BUCA INC /MN, S-1/A, 1999-03-24

BUCA INC /MN
S-1/A, 1999-03-24
EATING PLACES

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<PAGE>

As filed with the Securities and Exchange Commission on March 24, 1999

Registration No. 333-70841
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------

Amendment No. 1

to
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
BUCA, INC.
(Exact name of Registrant as specified in its charter)
----------------

Minnesota 5812 41-1802364
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)

1300 Nicollet Mall, Suite 3043
Minneapolis, Minnesota 55403
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Joseph P. Micatrotto
President and Chief Executive Officer
BUCA, Inc.
1300 Nicollet Mall, Suite 3043
Minneapolis, Minnesota 55403
(612) 288-2382
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:
Douglas P. Long, Esq. Jonathan B. Abram, Esq.
Faegre & Benson LLP Dorsey & Whitney LLP
2200 Norwest Center Pillsbury Center South, 20th Floor
90 South Seventh Street 220 South Sixth Street
Minneapolis, Minnesota 55402 Minneapolis, Minnesota 55402
---------------

CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Each Class of Amount to be Offering Price Offering Registration
Securities to be Registered Registered(1) Per Share(2) Price(2) Fee
- ---------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
3,190,410
Common Stock, $.01 par value.. Shares $12.50 $39,880,125 $11,087(3)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) Includes 416,140 shares of common stock which may be purchased by the
underwriters to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) of the Securities Act of 1933, as amended.

(3) Of this amount, $10,591 was previously paid.

The Registrant hereby amends this Registration Agreement 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.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the Securities and Exchange Commission +
+declares our registration statement effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to completion, dated March 24, 1999

2,770,819 Shares

BUCA, INC. [LOGO]

Common Stock

$ per share

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

. This is our initial public offering and no
. BUCA, Inc. is offering public market currently exists for our shares.
2,500,000 shares and
selling shareholders
are offering
270,819 shares.

. We anticipate that the . Proposed trading symbol: Nasdaq National
initial public Market--BUCA.
offering price will be
between $10.50 and
$12.50 per share.

----------

This investment involves risk. You should carefully consider the "Risk Factors"
beginning on page 7.

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

<TABLE>
<CAPTION>
Per
Share Total
------- ------------
<S> <C> <C>
Public Offering Price..................................... $ $
Underwriting Discount.....................................
Proceeds to BUCA, Inc. ...................................
Proceeds to Selling Shareholders..........................
</TABLE>

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

The underwriters have a 30-day option to purchase up to 415,622 additional
shares of common stock from us and a selling shareholder to cover over-
allotments, if any.

Neither the Securities and Exchange Commission nor any state securities
commission has approved of anyone's investment in these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

U.S. Bancorp Piper Jaffray

NationsBanc Montgomery
Securities LLC

The date of this prospectus is , 1999.
<PAGE>

[PHOTO OF GIRL EATING SPAGHETTI]

"Italian family dining at its best"
Chicago Tribune

Elegant Dining
in a cosmopolitan atmosphere

"ONE BIG RAUCOUS DINNER PARTY"
South Bay Weekly

"PORTIONS ARE NFL TRAINING TABLE WORTHY"
Cleveland Free Times

"BEST FAMILY RESTAURANT 1998"
Seattle Magazine Readers' Poll

BUCA(R) and BUCA di BEPPO(R), as well as additional names and logos appearing
in this prospectus, are registered trademarks of BUCA, Inc. This prospectus
also includes names and trademarks of other companies. The individual
restaurant reviews quoted in this prospectus are not intended to suggest or
imply an endorsement by the reviewers or their publishers of the contents of
this prospectus or an investment in the common stock.

2
<PAGE>

[PHOTO OF
RESTAURANT INTERIOR]

ONE OF
[PHOTO OF DINERS] THE BEST
NEW RESTAURANTS
IN AMERICA
"JUST TRY BON APPETIT [PHOTO OF
NOT TO SING RESTAURANT INTERIOR]
ALONG"
Los Angeles Times
"Exudes the excessive
exuberant, voluptuous
Neapolitan spirit"
San Francisco Chronicle

[PHOTO OF FOOD]

[PHOTO OF DINERS] "So much
FUN
you won't know
what hit you"
Seattle Post-Intelligencer

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary............................................................... 4
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.............................................................. 24
Management............................................................ 33
Certain Relationships and Related Transactions........................ 40
Principal and Selling Shareholders.................................... 43
Shares Eligible for Future Sale....................................... 46
Description of Capital Stock.......................................... 47
Underwriting.......................................................... 51
Legal Matters......................................................... 53
Experts............................................................... 53
Where You Can Find More Information................................... 54
Index to Consolidated Financial Statements............................ F-1
</TABLE>

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

You should rely only on the information contained in this prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. This prospectus is not an offer to sell, nor is it
seeking an offer to buy, these securities in any state where the offer or sale
is not permitted. The information in this prospectus is complete and accurate
as of the date on the front cover, but the information may have changed since
that date.

3
<PAGE>

SUMMARY

The items in the following summary are described in more detail later in this
prospectus. This summary provides an overview of selected information and does
not contain all the information you should consider. Therefore, you should also
read the more detailed information set out in this prospectus, including the
financial statements.

Business of BUCA

BUCA, Inc. owns and operates 20 full service, dinner-only restaurants under the
name BUCA di BEPPO. Our restaurants offer high quality, immigrant Southern
Italian cuisine served family-style in large portions in a fun and energetic
atmosphere that parodies the decor and ambiance of post-War Italian/American
restaurants.

Our food is based on authentic family recipes enjoyed for generations in the
villages of Southern Italy and then adapted to American ingredients. Our menu
features dishes such as the BUCA di BEPPO 1893 salad, chicken cacciatore,
spaghetti with half-pound meat balls, eggplant parmigiana, ravioli al pomodoro,
veal marsala, garlic mashed potatoes, pizza arrabiatta and tiramisu. These
dishes, often seasoned with garlic and served with vine-ripened tomatoes,
communicate the pure, powerful flavors of the immigrant Southern Italian
kitchen.

Our oversized portions, served family-style on large platters, are designed to
overwhelm guests with an abundance of high quality food. In family-style
serving, each item is shared by the entire table, which encourages guests to
interact and enjoy the meal together. We believe that the generous portions,
combined with an average check per guest of approximately $20.00, including
beverages, offer our guests exceptional value. We reinforce this value by
encouraging guests to take home their extra food in our logo-bearing BUCA bags,
allowing guests to enjoy an additional BUCA meal at home.

BUCA di BEPPO restaurants irreverently exaggerate the cliches of post-War
Italian/American restaurants found in Italian neighborhoods of large U.S.
cities. We design our restaurants to be a fun, high-energy destination. Each
BUCA di BEPPO restaurant in a market is unique, which reinforces our image as a
collection of neighborhood restaurants. Restaurant interiors are covered with
hundreds of vintage photos and icons of Italian heritage, and feature lively
music from classic artists such as Frank Sinatra and Dean Martin. Restaurant
exteriors feature flashing bare bulb signage, statuary and humorous neon signs.
Our food, decor and family-style servings all promote a fun, celebratory and
socially interactive dining experience that emulates a traditional
Italian/American evening meal. Our innovative concept has attracted national
attention as evidenced by national awards, including a 1998 "Hot Concepts!"
award from Nation's Restaurant News, and awards in all of our local markets.

We believe that our restaurants provide superior unit level economics. In
fiscal 1998, our restaurants with at least two full years of operating history
generated average restaurant sales of approximately $3.0 million and average
cash flow of approximately $693,000, or 23.5% of restaurant sales. We believe
that our Paisano Partners program, in which our restaurant general managers,
known as Paisano Partners, purchase stock and receive a significant portion of
their annual cash compensation based on restaurant cash flow, motivates
Paisanos to achieve significantly greater operating efficiencies and
contributes to our superior unit level economics. In fiscal 1998, our total
cash investment per restaurant averaged $1.4 million, excluding average
preopening costs per restaurant of approximately $195,000.

We are pursuing a rapid but disciplined expansion strategy. Our objective is to
become the dominant family-style, immigrant Southern Italian restaurant in each
of our markets. We focus primarily on metropolitan markets that can support
multiple BUCA di BEPPO restaurants. This focus allows us to build brand
awareness and realize operating and management efficiencies within each market.
We intend to continue our expansion throughout the United States with 13
openings planned in fiscal 1999, of which one has already opened, seven are
under construction and the remaining five have signed leases. By the end of
fiscal 1999, we plan to have 32 restaurants open in at least 17 markets.

4
<PAGE>

Office Location

We were incorporated on December 2, 1994 as a Minnesota corporation. Our
principal executive offices are located at 1300 Nicollet Mall, Minneapolis,
Minnesota 55403 and our telephone number is (612) 288-2382.

The Offering

Common stock offered:

<TABLE>
<S> <C>
By BUCA, Inc.............................. 2,500,000 shares
By selling shareholders................... 270,819 shares
Total.............................. 2,770,819 shares
Common stock outstanding after the offer-
ing...................................... 9,738,932 shares
Offering price............................ $ per share
Use of proceeds........................... To fund restaurant
development, repay bank debt
and for general corporate purposes.
Proposed Nasdaq National Market symbol.... BUCA
</TABLE>

The number of shares being offered by the selling shareholders include 56,375
shares to be issued upon conversion of approximately $389,000 in aggregate
principal amount of our outstanding subordinated convertible debt, assuming a
public offering price of $11.50 per share. The number of shares being offered
by the selling shareholders also includes 64,444 shares to be issued upon the
exercise of common stock warrants to be purchased by the underwriters from the
warrantholder.

The number of shares to be outstanding after the offering includes the issuance
of 4,545,434 shares of common stock in connection with the conversion of all
outstanding shares of preferred stock upon the closing of this offering and
55,937 shares to be issued upon the conversion of approximately an additional
$386,000 in aggregate principal amount of our outstanding subordinated
convertible debt in connection with the closing. It excludes (1) 1,050,154
shares of common stock issuable upon exercise of options outstanding as of the
date of this prospectus at a weighted average exercise price of $6.96 per
share, (2) 333,415 shares of common stock issuable upon exercise of warrants
remaining outstanding after this offering at a weighted average exercise price
of $2.44 per share and (3) 145,646 shares of common stock issuable after the
completion of this offering upon conversion of subordinated debt remaining
outstanding after this offering, assuming a public offering price of $11.50 per
share.

Except as otherwise noted, all information in this prospectus assumes (1) no
exercise of the underwriters' over- allotment option, (2) no exercise of those
options or warrants to purchase shares of common stock or the conversion of the
outstanding convertible subordinated debt into shares of common stock remaining
outstanding after the completion of this offering and (3) the issuance of
shares of common stock in connection with the conversion of all outstanding
shares of preferred stock upon the closing of this offering. Information in
this prospectus also gives effect to a two-for-three reverse split of the
common stock effected on February 17, 1999.

5
<PAGE>

Summary Consolidated Financial Data
(in thousands, except per share and operating data)

We changed our fiscal year-end from December 31 to the last Sunday in December,
beginning with the fiscal year ended December 28, 1997.

The pro forma information below gives effect, as of and for the period ending
December 27, 1998, to (1) the issuance of shares of common stock in connection
with the conversion of all outstanding shares of preferred stock upon the
closing of this offering, (2) the termination of our obligation to redeem
shares of common stock held in the Parasole Employee Stock Ownership Trust and
the BUCA Employee Stock Ownership Plan (the "redeemable common stock") upon the
closing of this offering, (3) the repayment of $6,600,000 of outstanding
subordinated and bank debt with borrowings of $7,000,000 under our credit
facility with U.S. Bank, and (4) a one-time extraordinary charge of $1,400,000
related to the early repayment of outstanding debt.

The as adjusted information below gives effect as of December 27, 1998 to (1)
our receipt of the estimated net proceeds of $25,875,000 from the sale of
2,500,000 shares of common stock offered by us at an assumed initial public
offering price of $11.50 per share, (2) application of a portion of the net
proceeds of this offering to repay amounts outstanding under our credit
facility with U.S. Bank and the resulting write-off of deferred financing
costs, (3) the special non-cash charge of approximately $1,300,000 related to
the discount applicable to the right of holders of $1,780,000 of our
outstanding subordinated debt to convert such debt into common stock after the
closing of this offering, and (4) the conversion of $775,000 in aggregate
principal amount of our outstanding subordinated debt into 112,312 shares in
connection with this offering, assuming a public offering price of $11.50 per
share.

<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
December 31, December 28, December 27,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Consolidated Statements of Operations
Data:
Restaurant sales....................... $11,316 $19,030 $38,483
Income from restaurant operations...... 1,499 2,501 5,581
Operating loss......................... (919) (2,399) (1,893)
Net loss............................... (1,113) (3,319) (2,946)
Net loss applicable to common stock.... (4,800) (5,305) (5,135)
Net loss per common share--basic and
diluted............................... $ (1.96) $ (2.13) $ (2.04)
Weighted common shares assumed
outstanding--basic and diluted........ 2,445 2,490 2,512
Pro forma net loss per common share--
basic and diluted..................... $ (.42)
Common shares assumed outstanding pro
forma--basic and diluted.............. 7,062
Operating Data:
Comparable restaurant sales
increase(/1/)......................... 0.3% 8.9% 13.3%
Average weekly restaurant sales........ $47,319 $47,579 $52,727
Restaurants open at end of period...... 6 11 19
<CAPTION>
December 27, 1998
--------------------------------------
Pro Forma
Actual Pro Forma As Adjusted
------------ ------------ ------------
<S> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents.............. $ 6,576 $ 6,576 $25,451
Total assets........................... 37,560 37,560 56,135
Total debt, including current portion.. 7,866 9,266 1,491
Redeemable stock(/2/).................. 36,973 -- --
Common shareholders' (deficit)/equity.. (13,540) 22,033 48,383
</TABLE>
- ---------------

(/1/) The calculation of comparable restaurant sales increase includes
restaurants open for 12 full calendar months, as adjusted to provide
comparable 52-week fiscal years.

(/2/) Includes Series A, Series B and Series C preferred stock and the
redeemable common stock.

6
<PAGE>

RISK FACTORS

You should carefully consider the following risk factors before you decide to
buy our common stock. You should also consider the other information in this
prospectus. If any of the following risks actually occur, our business,
financial condition, operating results or cash flows, could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you may lose part or all of your investment.

We May Be Unable to Achieve Profitability

Since we were formed, we have incurred net losses of approximately $7.6 million
through the end of fiscal 1998, primarily due to new restaurant opening
expenses and the costs of hiring senior management to develop and implement our
expansion strategy. We intend to continue to expend significant financial and
management resources on the development of additional restaurants. We cannot
predict whether we will be able to achieve or sustain revenue growth,
profitability or positive cash flow in the future. Failure to achieve these
objectives may cause our stock price to decline and make it difficult to raise
additional capital. See "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" for information on the history of our losses.

Our Business Could Be Materially Adversely Affected if We Are Unable to Expand
in a Timely and Profitable Manner

To continue to grow, we must open new BUCA di BEPPO restaurants on a timely and
profitable basis. We have experienced delays in restaurant openings from time
to time and may experience delays in the future. Delays or failures in opening
new restaurants could materially adversely affect our business, financial
condition, operating results or cash flows. We expanded from 11 restaurants at
the end of fiscal 1997 to 19 restaurants at the end of fiscal 1998. We expect
to open an additional 13 restaurants during fiscal 1999, one of which is
already open. Our ability to expand successfully will depend on a number of
factors, some of which are beyond our control, including the:

.identification and availability of suitable restaurant sites;

.competition for restaurant sites;

.negotiation of favorable leases;

.timely development in certain cases of commercial, residential, street
or highway construction near our restaurants;

.management of construction and development costs of new restaurants;

.securing required governmental approvals and permits;

.recruitment of qualified operating personnel, particularly Paisano
Partners and kitchen managers;

.competition in new markets; and

.general economic conditions.

In addition, we contemplate entering new markets in which we have no operating
experience. These new markets may have different demographic characteristics,
competitive conditions, consumer tastes and discretionary spending patterns
than our existing markets, which may cause our new restaurants to be less
successful in these new markets than in our existing markets.

7
<PAGE>

We May Not Be Able to Achieve and Manage Planned Expansion

We face many business risks associated with rapidly growing companies,
including the risk that our existing management, information systems and
financial controls will be inadequate to support our planned expansion. We
cannot predict whether we will be able to respond on a timely basis to all of
the changing demands that our planned expansion will impose on management and
these systems and controls. If we fail to continue to improve management,
information systems and financial controls or encounter unexpected difficulties
during expansion, our business, financial condition, operating results or cash
flows could be materially adversely affected.

Furthermore, we may seek to acquire the operations of other restaurants. To do
so successfully, we would need to identify suitable acquisition candidates,
obtain financing on acceptable terms, and negotiate acceptable acquisition
terms. Even if we are successful in completing acquisitions, they may have a
material adverse effect on our operating results, particularly in the fiscal
quarters immediately following the completion of an acquisition, while the
acquisition is being integrated into our operations. We do not currently have
any definitive agreements, arrangements or understandings regarding any
particular acquisition.

Fluctuations in Our Operating Results May Result in Decreases in Our Stock
Price

Our operating results will fluctuate significantly because of several factors,
including the timing of new restaurant openings and related expenses,
profitability of new restaurants, increases or decreases in comparable
restaurant sales, general economic conditions, consumer confidence in the
economy, changes in consumer preferences, competitive factors and weather
conditions. As a result, our operating results may fall below the expectations
of public market analysts and investors. In that event, the price of our common
stock would likely decrease.

In the past, our preopening costs have varied significantly from quarter to
quarter primarily due to the timing of restaurant openings. We typically incur
most preopening costs for a new restaurant within the two months immediately
preceding, and the month of, its opening. In addition, our labor and operating
costs for a newly opened restaurant during the first three to six months of
operation are materially greater than what can be expected after that time,
both in aggregate dollars and as a percentage of restaurant sales. Accordingly,
the volume and timing of new restaurant openings in any quarter has had and is
expected to continue to have a significant impact on quarterly preopening costs
and labor and direct and occupancy costs. We anticipate that preopening costs,
labor and direct and occupancy costs will significantly increase as a percent
of restaurant sales in the second and third quarters of fiscal 1999. Due to
these factors, results for a quarter may not indicate results to be expected
for any other quarter or for a full fiscal year. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for a discussion
of our historical operating results.

We May be Unable to Fund Our Significant Future Capital Needs and We May Need
Additional Funding Sooner Than Anticipated

We will need substantial capital to finance our expansion plans, which require
funds for capital expenditures, preopening costs and potential initial
operating losses related to new restaurant openings. We may not be able to
obtain additional financing on acceptable terms. If adequate funds are not
available, we will have to curtail projected growth, which could materially
adversely affect our business, financial condition, operating results or cash
flows. Moreover, if we issue additional equity securities, your holdings may be
diluted.

We estimate that capital expenditures during fiscal 1999 will be approximately
$17.0 million and that capital expenditures during future years will exceed
this amount. In addition, we have experienced negative cash flow from
operations of approximately $169,000 in fiscal 1996 and $1.5 million in fiscal
1997, while experiencing a positive cash flow from operations of approximately
$338,000 in fiscal 1998. Although we expect that the net proceeds of this
offering, combined with other resources, will be sufficient to fund our capital
requirements

8
<PAGE>

through at least the next 12 months, this may not be the case. We may be
required to seek additional capital earlier than anticipated if:

.future actual cash flows from operations fail to meet our expectations;

.costs and capital expenditures for new restaurant development exceed
anticipated amounts;

.we are unable to obtain sale-leaseback financing of certain
restaurants;

.landlord contributions, loans and other incentives are lower than
expected; or

.we are required to reduce prices to respond to competitive pressures.

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for a discussion of our historical
and anticipated capital needs.

Because of Our Small Restaurant Base, Our Operating Results Could Be Materially
Adversely Affected By the Negative Performance of a Small Number of Restaurants

We currently operate 20 restaurants, nine of which opened in the last 12
months. Due to our small restaurant base, poor operating results at any one or
more restaurants could materially adversely affect our business, financial
condition, operating results or cash flows. Our operating results achieved to
date may not be indicative of our future operating results with a larger number
of restaurants.

Increased Food Costs Could Materially Adversely Affect Our Operating Results

Our profitability depends in part on our ability to anticipate and react to
changes in food costs. We rely on SYSCO Corporation, a national food
distributor, as the primary distributor of our food. Although we believe that
alternative distribution sources are available, any increase in distribution
prices or failure to perform by SYSCO could cause our food costs to increase.
Further, various factors beyond our control, including adverse weather
conditions and governmental regulation, may affect our food costs. We cannot
predict whether we will be able to anticipate and react to changing food costs
by adjusting our purchasing practices and menu prices, and a failure to do so
could materially adversely affect our business, financial condition, operating
results or cash flows.

Changes in Consumer Preferences or Discretionary Consumer Spending Could
Negatively Impact Our Results

Our restaurants feature immigrant Southern Italian cuisine served family-style.
Our continued success depends, in part, upon the popularity of this type of
Italian cuisine and this style of informal dining. Shifts in consumer
preferences away from our cuisine or dining style could materially adversely
affect our future profitability. Also, our success depends to a significant
extent on numerous factors affecting discretionary consumer spending, including
economic conditions, disposable consumer income and consumer confidence.
Adverse changes in these factors could reduce guest traffic or impose practical
limits on pricing, either of which could materially adversely affect our
business, financial condition, operating results or cash flows.

We May Be Unable to Compete With Larger, Better Established Competitors

The restaurant industry is highly competitive. Due to our limited financial
resources and operating history, we may be unable to compete effectively with
our larger, better established competitors, which have substantially greater
financial resources and operating histories than we do. We will likely face
direct competition with these competitors in each of the markets we enter. See
"Business--Competition" for a discussion of the competition we face.

We Could Face Potential Labor Shortages

Our success depends in part upon our ability to attract, motivate and retain a
sufficient number of qualified employees, including restaurant managers,
kitchen staff and wait staff, necessary to keep pace with our

9
<PAGE>

expansion schedule. Qualified individuals needed to fill these positions are in
short supply in certain areas, and the inability to recruit and retain such
individuals may delay the planned openings of new restaurants or result in high
employee turnover in existing restaurants which could have a material adverse
effect on our business, financial condition, operating results or cash flows.
Additionally, competition for qualified employees could require us to pay
higher wages to attract sufficient employees, which could result in higher
labor costs.

Our Operations Depend on Governmental Licenses and We May Face Liability Under
Dram Shop Statutes

Our business depends on obtaining and maintaining required food service and
liquor licenses for each of our restaurants. If we fail to hold all necessary
licenses, we may be forced to delay or cancel new restaurant openings and close
or reduce operations at existing locations. In addition, our sale of alcoholic
beverages subjects us to "dram shop" statutes in some states. These statutes
allow an injured person to recover damages from an establishment that served
alcoholic beverages to an intoxicated person. If we receive a judgment
substantially in excess of our insurance coverage, or if we fail to maintain
our insurance coverage, our business, financial condition, operating results or
cash flows could be materially and adversely affected. See "Business--
Government Regulation" for a discussion of the regulations we must comply with.

Complaints or Litigation From Guests May Materially Adversely Affect Us

We are from time to time the subject of complaints or litigation from guests
alleging illness, injury or other food quality, health or operational concerns.
Adverse publicity resulting from these allegations may materially adversely
affect us and our restaurants, regardless of whether the allegations are valid
or whether BUCA is liable. These claims may divert our financial and management
resources that would otherwise be used to benefit the future performance of our
operations.

We Face Uncertainty Regarding Risk of Year 2000 Compliance

BUCA and third parties with which we do business, rely on numerous computer
programs for day to day operations. We cannot predict whether we will be able
to effectively address our year 2000 issues in a timely and cost-efficient
manner and without interruption to our business. We have initiated discussions
with our significant suppliers regarding their plans to solve year 2000 issues
where their systems interface with our systems or otherwise impact our
operations. We cannot predict whether year 2000 difficulties encountered by our
suppliers and other third parties with whom we do business will have a material
adverse impact on our business, financial conditions, operating results or cash
flows. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Compliance" for a discussion of our Year 2000
readiness.

We Could Face Consolidated Tax Group Liability

Prior to our spin-off in late fiscal 1996, we were a member of the consolidated
tax group of Parasole Restaurant Holdings, Inc. Under the Internal Revenue
Code, as a former member of the consolidated tax group, we could be held liable
for unpaid federal tax liabilities, if any, of the consolidated tax group
through the end of 1996 in the event of nonpayment by Parasole.

Our Existing Shareholders Will Retain Significant Control Which Could Reduce
Your Ability to Receive a Premium for Your Shares Through a Change in Control

Upon completion of this offering, our executive officers, directors and
principal shareholders and their affiliates will own approximately 57.8% of the
outstanding shares of common stock, or 55.4% if the underwriters' over-
allotment option is completely exercised. As a result, they may be able to
control us and direct our affairs, including the election of directors and
approval of significant corporate transactions. This concentration of ownership
also may delay, defer or prevent a change in control of BUCA, and make some
transactions more difficult or impossible without the support of these
shareholders. These transactions might include proxy

10
<PAGE>

contests, mergers, tender offers, open market purchase programs or other
purchases of common stock that could give our shareholders the opportunity to
realize a premium over the then prevailing market price for shares of common
stock. This could depress the price of our common stock. See "Management" and
"Principal and Selling Shareholders" for information about these shareholders
and the number of shares they will control.

Our Common Stock May Not Develop an Active, Liquid Trading Market

Prior to this offering, there has been no public market for our common stock.
We cannot assure that an active, liquid trading market for our stock will
develop or continue after the offering. The initial public offering price of
our common stock will be determined by negotiations among us, the selling
shareholders and the underwriters. You may not be able to resell the common
stock you buy at or above the initial public offering price.

Our Common Stock Price May Be Volatile

The market price of our common stock could fluctuate significantly in response
to quarterly operating results and other factors, including many over which we
have no control and that may not be directly related to us. The stock market
has from time to time experienced extreme price and volume fluctuations, which
have often been unrelated or disproportionate to the operating performance of
particular companies. Fluctuations or decreases in the trading price of our
common stock may adversely affect your ability to trade your shares. In
addition, these fluctuations could adversely affect our ability to raise
capital through future equity financings.

Future Sales of Our Common Stock May Depress Our Stock Price and Limit Our
Ability to Raise Capital in the Market

Sales of substantial amounts of our stock in the public market, or the
perception that these sales may occur, could adversely affect the market price
our stock and our ability to raise capital through a public offering of our
equity securities. After this offering, the shares offered under this
prospectus will be freely tradeable. The remaining 6,968,113 shares outstanding
will be available for sale at various times, with 6,811,545 shares available
for sale after their 180-day lock-up period. See "Shares Eligible for Future
Sale" for a discussion of potential future sales of our common stock.

Provisions of Our Articles of Incorporation, Our By-Laws and Minnesota Law
Could Discourage Potential Acquisition Proposals and Delay or Prevent a Change
in Control

Anti-takeover provisions of our Articles of Incorporation, By-Laws and
Minnesota law could diminish the opportunity for shareholders to participate in
acquisition proposals at a price above the then current market price of our
common stock. The provisions may also inhibit increases in the market price of
our stock that could result from takeover attempts. For example, while we have
no present plans to issue any preferred stock, our Board of Directors, without
further shareholder approval, may issue preferred stock that could have the
effect of delaying, deterring or preventing a change in control. The issuance
of preferred stock could adversely affect the voting power of your shares. In
addition, our Articles of Incorporation provide for a classified Board of
Directors consisting of three classes as well as require a 75% supermajority
vote for removal of directors. These classified board and supermajority removal
provisions could also have the effect of delaying, deterring or preventing a
change in control. See "Management--Board of Directors; Committees" and
"Description of Capital Stock" for a discussion of these provisions.

This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements relate to our future plans, objectives,
expectations and intentions. These statements may be identified by the use of
words such as "expects," "anticipates," "intends," "plans," and similar
expressions. Our actual results could differ materially from those discussed in
these statements. Factors that could contribute to these differences include
those discussed above and elsewhere in this prospectus.

