period selection in Adoption Agreement Section 2.02. This Section
2.03(B) does not affect a Participant's vesting credit under Article V and,
during a suspension period, the Participant's Account continues to share fully
in Trust Fund allocations under Section 9.11. Furthermore, this Section 2.03(B)
will not result in the restoration of any Year of Service disregarded under the
Break in Service rule of Section 2.03(A).

2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose
employment with the Employer terminates will re-enter the Plan as a Participant
on the date of his re-employment, subject to the Break in Service rule, if
applicable, under Section 2.03(B). An Employee who satisfies the Plan's
eligibility conditions but who terminates employment with the

2.01
<PAGE> 17

Defined Contribution Master Plan

Employer prior to becoming a Participant will become a Participant on the later
of the Plan Entry Date on which he would have entered the Plan had he not
terminated employment or the date of his re-employment, subject to the Break in
Service rule, if applicable, under Section 2.03(B). Any Employee who
terminates employment prior to satisfying the Plan's eligibility conditions
becomes a Participant in accordance with Adoption Agreement Section 2.01.

2.05 CHANGE IN EMPLOYEE STATUS. If a Participant has not incurred
a Separation from Service but ceases to be eligible to participate in the Plan,
by reason of employment within an employment classification excluded by the
Employer under Adoption Agreement Section 1.07, the Advisory Committee must
treat the Participant as an Excluded Employee during the period such a
Participant is subject to the Adoption Agreement exclusion. The Advisory
Committee determines a Participant's sharing in the allocation of Employer
contributions and Participant forfeitures, if applicable, by disregarding his
Compensation paid by the Employer for services rendered in his capacity as an
Excluded Employee. However, during such period of exclusion, the Participant,
without regard to employment classification, continues to receive credit for
vesting under Article V for each included Year of Service and the Participant's
Account continues to share fully in Trust Fund allocations under Section 9.11.

If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment classification, he
will participate in the Plan immediately if he has satisfied the eligibility
conditions of Section 2.01 and would have been a Participant had he not been an
Excluded Employee during his period of Service. Furthermore, the Plan takes
into account all of the Participant's included Years of Service with the
Employer as an Excluded Employee for purposes of vesting credit under Article
V.

2.06 ELECTION NOT TO PARTICIPATE. If the Employer's Plan is a
Standardized Plan, the Plan does not permit an otherwise eligible Employee nor
any Participant to elect not to participate in the Plan. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in its Adoption
Agreement whether an Employee eligible to participate, or any present
Participant, may elect not to participate in the Plan. For an election to be
effective for a particular Plan Year, the Employee or Participant must file the
election in writing with the Plan Administrator not later than the time
specified in the Employer's Adoption Agreement. The Employer may not make a
contribution under the Plan for the Employee or for the Participant for the
Plan Year for which the election is effective, nor for any succeeding Plan
Year, unless the Employee or Participant re-elects to participate in the Plan.
After an Employee's or Participant's election not to participate has been
effective for at least the minimum period prescribed by the Employer's Adoption
Agreement, the Employee or Participant may re-elect to participate in the Plan
for any Plan Year and subsequent Plan Years. An Employee or Participant may
re-elect to participate in the Plan by filing his election in writing with the
Plan Administrator not later than the time specified in the Employer's Adoption
Agreement. An Employee or Participant who re-elects to participate may again
elect not to participate only as permitted in the Employer's Adoption
Agreement. If an Employee is a Self-Employed Individual, the Employee's
election (except as permitted by Treasury regulations without creating a Code
Section 401(k) arrangement with respect to that Self-Employed Individual) must
be effective no later than the date the Employee first would become a
Participant in the Plan and the election is irrevocable. The Plan
Administrator must furnish an Employee or a Participant any form required for
purposes of an election under this Section 2.06. An election timely filed is
effective for the entire Plan Year.

A Participant who elects not to participate may not receive a
distribution of his Accrued Benefit attributable either to Employer or to
Participant contributions except as provided under Article IV or under Article
VI. However, for each Plan Year for which a Participant's election not to
participate is effective, the Participant's Account, if any, continues to share
in Trust Fund allocations under Article IX Furthermore, the Employee or the
Participant receives vesting credit under Article V for each included Year of
Service during the period the election not to participate is effective.

* * * * * * * * * * * * * * * *

2.02
<PAGE> 18
Defined Contribution Master Plan

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

PART 1. AMOUNT OF EMPLOYER CONTRIBUTIONS AND PLAN ALLOCATIONS: SECTIONS 3.01
THROUGH 3.06

3.01 AMOUNT. For each Plan Year, the Employer contributes to the
Trust the amount determined by application of the contribution option selected
by the Employer in its Adoption Agreement. The Employer may not make a
contribution to the Trust for any Plan Year to the extent the contribution
would exceed the Participants' Maximum Permissible Amounts.

The Employer contributes to this Plan on the condition its
contribution is not due to a mistake of fact and the Revenue Service will not
disallow the deduction for its contribution. The Trustee, upon written request
from the Employer, must return to the Employer the amount of the Employer's
contribution made by the Employer by mistake of fact or the amount of the
Employer's contribution disallowed as a deduction under Code Section 404. The
Trustee will not return any portion of the Employer's contribution under the
provisions of this paragraph more than one year after:

(a) The Employer made the contribution by mistake of fact; or

(b) The disallowance of the contribution as a deduction, and
then, only to the extent of the disallowance.

The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution
returnable for any losses attributable to it. The Trustee may require the
Employer to furnish it whatever evidence the Trustee deems necessary to enable
the Trustee to confirm the amount the Employer has requested be returned is
properly returnable under ERISA.

3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.

3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without interest.
The Employer must make its contribution to the Plan within the time prescribed
by the Code or applicable Treasury regulations. Subject to the consent of the
Trustee, the Employer may make its contribution in property rather than in
cash, provided the contribution of property is not a prohibited transaction
under the Code or under ERISA.

3.04 CONTRIBUTION ALLOCATION.

(A) METHOD OF ALLOCATION. The Employer must specify in its Adoption
Agreement the manner of allocating each annual Employer contribution to this
Trust.

(B) TOP HEAVY MINIMUM ALLOCATION. The Plan must comply with the
provisions of this Section 3.04(B), subject to the elections in the Employer's
Adoption Agreement.

(1) TOP HEAVY MINIMUM ALLOCATION UNDER STANDARDIZED PLAN. Subject
to the Employer's election under Section 3.04(B)(3), the top heavy minimum
allocation requirement applies to a Standardized Plan for each Plan Year,
irrespective of whether the Plan is top heavy.

(a) Each Participant employed by the Employer on the last
day of the Plan Year will receive a top heavy minimum
allocation for that Plan Year. The Employer may elect in
Section 3.04 of its Adoption Agreement to apply this paragraph
(a) only to a Participant who is a Non-Key Employee.

3.01
<PAGE> 19
Defined Contribution Master Plan

(b) Subject to any overriding elections in Section 3.18
of the Employer's Adoption Agreement, the top heavy minimum
allocation is the lesser of 3% of the Participant's
Compensation for the Plan Year or the highest contribution
rate for the Plan Year made on behalf of any Participant for
the Plan Year. However, if the Employee participates in
Paired Plans, the top heavy minimum allocation is 3% of his
Compensation. If, under Adoption Agreement Section 3.04, the
Employer elects to apply paragraph (a) only to a Participant
who is a Non-Key Employee, the Advisory Committee will
determine the "highest contribution rate" described in the
first sentence of this paragraph (b) by reference only to the
contribution rates of Participants who are Key Employees for
the Plan Year.

(2) TOP HEAVY MINIMUM ALLOCATION UNDER NONSTANDARDIZED PLAN. The
top heavy minimum allocation requirement applies to a Nonstandardized Plan only
in Plan Years for which the Plan is top heavy. Except as provided in the
Employer's Adoption Agreement, if the Plan is top heavy in any Plan Year:

(a) Each Non-Key Employee who is a Participant and is
employed by the Employer on the last day of the Plan Year will
receive a top heavy minimum allocation for that Plan Year,
irrespective of whether he satisfies the Hours of Service
condition under Section 3.06 of the Employer's Adoption
Agreement; and

(b) The top heavy minimum allocation is the lesser of 3%
of the Non-Key Employee's Compensation for the Plan Year or
the highest contribution rate for the Plan Year made on behalf
of any Key Employee. However, if a defined benefit plan
maintained by the Employer which benefits a Key Employee
depends on this Plan to satisfy the antidiscrimination rules
of Code Section 401(a)(4) or the coverage rule's of Code
Section 410 (or another plan benefiting the Key Employee so
depends on such defined benefit plan), the top heavy minimum
allocation is 3% of the Non-Key Employee's Compensation
regardless of the contribution rate for the Key Employees.

(3) SPECIAL ELECTION FOR STANDARDIZED CODE SECTION 401(k) PLAN.
If the Employer's Plan is a Standardized Code Section 401(k) Plan, the Employer
may elect in Adoption Agreement Section 3.04 to apply the top heavy minimum
allocation requirements of Section 3.04(B)(1) only for Plan Years in which the
Plan actually is a top heavy plan.

(4) SPECIAL DEFINITIONS. For purposes of this Section 3.04(B),
the term "Participant" includes any Employee otherwise eligible to participate
in the Plan but who is not a Participant because of his Compensation level or
because of his failure to make elective deferrals under a Code Section 401(k)
arrangement or because of his failure to make mandatory contributions. For
purposes of subparagraph (1)(b) or (2)(b), "Compensation" means Compensation as
defined in Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to include
these amounts in Section 1.12 of its Adoption Agreement, any exclusion selected
in Section 1.12 of the Adoption Agreement (other than the exclusion of elective
contributions) does not apply, and any modification to the definition of
Compensation in Section 3.06 does not apply.

(5) DETERMINING CONTRIBUTION RATES. For purposes of this Section
3.04(B), a Participant's contribution rate is the sum of all Employer
contributions (not including Employer contributions to Social Security) and
forfeitures allocated to the Participant's Account for the Plan Year divided by
his Compensation for the entire Plan Year. However, for purposes of satisfying
a Participant's top heavy minimum allocation in Plan Years beginning after
December 31, 1988, the Participant's contribution rate does not include any
elective contributions under a Code Section 401(k) arrangement nor any Employer
matching contributions allocated on the basis of those elective contributions
or on

3.02
<PAGE> 20
Defined Contribution Master Plan

the basis of employee contributions, except a Nonstandardized Plan may include
in the contribution rate any matching contributions not necessary to satisfy
the nondiscrimination requirements of Code Section 401(k) or of Code Section
401(m).

If the Employee is a Participant in Paired Plans, the Advisory
Committee will consider the Paired Plans as a single Plan to determine a
Participant's contribution rate and to determine whether the Plans satisfy this
top heavy minimum allocation requirement. To determine a Participant's
contribution rate under a Nonstandardized Plan, the Advisory Committee must
treat all qualified top heavy defined contribution plans maintained by the
Employer (or by any related Employers described in Section 1.30) as a single
plan.

(6) NO ALLOCATIONS. If, for a Plan Year, there are no allocations
of Employer contributions or forfeitures for any Participant (for purposes of
Section 3.04(B)(l)(b)) or for any Key Employee (for purposes of Section
3.04(B)(2)(b)), the Plan does not require any top heavy minimum allocation for
the Plan Year, unless a top heavy minimum allocation applies because of the
maintenance by the Employer of more than one plan.

(7) ELECTION OF METHOD. The Employer must specify in its Adoption
Agreement the manner in which the Plan will satisfy the top heavy minimum
allocation requirement.

(a) If the Employer elects to make any necessary additional
contribution to this Plan, the Advisory Committee first will allocate
the Employer contributions (and Participant forfeitures, if any) for
the Plan Year in accordance with the provisions of Adoption Agreement
Section 3.04. The Employer then will contribute an additional amount
for the Account of any Participant entitled under this Section 3.04(B)
to a top heavy minimum allocation and whose contribution rate for the
Plan Year, under this Plan and any other plan aggregated under
paragraph (5), is less than the top heavy minimum allocation. The
additional amount is the amount necessary to increase the
Participant's contribution rate to the top heavy minimum allocation.
The Advisory Committee will allocate the additional contribution to
the Account of the Participant on whose behalf the Employer makes the
contribution.

(b) If the Employer elects to guarantee the top heavy minimum
allocation under another plan, this Plan does not provide the top
heavy minimum allocation and the Advisory Committee will allocate the
annual Employer contributions (and Participant forfeitures) under the
Plan solely in accordance with the allocation method selected under
Adoption Agreement Section 3.04.

3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. The Advisory
Committee will allocate Participant forfeitures in the manner specified by the
Employer in its Adoption Agreement. The Advisory Committee will continue to
hold the undistributed, non-vested portion of a terminated Participant's
Accrued Benefit in his Account solely for his benefit until a forfeiture occurs
at the time specified in Section 5.09 or if applicable, until the time
specified in Section 9.14. Except as provided. under Section 5.04, a
Participant will not share in the allocation of a forfeiture of any portion of
his Accrued Benefit.

3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrual of benefit (Employer contributions and Participant forfeitures) on the
basis of the Plan Year in accordance with the Employer's elections in its
Adoption Agreement.

(A) COMPENSATION TAKEN INTO ACCOUNT. The Employer must specify in its
Adoption Agreement the Compensation the Advisory Committee is to take into
account in allocating an Employer contribution to a Participant's Account for
the Plan Year in which the Employee first becomes a Participant. For all other
Plan Years, the Advisory Committee will take into account only the

3.03

<PAGE> 21

Defined Contribution Master Plan

Compensation determined for the portion of the Plan Year in which the Employee
actually is a Participant. The Advisory Committee must take into account the
Employee's entire Compensation for the Plan Year to determine whether the Plan
satisfies the top heavy minimum allocation requirement of Section 3.04(B). The
Employer, in an addendum to its Adoption Agreement numbered 3.06(A), may elect
to measure Compensation for the Plan Year for allocation purposes on the basis
of a specified period other than the Plan Year.

(B) HOURS OF SERVICE REQUIREMENT. Subject to the applicable minimum
allocation requirement of Section 3.04, the Advisory Committee will not
allocate any portion of an Employer contribution for a Plan Year to any
Participant's Account if the Participant does not complete the applicable
minimum Hours of Service requirement specified in the Employer's Adoption
Agreement.

(C) EMPLOYMENT REQUIREMENT. If the Employer's Plan is a Standardized
Plan, a Participant who, during a particular Plan Year, completes the accrual
requirements of Adoption Agreement Section 3.06 will share in the allocation of
Employer contributions for that Plan Year without regard to whether he is
employed by the Employer on the Accounting Date of that Plan Year. If the
Employer's Plan is a Nonstandardized Plan, the Employer must specify in its
Adoption Agreement whether the Participant will accrue a benefit if he is not
employed by the Employer on the Accounting Date of the Plan Year. If the
Employer's Plan is a money purchase plan or a target benefit plan, whether
Nonstandardized or Standardized, the Plan conditions benefit accrual on
employment with the Employer on the last day of the Plan Year for the Plan Year
in which the Employer terminates the Plan.

(D) OTHER REQUIREMENTS. If the Employer's Adoption Agreement includes
options for other requirements affecting the Participant's accrual of benefits
under the Plan, the Advisory Committee will apply this Section 3.06 in
accordance with the Employer's Adoption Agreement selections.

(E) SUSPENSION OF ACCRUAL REQUIREMENTS UNDER NONSTANDARDIZED PLAN. If the
Employer's Plan is a Nonstandardized Plan, the Employer may elect in its
Adoption Agreement to suspend the accrual requirements elected under Adoption
Agreement Section 3.06 if, for any Plan Year beginning after December 31, 1989,
the Plan fails to satisfy the Participation Test or the Coverage Test. A Plan
satisfies the Participation Test if, on each day of the Plan Year, the number
of Employees who benefit under the Plan is at least equal to the lesser of 50
or 40% of the total number of Includible Employees as of such day. A Plan
satisfies the Coverage Test if, on the last day of each quarter of the Plan
Year, the number of Nonhighly Compensated Employees who benefit under the Plan
is at least equal to 70% of the total number of Includible Nonhighly
Compensated Employees as of such day. "Includible" Employees are all Employees
other than: (1) those Employees excluded from participating in the Plan for the
entire Plan Year by reason of the collective bargaining unit exclusion or the
nonresident alien exclusion under Adoption Agreement Section 1.07 or by reason
of the participation requirements of Sections 2.01 and 2.03; and (2) any
Employee who incurs a Separation from Service during the Plan Year and fails to
complete at least 501 Hours of Service for the Plan Year. A "Nonhighly
Compensated Employee" is an Employee who is not a Highly Compensated Employee
and who is not a family member aggregated with a Highly Compensated Employee
pursuant to Section 1.09 of the Plan.

For purposes of the Participation Test and the Coverage Test, an
Employee is benefiting under the Plan on a particular date if, under Adoption
Agreement Section 3.04, he is entitled to an allocation for the Plan Year.
Under the Participation Test, when determining whether an Employee is entitled
to an allocation under Adoption Agreement Section 3.04, the Advisory Committee
will disregard any allocation required solely by reason of the top heavy
minimum allocation, unless the top heavy minimum allocation is the only
allocation made under the Plan for the Plan Year.

3.04
<PAGE> 22
Defined Contribution Master Plan

If this Section 3.06(E) applies for a Plan Year, the Advisory
Committee will suspend the accrual requirements for the Includible Employees
who are Participants, beginning first with the Includible Employee(s) employed
with the Employer on the last day of the Plan Year, then the Includible
Employee(s) who have the latest Separation from Service during the Plan Year,
and continuing to suspend in descending order the accrual requirements for each
Includible Employee who incurred an earlier Separation from Service, from the
latest to the earliest Separation from Service date, until the Plan satisfies
both the Participation Test and the Coverage Test for the Plan Year. If two or
more Includible Employees have a Separation from Service on the same day, the
Advisory Committee will suspend the accrual requirements for all such Includible
Employees, irrespective of whether the Plan can satisfy the Participation Test
and the Coverage Test by accruing benefits for fewer than all such Includible
Employees. If the Plan suspends the accrual requirements for an Includible
Employee, that Employee will share in the allocation of Employer contributions
and Participant forfeitures, if any, without regard to the number of Hours of
Service he has earned for the Plan Year and without regard to whether he is
employed by the Employer on the last day of the Plan Year. If the Employer's
Plan includes Employer matching contributions subject to Code Section 401(m),
this suspension of accrual requirements applies separately to the Code Section
401(m) portion of the Plan, and the Advisory Committee will treat an Employee
as benefiting under that portion of the Plan if he is an Eligible Employee for
purposes of the Code Section 401(m) nondiscrimination test. The Employer may
modify the operation of this Section 3.06(E) by electing appropriate
modifications in Section 3.06 of its Adoption Agreement.

PART 2. LIMITATIONS ON ALLOCATIONS: SECTIONS 3.07 THROUGH 3.19

[Note: Sections 3.07 through 3.10 apply only to Participants in this
Plan who do not participate, and who have never participated, in another
qualified plan or in a welfare benefit fund (as defined in Code Section 419(e))
maintained by the Employer.]

3.07 The amount of Annual Additions which the Advisory Committee
may allocate under this Plan on a Participant's behalf for a Limitation Year
may not exceed the Maximum Permissible Amount. If the amount the Employer
otherwise would contribute to the Participant's Account would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible Amount, the
Employer will reduce the amount of its contribution so the Annual Additions for
the Limitation Year will equal the Maximum Permissible Amount. If an
allocation of Employer contributions, pursuant to Section 3.04, would result in
an Excess Amount (other than an Excess Amount resulting from the circumstances
described in Section 3.10) to the Participant's Account, the Advisory Committee
will reallocate the Excess Amount to the remaining Participants who are
eligible for an allocation of Employer contributions for the Plan Year in which
the Limitation Year ends. The Advisory Committee will make this reallocation
on the basis of the allocation method under the Plan as if the Participant
whose Account otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.

3.08 Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Advisory Committee may determine the
Maximum Permissible Amount on the basis of the Participant's estimated annual
Compensation for such Limitation Year. The Advisory Committee must make this
determination on a reasonable and uniform basis for all Participants similarly
situated. The Advisory Committee must reduce any Employer contributions
(including any allocation of forfeitures) based on estimated annual
Compensation by any Excess Amounts carried over from prior years.

3.09 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the Maximum Permissible
Amount for such Limitation Year on the basis of the Participant's actual
Compensation for such Limitation Year.

3.05

<PAGE> 23

Defined Contribution Master Plan

3.10 If, pursuant to Section 3.09, or because of the allocation of
forfeitures, there is an Excess Amount with respect to a Participant for a
Limitation Year, the Advisory Committee will dispose of such Excess Amount as
follows:

(a) The Advisory Committee will return any nondeductible voluntary
Employee contributions to the Participant to the extent the return
would reduce the Excess Amount.

(b) If, after the application of paragraph (a), an Excess Amount
still exists, and the Plan covers the Participant at the end of the
Limitation Year, then the Advisory Committee will use the Excess
Amount(s) to reduce future Employer contributions (including any
allocation of forfeitures) under the Plan for the next Limitation Year
and for each succeeding Limitation Year, as is necessary, for the
Participant. If the Employer's Plan is a profit sharing plan, the
Participant may elect to limit his Compensation for allocation
purposes to the extent necessary to reduce his allocation for the
Limitation Year to the Maximum Permissible Amount and eliminate the
Excess Amount.

(c) If, after the application of paragraph (a), an Excess Amount
still exists, and the Plan does not cover the Participant at the end
of the Limitation Year, then the Advisory Committee will hold the
Excess Amount unallocated in a suspense account. The Advisory
Committee will apply the suspense account to reduce Employer
Contributions (including allocation of forfeitures) for all remaining
Participants in the next Limitation Year, and in each succeeding
Limitation Year if necessary. Neither the Employer nor any Employee
may contribute to the Plan for any Limitation Year in which the Plan
is unable to allocate fully a suspense account maintained pursuant to
this paragraph (c).

(d) The Advisory Committee will not distribute any Excess
Amount(s) to Participants or to former Participants.

[Note: Sections 3.11 through 3.16 apply only to Participants who, in
addition to this Plan, participate in one or more plans (including Paired
Plans), all of which are qualified Master or Prototype defined contribution
plans or welfare benefit funds (as defined in Code Section 419(e)) maintained
by the Employer during the Limitation Year.]

3.11 The amount of Annual Additions which the Advisory Committee
may allocate under this Plan on a Participant's behalf for a Limitation Year
may not exceed the Maximum Permissible Amount, reduced by the sum of any Annual
Additions allocated to the Participant's Accounts for the same Limitation Year
under this Plan and such other defined contribution plan. If the amount the
Employer otherwise would contribute to the Participant's Account under this
Plan would cause the Annual Additions for the Limitation Year to exceed this
limitation, the Employer will reduce the amount of its contribution so the
Annual Additions under all such plans for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions,
pursuant to Section 3.04, would result in an Excess Amount (other than an
Excess Amount resulting from the circumstances described in Section 3.10) to
the Participant's Account, the Advisory Committee will reallocate the Excess
Amount to the remaining Participants who are eligible for an allocation of
Employer contributions for the Plan Year in which the Limitation Year ends.
The Advisory Committee will make this reallocation on the basis of the
allocation method under the Plan as if the Participant whose Account otherwise
would receive the Excess Amount is not eligible for an allocation of Employer
contributions.

3.12 Prior to the determination of the Participant's actual
Compensation for the Limitation Year, the Advisory Committee may determine the
amounts referred to in 3.11 above on the basis of the Participant's estimated
annual Compensation for such Limitation Year. The Advisory Committee will make
this determination on a reasonable and uniform basis for all Participants
similarly

3.06
<PAGE> 24
Defined Contribution Master Plan

situated. The Advisory Committee must reduce any Employer contribution
(including allocation of forfeitures) based on estimated annual Compensation by
any Excess Amounts carried over from prior years.

3.13 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the amounts referred to
in 3.11 on the basis of the Participant's actual Compensation for such
Limitation Year.

3.14 If pursuant to Section 3.13, or because of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and all such
other plans result in an Excess Amount, such Excess Amount will consist of the
Amounts last allocated. The Advisory Committee will determine the Amounts last
allocated by treating the Annual Additions attributable to a welfare benefit
fund as allocated first, irrespective of the actual allocation date under the
welfare benefit fund.

3.15 The Employer must specify in its Adoption Agreement the Excess
Amount attributed to this Plan, if the Advisory Committee allocates an Excess
Amount to a Participant on an allocation date of this Plan which coincides with
an allocation date of another plan.

3.16 The Advisory Committee will dispose of any Excess Amounts
attributed to this Plan as provided in Section 3.10.

[Note: Section 3.17 applies only to Participants who, in addition to
this Plan, participate in one or more qualified plans which are qualified
defined contribution plans other than a Master or Prototype plan maintained by
the Employer during the Limitation Year.]

3.17 SPECIAL ALLOCATION LIMITATION. The amount of Annual Additions
which the Advisory Committee may allocate under this Plan on behalf of any
Participant are limited in accordance with the provisions of Section 3.11
through 3.16, as though the other plan were a Master or Prototype plan, unless
the Employer provides other limitations in an addendum to the Adoption
Agreement, numbered Section 3.17.

3.18 DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a
defined benefit plan, or has ever maintained a defined benefit plan which the
Employer has terminated, then the sum of the defined benefit plan fraction and
the defined contribution plan fraction for any Participant for any Limitation
Year must not exceed 1.0. The Employer must provide in Adoption Agreement
Section 3.18 the manner in which the Plan will satisfy this limitation. The
Employer also must provide in its Adoption Agreement Section 3.18 the manner in
which the Plan will satisfy the top heavy requirements of Code Section 416
after taking into account the existence (or prior maintenance) of the defined
benefit plan.

3.19 DEFINITIONS - ARTICLE M. For purposes of Article III, the
following terms mean:

(a) "Annual Addition" - The sum of the following amounts allocated
on behalf of a Participant for a Limitation Year, of (i) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee
contributions. Except to the extent provided in Treasury regulations,
Annual Additions include excess contributions described in Code
Section 401(k), excess aggregate contributions, described in Code
Section 401(m) and excess deferrals described in Code Section 402(g),
irrespective of whether the plan distributes or forfeits such excess
amounts. Annual Additions also include Excess Amounts reapplied to
reduce Employer contributions under Section 3.10. Amounts allocated
after March 31, 1984, to an individual medical account (as defined in
Code Section 415(l)(2)) included as part of a defined benefit plan
maintained by the Employer are Annual

3.07
<PAGE> 25

Defined Contribution Master Plan

Additions. Furthermore, Annual Additions include contributions paid
or accrued after December 31, 1985, for taxable years ending after
December 31, 1985, attributable to postretirement medical benefits
allocated to the separate account of a key employee (as defined in
Code Section 419A(d)(3)) under a welfare benefit fund (as defined in
Code Section 419(e)) maintained by the Employer.

(b) "Compensation" - For purposes of applying the limitations of
Part 2 of this Article III, "Compensation" means Compensation as
defined in Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to
include these amounts as Compensation under Section 1.12 of its
Adoption Agreement, and any exclusion selected in Section 1.12 of the
Adoption Agreement (other than the exclusion of elective
contributions) does not apply.

(c) "Employer" - The Employer that adopts this Plan and any
related employers described in Section 1.30. Solely for purposes of
applying the limitations of Part 2 of this Article III, the Advisory
Committee will determine related employers described in Section 1.30
by modifying Code Sections 414(b) and (c) in accordance with Code
Section 415(h).

(d) "Excess Amount" - The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.

(e) "Limitation Year" - The period selected by the Employer under
Adoption Agreement Section 1.17. All qualified plans of the Employer
must use the same Limitation Year. If the Employer amends the
Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year for
which the Employer makes the amendment, creating a short Limitation
Year.

(f) "Master or Prototype Plan" - A plan the form of which is the
subject of a favorable notification letter or a favorable opinion
letter from the Internal Revenue Service.

(g) "Maximum Permissible Amount" - The lesser of (i) $30,000 (or,
if greater, one-fourth of the defined benefit dollar limitation under
Code Section 415(b)(1)(A)), or (ii) 25% of the Participant's
Compensation for the Limitation Year. If there is a short Limitation
Year because of a change in Limitation Year, the Advisory Committee
will multiply the $30,000 (or adjusted) limitation by the following
fraction:

Number of months in the short Limitation Year
---------------------------------------------------
12

(h) "Defined contribution plan" - A retirement plan which provides
for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any
income, expenses, gains and losses, and any forfeitures of accounts of
other participants which the plan may allocate to such participant's
account. The Advisory Committee must treat all defined contribution
plans (whether or not terminated) maintained by the Employer as a
single plan. Solely for purposes of the limitations of Part 2 of this
Article III, the Advisory Committee will treat employee contributions
made to a defined benefit plan maintained by the Employer as a
separate defined contribution plan. The Advisory Committee also will
treat as a defined contribution plan an individual medical account (as
defined in Code Section 415(l)(2)) included as part of a defined
benefit plan maintained by the Employer and, for taxable years ending
after December 31, 1985, a welfare benefit fund under Code Section
419(e) maintained by the Employer to the extent there are
post-retirement medical benefits allocated to the separate account of
a key employee (as defined in Code Section 419A(d)(3)).

3.08
<PAGE> 26
Defined Contribution Master Plan

(i) "Defined benefit plan" - A retirement plan which does not
provide for individual accounts for Employer contributions. The
Advisory Committee must treat all defined benefit plans (whether or
not terminated) maintained by the Employer as a single plan.

[Note: The definitions in paragraphs (j), (k) and (1) apply only if the
limitation described in Section 3.18 applies to the Employer's Plan.]