11
<PAGE>

USE OF PROCEEDS

The net proceeds to us from the sale of the 2,500,000 shares of common stock
offered by us at an assumed initial public offering price of $11.50 per share
are estimated to be approximately $25,875,000, after deducting the underwriting
discount and estimated offering expenses (approximately $30,149,000 if the
over-allotment option granted by us is exercised in full). We will not receive
any of the proceeds from the sale of shares of common stock by the selling
shareholders.

We intend to use approximately $17.0 million of the net proceeds of this
offering to finance the development of new BUCA di BEPPO restaurants during the
next twelve months and $7.0 million to retire existing bank debt. Our agreement
with our commercial lender, U.S. Bank National Association, requires us to
repay all amounts outstanding under the $7.0 million term loan with the lender,
which bears interest at 9.63% and matures on December 31, 2000. This debt was
incurred to repay other BUCA debt and for the development of restaurants. In
addition, we are required to repay all amounts outstanding in excess of $3.0
million under our revolving line of credit with the lender, which bears
interest at lender's prevailing reference rate plus 0.75% to 1.25% (based on
the then-applicable cash flow coverage ratio) and expires on December 31, 2000.
Currently, we do not have any amounts outstanding under our revolving line of
credit. We anticipate that prior to the completion of the offering we will
borrow from our revolving line of credit to fund a portion of our new
restaurant development. We plan to repay these outstanding amounts, which will
be a part of the $17.0 million of development expenditures, with the net
proceeds from this offering.

The balance of the net proceeds from this offering will be used to finance the
development of BUCA di BEPPO restaurants in subsequent periods and for general
corporate purposes. We may also use a portion of the net proceeds for the
acquisition of other restaurant operations. We do not currently have any
definitive agreements, arrangements or understandings regarding any particular
acquisition. Pending application of the net proceeds, we intend to invest the
net proceeds in short-term, investment-grade, interest-bearing securities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for additional information
regarding our sources and uses of capital.

DIVIDEND POLICY

We have never declared or paid cash dividends. We currently intend to retain
all future earnings for the operation and expansion of our business and do not
anticipate paying cash dividends on the common stock in the foreseeable future.
Any payment of cash dividends in the future will be at the discretion of our
Board and will depend upon our results of operations, earnings, capital
requirements, contractual restrictions and other factors deemed relevant by our
Board. In addition, our current credit facility prohibits us from paying any
cash dividends without our lender's consent.

12
<PAGE>

CAPITALIZATION

The following table sets forth, at December 27, 1998, our consolidated cash and
cash equivalents and capitalization on three different bases. First, the
information is set forth on an actual basis. Second, the information is set
forth on a pro forma basis to reflect the issuance of common stock in
connection with the conversion of the preferred stock upon the closing of this
offering, the termination of our redemption obligations with respect to the
redeemable common stock, the repayment of $6,600,000 of outstanding
subordinated and bank debt with borrowings of $7,000,000 under our credit
facility with U.S. Bank, and a one-time extraordinary charge of $1,400,000
related to the early repayment of outstanding debt. Third, the information is
set forth on a pro forma as adjusted basis to reflect the sale of the shares of
common stock offered by us by this prospectus at an assumed initial public
offering price of $11.50 per share and the application of the estimated net
proceeds from the offering, the resulting write-off of deferred financing
costs, the non-cash charge of $1,300,000 related to the discount applicable to
the right of holders of $1,780,000 of our outstanding subordinated debt to
convert the debt into common stock after the closing of this offering, the
conversion of $775,000 in aggregate principal amount of our outstanding
subordinated debt into 112,312 shares in connection with this offering and the
exercise of the warrant to be included in this offering. See "Use of Proceeds"
for a discussion of how we intend to use the proceeds. This table should be
read in conjunction with the Consolidated Financial Statements and their notes
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.

<TABLE>
<CAPTION>
December 27, 1998
-------------------------------
Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------
(in thousands)
<S> <C> <C> <C>
Cash and cash equivalents...................... $ 6,576 $ 6,576 $25,451
======== ======= =======
Long-term debt, including current portion...... $ 7,866 $ 9,266 $ 1,491
Redeemable stock(/1/).......................... 36,973 -- --
Common stock: $.01 par value;
13,100,000 shares authorized, 1,918,056 shares
issued and outstanding, actual; 7,062,176
shares issued and outstanding, pro forma;
9,738,932 shares issued and outstanding, pro
forma as adjusted(/2/)........................ 19 71 117
Additional paid-in capital..................... -- 36,921 64,825
Accumulated deficit............................ (13,266) (14,666) (16,266)
-------- ------- -------
(13,247) 22,326 48,676
Notes receivable from shareholders............. (293) (293) (293)
Total common shareholders' (deficit) equity
............................................ (13,540) 22,033 48,383
-------- ------- -------
Total capitalization......................... $ 31,299 $31,299 $49,874
======== ======= =======
</TABLE>

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

(/1/)Includes Series A, Series B and Series C preferred stock and the
redeemable common stock.

(/2/Excludes)(1) 1,050,154 shares of common stock issuable upon exercise of
options outstanding as of the date of this prospectus at a weighted average
exercise price of $6.96 per share, (2) 333,415 shares of common stock
issuable upon exercise of warrants remaining outstanding after this
offering at a weighted average exercise price of $2.44 per share and (3)
145,646 shares of common stock issuable after the completion of this
offering upon conversion of subordinated debt remaining outstanding after
this offering, assuming a public offering price of $11.50 per share.

13
<PAGE>

DILUTION

Our net tangible book value as of December 27, 1998 was approximately $22.8
million, or $3.15 per share of common stock. Net tangible book value per share
is determined by dividing BUCA's net tangible worth, which consists of tangible
assets less liabilities, by the aggregate number of shares of common stock
outstanding, giving effect to the conversion of the preferred stock, the
conversion of a portion of our outstanding subordinated debt in connection with
this offering and the exercise of the warrant to be included in this offering.
After giving effect to the sale of the 2,500,000 shares of common stock offered
by this prospectus at an assumed initial public offering price of $11.50 per
share and the application of the net proceeds from the offering, our pro forma
net tangible book value as of December 27, 1998 would have been approximately
$48.7 million, or $5.00 per share of common stock. This represents an immediate
increase in net tangible book value of $1.85 per share to existing shareholders
and an immediate dilution of $6.50 per share to new investors. The following
table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $11.50
Net tangible book value per share before this offering.......... $3.15
Increase per share attributable to new investors................ 1.85
-----
Pro forma as adjusted net tangible book value per share after this
offering......................................................... 5.00
------
Dilution per share to new investors............................... $ 6.50
======
</TABLE>

The following table sets forth as of December 27, 1998, giving effect to the
conversion of the preferred stock, the conversion of a portion of our
outstanding subordinated debt in connection with this offering and the exercise
of the warrant to be included in this offering, the difference between the
number of shares of common stock purchased from us, the total consideration
paid to us and the average price per share paid by existing shareholders and by
new investors at an assumed initial public offering price of $11.50 per share:

<TABLE>
<CAPTION>
Average
Shares Purchased Total Consideration Price
----------------- ------------------- Per
Number Percent Amount Percent Share
--------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing shareholders............. 7,238,932 74.3% $31,736,976 52.4% $ 4.38
New investors..................... 2,500,000 25.7 28,750,000 47.6 11.50
--------- ----- ----------- ----- ------
Total........................... 9,738,932 100.0% $60,486,976 100.0% $ 6.21
========= ===== =========== ===== ======
</TABLE>

Sales by the selling shareholders in this offering will reduce the number of
shares held by existing shareholders to 6,968,113, or 71.5% of the total number
of shares of common stock outstanding, and will increase the number of shares
held by new investors to 2,770,819, or 28.5% of the total number of shares of
common stock outstanding after the offering. To the extent shares are issued
upon the exercise of options and warrants or the conversion of subordinated
debt remaining outstanding after the completion of this offering, there will be
further dilution to new investors. See "Management" and "Description of Capital
Stock" for information regarding outstanding options, warrants and convertible
subordinated debt.

14
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except share, per share and operating data)

The following selected consolidated financial data for the five fiscal years
ended December 27, 1998 are derived from our audited Consolidated Financial
Statements. The Consolidated Financial Statements and the notes thereto for
each of the three fiscal years ended December 27, 1998, and the reports of
independent public accountants on those years, are included elsewhere in this
prospectus. This selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and their notes,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other financial information included elsewhere in this
prospectus. We changed our fiscal year-end from December 31 to the last Sunday
in December, beginning with the fiscal year ended December 28, 1997. The pro
forma information included in the following data gives effect as of December
27, 1998 to (1) the issuance of shares of common stock in connection with the
conversion of all outstanding shares of preferred stock upon the closing of
this offering, (2) the termination of our obligation to redeem the redeemable
common stock upon the closing of this offering, and (3) the repayment of
$6,600,000 of outstanding subordinated and bank debt with borrowings of
$7,000,000 under our credit facility with U.S. Bank; and (4) a one-time
extraordinary charge of $1,400,000 related to the early repayment of
outstanding debt.
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------------------
December 31, December 31, December 31, December 28, December 27,
1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------
Consolidated Statements of
Operations Data:
<S> <C> <C> <C> <C> <C>
Restaurant sales.......... $ 4,114 $ 7,142 $ 11,316 $ 19,030 $ 38,483
Restaurant costs:
Product................. 1,345 2,303 3,471 5,520 10,876
Labor................... 1,354 2,258 3,723 6,478 12,548
Direct and occupancy.... 829 1,270 2,242 3,750 7,861
Depreciation and
amortization........... 79 173 381 781 1,617
---------- ---------- ---------- ---------- ----------
Total restaurant
costs................ 3,607 6,004 9,817 16,529 32,902
---------- ---------- ---------- ---------- ----------
Income from restaurant
operations............... 507 1,138 1,499 2,501 5,581
General and administrative
expenses................. 332 656 1,988 3,760 5,579
Preopening costs.......... 151 183 430 1,140 1,895
---------- ---------- ---------- ---------- ----------
Operating income (loss)... 24 299 (919) (2,399) (1,893)
Interest expense.......... 98 219 295 497 1,036
---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes and
cumulative effect of
change in accounting
principle................ (74) 80 (1,214) (2,896) (2,929)
Provision (benefit) for
income taxes............. 1 43 (101) 72 17
---------- ---------- ---------- ---------- ----------
Income (loss) before
cumulative effect of
change in accounting
principle................ (75) 37 (1,113) (2,968) (2,946)
Cumulative effect of
change in accounting
principle related to
preopening costs......... -- -- -- (351) --
---------- ---------- ---------- ---------- ----------
Net income (loss)......... $ (75) $ 37 $ (1,113) $ (3,319) $ (2,946)
========== ========== ========== ========== ==========
Cumulative preferred stock
dividends, accretion of
preferred stock to
redemption value, and
change in redeemable
common stock............. -- -- (3,687) (1,986) (2,189)
---------- ---------- ---------- ---------- ----------
Net income (loss)
applicable to common
stock.................... $ (75) $ 37 $ (4,800) $ (5,305) $ (5,135)
========== ========== ========== ========== ==========
Net income (loss) per
share--basic and
diluted.................. $ (.03) $ .02 $ (1.96) $ (2.13) $ (2.04)
========== ========== ========== ========== ==========
Weighted average common
shares assumed
outstanding--basic and
diluted shares .......... 2,444,666 2,444,666 2,444,666 2,490,136 2,512,309
========== ========== ========== ========== ==========
Pro forma net loss per
share--
basic and diluted ....... $(.42)
==========
Common shares assumed
outstanding pro forma--
basic and diluted........ 7,062,176
==========
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------
December 31, December 28, December 27,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Operating Data:
Comparable restaurant sales in-
crease(/1/)........................... 0.3% 8.9% 13.3%
Average weekly restaurant sales........ $47,319 $47,579 $52,727
Restaurants open at end of period...... 6 11 19
</TABLE>

<TABLE>
<CAPTION>
As of
----------------------------------------------------------------
December 31, December 31, December 31, December 28, December 27,
1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Cash and cash equiva-
lents.................. $1,222 $ 805 $ 5,750 $ 6,099 $ 6,576
Total assets............ 2,480 4,477 12,771 21,288 37,560
Total debt, including
current portion........ 2,062 3,011 3,940 5,460 7,866
Redeemable stock(/2/)... -- -- 11,301 21,824 36,973
Shareholders' deficit... (179) (148) (4,942) (9,284) (13,540)
</TABLE>

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

(/1/)The calculation of comparable restaurant sales increase includes
restaurants open for 12 full calendar months, as adjusted to provide
comparable 52-week fiscal years.

(/2/)Includes Series A, Series B and Series C preferred stock and the
redeemable common stock.

16
<PAGE>

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

The following discussion of the financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements and
their notes appearing elsewhere in this prospectus.

Overview

We own and operate 20 full service, dinner-only restaurants that offer high
quality, immigrant Southern Italian cuisine served family-style in large
portions in a fun and energetic atmosphere that parodies the decor and ambiance
of post-War Italian/American restaurants. In late 1996, BUCA, then a wholly
owned subsidiary of Parasole Restaurant Holding, Inc., was spun-off to the
shareholders of Parasole. At the time of the spin-off, we operated five
restaurants and had recently hired Joseph P. Micatrotto as President and Chief
Executive Officer. Since then, Mr. Micatrotto has hired an experienced
management team to embark on a strategic expansion of the BUCA di BEPPO
concept, targeted at major metropolitan areas throughout the United States.
Since late 1996, we have pursued a rapid but disciplined expansion strategy,
opening two restaurants in 1996, five in 1997 and eight in 1998. We intend to
open 13 new restaurants in fiscal 1999, of which one opened in Louisville,
Kentucky, in January, seven are under construction and the remaining five have
signed leases.

We believe that the sales growth pattern of our new restaurants in the two
years after they open differs from the typical sales growth pattern for new
restaurants in other casual dining concepts. Our restaurants typically
experience lower restaurant sales during the first few periods after opening,
with gradually increasing restaurant sales during the remainder of the
restaurant's first year of operation. In the second year of operation, our
restaurants experience significant comparable restaurant sales growth. In
calculating comparable restaurant sales, we include a restaurant in the
comparable base once it has been open for 12 full calendar months. We believe
we have this "discovery" growth pattern over the first two years of operations
because we rely primarily on word-of-mouth advertising and repeat business to
generate increased restaurant sales. This new restaurant opening trend has
contributed to our high levels of comparable restaurant sales increases of 8.9%
in fiscal 1997 and 13.3% in fiscal 1998. After two years of operation, our
restaurants typically experience lower comparable restaurant sales increases
than experienced in prior periods. We expect this sales growth trend for new
restaurants to continue in the future; however, we expect that the impact of
new restaurant openings on total comparable restaurant sales will decrease as
our mature restaurant base continues to increase.

During fiscal 1997 and fiscal 1998, we expanded the use of daily specials and
began other measures to build sales in existing restaurants and reduce our
product costs as a percentage of restaurant sales. Each day, every restaurant
offers from two to four specials. These daily specials are selected from a list
of approximately 60 recipes. These daily specials typically are priced higher
than normal menu items and generate higher margins. We have increased sales of
specials to approximately 15% of restaurant sales in fiscal 1998. The increase
in sales of specials along with price increases of approximately 2% in fiscal
1997 and 3% in fiscal 1998 have produced an increase in our average check from
$17.50 in fiscal 1996 to $18.80 in fiscal 1997 and to $20.00 in fiscal 1998. In
addition to achieving reduced costs through our sales of daily specials, we
have achieved cost efficiencies through the improved management of product
purchasing. Each restaurant orders items primarily from our national
distributor, SYSCO Corporation, on terms negotiated by our centralized
purchasing staff. We expect to introduce a new wine list in the second quarter
of fiscal 1999, which is intended to increase wine sales and reduce the cost of
wine as a percentage of wine sales.

During fiscal 1999, we expect to incur special non-cash charges in the
aggregate amount of approximately $3.0 million related to the early repayment
of debt. On February 5, 1999, we entered into a new credit facility with U.S.
Bank. A portion of this facility was used to repay our outstanding subordinated
debt in the amount of $6.0 million. This early repayment of debt resulted in a
one-time extraordinary charge of approximately $1.4 million in the first
quarter of fiscal 1999. We also have outstanding $1.8 million of convertible
subordinated debt that is convertible, at the option of the holders, into
common stock at a conversion price equal to 60% of

17
<PAGE>

the initial public offering price. As a consequence of this right, we will
recognize a special non-cash charge of approximately $1.3 million in the second
quarter of fiscal 1999. Holders of $775,000 in aggregate principal amount of
the outstanding convertible subordinated debt have elected to convert their
debt into shares of common stock in connection with this offering. In addition,
the $7.0 million term loan portion of our credit facility with U.S. Bank is
required to be repaid upon the completion of this offering. This will result in
a one-time extraordinary charge of approximately $300,000 in the second quarter
of fiscal 1999 for the write-off of costs related to this loan.

Our restaurant sales are comprised almost entirely of the sales of food and
beverages. In fiscal 1998, alcohol sales accounted for 26.6% of total
restaurant sales. Product costs include the costs of food and beverages. Labor
costs include direct hourly and management wages, bonuses, taxes and benefits
for restaurant employees. Direct and occupancy costs include restaurant
supplies, marketing costs, rent, utilities, real estate taxes, repairs and
maintenance and other related costs.

Depreciation and amortization principally includes depreciation on capital
expenditures for restaurants. Preopening costs consist of direct costs related
to hiring and training the initial restaurant workforce and certain other
direct costs associated with opening new restaurants. General and
administrative expenses are composed of expenses associated with all corporate
and administrative functions that support existing operations, management and
staff salaries, employee benefits, travel, information systems and training and
market research. Management believes that future expansion and resulting
increases in restaurant sales will require proportionately smaller incremental
increases in general and administrative expenses, causing general and
administrative expenses as a percentage of sales to decrease further in the
future.

We adopted a fiscal year ending on the last Sunday in December beginning in
1997. Prior to that, our fiscal year followed the calendar year. Therefore,
fiscal 1997 included only 362 days instead of 364 days. Our fiscal quarters
include two four week periods followed by a five week period. Fiscal 2000 will
be a 53-week-year, with the final quarter of the fiscal year totaling 14 weeks.

Results of Operations

Our operating results for fiscal years 1996, 1997 and 1998 expressed as a
percentage of restaurant sales were as follows:

18
<PAGE>

Fiscal Year Ended December 27, 1998 Compared to Fiscal Year Ended December 28,
1997

Restaurant Sales. Restaurant sales increased by $19.5 million, or 102.2%, to
$38.5 million in fiscal 1998 from $19.0 million in fiscal 1997. The increase
was attributable to restaurant sales of $9.8 million at new restaurants opened
in fiscal 1998 and to increased sales at restaurants open prior to fiscal 1998.
Comparable restaurant sales increased by 13.3% in fiscal 1998, primarily as a
result of an increase in guest visits of approximately 7%, a price increase of
approximately 3% in July 1998 and increased sales of daily specials. The price
increase and sales of daily specials resulted in an increase in the average
check per guest to $20.00 in fiscal 1998 from $18.80 in fiscal 1997.

Product. Product costs increased by $5.4 million to $10.9 million in fiscal
1998 from $5.5 million in fiscal 1997. Product costs as a percentage of
restaurant sales decreased to 28.3% in fiscal 1998 from 29.0% in fiscal 1997.
This reduction was a result of management's efforts to reduce the cost of food
products and improve margins. We entered into an agreement with a national food
distributor which reduced our food product costs beginning in the second
quarter of fiscal 1997. We also sought to increase the percentage of daily
specials that are sold at the restaurants.

Labor. Labor costs increased by $6.1 million to $12.6 million in fiscal 1998
from $6.5 million in fiscal 1997. Labor costs decreased as a percentage of
restaurant sales to 32.6% in fiscal 1998 from 34.0% in fiscal 1997. This
decrease resulted from a reduction in hourly labor to 18.3% of restaurant sales
in fiscal 1998 from 19.0% in fiscal 1997. This decrease in hourly labor
resulted from lower average wage costs due to the opening of new stores in
states that allow tips credit toward minimum wage requirements. The decrease in
labor costs as a percentage of restaurant sales from fiscal 1997 to fiscal 1998
also resulted from improved management of hourly staff levels, particularly
during the new store openings.

Direct and Occupancy. Direct and occupancy costs increased by $4.1 million to
$7.9 million in fiscal 1998 from $3.8 million in fiscal 1997. Direct and
occupancy costs increased as a percentage of restaurant sales to 20.4% in
fiscal 1998 from 19.7% in fiscal 1997. This increase was a result of the higher
occupancy costs in our California restaurants opened in the last half of fiscal
1997 and during fiscal 1998.

Depreciation and Amortization. Depreciation and amortization expenses increased
by $836,000 to $1.6 million in fiscal 1998 from $781,000 in fiscal 1997. This
increase was the result of depreciation recognized on capital expenditures for
new restaurants.

General and Administrative. General and administrative expenses increased by
$1.8 million to $5.6 million in fiscal 1998 from $3.8 million in fiscal 1997.
General and administrative expenses decreased as a percentage of restaurant
sales to 14.5% in fiscal 1998 from 19.8% in fiscal 1997. This increase in
dollars was primarily the result of the addition of management personnel in
fiscal 1997 and fiscal 1998, resulting in $600,000 of additional compensation
and benefits and $300,000 of additional travel expenses, and an increase in
legal fees of $600,000. We expect that general and administrative expenses will
continue to increase in dollar amount in the future, but decrease as a
percentage of restaurant sales because our expansion plans will require
proportionately smaller incremental increases in general and administrative
expenses.

Preopening. Preopening costs increased by $400,000 to $1.9 million in fiscal
1998 from $1.5 million in fiscal 1997, including the cumulative effect of the
change in accounting principle related to preopening expenses, due to the
greater number of restaurants that were opened or under development in fiscal
1998 compared to fiscal 1997.

Interest Expense. Interest expense increased by $539,000 to $1.0 million in
fiscal 1998 from $497,000 in fiscal 1997 due to an increase in our long-term
debt.

Provision for Income Taxes. The provision for income taxes for fiscal 1998 and
fiscal 1997 represents certain minimum state taxes based on taxable factors
other than earnings and a minor charge for federal taxes primarily related to
deferred income taxes. We did not record a tax benefit in fiscal 1998 or fiscal
1997 for the losses generated in previous years as utilization of these losses
in future periods was deemed uncertain. At December

19
<PAGE>

27, 1998, we had a net operating loss carryforward of $3.5 million. The net
operating loss carryforwards begin to expire in fiscal 2003. The expected
income tax benefit derived by applying the statutory income tax rate has been
eliminated as a result of an increase in the deferred income tax asset
valuation allowance.

Fiscal Year Ended December 28, 1997 Compared to Fiscal Year Ended December 31,
1996

Restaurant Sales. Restaurant sales increased by $7.7 million, or 68.2%, to
$19.0 million in fiscal 1997 from $11.3 million in fiscal 1996. The increase
was attributable to restaurant sales of $2.8 million at restaurants opened in
fiscal 1997, increased sales of $4.2 million at restaurants opened in the third
and fourth quarters of fiscal 1996 and the comparable restaurant sales increase
of 8.9%. The increase in comparable restaurant sales resulted primarily from an
increase in guest visits of approximately 3%, a price increase of approximately
2% in June of 1997 and increased sales of daily specials. The increased sales
of daily specials and the price increase in fiscal 1997 contributed to the
increase in the average check per guest to $18.80 in fiscal 1997 from $17.50 in
fiscal 1996.

Product. Product costs increased by $2.0 million to $5.5 million in fiscal 1997
from $3.5 million in fiscal 1996. Product costs as a percentage of restaurant
sales decreased to 29.0% in fiscal 1997 from 30.7% in fiscal 1996. This
decrease was a result of the agreement entered into with a national food
distributor in the second quarter of fiscal 1997, as well as efforts to reduce
excess food preparation costs and the increased sales of daily specials.

Labor. Labor costs increased by $2.8 million to $6.5 million in fiscal 1997
from $3.7 million in fiscal 1996. Labor costs increased as a percentage of
restaurant sales to 34.0% in fiscal 1997 from 32.9% in fiscal 1996. This
increase was a result of the increased number of new restaurants opened in
fiscal 1997 compared to fiscal 1996, and the timing of these openings in each
year. Labor costs at new restaurants generally are higher both in dollars and
as a percentage of restaurant sales for the first six months after opening.

Direct and Occupancy. Direct and occupancy costs increased by $1.5 million to
$3.8 million in fiscal 1997 from $2.2 million in fiscal 1996. Direct and
occupancy costs decreased as a percentage of restaurant sales to 19.7% in
fiscal 1997 from 19.8% in fiscal 1996. This decrease was primarily due to lower
occupancy costs in the restaurants opened in the third and fourth quarters of
fiscal 1996 and during fiscal 1997.

Depreciation and Amortization. Depreciation and amortization increased by
$400,000 to $781,000 in fiscal 1997 from $381,000 in fiscal 1996. This increase
was principally the result of depreciation recognized on capital expenditures
for new restaurants opened in fiscal 1997.

General and Administrative. General and administrative expenses increased
$1.8 million to $3.8 million in fiscal 1997, from $2.0 million in fiscal 1996.
General and administrative expenses increased as a percentage of restaurant
sales to 19.8% in fiscal 1997 from 17.6% in fiscal 1996. The increase in fiscal
1997 was primarily related to the costs associated with adding management staff
necessary to operate BUCA as a separate company. For most of fiscal 1996, we
operated as wholly owned subsidiary of Parasole Restaurant Holdings, Inc.

Preopening. Preopening costs increased by $1.1 million to $1.5 million in
fiscal 1997 from $430,000 in fiscal 1996. This increase was a result of the
increased number of new stores developed in fiscal 1997 as well as the $351,000
charge for the change in accounting principle related to preopening costs.

Interest Expense. Interest expense increased by $202,000 to $497,000 in fiscal
1997 from $295,000 in fiscal 1996 due primarily to the increase in our long-
term debt.

Benefit/Provision for Income Taxes. The provision for income taxes for fiscal
1997 represents certain minimum state taxes based upon taxable factors other
than earnings and a minor charge for federal taxes primarily related to
deferred income taxes. In fiscal 1996, we recorded a benefit of $101,000
related to the net

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operating loss carryforwards. In fiscal 1997, the expected income tax benefit
derived by applying the statutory income tax rate has been eliminated as a
result of an increase in the deferred income tax asset valuation allowance.

Quarterly Results

Our quarterly operating results will fluctuate significantly as a result of a
variety of factors, including the timing of new restaurant openings and related
expenses, profitability of new restaurants, increases or decreases in
comparable restaurant sales, general economic conditions, consumer confidence
in the economy, changes in consumer preferences, competitive factors and
weather conditions. In the past, we have experienced significant variability in
preopening costs from quarter to quarter. These fluctuations are primarily a
function of the timing of restaurant openings. We typically incur the most
significant portion of preopening costs associated with a given restaurant
within the two months immediately preceding, and the month of, the opening of
the restaurant. In addition, our experience to date has been that labor and
direct and occupancy costs associated with a newly opened restaurant for the
first three to six months of operation are materially greater than what can be
expected after that time, both in aggregate dollars and as a percentage of
restaurant sales. Accordingly, the volume and timing of new restaurant openings
in any quarter has had and is expected to continue to have a significant impact
on quarterly preopening costs and labor and direct and occupancy costs. We
anticipate that this effect will significantly increase preopening costs, labor
and direct and occupancy costs as a percentage of sales in the second and third
quarters of fiscal 1999.

Liquidity and Capital Resources

Since we were formed, we have incurred significant net losses, primarily due to
restaurant development and the costs of hiring senior management to develop and
implement our expansion strategy. We have generated income from our restaurant
operations, but have incurred aggregate net losses of $7.6 million. We have
funded our capital requirements through private sales of equity securities,
debt financing and sale-leaseback arrangements. Net cash used in operating
activities was $1.5 million for fiscal 1997 and net cash provided by operations
was $338,000 for fiscal 1998.

Accounts receivable increased by $876,000 to $1.2 million at December 27, 1998.
Of this increase, $504,000 was due to greater credit card receivables and
$336,000 was related to property insurance damage claims. Our property
insurance carrier has paid a substantial portion of the receivable subsequent
to December 27, 1998.

We use cash primarily to fund the development and construction of new
restaurants. Net cash used in investing activities was $8.1 million for fiscal
1997 and $15.6 million for fiscal 1998. Capital expenditures were $7.9 million
for fiscal 1997 and $17.9 million for fiscal 1998. During fiscal 1997 and 1998,
we purchased the land and building for our Wheeling, Cleveland and St. Paul
locations. We subsequently entered into sale-leaseback arrangements for both
the Wheeling and Cleveland locations during 1998. These purchases of land and
buildings, along with our expansions of the Seattle and St. Paul restaurants,
accounted for $2.2 million of fiscal 1998 capital expenditures. We intend to
open 13 restaurants in fiscal 1999, one of which has already opened. Total
capital expenditures are expected to be approximately $17.0 million in fiscal
1999. Each new restaurant is expected to require, on average, a total cash
investment of between $1.0 million and $1.5 million, excluding preopening costs
expected to range from $175,000 to $210,000. Total capitalized investment
includes the capitalized lease value of the property, which can vary greatly
depending on the specific trade area. To date, all of our restaurants are
renovations of existing facilities ranging in size from 4,500 to 10,000 square
feet. We anticipate that future restaurants will typically range in size from
7,000 to 9,000 square feet. In 1999, we will build at least two restaurants
based on our prototype designs. These designs are expected to require between
$1.5 million and $2 million in total cash investment per restaurant. This
investment represents an incremental $500,000 increase over the historical cash
investment for remodeled restaurants. We plan to refinance any purchases of
land or buildings through sale-leaseback transactions. We cannot predict
whether this financing will be available when needed or on terms acceptable to
us.

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Net cash provided by financing activities was $9.9 million in fiscal 1997 and
$15.8 million in fiscal 1998. Financing activities in fiscal 1997 and fiscal
1998 consisted primarily of sales of preferred stock as well as the incurrence
of additional long-term debt. We have an $8.0 million revolving line of credit
which matures on December 31, 2000 under which we currently have no borrowings
and which bears interest at the bank's reference rate plus .75% to 1.25%. We
also have a $7.0 million term loan which expires on December 31, 2000 and bears
a fixed rate of interest of 9.63%. Pursuant to the terms of the credit
agreement, the term loan must be repaid upon the consummation of this offering.
In addition, we must repay any borrowings under the revolving line of credit in
excess of $3.0 million, which will become the line's credit limit. The credit
agreement contains covenants which place restrictions on sales of properties,
transactions with affiliates, creation of additional debt, and other customary
covenants. Borrowings under the credit agreement are collateralized by
substantially all of our assets. We do not anticipate that the above covenants
and restrictions will have a significant impact on us. After this offering, we
intend to renegotiate our line of credit and we believe that the lender will be
willing to increase the amount of the line of credit on terms and conditions
which are comparable to those contained in our existing line of credit, or that
other financing will be available in an amount and on terms and conditions
which are adequate to meet our currently planned working capital and liquidity
needs. However, we cannot predict whether our existing lender will ultimately
agree to any increase or whether any alternative financing will be available.

Our capital requirements, including development costs related to the opening of
additional restaurants, have been and will continue to be significant. We will
need substantial capital to finance our expansion plans, which require funds
for capital expenditures, preopening costs and initial operating losses related
to new restaurant openings. The adequacy of available funds after this offering
and our future capital requirements will depend on many factors, including the
pace of expansion, the costs and capital expenditures for new restaurant
development and the nature of contributions, loans and other arrangements
negotiated with landlords. Although we can make no assurance, we believe that
cash flow from operations together with the net proceeds from this offering and
available borrowings will be sufficient to fund our capital requirements
through at least the next twelve months. We will need to raise additional
capital in fiscal 2000 through public or private equity or debt financings to
continue our growth. Future capital funding transactions may result in dilution
to you. We cannot predict whether additional capital will be available on
favorable terms, if at all.

We lease restaurant and office facilities and certain real property under
operating leases expiring between fiscal 1999 and fiscal 2018. Future minimum
lease payments under operating leases, including restaurant facilities
currently under construction or yet to be constructed as of December 27, 1998
were as follows: $3.0 million in fiscal 1999, $4.0 million in fiscal 2000, $4.0
million in fiscal 2001, $4.1 million in fiscal 2002, $4.2 million in fiscal
2003 and thereafter $29.4 million.

Inflation

The primary inflationary factors affecting our operations are food and labor
costs. A large number of our restaurant personnel are paid at rates based on
the applicable minimum wage, and increases in the minimum wage directly affect
our labor costs. To date, inflation has not had a material impact on our
operating results. See "Business--Government Regulation" for a discussion of
the effects of changes in applicable minimum wage requirements.

Year 2000 Compliance

We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The "year 2000 problem" is
pervasive and complex as virtually every computer operation will be affected in
some way by the rollover of the two digit year value to "00". The issue is
whether computer systems will properly recognize date-sensitive information
when the year changes to 2000. We have reviewed both our information technology
and our non-information technology systems to determine whether they are year
2000 compliant, and we have not identified any material systems which are not
year 2000 compliant. We have substantially completed year 2000 testing of our
systems and have identified those components deemed

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<PAGE>

noncompliant. We have initiated formal communications with all significant
suppliers and service providers to determine the extent to which we are
vulnerable to those third parties' failure to solve the year 2000 problem. We
have received written assurances of year 2000 compliance from a majority of the
third parties with whom we have relationships, including our national food
distributor, and payroll and credit card service providers. Unless public
suppliers of water, electricity and natural gas are disrupted for a substantial
period of time, we believe that our operations will not be significantly
disrupted even if third parties with whom we have relationships are not year
2000 compliant. If public suppliers of water, electricity and natural gas are
disrupted for a substantial period of time, our business may be materially
adversely affected. We will develop a contingency plan to deal with potential
third party failure issues. Testing and replacement of all systems is scheduled
to be completed by June 30, 1999. A decision to implement a contingency plan is
expected by June 30, 1999. We estimate that we incurred approximately $100,000
in fiscal 1998 to address year 2000 issues, principally testing our existing
systems, and that we will incur an additional $100,000 in fiscal 1999 to
replace certain system components deemed non-year 2000 compliant. These amounts
do not include insurance proceeds used to replace hardware and software systems
destroyed in the recent fire at our headquarters with new systems represented
to be year 2000 compliant. However, uncertainty exists concerning the potential
costs and effects associated with any year 2000 compliance, and we intend to
continue to make efforts to ensure that third parties with whom we have
relationships are year 2000 compliant. Any year 2000 compliance problem of ours
or our vendors could materially adversely affect our business, financial
condition, operating results or cash flows, and could prohibit us from
operating our restaurants.

Quantitative and Qualitative Disclosure About Market Risks

We are exposed to market risk from changes in interest rates on borrowings
under our revolving line of credit that bears interest from time to time at the
lending bank's reference rate plus 0.75% to 1.25%. Because we have no
borrowings under our revolving line of credit and we do not believe that the
maximum available borrowings under the revolving line of credit are material,
we do not believe this risk will be material.

We have no derivative financial instruments or derivative commodity instruments
in our cash and cash equivalents and investments. We invest our cash and cash
equivalents and investments in investment grade, highly liquid investments,
consisting of money market instruments, bank certificates of deposit and
overnight investments in commercial paper. We anticipate investing our net
proceeds from this offering in similar investment grade and highly liquid
investments pending their use as described in this Prospectus. See "Use of
Proceeds." Primarily all of our transactions are conducted, and our accounts
are denominated, in United States dollars. Accordingly, we are not exposed to
foreign currency risk.

Many of the food products purchased by us are affected by commodity pricing and
are, therefore, subject to price volatility caused by weather, production
problems, delivery difficulties and other factors which are outside our
control. To control this risk in part, we have fixed price purchase commitments
with terms of one year or less for food and supplies from vendors who supply
our national food distributor. In addition, we believe that substantially all
of our food and supplies are available from several sources, which helps to
control food commodity risks. We believe we have the ability to increase menu
prices, or vary the menu items offered, if needed in response to a food product
price increases. To compensate for a hypothetical price increase of 10% for
food and supplies, we would need to increase menu prices by an average of 3%,
which is consistent with average price increases of 3% in fiscal 1998 and 2% in
fiscal 1997. Accordingly, we believe that a hypothetical 10% increase in food
product costs would not have a material effect on our operating results.

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BUSINESS

Overview

Our Business Strategy

Our objective is to become the dominant family-style, immigrant Southern
Italian restaurant in each of our markets. To achieve our objective, we have
developed the following strategies:

Offer Vital, Vibrant and Powerfully Flavored Food. BUCA di BEPPO restaurants
feature foods with the pure, powerful flavors of the immigrant Southern Italian
kitchen. Our BUCA di BEPPO 1893 salad, for example, combines a large bed of
greens with olives, two kinds of cheese, mortadella, pepperoni, peperoncini,
onions, cucumbers and tomatoes. Our chicken vesuvio features fresh, tender
chicken, seasoned with oregano, sauteed with spicy Italian sausage and tossed
in a sauce of olive oil, sweet white wine, garlic, chunks of tomato, broccoli,
red onion and white cannellini beans. For dessert, our cannoli's three crispy
shells are covered with powdered sugar and filled with a thick, creamy ricotta
and sweet mascarpone, sprinkled with pistachios and covered in chocolate sauce.

Create a Fun, Energetic, Destination Dining Experience. BUCA di BEPPO promotes
a fun, irreverent and socially interactive atmosphere. The family-style,
participatory dining format, "kitschy" decor, unique restaurant layouts, and
festive atmosphere all combine to make our restaurants entertaining and fun for
guests. We believe that this atmosphere results in BUCA di BEPPO restaurants
being a destination for diners who will seek out our restaurant locations. We
also believe this atmosphere is attractive for a wide variety of dining
occasions, including weekend evenings, business occasions, family celebrations
as well as regular weeknight dining.

Provide Superior Dining Value. Our restaurants provide high quality,
moderately priced food in oversized portions. We believe that the generous
portions, combined with an average check per guest of approximately $20.00,
including beverages, offer our guests exceptional value. We reinforce this
value by encouraging guests to take home their extra food in our logo-bearing
BUCA Bags, allowing guests to enjoy an additional BUCA meal at home.

Achieve Excellent Restaurant Economics. We believe that our restaurants
provide superior unit level economics. During fiscal 1998, our restaurants with
at least two full years of operating history generated average restaurant sales
of approximately $3.0 million and average cash flow of approximately $693,000,
or 23.5% of restaurant sales.

Leverage Our Paisano Partners Program. We believe that our Paisano Partners
program, in which restaurant general managers purchase BUCA stock, receive
stock options and share in their restaurant's profits, enables us to attract
and retain experienced and high caliber managers. We believe this program
motivates our Paisanos to achieve significantly greater operating efficiencies,
results in lower turnover and contributes to our superior unit level economics.

Pursue Rapid but Disciplined Restaurant Expansion. Since fiscal 1997, BUCA has
pursued a rapid but disciplined restaurant development strategy. Our current
development plan is to open 13 new restaurants in fiscal 1999, of which one is
already open, seven are under construction and the remaining five have signed
leases.

Create a Passionate Culture of Service. We foster a passionate culture of
guest service among our employees by emphasizing consideration of the guest
first in all decisions. From the moment a guest walks in

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the front door, the BUCA di BEPPO experience is enhanced by a high level of
guest service provided by a knowledgeable, energetic staff. Servers are trained
to introduce guests to the BUCA di BEPPO concept, explain the menu and
encourage guest interaction. The Paisano also interacts with guests to make
them feel welcome and is responsible for ensuring their satisfaction with the
dining experience.

The BUCA di BEPPO Concept

The BUCA di BEPPO concept irreverently exaggerates the cliches of traditional
post-War neighborhood Italian/American restaurants but also pays tribute to and
emulates their reverence for food, vibrant atmosphere, colorful decor and high
degree of social interaction. The innovation of this concept has attracted
national attention as evidenced by national awards won by BUCA, including a
1998 "Hot Concepts!" award from Nation's Restaurant News, and awards in all of
our local markets.

Powerfully Flavored High Quality Food. We believe that the authenticity,
quality and consistency of our food is the most important component of our
long-term success. In contrast to the levity of our decor and ambiance, we take
menu development and food preparation very seriously. Our menu is based on
authentic family recipes enjoyed for generations in the villages of Southern
Italy and then adapted to American ingredients. We make regular trips to
Southern Italy and Sicily to find new recipes for our menu that are then
extensively tested and refined before introduction in our restaurants.

Some of our most popular menu items include the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. Our foods, often seasoned with garlic and served with vine-ripened
tomatoes, communicate the pure, powerful flavors of the immigrant Southern
Italian kitchen. We also offer daily specials centered around a genre of
Southern Italian cooking called "cucina di povera," which translates as
"cuisine of the poor." These daily specials consist of year-round specials such
as manicotti or cannelloni as well as seasonal specials such as mozzarella
caprese that is offered only in the summer in order to assure the availability
of high quality ingredients and to take advantage of seasonal customer demand.
We believe that our daily specials play a vital role in keeping the menu fresh
and allow us to test prospective permanent menu items. In fiscal 1998, daily
specials accounted for approximately 15% of food sales.

To ensure that the food we are serving is of consistently high quality, we have
developed extensive quality control practices. For example, every member of our
kitchen staff must participate in a thorough training program. We also have
strict specifications that ensure only high quality ingredients are used in our
food. A kitchen manager at each restaurant is responsible for making a final
check of each item to assure it meets our high quality standards before it
leaves the kitchen.

Our menu pricing is consistent within a market, but may differ slightly from
one market to the next. Menu entrees range in price from $9.95 to $19.95 and
are designed to be shared by the entire party at the table. The average check
per guest is approximately $20.00, including beverages. In fiscal 1998,
alcoholic beverages, primarily table wine, accounted for 26.6% of total
restaurant sales.

Family-Style Serving and Ambiance. BUCA di BEPPO restaurants' oversized
portions, served family-style on large platters, are designed to overwhelm
guests with an abundance of high quality food. An order of our spaghetti and
meatballs, for example, features 2.5 pounds of pasta and three half-pound
meatballs, covered by a pound of marinara sauce. Our chicken cacciatore
consists of a whole chicken served on two pounds of garlic mashed potatoes,
ladled with cacciatore sauce and weighs seven pounds. Guests can enjoy their
meal with bottles of Italian table wine of up to five liters in size.

In family-style serving, each item is shared by the entire table, which
encourages guests to interact and enjoy the meal together. We locate menu
boards on our restaurant's walls instead of distributing individual menus,
encouraging guests to wander from their seats to read the menu. Guests take
note of what other tables have ordered and may interact with other parties. We
believe the fun and socially interactive dining experience

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<PAGE>

typical of a meal at one of our restaurants differentiates us from our
competitors and promotes guest loyalty from a wide range of guests. We maintain
a policy of serving dinner-only which reinforces our family-style concept.

We believe that serving guests family-style offers us a competitive advantage.
Because larger portions are more efficient to produce and serve, cost savings
are passed along to the guest. Furthermore, by exclusively serving larger
portions, we are able to consistently and emphatically make a value statement
to our guests.

Irreverent Decor and Unique Layout. Our restaurants are designed with an
irreverence that exaggerates the cliches of traditional post-War
Italian/American neighborhood restaurants. Our restaurant exteriors are
typically clad in faux flagstone and painted Tuscan red, feature flashing bare
bulb signage, statuary, fake flowers and humorous neon window signs promising
"elegant dining," "sanitary bathrooms" and "air conditioning." Our restaurant
interiors are decorated with hundreds of vintage photos of Italian and
Italian/American families and celebrities, bright strings of Christmas lights
displayed year-round and numerous other icons of Italian heritage. Boxes of
pasta, cans of olive oil and roasted peppers and jugs of wine fill window sills
and shelves throughout our restaurants. Lively music from classic artists such
as Frank Sinatra and Dean Martin adds to the fun and energetic atmosphere. The
combined effect of these exaggerated cliches is a lighthearted, tongue-in-
cheek, "kitschy" atmosphere that makes BUCA di BEPPO restaurants fun and
entertaining destinations.

The individual layout of each BUCA di BEPPO restaurant in a market is unique.
The restaurant's collection of individual dining rooms provide a variety of
seating possibilities. We believe that this individuality reinforces the image
of BUCA as a collection of quirky neighborhood restaurants. In most of our
restaurants, for example, guests must pass through the kitchen before being
seated. Some elements such as the signage, menu and service are consistent
throughout all restaurants. All restaurants feature a visible pizza kitchen,
several distinct dining rooms and a bar that is used primarily as a waiting
area.

BUCA di BEPPO restaurants are designed to accommodate groups, with a
predominance of tables seating four to six guests and many tables seating
parties of eight or more. Additionally, most locations feature a "Pope's Table"
and a "Kitchen Table." The Pope's Table is a large table that seats 16 to 20
people and occupies a marquee location in the restaurant. The Kitchen Table
seats six to ten people in the heart of the restaurant's loud and boisterous
kitchen, providing the ultimate BUCA di BEPPO experience.

Exemplary Guest Service. At BUCA, we are committed to guest satisfaction. From
the moment guests walk in the door, they are treated as part of the BUCA di
BEPPO family. The server ensures that first-time guests understand the BUCA di
BEPPO family-style servings and provides an explanation of the menu, if
necessary. When guests are ordering, our server highlights the daily specials
and helps them determine an appropriate amount of food to order. We emphasize
to our employees that they should consider the guest first in all decisions
they make. The restaurant's Paisano Partner interacts with guests to make them
feel welcome and is responsible for ensuring their satisfaction with the dining
experience. We also contract with an independent company to send its personnel
to dine in each of our restaurants unannounced at least twice each month. After
each visit, these anonymous diners issue a written report with both subjective
impressions and objective grading of our restaurants in several operational
areas.

Unit Level Economics

During fiscal 1998, our restaurants with at least two full years of operating
history generated average restaurant sales of approximately $3.0 million.
During fiscal 1998, these mature restaurants generated average cash flow of
approximately $693,000, or 23.5% of restaurant sales, and average restaurant
operating income of approximately $593,000, or 20.0% of restaurant sales. We
currently lease all but one of our restaurant locations and plan to lease most,
if not all, of our future restaurant sites. We anticipate that, on average, new
restaurants will require a cash investment of $1.0 million to $1.5 million. In
fiscal 1998, our total cash investment per restaurant averaged approximately
$1.4 million, excluding preopening costs of approximately $195,000. Preopening
costs for future restaurants are expected to range from $175,000 to $210,000
per restaurant.

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However, individual unit investment costs could vary due to a variety of
factors, including competition for sites, location, construction costs, unit
size and the mix of conversions, build-to-suit and leased locations.

Our current restaurants range in size from 4,500 to 10,000 square feet and have
approximately 170 to 375 seats. We anticipate that future restaurants will
typically range in size from 7,000 to 9,000 square feet and have approximately
250 to 350 seats. From time to time, we have expanded the size of existing
restaurants to meet demand.

Current Restaurant Locations

We currently own and operate the following 20 restaurants, located in 11
markets:

<TABLE>
<CAPTION>
Location Date Opened Square Feet Seats
- -------- ------------- ----------- -----
<S> <C> <C> <C>
Minneapolis, Minnesota.......................... July 1993 4,465 172
St. Paul, Minnesota............................. May 1994 9,991 375
Eden Prairie, Minnesota......................... June 1995 8,025 230
Milwaukee, Wisconsin............................ November 1995 9,210 293
Palo Alto, California........................... July1996 5,192 197
Seattle, Washington............................. November 1996 8,213 328
Chicago, Illinois............................... May 1997 5,340 185
Wheeling, Illinois.............................. May 1997 6,426 225
San Francisco, California....................... August 1997 6,393 202
Lynnwood, Washington............................ November 1997 6,890 262
Pasadena, California............................ December 1997 6,739 250
Indianapolis, Indiana........................... February 1998 7,678 326
Encino, California.............................. March 1998 6,080 248
Redondo Beach, California....................... June 1998 6,152 272
Lombard, Illinois............................... July 1998 8,278 328
Scottsdale, Arizona............................. October 1998 8,230 298
Burnsville, Minnesota........................... November 1998 7,340 312
Cleveland, Ohio................................. November 1998 9,430 256
Kansas City, Kansas............................. December 1998 7,494 298
Louisville, Kentucky............................ January 1999 8,315 244
</TABLE>

We expect that twelve additional restaurants will open during the remainder of
fiscal 1999. Construction has commenced on seven of these sites, one each in
Claremont, California; Denver, Colorado; Washington, D.C.; Des Moines, Iowa;
Detroit, Michigan; Buffalo, New York; and Columbus, Ohio. In addition, we have
11 signed leases for future sites, including six sites for restaurants we
expect to open in 1999. We also have entered into a lease for a 10,000 square
foot restaurant to be opened during fiscal 2000 at Universal Studios in Los
Angeles. We are currently negotiating additional leases for potential future
locations.

Expansion Strategy and Site Selection

Beginning in fiscal 1997, following the hiring of Joseph P. Micatrotto as our
President and CEO, we accelerated our rate of restaurant expansion. Mr.
Micatrotto previously had been instrumental in the expansion of two national
restaurant chains, Chi-Chi's Mexican Restaurants and Panda Express. Today we
are focused on growing our restaurant base in a rapid but disciplined manner.
We intend to open 13 new restaurants in fiscal 1999, of which one is already
open, seven are under construction and the remaining five have signed leases.
By the end of fiscal 1999, we plan to have 32 restaurants open in at least 17
markets. We intend to continue expanding BUCA primarily in metropolitan markets
of the United States with a population of at least 800,000 which we believe can
support multiple BUCA di BEPPO restaurants. We do, however, plan to enter one
or more smaller markets within the next 12 months. We believe that the majority
of our future growth will come

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<PAGE>

from opening new restaurants. We will, however, evaluate opportunities to
acquire other restaurant operations, but we do not currently have any
definitive agreements, arrangements or understandings regarding any particular
acquisition.

We have designated teams of employees that are responsible for opening new
restaurant locations, including kitchen personnel and other individuals who are
trained as hosts, servers, bartenders and managers. Our training programs
enable us to promote existing employees and managers as new restaurants open.
We believe that through our training programs and the hiring of outside
personnel we will be able to support our expansion strategy.

We believe that our concept is extremely flexible and can be successfully
operated in a number of different settings. We have located our restaurants in
both urban and suburban areas with equal success. Our restaurants have been
successfully opened both as freestanding structures and as tenants in larger
multi-purpose buildings. To date, all of our restaurant sites involved the
remodeling of existing structures. To develop efficiencies and to increase
flexibility with respect to locations, we have developed prototype designs for
new construction. While our restaurants typically share common interior decor
elements, the layouts of our restaurants differ to accommodate different types
of buildings and different square footage of available space.

We believe that a restaurant's location is a critical factor in determining its
success. Accordingly, we thoroughly analyze each prospective site before
signing a lease. Restaurant sites must be approved by the Real Estate Site
Approval Committee, consisting of two outside directors, our Chairman, CEO,
CFO, COO and the prospective Divisional Vice President. As a dinner-only
concept, we are most concerned about locating restaurants close to areas where
our guests typically spend their evening hours. The criteria we consider when
selecting a site include: the site's visibility, traffic patterns, general
accessibility and availability of suitable parking, competition within the
site's trade area, availability of restaurant-level employees and proximity of
shopping, entertainment activities, office parks, and tourist attractions. In
general, we prefer to open our restaurants within larger metropolitan areas
with higher population densities and above-average household incomes.

Operations

Restaurant Management. Our ability to effectively manage restaurants over a
diverse geographic area will continue to be critical to our overall success. We
currently have three Divisional Vice Presidents of Operations who report
directly to the Chief Operations Officer. Each Divisional Vice President
supervises a multi-state geographic area and is expected to effectively manage
up to 15 restaurants. Our Divisional Vice Presidents supervise each Paisano
within his or her territory with the goal of achieving an expected return on
investment through the successful implementation and operation of the BUCA di
BEPPO concept. We believe that our Divisional Vice Presidents can accomplish
this broad supervisory task in large part because of the experience and high
caliber of our Paisano Partners. In addition, because we are a dinner-only
concept, the number of meal shifts that the Paisano Partner and, indirectly,
the Divisional Vice President, must supervise are approximately one-half of
most restaurants in the industry. The typical restaurant management team
consists of the Paisano Partner, Kitchen Manager, Assistant General Manager and
Assistant Kitchen Manager. Under the Paisano Partners program, this management
team receives a percentage of incremental restaurant cash flow after their
restaurant achieves certain minimum performance levels. Each member of our
restaurant management team is cross-trained in all operational areas. As we
grow our restaurants and expand geographically, we expect to add additional
Divisional Vice Presidents.

Recruiting. We actively recruit and select individuals who share our passion of
guest service. Testing and multiple interviews are used to aid in the selection
of new employees at all levels. We have developed a competitive compensation
plan for restaurant management that includes a base salary, competitive
benefits package including a 401(k) plan, and participation in a management
incentive plan that rewards the restaurant management team for achieving
performance objectives. All of our employees are entitled to discounted meals
at our restaurants; in addition, all restaurant employees are invited to the
daily pre-shift meal held at each

28
<PAGE>

restaurant. We also enjoy the recruiting advantage of being a one-meal-period-
only restaurant concept, which provides employees with a more regular schedule
than they might have at other restaurant concepts. In addition, because they
are working only a dinner shift, where tips are usually greater than other
meals, servers realize better per hour compensation than most other multiple
meal concepts. It is our policy to promote from within, but we recognize the
need to supplement this policy with outside recruiting at this stage of our
growth and as new markets are opened.

Training. We provide all new employees with intensive training to ensure they
are provided with the tools to excel in their position. This training
encompasses classroom instruction, on-the-job training programs for each
position, and testing of the new employee's progress at pre-determined stages
within the training schedule. Each new member of the restaurant management team
receives a minimum of 12 weeks of training before being assigned to a
restaurant location. All management employees receive kitchen training. In
addition to the formal training programs, we maintain detailed operating
procedure manuals, standards, controls, food line management systems and a food
culture book to complement the training received at all levels.

Operational Control Systems. All of our restaurants use personal computer
systems integrated with management systems to monitor restaurant sales, product
costs and labor costs on a daily basis. Financial controls are maintained
through a centralized accounting system, which includes a sophisticated
theoretical food cost program and a labor scheduling and tracking program.
Physical inventories of food and beverage items are taken on a weekly basis.
Daily, weekly and monthly financial information is provided to each restaurant
and to the Divisional Vice Presidents for analysis and comparison to our budget
and to comparable restaurants. We closely monitor restaurant sales, cost of
sales, labor and other restaurant trends on a daily, weekly and monthly basis.
We believe that our current systems are adequate for our planned expansion
strategy.

Hours of Restaurant Operation. BUCA di BEPPO restaurants are open seven days a
week for dinner only, typically opening at 5:00 p.m. during the week and 4:00
p.m. on the weekends and closing at the Paisano's discretion, typically 10:00
p.m. on weekdays and 11:00 p.m. on weekends. Additionally, our restaurants open
at noon on selected holidays.

Marketing

Our marketing strategy is to communicate the BUCA di BEPPO brand through many
creative and non-traditional avenues. We focus our efforts on getting people in
the local community, particularly civic, business and media leaders, to talk
about the BUCA di BEPPO experience. During fiscal 1998, we spent an aggregate
of 2.5% of restaurant sales on marketing efforts. We expect to continue
investing approximately 2% to 3% of restaurant sales in marketing efforts in
the future, primarily in connection with the opening of new restaurants.

In connection with new restaurant openings, we contract with local public
relations firms to assist us in establishing and sustaining the BUCA di BEPPO
brand. By organizing events like pre-opening parties and concierge dinners,
these firms focus primarily on introducing BUCA di BEPPO restaurants to opinion
leaders, such as civic and media personalities, and to hospitality industry
leaders such as key hotel staff, meeting planners and convention and visitors
bureau representatives.

We sustain restaurant awareness primarily through unpaid media exposure and
word-of-mouth advertising, including grassroots neighborhood marketing efforts,
primarily by the Paisano Partner. BUCA di BEPPO restaurants have achieved
particular success by delivering a sample of menu items to drive-time radio
personalities and morning television hosts, earning free media exposure, and
often invitations for scheduled return engagements, while developing
relationships with high-profile media personalities.