(j) "Defined benefit plan fraction"

Projected annual benefit of the Participant under the defined benefit plan(s)
-----------------------------------------------------------------------------
The lesser of (i) 125% (subject to the "100% limitation" in paragraph (l)) of
the dollar limitation in effect under Code Section 415(b)(1)(A) for the
Limitation Year, or (ii) 140% of the Participant's average
Compensation for his high three (3) consecutive Years of Service

To determine the denominator of this fraction, the Advisory Committee
will make any adjustment required under Code Section 415(b) and will determine
a Year of Service, unless otherwise provided in an addendum to Adoption
Agreement Section 3.18, as a Plan Year in which the Employee completed at least
1,000 Hours of Service. The "projected annual benefit" is the annual
retirement benefit (adjusted to an actuarially equivalent straight life annuity
if the plan expresses such benefit in a form other than a straight life annuity
or qualified joint and survivor annuity) of the Participant under the terms of
the defined benefit plan on the assumptions he continues employment until his
normal retirement age (or current age, if later) as stated in the defined
benefit plan, his compensation continues at the same rate as in effect in the
Limitation Year under consideration until the date of his normal retirement age
and au other relevant factors used to determine benefits under the defined
benefit plan remain constant as of the current Limitation Year for all future
Limitation Years.

CURRENT ACCRUED BENEFIT. If the Participant accrued benefits in one
or more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the dollar limitation used in the denominator of this
fraction will not be less than the Participant's Current Accrued Benefit. A
Participant's Current Accrued Benefit is the sum of the annual benefits under
such defined benefit plans which the Participant had accrued as of the end of
the 1986 Limitation Year (the last Limitation Year beginning before January 1,
1987), determined without regard to any change in the terms or conditions of
the Plan made after May 5, 1986, and without regard to any cost of living
adjustment occurring after May 5, 1986. This Current Accrued Benefit rule
applies only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 as in effect at the end of the
1986 Limitation Year.

(k) "Defined contribution plan fraction" -

The sum, as of the close of the Limitation Year, of the Annual Additions
to the Participant's Account under the defined contribution plan(s)
---------------------------------------------------------------------------
The sum of the lesser of the following amounts determined
for the Limitation Year and for each prior Year of Service with the Employer:
(i) 125% (subject to the "100% limitation" in paragraph
(1)) of the dollar limitation in effect under Code Section 415(c)(1)(A) for the
Limitation Year (determined without regard to the special
dollar limitations for employee stock ownership plans), or (ii) 35% of the
Participant's Compensation for the Limitation Year

For purposes of determining the defined contribution plan fraction,
the Advisory Committee will not recompute Annual Additions in Limitation Years
beginning prior to

3.09

<PAGE> 27

Defined Contribution Master Plan

January 1, 1987, to treat all Employee contributions as Annual Additions. If
the Plan satisfied Code Section 415 for Limitation Years beginning prior to
January 1, 1987, the Advisory Committee will redetermine the defined
contribution plan fraction and the defined benefit plan fraction as of the end
of the 1986 Limitation Year, in accordance with this Section 3.19. If the sum
of the redetermined fractions exceeds 1.0, the Advisory Committee will subtract
permanently from the numerator of the defined contribution plan fraction an
amount equal to the product of (1) the excess of the sum of the fractions over
1.0, times (2) the denominator of the defined contribution plan fraction. In
making the adjustment, the Advisory Committee must disregard any accrued
benefit under the defined benefit plan which is in excess of the Current
Accrued Benefit. This Plan continues any transitional rules applicable to the
determination of the defined contribution plan fraction under the Employer's
Plan as of the end of the 1986 Limitation Year.

(1) "100% Limitation." If the 100% limitation applies, the Advisory
Committee must determine the denominator of the defined benefit plan fraction
and the denominator of the defined contribution plan fraction by substituting
100% for 125%. If the Employer's Plan is a Standardized Plan, the 100%
limitation applies in all Limitation Years, subject to any override provisions
under Section 3.18 of the Employer's Adoption Agreement. If the Employer
overrides the 100% limitation under a Standardized Plan, the Employer must
specify in its Adoption Agreement the manner in which the Plan satisfies the
extra minimum benefit requirement of Code Section 416(h) and the 10O%
limitation must continue to apply if the Plan's top heavy ratio exceeds 90%.
If the Employer's Plan is a Nonstandardized Plan, the 100% Limitation applies
only if: (i) the Plan's top heavy ratio exceeds 90%; or (ii) the Plan's top
heavy ratio is greater than 60%, and the Employer does not elect in its
Adoption Agreement Section 3.18 to provide extra minimum benefits which satisfy
Code Section 416(h)(2).

* * * * * * * * * *

3.10
<PAGE> 28
Defined Contribution Master Plan

ARTICLE IV
PARTICIPANT CONTRIBUTIONS

4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. This Plan does not
permit Participant nondeductible contributions unless the Employer maintains
its Plan under a Code Section 401(k) Adoption Agreement. If the Employer does
not maintain its Plan under a Code Section 401(k) Adoption Agreement and, prior
to the adoption of this Master Plan, the Plan accepted Participant
nondeductible contributions for a Plan Year beginning after December 31, 1986,
those contributions must satisfy the requirements of Code Section 401(m). This
Section 4.01 does not prohibit the Plan's acceptance of Participant
nondeductible contributions prior to the first Plan Year commencing after the
Plan Year in which the Employer adopts this Master Plan.

4.02 PARTICIPANT DEDUCTIBLE CONTRIBUTIONS. A qualified Plan may
not accept Participant deductible contributions after April 15, 1987. If the
Employer's Plan includes Participant deductible contributions ("DECs") made
prior to April 16, 1987, the Advisory Committee must maintain a separate
accounting for the Participant's Accrued Benefit attributable to DECs,
including DECs which are part of a rollover contribution described in Section
4.03. The Advisory Committee will treat the accumulated DECs as part of the
Participant's Accrued Benefit for all purposes of the Plan, except for purposes
of determining the top heavy ratio under Section 1.33. The Advisory Committee
may not use DECs to purchase life insurance on the Participant's behalf.

4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form
prescribed by the Advisory Committee, may contribute cash or other property to
the Trust other than as a voluntary contribution if the contribution is a
"rollover contribution" which the Code permits an employee to transfer either
directly or indirectly from one qualified plan to another qualified plan.
Before accepting a rollover contribution, the Trustee may require an Employee
to furnish satisfactory evidence that the proposed transfer is in fact a
"rollover contribution" which the Code permits an employee to make to a
qualified plan. A rollover contribution is not an Annual Addition under Part 2
of Article Ill.

The Trustee will invest the rollover contribution in a segregated
investment Account for the Participant's sole benefit unless the Trustee (or
the Named Fiduciary, in the case of a nondiscretionary Trustee designation), in
its sole discretion, agrees to invest the rollover contribution as part of the
Trust Fund. The Trustee will not have any investment responsibility with
respect to a Participant's segregated rollover Account. The Participant,
however, from time to time, may direct the Trustee in writing as to the
investment of his segregated rollover Account in property, or property
interests, of any kind, real, personal or mixed; provided however, the
Participant may not direct the Trustee to make loans to his Employer. A
Participant's segregated rollover Account alone will bear any extraordinary
expenses resulting from investments made at the direction of the Participant.
As of the Accounting Date (or other valuation date) for each Plan Year, the
Advisory Committee will allocate and credit the net income (or net loss) from a
Participant's segregated rollover Account and the increase or decrease in the
fair market value of the assets of a segregated rollover Account solely to that
Account. The Trustee is not liable nor responsible for any loss resulting to
any Beneficiary, nor to any Participant, by reason of any sale or investment
made or other action taken pursuant to and in accordance with the direction of
the Participant. In all other respects, the Trustee will hold, administer and
distribute a rollover contribution in the same manner as any Employer
contribution made to the Trust.

An elibible Employee, prior to satisfying the Plan's eligibility
conditions, may make a rollover contribution to the Trust to the same extent
and in the same manner as a Participant. If an Employee makes a rollover
contribution to the Trust prior to satisfying the Plan's eligibility
conditions, the Advisory Committee and Trustee must treat the Employee as a
Participant for all

4.01
<PAGE> 29

Defined Contribution Master Plan

purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan. If the Employee has a
Separation from Service prior to becoming a Participant, the Trustee will
distribute his rollover contribution Account to him as if it were an Employer
contribution Account.

4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY. A Participant's
Accrued Benefit is, at all times, 100% Nonforfeitable to the extent the value
of his Accrued Benefit is derived from his Participant contributions described
in this Article IV.

4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. A
Participant, by giving prior written notice to the Trustee, may withdraw all or
any part of the value of his Accrued Benefit derived from his Participant
contributions described in this Article IV. A distribution of Participant
contributions must comply with the joint and survivor requirements described in
Article VI, if those requirements apply to the Participant. A Participant may
not exercise his right to withdraw the value of his Accrued Benefit derived
from his Participant contributions more than once during any Plan Year. The
Trustee, in accordance with the direction of the Advisory Committee, will
distribute a Participant's unwithdrawn Accrued Benefit attributable to his
Participant contributions in accordance with the provisions of Article VI
applicable to the distribution of the Participant's Nonforfeitable Accrued
Benefit.

4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT. The Advisory
Committee must maintain a separate Account(s) in the name of each Participant
to reflect the Participant's Accrued Benefit under the Plan derived from his
Participant contributions. A Participant's Accrued Benefit derived from his
Participant contributions as of any applicable date is the balance of his
separate Participant contribution Account(s).

* * * * * * * * * *

4.02
<PAGE> 30
Defined Contribution Master Plan

ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING

5.01 NORMAL RETIREMENT AGE. The Employer must define Normal
Retirement Age in its Adoption Agreement. A Participant's Accrued Benefit
derived from Employer contributions is 100% Nonforfeitable upon and after his
attaining Normal Retirement Age (if employed by the Employer on or after that
date).

5.02 PARTICIPANT DISABILITY OR DEATH. The Employer may elect in
its Adoption Agreement to provide a Participant's Accrued Benefit derived from
Employer contributions will be 100% Nonforfeitable if the Participant's
Separation from Service is a result of his death or his disability.

5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and
5.02, for each Year of Service, a Participant's Nonforfeitable percentage of
his Accrued Benefit derived from Employer contributions equals the percentage
in the vesting schedule completed by the Employer in its Adoption Agreement.

(A) ELECTION OF SPECIAL VESTING FORMULA. If the Trustee makes a
distribution (other than a cash-out distribution described in Section 5.04) to
a partially-vested Participant, and the Participant has not incurred a
Forfeiture Break in Service at the relevant time, the Advisory Committee will
establish a separate Account for the Participant's Accrued Benefit. At any
relevant time following the distribution, the Advisory Committee will determine
the Participant's Nonforfeitable Accrued Benefit derived from Employer
contributions in accordance with the following formula: P(A.B + (R x D)) - (R.
x D).

To apply this formula, "P" is the Participant's current vesting
percentage at the relevant time, "AB" is the Participant's Employer-derived
Accrued Benefit at the relevant time, "R." is the ratio of "A-B" to the
Participant's Employer-derived Accrued Benefit immediately following the
earlier distribution and "D" is the amount of the earlier distribution. If,
under a restated Plan, the Plan has made distribution to a partially-vested
Participant prior to its restated Effective Date and is unable to apply the
cash-out provisions of Section 5.04 to that prior distribution, this special
vesting formula also applies to that Participant's remaining Account. The
Employer, in an addendum to its Adoption Agreement, numbered Section 5.03, may
elect to modify this formula to read as follows: P(AB + D) - D.

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a
partially-vested Participant receives a cash-out distribution before he incurs a
Forfeiture Break in Service (as defined in Section 5.08), the cash-out
distribution will result in an immediate forfeiture of the nonvested portion of
the Participant's Accrued Benefit derived from Employer contributions. See
Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable Percentage determined under Section 5.03 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.

(A) RESTORATION AND CONDITIONS UPON RESTORATION. A partially-vested
Participant who is re-employed by the Employer after receiving a cash-out
distribution of the Nonforfeitable percentage of his Accrued Benefit may repay
the Trustee the amount of the cash-out distribution attributable to Employer
contributions, unless the Participant no longer has a right to restoration by
reason of the conditions of this Section 5.04(A). If a partially-vested
Participant makes the cash-out distribution repayment, the Advisory Committee,
subject to the conditions of this Section 5.04(A), must restore his Accrued
Benefit attributable to Employer contributions to the same dollar amount as the
dollar amount of his Accrued Benefit on the Accounting Date, or other valuation
date, immediately preceding the date of the cash-out distribution, unadjusted
for any gains or losses occurring subsequent to that Accounting Date, or other
valuation date. Restoration of the Participant's

5.01
<PAGE> 31

Defined Contribution Master Plan

Accrued Benefit includes restoration of all Code Section 411(d)(6) protected
benefits with respect to that restored Accrued Benefit, in accordance with
applicable Treasury regulations. The Advisory Committee will not restore a
re-employed Participant's Accrued Benefit under this paragraph if:

(1) 5 years have elapsed since the Participant's first
re-employment date with the Employer following the cash-out
distribution; or

(2) The Participant incurred a Forfeiture Break in Service (as
defined in Section 5.08). This condition also applies if the
Participant makes repayment within the Plan Year in which he incurs
the Forfeiture Break in Service and that Forfeiture Break in Service
would result in a complete forfeiture of the amount the Advisory
Committee otherwise would restore.

(B) TIME AND METHOD OF RESTORATION. If neither of the two conditions
preventing restoration of the Participant's Accrued Benefit applies, the
Advisory Committee will restore the Participant's Accrued Benefit as of the
Plan Year Accounting Date coincident with or immediately following the
repayment. To restore the Participant's Accrued Benefit, the Advisory
Committee, to the extent necessary, will allocate to the Participant's Account:

(1) First, the amount, if any, of Participant forfeitures the
Advisory Committee would otherwise allocate under Section 3.05;

(2) Second, the amount, if any, of the Trust Fund net income or
gain for the Plan Year; and

(3) Third, the Employer contribution for the Plan Year to the
extent made under a discretionary formula.

In an addendum to its Adoption Agreement numbered 5.04(B), the
Employer may eliminate as a means of restoration any of the amounts described
in clauses (1), (2) and (3) or may change the order of priority of these
amounts. To the extent the amounts described in clauses (1), (2) and (3) are
insufficient to enable the Advisory Committee to make the required restoration,
the Employer must contribute, without regard to any requirement or condition of
Section 3.01, the additional amount necessary to enable the Advisory Committee
to make the required restoration. If, for a particular Plan Year, the Advisory
Committee must restore the Accrued Benefit of more than one re-employed
Participant, then the Advisory Committee will make the restoration allocations
to each such Participant's Account in the same proportion that a Participant's
restored amount for the Plan Year bears to the restored amount for the Plan
Year of all re-employed Participants. The Advisory Committee will not take
into account any allocation under this Section 5.04 in applying the limitation
on allocations under Part 2 of Article III.

(C) 0% VESTED PARTICIPANT. The Employer must specify in its Adoption
Agreement whether the deemed cash-out rule applies to a 0% vested Participant.
A 0% vested Participant is a Participant whose Accrued Benefit derived from
Employer contributions is entirely forfeitable at the time of his Separation
from Service. If the Participant's Account is not entitled to an allocation of
Employer contributions for the Plan Year in which he has a Separation from
Service, the Advisory Committee will apply the deemed cash-out rule as if the
0% vested Participant received a cash-out distribution on the date of the
Participant's Separation from Service. If the Participant's Account is
entitled to an allocation of Employer contributions or Participant forfeitures
for the Plan Year in which he has a Separation from Service, the Advisory
Committee will apply the deemed cash-out rule as if the 0% vested Participant
received a cash-out distribution on the first day of the first Plan Year
beginning after his Separation from Service. For purposes of applying the
restoration provisions of this Section 5.04, the Advisory Committee will treat
the 0% vested Participant as repaying his cash-out "distribution" on the first
date of his re-employment with the Employer. If the deemed cash-out rule does
not apply to the Employer's Plan, a 0% vested Participant will not incur a
forfeiture until he incurs a Forfeiture Break in Service.

5.05 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory
Committee restores the Participant's Accrued Benefit, as described in Section
5.04, the Trustee will invest the cash-out amount the Participant has repaid in
a segregated Account maintained solely for that

5.02
<PAGE> 32
Defined Contribution Master Plan

Participant. The Trustee must invest the amount in the Participant's
segregated Account in Federally insured interest bearing savings account(s) or
time deposit(s) (or a combination of both), or in other fixed income
investments. Until commingled with the balance of the Trust Fund on the date
the Advisory Committee restores the Participant's Accrued Benefit, the
Participant's segregated Account remains a part of the Trust, but it alone
shares in any income it earns and it alone bears any expense or loss it incurs.
Unless the repayment qualifies as a rollover contribution, the Advisory
Committee will direct the Trustee to repay to the Participant as soon as is
administratively practicable the full amount of the Participant's segregated
Account if the Advisory Committee determines either of the conditions of
Section 5.04(A) prevents restoration as of the applicable Accounting Date,
notwithstanding the Participant's repayment.

5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 5.03, Year of Service means any 12-consecutive month period designated
in the Employer's Adoption Agreement during which an Employee completes not
less than the number of Hours of Service (not exceeding 1,000) specified in the
Employer's Adoption Agreement. A Year of Service includes any Year of Service
earned prior to the Effective Date of the Plan, except as provided in Section
5.08.

5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any vesting computation
period he does not complete more than 500 Hours of Service. If, pursuant to
Section 5.06, the Plan does not require more than 500 Hours of Service to
receive credit for a Year of Service, a Participant incurs a Break in Service
in a vesting computation period in which he fails to complete a Year of
Service.

5.08 INCLUDED YEARS OF SERVICE-VESTING. For purposes of
determining "Years of Service" under Section 5.06, the Plan takes into account
all Years of Service an Employee completes with the Employer except:

(a) For the sole purpose of determining a Participant's
Nonforfeitable percentage of his Accrued Benefit derived from Employer
contributions which accrued for his benefit prior to a Forfeiture
Break in Service, the Plan disregards any Year of Service after the
Participant first incurs a Forfeiture Break in Service. The
Participant incurs a Forfeiture Break in Service when he incurs 5
consecutive Breaks in Service.

(b) The Plan disregards any Year of Service excluded under the
Employer's Adoption Agreement.

The Plan does not apply the Break in Service rule under Code Section
411(a)(6)(B). Therefore, an Employee need not complete a Year of Service after
a Break in Service before the Plan takes into account the Employee's otherwise
includible Years of Service under this Article V.

5.09 FORFEITURE OCCURS . A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the Plan on
the earlier of:

(a) The last day of the vesting computation period in which the
Participant first incurs a Forfeiture Break in Service; or

(b) The date the Participant receives a cash-out distribution.

The Advisory Committee determines the percentage of a Participant's
Accrued Benefit forfeiture, if any, under this Section 5.09 solely by reference
to the vesting schedule of Section 5.03. A Participant does not forfeit any
portion of his Accrued Benefit for any other reason or cause except as
expressly provided by this Section 5.09 or as provided under Section 9.14.

* * * * * * * * * *

5.03
<PAGE> 33

Defined Contribution Master Plan

ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS

6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to
Section 6.03, the Participant or the Beneficiary elects in writing to a
different time or method of payment, the Advisory Committee will direct the
Trustee to commence distribution of a Participant's Nonforfeitable Accrued
Benefit in accordance with this Section 6.01. A Participant must consent, in
writing, to any distribution required under this Section 6.01 if the present
value of the Participant's Nonforfeitable Accrued Benefit, at the time of the
distribution to the Participant, exceeds $3,500 and the Participant has not
attained the later of Normal Retirement Age or age 62. Furthermore, the
Participant's spouse also must consent, in writing, to any distribution, for
which Section 6.04 requires the spouse's consent. For all purposes of this
Article VI, the term "annuity starting date" means the first day of the first
period for which the Plan pays an amount as an annuity or in any other form. A
distribution date under this Article VI, unless otherwise specified within the
Plan, is the date or dates the Employer specifies in the Adoption Agreement, or
as soon as administratively practicable following that distribution date. For
purposes of the consent requirements under this Article VI, if the present
value of the Participant's Nonforfeitable Accrued Benefit, at the time of any
distribution, exceeds $3,500, the Advisory Committee must treat that present
value as exceeding $3,500 for purposes of all subsequent Plan distributions to
the Participant.

(A) SEPARATION FROM SERVICE FOR A REASON OTHER THAN DEATH.

(1) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING
$3,500. If the Participant's Separation from Service is for any reason other
than death, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in a lump sum, on the distribution
date the Employer specifies in the Adoption Agreement, but in no event later
than the 60th day following the close of the Plan Year in which the Participant
attains Normal Retirement Age. If the Participant has attained Normal
Retirement Age at the time of his Separation from Service, the distribution
under this paragraph will occur no later than the 60th day following the close
of the Plan Year in which the Participant's Separation from Service occurs.

(2) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500.
If the Participant's Separation from Service is for any reason other than
death, the Advisory Committee will direct the Trustee to commence distribution
of the Participant's Nonforfeitable Accrued Benefit in a form and at the time
elected by the Participant, pursuant to Section 6.03. In the absence of an
election by the Participant, the Advisory Committee will direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in a lump sum (or,
if applicable, the normal annuity form of distribution required under Section
6.04), on the 60th day following the close of the Plan Year in which the latest
of the following events occurs: (a) the Participant attains Normal Retirement
Age; (b) the Participant attains age 62; or (c) the Participant's Separation
from Service.

(3) DISABILITY. If the Participant's Separation from Service is
because of his disability, the Advisory Committee will direct the Trustee to
pay the Participant's Nonforfeitable Accrued Benefit in lump sum, on the
distribution date the Employer specifies in the Adoption Agreement, subject to
the notice and consent requirements of this Article VI and subject to the
applicable mandatory commencement dates described in Paragraphs (1) and (2).

(4) HARDSHIP. Prior to the time at which the Participant may
receive distribution under Paragraphs (1), (2) or (3), the Participant may
request a distribution from his Nonforfeitable Accrued Benefit in an amount
necessary to satisfy a hardship, if the Employer elects in the Adoption
Agreement to permit hardship distributions. Unless the Employer elects
otherwise in the Adoption Agreement, a hardship distribution must be on account
of any of the following: (a) medical expenses; (b) the purchase (excluding
mortgage payments) of the Participant's principal residence; (c) post-secondary
education tuition, for the next semester or quarter, for the Participant or for
the Participant's spouse, children or dependents; (d) to prevent the eviction
of the Participant from his principal residence or the foreclosure on the
mortgage of the Participant's

6.01
<PAGE> 34

Defined Contribution Master Plan

principal residence; (e) funeral expenses of the Participant's family member;
or (f) the Participant's disability. A partially-vested Participant may not
receive a hardship distribution described in this Paragraph (A)(4) prior to
incurring a Forfeiture Break in Service, unless the hardship distribution is a
cash-out distribution (as defined in Article V). The Advisory Committee will
direct the Trustee to make the hardship distribution as soon as
administratively practicable after the Participant makes a valid request for
the hardship distribution.

(B) REQUIRED BEGINNING DATE. If any distribution commencement date
described under Paragraph (A) of this Section 6.01, either by Plan provision or
by Participant election (or nonelection), is later than the Participant's
Required Beginning Date, the Advisory Committee instead must direct the Trustee
to make distribution on the Participant's Required Beginning Date, subject to
the transitional election, if applicable, under Section 6.03(D). A
Participant's Required Beginning Date is the April 1 following the close of the
calendar year in which the Participant attains age 70 1/2. However, if the
Participant, prior to incurring a Separation from Service, attained age 70 1/2
by January 1, 1988, and, for the five Plan Year period ending in the calendar
year in which he attained age 70 1/2 and for all subsequent years, the
Participant was not a more than 5% owner, the Required Beginning Date is the
April 1 following the close of the calendar year in which the Participant
separates from Service or, if earlier, the April 1 following the close of the
calendar year in which the Participant becomes a more than 5% owner.
Further-more, if a Participant who was not a more than 5% owner attained age 70
1/2 during 1988 and did not incur a Separation from Service prior to January 1,
1989, his Required Beginning Date is April 1, 1990. A mandatory distribution
at the Participant's Required Beginning Date will be in lump sum (or, if
applicable, the normal annuity form of distribution required under Section
6.04) unless the Participant, pursuant to the provisions of this Article VI,
makes a valid election to receive an alternative form of payment.

(C) DEATH OF THE PARTICIPANT. The Advisory Committee will direct the
Trustee, in accordance with this Section 6.01(C), to distribute to the
Participant's Beneficiary the Participant's Nonforfeitable Accrued Benefit
remaining in the Trust at the time of the Participant's death. Subject to the
requirements of Section 6.04, the Advisory Committee will determine the death
benefit by reducing the Participant's Nonforfeitable Accrued Benefit by any
security interest the Plan has against that Nonforfeitable Accrued Benefit by
reason of an outstanding Participant loan.

(1) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT DOES NOT
EXCEED $3,500. The Advisory Committee, subject to the requirements of Section
6.04, must direct the Trustee to distribute the deceased Participant's
Nonforfeitable Accrued Benefit in a single sum, as soon as administratively
practicable following the Participant's death or, if later, the date on which
the Advisory Committee receives notification of or otherwise confirms the
Participant's death.

(2) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS
$3,500. The Advisory Committee will direct the Trustee to distribute the
deceased Participant's Nonforfeitable Accrued Benefit at the time and in the
form elected by the Participant or, if applicable by the Beneficiary, as
permitted under this Article VI. In the absence of an election, subject to the
requirements of Section 6.04, the Advisory Committee will direct the Trustee to
distribute the Participant's undistributed Nonforfeitable Accrued Benefit in a
lump sum on the first distribution date following the close of the Plan Year in
which the Participant's death occurs or, if later, the first distribution date
following the date the Advisory Committee receives notification of or otherwise
confirms the Participant's death.

If the death benefit is payable in full to the Participant's surviving
spouse, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form
(other than a joint and survivor annuity) this Article VI would permit for a
Participant.

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a

6.02
<PAGE> 35
Defined Contribution Master Plan

Participant or Beneficiary may elect distribution under one, or any
combination, of the following methods: (a) by payment in a lump sum; or (b) by
payment in monthly, quarterly or annual installments over a fixed reasonable
period of time, not exceeding the Life expectancy of the Participant, or the
joint life and last survivor expectancy of the Participant and his Beneficiary.
The Employer may elect in its Adoption Agreement to modify the methods of
payment available under this Section 6.02.

The distribution options permitted under this Section 6.02 are
available only if the present value of the Participant Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds $3,500.
To facilitate installment payments under this Article VI, the Advisory
Committee may direct the Trustee to segregate all or any part of the
Participant's Accrued Benefit in a separate Account. The Trustee will invest
the Participant's segregated Account in Federally insured interest bearing
savings account(s) or time deposit(s) (or a combination of both), or in other
fixed income investments. A segregated Account remains a part of the Trust,
but it alone shares in any income it earns, and it alone bears any expense or
loss it incurs. A Participant or Beneficiary may elect to receive an
installment distribution in the form of a Nontransferable Annuity Contract.
Under an installment distribution, the Participant or Beneficiary, at any time,
may elect to accelerate the payment of all, or any portion, of the
Participant's unpaid Nonforfeitable Accrued Benefit, subject to the
requirements of Section 6.04.

(A) MINIMUM DISTRIBUTION REQUIREMENTS FOR PARTICIPANTS. The Advisory
Committee may not direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit, nor may the Participant elect to have the
Trustee distribute his Nonforfeitable Accrued Benefit, under a method of
payment which, as of the Required Beginning Date, does not satisfy the minimum
distribution requirements under Code Section 401(a)(9) and the applicable
Treasury regulations. The minimum distribution for a calendar year equals the
Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the Participant's life
expectancy or, if applicable, the joint and last survivor expectancy of the
Participant and his designated Beneficiary (as determined under Article VIII,
subject to the requirements of the Code Section 401(a)(9) regulations). The
Advisory Committee will increase the Participant's Nonforfeitable Accrued
Benefit, as determined on the relevant valuation date, for contributions or
forfeitures allocated after the valuation date and by December 31 of the
valuation calendar year, and will decrease the valuation by distributions made
after the valuation date and by December 31 of the valuation calendar year.
For purposes of this valuation, the Advisory Committee will treat any portion
of the minimum distribution for the first distribution calendar year made after
the close of that year as a distribution occurring in that first distribution
calendar year. In computing a minimum distribution, the Advisory Committee
must use the unisex life expectancy multiples under Treas. Reg. Section
1.72-9. The Advisory Committee, only upon the Participant's written request,
will compute the minimum distribution for a calendar year subsequent to the
first calendar year for which the Plan requires a minimum distribution by
redetermining the applicable life expectancy. However, the Advisory Committee
may not redetermine the joint Life and last survivor expectancy of the
Participant and a nonspouse designated Beneficiary in a manner which takes into
account any adjustment to a Life expectancy other than the Participant's life
expectancy.

If the Participant's spouse is not his designated Beneficiary, a method of
payment to the Participant (whether by Participant election or by Advisory
Committee direction) may not provide more than incidental benefits to the
Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must
satisfy the minimum distribution incidental benefit ("MDIB") requirement in the
Treasury regulations issued under Code Section 401(a)(9) for distributions made
on or after the Participant's Required Beginning Date and before the
Participant's death. To satisfy the MDIB requirement, the Advisory Committee
will compute the minimum distribution required by this Section 6.02(A) by
substituting the applicable MDIB divisor for the applicable life expectancy
factor, if the MDIB divisor is a lesser number. Following the Participant's
death, the Advisory Committee will compute the minimum distribution required by
this Section 6.02(A) solely on the basis of the applicable Life expectancy
factor and will disregard the MD1B factor. For Plan Years beginning prior to
January 1, 1989, the Plan satisfies the incidental benefits requirement if the
distributions to the Participant satisfied the MDIB requirement or if the
present value of the retirement benefits

6.03
<PAGE> 36
Defined Contribution Master Plan

payable solely to the Participant is greater than 50% of the present value of
the total benefits payable to the Participant and his Beneficiaries. The
Advisory Committee must determine whether benefits to the Beneficiary are
incidental as of the date the Trustee is to commence payment of the retirement
benefits to the Participant, or as of any date the Trustee redetermines the
payment period to the Participant.