To reinforce our image as a collection of unique neighborhood restaurants, the
Paisano Partner works diligently to establish a community presence. Through
ongoing neighborhood marketing efforts, supported by our marketing department,
the Paisano Partner establishes relationships with area businesses and
residents,

29
<PAGE>

participates in high-profile events and festivals, and takes advantage of
opportunities to introduce area residents and workers to the restaurant.
Because of their credibility as local business owners and community members,
Paisano Partners play an integral role in establishing BUCA di BEPPO in the
neighborhood.

We engage to a limited extent in paid advertising, including billboards, radio
spots, and newspaper and magazine ads. We also utilize a variety of printed
marketing materials, including restaurant location brochures, hotel concierge
cards, take-out menus and direct mailings. Typical themes in these materials
include: "Recorded Music in Every Room," "Cocktails in the Lounge and at Your
Table" and "Vinyl Booths Mean No Static Cling For the Ladies." All marketing
communications work to establish each of our restaurants as an irreverent,
distinct, casual and welcoming neighborhood immigrant Southern Italian
restaurant.

Purchasing

We endeavor to obtain high quality menu ingredients and other supplies and
services for our operations from reliable sources at competitive prices. To
this end, we continually research and evaluate various ingredients and products
in an effort to maintain the highest quality and to be responsive to changing
consumer tastes. Our centralized purchasing staff, under the direction of our
Vice President of Purchasing, procures the products specified by our Food and
Beverage Department, specifies the products to be used at our restaurants,
designates the vendors and provides suppliers with detailed ingredient
specifications. To maximize purchasing efficiencies and to provide for the
freshest ingredients for our menu items, each restaurant's management
determines the quantities of food and supplies required. To obtain the lowest
possible prices for the required high quality and consistency, each restaurant
orders items primarily from our national food distributor, SYSCO Corporation,
on terms negotiated by our centralized purchasing staff. We believe that all
essential food and beverage products are available from several qualified
suppliers at competitive prices should an alternative source be required.

Competition

The restaurant industry is intensely competitive. We compete on the basis of
taste, quality, and price of food offered, guest service, location, ambiance
and overall dining experience. We have many well established competitors, both
nationally and locally owned Italian and non-Italian concepts, with
substantially greater financial resources and a longer history of operations
than we do. Their resources and market presence may provide advantages in
marketing, purchasing and negotiating leases. We compete with other restaurant
and retail establishments for sites. Changes in consumer tastes, economic
conditions, demographic trends and the location and number of, and type of food
served by, competing restaurants could adversely affect our business as could
the unavailability of experienced management and hourly employees.

Our History

The BUCA di BEPPO concept was created in Minneapolis in 1993 by our founder,
Philip A Roberts, and originally operated by a company owned by Mr. Roberts,
Don W. Hays and Peter J. Mihajlov. On December 31, 1994, this company was
acquired by Parasole Restaurant Holdings, Inc., a diversified restaurant
company operating in the Minneapolis/St. Paul metropolitan area. Mr. Roberts,
Mr. Hays and Mr. Mihajlov are the principle shareholders of Parasole. From
January 1995 through September 1996, BUCA operated as a wholly owned subsidiary
of Parasole. On September 30, 1996, we were spun-off from Parasole through a
share dividend of our common stock pro rata among the Parasole shareholders to
create a better vehicle for obtaining financing for our expansion plans. See
"Certain Relationships and Related Transactions" for a discussion of the
relationship between us and Parasole and with Mr. Roberts, Mr. Hays and Mr.
Mihajlov.

Properties

All of our restaurants but one are located in leased facilities. Current
restaurant leases have expiration dates ranging from 2003 to 2018, with all of
the leases providing for five-year options to renew for at least one additional
term.

30
<PAGE>

The building formerly housing our executive offices suffered extensive fire
damage in December 1998. Our executive offices are now temporarily located in
approximately 10,000 square feet of leased space in Minneapolis, Minnesota.

Employees

At January 31, 1999, we had 1,400 employees. Forty served in administrative or
executive capacities, 85 served as restaurant management personnel, and the
remainder were hourly restaurant personnel.

None of our employees are covered by collective bargaining agreements, and we
have never experienced an organized work stoppage or strike. We believe that
our working conditions and compensation packages are competitive and consider
relations with our employees to be very good.

Intellectual Property

We have registered the servicemarks "BUCA" and "BUCA di BEPPO" with the United
States Patent and Trademark Office. We believe that our trademarks and other
proprietary rights have significant value and are important to the marketing of
our restaurant concept. We have in the past and expect to continue to
vigorously protect our proprietary rights. We cannot predict, however, whether
steps taken by us to protect our proprietary rights will be adequate to prevent
misappropriation of these rights or the use by others of restaurant features
based upon, or otherwise similar to, our concept. It may be difficult for us to
prevent others from copying elements of our concept and any litigation to
enforce our rights will likely be costly. In addition, other local restaurant
operations with names similar to those we use may try to prevent us from using
our marks in those locales.

Government Regulations

Our restaurants are subject to regulation by federal agencies and to licensing
and regulation by state and local health, sanitation, building, zoning, safety,
fire and other departments relating to the development and operation of
restaurants. These regulations include matters relating to environmental,
building, construction and zoning requirements and the preparation and sale of
food and alcoholic beverages. Our facilities are licensed and subject to
regulation under state and local fire, health and safety codes.

Each of our restaurants is required to obtain a license to sell alcoholic
beverages on the premises from a state authority and, in certain locations,
county and/or municipal authorities. Typically, licenses must be renewed
annually and may be revoked or suspended for cause at any time. Alcoholic
beverage control regulations relate to numerous aspects of the daily operations
of each of our restaurants, including minimum age of patrons and employees,
hours of operation, advertising, wholesale purchasing, inventory control and
handling, and storage and dispensing of alcoholic beverages. We have not
encountered any material problems relating to alcoholic beverage licenses to
date. The failure to receive or retain a liquor license in a particular
location could adversely affect that restaurant and our ability to obtain such
a license elsewhere.

We are subject to "dram-shop" statutes in the states in which restaurants are
located. These statutes generally provide a person injured by an intoxicated
person the right to recover damages from an establishment that wrongfully
served alcoholic beverages to the intoxicated individual. We carry liquor
liability coverage as part of our existing comprehensive general liability
insurance, which we believe is consistent with coverage carried by other
entities in the restaurant industry. Although we are covered by insurance, a
judgement against us under a dram-shop statute in excess of our liability
coverage could have a material adverse effect on us.

Our operations are also subject to federal and state laws governing such
matters as wages, working conditions, citizenship requirements and overtime.
Some states have set minimum wage requirements higher than the federal level.
Significant numbers of hourly personnel at our restaurants are paid at rates
related to the federal minimum wage and, accordingly, increases in the minimum
wage will increase labor costs. Other governmental initiatives such as mandated
health insurance, if implemented, could adversely affect us as well as the

31
<PAGE>

restaurant industry in general. We are also subject to the Americans With
Disability Act of 1990, which, among other things, may require certain
renovations to its restaurants to meet federally mandated requirements. The
cost of these renovations is not expected to materially affect us.

Legal Proceedings

From time to time, we are a defendant in litigation arising in the ordinary
course of our business, including claims resulting from "slip and fall"
accidents, claims under federal and state laws governing access to public
accommodations, employment-related claims and claims from guests alleging
illness, injury or other food quality, health or operational concerns. To date,
none of such litigation, some of which is covered by insurance, has had a
material effect on us.

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<PAGE>

MANAGEMENT

Executive Officers, Directors and Key Employees

Set forth below is certain information concerning our executive officers,
directors and key employees:

<TABLE>
<CAPTION>
Name Age Position with Company
---- --- ------------------------------------------------
<S> <C> <C>
Joseph P.
Micatrotto(/1/) 47 President, Chief Executive Officer and Director
Greg A. Gadel 39 Chief Financial Officer, Treasurer and Secretary
Leonard A. Ghilani 38 Chief Operations Officer
Philip A. Rob-
erts(/1/)(/2/) 60 Chairman of the Board
Peter J. Mihajlov(/3/) 59 Director
Don W. Hays(/2/) 57 Director
John P. Whaley(/2/)(/3/) 46 Director
David Yarnell(/1/)(/3/) 43 Director
Paul Zepf(/2/) 34 Director
Daniel E. Durenberger 31 Divisional Vice President
Joseph J. Kohaut 35 Divisional Vice President
Joseph J. Talarico 44 Divisional Vice President
John J. Motschenbacher 36 Vice President of Finance and Purchasing
Robert R. Parent 51 Vice President of Development
Jennifer Percival 39 Vice President of Family Relations
Vittorio Renda 44 Vice President of Food and Beverage
Lane Schmiesing 42 Vice President of Marketing
</TABLE>
- --------
(/1/)Member of Executive Committee.
(/2/)Member of the Compensation Committee.
(/3/)Member of Audit Committee.

Joseph P. Micatrotto joined BUCA in 1996 as our President and Chief Executive
Officer, and as a Director. Mr. Micatrotto's twenty-five year career in
restaurant management includes being CEO of Panda Management Company, Inc.
where he led the company's expansion and president and CEO of Chi-Chi's Mexican
Restaurant, Inc., where he was instrumental in its national growth. Mr.
Micatrotto is active on various boards and industry groups. He has been
nominated to the Board of Directors of the National Restaurant Association.

Greg A. Gadel has been BUCA's Chief Financial Officer and Treasurer since 1997
and its Secretary since 1998. Prior to joining BUCA, Mr. Gadel was CFO for the
32-unit restaurant chain, Leeann Chin. In addition he previously was vice
president and controller for the largest Chi-Chi's franchisee, Consul
Corporation. He has also worked for Marriot, McDonald's and the Deloitte &
Touche LLP accounting firm, and has over 15 years experience in the restaurant
industry. Mr. Gadel is a member of the American Institute of Certified Public
Accountants.

Leonard A. Ghilani joined BUCA in 1998 as a Divisional Vice President and was
named Chief Operations Officer in 1999. He was previously with Einstein Noah
Bagel Corporation where he spent two and a half years as Vice President of
Operations. Prior to his employment with Einstein Noah Bagel Corporation, Mr.
Ghilani worked for Chi-Chi's Mexican Restaurant, Inc., where he held several
positions including Divisional Vice President, District Manager, General
Manager and Kitchen Manager.

Philip A. Roberts co-founded BUCA in 1993. He has been a Director since 1993
and currently serves as Chairman of our Board of Directors. Mr. Roberts is also
a principal of Parasole Restaurant Holdings, Inc., which he co-founded in 1986.
Mr. Roberts has been involved in the restaurant industry since 1977, when he
co-founded with Mr. Mihajlov the first of several privately-held restaurant
companies, which later merged to form Parasole.

33
<PAGE>

Peter J. Mihajlov co-founded BUCA in 1993 and has served as a Director since
1993. Mr. Mihajlov is also a principal of Parasole, which he co-founded in
1986. Mr. Mihajlov has been in the restaurant industry since 1977, when he and
Mr. Roberts co-founded the first of several privately-held restaurant
companies, which later merged to form Parasole. Prior to that, Mr. Mihajlov
served in a variety of marketing and business management positions within The
Pillsbury Company over the course of seventeen years.

Don W. Hays co-founded BUCA in 1993 and has served as a Director since 1993.
Mr. Hays is also a principal of Parasole, which he co-founded in 1986. Prior to
that, Mr. Hays founded Hospitality Management Group, Inc. in 1977, which later
merged to form Parasole. Mr. Hays has been involved in the restaurant industry
since 1964, when he joined Dayton's Restaurant Division, of which he later
became Director of Operations.

John P. Whaley has served as a Director of BUCA since 1996. He is a partner of
Norwest Equity Partners and Norwest Venture Partners, and has been a partner or
officer of these and affiliated private equity investment funds since 1977. He
is also a director of several privately held companies.

David Yarnell has served as a Director of BUCA since 1996. He has been a Vice
President of Consumer Venture Partners since June 1993. He has been a General
Partner of Brand Equity Ventures since April 1997. Mr. Yarnell also serves on
the Board of Directors of Cyberian Outpost, a publicly held company.

Paul Zepf has served as a Director of BUCA since 1998. He has been a Managing
Director of Centre Partners Management L.L.C., which manages Centre Capital
Investors II, L.P. and related private equity investment funds, since 1995. He
is also a Managing Director of Corporate Advisors, L.P., which he joined in
1989. He is a director of The Learning Company, LaSalle Re Holdings Limited,
Firearms Training Systems, Inc., and Nationwide Credit, Inc.

Daniel E. Durenberger joined BUCA in 1993 as Paisano of the original BUCA di
BEPPO restaurant in Minneapolis, Minnesota and was promoted to his current
position of Divisional Vice President in 1998. From 1996 to 1998, Mr.
Durenberger served as Director of Training and Team Development at BUCA. Prior
to joining BUCA, he held various management positions at the Madison Hotel in
Washington, D.C.

Joseph J. Kohaut joined BUCA in 1997 as a Divisional Vice President. From 1994
to 1997, Mr. Kohaut was a regional manager with Panda Management Company, Inc.,
where he was responsible for developing his region from five to 14 operating
units. Mr. Kohaut has more than 18 years of restaurant industry experience,
including general management and operations positions with Chi-Chi's and Ground
Round prior to joining Panda.

Joseph J. Talarico joined BUCA in 1997 as a Divisional Vice President. Prior to
joining BUCA, Mr. Talarico served as Vice President of Development and Training
for the Chevy's Mexican Restaurant division of Pepsico from 1994 to 1997. For
the 12 years prior to joining Pepsico, Mr. Talarico held several positions with
Chi-Chi's, including General Manager, Area Supervisor and Vice President of
Training and Development.

John J. Motschenbacher joined BUCA as Corporate Controller in 1998 and was
named Vice President of Finance and Purchasing in 1999. Prior to joining BUCA,
Mr. Motschenbacher held the position of Controller at Cafe Odyssey, Leann Chin
and Bon Appetit. He also held various accounting positions at Consul
Corporation, the largest Chi-Chi's franchisee.

Robert R. Parent joined BUCA in 1998 as Vice President of Development. He was
previously with Don Pablo's, the Dallas-based division of Apple South, Inc.
(renamed Avado Brands, Inc.) and operator of the 93-unit Don Pablo's Mexican
restaurant chain, where he served as Senior Vice President of Development. Mr.
Parent brings 17 years of retail and restaurant site development experience to
BUCA. He previously held various real estate development positions with the Red
Lobster and Olive Garden casual dining restaurant chains.

Jennifer Percival joined BUCA in 1999 as Vice President of Family Resources.
Ms. Percival was previously with Lufthansa Service USA Corp.'s Venice Market
division, a Dallas-based company operating in-flight

34
<PAGE>

catering and specialty concepts, where she served as Vice President of Human
Resources for the United States. Ms. Percival has more than 20 years of
restaurant industry and human resources experience. Prior to her work with
Lufthansa, she held various management and human resources positions with La
Madeleine and TGI Friday's restaurant companies.

Vittorio Renda has been with BUCA since 1993, first as its Director of Culinary
Development and since 1996 as Vice President of Food and Beverage. From 1982 to
1993, Mr. Renda served in various culinary and management roles for Parasole
and its predecessor companies, with the exception of 1989-1991 when he was
General Manager and Executive Chef with the DeBartolo Corporation. Mr. Renda
developed his culinary skills working throughout Italy in the twelve years
prior to joining Parasole. Mr. Renda was born and raised in Calabria, Italy.

Lane Schmiesing joined BUCA in 1997 as Vice President of Marketing. He was
formerly with Rare Hospitality, Inc., where he spent three years as Vice
President of Marketing. He brings to BUCA 20 years of restaurant marketing
experience. He has developed award winning advertising and promotional
campaigns for such brands as Dairy Queen, Bonanza Restaurants and Longhorn
Steakhouses. A member of the Board of Directors of the Marketing Executive
Group of the National Restaurant Association, he is also a frequent guest
lecturer at colleges and universities on the topics of strategic marketing and
brand identity.

Board of Directors; Committees

Our Board consists of seven members. In accordance with our Articles of
Incorporation, upon the closing of this offering, the Board of Directors will
be divided into three classes with staggered three-year terms. One class will
consist of Mr. Yarnell and Mr. Hays, whose terms will expire at the annual
shareholders' meeting in 2000. A second class will consist of Mr. Mihajlov and
Mr. Zepf, whose terms will expire at the annual shareholders' meeting in 2001.
A third class will consist of Mr. Micatrotto, Mr. Roberts and Mr. Whaley, whose
terms will expire at the annual shareholders' meeting in 2002. At each annual
meeting of shareholders after the closing of this offering, the successors to
directors whose terms then expire will be elected to serve for a full term of
three years. This classification of the Board may delay or prevent changes in
our control or in our management. Pursuant to the terms of Mr. Micatrotto's
employment agreement, the Board is required to use its best efforts to cause
Mr. Micatrotto to continue to be elected to the Board as long as he is our
Chief Executive Officer.

The Executive Committee of the Board, comprised of Messrs. Micatrotto, Roberts
and Yarnell, provides advice and counsel to the Chief Executive Officer
regarding the day to day operations of BUCA. While the Executive Committee may
recommend policies and actions for the Board's consideration, it does not have
the authority to take any action on behalf of the Board.

The Compensation Committee of the Board, comprised of Messrs. Roberts, Hays,
Whaley and Zepf, is responsible for reviewing and establishing the compensation
structure for our officers and directors, including salaries, participation in
incentive compensation and benefit plans, stock option plans and other forms of
compensation, and is responsible for administering our 1996 Incentive Plan and
the Stock Option Plan for Non-employee Directors. See "Stock Incentive Plan and
Stock Options" for a discussion of this plan.

The Audit Committee of the Board, comprised of Messrs. Mihajlov, Whaley and
Yarnell, is responsible for recommending to the Board our independent auditors,
analyzing the reports and recommendations of the auditors and reviewing
internal audit procedures and controls.

Limitation of Liability and Indemnification

Pursuant to provisions of the Minnesota Business Corporation Act, we have
adopted provisions in our Articles of Incorporation that provide that our
directors shall not be personally liable for monetary damages to us or our
shareholders for a breach of fiduciary duty as a director to the full extent
that the act permits the limitation or elimination of the liability of
directors.

35
<PAGE>

Director Compensation

Our directors are reimbursed for certain reasonable expenses incurred in
attending Board meetings. Directors who are also our employees receive no
remuneration for services as members of the Board or any board committee.
Directors who are not employed by us have received certain grants of stock
options. See "Stock Incentive Plans and Stock Options" for a discussion of
grants previously made to our Directors.

Executive Compensation

Summary Compensation Table. The following table contains information concerning
compensation for fiscal 1998 earned by our President and Chief Executive
Officer and our Chief Financial Officer, our executive officers whose total
salary and bonus for this period exceeded $100,000.

Fiscal 1998 Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------- ------------
Other Annual Securities
Name and Salary Bonus Compensation Underlying
Principal Position ($) ($) ($) Options (#)
------------------ ------- ------ ------------ ------------
<S> <C> <C> <C> <C>
Joseph P. Micatrotto................... 300,573 38,139 65,200(/1/) 13,333
President and Chief Executive Officer
Greg A. Gadel.......................... 139,326 54,000 6,000(/2/) 23,333
Chief Financial Officer
</TABLE>

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

(/1/)Includes car allowance, living expenses and college tuition for Mr.
Micatrotto's child.
(/2/)Represents car allowance.

Stock Option Grants Table. The following table sets forth certain information
concerning all stock options granted during fiscal 1998 to the named executive
officers. We did not grant any stock appreciation rights or restricted stock
awards during fiscal 1998.

<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation For
Option Term Option Term(/2/)
-------------------------------- -----------------------
Number of Percent of
Shares Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted 1998 ($/Share)(/1/) Date 5% ($) 10% ($)
---- ---------- ------------- -------------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Micatrotto.... 13,333(/3/) 5.17 7.68 December 15, 2008 147,360 295,300
Greg A. Gadel........... 23,333(/4/) 9.04 7.68 December 15, 2008 257,883 516,780
</TABLE>
Fiscal 1998 Stock Option Grants

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

(/1/)The exercise price may be paid in cash, in shares of common stock valued
at fair market value on the exercise date, or in a combination of cash and
shares.
(/2/)The hypothetical potential appreciation shown in these columns reflects
the required calculations at annual assumed appreciation rates of 5% and
10%, as set by the Securities and Exchange Commission, and therefore is
not intended to represent either historical appreciation or anticipated
future appreciation of the common stock.
(/3/)The entire grant of options vested immediately upon grant and all options
are transferrable.
(/4/)The grant vests 20% per year beginning one year from the date of grant.

No stock options were exercised by the named executive officers during fiscal
1998. Mr. Micatrotto also received certain options to purchase common stock in
February 1999 in connection with the amendment of his

36
<PAGE>

employment agreement. See "Employment Agreements" for a discussion of Mr.
Micatrotto's employment agreement.

Fiscal Year-End Option Value Table. The following table sets forth certain
information concerning unexercised stock options held by the named executive
officers as of fiscal 1998 year-end.

Aggregate 1998 Fiscal Year-End Option Value Table

<TABLE>
<CAPTION>
Number of Shares Value of
Underlying Unexercised In-the-Money
Options at Options at
December 27, 1998 December 27, 1998(/1/)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Joseph P. Micatrotto........ 131,520 140,000 $1,067,114 $787,489
Greg A. Gadel............... 10,335 66,331 58,468 321,495
</TABLE>

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

(/1/)There was no public trading market for the common stock as of December 27,
1998. Accordingly, these values have been calculated, in accordance with
the rules of the SEC, on the basis of an assumed initial public offering
price per share of $11.50 minus the applicable exercise price per share.

Employment Agreements

We entered into an employment agreement with Joseph P. Micatrotto on July 22,
1996, which was subsequently amended and restated in February 1999. Under the
terms of the agreement, Mr. Micatrotto is currently serving as our President
and Chief Executive Officer for a term expiring on December 31, 2003. The
agreement provides that Mr. Micatrotto's annual salary will be $325,000 for the
current year, $335,000 for the year ended December 31, 2000, $350,000 for the
year ended December 31, 2001 and for the remainder of the term it will be an
amount determined by the Board, but not less than the prior year's amount. Mr.
Micatrotto is eligible to receive a yearly bonus based upon certain performance
criteria established by the Board. In connection with the amendment of Mr.
Micatrotto's employment agreement in February 1999, Mr. Micatrotto received
options to purchase 126,666 shares of our common stock at an exercise price of
$11.25 per share, 6,666 of which vest on each of December 31, 1999, 2000 and
2001 and 53,334 of which vest on each of December 31, 2002 and 2003. We also
have agreed to reimburse Mr. Micatrotto's reasonable and necessary business
expenses, including relocation expenses. Mr. Micatrotto is entitled to the
following termination benefits:

. If Mr. Micatrotto is terminated by us for cause (as defined in the
agreement) or if Mr. Micatrotto terminates his employment, he will
receive no additional compensation or termination benefits.

. If Mr. Micatrotto is terminated because of death or physical or
mental disability, he or his estate will be entitled to a
termination payment of two years' base salary then in effect,
payable in 24 equal monthly installments.

. If Mr. Micatrotto terminates his employment upon 30 days' prior
written notice following a change in control of the company (as
defined in the agreement), because his duties are substantially
reduced or negatively altered (as defined in the agreement)
without his prior written consent, or if Mr. Micatrotto's
employment is terminated by us without cause following a change in
control or within 180 days prior to a change in control and the
termination is related to the change in control, he will be
entitled to a termination payment of 18 months' base salary then
in effect, payable in 18 monthly installments. If Mr. Micatrotto
terminates employment as a result of a change in control, but his
duties have not been substantially reduced or negatively altered,
he will be entitled to a termination payment of 12 months' base
salary then in effect, payable in 12 monthly installments.

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<PAGE>

. If Mr. Micatrotto is terminated by us without cause and not
associated with a change in control, he will be entitled to a
termination payment of 18 months' base salary then in effect,
payable in 18 monthly installments.

The agreement also contains fringe benefits, confidentiality and non-
competition provisions.

On April 1, 1997, we entered into a letter agreement with Greg A. Gadel under
which Mr. Gadel will be entitled one year's base compensation in effect at the
time of termination if his employment is terminated as a result of a change in
control of BUCA or if he terminates his employment following a change in
control if his duties are substantially reduced or negatively altered.

Stock Incentive Plan and Stock Options

1996 Stock Incentive Plan. The 1996 Stock Incentive Plan of BUCA, Inc. and
Affiliated Companies provides an incentive to our key employees through the
award of stock options, stock appreciation rights, restricted stock, restricted
stock units, stock-based awards, or other performance awards that may be
granted in cash, shares of stock, or other property and are related to
performance goals. The plan is administered by the Compensation Committee of
the Board. The committee has full power and authority, subject to the terms of
the plan, to designate participants and the type and terms of any awards. Any
options granted may be incentive stock options or nonqualified stock options,
must be for no longer than 10 years and, except under limited circumstances,
are not transferable. The base price for any stock appreciation right must be
not less than 100% of the fair market value of a share of stock at the date of
grant.

The plan will be effective until October 1, 2006, but may be amended, altered,
suspended or discontinued at any time by the Board, subject to certain limited
exceptions. We have reserved 1,500,000 shares for issuance under the plan.

Stock Option Plan for Non-Employee Directors. The Stock Option Plan for Non-
Employee Directors is also administered by the Compensation Committee of the
Board. Prior to its termination in February 1999, the plan provided for option
grants of common stock to each director who was not an employee of BUCA and had
not been an employee for at least one year, in the amount of 1,333 shares on
first election or appointment to the Board and 666 shares on each of the
following anniversaries. The purchase price was 100% of the fair market value
of the common stock, as defined in the plan, at the time the option was
granted. The term of each option is ten years; however, the option is not
exercisable for the first year and will terminate if the optionee ceases to be
a director in the one-year period following the grant of the option. The
options are not transferable other than by will or the laws of descent and
distribution. We have reserved 26,666 shares for issuance under the plan. All
options outstanding under the plan when terminated shall remain outstanding. In
connection with the termination of the plan, the Board approved grants of
options to purchase 8,000 shares of common stock to each of our six non-
employee directors under the 1996 Stock Incentive Plan. These options have an
exercise price of $11.25 per share, are immediately exercisable and expire 10
years after grant. Non-employee directors will continue to be eligible for
option grants under the 1996 Stock Incentive Plan.

Paisano Partners Program. We have established the Paisano Partners program for
our general managers, kitchen managers and assistant managers. The program for
general managers has three primary components: profit sharing, the purchase of
shares of our common stock and a stock option grant. The profit sharing
component allows the general manager to participate in the profits of the
restaurant he or she manages. To participate in the Paisano Partners program,
general managers are required to purchase shares of our common stock worth
approximately $20,000, at fair market value. We will also loan the general
managers the purchase price of the stock at 8% interest, with the entire amount
payable over five years. Under the stock purchase agreement we enter into with
each general manager, we have certain repurchase rights regarding the stock.
General managers also receive a one-time option grant to purchase 2,000 shares
of our common stock at fair market value on the date of grant. The options are
exercisable only upon completion of five years of employment as a Paisano
Partner and expire 10 years after the date of grant. Participants in the

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<PAGE>

Paisano Partners program for kitchen managers participate in profit sharing and
receive a one-time option grant to purchase 1,000 shares of our common stock on
the same terms as that provided to general managers, but have no right to
purchase shares under the program. Participants in the Paisano Partners program
for assistant managers participate in profit sharing but receive no options and
have no right to purchase shares.

Compensation Committee Interlocks and Insider Participation

Philip A. Roberts, Don W. Hays, John P. Whaley and Paul Zepf, each a director,
are members of the Board's Compensation Committee.

39
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On September 30, 1996, we were spun off from our parent, Parasole Restaurant
Holdings, Inc. through a share dividend of our common stock pro rata among the
Parasole shareholders. The Parasole shareholders at the time of the dividend
included the Parasole Employer Stock Ownership Trust, owner of more than 5% of
a class of our capital stock, and Philip A. Roberts, Peter J. Mihajlov and Don
W. Hays, directors and owners of more than 5% of a class of our capital stock.

Series A Preferred Financing. In October 1996, we sold shares of Series A
Convertible Preferred Stock convertible into 1,493,331 shares of common stock
for an aggregate purchase price of $8,400,000, or $5.625 per common share. Upon
completion of this offering, all shares of our outstanding Series A Convertible
Preferred Stock will automatically convert into shares of common stock.