The minimum distribution for the first distribution calendar year is
due by the Participant's Required Beginning Date. The minimum distribution for
each subsequent distribution calendar year, including the calendar year in
which the Participant's Required Beginning Date occurs, is due by December 31
of that year. If the Participant receives distribution in the form of a
Nontransferable Annuity Contract, the distribution satisfies this Section
6.02(A) if the contract complies with the requirements of Code Section
401(a)(9) and the applicable Treasury regulations.

(B) MINIMUM DISTRIBUTION REQUIREMENTS FOR BENEFICIARIES. The method of
distribution to the Participant's Beneficiary must satisfy Code Section
401(a)(9) and the applicable Treasury regulations. If the Participant's death
occurs after his Required Beginning Date or, if earlier, the date the
Participant commences an irrevocable annuity pursuant to Section 6.04, the
method of payment to the Beneficiary must provide for completion of payment
over a period which does not exceed the payment period which had commenced for
the Participant. If the Participant's death occurs prior to his Required
Beginning Date, and the Participant had not commenced an irrevocable annuity
pursuant to Section 6.04, the method of payment to the Beneficiary, subject to
Section 6.04, must provide for completion of payment to the Beneficiary over a
period not exceeding: (i) 5 years after the date of the Participant's death; or
(ii) if the Beneficiary is a designated Beneficiary, the designated
Beneficiary's life expectancy. The Advisory Committee may not direct payment
of the Participant's Nonforfeitable Accrued Benefit over a period described in
clause (ii) unless the Trustee will commence payment to the designated
Beneficiary no later than the December 31 following the close of the calendar
year in which the Participant's death occurred or, if later, and the designated
Beneficiary is the Participant's surviving spouse, December 31 of the calendar
year in which the Participant would have attained age 70 1/2. If the Trustee
will make distribution in accordance with clause (ii), the minimum.
distribution for a calendar year equals the Participant's Nonforfeitable
Accrued Benefit as of the latest valuation date preceding the beginning of the
calendar year divided by the designated Beneficiary's life expectancy. The
Advisory Committee must use the unisex life expectancy multiples under Treas.
Reg. Section 1.72-9 for purposes of applying this paragraph. The Advisory
Committee, only upon the written request of the Participant or of the
Participant's surviving spouse, will recalculate the Life expectancy of the
Participant's surviving spouse not more frequently than annually, but may not
recalculate the life expectancy of a nonspouse designated Beneficiary after the
Trustee commences payment to the designated Beneficiary. The Advisory
Committee will apply this paragraph by treating any amount paid to the
Participant's child, which becomes payable to the Participant's surviving
spouse upon the child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the Beneficiary's written request, the
Advisory Committee must direct the Trustee to accelerate payment of au, or any
portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practicable following the effective date of that request.

6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not
later than 30 days, before the Participant's annuity starting date, the
Advisory Committee must provide a benefit notice to a Participant who is
eligible to make an election under this Section 6.03. The benefit notice must
explain the optional forms of benefit in the Plan, including the material
features and relative values of those options, and the Participant's right to
defer distribution until he attains the later of Normal Retirement Age or age
62.

If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of Section
6.02 and of Section 6.04. The Participant or Beneficiary must make an election
under this Section 6.03 by filing his election with the Advisory Committee at
any time before the

6.04
<PAGE> 37
Defined Contribution Master Plan

Trustee otherwise would commence to pay a Participant's Accrued Benefit in
accordance with the requirements of Article VI.

(A) PARTICIPANT ELECTIONS AFTER SEPARATION FROM SERVICE. If the present
value of a Participant's Nonforfeitable Accrued Benefit exceeds $3,500, he may
elect to have the Trustee commence distribution as of any distribution date
permitted under the Employer's Adoption Agreement Section 6.03. The Participant
may reconsider an election at any time prior to the annuity starting date and
elect to commence distribution as of any other distribution date permitted
under the Employer's Adoption Agreement Section 6.03. If the Participant is
partially-vested in his Accrued Benefit, an election under this Paragraph (A)
to distribute prior to the Participant's incurring a Forfeiture Break in
Service (as defined in Section 5.08), must be in the form of a cash-out
distribution (as defined in Article V). A Participant may not receive a
cash-out distribution if, prior to the time the Trustee actually makes the
cash-out distribution, the Participant returns to employment with the Employer.
Following his attainment of Normal Retirement Age, a Participant who has
separated from Service may elect distribution as of any distribution date,
irrespective of the elections under Adoption Agreement Section 6.03.

(B) PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE. The Employer
must specify in its Adoption Agreement the distribution election rights, if
any, a Participant has prior to his Separation from Service. A Participant
must make an election under this Section 6.03(B) on a form prescribed by the
Advisory Committee at any time during the Plan Year for which his election is
to be effective. In his written election, the Participant must specify the
percentage or dollar amount he wishes the Trustee to distribute to him. The
Participant's election relates solely to the percentage or dollar amount
specified in his election form and his right to elect to receive an amount, if
any, for a particular Plan Year greater than the dollar amount or percentage
specified in his election form terminates on the Accounting Date. The Trustee
must make a distribution to a Participant in accordance with his election under
this Section 6.03(B) within the 90 day period (or as soon as administratively
practicable) after the Participant files his written election with the Trustee.
The Trustee will distribute the balance of the Participant's Accrued Benefit
not distributed pursuant to his election(s) in accordance with the other
distribution provisions of this Plan.

(C) DEATH BENEFIT ELECTIONS. If the present value of the deceased
Participant's Nonforfeitable Accrued Benefit exceeds $3,500, the Participant's
Beneficiary may elect to have the Trustee distribute the Participant's
Nonforfeitable Accrued Benefit in a form and within a period permitted under
Section 6.02. The Beneficiary's election is subject to any restrictions
designated in writing by the Participant and not revoked as of his date of
death.

(D) TRANSITIONAL ELECTIONS. Notwithstanding the provisions of Sections
6.01 and 6.02, if the Participant (or Beneficiary) signed a written
distribution designation prior to January 1, 1984, the Advisory Committee must
distribute the Participant's Nonforfeitable Accrued Benefit in accordance with
that designation, subject however, to the survivor requirements, if applicable,
of Sections 6.04, 6.05 and 6.06. This Section 6.03(D) does not apply to a
pre-1984 distribution designation, and the Advisory Committee will not comply
with that designation, if any of the following applies: (1) the method of
distribution would have disqualified the Plan under Code Section 401(a)(9) as
in effect on December 31, 1983; (2) the Participant did not have an Accrued
Benefit as of December 31, 1983; (3) the distribution designation does not
specify the timing and form of the distribution and the death Beneficiaries (in
order of priority); (4) the substitution of a Beneficiary modifies the payment
period of the distribution; or, (5) the Participant (or Beneficiary) modifies
or revokes the distribution designation. In the event of a revocation, the
Plan must distribute, no later than December 31 of the calendar year following
the year of revocation, the amount which the Participant would have received
under Section 6.02(A) if the distribution designation had not been in effect
or, if the Beneficiary revokes the distribution designation, the amount which
the Beneficiary would have received under Section 6.02(B) if the distribution
designation had not been in effect. The Advisory Committee will apply this
Section 6.03(D) to rollovers and transfers in accordance with Part J of the
Code Section 401(a)(9) Treasury regulations.

6.05

<PAGE> 38

Defined Contribution Master Plan

6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.

(A) JOINT AND SURVIVOR ANNUITY. The Advisory Committee must direct the
Trustee to distribute a married or unmarried Participant's Nonforfeitable
Accrued Benefit in the form of a qualified joint and survivor annuity, unless
the Participant makes a valid waiver election (described in Section 6.05)
within the 90 day period ending on the annuity starting date. If, as of the
annuity starting date, the Participant is married, a qualified joint and
survivor annuity is an immediate annuity which is purchasable with the
Participant's Nonforfeitable Accrued Benefit and which provides a life annuity
for the Participant and a survivor annuity payable for the remaining life of
the Participant's surviving spouse equal to 50% of the amount of the annuity
payable during the life of the Participant. If, as of the annuity starting
date, the Participant is not married, a qualified joint and survivor annuity is
an immediate life annuity for the Participant which is purchasable with the
Participant's Nonforfeitable Accrued Benefit. On or before the annuity
starting date, the Advisory Committee, without Participant or spousal consent,
must direct the Trustee to pay the Participant's Nonforfeitable Accrued Benefit
in a lump sum, in lieu of a qualified joint and survivor annuity, in accordance
with Section 6.01, if the Participant's Nonforfeitable Accrued Benefit is not
greater than $3,500. This Section 6.04(A) applies only to a Participant who
has completed at least one Hour of Service with the Employer after August 22,
1984.

(B) PRERETIREMENT SURVIVOR ANNUITY. If a married Participant dies prior
to his annuity starting date, the Advisory Committee will direct the Trustee to
distribute a portion of the Participant's Nonforfeitable Accrued Benefit to the
Participant's surviving spouse in the form of a preretirement survivor annuity,
unless the Participant has a valid waiver election (as described in Section
6.06) in effect, or unless the Participant and his spouse were not married
throughout the one year period ending on the date of his death. A
preretirement survivor annuity is an annuity which is purchasable with 50% of
the Participant's Nonforfeitable Accrued Benefit (determined as of the date of
the Participant's death) and which is payable for the life of the Participant's
surviving spouse. The value of the preretirement survivor annuity is
attributable to Employer contributions and to Employee contributions in the
same proportion as the Participant's Nonforfeitable Accrued Benefit is
attributable to those contributions. The portion of the Participant's
Nonforfeitable Accrued Benefit not payable under this paragraph is payable to
the Participant's Beneficiary, in accordance with the other provisions of this
Article VI. If the present value of the preretirement survivor annuity does
not exceed $3,500, the Advisory Committee, on or before the annuity starting
date, must direct the Trustee to make a lump sum distribution to the
Participant's surviving spouse, in lieu of a preretirement survivor annuity.
This Section 6.04(B) applies only to a Participant who dies after August 22,
1984, and either (i) completes at least one Hour of Service with the Employer
after August 22, 1984, or (ii) separated from Service with at least 10 Years of
Service (as defined in Section 5.06) and completed at least one Hour of Service
with the Employer in a Plan Year beginning after December 31, 1975.

(C) SURVIVING SPOUSE ELECTIONS. If the present value of the preretirement
survivor annuity exceeds $3,500, the Participant's surviving spouse may elect
to have the Trustee commence payment of the preretirement survivor annuity at
any time following the date of the Participant's death, but not later than the
mandatory distribution periods described in Section 6.02, and may elect any of
the forms of payment described in Section 6.02, in lieu of the preretirement
survivor annuity. In the absence of an election by the surviving spouse, the
Advisory Committee must direct the Trustee to distribute the preretirement
survivor annuity on the first distribution date following the close of the Plan
Year in which the latest of the following events occurs: (i) the Participant's
death; (ii) the date the Advisory Committee receives notification of or
otherwise confirms the Participant's death; (iii) the date the Participant would
have attained Normal Retirement Age; or (iv) the date the Participant would
have attained age 62.

(D) SPECIAL RULES. If the Participant has in effect a valid waiver
election regarding the qualified joint and survivor annuity or the
preretirement survivor annuity, the Advisory Committee must direct the Trustee
to distribute the Participant's Nonforfeitable Accrued Benefit in accordance
with Sections 6.01, 6.02 and 6.03. The Advisory Committee will reduce the
Participant's Nonforfeitable Accrued Benefit by any security interest (pursuant
to any offset rights authorized by Section

6.06

<PAGE> 39
Defined Contribution Master Plan

10.03[E]) held by the Plan by reason of a Participant loan to determine the
value of the Participant's Nonforfeitable Accrued Benefit distributable in the
form of a qualified joint and survivor annuity or preretirement survivor
annuity, provided any post-August 18, 1985, loan satisfied the spousal consent
requirement described in Section 10.03[E] of the Plan. For purposes of
applying this Article VI, the Advisory Committee treats a former spouse as the
Participant's spouse or surviving spouse to the extent provided under a
qualified domestic relations order described in Section 6.07. The provisions of
this Section 6.04, and of Sections 6.05 and 6.06, apply separately to the
portion of the Participant's Nonforfeitable Accrued Benefit subject to the
qualified domestic relations order and to the portion of the Participant's
Nonforfeitable Accrued Benefit not subject to that order.

(E) PROFIT SHARING PLAN ELECTION. If this Plan is a profit sharing plan,
the Employer must elect the extent to which the preceding provisions of Section
6.04 apply. If the Employer elects to apply this Section 6.04 only to a
Participant described in this Section 6.04(E), the preceding provisions of this
Section 6.04 apply only to the following Participants: (1) a Participant as
respects whom the Plan is a direct or indirect transferee from a plan subject
to the Code Section 417 requirements and the Plan received the transfer after
December 31, 1984, unless the transfer is an elective transfer described in
Section 13.06; (2) a Participant who elects a life annuity distribution (if
Section 6.02 or Section 13.02 of the Plan requires the Plan to provide a life
annuity distribution option); and (3) a Participant whose benefits under a
defined benefit plan maintained by the Employer are offset by benefits provided
under this Plan. If the Employer elects to apply this Section 6.04 to all
Participants, the preceding provisions of this Section 6.04 apply to all
Participants described in the first two paragraphs of this Section 6.04,
without regard to the limitations of this Section 6.04(E). Sections 6.05 and
6.06 only apply to Participants to whom the preceding provisions of this
Section 6.04 apply.

6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not
earlier than 90 days, but not later than 30 days, before the Participant's
annuity starting date, the Advisory Committee must provide the Participant 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 joint and survivor form of benefit, the rights of the
Participant's spouse regarding the waiver election and the Participant's right
to make, and the effect of, a revocation of a waiver election. The Plan does
not limit the number of times the Participant may revoke a waiver of the
qualified joint and survivor annuity or make a new waiver during the election
period.

A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity), after the Participant has received the
written explanation described in this Section 6.05, has consented in writing to
the waiver election, the spouse's consent acknowledges the effect of the
election, and a notary public or the Plan Administrator (or his representative)
witnesses the spouse's consent, (b) the spouse consents to the alternate form
of payment designated by the Participant or to any change in that designated
form of payment, and (c) unless the spouse is the Participant's sole primary
Beneficiary, the spouse consents to the Participant's Beneficiary designation
or to any change in the Participant's Beneficiary designation. The spouse's
consent to a waiver of the qualified joint and survivor annuity is irrevocable,
unless the Participant revokes the waiver election. The spouse may execute a
blanket consent to any form of payment designation or to any Beneficiary
designation made by the Participant, if the spouse acknowledges the right to
limit that consent to a specific designation but, in writing, waives that
right. The consent requirements of this Section 6.05 apply to a former spouse
of the Participant, to the extent required under a qualified domestic relations
order described in Section 6.07.

The Advisory Committee will accept as valid a waiver election which
does not satisfy the spousal consent requirements if the Advisory Committee
establishes the Participant does not have a spouse, the Advisory Committee is
not able to locate the Participant's spouse, the Participant is legally
separated or has been abandoned (within the meaning of State law) and the
Participant has a court order to that effect, or other circumstances exist
under which the Secretary of the

6.07
<PAGE> 40

Defined Contribution Master Plan

Treasury will excuse the consent requirement. If the Participant's spouse is
legally incompetent to give consent, the spouse's legal guardian (even if the
guardian is the Participant) may give consent.

6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The Advisory
Committee must provide a written explanation of the preretirement survivor
annuity to each married Participant, within the following period which ends
last: (1) the period beginning on the first day of the Plan Year in which the
Participant attains age 32 and ending on the last day of the Plan Year in which
the Participant attains age 34; (2) a reasonable period after an Employee
becomes a Participant; (3) a reasonable period after the joint and survivor
rules become applicable to the Participant; or (4) a reasonable period after a
fully subsidized preretirement survivor annuity no longer satisfies the
requirements for a fully subsidized benefit. A reasonable period described in
clauses (2), (3) and (4) is the period beginning one year before and ending one
year after the applicable event. If the Participant separates from Service
before attaining age 35, clauses (1), (2), (3) and (4) do not apply and the
Advisory Committee must provide the written explanation within the period
beginning one year before and ending one year after the Separation from Service.
The written explanation must describe, in a manner consistent with Treasury
regulations, the terms and conditions of the preretirement survivor annuity
comparable to the explanation of the qualified joint and survivor annuity
required under Section 6.05. The Plan does not limit the number of times the
Participant may revoke a waiver of the preretirement survivor annuity or make a
new waiver during the election period.

A Participant's waiver election of the preretirement survivor annuity
is not valid unless (a) the Participant makes the waiver election no earlier
than the first day of the Plan Year in which he attains age 35 and (b) the
Participant's spouse (to whom the preretirement survivor annuity is payable)
satisfies the consent requirements described in Section 6.05, except the spouse
need not consent to the form of benefit payable to the designated Beneficiary.
The spouse's consent to the waiver of the preretirement survivor annuity is
irrevocable, unless the Participant revokes the waiver election. Irrespective
of the time of election requirement described in clause (a), if the Participant
separates from Service prior to the first day of the Plan Year in which he
attains age 35, the Advisory Committee will accept a waiver election as
respects the Participant's Accrued Benefit attributable to his Service prior to
his Separation from Service. Furthermore, if a Participant who has not
separated from Service makes a valid waiver election, except for the timing
requirement of clause (a), the Advisory Committee will accept that election as
valid, but only until the first day of the Plan Year in which the Participant
attains age 35. A waiver election described in this paragraph is not valid
unless made after the Participant has received the written explanation
described in this Section 6.06.

6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing
contained in this Plan prevents the Trustee, in accordance with the direction
of the Advisory Committee, from complying with the provisions of a qualified
domestic relations order (as defined in Code Section 414(p)). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order at any time, irrespective of whether the Participant
has attained his earliest retirement age (as defined under Code Section 414(p))
under the Plan. A distribution to an alternate payee prior to the
Participant's attainment of earliest retirement age is available only if(1) the
order specifies distribution at that time or permits an agreement between the
Plan and the alternate payee to authorize an earlier distribution; and (2) if
the present value of the alternate payee's benefits under the Plan exceeds
$3,500, and the order requires, the alternate payee consents to any
distribution occurring prior to the Participant's attainment of earliest
retirement age. The Employer, in an addendum to its Adoption Agreement
numbered 6.07, may elect to limit distribution to an alternate payee only when
the Participant has attained his earliest retirement age under the Plan.
Nothing in this Section 6.07 gives a Participant a right to receive
distribution at a time otherwise not permitted under the Plan nor does it
permit the alternate payee to receive a form of payment not otherwise permitted
under the Plan.

6.08
<PAGE> 41
Defined Contribution Master Plan

The Advisory Committee must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Advisory Committee promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and the Plan's procedures for determining the qualified
status of the order. Within a reasonable period of time after receiving the
domestic relations order, the Advisory Committee must determine the qualified
status of the order and must notify the Participant and each alternate payee,
in writing, of its determination. The Advisory Committee must provide notice
under this paragraph by mailing to the individual's address specified in the
domestic relations order, or in a manner consistent with Department of Labor
regulations.

If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Advisory Committee is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Advisory
Committee determines the order is a qualified domestic relations order within
18 months of the date amounts first are payable following receipt of the order,
the Advisory Committee will direct the Trustee to distribute the payable
amounts in accordance with the order. If the Advisory Committee does not make
its determination of the qualified status of the order within the 18-month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Advisory
Committee later determines the order is a qualified domestic relations order.

To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Advisory Committee may direct the
Trustee to invest any partitioned amount in a segregated subaccount or separate
account and to invest the account in Federally insured, interest-bearing
savings account(s) or time deposit(s) (or a combination of both), or in other
fixed income investments. A segregated subaccount remains a part of the Trust,
but it alone shares in any income it earns, and it alone bears any expense or
loss it incurs. The Trustee will make any payments or distributions required
under this Section 6.07 by separate benefit checks or other separate
distribution to the alternate payee(s).

* * * * * * * * * *

6.09
<PAGE> 42
Defined Contribution Master Plan

ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS

7.01 INFORMATION TO COMMITTEE. The Employer must supply current
information to the Advisory Committee as to the name, date of birth, date of
employment, annual compensation, leaves of absence, Years of Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Advisory Committee considers necessary. The Employer's records as to the
current information the Employer furnishes to the Advisory Committee are
conclusive as to all persons.

7.02 NO LIABILITY. The Employer assumes no obligation or
responsibility to any of its Employees, Participants or Beneficiaries for any
act of, or failure to act, on the part of its Advisory Committee (unless the
Employer is the Advisory Committee), the Trustee, the Custodian, if any, or the
Plan Administrator (unless the Employer is the Plan Administrator).

7.03 INDEMNITY OF CERTAIN FIDUCIARIES. The Employer indemnifies and
saves harmless the Plan Administrator and the members of the Advisory Committee,
and each of them, from and against any and all loss resulting from liability to
which the Plan Administrator and the Advisory Committee, or the members of the
Advisory Committee, may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence) in their official capacities in the
administration of this Trust or Plan or both, including all expenses reasonably
incurred in their defense, in case the Employer fails to provide such defense.
The indemnification provisions of this Section 7.03 do not relieve the Plan
Administrator or any Advisory Committee member from any liability he may have
under ERISA for breach of a fiduciary duty. Furthermore, the Plan Administrator
and the Advisory Committee members and the Employer may execute a letter
agreement further delineating the indemnification agreement of this Section
7.03, provided the letter agreement must be consistent with and does not violate
ERISA. The indemnification provisions of this Section 7.03 extend to the
Trustee (or to a Custodian, if any) solely to the extent provided by a letter
agreement executed by the Trustee (or Custodian) and the Employer.

7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right
to direct the Trustee with respect to the investment and reinvestment of assets
comprising the Trust Fund only if the Trustee consents in writing to permit such
direction. If the Trustee consents to Employer direction of investment, the
Trustee and the Employer must execute a letter agreement as a part of this Plan
containing such conditions, limitations and other provisions they deem
appropriate before the Trustee will follow any Employer direction as respects
the investment or re-investment of any part of the Trust Fund.

7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves
the right to amend the vesting schedule at any time, the Advisory Committee
will not apply the amended vesting schedule to reduce the Nonforfeitable
percentage of any Participant's Accrued Benefit derived from Employer
contributions (determined as of the later of the date the Employer adopts the
amendment, or the date the amendment becomes effective) to a percentage less
than the Nonforfeitable percentage computed under the Plan without regard to
the amendment. An amended vesting schedule will apply to a Participant only if
the Participant receives credit for at least one Hour of Service after the new
schedule becomes effective.

If the Employer makes a permissible amendment to the vesting schedule,
each Participant having at least 3 Years of Service with the Employer may elect
to have the percentage of his Nonforfeitable Accrued Benefit computed under the
Plan without regard to the amendment. For Plan Years beginning prior to
January 1, 1989, the election described in the preceding sentence

7.01
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Defined Contribution Master Plan

applies only to Participants having at least 5 Years of Service with the
Employer. The Participant must file his election with the Advisory Committee
within 60 days of the latest of (a) the Employer's adoption of the amendment;
(b) the effective date of the amendment; or (c) his receipt of a copy of the
amendment. The Advisory Committee, as soon as practicable, must forward a true
copy of any amendment to the vesting schedule to each affected Participant,
together with an explanation of the effect of the amendment, the appropriate
form upon which the Participant may make an election to remain under the
vesting schedule provided under the Plan prior to the amendment and notice of
the time within which the Participant must make an election to remain under the
prior vesting schedule. The election described in this Section 7.05 does not
apply to a Participant if the amended vesting schedule provides for vesting at
least as rapid at all times as the vesting schedule in effect prior to the
amendment. For purposes of this Section 7.05, an amendment to the vesting
schedule includes any Plan amendment which directly or indirectly affects the
computation of the Nonforfeitable percentage of an Employee's rights to his
Employer derived Accrued Benefit. Furthermore, the Advisory Committee must
treat any shift in the vesting schedule, due to a change in the Plan's top
heavy status, as an amendment to the vesting schedule for purposes of this
Section 7.05.

7.02

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Defined Contribution Master Plan

ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS

8.01 BENEFICIARY DESIGNATION. Any Participant may from time to
time designate, in writing, any person or persons, contingently or
successively, to whom the Trustee will pay his Nonforfeitable Accrued Benefit
(including any life insurance proceeds payable to the Participant's Account) in
the event of his death and the Participant may designate the form and method of
payment. The Advisory Committee will prescribe the form for the written
designation of Beneficiary and, upon the Participant's filing the form with the
Advisory Committee, the form effectively revokes all designations filed prior
to that date by the same Participant.

(A) COORDINATION WITH SURVIVOR REQUIREMENTS. If the joint and survivor
requirements of Article VI apply to the Participant, this Section 8.01 does not
impose any special spousal consent requirements on the Participant's
Beneficiary designation. However, in the absence of spousal consent (as
required by Article VI) to the Participant's Beneficiary designation: (1) any
waiver of the joint and survivor annuity or of the preretirement survivor
annuity is not valid; and (2) if the Participant dies prior to his annuity
starting date, the Participant's Beneficiary designation will apply only to the
portion of the death benefit which is not payable as a preretirement survivor
annuity. Regarding clause (2), if the Participant's surviving spouse is a
primary Beneficiary under the Participant's Beneficiary designation, the
Trustee will satisfy the spouse's interest in the Participant's death benefit
first from the portion which is payable as a preretirement survivor annuity.

(B) PROFIT SHARING PLAN EXCEPTION. If the Plan is a profit sharing plan,
the Beneficiary designation of a married Exempt Participant is not valid unless
the Participant's spouse consents (in a manner described in Section 6.05) to
the Beneficiary designation. An "Exempt Participant" is a Participant who is
not subject to the joint and survivor requirements of Article VI. The spousal
consent requirement in this paragraph does not apply if the Exempt Participant
and his spouse are not married throughout the one year period ending on the
date of the Participant's death, or if the Participant's spouse is the
Participant's sole primary Beneficiary.

8.02 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a
Participant fails to name a Beneficiary in accordance with Section 8.01, or if
the Beneficiary named by a Participant predeceases him, then the Trustee will
pay the Participant's Nonforfeitable Accrued Benefit in accordance with Section
6.02 in the following order of priority, unless the Employer specifies a
different order of priority in an addendum to its Adoption Agreement, to:

(a) The Participant's surviving spouse;

(b) The Participant's surviving children, including adopted
children, in equal shares;

(d) The Participant's estate.

If the Beneficiary does not predecease the Participant, but dies prior
to distribution of the Participant's entire Nonforfeitable Accrued Benefit, the
Trustee will pay the remaining Nonforfeitable Accrued Benefit to the
Beneficiary's estate unless the Participant's Beneficiary designation provides
otherwise or unless the Employer provides otherwise in its Adoption Agreement.
If the Plan is a profit sharing plan, and the Plan includes Exempt
Participants, the Employer may not specify a different order of priority in the
Adoption Agreement unless the Participant's surviving spouse will be first in
the different order of priority. The Advisory Committee will direct the
Trustee as to the method and to whom the Trustee will make payment under this
Section 8.02.

8.01
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Defined Contribution Master Plan

8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each
Beneficiary of a deceased Participant must furnish to the Advisory Committee
such evidence, data or information as the Advisory Committee considers
necessary or desirable for the purpose of administering the Plan. The
provisions of this Plan are effective for the benefit of each Participant upon
the condition precedent that each Participant will furnish promptly full, true
and complete evidence, data and information when requested by the Advisory
Committee, provided the Advisory Committee advises each Participant of the
effect of his failure to comply with its request.

8.04 ADDRESS FOR NOTIFICATION. Each Participant and each
Beneficiary of a deceased Participant must file with the Advisory Committee
from time to time, in writing, his post office address and any change of post
office address. Any communication, statement or notice addressed to a
Participant, or Beneficiary, at his last post office address filed with the
Advisory Committee, or as shown on the records of the Employer, binds the
Participant, or Beneficiary, for all purposes of this Plan.

8.05 ASSIGNMENT OR ALIENATION. Subject to Code Section 414(p)
relating to qualified domestic relations orders, neither a Participant nor a
Beneficiary may anticipate, assign or alienate (either at law or in equity) any
benefit provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, a benefit under the Plan
is not subject to attachment, garnishment, levy, execution or other legal or
equitable process.

8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.

8.07 LITIGATION AGAINST THE TRUST. A court of competent
jurisdiction may authorize any appropriate equitable relief to redress
violations of ERISA or to enforce any provisions of ERISA or the terms of the
Plan. A fiduciary may receive reimbursement of expenses properly and actually
incurred in the performance of his duties with the Plan.

8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual report,
any bargaining agreement, this Plan and Trust, contract or any other instrument
under which the Plan was established or is operated. The Plan Administrator
will maintain all of the items listed in this Section 8.08 in his office, or in
such other place or places as he may designate from time to time in order to
comply with the regulations issued under ERISA, for examination during
reasonable business hours. Upon the written request of a Participant or
Beneficiary the Plan Administrator must furnish him with a copy of any item
listed in this Section 8.08. The Plan Administrator may make a reasonable
charge to the requesting person for the copy so furnished.

8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant or a
Beneficiary ("Claimant') may file with the Advisory Committee a written claim
for benefits, if the Participant or Beneficiary determines the distribution
procedures of the Plan have not provided him his proper Nonforfeitable Accrued
Benefit. The Advisory Committee must render a decision on the claim within 60
days of the Claimant's written claim for benefits. The Plan Administrator must
provide adequate notice in writing to the Claimant whose claim for benefits
under the Plan the Advisory Committee has denied. The Plan Administrator's
notice to the Claimant must set forth:

(a) The specific reason for the denial;

8.02
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Defined Contribution Master Plan

(b) Specific references to pertinent Plan provisions on which the
Advisory Committee based its denial;

(c) A description of any additional material and information
needed for the Claimant to perfect his claim and an explanation of why
the material or information is needed; and

(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75
days after receipt of the Plan Administrator's notice of denial of
benefits. The Plan Administrator's notice must further advise the
Claimant that his failure to appeal the action to the Advisory
Committee in writing within the 75-day period will render the Advisory
Committee's determination final, binding and conclusive.

If the Claimant should appeal to the Advisory Committee, he, or his
duly authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent. The
Claimant, or his duly authorized representative, may review pertinent Plan
documents. The Advisory Committee will re-examine all facts related to the
appeal and make a final determination as to whether the denial of benefits is
justified under the circumstances. The Advisory Committee must advise the
Claimant of its decision within 60 days of the Claimant's written request for
review, unless special circumstances (such as a hearing) would make the
rendering of a decision within the 60-day limit unfeasible, but in no event may
the Advisory Committee render a decision respecting a denial for a claim for
benefits later than 120 days after its receipt of a request for review.

The Plan Administrator's notice of denial of benefits must identify
the name of each member of the Advisory Committee and the name and address of
the Advisory Committee member to whom the Claimant may forward his appeal.

8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the
right to direct the Trustee with respect to the investment or re-investment of
the assets comprising the Participant's individual Account only if the Trustee
consents in writing to permit such direction. If the Trustee consents to
Participant direction of investment, the Trustee will accept direction from
each Participant on a written election form (or other written agreement), as a
part of this Plan, containing such conditions, limitations and other provisions
the parties deem appropriate. The Trustee or, with the Trustee's consent, the
Advisory Committee, may establish written procedures, incorporated specifically
as part of this Plan, relating to Participant direction of investment under
this Section 8.10. The Trustee will maintain a segregated investment Account to
the extent a Participant's Account is subject to Participant self-direction.
The Trustee is not liable for any loss, nor is the Trustee liable for any
breach, resulting from a Participant's direction of the investment of any part
of his directed Account.

The Advisory Committee, to the extent provided in a written loan
policy adopted under Section 9.04, will treat a loan made to a Participant as a
Participant direction of investment under this Section 8.10. To the extent of
the loan outstanding at any time, the borrowing Participant's Account alone
shares in any interest paid on the loan, and it alone bears any expense or loss
it incurs in connection with the loan. The Trustee may retain any principal or
interest paid on the borrowing Participant's loan in an interest bearing
segregated Account on behalf of the borrowing Participant until the Trustee (or
the Named Fiduciary, in the case of a nondiscretionary Trustee) deems it
appropriate to add the amount paid to the Participant's separate Account under
the Plan.

If the Trustee consents to Participant direction of investment of his
Account, the Plan treats any post-December 31, 1981, investment by a
Participant's directed Account in collectibles (as defined by Code Section
408(m)) as a deemed distribution to the Participant for Federal income tax
purposes.

8.03

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Defined Contribution Master Plan

ARTICLE IX

ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS

9.01 MEMBERS' COMPENSATION, EXPENSES. The Employer must appoint an
Advisory Committee to administer the Plan, the members of which may or may not
be Participants in the Plan, or which may be the Plan Administrator acting
alone. In the absence of an Advisory Committee appointment, the Plan
Administrator assumes the powers, duties and responsibilities of the Advisory
Committee. The members of the Advisory Committee will serve without
compensation for services as such, but the Employer will pay all expenses of
the Advisory Committee, except to the extent the Trust properly pays for such
expenses, pursuant to Article X.

9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.

9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.

9.04 GENERAL. The Advisory Committee has the following powers and
duties:

(a) To select a Secretary, who need not be a member of the Advisory
Committee;

(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued
Benefit;

(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the rules are
not inconsistent with the terms of this Agreement;

(d) To construe and enforce the terms of the Plan and the rules
and regulations it adopts, including interpretation of the Plan
documents and documents related to the Plan's operation;

(e) To direct the Trustee as respects the crediting and
distribution of the Trust;

(f) To review and render decisions respecting a claim for (or
denial of a claim for) a benefit under the Plan;

(g) To furnish the Employer with information which the Employer
may require for tax or other purposes;

(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;

(i) To engage the services of an Investment Manager or Managers
(as defined in ERISA Section 3(38)), each of whom will have full power
and authority to manage, acquire or dispose (or direct the Trustee
with respect to acquisition or disposition) of any Plan asset under
its control;

(j) To establish, in its sole discretion, a nondiscriminatory
policy (see Section 9.04(A)) which the Trustee must observe in making
loans, if any, to Participants and Beneficiaries; and

9.01

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Defined Contribution Master Plan

(k) To establish and maintain a funding standard account and to
make credits and charges to the account to the extent required by and
in accordance with the provisions of the Code.

The Advisory Committee must exercise all of its powers, duties and discretion
under the Plan in a uniform and nondiscriminatory manner.

(A) LOAN POLICY. If the Advisory Committee adopts a loan policy, pursuant
to paragraph (j), the loan policy must be a written document and must include:
(1) the identity of the person or positions authorized to administer the
participant loan program; (2) a procedure for applying for the loan; (3) the
criteria for approving or denying a loan; (4) the limitations, if any, on the
types and amounts of loans available; (5) the procedure for determining a
reasonable rate of interest; (6) the types of collateral which may secure the
loan; and (7) the events constituting default and the steps the Plan will take
to preserve plan assets in the event of default. This Section 9.04
specifically incorporates a written loan policy as part of the Employer's Plan.

9.05 FUNDING POLICY. The Advisory Committee will review, not less
often than annually, all pertinent Employee information and Plan data in order
to establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.

9.06 MANNER OF ACTION. The decision of a majority of the members
appointed and qualified controls.

9.07 AUTHORIZED REPRESENTATIVE. The Advisory Committee may
authorize any one of its members, or its Secretary, to sign on its behalf any
notices, directions, applications, certificates, consents, approvals, waivers,
letters or other documents. The Advisory Committee must evidence this
authority by an instrument signed by all members and filed with the Trustee.

9.08 INTERESTED MEMBER. No member of the Advisory Committee may
decide or determine any matter concerning the distribution, nature or method of
settlement of his own benefits under the Plan, except in exercising an election
available to that member in his capacity as a Participant, unless the Plan
Administrator is acting alone in the capacity of the Advisory Committee.

9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain, or
direct the Trustee to maintain, a separate Account, or multiple Accounts, in
the name of each Participant to reflect the Participant's Accrued Benefit under
the Plan. If a Participant re-enters the Plan subsequent to his having a
Forfeiture Break in Service, the Advisory Committee, or the Trustee, must
maintain a separate Account for the Participant's pre-Forfeiture Break in
Service Accrued Benefit and a separate Account for his post-Forfeiture Break in
Service Accrued Benefit, unless the Participant's entire Accrued Benefit under
the Plan is 100% Nonforfeitable.

The Advisory Committee will make its allocations, or request the
Trustee to make its allocations, to the Accounts of the Participants in
accordance with the provisions of Section 9.11. The Advisory Committee may
direct the Trustee to maintain a temporary segregated investment Account in the
name of a Participant to prevent a distortion of income, gain or loss
allocations under Section 9.11. The Advisory Committee must maintain records of
its activities.

9.10 VALUE OF PARTICIPANTS ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Employer's Trust Fund which the net credit balance in
his Account (exclusive of the cash value of

9.02
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Defined Contribution Master Plan

Incidental benefit insurance contracts) bears to the total net credit balance
in the Accounts (exclusive of the cash value of the incidental benefit
insurance contracts) of all Participants plus the cash surrender value of any
incidental benefit insurance contracts held by the Trustee on the Participant's
life.

For purposes of a distribution under the Plan, the value of a
Participant's Accrued Benefit is its value as of the valuation date
immediately preceding the date of the distribution. Any distribution (other
than a distribution from a segregated Account) made to a Participant (or to his
Beneficiary) more than 90 days after the most recent valuation date may include
interest on the amount of the distribution as an expense of the Trust Fund.
The interest, if any, accrues from such valuation date to the date of the
distribution at the rate established in the Employer's Adoption Agreement.

9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A
"valuation date" under this Plan is each Accounting Date and each interim
valuation date determined under Section 10.14. As of each valuation date the
Advisory Committee must adjust Accounts to reflect net income, gain or loss
since the last valuation date. The valuation period is the period beginning
the day after the last valuation date and ending on the current valuation date.

(A) TRUST FUND ACCOUNTS. The allocation provisions of this paragraph
apply to all Participant Accounts other than segregated investment Accounts.
The Advisory Committee first will adjust the Participant Accounts, as those
Accounts stood at the beginning of the current valuation period, by reducing
the Accounts for any forfeitures arising under Section 5.09 or under Section
9.14, for amounts charged during the valuation period to the Accounts in
accordance with Section 9.13 (relating to distributions) and Section 11.01
(relating to insurance premiums), and for the cash value of incidental benefit
insurance contracts. The Advisory Committee then, subject to the restoration
allocation requirements of Section 5.04 or of Section 9.14, will allocate the
net income, gain or loss pro rata to the adjusted Participant Accounts. The
allocable net income, gain or loss is the net income (or net loss), including
the increase or decrease in the fair market value of assets, since the last
valuation date.

(B) SEGREGATED INVESTMENT ACCOUNTS. A segregated investment Account
receives all income it earns and bears all expense or loss it incurs. The
Advisory Committee will adopt uniform and nondiscriminatory procedures for
determining income or loss of a segregated investment Account in a manner which
reasonably reflects investment directions relating to pooled investments and
investment directions occurring during a valuation period. As of the valuation
date, the Advisory Committee must reduce a segregated Account for any
forfeiture arising under Section 5.09 after the Advisory Committee has made all
other allocations, changes or adjustments to the Account for the Plan Year.

(C) ADDITIONAL RULES. An Excess Amount or suspense account described in
Part 2 of Article III does not share in the allocation of net income, gain or
loss described in this Section 9.11. If the Employer maintains its Plan under a
Code Section 401(k) Adoption Agreement, the Employer may specify in its
Adoption Agreement alternate valuation provisions authorized by that Adoption
Agreement. This Section 9.11 applies solely to the allocation of net income,
gain or loss of the Trust. The Advisory Committee will allocate the Employer
contributions and Participant forfeitures, if any, in accordance with Article
III.

9.12 INDIVIDUAL STATEMENT. As soon as practicable after the
Accounting Date of each Plan Year, but within the time prescribed by ERISA and
the regulations under ERISA, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition of
his Accrued Benefit in the Trust as of that date and such other information
ERISA requires be furnished the Participant or Beneficiary. No Participant,
except a member of the

9.03

<PAGE> 50
Defined Contribution Master Plan

Advisory Committee, has the right to inspect the records reflecting the Account
of any other Participant.

9.13 ACCOUNT CHARGED. The Advisory Committee will charge a
Participant's Account for all distributions made from that Account to the
Participant, to his Beneficiary or to an alternate payee. The Advisory
Committee also will charge a Participant's Account for any administrative
expenses incurred by the Plan directly related to that Account.

9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either
the Trustee or the Advisory Committee to search for, or to ascertain the
whereabouts of, any Participant or Beneficiary. At the time the Participant's
or Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
of record with the Advisory Committee or the Employer, must notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.14 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts
known in writing to the Advisory Committee within 6 months from the date of
mailing of the notice, the Advisory Committee will treat the Participant's or
Beneficiary's unclaimed payable Accrued Benefit as forfeited and will
reallocate the unclaimed payable Accrued Benefit in accordance with Section
3.05. A forfeiture under this paragraph will occur at the end of the notice
period or, if later, the earliest date applicable Treasury regulations would
permit the forfeiture. Pending forfeiture, the Advisory Committee, following
the expiration of the notice period, may direct the Trustee to segregate the
Nonforfeitable Accrued Benefit in a segregated Account and to invest that
segregated Account in Federally insured interest bearing savings accounts or
time deposits (or in a combination of both), or in other fixed income
investments.

If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section
9.14 makes a claim, at any time, for his forfeited Accrued Benefit, the
Advisory Committee must restore the Participant's or Beneficiary's forfeited
Accrued Benefit to the same dollar amount as the dollar amount of the Accrued
Benefit forfeited, unadjusted for any gains or losses occurring subsequent to
the date of the forfeiture. The Advisory Committee will make the restoration
during the Plan Year in which the Participant or Beneficiary makes the claim,
first from the amount, if any, of Participant forfeitures the Advisory
Committee otherwise would allocate for the Plan Year, then from the amount, if
any, of the Trust Fund net income or gain for the Plan Year and then from the
amount, or additional amount, the Employer contributes to enable the Advisory
Committee to make the required restoration. The Advisory Committee must direct
the Trustee to distribute the Participant's or Beneficiary's restored Accrued
Benefit to him not later than 60 days after the close of the Plan Year in which
the Advisory Committee restores the forfeited Accrued Benefit. The forfeiture
provisions of this Section 9.14 apply solely to the Participant's or to the
Beneficiary's Accrued Benefit derived from Employer contributions.

* * * * * * * * * *

9.04

<PAGE> 51
Defined Contribution Master Plan

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.01 ACCEPTANCE. The Trustee accepts the Trust created under the
Plan and agrees to perform the obligations imposed. The Trustee must provide
bond for the faithful performance of its duties under the Trust to the extent
required by ERISA.

10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the
Employer for the funds contributed to it by the Employer, but does not have any
duty to see that the contributions received comply with the provisions of the
Plan. The Trustee is not obliged to collect any contributions from the
Employer, nor is obliged to see that funds deposited with it are deposited
according to the provisions of the Plan.

10.03 INVESTMENT POWERS.

[A] DISCRETIONARY TRUSTEE DESIGNATION. If the Employer, in Adoption Agreement
Section 1.02, designates the Trustee to administer the Trust as a discretionary
Trustee, then the Trustee has full discretion and authority with regard to the
investment of the Trust Fund, except with respect to a Plan asset under the
control or direction of a properly appointed Investment Manager or with respect
to a Plan asset properly subject to Employer, Participant or Advisory Committee
direction of investment. The Trustee must coordinate its investment policy
with Plan financial needs as communicated to it by the Advisory Committee. The
Trustee is authorized and empowered, but not by way of limitation, with the
following powers, rights and duties:

(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized exchange with or
without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery
of commodities, and to make any other investments the Trustee deems
appropriate, as a prudent man would do under like circumstances with
due regard for the purposes of this Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a kind
constituting a diversification considered by law suitable for trust
investments.

(b) To retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to deposit any
cash held in the Trust Fund in a bank account at reasonable interest.

(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, in any type
of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code Section 414(b)) at a reasonable rate of interest
or in a common trust fund, as described in Code Section 584, or in a
collective investment fund, the provisions of which govern the
investment of such assets and which the Plan incorporates by this
reference, which the Trustee (or its affiliate, as defined in Code
Section 1504) maintains exclusively for the collective investment of
money contributed by the bank (or the affiliate) in its capacity as
trustee and which conforms to the rules of the Comptroller of the
Currency.

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Defined Contribution Master Plan

(d) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease
for any term even though commencing in the future or extending beyond
the term of the Trust, and otherwise deal with au property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Trustee decides.

(e) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any
payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is
accountable only to the Advisory Committee for any payment or
distribution made by it in good faith on the order or direction of the
Advisory Committee.

(f) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.

(g) To compromise, contest, arbitrate or abandon claims and
demands, in its discretion.

(h) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights.

(i) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders.

(j) To hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent depositories or in
another form as it may deem best, with or without disclosing the trust
relationship.

(k) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust.

(l) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until final adjudication is made
by a court of competent jurisdiction.

(m) To file all tax returns required of the Trustee.

(n) To furnish to the Employer, the Plan Administrator and the
Advisory Committee an annual statement of account showing the
condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by the Trustee during
the Plan Year covered by the statement and also stating the assets of
the Trust held at the end of the Plan Year, which accounts are
conclusive on all persons, including the Employer, the Plan
Administrator and the Advisory Committee, except as to any act or
transaction concerning which the Employer, the Plan Administrator or
the Advisory Committee files with the Trustee written exceptions or
objections within 90 days after the receipt of the accounts or for
which ERISA authorizes a longer period within which to object.

(o) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the
Trustee is not obliged or required to do so unless indemnified to its
satisfaction.

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[B] Nondiscretionary Trustee Designation/Appointment of Custodian. If the
Employer, in its Adoption Agreement Section 1.02, designates the Trustee to
administer the Trust as a nondiscretionary Trustee, then the Trustee will not
have any discretion or authority with regard to the investment of the Trust
Fund, but must act solely as a directed trustee of the funds contributed to it.
A nondiscretionary Trustee, as directed trustee of the funds held by it under
the Employer's Plan, is authorized and empowered, by way of limitation, with
the following powers, rights and duties, each of which the nondiscretionary
Trustee exercises solely as directed trustee in accordance with the written
direction of the Named Fiduciary (except to the extent a Plan asset is subject
to the control and management of a properly appointed Investment Manager or
subject to Advisory Committee or Participant direction of investment):

(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized options exchange
with or without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery
of commodities, and to make any other investments the Named Fiduciary
deems appropriate.

(b) To retain in cash so much of the Trust Fund as the Named
Fiduciary may direct in writing to satisfy liquidity needs of the Plan
and to deposit any cash held in the Trust Fund in a bank account at
reasonable interest, including, specific authority to invest in any
type of deposit of the Trustee (or of a bank related to the Trustee
within the meaning of Code Section 414(b)) at a reasonable rate of
interest.

(c) To sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any
term even though commencing in the future or extending beyond the term
of the Trust, and otherwise deal with all property, real or personal,
in such manner, for such considerations and on such terms and
conditions as the Named Fiduciary directs in writing.

(d) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any
payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is
accountable only to the Advisory Committee for any payment or
distribution made by it in good faith on the order or direction of the
Advisory Committee.

(e) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.

(f) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or Liquidations, and to
exercise or sell stock subscriptions or conversion rights, provided
the exercise of any such powers is in accordance with and at the
written direction of the Named Fiduciary.

(g) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders, provided the
exercise

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Defined Contribution Master Plan

of any such powers is in accordance with and at the written direction
of the Named Fiduciary.

(h) To hold any securities or other property in the name of the
nondiscretionary Trustee or its nominee, with depositories or agent
depositories or in another form as the Named Fiduciary may deem best,
with or without disclosing the custodial relationship.

(i) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.

(j) To file all tax returns required of the Trustee.

(k) To furnish to the Named Fiduciary, the Employer, the Plan
Administrator and the Advisory Committee an annual statement of
account showing the condition of the Trust Fund and all investments,
receipts, disbursements and other transactions effected by the
nondiscretionary Trustee during the Plan Year covered by the statement
and also stating the assets of the Trust held at the end of the Plan
Year, which accounts are conclusive on all persons, including the
Named Fiduciary, the Employer, the Plan Administrator and the Advisory
Committee, except as to any act or transaction concerning which the
Named Fiduciary, the Employer, the Plan Administrator or the Advisory
Committee files with the nondiscretionary Trustee written exceptions
or objections within 90 days after the receipt of the accounts or for
which ERISA authorizes a longer period within which to object.

(l) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the
Trustee is not obliged or required to do so unless indemnified to its
satisfaction.

APPOINTMENT OF CUSTODIAN. The Employer may appoint a Custodian under
the Plan, the acceptance by the Custodian indicated on the execution page of
the Employer's Adoption Agreement. If the Employer appoints a Custodian, the
Employer's Plan must have a discretionary Trustee, as described in Section
10.03[A]. A Custodian has the same powers, rights and duties as a
nondiscretionary Trustee, as described in this Section 10.03[B]. The Custodian
accepts the terms of the Plan and Trust by executing the Employer's Adoption
Agreement. Any reference in the Plan to a Trustee also is a reference to a
Custodian where the context of the Plan dictates. A limitation of the
Trustee's liability by Plan provision also acts as a limitation of the
Custodian's liability. Any action taken by the Custodian at the discretionary
Trustee's direction satisfies any provision in the Plan referring to the
Trustee's taking that action.

MODIFICATION OF POWERS/LIMITED RESPONSIBILITY. The Employer and the
Custodian or nondiscretionary Trustee, by letter agreement, may limit the
powers of the Custodian or nondiscretionary Trustee to any combination of
powers listed within this Section 10.03[B]. If there is a Custodian or a
nondiscretionary Trustee under the Employer's Plan, then the Employer, in
adopting this Plan acknowledges the Custodian or nondiscretionary Trustee has
no discretion with respect to the investment or re-investment of the Trust Fund
and that the Custodian or nondiscretionary Trustee is acting solely as
custodian or as directed trustee with respect to the assets comprising the
Trust Fund.

[C] LIMITATION OF POWERS OF CERTAIN CUSTODIANS. If a Custodian is a bank
which, under its governing state law, does not possess trust powers, then
paragraphs (a), (c), (e), (f), (g) of Section 10.03[B], Section 10.16 and
Article XI do not apply to that bank and that bank only has the power and
authority to exercise the remaining powers, rights and duties under Section
10.03[B].

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[D] NAMED FIDUCIARY/LIMITATION OF LIABILITY OF NONDISCRETIONARY TRUSTEE OR
CUSTODIAN. Under a nondiscretionary Trustee designation, the Named Fiduciary
under the Employer's Plan has the sole responsibility for the management and
control of the Employer's Trust Fund, except with respect to a Plan asset under
the control or direction of a properly appointed Investment Manager or with
respect to a Plan asset properly subject to Participant or Advisory Committee
direction of investment. If the Employer appoints a Custodian, the Named
Fiduciary is the discretionary Trustee. Under a nondiscretionary Trustee
designation, unless the Employer designates in writing another person or
persons to serve as Named Fiduciary, the Named Fiduciary under the Plan is the
president of a corporate Employer, the managing partner of a partnership
Employer or the sole proprietor, as appropriate. The Named Fiduciary will
exercise its management and control of the Trust Fund through its written
direction to the nondiscretionary Trustee or to the Custodian, whichever
applies to the Employer's Plan.

The nondiscretionary Trustee or Custodian has no duty to review or to
make recommendations regarding investments made at the written direction of the
Named Fiduciary. The nondiscretionary Trustee or Custodian must retain any
investment obtained at the written direction of the Named Fiduciary until
further directed in writing by the Named Fiduciary to dispose of such
investment. The nondiscretionary Trustee or Custodian is not liable in any
manner or for any reason for making, retaining or disposing of any investment
pursuant to any written direction described in this paragraph. Furthermore,
the Employer agrees to indemnify and to hold the nondiscretionary Trustee or
Custodian harmless from any damages, costs or expenses, including reasonable
counsel fees, which the nondiscretionary Trustee or Custodian may incur as a
result of any claim asserted against the nondiscretionary Trustee, the
Custodian or the Trust arising out of the nondiscretionary Trustee's or
Custodian's compliance with any written direction described in this paragraph.

[E] PARTICIPANT LOANS. This Section 10.03[E] specifically authorizes the
Trustee to make loans on a nondiscriminatory basis to a Participant or to a
Beneficiary in accordance with the loan policy established by the Advisory
Committee, provided: (1) the loan policy satisfies the requirements of Section
9.04; (2) loans are available to all Participants and Beneficiaries on a
reasonably equivalent basis and are not available in a greater amount for
Highly Compensated Employees than for other Employees; (3) any loan is
adequately secured and bears a reasonable rate of interest; (4) the loan
provides for repayment within a specified time; (5) the default provisions of
the note prohibit offset of the Participant's Nonforfeitable Accrued Benefit
prior to the time the Trustee otherwise would distribute the Participant's
Nonforfeitable Accrued Benefit; (6) the amount of the loan does not exceed (at
the time the Plan extends the loan) the present value of the Participant's
Nonforfeitable Accrued Benefit; and (7) the loan otherwise conforms to the
exemption provided by Code Section 4975(d)(1). If the joint and survivor
requirements of Article VI apply to the Participant, the Participant may not
pledge any portion of his Accrued Benefit as security for a loan made after
August 18, 1985, unless, within the 90 day period ending on the date the pledge
becomes effective, the Participant's spouse, if any, consents (in a manner
described in Section 6.05 other than the requirement relating to the consent of
a subsequent spouse) to the security or, by separate consent, to an increase in
the amount of security. If the Employer is an unincorporated trade or
business, a Participant who is an Owner-Employee may not receive a loan from
the Plan, unless he has obtained a prohibited transaction exemption from the
Department of Labor. If the Employer is an "S Corporation," a Participant who
is a shareholder-employee (an employee or an officer) who, at any time during
the Employer's taxable year, owns more than 5%, either directly or by
attribution under Code Section 318(a)(1), of the Employer's outstanding stock
may not receive a loan from the Plan, unless he has obtained a prohibited
transaction exemption from the Department of Labor. If the Employer is not an
unincorporated trade or business nor an "S Corporation," this Section 10.03[E]
does not impose any restrictions on the class of Participants eligible for a
loan from the Plan.

[F] INVESTMENT IN QUALIFYING EMPLOYER SECURITIES AND QUALIFYING EMPLOYER REAL
PROPERTY. The investment options in this Section 10.03[F] include the ability
to invest in qualifying Employer securities or qualifying Employer real
property, as defined in and as limited by ERISA. If the Employer's Plan is a
Nonstandardized profit sharing plan, it may elect in its Adoption Agreement to

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Defined Contribution Master Plan

permit the aggregate investments in qualifying Employer securities and in
qualifying Employer real property to exceed 10% of the value of Plan assets.

10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining
to the Plan must be open to the inspection of the Plan Administrator, the
Advisory Committee and the Employer at all reasonable times and may be audited
from time to time by any person or persons as the Employer, Plan Administrator
or Advisory Committee may specify in writing. The Trustee must furnish the
Plan Administrator or Advisory Committee with whatever information relating to
the Trust Fund the Plan Administrator or Advisory Committee considers
necessary.

10.05 FEES AND EXPENSES FROM FUND. A Trustee or Custodian will
receive reasonable annual compensation as may be agreed upon from time to time
between the Employer and the Trustee or Custodian. No person who is receiving
full pay from the Employer may receive compensation for services as Trustee or
as Custodian. The Trustee will pay from the Trust Fund all fees and expenses
reasonably incurred by the Plan, to the extent such fees and expenses are for
the ordinary and necessary administration and operation of the Plan, unless the
Employer pays such fees and expenses. Any fee or expense paid, directly or
indirectly, by the Employer is not an Employer contribution to the Plan,
provided the fee or expense relates to the ordinary and necessary
administration of the Fund.

10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA,
no Participant or Beneficiary is a necessary party or is required to receive
notice of process in any court proceeding involving the Plan, the Trust Fund or
any fiduciary of the Plan. Any final judgment entered in any proceeding will
be conclusive upon the Employer, the Plan Administrator, the Advisory
Committee, the Trustee, Custodian, Participants and Beneficiaries.

10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the
Trust Fund reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in its opinion may be necessary. The Trustee
may delegate to any agent, attorney, accountant or other person selected by it
any non-Trustee power or duty vested in it by the Plan, and the Trustee may act
or refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.

10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make
distribution under the Plan in cash or property, or partly in each, at its fair
market value as determined by the Trustee. For purposes of a distribution to a
Participant or to a Participant's designated Beneficiary or surviving spouse,
"property" includes a Nontransferable Annuity Contract, provided the contract
satisfies the requirements of this Plan.

10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee must promptly notify the Advisory
Committee and then dispose of the payment in accordance with the subsequent
direction of the Advisory Committee.

10.10 THIRD PARTY/MULTIPLE TRUSTEES. No person dealing with the
Trustee is obligated to see to the proper application of any money paid or
property delivered to the Trustee, or to inquire whether the Trustee has acted
pursuant to any of the terms of the Plan. Each person dealing with the Trustee
may act upon any notice, request or representation in writing by the Trustee,
or by the Trustee's duly authorized agent, and is not liable to any person in
so acting. The certificate of the Trustee that it is acting in accordance with
the Plan will be conclusive in favor of any person relying on the certificate.
If more than two persons act as Trustee, a decision of the majority of such
persons controls with respect to any decision regarding the administration or
investment of the Trust Fund or of any portion of the Trust Fund with respect
to which such persons act as Trustee. However, the signature of only one
Trustee is necessary to effect any transaction on behalf of the Trust.

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Defined Contribution Master Plan

10.11 RESIGNATION. The Trustee or Custodian may resign its position
at any time by giving 30 days' written notice in advance to the Employer and to
the Advisory Committee. if the Employer fails to appoint a successor Trustee
within 60 days of its receipt of the Trustee's written notice of resignation,
the Trustee will treat the Employer as having appointed itself as Trustee and
as having filed its acceptance of appointment with the former Trustee. The
Employer, in its sole discretion, may replace a Custodian. If the Employer
does not replace a Custodian, the discretionary Trustee will assume possession
of Plan assets held by the former Custodian.

10.12 REMOVAL. The Employer, by giving 30 days' written notice in
advance to the Trustee, may remove any Trustee or Custodian. In the event of
the resignation or removal of a Trustee, the Employer must appoint a successor
Trustee if it intends to continue the Plan. If two or more persons hold the
position of Trustee, in the event of the removal of one such person, during any
period the selection of a replacement is pending, or during any period such
person is unable to serve for any reason, the remaining person or persons will
act as the Trustee.

10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee
succeeds to the title to the Trust vested in his predecessor by accepting in
writing his appointment as successor Trustee and by filing the acceptance with
the former Trustee and the Advisory Committee without the signing or filing of
any further statement. The resigning or removed Trustee, upon receipt of
acceptance in writing of the Trust by the successor Trustee, must execute all
documents and do all acts necessary to vest the title of record in any
successor Trustee. Each successor Trustee has and enjoys all of the powers,
both discretionary and ministerial, conferred under this Agreement upon his
predecessor. A successor Trustee is not personally liable for any act or
failure to act of any predecessor Trustee, except as required under ERISA.
With the approval of the Employer and the Advisory Committee, a successor
Trustee, with respect to the Plan, may accept the account rendered and the
property delivered to it by a predecessor Trustee without incurring any
liability or responsibility for so doing.