The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series A Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:

<TABLE>
<CAPTION>
5% Shareholders(/1/) Shares Purchased(/2/)
-------------------- ---------------------
<S> <C>
Norwest Equity Partners V, L.P....................... 711,111
Consumer Venture Partners II, L.P.................... 266,666
Northwood Ventures................................... 266,666
Regent Capital Partners, L.P......................... 177,778
</TABLE>

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

(/1/)See notes to "Principal and Selling Shareholders" for information relating
to the beneficial ownership of shares and identification of affiliated
shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
purchased shares of Series A Convertible Preferred Stock.

Series B Preferred Financing. In September 1997, we sold shares of Series B
Convertible Preferred Stock convertible into 640,739 shares of common stock for
an aggregate purchase price of $4,324,999.50, or $6.75 per common share. In
December 1997, we sold additional shares of Series B Convertible Preferred
Stock convertible into 640,738 shares of common stock for an aggregate purchase
price of $4,324,999.50, or $6.75 per common share. Upon completion of this
offering, all shares of our outstanding Series B Convertible Preferred Stock
will automatically convert into shares of common stock.

The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series B Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:

<TABLE>
<CAPTION>
5% Shareholders(/1/) Shares Purchased(/2/)
-------------------- ---------------------
<S> <C>
Norwest Equity Partners V, L.P....................... 370,370
National Dining Concepts, Inc........................ 296,296
Walden Investors..................................... 237,036
Consumer Venture Partners II, L.P.................... 148,148
Northwood Ventures................................... 148,147
</TABLE>

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

Series C Preferred Financing. In October 1998, we sold shares of Series C
Convertible Preferred Stock convertible into 1,092,679 shares of common stock
and related contingent value rights for an aggregate purchase price of
$8,400,007.02, or $7.6875 per common share. In December 1998, we sold
additional shares

40
<PAGE>

of Series C Convertible Preferred Stock convertible into 637,752 shares of
common stock and related contingent value rights for an aggregate purchase
price of $5,000,000, or $7.84 per common share. The contingent value rights
entitle the holders to receive, in the aggregate, up to 610,082 shares of
common stock if certain events regarding our common stock do not occur prior to
October 2001.

Upon completion of this offering, all shares of our outstanding Series C
Convertible Preferred Stock will automatically convert into shares of common
stock and the related contingent value rights will terminate. In connection
with such conversion and termination, an aggregate of 40,195 additional shares
of common stock will be issued to the holders of the Series C Convertible
Preferred Stock immediately after the completion of this offering.

The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series C Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:

<TABLE>
<CAPTION>
5% Shareholders(/1/) Shares Purchased(/2/)
-------------------- ---------------------
<S> <C>
Centre Capital Investors II, L.P..................... 1,288,156
Norwest Equity Partners V, L.P....................... 282,802
Northwood Ventures................................... 65,040
Walden-SBIC, L.P..................................... 45,994
Regent Capital Partners, L.P......................... 48,439
</TABLE>

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

Subordinated Debt Transactions. In October 1997, we entered into a subordinated
loan transaction under which we borrowed $2,500,000, including $500,000 from
Regent Capital Partners, L.P. Regent is a beneficial owner of more than 5% of a
class of our capital stock. In connection with the transaction, we also issued
warrants to purchase 16,111 shares of our common stock at $0.01 per share to
Regent. In May 1998, we borrowed an additional $3,500,000, including $1,500,000
from Regent. In connection with the May transaction, we also issued warrants to
purchase 48,332 shares of our common stock at $0.01 per share to Regent. The
indebtedness was repaid by us from amounts borrowed under our current credit
facilities.

In connection with these subordinated debt transactions, we issued warrants to
purchase an aggregate of 66,663 shares of our common stock at $0.01 per share
to the purchasers of our Series B Convertible Preferred Stock. The warrants
vest upon completion of our initial public offering, but only if the public
offering price per share is less than $13.50.

Agreements with Parasole. We have entered into an Amended and Restated
Management Agreement dated January 1, 1997, as amended, with Parasole. Philip
Roberts, Don Hays and Peter Mihajlov are officers, directors and shareholders
of Parasole as well as our directors and holders of more than 5% of a class of
our capital stock. Under the management agreement, Parasole provides
development and design support in connection with our new restaurants. In
exchange for these services, we pay Parasole a fee of $12,500 for each new
restaurant we open. Prior to the amendment of the management agreement, we
agreed to pay Parasole an accounting charge of $1,000 per month for the first
24 months after a new restaurant's opening. While we no longer incur new
charges under the amended management agreement, the 24-month period has not
expired for all of our restaurants opened prior to the amendment of the
management agreement. The amount paid by us to Parasole under the management
agreement in fiscal 1996 was $354,000, in fiscal 1997 was $270,000 and fiscal
1998 was $248,000.

We have a vendor relationship with Parasole Good Earth Bakery, owned by
Parasole, through which the bakery provides various baked goods to our
restaurants in the Minneapolis/St. Paul market. The relationship can be

41
<PAGE>

terminated at any time at our discretion. The amount paid by us to the bakery
in fiscal 1996 was $211,000, in fiscal 1997 was $180,000, and in fiscal 1998
was $169,000. We believe the terms of the supply arrangement are at least as
favorable as we could obtain from unrelated parties.

We have a redemption agreement with Parasole under which we are obligated to
repurchase shares of our common stock held by the Parasole Employee Stock
Ownership Trust until our stock is publicly traded. The Parasole Employee Stock
Ownership Plan holds a total of 499,936 shares of our common stock. Parasole
has similar obligations regarding its stock held by our ESOP.

Agreement with Steven Roberts. Steven Roberts, son of Philip Roberts, our
director and a holder of more than 5% of a class of our capital stock, from
time to time performs architectural services for us under a letter agreement.
The amount paid by us to Mr. Roberts for these services in fiscal 1998 was
$99,947. We believe the terms of the letter agreement are at least as favorable
as we could obtain from unrelated parties.

42
<PAGE>

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth information regarding the beneficial ownership
of our common stock as of the date of this prospectus and as adjusted to
reflect the sale of the 2,500,000 shares of common stock offered by us by this
prospectus by (1) each shareholder known by us to beneficially own more than
five percent of any class of our capital stock, (2) each of our directors, (3)
the named executive officers, and (4) all of our directors and executive
officers as a group. Except as otherwise noted below, each of the shareholders
identified in the table has sole voting and investment power with respect to
the shares of common stock beneficially owned by the person. The following
table gives effect to (1) the conversion of all outstanding shares of our
preferred stock, which will occur automatically upon the closing of the
offering, (2) the conversion of $775,000 in aggregate principal amount of our
outstanding subordinated debt, assuming a public offering price of $11.50 per
share, and (3) the exercise of warrants to purchase 64,444 shares of common
stock to be sold in this offering, and assumes the vesting of outstanding
contingent warrants.

<TABLE>
<CAPTION>
Shares
Beneficially
Owned Prior to Shares Beneficially
the Offering(/1/) Shares Owned After Offering
----------------- Being -----------------------
Name of Beneficial Owner Number Percent Offered Number Percent
- ------------------------ --------- ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Principal Shareholders,
Directors and Executive
Officers
Norwest Equity Partners V,
L.P.(/2/).................... 1,423,246 19.5 -- 1,423,246 14.5
Centre Capital Investors II,
L.P.(/3/).................... 1,348,249 18.5 -- 1,348,249 13.8
Philip A. Roberts(/4/)........ 1,138,898 15.7 50,000 1,088,898 11.2
Peter J. Mihajlov(/5/)........ 1,138,862 15.7 50,000 1,088,862 11.2
Don W. Hays(/6/).............. 1,132,330 15.6 50,000 1,082,330 11.1
Parasole Employee Stock
Ownership Trust(/7/)......... 499,936 6.9 -- 499,936 5.1
Northwood Ventures(/8/)....... 499,210 6.9 -- 499,210 5.1
Consumer Venture Partners II,
L.P.(/9/).................... 438,904 6.0 -- 438,904 4.5
National Dining Concepts,
Inc.(/10/)................... 311,710 4.3 -- 311,710 3.2
Regent Capital Partners,
L.P.(/11/)................... 303,539 4.2 -- 303,539 3.1
Walden Investors(/12/)........ 296,420 4.1 -- 296,420 3.0
John P. Whaley(/13/).......... 1,423,246 19.5 -- 1,423,246 14.5
David Yarnell(/14/)........... 438,904 6.0 -- 438,904 4.5
Paul Zepf(/15/)............... 1,348,246 18.5 -- 1,348,246 13.8
Joseph P. Micatrotto(/16/).... 244,747 3.3 * 244,747 2.5
Greg A. Gadel(/17/)........... 10,335 -- -- 10,335 --
All directors and officers as
a group (9 persons).......... 5,584,021 74.3 5,434,021 54.3
Additional Selling
Shareholders
Sirrom Funding
Corporation(/18/)............ 64,444 -- 64,444 0 --
Wedgewood Capital Limited
Partnership(/19/)............ 11,740 -- 7,246 4,494 --
Stewart Applebaum and Lloyd
Sigel(/20/).................. 11,740 -- 7,246 4,494 --
Michael Silverman(/21/)....... 11,740 -- 7,246 4,494 --
Thomas Wuerzberger(/22/)...... 11,740 -- 4,500 7,240 --
Harvey Ernest and Doris
Ernest(/23/)................. 11,740 -- 3,623 8,117 --
Dermot Rowland and Marvin
Schenk(/24/)................. 10,578 -- 4,500 6,078 --
Kevin Kuester(/25/)........... 7,246 -- 7,246 0 --
Donn Osmon(/25/).............. 7,246 -- 4,000 3,246 --
Thomas Grossman(/25/)......... 7,246 -- 3,646 3,600 --
Timothy Alevizos(/25/)........ 7,246 -- 3,500 3,746 --
Howard Kuretsky(/26/)......... 2,934 -- 1,811 1,123 --
Toby Silverman(/27/).......... 2,934 -- 1,811 1,123 --
</TABLE>

- --------

* Mr. Micatrotto has granted to the underwriters an option to purchase up to
an additional 16,000 shares of common stock as part of their option to cover
over-allotments, if any. This option will be exercised on a pro rata basis
with the option granted to us.

43
<PAGE>

(/1/)Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission that generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities and includes
shares of common stock issuable pursuant to the exercise of stock options
that are immediately exercisable or exercisable within 60 days. Unless
otherwise indicated, the persons or entities identified in this table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them. Percentage ownership calculations prior to and
after the offering are based on 7,238,932 shares and 9,738,932 shares,
respectively, of common stock outstanding. As of March 24, 1999, we had
105 shareholders of record.

(/2/)Includes (1) warrants for the purchase of 42,442 shares of common stock
exercisable within 60 days held by Norwest; (2) 6,522 shares of common
stock to be issued to Norwest upon completion of the offering; and (3)
options for the purchase of 9,999 shares of common stock exercisable
within 60 days granted to John P. Whaley. The address for Norwest is 222
South Ninth Street, Minneapolis, Minnesota 55402.

(/3/)Includes (1) 602,561 shares owned by State Board of Administration of
Florida; (2) 129,122 shares owned by Centre Capital Tax-Exempt Investors
II, L.P.; (3) 86,338 shares owned by Centre Capital Offshore Investors II,
L.P.; (4) 67,264 shares owned by Centre Partners Coinvestment, L.P.; (5)
6,082 shares owned by Centre Parallel Management Partners, L.P.; (6) 9,240
shares of common stock to be issued upon completion of the offering to
Centre Capital Investors II, L.P.; (7) 14,033 shares of common stock to be
issued upon completion of the offering to State Board of Administration of
Florida; (8) 3,007 shares of common stock to be issued upon completion of
the offering to Centre Capital Tax-Exempt Investors II, L.P.; (9) 2,010
shares of common stock to be issued upon completion of the offering to
Centre Capital Offshore Investors II, L.P.; (10) 1,566 shares of common
stock to be issued upon completion of the offering to Centre Partners
Coinvestment, L.P.; (11) 141 shares of common stock to be issued upon
completion of the offering to Centre Parallel Management Partners, L.P.;
(12) options for the purchase of 8,000 shares of common stock exercisable
within 60 days granted to Paul Zepf; (13) warrants for the purchase of
6,806 shares of common stock exercisable within 60 days held by Centre
Capital Investors II, L.P.; (14) warrants for the purchase of 2,216 shares
of common stock exercisable within 60 days held by Centre Capital Tax-
Exempt Investors II, L.P.; (15) warrants for the purchase of 1,482 shares
of common stock exercisable within 60 days held by Centre Capital Offshore
Investors II, L.P.; (16) warrants for the purchase of 103 shares of common
stock exercisable within 60 days held by Centre Parallel Management
Partners, L.P.; (17) warrants for the purchase of 10,336 shares of common
stock exercisable within 60 days held by State Board of Administration of
Florida and (18) warrants for the purchase of 1,153 shares of common stock
exercisable within 60 days held by Centre Partners Coinvestment, L.P. The
address for Centre is 30 Rockefeller Plaza, New York, New York 10020.

(/4/)Includes (1) 133,333 shares owned by the Roberts Family Limited
Partnership II; (2) 106,666 shares owned by Mr. Roberts' wife; (3) options
for the purchase of 8,000 shares of common stock exercisable within 60
days granted to Mr. Roberts; (4) options for the purchase of 35 shares of
common stock exercisable within 60 days granted to Mr. Robert's wife; (5)
499,936 shares of common stock held by the Parasole ESOT, of which Mr.
Roberts is a co-trustee, and (6) 97,226 shares of common stock held by the
BUCA Employee Stock Ownership Plan, of which Mr. Roberts is a co-trustee.
The address for Mr. Roberts is 1300 Nicollet Mall, Minneapolis, Minnesota
55403. Mr. Roberts is one of our directors and our chairman of the board.

(/5/)Includes (1) 166,666 shares owned by the Mihajlov Family Limited
Partnership; (2) 106,666 shares owned by Mr. Mihajlov's wife; (3) 13,066
shares held in the Mihajlov Irrevocable Grandchildren's Trust; (4) options
for the purchase of 8,000 shares of common stock exercisable within 60
days granted to Mr. Mihajlov; (5) 499,936 shares of common stock held by
the Parasole ESOT, of which Mr. Mihajlov is a co-trustee; and (6) 97,226
shares of common stock held by the BUCA Employee Stock Ownership Plan, of
which Mr. Mihajlov is a co-trustee. The address for Mr. Mihajlov is 2908
Hennepin Avenue South, Minneapolis, Minnesota 55408. Mr. Mihajlov is one
of our directors.

(/6/)Includes (1) 133,333 shares owned by the Hays Family Limited Partnership;
(2) 100,133 shares owned by Mr. Hays' wife; (3) options for the purchase
of 8,000 shares of common stock exercisable within 60 days granted to Mr.
Hays; (4) 499,936 shares of common stock held by the Parasole ESOT, of
which Mr. Hays is a co-trustee; and (5) 97,226 shares of common stock held
by the BUCA Employee Stock Ownership Plan, of which Mr. Hays is a co-
trustee. The address for Mr. Hays is 2908 Hennepin Avenue South,
Minneapolis, Minnesota 55408. Mr. Hays is one of our directors.

(/7/)The address for the Parasole ESOT is 2908 Hennepin Avenue South,
Minneapolis, Minnesota 55408.

(/8/)Includes (1) 89,466 shares owned by Northwood Capital Partners LLC; (2)
1,350 shares of common stock to be issued upon completion of the offering
to Northwood Ventures; (3) 149 shares of common stock to be issued upon
completion of the offering to Northwood Capital Partners LLC; (4) warrants
for the purchase of 14,318 shares of common stock exercisable within 60
days held by Northwood Ventures; (5) warrants for the purchase of 1,541
shares of common stock exercisable within 60 days held by Northwood
Capital Partners LLC; and (6) options for the purchase of 1,999 shares of
common stock exercisable within 60 days granted to Henry T. Wilson. The
address for Northwood is 485 Underhill Boulevard, Syosset, New York 11791.

(/9/)Includes (1) warrants for the purchase of 14,757 shares of common stock
exercisable within 60 days held by Consumer Venture Partners II, L.P.; and
(2) options for the purchase of 9,333 shares of common stock exercisable
within 60 days granted to David Yarnell. The address for Consumer Venture
is 3 Pickwick Plaza, Greenwich, Connecticut 06830.

(/10/)Includes warrants to purchase 15,414 shares of common stock exercisable
within 60 days held by National Dining Concepts, Inc. As of the date of
this prospectus National Dining Concepts, Inc. holds 23.1% of our Series
B Preferred Stock and upon closing of the offering, National Dining
Concepts, Inc. will hold less than 5% of our Common Stock.

(/11/)Includes (1) warrants to purchase 68,798 shares of common stock
exercisable within 60 days held by Regent Capital Partners, L.P.; and (2)
1,117 shares of common stock to be issued upon completion of the offering
to Regent Capital Partners, L.P. As of the date of this prospectus,
Regent Capital Partners, L.P. holds 11.9% of our Series A Preferred Stock
and upon closing of the offering, Regent Capital Partners, L.P. will hold
less than 5% of our common stock. The address for Regent Capital
Partners, L.P. is 505 Park Avenue, Suite 1700, New York, New York 10022.

44
<PAGE>

(/12/)Includes (1) 22,222 shares owned by Walden Ventures; (2) 7,407 shares
owned by Walden Capital Partners; (3) 172,780 shares owned by Walden-
SBIC, L.P.; (4) 28,770 shares owned by Walden Technology Ventures II,
L.P. (5) warrants to purchase 2,697 shares of common stock exercisable
within 60 days held by Walden Investors; (6) warrants to purchase 1,156
shares of common stock exercisable within 60 days held by Walden
Ventures; (7) warrants to purchase 385 shares of common stock exercisable
within 60 days held by Walden Capital Partners; (8) warrants to purchase
6,936 shares of common stock exercisable within 60 days held by Walden-
SBIC, L.P.; (9) warrants to purchase 1,156 shares of common stock
exercisable within 60 days held by Walden Technology Ventures II, L.P.;
(10) 909 shares of common stock to be issued upon completion of the
offering to Walden-SBIC, L.P.; and (11 ) 151 shares of common stock to be
issued upon completion of the offering to Walden Technology Ventures II,
L.P. As of the date of this Prospectus, Walden holds 18.5% of our Series
B Preferred Stock and upon closing of the offering, Walden will hold less
than 5% of our common stock. The address for Walden is 750 Battery
Street, Suite 700, San Francisco, California 94111.

(/13/)Consists of options for the purchase of 9,999 shares of common stock
exercisable within 60 days granted to Mr. Whaley and 1,413,247 shares of
common stock beneficially owned by Norwest Equity Partners V, L.P. Mr.
Whaley disclaims beneficial ownership of the 1,413,247 shares of common
stock owned by Norwest Equity Partners V, L.P. The address for Mr. Whaley
is 222 South Ninth Street, Minneapolis, Minnesota 55402.

(/14/)Consists of (1) options for the purchase of 9,333 shares of common stock
exercisable within 60 days granted to Mr. Yarnell; (2) 429,571 shares of
common stock beneficially owned by Consumer Venture Partners II, L.P.

(/15/)Consists of (1) options to purchase 8,000 shares of common stock
exercisable within 60 days granted to Mr. Zepf; and (2) 1,340,249 shares
of common stock beneficially owned by Centre Capital Investors II, L.P.
The address for Mr. Zepf is 30 Rockefeller Plaza, New York, New York
10020.

(/16/)Includes (1) options for the purchase of 131,521 shares of common stock
exercisable within 60 days granted to Mr. Micatrotto and (2) 97,226
shares of common stock held by the BUCA Employee Stock Ownership Plan, of
which Mr. Micatrotto is a co-trustee. Mr. Micatrotto is our president and
chief executive officer and one of our directors.

(/17/Consists)of options for the purchase of 10,335 shares of common stock
exercisable within 60 days granted to Mr. Gadel.

(/18/Consists)of warrants for the purchase of 64,444 shares of common stock
exercisable within 60 days issued to Sirrom. In each of October 1997 and
May 1998 we borrowed $2 million from Sirrom in a subordinated debt
transaction, In connection with the transaction we issued warrants to
purchase an aggregate of 128,888 shares of our common stock at $0.01 per
share to Sirrom. The indebtedness was subsequently repaid by us from
amounts borrowed under our credit facilities.

(/19/Consists)of 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt, assuming a
public offering price of $11.50 per share, and 4,494 shares of common
stock held by Wedgewood.

(/20/Consists)of (1) 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt held by
Messrs. Applebaum and Sigel, assuming a public offering price of $11.50
per share; (2) 2,247 shares of common stock held by Mr. Applebaum; and (3)
2,247 shares of common stock held by the Lloyd Sigel Trust, of which Mr.
Sigel is the beneficial owner.

(/21/Consists)of 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt, assuming a
public offering price of $11.50 per share and 4,494 shares of common stock
held by Mr. Silverman.

(/22/Consists)of 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt, assuming a
public offering price of $11.50 per share, and 4,494 shares of common
stock held by Mr. Wuerzberger.

(/23/Consists)of (1) 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt held by Mr.
Ernest and Ms. Ernest, assuming a public offering price of $11.50 per
share; (2) 2,247 shares of common stock held by Mr. Ernest; and (3) 2,247
shares of common stock held by Ms. Ernest.

(/24/Consists)of (1) 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt, assuming a
public offering of $11.50 per share, (2) 1,666 shares of common stock held
by Mr. Rowland and (3) 1,666 shares of common stock held by Mr. Schenk.

(/25/Consists)of 7,246 shares of common stock issuable upon conversion of
$50,000 in aggregate principal amount of our subordinated debt, assuming a
public offering price of $11.50 per share.

(/26/Consists)of 1,811 shares of common stock issuable upon conversion of
$12,500 in aggregate principal amount of our subordinated debt, assuming a
public offering price of $11.50 per share and 1,123 shares of common stock
held by Mr. Kuretsky.

(/27/Consists)of 1,811 shares of common stock issuable upon conversion of
$12,500 in aggregate principal amount of our subordinated debt, assuming a
public offering price of $11.50 per share, and 1,123 shares of common
stock held by the Toby Silverman Revocable Trust, of which Mr. Silverman
is the beneficial owner.

45
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, the 2,770,819 shares sold in this
offering will be freely tradable without restriction under the Securities Act,
unless purchased by an "affiliate" of ours, as that term is defined in Rule 144
under the Securities Act. The remaining 6,968,113 shares are "restricted
shares," as that term is defined in Rule 144. Of these shares (1) 1,597,551
will be eligible for immediate sale in the public market, subject to the
limitations of Rule 144, (2) 3,410,560 will be eligible for sale in the public
market 90 days from the completion of this offering, subject to the limitations
of Rule 144 and (3) the remaining 1,960,002 shares will be eligible for sale
pursuant to Rule 144. Of the 6,968,113 restricted shares, holders of an
aggregate of 6,811,545 shares have entered into lock-up agreements under which
they have agreed that they will not, without the prior written consent of U.S.
Bancorp Piper Jaffray, offer, sell or otherwise dispose of, any shares of
common stock, options or warrants to acquire shares of common stock or
securities exchangeable for or convertible into shares of common stock owned by
them during the 180-day period following the date of this prospectus. U.S.
Bancorp Piper Jaffray may, in its sole discretion at any time without notice,
release any portion of the shares subject to the lock-up agreements during the
180-day period.

In general, under Rule 144 as currently in effect, a person, or persons whose
shares are aggregated, including an affiliate, who has beneficially owned
shares for at least one year, within any three-month period commencing 90 days
after the date of this prospectus, may sell a number of shares that does not
exceed the greater of (1) one percent of the number of shares of common stock
then outstanding, this would be 97,389 shares immediately after this offering,
or (2) the average weekly trading volume of the common stock during the four
calendar weeks preceding the sale. Sales under Rule 144 are generally subject
to certain manner of sale provisions and notice requirements and to the
availability of current public information about us. Under Rule 144(k), a
person who is not deemed to have been our affiliate at any time during the 90
days preceding a sale, and who has beneficially owned the shares proposed to be
sold for at least two years, is entitled to sell the shares without having to
comply with the manner of sale, public information, volume limitation or notice
provisions of Rule 144. Under Rule 701 under the Securities Act, persons who
purchase shares upon exercise of options granted prior to the effective date of
this offering are entitled to sell the shares 90 days after the effective date
of this offering in reliance on Rule 144, without having to comply with the
holding period requirements of Rule 144 and, in the case of non-affiliates,
without having to comply with the public information, volume limitation or
notice provisions of Rule 144.

We intend to file a registration statement on Form S-8 covering all shares of
common stock issuable upon exercise of stock options in effect on the date of
this prospectus and stock option or other benefits to be granted under our 1996
Stock Incentive Plan and Stock Option Plan for Non-Employee Directors. We have
outstanding stock options with respect to an aggregate of 1,034,154 shares of
common stock as of the date of this prospectus. Upon this registration on Form
S-8, an additional 1,034,154 shares of common stock, together with any
additional shares of common stock which will be issuable pursuant to stock
options or other benefits to be granted under the 1996 Stock Incentive Plan,
will be eligible for sale in the public market.

Prior to the offering, there has been no market for the common stock, and we
cannot predict the effect, if any, that public sales of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales of substantial amounts of common stock in the public market
following the offering, or the perception that sales may occur, could adversely
affect the prevailing market price of the common stock and our ability to raise
capital through a public offering our equity securities.

46
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, our authorized capital stock will consist of
20,000,000 shares of common stock, par value $.01 per share, and 5,000,000
undesignated shares.

Common Stock

As of the date of this prospectus, there are 7,062,176 shares of common stock
outstanding, after giving effect to the conversion of preferred stock into
common stock in connection with this offering. These shares are held of record
by 105 persons.

Holders of common stock are entitled to one vote per share on all matters to be
voted upon by shareholders. All shares of common stock rank equally as to
voting and all other matters. The shares of common stock have no preemptive or
conversion rights, no redemption or sinking fund provisions, are not liable for
further call or assessment, and are not entitled to cumulative voting rights.
However, shares of common stock held in the Parasole Employee Stock Ownership
Trust and the Buca Employee Stock Ownership Plan have contractual redemption
rights that will terminate upon the closing of this offering. See note 6 to
notes to Consolidated Financial Statements for additional information regarding
these plans.

Subject to the prior rights of holders of preferred stock, the holders of
common stock are entitled to receive dividends when and as declared by the
Board out of funds legally available for dividends. We have never declared or
paid cash dividends. We currently intend to retain all future earnings for the
operation and expansion of our business and do not anticipate paying cash
dividends on the common stock in the foreseeable future.

Upon a liquidation of BUCA, creditors and holders of our preferred stock with
preferential liquidation rights will be paid before any distribution to holders
of our common stock.The holders of common stock would be entitled to receive a
pro rata distribution per share of any excess amount.

Our common stock has been approved for listing on the Nasdaq National Market
under the symbol "BUCA," subject to notice of issuance.

Preferred Stock

Upon completion of the offering, all of our issued and outstanding Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, and Series C
Convertible Preferred Stock will be converted into an aggregate of 4,505,239
shares of common stock. The conversion will occur at the applicable conversion
price of each series of preferred stock as provided in our Articles of
Incorporation. Upon conversion, all accrued and unpaid dividends on the
preferred stock will be eliminated.

Additional Preferred Stock

Our Articles of Incorporation empower the Board to issue the undesignated stock
from time to time in one or more series. The Board also may fix the
designation, privileges, preferences and rights and the qualifications,
limitations and restrictions of those shares, including dividend rights,
conversion rights, voting rights, redemption rights, terms of sinking funds,
liquidation preferences and the number of shares constituting any series or the
designation of the series. Terms selected could decrease the amount of earnings
and assets available for distribution to holders of common stock or adversely
affect the rights and powers, including voting rights, of the holders of the
common stock without any further vote or action by the shareholders. The
issuance of new preferred stock could have the effect of delaying or preventing
a change in control of the company or make removal of management more
difficult. Additionally, the issuance of new preferred stock may have the
effect of decreasing the market price of the common stock, and may adversely
affect the voting and other rights of the holders of common stock. While we
have no present intention to issue any shares of new preferred stock, any
issuance could have the effect of making it more difficult for a third party to
acquire a majority of our outstanding voting stock.