10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as
of each Accounting Date to determine the fair market value of each
Participant's Accrued Benefit in the Trust. The Trustee also must value the
Trust Fund on such other valuation dates as directed in writing by the Advisory
Committee or as required by the Employer's Adoption Agreement.

10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY
TRUSTEE OR INDEPENDENT FIDUCIARY APPOINTED. The Trustee is not liable for the
acts or omissions of any Investment Manager the Advisory Committee may appoint,
nor is the Trustee under any obligation to invest or otherwise manage any asset
of the Plan which is subject to the management of a properly appointed
Investment Manager. The Advisory Committee, the Trustee and any properly
appointed Investment Manager may execute a letter agreement as a part of this
Plan delineating the duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the Trust Fund under the control of the
Investment Manager.

The limitation on liability described in this Section 10.15 also
applies to the acts or omissions of any ancillary trustee or independent
fiduciary properly appointed under Section 10.17 of the Plan. However, if a
discretionary Trustee, pursuant to the delegation described in Section 10.17 of
the Plan, appoints an ancillary trustee, the discretionary Trustee is
responsible for the periodic review of the ancillary trustee's actions and must
exercise its delegated authority in accordance with the terms of the Plan and
in a manner consistent with ERISA. The Employer, the discretionary Trustee and
an ancillary trustee may execute a letter agreement as a part of this Plan
delineating any indemnification agreement between the parties.

10.16 INVESTMENT IN GROUP TRUST FUND. The Employer, by adopting
this Plan, specifically authorizes the Trustee to invest all or any portion of
the assets comprising the Trust Fund in any group trust fund which at the time
of the investment provides for the pooling of the assets of plans qualified
under Code Section 401(a). This authorization applies solely to a group trust
fund

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Defined Contribution Master Plan

exempt from taxation under Code Section 501(a) and the trust agreement of which
satisfies the requirements of Revenue Ruling 81-100. The provisions of the
group trust fund agreement, as amended from time to time, are by this reference
incorporated within this Plan and Trust. The provisions of the group trust fund
will govern any investment of Plan assets in that fund. The Employer must
specify in an attachment to its adoption agreement the group trust fund(s) to
which this authorization applies. If the Trustee is acting as a
nondiscretionary Trustee, the investment in the group trust fund is available
only in accordance with a proper direction, by the Named Fiduciary, in
accordance with Section 10.03[B]. Pursuant to paragraph (c) of Section 10.03[A]
of the Plan, a Trustee has the authority to invest in certain common trust funds
and collective investment funds without the need for the authorizing addendum
described in this Section 10.16.

Furthermore, at the Employer's direction, the Trustee, for collective
investment purposes, may combine into one trust fund the Trust created under
this Plan with the Trust created under any other qualified retirement plan the
Employer maintains. However, the Trustee must maintain separate records of
account for the assets of each Trust in order to reflect properly each
Participant's Accrued Benefit under the plan(s) in which he is a Participant.

10.17 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY. The
Employer, in writing, may appoint any person in any State to act as ancillary
trustee with respect to a designated portion of the Trust Fund, subject to the
consent required under Section 1.02 if the Master Plan Sponsor is a financial
institution. An ancillary trustee must acknowledge in writing its acceptance of
the terms and conditions of its appointment as ancillary trustee and its
fiduciary status under ERISA. The ancillary trustee has the rights, powers,
duties and discretion as the Employer may delegate, subject to any limitations
or directions specified in the instrument evidencing appointment of the
ancillary trustee and to the terms of the Plan or of ERISA. The investment
powers delegated to the ancillary trustee may include any investment powers
available under Section 10.03 of the Plan including the right to invest any
portion of the assets of the Trust Fund in a common trust fund, as described in
Code Section 584, or in any collective investment fund, the provisions of which
govern the investment of such assets and which the Plan incorporates by this
reference, but only if the ancillary trustee is a bank or similar financial
institution supervised by the United States or by a State and the ancillary
trustee (or its affiliate, as defined in Code Section 1504) maintains the common
trust fund or collective investment fund exclusively for the collective
investment of money contributed by the ancillary trustee (or its affiliate) in a
trustee capacity and which conforms to the rules of the Comptroller of the
Currency. The Employer also may appoint as an ancillary trustee, the trustee of
any group trust fund designated for investment pursuant to the provisions of
Section 10.16 of the Plan.

The ancillary trustee may resign its position at any time by providing
at least 30 days' advance written notice to the Employer, unless the Employer
waives this notice requirement. The Employer, in writing, may remove an
ancillary trustee at any time. In the event of resignation or removal, the
Employer may appoint another ancillary trustee, return the assets to the control
and management of the Trustee or receive such assets in the capacity of
ancillary trustee. The Employer may delegate its responsibilities under this
Section 10.17 to a discretionary Trustee under the Plan, but not to a
nondiscretionary Trustee or to a Custodian, subject to the acceptance by the
discretionary Trustee of that delegation.

If the U.S. Department of Labor ("the Department") requires engagement
of an independent fiduciary to have control or management of all or a portion of
the Trust Fund, the Employer will appoint such independent fiduciary, as
directed by the Department. The independent fiduciary will have the duties,
responsibilities and powers prescribed by the Department and will exercise those
duties, responsibilities and powers in accordance with the terms, restrictions
and conditions established by the Department and, to the extent not inconsistent
with ERISA, the terms of the Plan. The independent fiduciary must accept its
appointment in writing and must acknowledge its status as a fiduciary of the
Plan.

* * * * * * * * * *

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<PAGE> 59
Defined Contribution Master Plan

ARTICLE XI
PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY

11.01 INSURANCE BENEFIT. The Employer may elect to provide
incidental life insurance benefits for insurable Participants who consent to
Life insurance benefits by signing the appropriate insurance company
application form. The Trustee will not purchase any incidental life insurance
benefit for any Participant prior to an allocation to the Participant's
Account. At an insured Participant's written direction, the Trustee will use
all or any portion of the Participant's nondeductible voluntary contributions,
if any, to pay insurance premiums covering the Participant's life. This
Section 11.01 also authorizes the purchase of life insurance, for the benefit
of the Participant, on the life of a family member of the Participant or on any
person in whom the Participant has an insurable interest. However, if the
policy is on the joint lives of the Participant and another person, the Trustee
may not maintain that policy if that other person predeceases the Participant.

The Employer will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan. Each
application for a policy, and the policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the policies, subject to the terms and provisions
of this Agreement. The Trustee must be the named beneficiary for the Account
of the insured Participant. Proceeds of insurance contracts paid to the
Participant's Account under this Article XI are subject to the distribution
requirements of Article V and of Article VI. The Trustee will not retain any
such proceeds for the benefit of the Trust.

The Trustee will charge the premiums on any incidental benefit
insurance contract covering the life of a Participant against the Account of
that Participant. The Trustee will hold all incidental benefit insurance
contracts issued under the Plan as assets of the Trust created under the Plan.

(A) INCIDENTAL INSURANCE BENEFITS. The aggregate of life insurance
premiums paid for the benefit of a Participant, at all times, may not exceed
the following percentages of the aggregate of the Employer's contributions
allocated to any Participant's Account: (i) 49% in the case of the purchase of
ordinary life insurance contracts; or (ii) 25% in the case of the purchase of
term life insurance or universal life insurance contracts. If the Trustee
purchases a combination of ordinary life insurance contract(s) and term life
insurance or universal life insurance contract(s), then the sum of one-half of
the premiums paid for the ordinary life insurance contract(s) and the premiums
paid for the term life insurance or universal life insurance contract(s) may
not exceed 25% of the Employer contributions allocated to any Participant's
Account.

(B) EXCEPTION FOR CERTAIN PROFIT SHARING PLANS. If the Employer's Plan is
a profit sharing plan, the incidental insurance benefits requirement does not
apply to the Plan if the Plan purchases life insurance benefits only from
Employer contributions accumulated in the Participant's Account for at least
two years (measured from the allocation date).

11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not
continue any life insurance protection for any Participant beyond his annuity
starting date (as defined in Article VI). If the Trustee holds any incidental
benefit insurance contract(s) for the benefit of a Participant when he
terminates his employment (other than by reason of death), the Trustee must
proceed as follows:

11.01
<PAGE> 60
Defined Contribution Master Plan

(a) If the entire cash value of the contract(s) is vested in the
terminating Participant, or if the contract(s) will have no cash value
at the end of the policy year in which termination of employment
occurs, the Trustee will transfer the contract(s) to the Participant
endorsed so as to vest in the transferee all right, title and interest
to the contract(s), free and clear of the Trust; subject however, to
restrictions as to surrender or payment of benefits as the issuing
insurance company may permit and as the Advisory Committee directs;

(b) If only part of the cash value of the contract(s) is vested in
the terminating Participant, the Trustee, to the extent the
Participant's interest in the cash value of the contract(s) is not
vested, may adjust the Participant's interest in the value of his
Account attributable to Trust assets other than incidental benefit
insurance contracts and proceed as in (a), or the Trustee must effect
a loan from the issuing insurance company on the sole security of the
contract(s) for an amount equal to the difference between the cash
value of the contract(s) at the end of the policy year in which
termination of employment occurs and the amount of the cash value that
is vested in the terminating Participant, and the Trustee must
transfer the contract(s) endorsed so as to vest in the transferee all
right, title and interest to the contract(s), free and clear of the
Trust; subject however, to the restrictions as to surrender or payment
of benefits as the issuing insurance company may permit and the
Advisory Committee directs;

(c) If no part of the cash value of the contract(s) is vested in
the terminating Participant, the Trustee must surrender the
contract(s) for cash proceeds as may be available.

In accordance with the written direction of the Advisory Committee,
the Trustee will make any transfer of contract(s) under this Section 11.02 on
the Participant's annuity starting date (or as soon as administratively
practicable after that date). The Trustee may not transfer any contract under
this Section 11.02 which contains a method of payment not specifically
authorized by Article VI or which fails to comply with the joint and survivor
annuity requirements, if applicable, of Article VI. In this regard, the
Trustee either must convert such a contract to cash and distribute the cash
instead of the contract, or before making the transfer, require the issuing
company to delete the unauthorized method of payment option from the contract.

11.03 DEFINITIONS. For purposes of this Article XI:

(a) "Policy" means an ordinary life insurance contract or a term
life insurance contract issued by an insurer on the life of a
Participant.

(b) "Issuing insurance company" is any Life insurance company
which has issued a policy upon application by the Trustee under the
terms of this Agreement.

(c) "Contract" or "Contracts" means a policy of insurance. In the
event of any conflict between the provisions of this Plan and the
terms of any contract or policy of insurance issued in accordance with
this Article XI, the provisions of the Plan control.

(d) "Insurable Participant" means a Participant to whom an
insurance company, upon an application being submitted in accordance
with the Plan, will issue insurance coverage, either as a standard
risk or as a risk in an extra mortality classification.

11.04 DIVIDEND PLAN. The dividend plan is premium reduction unless
the Advisory Committee directs the Trustee to the contrary. The Trustee must
use all dividends for a contract to purchase insurance benefits or additional
insurance benefits for the Participant on whose Life the insurance company has
issued the contract. Furthermore, the Trustee must arrange, where possible,
for all policies issued on the lives of Participants under the Plan to have the
same premium due

11.02
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Defined Contribution Master Plan

date and all ordinary life insurance contracts to contain guaranteed cash
values with as uniform basic options as are possible to obtain. The term
"dividends" includes policy dividends, refunds of premiums and other credits.

11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance
company, solely in its capacity as an issuing insurance company, is a party to
this Agreement nor is the company responsible for its validity.

11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an issuing insurance company,
need examine the terms of this Agreement nor is responsible for any action
taken by the Trustee.

11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For the
purpose of making application to an insurance company and in the exercise of
any right or option contained in any policy, the insurance company may rely
upon the signature of the Trustee and is saved harmless and completely
discharged in acting at the direction and authorization of the Trustee.

11.08 ACQUITTANCE. An insurance company is discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution or
further application of any moneys it so pays.

11.09 DUTIES OF INSURANCE COMPANY. Each insurance company must keep
such records, make such identification of contracts, funds and accounts within
funds, and supply such information as may be necessary for the proper
administration of the Plan under which it is carrying insurance benefits.

NOTE: The provisions of this Article XI are not applicable, and the
Plan may not invest in insurance contracts, if a Custodian signatory to the
Adoption Agreement is a bank which has not acquired trust powers from its
governing state banking authority.

* * * * * * * * * *
<PAGE> 62
Defined Contribution Master Plan

ARTICLE XII
MISCELLANEOUS

12.01 EVIDENCE. Anyone required to give evidence under the terms of
the Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. The Advisory Committee and the Trustee are fully protected in acting
and relying upon any evidence described under the immediately preceding
sentence.

12.02 NO RESPONSIBILITY FOR EMPLOYER ACTI0N. Neither the Trustee
nor the Advisory Committee has any obligation or responsibility with respect to
any action required by the Plan to be taken by the Employer, any Participant or
eligible Employee, or for the failure of any of the above persons to act or
make any payment or contribution, or to otherwise provide any benefit
contemplated under this Plan. Furthermore, the Plan does not require the
Trustee or the Advisory Committee to collect any contribution required under
the Plan, or to determine the correctness of the amount of any Employer
contribution. Neither the Trustee nor the Advisory Committee need inquire into
or be responsible for any action or failure to act on the part of the others,
or on the part of any other person who has any responsibility regarding the
management, administration or operation of the Plan, whether by the express
terms of the Plan or by a separate agreement authorized by the Plan or by the
applicable provisions of ERISA. Any action required of a corporate Employer
must be by its Board of Directors or its designate.

12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory
Committee, the Plan Administrator and the Employer in no way guarantee the
Trust Fund from loss or depreciation. The Employer does not guarantee the
payment of any money which may be or becomes due to any person from the Trust
Fund. The Liability of the Advisory Committee and the Trustee to make any
payment from the Trust Fund at any time and all times is limited to the then
available assets of the Trust.

12.04 WAIVER OF NOTICE. Any person entitled to notice under the
Plan may waive the notice, unless the Code or Treasury regulations prescribe
the notice or ERISA specifically or impliedly prohibits such a waiver.

12.05 SUCCESSORS. The Plan is binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustee, the Advisory
Committee, the Plan Administrator and their successors.

12.06 WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Employer's Plan
dictates, the plural includes the singular and the singular includes the
plural.

12.07 STATE LAW. The law of the state of the Employer's principal
place of business (unless otherwise designated in an addendum to the Employer's
Adoption Agreement) will determine all questions arising with respect to the
provisions of this Agreement except to the extent superseded by Federal law.

12.08 EMPLOYER'S RIGHT TO PARTICIPATE. If the Employer's Plan fails
to qualify or to maintain qualification or if the Employer makes any amendment
or modification to a provision of this Plan (other than a proper completion of
an elective provision under the Adoption Agreement or the attachment of an
addendum authorized by the Plan or by the Adoption Agreement), the Employer may
no longer participate under this Master Plan. The Employer also may not
participate (or continue to participate) in this Master Plan if the Trustee or
Custodian (or a change in the Trustee or Custodian) does not satisfy the
requirements of Section 1.02 of the Plan. If the

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Defined Contribution Master Plan

Employer is not entitled to participate under this Master Plan, the Employer's
Plan is an individually-designed plan and the reliance procedures specified in
the applicable Adoption Agreement no longer will apply.

12.09 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or
with respect to the establishment of the Trust, or any modification or
amendment to the Plan or Trust, or in the creation of any Account, or the
payment of any benefit, gives any Employee, Employee-Participant or any
Beneficiary any right to continue employment, any legal or equitable right
against the Employer, or Employee of the Employer, or against the Trustee, or
its agents or employees, or against the Plan Administrator, except as expressly
provided by the Plan, the Trust, ERISA or by a separate agreement.

* * * * * * * * * *

12.02

<PAGE> 64
Defined Contribution Master Plan

ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION

13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the
Employer has no beneficial interest in any asset of the Trust and no part of
any asset in the Trust may ever revert to or be repaid to an Employer, either
directly or indirectly; nor, prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any
part of the corpus or income of the Trust Fund, or any asset of the Trust, be
(at any time) used for, or diverted to, purposes other than the exclusive
benefit of the Participants or their Beneficiaries. However, if the
Commissioner of Internal Revenue, upon the Employer's request for initial
approval of this Plan, determines the Trust created under the Plan is not a
qualified trust exempt from Federal income tax, then (and only then) the
Trustee, upon written notice from the Employer, will return the Employer's
contributions (and increment attributable to the contributions) to the
Employer. The Trustee must make the return of the Employer contribution under
this Section 13.01 within one year of a final disposition of the Employer's
request for initial approval of the Plan. The Employer's Plan and Trust will
terminate upon the Trustee's return of the Employer's contributions.

13.02 AMENDMENT BY EMPLOYER. The Employer has the right at any time
and from time to time:

(a) To amend the elective provisions of the Adoption Agreement in
any manner it deems necessary or advisable in order to qualify (or
maintain qualification of) this Plan and the Trust created under it
under the provisions of Code Section 401(a);

(b) To amend the Plan to allow the Plan to operate under a waiver
of the minimum funding requirement; and

No amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administration expenses) to be used
for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates. No amendment may cause or
permit any portion of the Trust Fund to revert to or become a property of the
Employer. The Employer also may not make any amendment which affects the
rights, duties or responsibilities of the Trustee, the Plan Administrator or
the Advisory Committee without the written consent of the affected Trustee, the
Plan Administrator or the affected member of the Advisory Committee. The
Employer must make all amendments in writing. Each amendment must state the
date to which it is either retroactively or prospectively effective. See
Section 12.08 for the effect of certain amendments adopted by the Employer.

(A) CODE SECTION 411(d)(6) PROTECTED BENEFITS. An amendment (including
the adoption of this Plan as a restatement of an existing plan) may not
decrease a Participant's Accrued Benefit, except to the extent permitted under
Code Section 412(c)(8), and may not reduce or eliminate Code Section 411(d)(6)
protected benefits determined immediately prior to the adoption date (or, if
later, the effective date) of the amendment. An amendment reduces or
eliminates Code Section 411(d)(6) protected benefits if the amendment has the
effect of either (1) eliminating or reducing an early retirement benefit or a
retirement-type subsidy (as defined in Treasury regulations), or (2) except as
provided by Treasury regulations, eliminating an optional form of benefit. The
Advisory Committee must disregard an amendment to the extent application of the
amendment would fail to satisfy this paragraph. If the Advisory Committee must
disregard an amendment because the amendment would violate clause (1)

13.01
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Defined Contribution Master Plan

or clause (2), the Advisory Committee must maintain a schedule of the early
retirement option or other optional forms of benefit the Plan must continue for
the affected Participants.

13.03 AMENDMENT BY MASTER PLAN SPONSOR. The Master Plan Sponsor (or
PPD, as agent of the Master Plan Sponsor), without the Employer's consent, may
amend the Plan and Trust, from time to time, in order to conform the Plan and
Trust to any requirement for qualification of the Plan and Trust under the
Internal Revenue Code. The Master Plan Sponsor may not amend the Plan in any
manner which would modify any election made by the Employer under the Plan
without the Employer's written consent. Furthermore, the Master Plan Sponsor
may not amend the Plan in any manner which would violate the proscription of
Section 13.02. A Trustee does not have the power to amend the Plan or Trust.

13.04 DISCONTINUANCE. The Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan, and to terminate, at
any time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:

(a) The date terminated by action of the Employer;

(b) The dissolution or merger of the Employer, unless the
successor makes provision to continue the Plan, in which event the
successor must substitute itself as the Employer under this Plan. Any
termination of the Plan resulting from this paragraph (b) is not
effective until compliance with any applicable notice requirements
under ERISA.

13.05 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of
profit sharing plan contributions to the Plan, an affected Participant's right
to his Accrued Benefit is 100% Nonforfeitable, irrespective of the
Nonforfeitable percentage which otherwise would apply under Article V.

13.06 MERGER/DIRECT TRANSFER. The Trustee may not consent to, or be
a party to, any merger or consolidation with another plan, or to a transfer of
assets or liabilities to another plan, unless immediately after the merger,
consolidation or transfer, the surviving Plan provides each Participant a
benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger or consolidation
or transfer. The Trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code Section 401(a), including an elective
transfer, and to accept the direct transfer of plan assets, or to transfer plan
assets, as a party to any such agreement.

The Trustee may accept a direct transfer of plan assets on behalf of
an Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts such a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan.

(A) ELECTIVE TRANSFERS. The Trustee, after August 9, 1988, may not
consent to, or be a party to a merger, consolidation or transfer of assets with
a defined benefit plan, except with respect to an elective transfer, or unless
the transferred benefits are in the form of paid-up individual annuity
contracts guaranteeing the payment of the transferred benefits in accordance
with the terms of the transferor plan and in a manner consistent with the Code
and with ERISA. The Trustee will hold, administer and distribute the
transferred assets as a part of the Trust Fund and the Trustee must maintain a
separate Employer contribution Account for the benefit of the Employee on whose
behalf the Trustee accepted the transfer in order to reflect the value of the
transferred assets. Unless a transfer of assets to this Plan is an elective
transfer, the Plan will preserve all Code Section 411(d)(6)

13.02
<PAGE> 66
Defined Contribution Master Plan

protected benefits with respect to those transferred assets, in the manner
described in Section 13.02. A transfer is an elective transfer if: (1) the
transfer satisfies the first paragraph of this Section 13.06; (2) the transfer
is voluntary, under a fully informed election by the Participant; (3) the
Participant has an alternative that retains his Code Section 411(d)(6) protected
benefits (including an option to leave his benefit in the transferor plan, if
that plan is not terminating); (4) the transfer satisfies the applicable spousal
consent requirements of the Code; (5) the transferor plan satisfies the joint
and survivor notice requirements of the Code, if the Participant's transferred
benefit is subject to those requirements; (6) the Participant has a right to
immediate distribution from the transferor plan, in lieu of the elective
transfer; (7) the transferred benefit is at least the greater of the single sum
distribution provided by the transferor plan for which the Participant is
eligible or the present value of the Participant's accrued benefit under the
transferor plan payable at that plan's normal retirement age; (8) the
Participant has a 100% Nonforfeitable interest in the transferred benefit; and
(9) the transfer otherwise satisfies applicable Treasury regulations. An
elective transfer may occur between qualified plans of any type. Any direct
transfer of assets from a defined benefit plan after August 9, 1988, which does
not satisfy the requirements of this paragraph will render the Employer's Plan
individually-designed. See Section 12.08.

(B) DISTRIBUTION RESTRICTIONS UNDER CODE SECTION 401(k). If the Plan
receives a direct transfer (by merger or otherwise) of elective contributions
(or amounts treated as elective contributions) under a Plan with a Code Section
401(k) arrangement, the distribution restrictions of Code Sections 401(k)(2) and
(10) continue to apply to those transferred elective contributions.

13.07 TERMINATION.

(A) PROCEDURE. Upon termination of the Plan, the distribution provisions
of Article VI remain operative, with the following exceptions:

(1) if the present value of the Participant's Nonforfeitable
Accrued Benefit does not exceed $3,500, the Advisory Committee will
direct the Trustee to distribute the Participant's Nonforfeitable
Accrued Benefit to him in lump sum as soon as administratively
practicable after the Plan terminates; and

(2) if the present value of the Participant's Nonforfeitable
Accrued Benefit exceeds $3,500, the Participant or the Beneficiary, in
addition to the distribution events permitted under Article VI, may
elect to have the Trustee commence distribution of his Nonforfeitable
Accrued Benefit as soon as administratively practicable after the Plan
terminates.

To liquidate the Trust, the Advisory Committee will purchase a
deferred annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500 and the Participant does not elect an immediate
distribution pursuant to Paragraph (2).

If the Employer's Plan is a profit sharing plan, in lieu of the
preceding provisions of this Section 13.07 and the distribution provisions of
Article VI, the Advisory Committee will direct the Trustee to distribute each
Participant's Nonforfeitable Accrued Benefit, in lump sum, as soon as
administratively practicable after the termination of the Plan, irrespective of
the present value of the Participant's Nonforfeitable Accrued Benefit and
whether the Participant consents to that distribution. This paragraph does not
apply if: (1) the Plan provides an annuity option; or (2) as of the period
between the Plan termination date and the final distribution of assets, the
Employer maintains any other defined contribution plan (other than an ESOP).
The Employer, in an addendum to its Adoption Agreement numbered 13.07, may
elect not to have this paragraph apply.

13.03
<PAGE> 67
Defined Contribution Master Plan

The Trust will continue until the Trustee in accordance with the
direction of the Advisory Committee has distributed all of the benefits under
the Plan. On each valuation date, the Advisory Committee will credit any part
of a Participant's Accrued Benefit retained in the Trust with its proportionate
share of the Trust's income, expenses, gains and losses, both realized and
unrealized. upon termination of the Plan, the amount, if any, in a suspense
account under Article III will revert to the Employer, subject to the conditions
of the Treasury regulations permitting such a reversion. A resolution or
amendment to freeze all future benefit accrual but otherwise to continue
maintenance of this Plan, is not a termination for purposes of this Section
13.07.

(B) DISTRIBUTION RESTRICTIONS UNDER CODE SECTION 401(k). If the Employer's
Plan includes a Code Section 401(k) arrangement or if transferred assets
described in Section 13.06 are subject to the distribution restrictions of Code
Sections 401(k)(2) and (10), the special distribution provisions of this Section
13.07 are subject to the restrictions of this paragraph. The portion of the
Participant's Nonforfeitable Accrued Benefit attributable to elective
contributions (or to amounts treated under the Code Section 401(k) arrangement
as elective contributions) is not distributable on account of Plan termination,
as described in this Section 13.07, unless: (a) the Participant otherwise is
entitled under the Plan to a distribution of that portion of his Nonforfeitable
Accrued Benefit; or (b) the Plan termination occurs without the establishment of
a successor plan. A successor plan under clause (b) is a defined contribution
plan (other than an ESOP) maintained by the Employer (or by a related employer)
at the time of the termination of the Plan or within the period ending twelve
months after the final distribution of assets. A distribution made after March
31, 1988, pursuant to clause (b), must be part of a lump sum distribution to the
Participant of his Nonforfeitable Accrued Benefit.

* * * * * * * * * *

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Defined Contribution Master Plan

ARTICLE XIV
CODE Section 401(k) AND CODE Section 401(m) ARRANGEMENTS

14.01 APPLICATION. This Article XIV applies to an Employer's Plan
only if the Employer is maintaining its Plan under a Code Section 401(k)
Adoption Agreement.

14.02 CODE SECTION 401(k) ARRANGEMENT. The Employer will elect in
Section 3.01 of its Adoption Agreement the terms of the Code Section 401(k)
arrangement, if any, under the Plan. If the Employer's Plan is a Standardized
Plan, the Code Section 401(k) arrangement must be a salary reduction
arrangement. If the Employer's Plan is a Nonstandardized Plan, the Code
Section 401(k) arrangement may be a salary reduction arrangement or a cash or
deferred arrangement.

(A) SALARY REDUCTION ARRANGEMENT. If the Employer elects a salary
reduction arrangement, any Employee eligible to participate in the Plan may
file a salary reduction agreement with the Advisory Committee. The salary
reduction agreement may not be effective earlier than the following date which
occurs last: (i) the Employee's Plan Entry Date (or, in the case of a
reemployed Employee, his reparticipation date under Article II); (ii) the
execution date of the Employee's salary reduction agreement; (iii) the date the
Employer adopts the Code Section 401(k) arrangement by executing the Adoption
Agreement; or (iv) the effective date of the Code Section 401(k) arrangement,
as specified in the Employer's Adoption Agreement. Regarding clause (i), an
Employee subject to the Break in Service rule of Section 2.03(b) of the Plan
may not enter into a salary reduction agreement until the Employee has
completed a sufficient number of Hours of Service to receive credit for a Year
of Service (as defined in Section 2.02) following his reemployment commencement
date. A salary reduction agreement must specify the amount of Compensation (as
defined in Section 1.12) or percentage of Compensation the Employee wishes to
defer. The salary reduction agreement will apply only to Compensation which
becomes currently available to the Employee after the effective date of the
salary reduction agreement. The Employer will apply a reduction election to
all Compensation (and to increases in such Compensation) unless the Employee
specifies in his salary reduction agreement to limit the election to certain
Compensation. The Employer will specify in Adoption Agreement Section 3.01 the
rules and restrictions applicable to the Employees salary reduction agreements.

(B) CASH OR DEFERRED ARRANGEMENT. If the Employer elects a cash or
deferred arrangement, a Participant may elect to make a cash election against
his proportionate share of the Employer's Cash or Deferred Contribution, in
accordance with the Employer's elections in Adoption Agreement Section 3.01. A
Participant's proportionate share of the Employer's Cash or Deferred
Contribution is the percentage of the total Cash or Deferred Contribution which
bears the same ratio that the Participant's Compensation for the Plan Year
bears to the total Compensation of all Participants for the Plan Year. For
purposes of determining each Participant's proportionate share of the Cash or
Deferred Contribution, a Participant's Compensation is his Compensation as
determined under Section 1.12 of the Plan (as modified by Section 3.06 for
allocation purposes), excluding any effect the proportionate share may have on
the Participant's Compensation for the Plan Year. The Advisory Committee will
determine the proportionate share prior to the Employer's actual contribution
to the Trust, to provide the Participants the opportunity to file cash
elections. The Employer will pay directly to the Participant the portion of
his proportionate share the Participant has elected to receive in cash.

(C) ELECTION NOT TO PARTICIPATE. A Participant's or Employee's election
not to participate, pursuant to Section 2.06, includes his right to enter into
a salary reduction agreement or to share in the allocation of a Cash or
Deferred Contribution, unless the Participant or Employee limits the effect of
the election to the non-401(k) portions of the Plan.