47
<PAGE>

Series A Convertible Subordinated Debentures

We have outstanding $1.8 million in principal amount of Series A Convertible
Subordinated Debentures due July 30, 2001. Under the debentures, we have agreed
to pay interest at a rate adjusted semi-annually equal to one percent in excess
of the rate announced or published by U.S. Bank as its reference or prime rate
in effect on the banking day immediately prior to January 1 and July 1 of each
year. The holders may elect to have their debentures paid in full on July 30,
1999 and receive a premium payment from us equal to 10% of the original
principal sum of the debenture. Upon completion of this offering, the holders
of the debentures will have the right, for a period of one year, to convert the
entire principal amount of their debentures into shares of our common stock at
a price per share equal to 60% of the price of the common stock being sold in
this offering. If the holder holds the debenture until maturity, the holder is
entitled to a premium payment from us equal to 20% of the original principal
sum of the debenture. Holders of $775,000 in aggregate principal amount of the
debentures have elected to convert them into shares of common stock in
connection with this offering.

Stock Option

In 1998, we granted a non-qualified stock option to purchase up to 16,000
shares of our common stock at an exercise price of $6.75 per share to
1204 Harmon Partnership. The options vest in eight equal annual amounts
beginning on May 31, 1999. The option expires upon the earlier to occur of
May 31, 2008 or, at our option, upon payment to 1204 Harmon Partnership of the
excess of the fair market value of the common stock underlying the option over
the exercise price upon the occurrence of certain circumstances. The options
provide for adjustments in the number of shares, to the nearest whole share,
subject to the option and the exercise price to give effect to any distribution
of assets, other than regular dividends, or debt securities to holders of
common stock or any change made in the number of outstanding common stock by a
recapitalization, reclassification, combination, share dividend, share
division, share combination or other similar change.

Warrants

We issued warrants to purchase 156,800 shares of Series A Convertible Preferred
Stock at an exercise price of $3.75 per share to our placement agents in
connection with the private placement of our Series A Convertible Preferred
Stock in October 1996. These warrants expire on October 23, 2003. Upon the
closing of this offering, these warrants will automatically convert into
warrants to purchase 104,532 shares of common stock at an exercise price of
$5.625 per common share.

We issued warrants to purchase 50,000 shares of Series B Convertible Preferred
Stock at an exercise price of $4.50 per share to our placement agent in the
connection with the private placement of our Series B Convertible Preferred
Stock. These warrants expire on September 2, 2004. Upon closing of this
offering, these warrants will automatically convert into warrants to purchase
33,333 shares of common stock at an exercise price of $6.75 per common share.

We issued warrants to purchase an aggregate of 66,663 shares of common stock at
an exercise price of $.01 per share to the purchasers of our Series B
Convertible Preferred Stock. These warrants will become vested and exercisable
if the public offering price per share in this offering is less than $13.50.
These warrants expire on September 30, 2002.

As partial consideration for subordinated loan financings of $6.0 million, we
issued warrants to purchase a total of 193,331 shares of common stock at an
exercise price of $.01 per share to our lenders. These warrants expire on
September 20, 2002 with respect to 80,555 shares and on June 30, 2003 with
respect to the remaining shares. We granted the warrantholders the right to
sell their warrants to us for a period of 30 days immediately prior to their
expiration at a purchase price equal to the fair market value of the shares of
common stock issuable upon exercise of the warrant. This right will expire upon
the closing of this offering. Warrants to purchase 64,444 shares of common
stock are being exercised in connection with this offering, and the shares
issued are being included in this offering.

48
<PAGE>

All of these warrants provide for anti-dilution adjustments in the event of
stock splits, stock dividends, sales by us of our stock at, or issuance of
options or warrants containing an exercise price of, less than fair market
value or merger, consolidation, recapitalization or similar transactions.

Registration and Other Rights

We have granted registration rights to the holders of shares of common stock
issued in exchange for any of our preferred stock under the terms of the
Securities Purchase Agreement dated as of October 13, 1998 by and between us
and the purchasers named in the agreement. Following the closing of this
offering, approximately 4,571,902 shares of common stock, including 66,663
shares subject to outstanding warrants, will be entitled to these rights. Under
the terms of the Securities Purchase Agreement, the holders have the right to
require us to register their shares at our expense under the circumstances
described in that agreement. In addition, the holders have the right to have
any or all of their shares included, at our expense, in a registration
statement relating to common stock filed by us, subject to the right of an
underwriter to limit the number of the holders' shares to be included in the
registration. In connection with any registration under these provisions, we
are required to indemnify the holders participating in an offering against
civil liabilities under the Securities Act. Warrants to purchase an aggregate
of 137,865 shares of our common stock issued in connection with the sales of
the Series A Convertible Preferred Stock and the Series B Convertible Preferred
Stock contain similar registration rights provisions.

We also granted piggyback registration rights under the warrants to purchase
193,331 shares of our common stock granted to the lenders in our subordinated
debt transactions. Upon completion of this offering 128,887 shares will be
subject to these rights. See "Certain Relationships and Related Transactions--
Subordinated Debt Transactions" for a discussion of these subordinated debt
transactions. The rights are subject to the right of an underwriter to limit
the number of the holders' shares to be included in the registration. The
warrants grant the holders the right to sell the warrants back to us for a
period of 30 days prior to their expiration at a purchase price equal to the
fair market value of the shares of common stock issuable upon exercise of the
warrants and grant the holders co-sale rights with respect to sales of shares
by Philip A. Roberts, Peter J. Mihajlov, Don W. Hays, Joseph P. Micatrotto or
Barbara Marshall.

Under the terms of a Non-Statutory Stock Option Agreement between us and 1204
Harmon Partnership, we have granted the holder piggyback registration rights
with respect to the 16,000 shares covered by the option agreement. The rights
are subject to the right of an underwriter to limit the number of the holders'
shares to be included in the registration. In connection with any registration
under these provisions, we are required to indemnify the holder participating
in an offering against civil liabilities under the Securities Act.

Potential Anti-Takeover Effect of Provisions of Charter Documents and Minnesota
Law

Provisions of our Articles of Incorporation and By-Laws to be effective upon
the closing of this offering and of Minnesota law described below could have an
anti-takeover effect. These provisions are intended to provide management
flexibility to enhance the likelihood of continuity and stability in the
composition of our Board of Directors and in the policies formulated by the
Board and to discourage an unsolicited takeover of the company, if the Board
determines that such a takeover is not in the best interests of the company and
our shareholders. However, these provisions could have the effect of
discouraging attempts to acquire us which could deprive our shareholders of
opportunities to sell their shares of common stock at prices higher than
prevailing market prices.

Under the Articles, the Board will be classified into three classes of
Directors, and Directors may be removed by shareholders only by a vote of
holders of at least 75% of the voting power. For the shareholders to call a
meeting to take action concerning a business combination, the By-Laws require
that holders of at least 25% of the voting power must join in the request. The
By-Laws establish procedures, including advance notice procedures, with regard
to shareholder proposals and the nomination of candidates for election as
directors.

49
<PAGE>

Section 302A.671 of the Minnesota Statutes applies, with certain exceptions, to
any acquisitions of our voting stock from a person other than us, and other
than in connection with certain mergers and exchanges to which we are party
resulting in the beneficial ownership of 20% or more of the voting stock then
outstanding. Section 302A.671 requires approval of the granting of voting
rights for the shares received pursuant to any such acquisitions by a majority
vote of our shareholders. In general, shares acquired without this approval are
denied voting rights and can be called for redemption at their then fair market
value by us within 30 days after the acquiring person has failed to deliver a
timely information statement to us or the date the shareholders voted not to
grant voting rights to the acquiring person's shares.

Section 302A.673 of the Minnesota Statutes generally prohibits any business
combination by us, or any subsidiary of us, with any shareholder that purchases
10% or more of our voting shares (an "interested shareholder") within four
years following the interested shareholder's share acquisition date, unless the
business combination is approved by a committee of all of the disinterested
members of our Board of Directors before the interested shareholder's share
acquisition date.

Section 302A.675 of the Minnesota Statutes generally prohibits an offeror from
acquiring shares of a publicly held Minnesota corporation within two years
following the offeror's last purchase of the corporation's shares pursuant to a
takeover offer with respect to that class, unless the corporation's
shareholders are able to sell their shares to the offeror upon substantially
equivalent terms as those provided in the earlier takeover offer. This statute
will not apply if the acquisition of shares is approved by a committee of all
of the disinterested members of our Board of Directors before the purchase of
any shares by the offeror pursuant to a takeover offer.

Transfer Agent and Registrar

Norwest Bank Minnesota, National Association has been appointed as the transfer
agent and registrar for our common stock.

50
<PAGE>

UNDERWRITING

The underwriters named below, for whom U.S. Bancorp Piper Jaffray Inc. and
NationsBanc Montgomery Securities LLC are acting as representatives, have
agreed to buy, subject to the terms and conditions of the purchase agreement,
the number of shares listed opposite their names below. Shares purchased from
the selling shareholders include 64,444 shares issuable upon exercise of a
warrant that the underwriters are purchasing from a selling shareholder. The
underwriters are committed to purchase and pay for all of the shares if any are
purchased, other than those shares covered by the over-allotment option
described below.

<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
U.S. Bancorp Piper Jaffray Inc. ............................
NationsBanc Montgomery Securities LLC.......................

---------
Total................................................... 2,770,819
=========
</TABLE>

The underwriters have advised us and the selling shareholders that they propose
to offer the shares to the public at $ per share. The underwriters propose
to offer the shares to certain dealers at the same price less a concession of
not more than $ per share. The underwriters may allow and the dealers may
reallow a concession of not more than $ per share on sales to certain other
brokers and dealers. After the offering, these figures may be changed by the
representatives.

Of the 2,500,000 shares of common stock offered by us, up to 200,000 shares
will be reserved for sale to persons designated by us. Shares not sold to these
persons will be reoffered immediately by the underwriters to the public at the
initial public offering price.

We have granted to the underwriters an option to purchase up to an additional
399,622 shares of common stock from us and Joseph P. Micatrotto has granted to
the underwriters an option to purchase up to an additional 16,000 shares of
common stock, on a pro rata basis, at the same price to the public, and with
the same underwriting discount, as set forth in the table on the cover page of
this prospectus. The underwriters may exercise this option any time during the
30-day period after the date of this prospectus, but only to cover over-
allotments, if any. To the extent the underwriters exercise the option, each
underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of the additional shares as it was obligated
to purchase under the purchase agreement.

We intend to use more than 10% of the net proceeds from the sale of the shares
offered by us by this prospectus to repay indebtedness owed by us to U.S. Bank,
an affiliate of U.S. Bancorp. See "Use of Proceeds". U.S. Bancorp is an
affiliate of U.S. Bancorp Piper Jaffray, one of the underwriters. The decision
of U.S. Bancorp Piper Jaffray to underwrite this offering was made
independently of U.S. Bancorp, which had no involvement in determining whether
or when to underwrite this offering or the terms of this offering. U.S.
Bankcorp Piper Jaffray will not receive any benefit from this offering other
than its respective portion of the underwriting fees payable by us. The
offering is being made in compliance with the requirements of Rule 2710(c)(8)
of the National Association of Securities Dealers, Inc. Conduct Rules. This
rule provides generally that if more than 10% of the net proceeds from the sale
of stock, not including underwriting compensation, is paid to the underwriters
or their affiliates, the initial public offering price of the stock may not be
higher than that recommended by a "qualified independent underwriter" ("QIU")
meeting standards set forth in Rule 2720(c)(3) of the NASD Conduct Rules.
NationsBanc Montgomery Securities LLC has agreed to act as the QIU in pricing
the offering and conducting due diligence. The initial public offering price of
the shares set

51
<PAGE>

forth on the cover page of this prospectus is no higher than the price
recommended by NationsBanc Montgomery. Moreover, NationsBanc Montgomery, as
QIU, has performed due diligence investigations and has reviewed and
participated in the preparation of this prospectus.

The following table shows the underwriting fees to be paid to the underwriters
in connection with this offering. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option.

<TABLE>
<CAPTION>
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.................................... $ $
Total........................................ $ $
</TABLE>

U.S. Bancorp Piper Jaffray acted as placement agent in connection with the
private placement of our Series A Convertible Preferred Stock in October 1996.
We issued warrants to purchase 112,000 shares of Series A Convertible Preferred
Stock convertible into 74,666 shares of common stock at an exercise price of
$5.625 per common share to U.S. Bancorp Piper Jaffray for its services as
placement agent. These warrants became exercisable in May 1997 and expire on
October 23, 2003. We paid U.S. Bancorp Piper Jaffray $421,000 for its services
as placement agent. U.S. Bancorp Piper Jaffray also purchased 53,333 shares of
Series A Convertible Preferred Stock convertible into 35,555 shares of common
stock at a price of $5.625 per common share, the same price paid by other
investors for the Series A Convertible Preferred Stock.

U.S. Bancorp Piper Jaffray also acted as placement agent in connection with the
private placement of our Series B Convertible Preferred Stock in September
1997. We issued warrants to purchase 50,000 shares of Series B Convertible
Preferred Stock convertible into 33,333 shares of common stock at an exercise
price of $6.75 per common share to U.S. Bancorp Piper Jaffray for its services
as placement agent. These warrants became exercisable on October 31, 1997 and
expire on September 2, 2004. We paid U.S. Bancorp Piper Jaffray $75,000 for its
services as placement agent.

Standby Fund 1997, an entity controlled by affiliates of U.S. Bancorp Piper
Jaffray, and U.S. Bancorp Piper Jaffray also purchased a total of 55,556 shares
of Series B Convertible Preferred Stock convertible into 37,037 shares of
common stock at a price of $6.75 per common share, the same price paid by other
investors for the Series B Convertible Preferred Stock. Along with the other
purchasers of Series B Preferred Stock, Standby Fund was issued, pro rata,
warrants to purchase 1,926 shares of our common stock at an exercise price of
$.01 per share. These warrants only become vested and exercisable upon
completion of this offering if the public offering price per share is less than
$13.50.

U.S. Bancorp Piper Jaffray has provided investment banking services to us in
1998 and 1999 and will receive fees in the amount of $45,000 for such services.

We and the selling shareholders have agreed to indemnify the underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or to contribute to payments that the underwriters may be required to make
in respect to those liabilities.

The underwriters have informed us that neither they, nor any other underwriter
participating in the distribution of the offering, will make sales of the
common stock offered by this prospectus to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.

The offering of our shares of common stock is made for delivery when, as and if
accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject an order for the purchase of shares in whole or
part.

We and each of our directors, executive officers and principal shareholders and
the selling shareholders have agreed to certain restrictions on our ability to
sell additional shares of our common stock for a period of 180 days after the
date of this prospectus. We have agreed not to directly or indirectly offer for
sale, sell, contract to sell, grant any option for the sale of, or otherwise
issue or dispose of, any shares of common stock,

52
<PAGE>

options or warrants to acquire shares of common stock, or any related security
or instrument, without the prior written consent of U.S. Bancorp Piper Jaffray.
The agreements provide exceptions for (1) sales to underwriters pursuant to the
purchase agreement (2) our sales in connection with the exercise of options
granted and the granting of options to purchase shares under our existing stock
option plans and (3) other exceptions.

Prior to the offering, there has been no established trading market for the
common stock. The initial public offering price for the shares of common stock
offered by this prospectus was negotiated by us and the underwriters as
recommended by the QIU. The factors considered in determining the initial
public offering price include the history of and the prospects for the industry
in which we compete, our past and present operations, our historical results of
operations, our prospects for future earnings, the recent market prices of
securities of generally comparable companies and the general condition of the
securities markets at the time of the offering and other relevant factors.
There can be no assurance that the initial public offering price of the common
stock will corresponded to the price at which the common stock will trade in
the public market subsequent to this offering or that an active public market
for the common stock will develop and continue after this offering.

To facilitate the offering, the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock during
and after the offering. Specifically, the underwriters may over-allot or
otherwise create a short position in the common stock for their own account by
selling more shares of common stock than have been sold to them by us and the
selling shareholders. The underwriters may elect to cover any such short
position by purchasing shares of common stock in the open market or by
exercising the over-allotment option granted to the underwriters. In addition,
the underwriters may stabilize or maintain the price of the common stock by
bidding for or purchasing shares of common stock on the open market and may
impose penalty bids. If penalty bids are imposed, selling concessions allowed
to syndicate members or other broker-dealers participating in the offering are
reclaimed if shares of common stock previously distributed in the offering are
repurchased, whether in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain the
market price of the common stock at a level above that which might otherwise
prevail in the open market. The imposition of a penalty bid may also affect the
price of the common stock to the extent that it discourages resales of the
common stock. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on the Nasdaq
National Market or otherwise and, if commenced, may be discontinued at any
time.

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus and
certain other legal matters will be passed upon for us by Faegre & Benson LLP,
Minneapolis, Minnesota. The validity of the shares of common stock offered by
this prospectus will be passed upon for the underwriters by Dorsey & Whitney
LLP, Minneapolis, Minnesota.

EXPERTS

The consolidated financial statements at December 27, 1998 and December 28,
1997 and for each of the two fiscal years in the period ended December 27,
1998, included in this prospectus and registration statement have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein and elsewhere in the registration statement and are included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.

The consolidated financial statements for the year ended December 31, 1996
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.

53
<PAGE>

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the stock
we are offering by this prospectus. This prospectus does not include all of the
information contained in the registration statement. You

should refer to the registration statement and its exhibits for additional
information. Whenever we make reference in this prospectus to any of our
contracts, agreements or other documents, the references are not necessarily
complete and you should refer to the exhibits attached to the registration
statement for copies of the actual contract, agreement or other document. When
we complete this offering, we will also be required to file annual, quarterly
and special reports, proxy statements and other information with the SEC.

You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facilities at
450 Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at
450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-
0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the Nasdaq
National Market. For further information on obtaining copies of our public
filings at the Nasdaq National Market you should call (212) 656-5060.

54
<PAGE>

BUCA, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report........................................ F-2
Report of Independent Public Accountants............................ F-3
Consolidated Balance Sheets as of December 28, 1997 and December 27,
1998............................................................... F-4
Consolidated Statements of Operations for the fiscal years ended
December 31, 1996, December 28, 1997 and December 27, 1998 ........ F-5
Consolidated Statements of Shareholders' Deficit for the fiscal
years
ended December 31, 1996, December 28, 1997 and December 27, 1998... F-6
Consolidated Statements of Cash Flows for the fiscal years ended
December 31, 1996, December 28, 1997 and December 27, 1998......... F-7
Notes to Consolidated Financial Statements.......................... F-8
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
BUCA, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of BUCA, Inc. and
Subsidiaries (the Company) as of December 28, 1997 and December 27, 1998, and
the related consolidated statements of operations, shareholders' deficit, and
cash flows for the fiscal years ended December 28, 1997 and December 27, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 1997 and 1998 consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 1997 and 1998 consolidated financial statements present
fairly, in all material respects, the financial position of BUCA, Inc. and
Subsidiaries as of December 28, 1997 and December 27, 1998, and the results of
their operations and their cash flows for the fiscal years then ended in
conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, in fiscal 1997
the Company changed its method of accounting for preopening costs.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota
February 17, 1999

F-2
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To BUCA, Inc:

We have audited the accompanying consolidated statements of operations,
shareholders' deficit and cash flows of BUCA, Inc. (a Minnesota corporation)
and Subsidiaries (the Company) for the year ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based upon our audit.

We conducted our audit 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 our audit provides a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
BUCA, Inc. and Subsidiaries for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.

/s/ Arthur Andersen LLP

Minneapolis, Minnesota
March 14, 1997

F-3
<PAGE>

BUCA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
December 28, 1997 and December 27, 1998
(in thousands, except for share and per share data)

<TABLE>
<CAPTION>
Pro forma
Shareholders'
Equity 1998
1997 1998 (Note 12)
------- -------- -------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................... $ 6,099 $ 6,576
Accounts receivable.......................... 284 1,160
Inventories.................................. 545 935
Prepaids and other........................... 457 585
------- --------
Total current assets....................... 7,385 9,256
PROPERTY AND EQUIPMENT, net................... 13,428 27,697
OTHER ASSETS.................................. 475 607
------- --------
$21,288 $ 37,560
======= ========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable............................. $ 2,309 $ 3,257
Accrued expenses............................. 962 2,638
Current maturities of long-term debt......... 320 205
------- --------
Total current liabilities.................. 3,591 6,100
LONG-TERM DEBT, less current maturities....... 5,140 7,661
DEFERRED RENT................................. 17 239
OTHER LIABILITIES............................. 127
COMMITMENTS AND CONTINGENCIES (Notes 6, 7, and
8)
REDEEMABLE STOCK (Notes 6 and 9):
Preferred stock, $.01 par value, cumulative,
Series A convertible--2,396,800 shares
authorized; 2,240,000 shares issued and
outstanding................................. 8,984 9,665 $ --
Preferred stock, $.01 par value, cumulative,
Series B convertible--2,100,000 shares
authorized; 1,922,222 shares issued and
outstanding................................. 8,777 9,441 --
Preferred stock, $.01 par value, cumulative,
Series C convertible--3,679,053 shares
authorized; 2,614,634 shares issued and
outstanding................................. 13,154 --
Common stock, $.01 par value; 601,929 shares
issued and outstanding...................... 4,063 4,713 --
------- -------- --------
21,824 36,973 --
SHAREHOLDERS' (DEFICIT) EQUITY:
Undesignated stock, 617,147 shares
authorized, none issued or outstanding
Common stock, $.01 par value--13,100,000
shares authorized; 1,899,246 and 1,918,056
shares issued and outstanding,
respectively................................ 19 19 93
Additional paid-in capital................... 36,899
Accumulated deficit.......................... (9,032) (13,266) (13,266)
------- -------- --------
(9,013) (13,247) 23,726
Notes receivable from shareholders........... (271) (293) (293)
------- -------- --------
Total shareholders' (deficit) equity ...... (9,284) (13,540) 23,433
------- -------- --------
$21,288 $ 37,560 $ 37,560
======= ======== ========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

BUCA, INC. AND SUBSIDIARIES

Consolidated Statements of Operations
For the Fiscal Years Ended December 31, 1996,
December 28, 1997 and December 27, 1998
(in thousands, except for share and per share data)

<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
RESTAURANT SALES........................... $ 11,316 $ 19,030 $ 38,483
RESTAURANT COSTS:
Product................................... 3,471 5,520 10,876
Labor..................................... 3,723 6,478 12,548
Direct and occupancy...................... 2,242 3,750 7,861
Depreciation and amortization............. 381 781 1,617
---------- ---------- ----------
Total restaurant costs................. 9,817 16,529 32,902
---------- ---------- ----------
INCOME FROM RESTAURANT OPERATIONS.......... 1,499 2,501 5,581
GENERAL AND ADMINISTRATIVE EXPENSES........ 1,988 3,760 5,579
PREOPENING COSTS........................... 430 1,140 1,895
---------- ---------- ----------
OPERATING LOSS............................. (919) (2,399) (1,893)
INTEREST EXPENSE........................... 295 497 1,036
---------- ---------- ----------
LOSS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.. (1,214) (2,896) (2,929)
(BENEFIT) PROVISION FOR INCOME TAXES....... (101) 72 17
---------- ---------- ----------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE...................... (1,113) (2,968) (2,946)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE RELATED TO PREOPENING COSTS..... (351)
---------- ---------- ----------
NET LOSS................................... $ (1,113) $ (3,319) $ (2,946)
========== ========== ==========
CUMULATIVE PREFERRED STOCK DIVIDENDS,
ACCRETION OF PREFERRED STOCK TO REDEMPTION
VALUE, AND CHANGE IN REDEEMABLE COMMON
STOCK..................................... (3,687) (1,986) (2,189)
---------- ---------- ----------
NET LOSS APPLICABLE TO COMMON STOCK........ $ (4,800) $ (5,305) $ (5,135)
========== ========== ==========
NET LOSS PER COMMON SHARE--BASIC AND
DILUTED................................... $ (1.96) $ (2.13) $ (2.04)
========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES ASSUMED
OUTSTANDING--BASIC AND DILUTED............. 2,444,666 2,490,136 2,512,309
========== ========== ==========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

BUCA, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders' Deficit
(in thousands, except for share data)

<TABLE>
<CAPTION>
Notes
Common Stock Stock Additional Receivable Total
----------------- Subscription Paid-in Accumulated from Shareholders'
Shares Amount Receivable Capital Deficit Shareholders Deficit
--------- ------ ------------ ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1995................... 1,842,738 $18 $ (6) $ 13 $ (173) $ (148)
Collection on stock
subscription
receivable............ 6 6
Change in redeemable
common stock.......... (13) (3,373) (3,386)
Preferred stock
dividends............. (111) (111)
Accretion of preferred
stock................. (190) (190)
Net loss............... (1,113) (1,113)
--------- --- ---- ----- -------- --------
BALANCE AT DECEMBER 31,
1996................... 1,842,738 18 -- -- (4,960) (4,942)
Issuance of common
stock options......... 350 350
Issuance of common
stock warrants........ 544 544
Issuance of common
stock................. 65,766 1 389 $(275) 115
Repurchase of common
stock................. (9,258) (50) (50)
Payments of notes
receivable due from
shareholders.......... 4 4
Change in redeemable
common stock.......... (677) (677)
Preferred stock
dividends............. (556) (229) (785)
Accretion of preferred
stock................. (524) (524)
Net loss............... (3,319) (3,319)
--------- --- ---- ----- -------- ----- --------
BALANCE AT DECEMBER 28,
1997................... 1,899,246 19 -- -- (9,032) (271) (9,284)
Issuance of common
stock warrants........ 761 761
Issuance of common
stock................. 28,882 200 (160) 40
Repurchase of common
stock................. (10,072) (60) (60)
Payments of notes
receivable due from
shareholders.......... 138 138
Change in redeemable
common stock.......... (650) (650)
Preferred stock
dividends............. (251) (1,041) (1,292)
Accretion of preferred
stock................. (247) (247)
Net loss............... (2,946) (2,946)
--------- --- ---- ----- -------- ----- --------
BALANCE AT DECEMBER 27,
1998................... 1,918,056 $19 $-- $ -- $(13,266) $(293) $(13,540)
========= === ==== ===== ======== ===== ========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

BUCA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
For the Fiscal Years Ended December 31, 1996,
December 28, 1997, and December 27, 1998
(in thousands)

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(1,113) $(3,319) $ (2,946)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization.................... 381 781 1,617
Cumulative effect of change in accounting
principle....................................... 351
Deferred income taxes............................ 34
Loss (gain) on sale of property and equipment.... 112 (52)
Accretion of call premium........................ 50 51 51
Amortization of debt discount.................... 216
Issuance of common stock and common stock options
for services.................................... 439
Change in assets and liabilities:
Accounts receivable............................. (43) (130) (876)
Inventories..................................... (101) (247) (390)
Preopening costs................................ (134)
Prepaids and other.............................. (27) (370) (128)
Accounts payable................................ 582 985 948
Accrued expenses................................ 236 (137) 1,676
Other liabilities............................... 222
------- ------- --------
Net cash (used in) provided by operating
activities................................... (169) (1,450) 338
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment................ (2,783) (7,896) (17,864)
Escrow deposits................................... (551) (131)
Increase in other assets.......................... (33) (45) (48)
Proceeds from sale of property and equipment...... 2,263
------- ------- --------
Net cash used in investing activities......... (3,367) (8,072) (15,649)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.......... 896 2,500 3,500
Principal payments on long-term debt.............. (331) (489) (599)
Collection on stock subscription receivable....... 6
Payments of notes receivable from shareholders.... 4 80
Repurchase of common stock........................ (30)
Net proceeds from issuance of preferred stock..... 7,614 8,537 12,958
Issuance of common stock.......................... 40
Loan and lease acquisition costs.................. (251) (191)
Principal payments on note payable................ (104) (400)
Proceeds from issuance of note payable............ 400
------- ------- --------
Net cash provided by financing activities..... 8,481 9,871 15,788
------- ------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS.......... 4,945 349 477
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR..... 805 5,750 6,099
------- ------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR........... $ 5,750 $ 6,099 $ 6,576
======= ======= ========
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE>

BUCA, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements
Fiscal Years Ended December 31, 1996, December 28, 1997,
and December 27, 1998

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business--BUCA, Inc. and Subsidiaries (BUCA or the Company) develops
and operates family-style, immigrant Southern Italian restaurants located in
Minnesota, Wisconsin, California, Illinois, Indiana, Arizona, Ohio, Kansas, and
Washington. Effective December 31, 1994, Parasole Restaurant Holdings, Inc.
(Parasole) acquired all the common stock of BUCA, which resulted in BUCA
becoming a wholly owned subsidiary of Parasole. On September 30, 1996, the
Parasole Board of Directors in a spin-off distributed all of the outstanding
common stock of BUCA pro rata to the Parasole shareholders. Prior to a written
action of the Board of Directors on May 14, 1996, the Company was known as BUCA
Ventures, Inc.