14.03 DEFINITIONS. For purposes of this Article XIV:

(a) "Highly Compensated Employee" means an Eligible Employee who
satisfies the definition in Section 1.09 of the Plan. Family members
aggregated as a single Employee under Section 1.09 constitute a single
Highly Compensated Employee, whether a particular family member is a

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Defined Contribution Master Plan

Highly Compensated Employee or a Nonhighly Compensated Employee
without the application of family aggregation.

(b) "Nonhighly Compensated Employee" means an Eligible Employee
who is not a Highly Compensated Employee and who is not a family
member treated as a Highly Compensated Employee.

(c) "Eligible Employee" means, for purposes of the ADP test
described in Section 14.08, an Employee who is eligible to enter into
a salary reduction agreement for the Plan Year, irrespective of
whether he actually enters into such an agreement, and a Participant
who is eligible for an allocation of the Employer's Cash or Deferred
Contribution for the Plan Year. For purposes of the ACP test
described in Section 14.09, an "Eligible Employee" means a
Participant who is eligible to receive an allocation of matching
contributions (or would be eligible if he made the type of
contributions necessary to receive an allocation of matching
contributions) and a Participant who is eligible to make nondeductible
contributions, irrespective of whether he actually makes nondeductible
contributions. An Employee continues to be an Eligible Employee
during a period the Plan suspends the Employee's right to make
elective deferrals or nondeductible contributions following a hardship
distribution.

(d) "Highly Compensated Group" means the group of Eligible
Employees who are Highly Compensated Employees for the Plan Year.

(e) "Nonhighly Compensated Group" means the group of Eligible
Employees who are Nonhighly Compensated Employees for the Plan Year.

(f) "Compensation" means, except as specifically provided in this
Article XIV, Compensation as defined for nondiscrimination purposes in
Section 1.12(B) of the Plan. To compute an Employee's ADP or ACP, the
Advisory Committee may limit Compensation taken into account to
Compensation received only for the portion of the Plan Year in which
the Employee was an Eligible Employee and only for the portion of the
Plan Year in which the Plan or the Code Section 401(k) arrangement was
in effect.

(g) "Deferral contributions" are Salary Reduction Contributions
and Cash or Deferred Contributions the Employer contributes to the
Trust on behalf of an Eligible Employee, irrespective of whether, in
the case of Cash or Deferred Contributions, the contribution is at the
election of the Employee. For Salary Reduction Contributions, the
terms "deferral contributions" and "elective deferrals" have the same
meaning.

(h) "Elective deferrals" are all Salary Reduction Contributions
and that portion of any Cash or Deferred Contribution which the
Employer contributes to the Trust at the election of an Eligible
Employee. Any portion of a Cash or Deferred Contribution contributed
to the Trust because of the Employee's failure to make a cash election
is an elective deferral. However, any portion of a Cash or Deferred
Contribution over which the Employee does not have a cash election is
not an elective deferral. Elective deferrals do not include amounts
which have become currently available to the Employee prior to the
election nor amounts designated as nondeductible contributions at the
time of deferral or contribution.

(i) "Matching contributions" are contributions made by the
Employer on account of elective deferrals under a Code Section 401(k)
arrangement or on account of employee contributions. Matching
contributions also include Participant forfeitures allocated on
account of such elective deferrals or employee contributions.

(j) "Nonelective contributions" are contributions made by the
Employer which are not subject to a deferral election by an Employee
and which are not matching contributions.

(k) "Qualified matching contributions" are matching contributions
which are 100% Nonforfeitable at all times and which are subject to
the distribution restrictions described in paragaph (m). Matching
contributions are not 100% Nonforfeitable at all times if the Employee
has a 100% Nonforfeitable interest because of his Years of Service
taken into account under a vesting schedule. Any matching
contributions allocated to a Participant's

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Defined Contribution Master Plan

Qualified Matching Contributions Account under the Plan automatically,
satisfy the definition of qualified matching contributions.

(l) "Qualified nonelective contributions" are nonelective
contributions which are 100% Nonforfeitable at all times and which are
subject to the distribution restrictions described in paragraph (m).
Nonelective contributions are not 100% Nonforfeitable at all times if
the Employee has a 100% Nonforfeitable interest because of his Years
of Service taken into account under a vesting schedule. Any
nonelective contributions allocated to a Participant's Qualified
Nonelective Contributions Account under the Plan automatically satisfy
the definition of qualified nonelective contributions.

(m) "Distribution restrictions" means the Employee may not receive
a distribution of the specified contributions (nor earnings on those
contributions) except in the event of (1) the Participant's death,
disability, termination of employment or attainment of age 59 1/2, (2)
financial hardship satisfying the requirements of Code Section 401(k)
and the applicable Treasury regulations, (3) a plan termination,
without establishment of a successor defined contribution plan (other
than an ESOP), (4) a sale of substantially all of the assets (within
the meaning of Code Section 409(d)(2)) used in a trade or business,
but only to an employee who continues employment with the corporation
acquiring those assets, or (5) a sale by a corporation of its interest
in a subsidiary (within the meaning of Code Section 409(d)(3)), but
only to an employee who continues employment with the subsidiary. For
Plan Years beginning after December 31, 1988, a distribution on
account of financial hardship, as described in clause (2), may not
include earnings on elective deferrals credited as of a date later
than December 31, 1988, and may not include qualified matching
contributions and qualified nonelective contributions, nor any
earnings on such contributions, credited after December 31, 1988. A
plan does not violate the distribution restrictions if, instead of the
December 31, 1988, date in the preceding sentence the plan specifies a
date not later than the end of the last Plan Year ending before July
1, 1989. A distribution described in clauses (3), (4) or (5), if made
after March 31, 1988, must be a lump sum distribution, as required
under Code Section 401(k)(10).

(n) "Employee contributions" are contributions made by a
Participant on an after-tax basis, whether voluntary or mandatory, and
designated, at the time of contribution as an employee (or
nondeductible) contribution. Elective deferrals and deferral
contributions are not employee contributions. Participant
nondeductible contributions, made pursuant to Section 4.01 of the
Plan, are employee contributions.

14.04 MATCHING CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS. The Employer
may elect in Adoption Agreement Section 3.01 to provide matching contributions.
The Employer also may elect in Adoption Agreement Section 4.01 to permit or to
require a Participant to make nondeductible contributions.

(A) MANDATORY CONTRIBUTIONS. Any Participant nondeductible contributions
eligible for matching contributions are mandatory contributions. The Advisory
Committee will maintain a separate accounting, pursuant to Section 4.06 of the
Plan, to reflect the Participant's Accrued Benefit derived from his mandatory
contributions. The Employer, under Adoption Agreement Section 4.05, may
prescribe special distribution restrictions which will apply to the Mandatory
Contributions Account prior to the Participant's Separation from Service.
Following his Separation from Service, the general distribution provisions of
Article VI apply to the distribution of the Participant's Mandatory
Contributions Account.

14.05 TIME OF PAYMENT OF CONTRRIBUTIONS. The Employer must make
Salary Reduction Contributions to the Trust within an administratively
reasonable period of time after withholding the corresponding Compensation from
the Participant. Furthermore, the Employer must make Salary Reduction
Contributions, Cash or Deferred Contributions, Employer matching contributions
(including qualified Employer matching contributions) and qualified Employer
nonelective contributions no later than the time prescribed by the Code or by
applicable Treasury regulations. Salary Reduction Contributions and Cash or
Deferred Contributions are Employer contributions for all purposes under this
Plan, except to the extent the Code or Treasury

14.03
<PAGE> 71
Defined Contribution Master Plan

regulations prohibit the use of these contributions to satisfy the
qualification requirements of the Code.

14.06 SPECIAL ALLOCATION PROVISIONS - DEFERRAL CONTRIBUTIONS.
MATCHING CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS. To make
allocations under the Plan, the Advisory Committee must establish a Deferral
Contributions Account, a Qualified Matching Contributions Account, a Regular
Matching Contributions Account, a Qualified Nonelective, Contributions Account
and an Employer Contributions Account for each Participant.

(A) DEFERRAL CONTRIBUTIONS. The Advisory Committee will allocate to each
Participant's Deferral Contributions Account the amount of Deferral
Contributions the Employer makes to the Trust on behalf of the Participant.
The Advisory Committee will make this allocation as of the last day of each
Plan Year unless, in Adoption Agreement Section 3.04, the Employer elects more
frequent allocation dates for salary reduction contributions.

(B) MATCHING CONTRIBUTIONS. The Employer must specify in its Adoption
Agreement whether the Advisory Committee will allocate matching contributions
to the Qualified Matching Contributions Account or to the Regular Matching
Contributions Account of each Participant. The Advisory Committee will make
this allocation as of the last day of each Plan Year unless, in Adoption
Agreement Section 3.04, the Employer elects more frequent allocation dates for
matching contributions.

(1) To the extent the Employer makes matching contributions under
a fixed matching contribution formula, the Advisory Committee will
allocate the matching contribution to the Account of the Participant
on whose behalf the Employer makes that contribution. A fixed
matching contribution formula is a formula under which the Employer
contributes a certain percentage or dollar amount on behalf of a
Participant based on that Participant's deferral contributions or
nondeductible contributions eligible for a match, as specified in
Section 3.01 of the Employer's Adoption Agreement. The Employer may
contribute on a Participant's behalf under a specific matching
contribution formula only if the Participant satisfies the accrual
requirements for matching contributions specified in Section 3.06 of
the Employer's Adoption Agreement and only to the extent the matching
contribution does not exceed the Participant's annual additions
limitation in Part 2 of Article III.

(2) To the extent the Employer makes matching contributions under
a discretionary formula, the Advisory Committee will allocate the
discretionary matching contributions to the Account of each
Participant who satisfies the accrual requirements for matching
contributions specified in Section 3.06 of the Employer's Adoption
Agreement. The allocation of discretionary matching contributions to
a Participant's Account is in the same proportion that each
Participant's eligible contributions bear to the total eligible
contributions of all Participants. If the discretionary formula is a
tiered formula, the Advisory Committee will make this allocation
separately with respect to each tier of eligible contributions,
allocating in such manner the amount of the matching contributions
made with respect to that tier. "Eligible contributions" are the
Participant's deferral contributions or nondeductible contributions
eligible for an allocation of matching contributions, as specified in
Section 3.01 of the Employer's Adoption Agreement.

If the matching contribution formula applies both to deferral
contributions and to Participant nondeductible contributions, the matching
contributions apply first to deferral contributions. Furthermore, the matching
contribution formula does not apply to deferral contributions that are excess
deferrals under Section 14.07. For this purpose: (a) excess deferrals relate
first to deferral contributions for the Plan Year not otherwise eligible for a
matching contribution; and (2) if the Plan Year is not a calendar year, the
excess deferrals for a Plan Year are the last elective deferrals made for a
calendar year. Under a Standardized Plan, an Employee forfeits any matching
contribution attributable to an excess contribution or to an excess aggregate
contribution, unless distributed pursuant to Sections 14.08 or 14.09. Under a
Nonstandardized Plan, this forfeiture rule applies only if specified in
Adoption Agreement Section 3.06. The provisions of Section 3.05 govern

14.04
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Defined Contribution Master Plan

the treatment of any forfeiture described in this paragraph, and the Advisory
Committee will compute a Participant's ACP under 14.09 by disregarding the
forfeiture.

(C) QUALIFIED NONELECTIVE CONTRIBUTIONS. If the Employer, at the time of
contribution, designates a contribution to be a qualified nonelective
contribution for the Plan Year, the Advisory Committee will allocate that
qualified nonelective contribution to the Qualified Nonelective Contributions
Account of each Participant eligible for an allocation of that designated
contribution, as specified in Section 3.04 of the Employer's Adoption
Agreement. The Advisory Committee will make the allocation to each eligible
Participant's Account in the same ratio that the Participant's Compensation for
the Plan Year bears to the total Compensation of all eligible Participants for
the Plan Year. The Advisory Committee will determine a Participant's
Compensation in accordance with the general definition of Compensation under
Section 1.12 of the Plan, as modified by the Employer in Sections 1.12 and 3.06
of its Adoption Agreement.

(D) NONELECTIVE CONTRIBUTIONS. To the extent the Employer makes
nonelective contributions for the Plan Year which, at the time of contribution,
it does not designate as qualified nonelective contributions, the Advisory
Committee will allocate those contributions in accordance with the elections
under Section 3.04 of the Employer's Adoption Agreement. For purposes of the
special nondiscrimination tests described in Sections 14.08 and 14.09, the
Advisory Committee may treat nonelective contributions allocated under this
paragraph as qualified nonelective contributions, if the contributions otherwise
satisfy the definition of qualified nonelective contributions.

14.07 ANNUAL ELECTIVE DEFERRAL LIMITATION.

(A) ANNUAL ELECTIVE DEFERRAL LIMITATION. An Employee's elective deferrals
for a calendar year beginning after December 31, 1986, may not exceed the
402(g) limitation. The 402(g) limitation is the greater of $7,000 or the
adjusted amount determined by the Secretary of the Treasury. If, pursuant to a
salary reduction agreement or pursuant to a cash or deferral election, the
Employer determines the Employee's elective deferrals to the Plan for a
calendar year would exceed the 402(g) limitation, the Employer will suspend the
Employee's salary reduction agreement, if any, until the following January 1
and pay in cash the portion of a cash or deferral election which would result
in the Employee's elective deferrals for the calendar year exceeding the 402(g)
limitation. If the Advisory Committee determines an Employee's elective
deferrals already contributed to the Plan for a calendar year exceed the 402(g)
limitation, the Advisory Committee will distribute the amount in excess of the
402(g) limitation (the "excess deferral"), as adjusted for allocable income, no
later than April 15 of the following calendar year. If the Advisory Committee
distributes the excess deferral by the appropriate April 15, it may make the
distribution irrespective of any other provision under this Plan or under the
Code. The Advisory Committee will reduce the amount of excess deferrals for a
calendar year distributable to the Employee by the amount of excess
contributions (as determined in Section 14.08), if any, previously distributed
to the Employee for the Plan Year beginning in that calendar year.

If an Employee participates in another plan under which he makes
elective deferrals pursuant to a Code Section 401(k) arrangement, elective
deferrals under a Simplified Employee Pension, or salary reduction
contributions to a tax-sheltered annuity, irrespective of whether the Employer
maintains the other plan, he may provide the Advisory Committee a written claim
for excess deferrals made for a calendar year. The Employee must submit the
claim no later than the March 1 following the close of the particular calendar
year and the claim must specify the amount of the Employee's elective
deferrals under this Plan which are excess deferrals. If the Advisory
Committee receives a timely claim, it will distribute the excess deferral (as
adjusted for allocable income) the Employee has assigned to this Plan, in
accordance with the distribution procedure described in the immediately
preceding paragraph.

(B) ALLOCABLE INCOME. For purposes of making a distribution of excess
deferrals pursuant to this Section 14.07, allocable income means net income or
net loss allocable to the excess deferrals for the calendar year in which the
Employee made the excess deferral, determined in a manner which is uniform,
nondiscriminatory and reasonably reflective of the manner used by the Plan to
allocate income to Participants' Accounts.

14.05
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Defined Contribution Master Plan

14.08 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year,
the Advisory Committee must determine whether the Plan's Code Section 401(k)
arrangement satisfies either of the following ADP tests:

(i) The average ADP for the Highly Compensated Group does not
exceed 1.25 times the average ADP of the Nonhighly Compensated Group;
or

(ii) The average ADP for the Highly Compensated Group does not
exceed the average ADP for the Nonhighly Compensated Group by more
than two percentage points (or the lesser percentage permitted by the
multiple use limitation in Section 14.10) and the average ADP for the
Highly Compensated Group is not more than twice the average ADP for
the Nonhighly Compensated Group.

(A) CALCULATION OF ADP. The average ADP for a group is the average of the
separate ADPs calculated for each Eligible Employee who is a member of that
group. An Eligible Employee's ADP for a Plan Year is the ratio of the Eligible
Employee's deferral contributions for the Plan Year to the Employee's
Compensation for the Plan Year. For aggregated family members treated as a
single Highly Compensated Employee, the ADP of the family unit is the ADP
determined by combining the deferral contributions and Compensation of all
aggregated family members. A Nonhighly Compensated Employee's ADP does not
include elective deferrals made to this Plan or to any other Plan maintained by
the Employer, to the extent such elective deferrals exceed the 402(g)
limitation described in Section 14.07(A).

The Advisory Committee, in a manner consistent with Treasury
regulations, may determine the ADPs of the Eligible Employees by taking into
account qualified nonelective contributions or qualified matching
contributions, or both, made to this Plan or to any other qualified Plan
maintained by the Employer. The Advisory Committee may not include qualified
nonelective contributions in the ADP test unless the allocation of nonelective
contributions is nondiscriminatory when the Advisory Committee takes into
account all nonelective contributions (including the qualified nonelective
contributions) and also when the Advisory Committee takes into account only the
nonelective contributions not used in either the ADP test described in this
Section 14.08 or the ACP test described in Section 14.09. For Plan Years
beginning after December 31, 1989, the Advisory Committee may not include in
the ADP test any qualified nonelective contributions or qualified matching
contributions under another qualified plan unless that plan has the same plan
year as this Plan. The Advisory Committee must maintain records to demonstrate
compliance with the ADP test, including the extent to which the Plan used
qualified nonelective contributions or qualified matching contributions to
satisfy the test.

For Plan Years beginning prior to January 1, 1992, the Advisory
Committee may elect to apply a separate ADP test to each component group under
the Plan. Each component group separately must satisfy the commonality
requirement of the Code Section 401(k) regulations and the minimum coverage
requirements of Code Section 410(b). A component group consists of all the
allocations and other benefits, rights and features provided that group of
Employees. An Employee may not be part of more than one component group. The
correction rules described in this Section 14.08 apply separately to each
component group.

(B) SPECIAL AGGREGATION - RULE FOR HIGHLY COMPENSATED EMPLOYEES. To
determine the ADP of any Highly Compensated Employee, the deferral contributions
taken into account must include any elective deferrals made by the Highly
Compensated Employee under any other Code Section 401(k) arrangement maintained
by the Employer, unless the elective deferrals are to an ESOP. If the plans
containing the Code Section 401(k) arrangements have different plan years, the
Advisory Committee win determine the combined deferral contributions on the
basis of the plan years ending in the same calendar year.

(C) AGGREGATION OF CERTAIN CODE SECTION 401(k) ARRANGEMENTS. If the
Employer treats two plans as a unit for coverage or nondiscrimination purposes,
the Employer must combine the Code Section 401(k) arrangements under such plans
to determine whether either plan satisfies the ADP test. This

14.06
<PAGE> 74
Defined Contribution Master Plan

aggregation rule applies to the ADP determination for all Eligible Employees,
irrespective of whether an Eligible Employee is a Highly Compensated Employee or
a Nonhighly Compensated Employee. For Plan Years beginning after December 31,
1989, an aggregation of Code Section 401(k) arrangements under this paragraph
does not apply to plans which have different plan years and, for Plan Years
beginning after December 31, 1988, the Advisory Committee may not aggregate an
ESOP (or the ESOP portion of a plan) with a non-ESOP plan (or non-ESOP portion
of a plan).

(D) CHARACTERIZATION OF EXCESS CONTRIBUTIONS. If, pursuant to this Section
14.08, the Advisory Committee has elected to include qualified matching
contributions in the average ADP, the Advisory Committee will treat excess
contributions as attributable proportionately to deferral contributions and to
qualified matching contributions allocated on the basis of those deferral
contributions. If the total amount of a Highly Compensated Employee's excess
contributions for the Plan Year exceeds his deferral contributions or qualified
matching contributions for the Plan Year, the Advisory Committee will treat the
remaining portion of his excess contributions as attributable to qualified
nonelective contributions. The Advisory Committee will reduce the amount of
excess contributions for a Plan Year distributable to a Highly Compensated
Employee by the amount of excess deferrals (as determined in Section 14.07), if
any, previously distributed to that Employee for the Employee's taxable year
ending in that Plan Year.

(E) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the Advisory Committee
determines the Plan fails to satisfy the ADP test for a Plan Year, it must
distribute the excess contributions, as adjusted for allocable income, during
the next Plan Year. However, the Employer will incur an excise tax equal to 10%
of the amount of excess contributions for a Plan Year not distributed to the
appropriate Highly Compensated Employees during the first 2-1/2 months of that
next Plan Year. The excess contributions are the amount of deferral
contributions made by the Highly Compensated Employees which causes the Plan to
fail to satisfy the ADP test. The Advisory Committee will distribute to each
Highly Compensated Employee his respective share of the excess contributions.
The Advisory Committee will determine the respective shares of excess
contributions by starting with the Highly Compensated Employee(s) who has the
greatest ADP, reducing his ADP (but not below the next highest ADP), then, if
necessary, reducing the ADP of the Highly Compensated Employee(s) at the next
highest ADP level (including the ADP of the Highly Compensated Employee(s) whose
ADP the Advisory Committee already has reduced), and continuing in this manner
until the average ADP for the Highly Compensated Group satisfies the ADP test.
If the Highly Compensated Employee is part of an aggregated family group, the
Advisory Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
contributions assigned to the family unit.

(F) ALLOCABLE INCOME. To determine the amount of the corrective
distribution required under this Section 14.08, the Advisory Committee must
calculate the allocable income for the Plan Year in which the excess
contributions arose. "Allocable income" means net income or net loss. To
calculate allocable income for the Plan Year, the Advisory Committee will use a
uniform and nondiscriminatory method which reasonably reflects the manner used
by the Plan to allocate income to Participants' Accounts.

14.09 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. For Plan Years beginning
after December 31, 1986, the Advisory Committee must determine whether the
annual Employer matching contributions (other than qualified matching
contributions used in the ADP under Section 14.08), if any, and the Employee
contributions, if any, satisfy either of the following average contribution
percentage ("ACP") tests:

(i) The ACP for the Highly Compensated Group does not exceed 1.25
times the ACP of the Nonhighly Compensated Group; or

(ii) The ACP for the Highly Compensated Group does not exceed the
ACP for the Nonhighly Compensated Group by more than two percentage
points (or the lesser percentage permitted by the multiple use
limitation in Section 14.10) and the ACP for the Highly Compensated
Group is not more than twice the ACP for the Nonhighly Compensated
Group.

14.07
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Defined Contribution Master Plan

(A) CALCULATION OF ACP. The average contribution percentage for a group
is the average of the separate contribution percentages calculated for each
Eligible Employee who is a member of that group. An Eligible Employee's
contribution percentage for a Plan Year is the ratio of the Eligible Employee's
aggregate contributions for the Plan Year to the Employee's Compensation for
the Plan Year. "Aggregate contributions" are Employer matching contributions
(other than qualified matching contributions used in the ADP test under Section
14.08) and employee contributions (as defined in Section 14.03). For aggregated
family members treated as a single Highly Compensated Employee, the
contribution percentage of the family unit is the contribution percentage
determined by combining the aggregate contributions and Compensation of all
aggregated family members.

The Advisory Committee, in a manner consistent with Treasury
regulations, may determine the contribution percentages of the Eligible
Employees by taking into account qualified nonelective contributions (other
than qualified nonelective contributions used in the ADP test under Section
14.08) or elective deferrals, or both, made to this Plan or to any other
qualified Plan maintained by the Employer. The Advisory Committee may not
include qualified nonelective contributions in the ACP test unless the
allocation of nonelective contributions is nondiscriminatory when the Advisory
Committee takes into account all nonelective contributions (including the
qualified nonelective contributions) and also when the Advisory Committee takes
into account only the nonelective contributions not used in either the ADP test
described in Section 14.08 or the ACP test described in this Section 14.09. The
Advisory Committee may not include elective deferrals in the ACP test, unless
the Plan which includes the elective deferrals satisfies the ADP test both with
and without the elective deferrals included in this ACP test. For Plan Years
beginning after December 31, 1989, the Advisory Committee may not include in
the ACP test any qualified nonelective contributions or elective deferrals
under another qualified plan unless that plan has the same plan year as this
Plan. The Advisory Committee must maintain records to demonstrate compliance
with the ACP test, including the extent to which the Plan used qualified
nonelective contributions or elective deferrals to satisfy the test. For Plan
Years beginning prior to January 1, 1992, the component group testing rule
permitted under Section 14.08(A) also applies to the ACP test under this
Section 14.09.

(B) SPECIAL AGGREGATION RULE FOR HIGHLY COMPENSATED EMPLOYEES. To
determine the contribution percentage of any Highly Compensated Employee, the
aggregate contributions taken into account must include any matching
contributions (other than qualified matching contributions used in the ADP
test) and any Employee contributions made on his behalf to any other plan
maintained by the Employer, unless the other plan is an ESOP. If the plans
have different plan years, the Advisory Committee will determine the combined
aggregate contributions on the basis of the plan years ending in the same
calendar year.

(C) AGGREGATION OF CERTAIN PLANS. If the Employer treats two plans as a
unit for coverage or nondiscrimination purposes, the Employer must combine the
plans to determine whether either plan satisfies the ACP test. This
aggregation rule applies to the contribution percentage determination for all
Eligible Employees, irrespective of whether an Eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. For Plan Years
beginning after December 31, 1989, an aggregation of plans under this paragraph
does not apply to plans which have different plan years and, for Plan Years
beginning after December 31, 1988, the Advisory Committee may not aggregate an
ESOP (or the ESOP portion of a plan) with a non-ESOP plan (or non-ESOP portion
of a plan).

(D) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. The Advisory
Committee will determine excess aggregate contributions after determining
excess deferrals under Section 14.07 and excess contributions under Section
14.08. If the Advisory Committee determines the Plan fails to satisfy the ACP
test for a Plan Year, it must distribute the excess aggregate contributions,
as adjusted for allocable income, during the next Plan Year. However, the
Employer will incur an excise tax equal to 10% of the amount of excess
aggregate contributions for a Plan Year not distributed to the appropriate
Highly Compensated Employees during the first 2-1/2 months of that next Plan
Year. The excess aggregate contributions are the amount of aggregate
contributions allocated on behalf of the Highly Compensated Employees which
causes the Plan to fail to satisfy the ACP test. The Advisory

14.08

<PAGE> 76
Defined Contribution Master Plan

Committee will distribute to each Highly Compensated Employee his respective
share of the excess aggregate contributions. The Advisory Committee will
determine the respective shares of excess aggregate contributions by starting
with the Highly Compensated Employee(s) who has the greatest contribution
percentage, reducing his contribution percentage (but not below the next
highest contribution percentage), then, if necessary, reducing the contribution
percentage of the Highly Compensated Employee(s) at the next highest
contribution percentage level (including the contribution percentage of the
Highly Compensated Employee(s) whose contribution percentage the Advisory
Committee already has reduced), and continuing in this manner until the ACP for
the Highly Compensated Group satisfies the ACP test. If the Highly Compensated
Employee is part of an aggregated family group, the Advisory Committee, in
accordance with the applicable Treasury regulations, will determine each
aggregated family member's allocable share of the excess aggregate
contributions assigned to the family unit.

(E) ALLOCABLE INCOME. To determine the amount of the corrective
distribution required under this Section 14.09, the Advisory Committee must
calculate the allocable income for the Plan Year in which the excess aggregate
contributions arose. "Allocable income" means net income or net loss. The
Advisory Committee will determine allocable income in the same manner as
described in Section 14.08(F) for excess contributions.

(F) CHARACTERIZATION OF EXCESS AGGREGATE CONTRIBUTIONS. The Advisory
Committee will treat a Highly Compensated Employee's allocable share of excess
aggregate contributions in the following priority: (1) first as attributable to
his Employee contributions which are voluntary contributions, if any; (2) then
as matching contributions allocable with respect to excess contributions
determined under the ADP test described in Section 14.08; (3) then on a pro
rata basis to matching contributions and to the deferral contributions relating
to those matching contributions which the Advisory Committee has included in
the ACP test; (4) then on a pro rata basis to Employee contributions which are
mandatory, contributions, if any, and to the matching contributions allocated
on the basis of those mandatory contributions; and (5) last to qualified
nonelective contributions used in the ACP test. To the extent the Highly
Compensated Employee's excess aggregate contributions are attributable to
matching contributions, and he is not 100% vested in his Accrued Benefit
attributable to matching contributions, the Advisory Committee will distribute
only the vested portion and forfeit the nonvested portion. The vested portion
of the Highly Compensated Employee's excess aggregate contributions
attributable to Employer matching contributions is the total amount of such
excess aggregate contributions (as adjusted for allocable income) multiplied by
his vested percentage (determined as of the last day of the Plan Year for which
the Employer made the matching contribution). The Employer will specify in
Adoption Agreement Section 3.05 the manner in which the Plan wi1l allocate
forfeited excess aggregate contributions.

14.10 MULTIPLE USE LIMITATION. For Plan Years beginning after
December 31, 1988, if at least one Highly Compensated Employee is includible in
the ADP test under Section 14.08 and in the ACP test under Section 14.09, the
sum of the Highly Compensated Group's ADP and ACP may not exceed the multiple
use limitation.

The multiple use limitation is the sum of (i) and (ii):

(i) 125% of the greater of: (a) the ADP of the Nonhighly
Compensated Group under the Code Section 401(k) arrangement; or (b)
the ACP of the Nonhighly Compensated Group for the Plan Year beginning
with or within the Plan Year of the Code Section 401(k) arrangement.

(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice
the lesser of (i)(a) or (i) (b).

The Advisory Committee, in lieu of determining the multiple use
limitation as the sum of (i) and (ii), may elect to determine the multiple use
limitation as the sum of (iii) and (iv):

(iii) 125% of the lesser of: (a) the ADP of the Nonhighly
Compensated Group under the Code Section 401(k) arrangement; or (b)
the ACP of the Nonhighly Compensated Group for the Plan Year beginning
with or within the Plan Year of the Code Section 401(k) arrangement.

14.09
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Defined Contribution Master Plan

(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than
twice the greater of (iii)(a) or (iii)(b).

The Advisory Committee will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 14.08 and the
ACP test under Section 14.09 and after making any corrective distributions
required by those Sections. If, after applying this Section 14.10, the Advisory
Committee determines the Plan has failed to satisfy the multiple use limitation,
the Advisory Committee will correct the failure by treating the excess amount as
excess contributions under Section 14.08 or as excess aggregate contributions
under Section 14.09, as it determines in its sole discretion. This Section
14.10 does not apply unless, prior to application of the multiple use
limitation, the ADP and the ACP of the Highly Compensated Group each exceeds
125% of the respective percentages for the Nonhighly Compensated Group.

14.11 DISTRIBUTION RESTRICTIONS. The Employer must elect in Section
6.03 the Adoption Agreement the distribution events permitted under the Plan.
The distribution events applicable to the Participant's Deferral Contributions
Account, Qualified Nonelective Contributions Account and Qualified Matching
Contributions Account must satisfy the distribution restrictions described in
paragraph (m) of Section 14.03.

(A) HARDSHIP DISTRIBUTIONS FROM DEFERRAL CONTRIBUTIONS ACCOUNT. The
Employer must elect in Adoption Agreement Section 6.03 whether a Participant may
receive hardship distributions from his Deferral Contributions Account prior to
the Participant's Separation from Service. Hardship distributions from the
Deferral Contributions Account must satisfy the requirements of this Section
14.11. A hardship distribution option may not apply to the Participant's
Qualified Nonelective Contributions Account or Qualified Matching Contributions
Account, except as provided in paragraph (3).

(1) DEFINITION OF HARDSHIP. A hardship distribution under this
Section 14.11 must be on account of one or more of the following immediate and
heavy financial needs: (1) medical care described in Code Section 213(d)
incurred by the Participant, by the Participant's spouse, or by any of the
Participant's dependents, or necessary to obtain such medical care; (2) the
purchase (excluding mortgage payments) of a principal residence for the
Participant; (3) the payment of post-secondary education tuition and related
educational fees, for the next 12-month period, for the Participant, for the
Participant's spouse, or for any of the Participant's dependents (as defined in
Code Section 152); (4) to prevent the eviction of the Participant from his
principal residence or the foreclosure on the mortgage of the Participant's
principal residence; or (5) any need prescribed by the Revenue Service in a
revenue ruling, notice or other document of general applicability which
satisfies the safe harbor definition of hardship.

(2) RESTRICTIONS. The following restrictions apply to a
Participant who receives a hardship distribution: (a) the Participant may not
make elective deferrals or employee contributions to the Plan for the 12-month
period following the date of his hardship distribution; (b) the distribution is
not in excess of the amount of the immediate and heavy financial need (including
any amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution); (c) the
Participant must have obtained all distributions, other than hardship
distributions, and all nontaxable loans (determined at the time of the loan)
currently available under this Plan and all other qualified plans maintained by
the Employer; and (d) the Participant agrees to limit elective deferrals under
this Plan and under any other qualified Plan maintained by the Employer, for the
Participant's taxable year immediately following the taxable year of the
hardship distribution, to the 402(g) limitation (as described in Section 14.07),
reduced by the amount of the Participant's elective deferrals made in the
taxable year of the hardship distribution. The suspension of elective deferrals
and employee contributions described in clause (a) also must apply to all other
qualified plans and to all nonqualified plans of deferred compensation
maintained by the Employer, other than any mandatory employee contribution
portion of a defined benefit plan, including stock option, stock purchase and
other similar plans, but not including health or welfare benefit plans (other
than the cash or deferred arrangement portion of a cafeteria plan).

14.10

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Defined Contribution Master Plan

(3) EARNINGS. For Plan Years beginning after December 31, 1988, a
hardship distribution under this Section 14.11 may not include earnings on an
Employee's elective deferrals credited after December 31, 1988. Qualified
matching contributions and qualified nonelective contributions, and any
earnings on such contributions, credited as of December 31, 1988, are subject
to the hardship withdrawal only if the Employer specifies in an addendum to
this Section 14.11. The addendum may modify the December 31, 1988, date for
purposes of determining credited amounts provided the date is not later than
the end of the last Plan Year ending before July 1, 1989.

(B) DISTRIBUTIONS AFTER SEPARATION FROM SERVICE. Following the
Participant's Separation from Service, the distribution events applicable to
the Participant apply equally to all of the Participant's Accounts, except as
elected in Section 6.03 of the Employer's Adoption Agreement.

(C) CORRECTION OF ANNUAL ADDITIONS LIMITATION. If, as a result of a
reasonable error in determining the amount of elective deferrals an Employee
may make without violating the Limitations of Part 2 of Article III, an Excess
Amount results, the Advisory Committee wi1l return the Excess Amount (as
adjusted for allocable income) attributable to the elective deferrals. The
Advisory Committee will make this distribution before taking any corrective
steps pursuant to Section 3.10 or to Section 3.16. The Advisory Committee will
disregard any elective deferrals returned under this Section 14.11(C) for
purposes of Sections 14.07, 14.08 and 14.09.

14.12 SPECIAL ALLOCATION RULES. If the Code Section 401(k)
arrangement provides for salary reduction contributions, if the Plan accepts
Employee contributions, pursuant to Adoption Agreement Section 4.01, or if the
Plan allocates matching contributions as of any date other than the last day of
the Plan Year, the Employer must elect in Adoption Agreement 9.11 whether any
special allocation provisions will apply under Section 9.11 of the Plan. For
purposes of the elections:

(a) A "segregated Account" direction means the Advisory Committee
will establish a segregated Account for the applicable contributions
made on the Participant's behalf during the Plan Year. The Trustee
must invest the segregated Account in Federally insured interest
bearing savings account(s) or time deposits, or a combination of both,
or in any other fixed income investments, unless otherwise specified
in the Employer's Adoption Agreement. As of the last day of each Plan
Year (or, if earlier, an allocation date coinciding with a valuation
date described in Section 9.11), the Advisory Committee will
reallocate the segregated Account to the Participant's appropriate
Account, in accordance with Section 3.04 or Section 4.06, whichever
applies to the contributions.

(b) A "weighted average allocation" method will treat a weighted
portion of the applicable contributions as if includible in the
Participant's Account as of the beginning of the valuation period. The
weighted portion is a fraction, the numerator of which is the number
of months in the valuation period, excluding each month in the
valuation period which begins prior to the contribution date of the
applicable contributions, and the denominator of which is the number
of months in the valuation period. Toe Employer may elect in its
Adoption Agreement to substitute a weighting period other than months
for purposes of this weighted average allocation.

* * * * * * * * * *

<PAGE> 1

EXHIBIT 10.26

THIRD AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT

This Third Amendment to Amended and Restated Loan Agreement ("Third
Amendment") is made and entered into as of this 22nd day of October, 1996, by
and between TRANSCRYPT INTERNATIONAL, INC., a Delaware Corporation, formerly
known as Transcrypt International, Ltd., a Nebraska Limited Partnership, which
has its principal place of business in Lincoln, Nebraska ("Borrower") and
NORWEST BANK NEBRASKA, NATIONAL ASSOCIATION, a national banking association,
organized and existing under the laws of the United States of America, and
which has its principal place of business in Omaha, Nebraska ("Bank").

RECITALS:

A. Transcrypt International, Ltd. and the Bank have previously entered into
a Loan Agreement dated February 5, 1993 (the "Prior Loan Agreement"),
and Amended and Restated Loan Agreement dated May 18, 1994 (the
"Restated Loan Agreement"), a First Amendment to Amended and Restated
Loan Agreement dated June 1, 1995 (the "First Amendment"), and a Second
Amendment to Amended and Restated Loan Agreement dated April 10, 1996
(the "Second Amendment"), which mutually describe the terms and
conditions of certain loans made by Bank to Transcrypt International,
Ltd. and hereafter are referred to collectively as the "Loan Agreement".

B. Transcrypt International, Inc. incorporated by filing its First Amended
and Restated Certificate of Incorporation in Delaware on or about
December 13, 1995. Transcrypt International, Ltd. and Transcrypt
International, Inc. entered into an Agreement and Plan of Merger as of
June 28, 1996, under the terms of which they agreed to the terms and
conditions of the merger of Transcrypt International, Ltd. into
Transcrypt International, Inc. and the assumption by Transcrypt
International, Inc. of all debts and obligations of Transcrypt
International, Ltd., including all debts and obligations under the Loan
Agreement and under the Loan Documents, as defined in the Loan
Agreement. Transcrypt International, Inc. and Transcrypt International,
Ltd. entered into a Certificate of Merger which was dated and filed in
Delaware on June 28, 1996. The merger became effective on June 30, 1996.
Articles of Merger were filed in Nebraska on June 28, 1996.

C. Subject to the terms and conditions of the Loan Agreement, Bank agreed
to make one or more advances to Borrower not to exceed the aggregate
principal sum of Two Million Dollars ($2,000,000.00) (the "Operating
Loan"), which was evidenced by a Commercial Note dated June 1, 1995, in
the principal sum of One Million One Hundred Thousand Dollars
($1,100,000.00), having a maturity date of May 1, 1996 (the "Operating
Note"), and

<PAGE> 2
an Amendment to Operating Note having an effective date of April 9,
1996, which increase the principal amount of said COmmercial Note to Two
Million Dollars ($2,000,000.00).

D. Borrower has requested and Bank has agreed to extend the maturity
date of the Operating Note to May 31, 1997, subject to the terms and
conditions of this Third Amendment.

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements, terms and conditions hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Borrower and Bank agree as follows:

1. The foregoing Recitals are an integral part of this Third Amendment
and are incorporated by reference. All capitalized terms not defined in this
Third Amendment shall have the meanings defined in the Loan Agreement.

2. The maturity date of the Operating Note is hereby extended to May
31, 1997. Interest shall continue to be paid monthly. All other terms of the
Operating Note shall remain in full force and effect.

3. The Operating Note is and shall continue to be secured by all now
owned and hereafter acquired inventory, equipment, accounts, and general
intangibles under and pursuant to the terms of the Security Agreement, which
such security interest is perfected by the Financing Statements previously
filed of record by Bank.

4. Bank may require Borrower at any time to execute substitute or
replacement Loan Documents reflecting the name of Transcrypt International,
Inc. Transcrypt International, Inc. hereby acknowledges and agrees that it has
assumed, and it also hereby assumes, all debts and obligations under the Loan
Agreement and the Loan Documents.

5. All terms and conditions set forth in the Loan Agreement shall
remain in full force and effect, except as modified or supplemented by this
Third Amendment.

Dated the day and year first above written.

TRANSCRYPT INTERNATIONAL, INC. NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION

By: /s/ John T. Connor By: /s/ DeeAnn K. Wenger
--------------------------- -----------------------
John T. Connor

Its: Chairman and CEO Its: Assistant Vice President

-2-
<PAGE> 3

No. 080892

MODIFICATION OF NOTE

It is agreed by the undersigned maker, for additional and valuable
consideration, that maker's note of August 13, 1996, in face amount of
$431,425.98, to which this modification is attached, is hereby modified as
follows:

[ ] By alteration of the maturity date to _______________________________

[x] By change of interest rate to 8.75% percent per annum, said modified
rate to be effective on and after date hereof. (NMMR + .5%)

[ ] By change of payment schedule to:_____________________________________
______________________________________________________________________
______________________________________________________________________

[ ] By substitution, exchange or release of collateral as follows: _______
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________

Except as above modified, the note is in all respects ratified and confirmed.
Maker agrees that the correct balance is $431,425.98 with interest accruing on
same from and after July 15, 1996.

TRANSCRYPT INTERNATIONAL, INC.

/s/ John T. Connor
________________________________
John T. Connor

Consent to by
NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION

By: /s/ Illewn L. Wenger
____________________

Its: AVP
____________________

<PAGE> 1
EXHIBIT 10.27

FOURTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT

This Fourth Amendment to Amended and Restated Loan Agreement ("Fourth
Amendment") is made and entered into as of this 19th day of November, 1996, by
and between TRANSCRYPT INTERNATIONAL, INC., a Delaware Corporation, formerly
known as Transcrypt International, Ltd., a Nebraska Limited Partnership, which
has its principal place of business in Lincoln, Nebraska ("Borrower") and
NORWEST BANK NEBRASKA, NATIONAL ASSOCIATION, a national banking association,
organized and existing under the laws of the United States of America, and
which has its principal place of business in Omaha, Nebraska ("Bank").

RECITALS:

A. Transcrypt International, Ltd. and the Bank have previously entered into
a Loan Agreement dated February 5, 1993 (the "Prior Loan Agreement"),
and Amended and Restated Loan Agreement dated May 18, 1994 (the
"Restated Loan Agreement"), a First Amendment to Amended and Restated
Loan Agreement dated June 1, 1995 (the "First Amendment"), a Second
Amendment to Amended and Restated Loan Agreement dated April 10, 1996
(the "Second Amendment"), and a Third Amendment to Amended and Restated
Loan Agreement dated October 22, 1996, (the "Third Amendment"), which
mutually describe the terms and conditions of certain loans made by Bank
to Transcrypt International, Ltd. (now known as Transcrypt
International, Inc.) and hereafter are referred to collectively as the
"Loan Agreement".

B. Borrower has requested a loan from Bank in the principal sum of One
Million Dollars ($1,000,000.00) to finance the construction of certain
improvements to real estate in Lancaster County, Nebraska, legally
described as Lot 1, Highlands Coalition Second Addition, as surveyed,
platted, and recorded in Lancaster County, Nebraska (the "Property").

C. Bank has agreed to loan said sum to Borrower on the terms and
conditions set forth in this Fourth Amendment.

<PAGE> 2
1. The foregoing Recitals are an integral part of this Fourth
Amendment and are incorporated by reference. All capitalized terms not defined
in this Fourth Amendment shall have the meanings defined in the Loan Agreement.

2. Bank agrees to make a term loan advance to Borrower in the principal
sum of One Million Dollars ($1,000,000.00) to be evidenced by a Promissory Note
(the "Third Term Note") to finance the construction of improvements to the
Property.

3. Bank shall make periodic advances of the loan proceeds as
construction of the improvements progresses through State Title Insurance
Company. Each advance shall be made only upon Bank being furnished with a
completed Architect Certification and a Disbursement Order executed by Borrower
and its general contractor and only when all work performed at that stage of
construction shall have been performed in a good and workmanlike manner and a
progress payment is then due and owing by Borrower to its general contractor.

4. Interest shall be payable on the Third Term Note at the rate of the
Base Rate plus one-half percent (.50%), with interest rate adjustments
effective simultaneously with any change in the Base Rate. Interest shall be
computed on the basis of actual number of days elapsed in a 360-day year. Upon
and after demand, maturity, or any Event of Default, the interest rate on the
Third Term Note shall be equal to the Base Rate plus two percent (2.0%), with
interest rate adjustments effective simultaneously with any change in the Base
Rate.

5. Accrued interest on the Third Term Note shall be payable monthly
beginning one month from the date of this Fourth Amendment and on the same day
of each month thereafter. The entire unpaid principal balance under the Third
Term Note, plus all accrued and unpaid interest thereon, shall be due and
payable nine (9) months from the date of this Fourth Amendment. The Third Term
Note may be prepaid by Borrower, in full or in part, without penalty. All
payments shall be first applied to accrued but unpaid interest and the
remainder applied to reduce principal.

6. The Third Term Note shall be secured by a Deed of
Trust/Construction Security Agreement against the Property, in such form and
containing such terms as may be required by Bank.

7. All payments of principal and interest on the Third Term Note shall
be made in immediately available funds and must be received by Bank prior to
11:00 a.m. to be credited on the same Business Day. Any payment received after
11:00 a.m. shall be credited on the next Business Day.

-2-
<PAGE> 3
8. Any default by Borrower under the Third Term Note or the Deed of
Trust/Construction Security Agreement shall constitute an Event of Default
under the Loan Agreement.

9. Borrower agrees to pay on demand all filing and recording fees,
search fees, title insurance premiums and service fees, and all other costs and
expenses incurred by Bank in connection with the loan and security described in
this Fourth Amendment, including reasonable fees and costs of counsel for Bank.
Borrower further agrees to pay all costs and expenses, including reasonable
attorney fees and costs, incurred by Bank in connection with the enforcement of
this Fourth Amendment, the Third Term Note, and the Deed of Trust.

10. All terms and conditions set forth in the Loan Agreement shall
remain in full force and effect, except as modified or supplemented by this
Fourth Amendment.

Dated the day and year first above written.

TRANSCRYPT INTERNATIONAL, INC. NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION

By: /s/ John T. Connor By:
----------------------- -----------------------
John T. Connor

Its: Its:
---------------------- ---------------------

-3-
<PAGE> 4
_______________________________________________________________________________
[NORWEST BANK LOGO] COMMERCIAL
INSTALLMENT NOTE
________________________________________________________________________________
Borrower's Name | Date
|
Transcrypt International, Inc. | 11-15-1996
_______________________________________________________________________________

PROMISE TO PAY: For value received, the undersigned Borrower promises to pay to
the order of Norwest Bank Nebraska, National Association (the "Bank") at
1919 Douglas Street Omaha, NE 68102 or such other place as the Bank or the
holder of this promissory note (the "Note") may designate, the principal sum of
One Million and 00/100 Dollars ($1,000,000), together with interest on the
unpaid balance in accordance with the repayment terms set forth below.

INTEREST: The Borrower will pay interest (calculated on the basis of actual
days elapsed in a 360 day year) on the unpaid principal balance at the
following rate (the "Note Rate"):

/ / an annual rate of _______%.
/x/ an annual rate equal to 0.5000% above the Base Rate, floating.
/ / an annual rate which, for any month hereafter, shall be equal to ______%
______ the Base Rate in effect on the last day of the preceding month,
with an initial rate equal to ______%.
/ / an annual rate__________________________________________________________.

If this / / is checked and the Note Rate is variable, the Note Rate shall at no
time be less than an annual rate of ______%, and shall at no time exceed an
annual rate (if one is specified) of ______%. The interest rate on this Note
shall never exceed the maximum rate permitted by law.

"Base Rate" means the rate of interest established by Norwest Bank Nebraska,
N.A. National Money Market Rate from time to time as its "Prime" rate. "Due
Date" means the maturity date on which all unpaid principal and interest is
scheduled to be repaid as stated in the Section entitled "Repayment Terms" or
the date of the acceleration of this Note, whichever is earlier.

REPAYMENT TERMS: Unless payable sooner as a result of its acceleration, the
Borrower shall pay this Note as follows:

/ / FIXED INSTALLMENTS OF PRINCIPAL AND INTEREST. Principal and interest shall
be paid in ____ consecutive installments of $____________ each, _______________
beginning _________________, and on the same day of each ______________________
thereafter until ______________________, / / plus irregular installments as
follows:
$____________ on _______________; $_____________ on ________________; and
$____________ on _______________. On_________________, the entire unpaid
balance of principal and accrued but unpaid interest shall be due and payable.
Each installment shall be applied first to accrued interest and the balance to
principal.

/x/ FIXED PRINCIPAL PAYMENTS PLUS INTEREST. Principal only shall be paid:
/ / in ____ consecutive installments of $___________ each, beginning
_______________________, and on the same day of each ________________
thereafter until __________________, plus a final payment on ________
___________, when the entire unpaid balance of principal shall become
due and payable.
/x/ $1,000,000.00 on 08-15-1997 ; $_________________ on ____________;
$_______________ on _____________; $_________________ on ____________;
$_______________ on _____________; $_________________ on ____________;
and in addition, interest shall be payable Monthly, beginning 12-01-1996,
and on the same day of each subsequent month.

LATE FEE: / / Each time that a scheduled payment is not paid when due or within
______ days afterwards, the Borrower will pay a late fee equal to / / $________;
/ / _______% of the full amount of the late payment; / / the lessor of $________
or ______% of the full amount of the late payment.

/ / ADDITIONAL INTEREST. Each time a scheduled payment is not paid when due or
within ____ days afterwards, the Borrower will pay additional interest
("Additional Interest") which will begin accruing on the next calendar day on
the entire unpaid principal balance at an annual rate of ______% in excess of
the Note Rate. The Additional Interest will continue to accrue until all past
due payments and any Additional Interest are paid in full. Acceptance by the
Bank of any late fee or Additional Interest shall not constitute a waiver of
any default hereunder.

PREPAYMENT: The Borrower may prepay this Note, at any time, in whole or in
part, /x/ without penalty / / provided that at the time of prepayment the
Borrower pays a prepayment penalty equal to ____% of the principal amount
prepaid. Any partial payment shall be applied against the principal portion of
the installments due in inverse order of maturity.

OTHER FEES: If this / / is checked, the undersigned shall pay to the Bank a
nonrefundable: (Mark the applicable fee type(s))
/ / commitment fee of (Choose one) / / $_________ / / _____% of the Note Amount
/ / facility fee of (Choose one) / / $_________ / / _____% of the Note Amount
/ / documentation fee of (Choose one)/ / $_________ / / _____% of the Note
Amount
/ / application and loan processing fee of (Choose one) / / $_________ / /
_____% of the Note Amount
"Note Amount" means the principal amount of this Note, at the time this Note is
signed.

ADDITIONAL TERMS: The terms set forth on the reverse are incorporated into and
made a part of this Note.

LOAN PURPOSE: The Borrower certifies that the proceeds of this loan will be
used for business or agricultural purposes.
_______________________________________________________________________________
SIGNATURES
_______________________________________________________________________________
Signature | Signature
|
x /s/ John T. Connor | x
_______________________________________________________________________________
Name and Title (if applicable) | Name and Title (if applicable)
|
John T. Connor, Chief Executive |
Officer |
_______________________________________________________________________________
Borrower's name | Signature
|
Transcrypt International, Inc. | x
_______________________________________________________________________________
Address | Name and Title (if applicable)
|
4800 NW 1st Street |
_______________________________________________________________________________
City, State, Zip Code | / / This Note is given as a replacement
| for, and not in satisfaction of, Note
Lincoln, NE 68521 | Number _____________, given by the
| Borrower and dated __________________
_______________________________________________________________________________
<PAGE> 5
ADDITIONAL TERMS

DEFAULT AND ACCELERATION: Upon the occurrence of any one or more of the
following events of default, or at any time thereafter unless such default is
cured, the Bank may at its option declare all unpaid principal, accrued
interest, fees and all other amounts payable under this Note to be immediately
due and payable, without notice or demand to the Borrower:

- -- Default by the Borrower in the payment when due of any principal, interest or
other amounts due under this Note; or
- -- The Borrower fails to perform or observe any term or covenant of this Note or
any related documents or perform any other agreement with the Bank; or
- -- The Borrower fails to perform or observe any agreement with any other
creditor that relates to indebtedness or contingent liabilities which would
allow the maturity of such indebtedness or obligation to be accelerated; or
- -- The Borrower changes its legal form of organization; or
- -- If the holder of this Note at any time, in good faith, believes that the
undersigned will not be able to pay this Note when it is due; or
- -- Any representation or warranty made by the Borrower in applying for this loan
is untrue in any material respect; or
- -- A garnishment, levy or writ of attachment, or any local, state or federal
notice of tax lien or levy is served upon the Bank for the attachment of
property of the Borrower in the Bank's possession or indebtedness owed to the
Borrower by the Bank.

AUTOMATIC ACCELERATION: If, with or without the Borrower's consent, a
custodian, trustee or receiver is appointed for any of the Borrower's
properties, or if a petition is filed by or against the Borrower under the
United States Bankruptcy Code, or if the Borrower is dissolved or liquidated
(if an entity), or dies (if an individual), the unpaid principal, accrued
interest and all other amounts payable under this Note will automatically
become due and payable without notice or demand.

WAIVER OF DEMAND, PRESENTMENT, NOTICE OF DISHONOR AND PROTEST: Each maker,
accommodation party, endorser or guarantor of this Note, and any other party
liable for its repayment, hereby severally waives demand, presentment, notice
of dishonor and protest.

AMENDMENT OR MODIFICATION OF TERMS: Any amendment or modification of this Note
must be in writing and signed by the party against when enforcement of such
amendment or modification is sought. The Bank may also change any of the
repayment terms of this Note, including extensions of time and renewals, and
release or add any party liable on this Note, or agree to the substitution or
release of any security collateralizing this Note without notifying or releasing
from liability any maker, accommodation party, endorser or guarantor. The Bank
may suspend or waive any rights or remedies that it may have against any person
who may be liable for its repayment.

NO WAIVER OF DEFAULTS OR REMEDIES: No delay on the part of the Bank in the
exercise of any right or remedy shall operate as a waiver thereof. No single or
partial exercise by the Bank of any right or remedy shall preclude any further
exercise of that or any other right or remedy, and no waiver or indulgence by
the Bank of any default shall be effective unless in writing and signed by the
Bank.

SUBSEQUENT HOLDERS, MULTIPLE BORROWERS, AND GOVERNING LAW: Any reference to the
Bank in this Note shall be deemed to include any subsequent holder of this
Note. The undersigned Borrower, if more than one, shall be jointly and
severally liable hereunder and the term "Borrower" shall mean any one or more
of them. This Note will be governed by the substantive laws of the state where
the Bank's principal office is located, and any mortgage securing this Note
will be governed by the state where the real property subject to the Mortgage
is located.

ATTORNEYS' FEES: In the event the Bank is required to collect this Note
following its Due Date or the bankruptcy of any maker hereof, the Borrower will
pay to the Bank such further amounts as shall be sufficient to cover the costs
and expenses incurred in collecting this Note and liquidating any security or
guaranties given in support hereof, including reasonable attorneys' fees and
expenses required to take such actions in any court, including any bankruptcy
court.

FINANCIAL REPORTING: While any amounts are due under this Note, the Borrower
agrees to provide to the Bank annual financial statements and such other
financial information as the Bank may request.

ARBITRATION

AGREEMENT TO ARBITRATE: The Bank and Borrower agree to submit to binding
arbitration all claims, disputes and controversies (whether in tort contract, or
otherwise, except "core proceedings" under the U.S. Bankruptcy Code) arising
between themselves and their respective employees, officers, directors,
attorneys and other agents, which relate in any way without limitation to this
Note, including by way of example but not by way of limitation the negotiation,
collateralization, administration, repayment, modification, default,
termination and enforcement of the loans or credit evidenced by this Note.

RULES GOVERNING ARBITRATION AND SELECTION OF ARBITRATOR: Arbitration under this
Agreement will be governed by the Federal Arbitration Act and proceed in the
city where the Bank's principal office is located, or such other location as
the Bank and Borrower may agree in accordance with the American Arbitration
Association's commercial arbitration rules ("AAA Rules"). Arbitration will be
conducted before a single neutral arbitrator selected in accordance with AAA
Rules and who shall be an attorney who has practiced commercial law for at
least ten years.

STATUTES OF LIMITATION, PROCEDURAL ISSUES, COSTS AND FEES: The arbitrator will
determine whether an issue is arbitratable and will give effect to applicable
statutes of limitation. Judgment upon the arbitrator's award may be entered in
any court having jurisdiction. The arbitrator has the discretion to decide, upon
documents only or with a hearing, any motion to dismiss for failure to state a
claim or any motion for summary judgment. The arbitrator will award costs and
expenses in accordance with the provisions of this Note.

DISCOVERY: Discovery will be governed by the rules of civil procedure in effect
in the state where the Bank's principal office is located. Discovery must be
completed at least 20 days before the hearing date and within 180 days of the
commencement of arbitration. Each request for an extension and all other
discovery disputes will be determined by the arbitrator upon a showing that the
request is essential for the party's presentation and that no alternative means
for obtaining information are available during the initial discover period.

EXCEPTIONS TO ARBITRATION: This Agreement does not limit the right of either
party to a) foreclose against real or personal property collateral; b) exercise
self-help remedies such as setoff or repossession, or c) obtain provisional
remedies such as replevin, injunctive relief, attachment or the appointment of
a receiver during the dependency or before or after any arbitration proceeding.
These exceptions do not constitute a waiver of the right or obligation of
either party to submit any dispute to arbitration, including those arising from
the exercise of these remedies.
<PAGE> 6
NOTICE OF COMMENCEMENT

TO WHOM IT MAY CONCERN:

You are hereby notified that improvements are to be made to certain
real property and, in accordance with Section 52-1145 of the Nebraska
Construction Lien Act, the following information is provided:

REAL PROPERTY DESCRIPTION: Lot 1, Highlands Coalition Second
Addition, as surveyed, platted, and
recorded in Lancaster County, Nebraska

CONTRACTING OWNER: Name: Transcrypt International Inc.
Address: 5800 N.W. 1st Street
Lincoln, NE 68521

TITLEHOLDER: Name: Transcrypt International Inc.
Address: 5800 N.W. 1st Street
Lincoln, NE 68521

IF, AFTER THIS NOTICE OF COMMENCEMENT IS RECORDED, A CONSTRUCTION LIEN IS
RECORDED AGAINST ANY IMPROVEMENT COVERED BY THIS NOTICE OF COMMENCEMENT, THE
LIEN WILL HAVE PRIORITY FROM THE TIME THIS NOTICE OF COMMENCEMENT IS RECORDED.

THE DURATION OF THIS NOTICE OF COMMENCEMENT IS ONE YEAR.

THIS NOTICE OF COMMENCEMENT IS LIMITED TO:

Name: Northwest Bank Nebraska, N.A.
Address: 1919 Douglas Street, P.O. Box 3408
Omaha, NE 68103

TRANSCRYPT INTERNATIONAL, INC.

By: /s/ John T. Connor
-------------------------------------
Its:
-------------------------------------

STATE OF NEBRASKA )
) ss.
COUNTY OF LANCASTER )

The foregoing instrument was acknowledged before me this _____ day of
November, 1996, by _________________________, the _________________________ of
Transcrypt International, Inc., a Delaware Corporation, on behalf of the
corporation.