The Company incurred net losses of $1,113,000, $3,319,000 and $2,946,000 in
1996, 1997 and 1998, respectively, and as of December 27, 1998, had an
accumulated deficit of $13,266,000. Losses have been primarily attributable to
costs and expenses incurred in the completion of the development and opening of
new restaurants and the costs associated with the hiring of senior corporate
management to position the Company for its future expansion plans. Future
revenues and results from operations will depend upon various factors,
including the Company's ability to open new restaurants on a timely and
profitable basis and general economic conditions. The Company's ability to meet
its expansion plans and achieve profitability depends on its ability to obtain
additional financing for the development of new locations currently under
consideration. There are no assurances that such financing will be available on
terms acceptable or favorable to the Company.

The Company manages its operations by restaurant. All of the Company's
restaurants operate under the same concept, are marketed to similar customers,
and have comparable economic characteristics. The Company has aggregated its
operating segments into one reportable segment.

Principles of Consolidation--The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during the reporting
period. Actual results could differ from those estimates.

Cash and Cash Equivalents--The Company considers all unrestricted demand
deposits and all unrestricted highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents. At December
28, 1997 and December 27, 1998, cash and cash equivalents consisted primarily
of money market funds.

Fair Value of Financial Instruments--At December 28, 1997 and December 27,
1998, the fair values of cash and cash equivalents, accounts receivable, and
accounts payable approximate their carrying value due to the short-term nature
of the instrument. The fair value of debt is estimated at its carrying value
based upon current rates available to the Company. The fair value of the
redeemable preferred stock is estimated at $35,375,000 based upon the December
1998 closing of the Series C preferred stock private placement.

F-8
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Inventories--Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method of valuation. Inventories
consisted of the following as of December 28, 1997 and December 27, 1998 (in
thousands):

<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Food and beverage............................................... $300 $521
Supplies........................................................ 245 414
---- ----
$545 $935
==== ====
</TABLE>

Other Assets--Other assets consisted of the following as of December 28, 1997
and December 27, 1998 (in thousands):

<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Loan and lease acquisition costs, net.......................... $300 $365
Escrow deposits................................................ 131 131
Other.......................................................... 44 111
---- ----
$475 $607
==== ====
</TABLE>

Loan and lease acquisition costs are being amortized over the term of the
related debt or lease. Accumulated amortization as of December 28, 1997 and
December 27, 1998 was $94,000 and $206,000, respectively.

Accrued expenses--Accrued expenses consisted of the following as of December
28, 1997 and December 27, 1998 (in thousands):

<TABLE>
<CAPTION>
1997 1998
---- ------
<S> <C> <C>
Accrued payroll and related benefits......................... $315 $1,117
Gift certificate liability................................... 230 518
Accrued sales taxes.......................................... 241 546
Other accrued expenses....................................... 176 457
---- ------
$962 $2,638
==== ======
</TABLE>

Recoverability of Long-Lived Assets--The Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate the carrying
value amount of an asset or group of assets may not be recoverable. The Company
considers a history of operating losses to be its primary indicator of
potential impairment. Assets are grouped and evaluated for impairment at the
lowest level for which there are identifiable cash flows, individual
restaurants. A restaurant is deemed to be impaired if a forecast of
undiscounted future operating cash flows directly related to the restaurant is
less than its carrying amount. If a restaurant is determined to be impaired,
the loss is measured as the amount by which the carrying amount of the
restaurant exceeds its fair value. Fair value is an estimate based on the best
information available, including prices for similar assets or the results of
valuation techniques such as discounted estimated future cash flows as if the
decision to continue to use the impaired restaurant was a new investment
decision. The Company generally measures fair value by discounting estimated
future cash flows.

Net Loss Per Share--Basic loss per share is computed by dividing net loss by
the weighted average number of common shares outstanding. Diluted earnings per
share assumes conversion of the convertible subordinated debentures and
convertible preferred stock as of the beginning of the year and exercise of
stock options and warrants using the treasury stock method, if dilutive.
Dilutive net loss per share for 1996, 1997, and 1998 are the same as basic net
loss per share due to the antidilutive effect of the assumed exercise of stock
options, warrants, convertible subordinated debentures, and convertible
preferred stock securities.

F-9
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Diluted loss per share excludes the following due to their antidilutive effect:

<TABLE>
<CAPTION>
1996 1997 1998
------------------ ------------------ ------------------
Weighted Weighted Weighted
Average Average Average
Price Price Price
Number Of Per Number of Per Number of Per
Shares Share Shares Share Shares Share
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Stock warrants.......... 104,532 $5.63 218,420 $3.73 331,196 $2.46
Stock options........... 13,331 4.84 581,507 5.38 854,155 6.08
Convertible preferred
stock.................. 1,493,331 5.63 2,774,808 6.14 4,505,239 6.76
Convertible subordinated
debentures............. 565,079 3.15 565,079 3.15 439,506 4.05
--------- ----- --------- ----- --------- -----
2,176,273 $4.98 4,139,814 $5.50 6,130,096 $6.24
========= ===== ========= ===== ========= =====
</TABLE>

Postemployment and Postretirement Benefits--The Company does not provide
postemployment health care or postretirement benefits.

Stock Compensation--The Company accounts for its stock-based compensation
awards to employees under Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and will disclose the required pro
forma effect on net loss as recommended by Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.

Accounting Change--Effective January 1, 1997, the Company changed its method of
accounting for restaurant preopening costs in accordance with Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities. Prior to
fiscal 1997, preopening costs were deferred and amortized over the initial 12
months of a restaurant's operation. Under the new method, preopening costs are
expensed as incurred. The expensing of preopening costs is prevalent in
industry practice. The change in accounting method increased the 1997 loss
before cumulative effect of change in accounting principle by $834,000.

Fiscal Year--The Company changed its fiscal year-end from December 31 to the
last Sunday in December, beginning with the fiscal year ended December 28,
1997. The fiscal years ended December 31, 1996, December 28, 1997, and December
27, 1998 were 52-week years.

Comprehensive Income--The Company does not have any items of other
comprehensive income in any of the periods presented.

Accounting Pronouncements--In June 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 requires companies to record derivatives on
the balance sheet as assets and liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. SFAS No. 133 is effective for fiscal years beginning
after June 15, 1999, with earlier adoption encouraged. Management has not yet
determined the effects SFAS No. 133 will have on its financial position or the
results of its operations.

2. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for renewals and
betterments are capitalized while repairs and maintenance costs are charged to
expense. The cost of property and equipment is depreciated on the straight-line
method over their estimated useful lives. Leasehold improvements are amortized
on the straight-

F-10
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

line method over the shorter of the life of the lease including extensions or
their estimated useful lives. Estimated useful lives are as follows:

<TABLE>
<CAPTION>
Years
-----
<S> <C>
Leasehold improvements.............................................. 5-20
Furniture, fixtures, and equipment.................................. 5-10
Building............................................................ 20
</TABLE>

Property and equipment consisted of the following as of December 28, 1997 and
December 27, 1998 (in thousands):

<TABLE>
<CAPTION>
1997 1998
------- -------
<S> <C> <C>
Leasehold improvements................................... $ 8,639 $19,214
Furniture, fixtures, and equipment....................... 4,991 10,869
Land..................................................... 793 267
Building................................................. 300 114
------- -------
14,723 30,464
Less accumulated depreciation and amortization........... 1,295 2,767
------- -------
$13,428 $27,697
======= =======
</TABLE>

In 1998, the Company sold the building and land associated with a restaurant in
Illinois for approximately $1,200,000 and simultaneously entered into an
operating lease for a term of 20 years. The assets were removed from the
financial statements and a deferred gain included as other liabilities on the
consolidated balance sheet of approximately $132,000 was recorded which is
being amortized over the lease term.

Additionally, in 1998, the Company purchased the land and building associated
with a restaurant in Minnesota for approximately $375,000.

3. NOTE PAYABLE

The Company had a $1,000,000 line of credit agreement secured by the assets of
the Company that expired on June 30, 1998.

F-11
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. LONG-TERM DEBT

Long-term debt consisted of the following as of December 28, 1997 and December
27, 1998 (in thousands):

<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Notes payable maturing October 2002, $2,500,000 and June
2003, $3,500,000, with interest payable monthly at 13.5%
and accretion of common stock warrant value of 4.4%.
Collateralized by equipment, inventory, accounts
receivable, trademarks, and copyrights. Net of discounts of
$544,000 and $1,089,000, respectively, resulting from
common stock warrants issued to lenders.................... $1,956 $4,911
Convertible subordinated debentures maturing July 2001 with
interest payable quarterly at 8.0% until January 1997, at
which time interest will be adjusted semiannually to 1.0%
in excess of the prime rate, not to exceed 12.0% per annum
(9.50% and 8.75% at December 28, 1997 and December 27,
1998, respectively); includes call premium accretion of
$165,000 and $216,000, respectively........................ 1,945 1,996
Note payable to bank in monthly installments, including
interest at 2.0% in excess of the prime rate (10.50% and
9.75% at December 28, 1997 and December 27, 1998,
respectively), maturing July 2000, with a principal balloon
payment upon maturity of $185,000, collateralized by
equipment, accounts receivable, and inventory.............. 363 296
Note payable to bank in monthly installments, including
interest at 2.0% in excess of the prime rate (10.50% and
9.75% at December 28, 1997 and December 27, 1998,
respectively), maturing May 1999, collateralized by
equipment, accounts receivable, and inventory.............. 97 29
Note payable to bank in monthly installments including
interest at 2.0% in excess of the prime rate (10.50% and
9.75% at December 28, 1997 and December 27, 1998,
respectively), maturing March 2003, collateralized by
equipment, accounts receivable, and inventory.............. 332 269
Note payable in monthly installments, including interest at
7.153%, maturing May 2006, collateralized by equipment, a
guarantee of Parasole, and the personal guarantees of
certain shareholders and the U.S. Small Business
Administration............................................. 402 365
Capitalized leases.......................................... 365 --
------ ------
Total.................................................... 5,460 7,866
Less current maturities..................................... 320 205
------ ------
Total long-term maturities............................... $5,140 $7,661
====== ======
</TABLE>

The Company's loan agreements, among other things, restrict additional
indebtedness and dividend payments and requires the Company to meet certain
financial covenants, the most restrictive of which includes maintaining
tangible net worth of $4,000,000. The Company was in compliance with these
financial covenants at December 27, 1998.

The holders of the convertible subordinated debentures are entitled, at their
option for a one year period commencing upon an initial public offering (IPO)
of common stock by BUCA, to convert the entire principal amount held by such
person into fully paid shares of common stock at a specified discount. The
discount amount is based upon the effective date of the IPO: a 30% discount if
the effective date is on or prior to August 1, 1997; a 40% discount if the
effective date is after August 1, 1997 but on or prior to August 1, 1999; and a
50% discount if the effective date is after August 1, 1999 but on or prior to
the conversion rights

F-12
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

termination date of July 30, 2001. In accordance with EITF 98-5, Accounting for
Convertible Securities with Beneficial Conversion Features or Contigently
Adjustable Conversion Ratios, the Company will record an expense associated
with the beneficial conversion feature at the effective date of the IPO. The
individual holders of the debentures may elect to have the debentures paid in
full in July 1999, at which time any holder would be entitled to a premium
payment equal to 10% of the original principal sum of the debenture. In the
event the holder retains the debenture to maturity, the holder will be entitled
to a premium payment equal to 20% of the original principal sum of the
debenture. The 20% premium is being accreted over the debenture term. The
debentures are fully subordinated to all obligations of BUCA to the bank.

The future maturities of long-term debt, excluding the discount related to
common stock warrants, are as follows (in thousands):

<TABLE>
<S> <C>
1999............................................................... $ 205
2000............................................................... 328
2001............................................................... 2,104
2002............................................................... 2,612
2003............................................................... 3,570
Thereafter......................................................... 136
------
$8,955
======
</TABLE>

On February 5, 1999, the Company refinanced its existing term debt, excluding
the convertible subordinated debentures and the note payable guaranteed by the
U.S. Small Business Administration, with a $15 million credit arrangement that
expires on December 31, 2000. The credit arrangement includes a $7 million term
loan which bears a fixed rate of interest of 9.63% and an $8 million revolving
line of credit which bears interest at prime plus .75% to 1.25%, depending on
the then-applicable cash flow coverage ratio of the Company. In accordance with
the credit agreement, the term loan must be repaid upon the consummation of an
initial public offering along with any borrowings under the revolving line of
credit in excess of $3 million. The credit agreement, among other things,
restricts additional indebtedness and requires the Company to meet certain
financial covenants. In conjunction with the refinancing, the Company will
recognize an extraordinary loss on extinguishment of debt of approximately $1.4
million in 1999 which includes deferred financing costs associated with the
refinanced debt.

5. INCOME TAXES

Deferred income taxes are recognized for the tax consequences of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. At December 28, 1997 and December 27, 1998 the Company has
recorded a valuation allowance to reduce recorded deferred tax assets to zero.

At December 27, 1998, for income tax return purposes, the Company has estimated
net operating loss carryforwards of approximately $3,500,000. If not used,
these carryforwards will begin to expire in 2003.

F-13
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The (benefit) provision for income taxes consisted of the following for the
fiscal years ended December 31, 1996, December 28, 1997, and December 27, 1998
(in thousands):

<TABLE>
<CAPTION>
1996 1997 1998
----- ------- -------
<S> <C> <C> <C>
Federal......................................... $(107) $ 34
State........................................... 6 4 $ 17
Deferred........................................ 34
----- ------- -------
(Benefit) provision for income taxes............ $(101) $ 72 $ 17
===== ======= =======

A reconciliation between taxes computed at the expected federal income tax rate
and the effective tax rate for the fiscal years ended December 31, 1996,
December 28, 1997, and December 27, 1998 is as follows (in thousands):

<CAPTION>
1996 1997 1998
----- ------- -------
<S> <C> <C> <C>
Tax benefit computed at statutory rates......... $(425) $(1,162) $(1,025)
State taxes, net of federal effect.............. (47) (129) (114)
Other........................................... 12
Change in valuation allowance................... 371 1,363 1,144
----- ------- -------
$(101) $ 72 $ 17
===== ======= =======
</TABLE>

The tax effect of significant temporary differences representing deferred tax
assets is as follows as of December 28, 1997 and December 27, 1998 (in
thousands):

<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Current:
Preopening costs......................................... $ 108 $ 228
Accrued liabilities...................................... 131
Less valuation allowance................................. (108) (359)
------ ------
$ -- $ --
====== ======
Noncurrent:
Preopening costs and property and equipment.............. $ 400 $ 873
Call premium accretion................................... 65 84
Net operating loss carryforwards......................... 1,028 1,380
Other.................................................... 49
Less valuation allowance................................. (1,493) (2,386)
------ ------
$ -- $ --
====== ======
</TABLE>

6. EMPLOYEE BENEFIT PLANS

Effective with the spin-off of BUCA discussed in Note 1, the BUCA employee
stock ownership plan (ESOP) was established for the benefit of eligible
employees of BUCA. A pro rata portion of the assets held by the Parasole ESOT
were transferred to the BUCA ESOP as of that date, and the BUCA participants
became 100% vested in their accounts. The Parasole ESOT retained the entire
unallocated stock account and the entire obligation under the loan agreement
with the bank. The BUCA ESOP was frozen upon its establishment and no
contributions were made during fiscal 1997 or 1998. BUCA's pro rata portion of
compensation expense related to the Parasole ESOT was $50,000 in 1996.

F-14
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

BUCA has entered into a redemption agreement with Parasole whereby BUCA has
agreed to redeem at fair value shares of BUCA stock distributed by the Parasole
ESOT if no public market exists. Additionally, the BUCA stock held in the BUCA
ESOP must be redeemed by the Company in accordance with the plan agreement. At
December 28, 1997 and December 27, 1998, 504,702 and 97,227 shares were held in
the Parasole ESOT and BUCA ESOP, respectively. Such shares have been classified
as redeemable stock on the consolidated balance sheet.

Company employees with one year of service, age 21 or older, who worked at
least 1,000 hours in the prior year are eligible to participate in the
Company's 401(k) Plan. Under the provisions of the plan, the Company may, at
its discretion, make contributions to the 401(k) Plan. Participants are 100%
vested in their own contributions. No contributions were made by the Company
during 1996, 1997 or 1998.

7. COMMITMENTS AND CONTINGENCIES

Leases--The Company is obligated under various operating leases for restaurant
and storage space and equipment. Generally, the base lease terms are between 5
and 15 years. Certain of the leases provide for additional rents based on a
percentage of annual sales in excess of stipulated minimums. The leases also
require the Company to pay its pro rata share of real estate taxes, operating
expenses, and common area costs. In addition, the Company has received lease
incentives in connection with certain leases. The Company is recognizing the
benefits related to the lease incentives on a straight-line basis over the
applicable lease term. The Company has recorded deferred rent related to their
lease incentives of $17,000 and $239,000 as of December 28, 1997 and December
27, 1998, respectively.

Total rent expense, including real estate taxes, operating expenses, and
percentage rent, was $941,000, $1,754,000, and $3,812,000 in 1996, 1997, and
1998, respectively.

Approximate future minimum lease obligations, including units which are not yet
open and excluding percentage rents, at December 27, 1998, are as follows (in
thousands):

<TABLE>
<S> <C>
1999............................................................. $ 2,989
2000............................................................. 3,950
2001............................................................. 4,038
2002............................................................. 4,118
2003............................................................. 4,189
Thereafter....................................................... 29,405
-------
Total future minimum base rents.................................. $48,689
=======
</TABLE>

Litigation--The Company is subject to certain legal actions arising in the
normal course of business, none of which are expected to have a material effect
on the Company's results of operations, financial condition or cash flows.

8. RELATED-PARTY TRANSACTIONS

Management Agreement--The Company has entered into a management agreement with
Parasole to provide for certain management and administrative services. The
management agreement may be terminated by Parasole upon one year's written
notice and the Company may terminate the management agreement upon 60 days'
written notice. Management fees of approximately $354,000, $270,000, and
$248,000 were charged to operations in 1996, 1997, and 1998, respectively.

Purchase of Inventory--The Company has entered into a vendor relationship with
Parasole whereby the Company purchases bread products and a majority of the
dessert products offered at the Company's

F-15
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Minneapolis-Saint Paul metropolitan area restaurants. The Company purchases the
products at rates which management believes approximate market rates. The
relationship can terminate at any time at the discretion of the Company;
however, the Company expects this relationship to continue. The Company
purchased bakery products in the amount of $211,000, $180,000, and $169,000 in
1996, 1997, and 1998, respectively.

Employment Agreement--The Company entered into an employment agreement with one
of its officers which requires the payment of annual compensation and certain
fringe benefits through 2001 and includes bonus provisions in the form of both
a stock grant and stock options.

9. REDEEMABLE STOCK

Series A Preferred Stock Private Placement--During October 1996, the Company
issued 2,240,000 shares of Series A preferred stock in a private placement at
an offering price of $3.75 per share. This stock is convertible into 1,493,331
shares of common stock and the preferred shares are redeemable in cash on
October 1, 2003, 2004, and 2005 at the election of the holder and accumulate
dividends at a rate of $.2625 per share annually beginning October 24, 1996.
The shares are redeemable at $3.75 per share plus unpaid and accumulated
dividends. Accumulated undeclared dividends amounted to $699,000 and $1,287,000
at December 28, 1997 and December 27, 1998, respectively. Total liquidation
preference of outstanding shares is $3.75 per share plus, unpaid and
accumulated dividends. The Company received net proceeds of $7,614,000 after
the payment of $786,000 in related offering costs. The net proceeds were used
to pay off certain indebtedness and to fund expansion and operating expenses.

Series B Preferred Stock Private Placement--During 1997, the Company issued a
total of 1,922,222 shares of Series B preferred stock in a private placement at
an offering price of $4.50 per share. The stock is convertible into 1,281,477
shares of common stock and the preferred shares are redeemable in cash on
October 1, 2003, 2004, and 2005 at the election of the holder and accumulate
dividends at a rate of $.315 per share annually beginning September 3, 1997.
The shares are redeemable at $4.50 per share plus unpaid and accumulated
dividends. Accumulated undeclared dividends amounted to $197,000 and $802,000
at December 28, 1997 and December 27, 1998, respectively. Total liquidation
preference of outstanding shares is $4.50 per share plus, unpaid and
accumulated dividends. The Company received net proceeds of $8,537,000 after
the payment of $113,000 in related offering costs. The net proceeds were used
to fund expansion and operating expenses.

Series C Preferred Stock Private Placement--In October 1998, the Company sold
1,639,025 shares of Series C preferred stock in a private placement at an
offering price of $5.125 per share. The stock is convertible into 1,092,679
shares of common stock. In December 1998, the Company sold an additional
975,609 shares of Series C preferred stock at an offering price of $5.125 per
share. The stock is convertible into 637,752 shares of common stock. Preferred
shares are redeemable in cash on October 1, 2003, 2004, and 2005 at the
election of the holder and accumulate dividends at a rate of $.35875 per share
annually beginning October 13, 1998. The shares are redeemable at $5.125
(1,639,025 shares) and $5.22 (975,609 shares) per share plus unpaid and
accumulated dividends. Accumulated undeclared dividends amounted to $99,000 at
December 27, 1998. Total liquidation preference of outstanding shares is $5.125
(1,639,025) and $5.22 (975,609) per share plus, unpaid and accumulated
dividends. The Company received net proceeds of $12,958,000 after the payment
of $442,000 in related offering expenses. The net proceeds were used to fund
expansion, operating expenses, and pay off certain indebtedness.

Additionally, the purchasers of the Series C preferred stock received 2,614,634
"Contingent Value Rights" which entitles the holder to receive additional
shares of common stock if, on or prior to October 12, 2001, the Company has not
effected a qualified public offering or had a publicly traded security with an
average closing price of $18 per share for a period of at least 120 consecutive
trading days. In 1999, the Company agreed to

F-16
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

issue 40,195 shares of common stock contingent upon the completion of the
initial public offering (IPO) in exchange for an agreement which results in the
termination of the contingent value rights.

The Series A, B, and C preferred stock are automatically convertible to common
stock upon a public offering that meets each of the following requirements: (i)
the aggregate public offering price is $15 million, (ii) the public offering is
underwritten on a firm commitment basis by an underwriter that is a member of
the New York Stock Exchange, and (iii) the public offering price per share is
at least $18, except as one or more of such requirements may be modified or
waived by holders of two-thirds of the shares of preferred stock then
outstanding.

The carrying value of the preferred stock includes cumulative undeclared
dividends and the accretion to the redemption value.

10. SHAREHOLDERS' EQUITY

Stock Split--On February 17, 1999, the Company effected a two-for-three reverse
stock split which has been retroactively reflected in the consolidated
financial statements.

Warrants--The Company has issued warrants to placement agents and debt holders
in connection with the issuances of debt and equity securities. The warrants
are exercisable at various dates through September 2004. No warrants have been
exercised. The fair market value of the warrants were recorded as additional
paid-in capital. The excess of fair market value over exercise price is being
amortized over the respective debt maturity term. A summary of the Company's
common stock warrant activity is as follows:

<TABLE>
<CAPTION>
Number of Weighted
Common Average
Stock Price
Shares Per Share
--------- ---------
<S> <C> <C>
Warrants issued--Series A placement agents............ 104,532 $5.63
------- -----
Outstanding, December 31, 1996........................ 104,532 5.63
Warrants issued--Series B placement agents............ 33,333 6.75
Warrants issued--debt holders......................... 80,555 .01
------- -----
Outstanding, December 28, 1997........................ 218,420 3.73
Warrants issued--debt holders......................... 112,776 .01
------- -----
Outstanding and exercisable, December 27, 1998........ 331,196 $2.46
======= =====
</TABLE>

Additionally, the Company issued warrants to purchase 66,663 shares of common
stock at $.01 per share to the purchasers of Series B preferred stock. The
warrants vest upon completion of an IPO, but only if the public offering price
per share is less than $13.50.

Stock Option Plans--During 1996, the Company adopted the 1996 Incentive Stock
Option Plan (the 1996 Plan), pursuant to which options to acquire an aggregate
of 433,333 shares of the Company's common stock may be granted. Under the 1996
Plan, the Board of Directors may grant options to purchase shares of the
Company's stock to eligible employees for both incentive and nonstatutory stock
options. Options granted under the 1996 Plan vest as determined by the Board of
Directors and are exercisable for a term not to exceed ten years.

During 1998, the Board of Directors approved amendments to the 1996 Plan to
increase the number of shares available for issuance under the 1996 Plan to
1,000,000 shares.

F-17
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

During 1996, the Company adopted the 1996 Stock Option Plan for Nonemployee
Directors (the Directors' Plan) pursuant to which options to acquire an
aggregate of 26,666 shares of the Company's common stock may be granted to
outside directors. Under the Directors' Plan, 1,333 options will automatically
be granted to each outside director upon election to the Board of Directors,
and thereafter 666 options will be granted annually for each year of continued
service by the outside director. Options granted under the Directors' Plan vest
over one year from date of grant and are exercisable for ten years.

A summary of the status of the Company's stock options are presented in the
table and narrative below:

<TABLE>
<CAPTION>
Options
Weighted Available
Average for
Extended Price Future
Shares Price Range Grant
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Granted.......................... 13,331 $4.84 $4.50-5.63
-------- ----- ---------- -------
Outstanding, December 31, 1996... 13,331 4.84 1.13-5.63 413,335
=======
Granted.......................... 700,353 4.61 1.13-6.75
Terminated....................... (132,177) 1.25 1.13-5.63
-------- ----- ---------- -------
Outstanding, December 28, 1997... 581,507 5.38 1.13-6.75 111,826
=======
Granted.......................... 273,314 7.59 6.75-7.68
Terminated....................... (666) 7.68 7.68
-------- ----- ---------- -------
Outstanding, December 27, 1998... 854,155 $6.08 $1.13-7.68 172,511
======== ===== ========== =======
Exercisable, December 27, 1998... 212,109 $4.47 $1.13-7.68
======== ===== ==========
</TABLE>

During 1998, the Company granted 16,000 stock options to a landlord at a price
of $6.75 per share which were outside of the two stock option plans.

The Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed by APB Opinion No. 25 and related
interpretations. No compensation cost has been recognized for options issued to
employees under the Plans when the exercise price of the options granted are at
least equal to the fair value of the common stock on the date of grant. Had
compensation costs for these plans been determined consistent with SFAS No.
123, the Company's net loss would have been increased to the following pro
forma amounts for 1996, 1997, and 1998 (in thousands):

<TABLE>
<CAPTION>
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Net loss applicable to common stock:
As reported.................................. $(4,800) $(5,305) $(5,135)
Pro forma.................................... (4,800) (5,773) (5,380)
Net loss per common share, basic and diluted:
As reported.................................. $ (1.96) $ (2.13) $ (2.04)
Pro forma.................................... (1.96) (2.32) (2.14)
</TABLE>

F-18
<PAGE>

BUCA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)

The fair value of each option grant for the pro forma disclosure required by
SFAS No. 123 is estimated on the grant date using the Black-Scholes option-
pricing model with the following assumptions and the results for the grants:

<TABLE>
<CAPTION>
1996 1997 1998
------- --------- ---------
<S> <C> <C> <C>
Dividend yield............................. None None None
Expected volatility........................ None None None
Expected life of option.................... 7 years 7 years 7 years
Risk-free interest rate.................... 6.38% 5.76-6.70% 4.63-5.68%
</TABLE>

Paisano Partners Program--On January 1, 1997, the Company implemented the
Paisano Partners program for certain restaurant employees. This program
requires restaurant general managers known as Paisano Partners to purchase
approximately $20,000 of the Company's common stock and they also receive stock
options. In addition, kitchen managers also receive stock options. The Company
allows the Paisano Partners the option to finance the initial stock purchase
over five years at an interest rate of 8%. At December 28, 1997 and December
27, 1998 the notes receivable balances related to this financing were $271,000
and $293,000, respectively, were included as contra-equity. At December 28,
1997 and December 27, 1998, 31,998 and 81,396 shares of common stock was issued
under this program.