_________________________________________
Notary Public

My commission expires _____________________.
<PAGE> 7
ENVIRONMENTAL INDEMNITY AGREEMENT

This Agreement is made and entered into this ____ day of November,
1996, by and between TRANSCRYPT INTERNATIONAL, INC., a Delaware Corporation
which has its principal place of business in Lincoln, Nebraska ("Transcrypt")
and NORWEST BANK NEBRASKA, NATIONAL ASSOCIATION, a national banking association
which has its principal place of business in Omaha, Nebraska ("Norwest").

Recitals:
---------

A. Transcrypt is the owner of the real estate described as Lot 1, Highlands
Coalition Second Addition, as surveyed, platted, and recorded in
Lancaster County, Nebraska (the "Property").

B. Norwest is loaning the principal sum of One Million Dollars
($1,000,000.00) to Transcrypt to finance the construction of certain
improvements to the Property, which such loan is evidenced by a
Promissory Note of even date executed and delivered by Transcrypt to and
in favor of Norwest (the "Note").

C. The Note is secured by a Deed of Trust and Construction Security
Agreement of even date covering the Property (the "Deed of Trust") under
which Transcrypt is Trustor and Norwest is Trustee and Beneficiary.

D. Norwest has required this Agreement in consideration of and as a
condition of the loan evidenced by the Note.

NOW, THEREFORE, in consideration of the foregoing Recitals, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Transcrypt hereby agrees, covenants, and represents to Norwest as
follows:

1. For purposes of this Agreement, "Pollutant" shall mean any
pollutant, contaminant, solid waste, or hazardous or toxic waste, substance, or
material defined as such under the Resource Conservation and Recovery Act (42
U.S.C. Sections 6901, et seq.), the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Sections 9601, et seq.,), or any
other federal, state, or local environmental law, statute, code, rule,
regulation, order, decree, or ordinance.

2. Transcrypt represents and warrants that there is no Pollutant
above, in, on, under, or around the Property and that neither Transcrypt nor
any previous owner of the Property generated, used, had, managed, or released
any Pollutant above, in, on, under, or around the Property.
<PAGE> 8
3. Transcrypt warrants and covenants that it will not allow any
Pollutant to be above, in, on, under, or around the Property or to generate,
use, have, manage, release, or allow any Pollutant above, in, on, under, or
around the Property.

4. Transcrypt hereby agrees to indemnify and hold Norwest harmless
from any actions, claims, damages, liabilities, remedial action, costs,
attorney fees, damages, and civil and criminal penalties which may result from
or in connection with any Pollutant which is now or hereafter may be located
above, in, on, under, or around the Property. This indemnification shall
survive the termination of the Deed of Trust and the Note referenced in the
Recitals in this Agreement.

5. Transcrypt shall immediately notify Norwest in writing of any
proceeding or inquiry by any governmental authority with respect to any
Pollutant relating to the Property and immediately notify Norwest in writing of
any claims made or threatened by any third party relating to any damage, loss,
or injury resulting from any Pollutant relating to the Property. In the event
of any proceeding or inquiry by any governmental authority with respect to a
Pollutant relating to the Property, Transcrypt shall take such abatement,
corrective, remedial, or response action as may be required by law or by
direction or order of any governmental authority or court.

6. In the event Norwest reasonably suspects the presence of any
Pollutant above, in, on, under, or around the Property, or in the event of any
Event of Default under the Deed of Trust referred to in the Recitals to this
Agreement, Norwest may require Transcrypt, at the sole cost and expense of
Transcrypt, to employ a qualified independent environmental auditor, acceptable
to Norwest, to conduct an environmental audit of the Property to determine
whether there is any Pollutant above, in, on, under, or around the Property.

IN WITNESS WHEREOF, this instrument was executed on the date first set
forth above.

NORWEST BANK NEBRASKA TRANSCRYPT INTERNATIONAL, INC.
NATIONAL ASSOCIATION

By: By: /s/ John T. Connor
----------------------------- -------------------------------
Dee Ann K. Wenger, Its: Chairman
Assistant Vice President -------------------------------
Corporate Banking Division

-2-

<PAGE> 9
DEED OF TRUST
CONSTRUCTION SECURITY AGREEMENT

THIS DEED OF TRUST CONSTITUTES A CONSTRUCTION SECURITY AGREEMENT WITHIN THE
PURVIEW OF THE NEBRASKA CONSTRUCTION LIEN ACT, AND SECURES AN OBLIGATION WHICH
TRUSTOR INCURRED FOR THE PURPOSE OF MAKING AN IMPROVEMENT OF THE REAL ESTATE IN
WHICH THE SECURITY INTEREST IS GIVEN AND IS A CONSTRUCTION SECURITY INTEREST.

THIS DEED OF TRUST and CONSTRUCTION SECURITY AGREEMENT ("Deed of
Trust") made this _____ day of November, 1996, among TRANSCRYPT INTERNATIONAL,
INC., whose mailing address is 4800 NW 1st Street, Lincoln, Nebraska 68521, as
Trustor, NORWEST BANK NEBRASKA, NATIONAL ASSOCIATION, a national banking
association, whose mailing address is 1919 Douglas Street, P.O. Box 3408,
Omaha, Nebraska 68103, as Trustee; and NORWEST BANK NEBRASKA, NATIONAL
ASSOCIATION, a national banking association, whose mailing address is 1919
Douglas Street, P.O. Box 3408, Omaha, Nebraska 68103, as Beneficiary:

W I T N E S S E T H:

That Trustor irrevocably grants, transfers, and assigns to Trustee IN
TRUST WITH POWER OF SALE all of Trustor's estate, right, title, and interest in
and to the real estate in Lancaster County, Nebraska, legally described as:

Lot 1, Highlands Coalition Second Addition, as surveyed,
platted, and recorded in Lancaster County, Nebraska

the "Real Estate"), together with all interest which Trustor now has or may
hereafter acquire in and to the Real Estate and in and to:

(a) all easements and rights of way appurtenant thereto and all of the
state, right, title, interest, claim, and demand whatsoever of
Trustor in the Real Estate, either at law or in equity, now or
hereafter acquired;

(b) all structures, buildings, and improvements of every kind and
description now or at any time hereafter located or placed on the
Real Estate (the "Improvements");

(c) all fixtures now or hereafter located in, upon, or under the Real
Estate or the Improvements, or any part thereof, and used or usable
in connection with any present or future operation thereof, and all
additions thereto and replacements thereof;
<PAGE> 10
(d) all building materials and supplies now or hereafter placed on
the Real Estate or in the Improvements;

(e) all proceeds of the conversion, voluntary or involuntary, of any
of the foregoing into cash or liquidated claims, including,
without limitation, proceeds of insurance and condemnation
awards; and

(f) all other or greater rights and interests of every nature in the
Real Estate and the Improvements and in the possession or use
thereof and income therefrom, whether now owned or subsequently
acquired by Trustor.

The property so conveyed hereunder is hereinafter referred to as the
"Trust Property."

FOR THE PURPOSE OF SECURING THE FOLLOWING (the "Obligations"):

A. Payment of the principal sum or One Million dollars
($1,000,000.00), together with interest thereon (the "Loan"), as
evidenced by that certain Promissory Note dated of even date
herewith, in the principal amount of One Million Dollars
($1,000,000.00), executed and delivered by Trustor to
Beneficiary (the "Promissory Note").

B. Payment of late charges and other sums due under the terms of
the Promissory Note.

C. Performance, discharge of, and compliance with every debt,
obligation, covenant, and agreement of Trustor to Beneficiary
(all of which are collectively hereinafter called the "Loan
Documents").

D. Payment of future advances to be made at the option of
Beneficiary and Trustor.

TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS:

1. TITLE. That it is lawfully seized and possessed of a good and
indefeasible title and estate in the Real Estate and the other Trust Property,
and will forever warrant and defend the title thereto against the claims and
demands of all persons whomsoever; that it will, at its expense, maintain and
preserve the lien of this Deed of Trust as a third lien upon the Trust
Property, subject only to the following:

(a) Deed of Trust Construction Security Agreement executed by
Transcrypt International, Ltd., as Trustor, and Norwest Bank
Nebraska, N.A., as Trustee and Beneficiary, to secure the
principal sum of $850,000.00, dated

-2-
<PAGE> 11
January 15, 1994, and filed January 31, 1994, as Instrument No.
94-5296 in the office of the Register of Deeds of Lancaster
County, Nebraska; and

(b) Deed of Trust executed by Transcrypt International, Ltd., as
Trustor, and Norwest Bank Nebraska, N.A., as Trustee and
Beneficiary, to secure the principal sum of $700,000.00, dated
May 18, 1994, and filed June 20, 1994, as Instrument No.
94-28725, in the office of the Register of Deeds of Lancaster
County, Nebraska.

2. Maintenance. To keep the Trust Property in good condition and
repair; to complete or restore promptly and in good and workmanlike manner any
building which may be constructed, damaged, or destroyed thereon, and to pay,
when due, all claims for labor performed and materials furnished therefor and
for any alterations thereof; not to remove, demolish, or materially alter any
building, or the character or use thereof at any time thereon; not to drill or
extract nor to permit the drilling for or extraction of oil, gas, or other
hydrocarbon substances or any mineral of any kind unless the written consent of
Beneficiary is first had and obtained; not to commit or permit any waste
thereof or any act upon the Trust Property in violation of law; to do all other
acts in a timely and proper manner which from the character or use of the Trust
Property may be reasonably necessary to protect and preserve the same, the
specific enumerations herein not excluding the general.

3. Fire and Casualty Insurance.

(a) To keep the Trust Property insured against loss or damage by fire
with extended coverage, vandalism, and malicious mischief endorsement and
business interruption insurance in an amount acceptable to Beneficiary, and
against such other risks or hazards which, in the reasonable opinion of
Beneficiary, should be insured against (including, during any period of
construction, builder's risk insurance), to the amount of the full insurable
value thereof on a replacement cost basis with a company or companies and in
such form and with such endorsements as may be approved or required by
Beneficiary. Proceeds under all such insurance shall be payable to Trustor and
Beneficiary, as their interests may appear, and all such insurance policies
shall be endorsed with a standard, noncontributory mortgagee's clause in favor
of Beneficiary and with a lender's loss payee endorsement as to loss of rental
income. Trustor shall also carry public liability insurance in such form,
amount, and with such companies as to protect Beneficiary against any liability
incident to the use of or resulting from any incident occurring in or about
the Trust Property. Initially, such public liability insurance shall provide
for comprehensive general liability coverage with limits of not less than
$1,000,000.00 combined single limit per occurrence for personal injury, death,
and property damage. However, such

-3-
<PAGE> 12

amount shall be increased from time to time as Beneficiary may
hereafter require. Said policies or copies thereof, at Beneficiary's
request, shall be delivered to, and remain in possession of,
Beneficiary as further security for the faithful performance of the
Obligations, which delivery shall constitute an assignment by Trustor
to Beneficiary of all rights thereunder, including all return premiums;
to deliver to Beneficiary a policy or policies renewing or extending
any expiring insurance with a receipt showing premiums paid at least
thirty (30) days before expiration. If Trustor fails to so deliver any
renewal policies, Beneficiary may procure such insurance as it may
elect and may make payment of premiums thereon, which payment is
reimbursable on demand. Neither Trustee nor Beneficiary shall be
responsible for obtaining or maintaining such insurance. Beneficiary,
from time to time, may furnish to any insurance agency or company, or
any other person, any information contained in or extracted from any
insurance policy theretofore delivered to Beneficiary pursuant hereto,
and any information concerning the Loan. In no event, and whether or
not an Event of Default (as hereinafter defined) has occurred
hereunder, shall Beneficiary, by the fact of approving, accepting, or
obtaining such insurance, incur any liability for the amount of such
insurance, the form of legal sufficiency of insurance contracts,
solvency of insurers, or payment of losses by insurers, and Trustor
hereby expressly assumes full responsibility therefor. Trustor shall
give immediate written notice of any loss to Beneficiary, and
Beneficiary may, but is not obligated to, make proof of loss if not
made promptly by Trustor. Said policies shall require sixty (60) days'
prior written notice of cancellation or modification by given to
Beneficiary.

(b) In case of any loss, the amount collected under any policy of insurance
on the Trust Property may, at the option of Beneficiary, be applied by
Beneficiary to satisfaction of any Obligations and in such order and
amount as Beneficiary may determine; or said amount, or any portion
thereof may, at the option of Beneficiary, either be used in replacing
or restoring the Trust Property to a condition satisfactory to
Beneficiary, or said amount or any portion thereof, may be released to
Trustor. In any such event, neither Trustee nor Beneficiary shall be
obligated to see to the proper application thereof; nor shall the
amount so released or used be deemed a payment on any Obligation. Such
application, use, and/or release shall not cure or waive any Event of
Default or notice of default hereunder or invalidate any act done
pursuant to such notice. Any unexpired insurance and all returnable
insurance premiums shall inure to the benefit of, and pass to, the
purchaser of the Trust Property covered thereby at any Trustee's sale
or judicial foreclosure sale held hereunder. If the Trust Property is
sold pursuant to the power of sale contained herein or pursuant to any
decree of foreclosure, all right, title, and interest of Trustor in and
to the proceeds of fire and other

-4-

<PAGE> 13
insurance policies for damage prior to the sale, which proceeds
are not received prior to the date of said sale, shall belong
to Beneficiary.

4. TAXES AND OTHER SUMS DUE. To pay, satisfy, and discharge at
least ten (10) days before delinquency, any and all of the following sums:

(a) all general and special taxes and assessments and public charges
affecting or levied against the Trust Property;

(b) all encumbrances, charges, and liens, with interest, on the
Trust Property, or any part thereof, which are, or appear to
Beneficiary to be, prior to or superior hereto;

(d) fees or charges for any statement regarding any Obligation in
any amount demanded by Beneficiary, not to exceed the maximum
amount allowed by law therefor at the time when such request is
made;

(e) such other charges as the Beneficiary may deem reasonable for
services rendered by Beneficiary and furnished at the request of
Trustor or any successor in interest to Trustor.

5. SUMS ADVANCED TO BEAR INTEREST. To pay immediately upon demand
any sums advanced or paid by Beneficiary or Trustee under any clause or
provision of this Deed of Trust. Any such sums, until so repaid, shall be
considered a portion of the Obligations secured hereby and bear interest from
the date advanced or paid at the same rate specified in the Promissory Note and
shall be secured by this Deed of Trust.

6. EVENTS OF DEFAULT. Upon the occurrence of any one of the
following (hereinafter an "Event of Default" or "default"), the payment of all
principal, interest, and any other sums due under the terms of the Promissory
Note shall, at the option of Beneficiary, be accelerated and such principal,
interest, and other sums shall immediately be due and payable without notice or
demand, and Beneficiary shall have the option to foreclose judicially or
extrajudicially through power of sale any and all liens securing the payment
thereof:

(a) Default in the payment of principal or interest under the
Promissory Note;

(b) Default in the payment of principal or interest under any of
the other Obligations;

-5-
<PAGE> 14
(d) Trustor fails to keep or perform any of its agreements, undertakings,
obligations, covenants, or conditions under this Deed of Trust;

(e) Any default under the Amended and Restated Loan Agreement between
Norwest Bank Nebraska, N.A. and Transcrypt International, Ltd. dated May
18, 1994, as amended by the First Amendment to Amended and Restated Loan
Agreement dated April 10, 1996, the Third Amendment to Amended and
Restated Loan Agreement and Restated Loan Agreement dated of even date
with this Deed of Trust;

(f) Any default under the environmental Indemnification Agreement of even
date with this Deed of Trust;

(g) Any warranty, representation, or financial statement made or furnished
by Trustor to Beneficiary is discovered to have been false in any
material respect when made or furnished; or

(h) Trustor shall:

(i) have an order for relief entered with respect to it under any
law relating to bankruptcy, insolvency, reorganization, or
relief of debtors ("Bankruptcy Law");

(ii) not pay, or admit in writing its inability to pay, its debts
generally as they become due;

(iii) make an assignment for the benefit of its creditors;

(iv) apply for, seek, consent to, or acquiesce in the appointment of
a receiver, custodian, trustee, examiner, liquidator, or similar
official for it or any of its property; or

(v) institute any proceedings seeking an order for relief under any
Bankruptcy Law, or a proceeding seeking to adjudicate if a
bankrupt or insolvent or seeking a dissolution, winding up,
liquidation, reorganization, arrangement, adjustment, or
composition of it, or its debts, under any Bankruptcy Law; or
fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it;

-6-
<PAGE> 15
(i) Should it be discovered after the execution and delivery of
this Deed of Trust that there is a defect in the title to, or
a lien or encumbrance of any nature on the Real Estate or other
Trust Property described in the Loan Documents prior to the lien
of the Beneficiary evidenced by the Loan Documents, and not
disclosed in the policy of title insurance issued to the
Beneficiary insuring the priority of the Deed of Trust covering
the Real Estate, unless such defect is cured within thirty (30)
days after written notice of such defect from Beneficiary to
Trustor; or

(j) Should Trustor be divested of title to the Real Estate, or any
part thereof, or any interest therein, either voluntarily or
involuntarily; or

(k) If title to the Trust Property be subjected to any lien or
charge, whether superior or inferior to the lien of the Loan
Documents, voluntarily or involuntarily, contractual or
statutory, except as permitted by the Loan Documents, without
the prior written consent of Beneficiary in each such instance
first had and obtained, and if any such lien or charge is not
released of record within thirty (30) days following written
notice to Trustor; or

(l) If the Trust Property or any part thereof or beneficial interest
therein is sold, assigned, transferred, conveyed, encumbered,
hypothecated, mortgaged, or otherwise alienated by Trustor,
whether voluntarily or involuntarily, or by operation of law,
in either or any case without the prior written consent of
Beneficiary.

7. COMPLIANCE WITH LAWS, ETC. Trustor shall comply promptly and
fully with all present and future laws, ordinances, rules, and regulations and
any governmental authority having jurisdiction of or over the Trust Property or
any part thereof or any use of the Trust Property, including, without
limitation, laws, ordinances, rules, or regulations relating to asbestos,
petroleum products, or hazardous or toxic wastes or materials.

IT IS MUTUALLY AGREED THAT:

8. LITIGATION. Trustor shall defend this Deed of Trust in any
action or proceeding purporting to affect the Trust Property, whether or not it
affects the security hereof, or purporting to affect the rights or powers of
Beneficiary or Trustee, and shall file and prosecute all necessary claims and
actions to prevent or recover for any damage to or destruction of the Trust
Property, and either Trustee or Beneficiary is hereby authorized, without
obligation so to do, to commence, appear in, or defend any such action, whether
brought by or against Trustor, Beneficiary, or Trustee, or with or without
suit, to exercise or enforce any other right, remedy, or power available or
conferred hereunder, whether or not judgment be entered in any action or
proceeding; and Trustee or Beneficiary may appear or intervene in any action or
proceeding, and retain counsel therein; and take such

-7-
<PAGE> 16
action therein as either may be advised and may settle, compromise, or pay the
same or any other claims and, in the behalf and for any of said purposes, may
expend and advance such sums of money as either may deem necessary. Whether or
not Trustor so appears or defends, Trustor on written demand, shall pay all
actual and reasonable costs and expenses of Beneficiary and Trustee, including
costs of evidence of title and attorneys' fees, in any such action or
proceeding in which Beneficiary or Trustee may appear by virtue of being made a
party defendant or otherwise and irrespective of whether the interest of
Beneficiary or Trustee in the Trust Property is directly questioned by such
action, including but not limited to any action for the condemnation or
partition of the Trust Property.

9. CASUALTY AND CONDEMNATION. All sums due, paid, or payable to
Trustor, or any successor in interest of Trustor, whether by way of judgment,
settlement, or otherwise;

(a) for injury or damage to the Trust Property;

(b) in connection with any condemnation for public use or injury to the
Trust Property or any part thereof;

are hereby absolutely and irrevocably assigned and shall be paid to
Beneficiary.

Beneficiary shall be entitled, at its option, to commence, intervene
in, appear in, and prosecute in its own name, any action or proceeding, or to
make any compromise or settlement, in connection with any such taking or
damage. Trustor agrees to execute such further assignments of any compensation,
award, damages, rights of action, and proceeds as Beneficiary may require.

All amounts received by Beneficiary pursuant to this Deed of Trust, in
connection with any condemnation for public use of, or injury to, the Trust
Property, may, at the option of the beneficiary, be applied by Beneficiary upon
any indebtedness secured hereby or other Obligation, and in such order and
amount as Beneficiary may determine; or said amount or any portion thereof, may
at the option of Beneficiary, be used in replacing or restoring the Trust
Property to a condition satisfactory to Beneficiary, or be released to Trustor,
to be applied, at the option of Beneficiary, upon any indebtedness secured
hereby. No such application, use, or release shall cure or waive any Event of
Default, or notice of default hereunder, or invalidate any act done pursuant to
such notices.

10. JUDICIAL FORECLOSURE OR TRUSTEE'S SALE ON DEFAULT.

(a) Upon the occurrence of one or more Events of Default, or default by
Trustor in the performance of any other covenant or agreement
hereunder, or any covenant or agreement under any Loan Document or
under any instrument or document now or hereafter executed by
Trustor to further secure payment

-8-
<PAGE> 17
of and performance of the Obligations, Beneficiary may declare
all indebtedness secured hereby immediately due and payable and,
at the option of Beneficiary this Deed of Trust may be
foreclosed in the manner provided by law for the foreclosure of
mortgages on real property or, at the option of Trustee and
Beneficiary, may be sold in the manner provided in the Nebraska
Trust Deeds Act, under the power of sale conferred upon the
Trustee hereunder.

(b) If the Trust Property is sold pursuant to the power of sale
conferred upon Trustee hereunder, Trustee shall cause to be
filed of record a written notice of default and election to sell
the Trust Property. After the lapse of such time as then may be
required by law following recordation of such notice of default,
and notice of sale having been given as then required by law,
Trustee, without demand on Trustor, shall sell the Trust
Property, either as a whole or in separate parcels, and in such
order as it or Beneficiary may determine, at a public auction to
the highest bidder. Trustee may postpone the sale of all or any
portion of the Trust Property by public announcement at the time
and place of sale, and from time to time thereafter may postpone
the sale by public announcement at the time and place fixed by
the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying any Trust Property so sold, but
without any covenant or warranty, express or implied. The
recital in such deed of any matters of fact or otherwise shall
be conclusive proof of the truthfulness thereof. Any person,
including Trustor, Trustee, or Beneficiary, may purchase at such
sale. Trustee shall first apply the proceeds of the Trustee's
sale to the costs and expenses of exercising the power of sale
and of the sale, including the payment of Trustee's fees
actually incurred, and second to the payment of any Obligations,
and third to the payment of junior trust deeds, mortgages, or
other liens, and the balance, if any, to the person or persons
legally entitled thereto.

(c) Trustor agrees, for itself and any and all persons or concerns
claiming by, through, or under Trustor, that if it, or any one
or more of them, shall hold possession of the Trust Property, or
any part thereof, subsequent to the Trustee's or judicial sale
hereunder, it, or the parties so holding possession, shall
become, and be considered as, tenants at will of the purchaser
or purchasers at either such sale; and any such tenant failing
or refusing to surrender possession upon demand shall be guilty
of forcible detainer and shall be liable to such purchaser or
purchasers for reasonable rental of the Real Estate, and shall
be subject to eviction and removal, forcible or otherwise, with
or without process of law, and all damages which may be
sustained by any such tenant as a result thereof are hereby
expressly waived.

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<PAGE> 18
11. SECURITY INTEREST IN FIXTURES. This Deed of Trust is also
intended to create, and Trustor does hereby grant to beneficiary, a security
interest in any and all now owned and hereafter acquired fixtures now or
hereafter located on or used in connection with the Trust Property. Beneficiary
shall have, cumulative of all other rights and remedies of beneficiary
hereunder, all of the rights and remedies of a secured party under the Nebraska
Uniform Commercial Code. Trustor hereby agrees to execute and deliver on demand
and hereby irrevocably constitutes and appoints Beneficiary the
attorney-in-fact of Trustor to execute and deliver and, if appropriate, to file
with the appropriate filing officer or officers such security agreements,
financing statements, continuation statements, or other instruments as
Beneficiary may request or require in order to perfect or continue the
perfection of the lien or security interest created hereby.

12. FIXTURE FINANCING STATEMENT. This Deed of Trust is intended to be
a financing statement within the purview of the Nebraska Uniform Commercial
Code with respect to those items of the Trust Property that constitute fixtures
to the Real Estate. The address of Trustor (Debtor) and Beneficiary (Secured
Party) are set forth on the first page of this Deed of Trust. This Deed of
Trust is to be filed for record in the office of the Register of Deeds of
Lancaster County, Nebraska, where the Real Estate is located. Trustor is the
record owner of the Real Estate.

13. SUBSTITUTION OF TRUSTEE. Beneficiary may, from time to time, by
instrument in writing, substitute a successor or successors to any Trustee
named herein or acting hereunder, which instrument, executed and acknowledged
by Beneficiary and recorded in the office of the Registrar of Deeds of
Lancaster County, Nebraska, shall be conclusive proof of proper substitution of
such Trustee or Trustees, who shall, without conveyance from the Trustee
predecessor, succeed to all its title, estate, rights, power, and duties.

14. NO WAIVER BY BENEFICIARY. No waiver by Beneficiary of any right
under this Deed of Trust shall be effective unless in writing. Any waiver by
Beneficiary of any right granted to Beneficiary under this Deed of Trust or of
any provision of this Deed of Trust as to any transaction or occurrence shall
not be deemed a waiver as to any future transaction or occurrence. By
accepting payment of any Obligation after its due date, or by making any
payment or performing any act on behalf of Trust or for which Trustor was
obligated hereunder, but failed to make or perform, or by adding any payment so
made by Beneficiary to the indebtedness secured hereby, Beneficiary does not
waive its right to require prompt payment when due of, or to require prompt
performance of, any Obligation, or to declare a default for failure so to pay or
perform.

15. TIME OF THE ESSENCE. Time is of the essence in all Trustor's
obligations hereunder.

16. REMEDIES. No remedy herein provided shall be exclusive of any
other remedy herein or now or hereafter existing by law, but shall be
cumulative. Every power

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<PAGE> 19
or remedy hereby given to Trustee or Beneficiary, or to which either of them
may be otherwise entitled, may be exercised from time to time and as often as
may be deemed expedient by them, and either of them may pursue inconsistent
remedies. If Beneficiary holds any additional security for any Obligation, it
may enforce the sale thereof at its option, either before, contemporaneously
with, or after any sale is made hereunder, and on any default of Trustor,
Beneficiary may, at its option, offset against any indebtedness secured hereby,
and the Beneficiary is hereby authorized and empowered at its option, without
any obligation so to do, and without affecting the enforceability of any
Obligation, to apply toward the payment of any Indebtedness of the Trustor to
the Beneficiary any and all sums of money of Trustor which Beneficiary may have
in its possession or under its control, including without limiting the
generality of the foregoing, any savings account, deposit, investment
certificate, escrow or trust funds.

17. ILLEGALITY. In the event that any provision or clause of this
Deed of Trust conflicts with applicable law, such conflict shall not affect
other provisions of this Deed of Trust which can be given effect without the
conflicting provision, and to this end the provisions of this Deed of Trust are
declared to be severable.

18. ADDRESS FOR MAILING NOTICES. Trustor hereby requests that a copy
of any notice of default and a copy of any notice of sale hereunder shall be
mailed to each person below at the address indicated:

If to Trustor: Mr. John T. Connor, Chairman of the Board
Transcrypt International, Inc.
4800 N.W. 1st Street
Lincoln, NE 68521-9918

If to Beneficiary Norwest Bank Nebraska, National Association
or Trustee: 1919 Douglas Street
P.O. Box 3408
Omaha, NE 68103
Attention: DeeAnn K. Wenger, Assistant Vice
President, Corporate Banking Division

-11-
<PAGE> 20
IN WITNESS WHEREOF, this instrument was executed on the date first set
forth above.

TRUSTOR: TRUSTEE:

TRANSCRYPT INTERNATIONAL, INC. NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION

By: /s/ John T. Connor By:
-------------------------- --------------------------
Its: Chairman DeeAnn K. Wenger,
-------------------------- Assistant Vice President
Corporate Banking Division

BENEFICIARY:

NORWEST BANK NEBRASKA,
NATIONAL ASSOCIATION

By:
--------------------------
DeeAnn K. Wenger,
Assistant Vice President
Corporate Banking Division

STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )

The foregoing instrument was acknowledged before me this day of
--
November, 1996, by , the of
-------------------------------- --------------
Transcrypt International Inc., a Delaware Corporation, on behalf of the
corporation.

------------------------------
Notary Public

My commission expires .
--------------------------

-12-
<PAGE> 21
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )

The foregoing instrument was acknowledged before me this ____ day of
November, 1996, by DeeAnn K. Wenger, Assistant Vice President of Norwest Bank
Nebraska, National Association, Trustee, on behalf of said bank.

-----------------------------
Notary Public

My commission expires
----------------------.

STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )

-----------------------------
Notary Public

My commission expires
----------------------.

-13-

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (File No.
333-14351) of our reports dated February 23, 1996, on our audits of the
financial statements as of December 31, 1994 and 1995 and for each of the three
years in the period ended December 31, 1995, and the financial statement
schedule of Transcrypt International, Inc. We also consent to the reference of
our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Lincoln, Nebraska
November 21, 1996

<PAGE> 1
EXHIBIT 23.3

November 21, 1996

Transcrypt International, Inc.
4800 NW First Street
Lincoln, Nebraska 68521
Attention: John T. Connor

Dear Sirs:

International Data Corporation does hereby consent to the references to
the information published by us and to our name, all of which appear under the
captions "Prospectus Summary -- The Company -- Telephony Products" and
"Business -- Industry Background -- Telephony Market" in the Registration
Statement on Form S-1, as amended (File No. 33-14351), filed by Transcrypt
International, Inc. with the Securities and Exchange Commission.

International Data Corporation

By: /s/ Gigi Wang
-------------------------
Name: Gigi Wang
Title: Senior Vice President of Communications