11. SUPPLEMENTAL CASH FLOW INFORMATION

The following is supplemental cash flow information for the years ended:

<TABLE>
<CAPTION>
1996 1997 1998
----- ---- -----
<S> <C> <C> <C>
Cash paid during year for:
Interest.............................................. $ 359 $527 $ 714
Income taxes.......................................... 9 17
Noncash investing and financing activities:
Property and equipment additions financed through
capital lease obligation............................. 18 401
Shareholder receivable from issuance of common stock.. 275 160
Shareholder receivable reduction due to retirement of
stock................................................ 58
Escrow deposit transferred to property and equipment.. 551
Accretion of redeemable preferred stock to redemption
value................................................ 190 524 247
Dividends accrued on redeemable preferred stock....... 111 785 1,292
Change in value of redeemable common stock............ 3,386 677 650
</TABLE>

12. PRO FORMA SHAREHOLDERS' EQUITY

The redeemable preferred and common stock will convert to common or the
obligation to redeem shares will terminate in conjunction with the closing of a
initial public offering. Pro forma shareholders' equity represents the
conversion of redeemable preferred stock and the termination of the obligation
to redeem shares of common stock excluding the effect of any offering proceeds.
The pro forma adjustment does not include the 1999 $1.4 million extraordinary
loss on extinguishment of debt disclosed in Note 4.

F-19
<PAGE>

[Restaurant Menu]

Buon
Appetito!

BUCA(TM)
di BEPPO

<PAGE>

ANTIPASTI
Meant to be shared, Buca di Beppo antipasti ($5.95-$12.95) arrive in
family-style portions ("That's Italian family, not nuclear family" warns the
Seattle Post-Intelligencer). From our signature garlic bread to mussels
marinara, each boasts the powerful flavors of our immigrant southern
Italian roots.

GARLIC BREAD

BRUSCHETTA

ROASTED PEPPERS WITH GARLIC AND ANCHOVIES

FRIED CALAMARI

MUSSELS MARINARA

INSALATE

Overflowing from their platters right onto the table, Buca di Beppo
salads ($7.95-$13.95) will feed your family and all the in-laws.
A small Ceasar easily serves four, our signature "Beppo 1893" salad,
laden with imported mortadella, pepperoni, and pepperoncini --
has yet to be consumed in one sitting.

MIXED GREEN SALAD SMALL AND LARGE

MIXED GREEN SALAD SMALL AND LARGE
WITH PROSCIUTTO AND GORGONZOLA CHEESE

CEASAR SALAD SMALL AND LARGE

DI BEPPO "1893" SALAD

FRESH TOMATOES
WITH RED ONIONS, OLIVE OIL, AND BASIL

FRESH TOMATOES
WITH RED ONIONS, FRESH MOZZARELLA, BASIL, SALAMI AND MORTADELLA

NEAPOLITAN PIZZA

Bigger than the 1-by-2-foot slabs they're served on, Buca di Beppo
pizzas ($9.95 up to $17.95) evoke the best of Napoli,
with their purity and simplicity of both flavor and texture.

MARINARA
TOMATOES GARLIC, BASIL AND OREGANO (NO CHEESE)

CALABRESE
TOMATOES, POTATOES, ROSEMARY, OLIVES, ONIONS, PROCIUTTO AND
PECORINO CHEESE

ARRABBIATA
FOUR CHEESES, PEPPERONI, SAUSAGE, AND CARMELIZED ONIONS

MARGHERITA
TOMATOES, FRESH MOZZARELLA AND BASIL

PIZZA BIANCA
GORGONZOLA, PROVOLONE, MOZZARELLA, ROMANO AND RED ONIONS

PEPPERONI
WITH PEPPERONCINI

VEGETALE RUSTICA
EGGPLANT, ESCAROLE, ONIONS, TOMATOES, ARTICHOKES, BROCCOLI AND
PROVOLONE CHEESE

SAUSAGE AND MUSHROOMS

SIDE DISHES

Powerfully flavored and utterly fresh, each of our side dishes
($6.95-$8.95) demonstrates the vitality and simplicity of immigrant
southern Italian cooking. And each is meant for family-style sharing.

GARLIC MASHED POTATOES

ESCAROLE
SAUTEED WITH OLIVE OIL AND GARLIC

ONE OF OUR NICE POCKET PROTECTORS

MEAT BALLS (3)

GREENS AND BEANS
ESCAROLE, CANNELLINI BEANS AND TOMATOE SAUCE

ITALIAN SAUSAGE (4)

GREEN BEANS
WITH OLIVE OIL AND LEMON

A HANDY REFRIGERATOR MAGNET

PASTA

Portioned to withstand the most powerful appetites, Buca di Beppo
pastas ($7.95-$19.95) overwhelm with flavor. We make all sauces daily;
serve only imported, 100% durum semolina (two pounds to an order);
and slow-cook our meatballs in pure marinara.

SPAGHETTI MARINARA SMALL AND LARGE

SPAGHETTI MEAT SAUCE SMALL AND LARGE

SPAGHETTI AGLIO OLIO SMALL AND LARGE
WITH FRESH VEGETABLES AND GARLIC

SPAGHETTI MATRICIANA
TOMATOES, RED ONIONS, BACON & PECORINO ROMANO CHEESE

SPAGHETTI MEAT BALLS SMALL AND LARGE

LINGUINI CLAM SAUCE (RED OR WHITE) SMALL AND LARGE

LINGUINI FRUTTI DI MARE
MUSSELS, CLAMS AND CALAMARI

HOMEMADE RAVIOLI AL POMODORO

HOMEMADE RAVIOLI - MEAT SAUCE

RIGATONI POSITANO
WITH CHIKEN, EGGPLANT, MARINARA SAUCE AND FRESH MOZZARELLA

BUCA(TM) RIGATONI COUNTRY STYLE
WITH WHITE BEANS, SAUSAGE, RED ONIONS, BROCCOLI AND TOMATOES

MACARONI ROSA
WITH CHICKEN, BROCCOLLI, MUSHROOMS AND PEAS IN PINK SAUCE

TORTELLONI
WITH CREAM, MUSHROOMS, TOMATOES, PEAS, BROCCOLI

<PAGE>

ENTREES

If you're not Italian, you'll feel like one after partaking in entrees
($14.95-$19.95) like eggplant parmigiana, veal Marsala,
or our signature chicken cacciatore -- consisting of an entire bird,
served over garlic mashed potatoes, ladled with spicy cacciatore sauce.

EGGPLANT PARMIGIANA

CHICKEN WITH LEMON

CHICKEN PARMIGIANA

CHICKEN MARSALA WITH FRESH MUSHROOMS

CHICKEN CACCIATORE
OVER GARLIC MASHED POTATOES

BUCA(TM) CHICKEN VESUVIO
WHITE BEANS, SAUSAGE, OREGANO AND POTATOES

VEAL LIMONE
WITH WHITE BEANS, ESCAROLE AND LEMON SAUCE

VEAL MARSALA WITH FRESH MUSHROOMS

VEAL PARMIGIANA

DOLCI

One glimpse of our dolci ($5.95-$8.95) will goad you into
"joyous gluttony" (Pasadena Star News). One taste will justify
the indulgence--whether you order a slab of spumoni, a platter of
chocolate-drenched cannoli, or a quart-sized bowl of rum- and
espresso-soaked tiramisu.

SPUMONI

SPUMONI WITH CHOCOLATE SAUCE

CHOCOLATE CANNOLI (3)

BUCA(TM) BREAD PUDDING CARAMELLO

TIRAMISU

TORTA FORMAGGIO CON RASBERRY

BOTTLE OF LIMONCELLO

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

WE PROUDLY FEATURE PERONI,
ITALY'S #1 BEER

<PAGE>

LIKE LITTLE ITALY IN THE '50S,

Buca di Beppo celebrates the hearty
cooking of southern Italian immigrants.
It's a place where meats and
pastas overflow from their HEALTH
plates right onto the table, INSPECTED
wine flows from the jug,
and laughter often drowns SANITARY
out the music. BATHROOMS

You'll smell the sauces before you reach
the door. Inside, Neapolitan pizzas, as grand as
our ovens can accommodate, pass before your
eyes. Family platters of ravioli al pomodoro and
chicken cacciatore. And our signature spaghetti
and meatballs, two pounds of pasta,
and ladles of fresh marinara sauce.

You won't have room for dessert, but
order some anyway -- maybe our house-made
tiramisu or chocolate cannoli, with three ricotta-
stuffed pastry shells, submerged in chocolate.
Looking for something on the lighter side?
Though buried under raspberries, the torta
formaggio is as white as snow.

This is real immigrant Italian food. Smell it,
taste it, wander into the kitchen to watch us
prepare it.

<PAGE>

"Joyous Gluttony"
"1998 Hot Concepts Award Winner" Pasadena Star News
Nation's Restaurant News
"BEST ITALIAN
BEST VALUE,
TOP 10 BEST"
Minneapolis-
St. Paul Magazine
Readers' Poll

Lynwood Eden Prairie Burnsville Minneapolis
[PHOTO OF [PHOTO OF [PHOTO OF
Seattle STORE EXTERIOR] STORE EXTERIOR] STORE EXTERIOR]

St. Paul
[MAP OF UNITED STATES WITH ARROWS
San Francisco POINTING OUT RESTAURANT LOCATIONS] Milwaukee

"Feeds an American hunger for community" Westlake
Palo Alto Minneapolis Star-Tribune
Indianapolis
Redondo Beach Louisville [PHOTO OF
[PHOTO OF STORE EXTERIOR]
STORE EXTERIOR] Lenexa Lombard
"Bawdy
informality
Encino Scottsdale Chicago Wheeling and delicious
[PHOTO OF [PHOTO OF [PHOTO OF [PHOTO OF Italian fare"
STORE EXTERIOR] STORE EXTERIOR] STORE EXTERIOR] STORE EXTERIOR] Chicago Tribune

Pasadena "Voted BEST New Restaurant" "WHERE TO EAT"
[PHOTO OF Pasadena Weekly Readers' Poll The New York Times
STORE EXTERIOR]

<PAGE>

[PHOTO OF MAN PEELING ARTICHOKE]

"Packed Like a Ravioli"
Indianapolis Star/News

"Boisterously BIG in every way"
Seattle Post-Intelligencer

"Best Pizza for Sharing"
Chicago

"Vital, vibrant and powerfully flavored"
San Jose Mercury News

"OUT-AND-OUT GOOD"
The Courier Journal
Louisville
<PAGE>
[LOGO]

2,770,819 Shares

BUCA, INC.

Common Stock

BUCA(TM)
di BEPPO

Italian Dinners
and Sanitary Bathrooms

---------------
PROSPECTUS
---------------

Until , all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

U.S. Bancorp Piper Jaffray

NationsBanc Montgomery Securities LLC

, 1999
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

Expenses in connection with the issuance and distribution of the shares of
Common Stock being registered hereunder, other than underwriting commissions
and expenses, are estimated below.

<TABLE>
<S> <C>
SEC registration fee............................................. $ 10,591
NASD filing fee.................................................. 4,333
Nasdaq listing fee............................................... 53,700
Legal fees and expenses.......................................... 225,000
Accounting fees and expenses..................................... 225,000
Blue Sky fees and expenses....................................... 5,000
Printing expenses................................................ 210,000
Transfer agent fees and expenses................................. 15,000
Miscellaneous expenses........................................... 113,876
--------
Total........................................................ $862,500
</TABLE>

Item 14. Indemnification of Directors and Officers

Section 302A.521 of the Minnesota Statutes requires the Company to indemnify a
person made or threatened to be made a party to a proceeding, by a reason of
the former or present official capacity of the person with respect to the
Company, against judgments, penalties, fines, including without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorneys' fees and
disbursements, if, with respect to the acts or omissions of the person
complained of in the proceeding, such person (1) has not been indemnified by
another organization or employee benefit plan for the same judgments,
penalties, fines, including without limitation, excise taxes assessed against
the person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorneys' fees and disbursements, incurred by
the person in connection with the proceeding with respect to the same acts or
omissions; (2) acted in good faith; (3) received no improper personal benefit,
and statutory procedure has been followed in the case of any conflict of
interest by a director; (4) in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and (5) in the case of
acts or omissions occurring in the person's performance in the official
capacity of director or, for a person not a director, in the official capacity
of officer, committee member, employee or agent, reasonably believed that the
conduct was in the best interests of the Company, or in the case of performance
by a director, officer, employee or agent of the Company as a director,
officer, partner, trustee, employee or agent of another organization or
employee benefit plan, reasonably believed that the conduct was not opposed to
the best interests of the Company. In addition, Section 302A.521, subd. 3
requires payment by the Company, upon written request, of reasonable expenses
in advance of final disposition in certain instances. A decision as to required
indemnification is made by a majority of the disinterested Board of Directors
present at a meting at which a disinterested quorum is present, or by a
designated committee of disinterested directors, by special legal counsel, by
the disinterested shareholders, or by a court.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Act, and is therefore unenforceable.

Under the terms of the form of Purchase Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain of its officers and persons who control the
Company within the meaning of the Act, against certain liabilities.

II-1
<PAGE>

Item 15. Recent Sales of Unregistered Securities

During the past three years, the Company has sold the following securities
pursuant to exemptions from registration under the Act. The sales referred to
in numbers 1, 2, 3, 4, 6, 7, 12, 14, 15, 16, 17, 20, 21, 28, 30, 33, 34, 37,
39, 40 and 41 were made in reliance upon the exemptions from registration
provided under Section 4(2) of the Act for transactions not involving a public
offering and the sales referred to in numbers 5, 8, 9, 10, 11, 13, 18, 19, 22,
23, 24, 25, 26, 27, 29, 31, 32, 35, 36 and 38 were made in reliance upon the
exemptions from registration provided pursuant to Rule 701 under the Act for
securities sold pursuant to certain compensatory benefit plans and contracts
relating to compensation, and related state securities laws. Unless otherwise
stated, all shares were issued directly by the Company, no underwriters were
involved and, except as otherwise noted below, no discount, commission or other
transaction-related remuneration was paid. Share figures have been adjusted for
the 2-for-3 reverse stock split that was effective on February 17, 1999.

1. On August 27, 1996, the Company granted options to purchase an
aggregate of 9,332 shares of the Company's common stock at $4.50 per
share to two of the Company's directors.

2. On October 23, 1996, the Company issued warrants to purchase an
aggregate of 156,800 shares of its Series A Convertible Preferred
Stock convertible into 104,532 shares of common stock at $5.625 per
common share to U.S. Bancorp Piper Jaffray Inc. and Michael Bochert.

3. On October 23, 1996, the Company issued 2,240,000 shares of its Class
A Convertible Preferred Stock convertible into 1,493,331 shares of
common stock to outside investors for $8,400,000 or $5.625 per common
share.

4. On October 24, 1996, the Company granted options to purchase an
aggregate of 3,999 shares of the Company's common stock at $5.625 per
share to the Company's directors.

5. On February 1, 1997, the Company granted options to purchase an
aggregate of 78,331 shares of the Company's common stock at $5.625
per share to employees of the Company.

6. On February 1, 1997, the Company granted options to purchase 122,854
shares of the Company's common stock at $1.125 per share to Joseph P.
Micatrotto under the terms of his employment agreement with the
Company.

7. On February 1, 1997, the Company sold 16,000 shares of common stock
to Joseph P. Micatrotto under the terms of his employment agreement
with the Company for $90,000 or $5.625 per share.

8. On February 6, 1997, the Company granted options to purchase 33,333
shares of the Company's common stock at $5.625 per share to an
employee of the Company.

9. On March 1, 1997, the Company granted options to purchase 13,333
shares of the Company's common stock at $5.625 per share to an
employee of the Company.

10. On April 21, 1997, the Company sold an aggregate of 31,995 shares of
common stock to employees of the Company for $179,998.75 or $5.625
per share.

11. On June 1, 1997, the Company granted options to purchase an
aggregate of 4,000 shares of the Company's common stock at $5.625
per share to two of the Company's employees.

12. On July 8, 1997, the Company granted options to purchase 1,333
shares of the Company's common stock at $5.625 per share to a
director of the Company.

13. On August 1, 1997, the Company granted options to purchase 13,333
shares of the Company's common stock at $5.625 per share to an
employee of the Company.

14. On September 3, 1997, the Company issued warrants to purchase 50,000
shares of the Company's Class B Convertible Preferred Stock
convertible into 33,333 shares of common stock at $6.75 per common
share to U.S. Bancorp Piper Jaffray Inc.

II-2
<PAGE>

15. On September 3, 1997, the Company sold an aggregate of 961,000
shares of its Class B Convertible Stock convertible into 640,739
shares of common stock to outside investors for $4,324.999.50 or
$6.75 per common share.

16. On October 24, 1997, the Company granted options to purchase an
aggregate of 1,332 shares of common stock at $6.75 per share to
directors of the Company.

17. On October 31, 1997, the Company issued warrants to purchase an
aggregate of 147,218 shares of the Company's common stock at $0.01
per share to its investors and lenders in connection with the
Company's subordinated debt transaction.

18. On November 4, 1997, the Company granted options to purchase an
aggregate of 214,327 shares of the Company's common stock at $6.75
per share to employees of the Company.

19. On December 18, 1997, the Company sold an aggregate of 11,848 shares
of common stock to employees of the Company for $79,992, or $6.75
per share.

20. On December 18, 1997, the Company granted options to purchase 51,511
shares of the Company's common stock at $1.125 per share and options
to purchase 186,666 shares of the Company's common stock at $5.675
per share to Joseph P. Micatrotto under the terms of his employment
agreement with the Company.

21. On December 19, 1997, the Company sold an aggregate of 961,000
shares of Series B Convertible Preferred Stock convertible into
640,739 shares of common stock to outside investors for
$4,324,999.50 or $6.75 per common share.

22. On January 1, 1998, the Company sold 2,962 shares of common stock to
an employee of the Company for $20,000, or $6.75 per share.

23. On February 1, 1998, the Company sold 5,924 shares of common stock
to an employee of the Company for $40,000, or $6.75 per share.

24. On February 1, 1998, the Company granted options to purchase 2,000
shares of the Company's common stock at $6.75 per share to an
employee of the Company.

25. On March 1, 1998, the Company sold 2,962 shares of common stock to
an employee of the Company for $20,000, or $6.75 per share.

26. On April 28, 1998, the Company granted options to purchase 13,333
shares of the Company's common stock at $6.75 per share to an
employee of the Company.

27. On May 1, 1998, the Company granted options to purchase 2,000 shares
of the Company's common stock at $6.75 per share to an employee of
the Company.

28. On May 18, 1998, the Company issued warrants to purchase an
aggregate of 112,776 shares of the Company's common stock at $0.01
per share to its lenders in connection with the Company's
subordinated debt transaction.

29. On June 1, 1998, the Company granted options to purchase an
aggregate of 10,000 shares of the Company's common stock at $6.75
per share and sold 8,886 shares of the Company's common stock for
$60,000, or $6.75 per share, to employees of the Company.

30. On July 1, 1998, the Company granted options to purchase 666 shares
of the Company's common stock at $6.75 per share to a director of
the Company.

II-3
<PAGE>

31. On September 1, 1998, the Company granted options to purchase an
aggregate of 8,000 shares of the Company's common stock at $6.75 per
share to employees of the Company.

32. On September 1, 1998, the Company sold an aggregate of 10,404 shares
of common stock to employees of the Company for $80,000, or $6.75
per share.

33. On October 13, 1998, the Company sold an aggregate of 1,639,025
shares of its Series C Convertible Preferred Stock convertible into
1,092,679 shares of common stock to outside investors for
$8,400,007.02 or $7.6875 per common share.

34. On October 24, 1998, the Company granted options to purchase 1,332
shares of the Company's common stock at $7.6875 per share to
directors of the Company.

35. On October 27, 1998, the Company sold 2,601 shares of common stock
to an employee of the Company for $20,000 or $7.6875 per share.

36. On October 27, 1998, the Company granted options to purchase an
aggregate of 235,983 shares of the Company's common stock at $7.6875
per share to employees of the Company.

37. On December 23, 1998, the Company issued 975,609 shares of its
Series C Convertible Preferred Stock convertible into 637,752 shares
of common stock to outside investors, for $5,000,000 or $7.84 per
common share.

38. On January 26, 1999, the Company granted options to purchase 3,333
shares of the Company's common stock at $7.6875 per share to an
employee at the Company.

39. On February 15, 1999, the Company granted options to purchase 48,000
shares of the Company's common stock at $11.25 per share to
directors of the Company.

40. On February 15, 1999, the Company granted options to purchase
126,666 shares of the Company's common stock at $11.25 per share to
Joseph P. Micatrotto.

41. On February 15, 1999, the Company agreed to issue 40,195 shares of
the Company's common stock to holders of the Series C Preferred
Stock in connection with the conversion of the Series C Preferred
Stock.

II-4
<PAGE>

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
*3.1 Amended and Restated Articles of Incorporation of the Registrant.
*3.2 Amendment to Amended and Restated Articles of Incorporation of the
Registrant.
*3.3 By-Laws of the Registrant.
3.4 Amended and Restated Articles of Incorporation of the Registrant,
adopted subject to completion of this offering.
3.5 Amended and Restated By-Laws of the Registrant, adopted subject to
completion of the offering.
4.1 Specimen of Common Stock certificate.
5.1 Opinion of Faegre & Benson LLP.
*10.1 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies.
*10.2 Stock Option Plan for Non-Employee Directors
*10.3 BUCA, Inc. Employee Stock Ownership Plan.
10.4 BUCA, Inc. 401(k) Plan.
*10.5 Employment Agreement dated as of July 22, 1996, between the
Registrant and Joseph P. Micatrotto, including amendments and
option agreements related thereto.
*10.6 Letter Agreement dated April 1, 1997 between the Registrant and
Greg A. Gadel.
*10.7 Credit Agreement dated as of February 5, 1999 between the
Registrant, as Borrower, and U.S. Bank National Association, as
Lender.
*10.8 Security Agreement dated as of February 5, 1999 by the Registrant,
in favor of U.S. Bank National Association.
*10.9 Form of Series A Convertible Subordinated Debenture due July 30,
2001 of the Registrant.
*10.10 Form of Stock Purchase Warrant for the purchase of Series A
Convertible Preferred Stock of the Registrant.
*10.11 Form of Stock Purchase Warrant for the purchase of Series B
Convertible Preferred Stock of the Registrant.
*10.12 Form of Stock Purchase Warrant dated as of October 31, 1997.
*10.13 Form of Stock Purchase Warrant for the purchase of common stock of
the Registrant, dated October 31, 1997.
*10.14 Form of Stock Purchase Warrant for the purchase of common stock of
the Registrant, dated May 19, 1998.
*10.15 Non-Statutory Stock Option Agreement between the Registrant and
1204 Harmon Partnership for the purchase of 24,000 shares of
common stock of the Registrant, dated as of June 1, 1998.
*10.16 Stock Purchase Agreement dated as of September 2, 1997 between the
Registrant and the Purchasers.
*10.17 Securities Purchase Agreement dated as of October 13, 1998 between
the Registrant and the Purchasers.
*10.18 Redemption Agreement between BUCA, Inc. and Parasole Restaurant
Holdings, Inc. regarding the Parasole Employee Stock Ownership
Plan.
*10.19 Form of BUCA, Inc. Contingent Value Rights to Receive Shares of
Capital Stock.
10.20 Amended and Restated Employment Agreement dated as of February 17,
1999, between the Registrant and Joseph P. Micatrotto.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Faegre & Benson LLP (included in Exhibit No. 5.1 to the
Registration Statement).
*24.1 Powers of Attorney.
27.1 Financial Data Schedule.
</TABLE>

* Previously filed
(b) Financial Statement Schedules

None required.

II-5
<PAGE>

Item 17. Undertakings.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Company
pursuant to the provisions summarized in Item 14 above, or otherwise, the
Company has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification is
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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, the Company 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 Company hereby undertakes to provide to the Underwriters, at
the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

The undersigned Company hereby undertakes that:

(1) For 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 a form of prospectus
filed by the Company under 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) 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-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Amendment No. 1 to the registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on March 24, 1999.

BUCA, INC.

/s/ Joseph P. Micatrotto
By___________________________________
Joseph P. Micatrotto
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment No.
1 to the Registration Statement has been signed by the following persons in the
capacities indicated on March 24, 1999.

Signature Title

/s/ Joseph P. Micatrotto President and Chief Executive
_____________________________________ Officer
Joseph P. Micatrotto (Principal Executive Officer) and
Director

/s/ Greg A. Gadel
_____________________________________ Chief Financial Officer
Greg A. Gadel (Principal Financing and Accounting
Officer)

Don W. Hays Board of Directors
Peter J. Mihajlov
Philip A. Roberts
John P. Whaley
David Yarnell
Paul Zepf

- --------
* Joseph P. Micatrotto, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named officers and/or directors of
the Company pursuant to powers of attorney duly executed by such persons.

/s/ Joseph P. Micatrotto
By___________________________________
Joseph P. Micatrotto, Attorney-in-
Fact

II-7

<PAGE>
EXHIBIT 1.1

2,770,819 Shares(1)

BUCA, INC.

Common Stock

PURCHASE AGREEMENT

_____________________, 1999

U.S. BANCORP PIPER JAFFRAY INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
As Representatives of the several Underwriters
named in Schedule II hereto
c/o U.S. Bancorp Piper Jaffray Inc.
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402

Ladies and Gentlemen:

BUCA, Inc., a Minnesota corporation (the "Company"), and the
shareholders of the Company listed in Schedule I hereto (the "Selling
Shareholders") severally propose to sell to the several Underwriters named in
Schedule II hereto (the "Underwriters") an aggregate of 2,706,375 shares of
Common Stock, $.01 par value per share (the "Common Stock"), of the Company and
warrants (the "Warrants") to purchase an aggregate of 64,444 authorized but
unissued shares of Common Stock. The aggregate of 2,500,000 authorized but
unissued shares of Common Stock to be issued and sold by the Company, 150,000
outstanding shares of Common Stock to be sold by the Selling Shareholders,
56,375 shares of Common Stock issued by the Company upon conversion of the
Company's Series A Convertible Subordinated Debenture (the "Debentures") and to
be sold by the Selling Shareholders and, 64,444 shares of Common Stock to be
issued by the Company upon exercise of the Warrants to be purchased from the
Selling Shareholders are referred to as the "Firm Shares." The Company has also
granted to the several Underwriters an option to purchase up to 399,622
additional shares of Common Stock and a Selling Shareholder has granted to the
Underwriters an option to purchase up to 16,000 additional shares of Common
Stock on the terms and for the purposes set forth in Section 3 hereof (the
"Option Shares"). The Firm Shares and any Option Shares purchased pursuant to
this Purchase Agreement are herein collectively called the "Securities."

- --------
1 Plus an option to purchase up to 415,622 additional shares to cover
over-allotments.
<PAGE>

The Company and the Selling Shareholders hereby confirm their agreement
with respect to the sale of the Securities to the several Underwriters, for whom
you are acting as Representatives (the "Representatives").

1. Registration Statement and Prospectus. A registration statement on
Form S-1 (File No. 333-70841) with respect to the Securities, including a
preliminary form of prospectus, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission; one or more amendments to such registration statement have also been
so prepared and have been, or will be, so filed; and, if the Company has elected
to rely upon Rule 462(b) of the Rules and Regulations to increase the size of
the offering registered under the Act, the Company will prepare and file with
the Commission a registration statement with respect to such increase pursuant
to Rule 462(b). Copies of such registration statement(s) and amendments and each
related preliminary prospectus have been delivered to you.

If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus (including a term sheet, if
any, meeting the requirements of Rule 434 of the Rules and Regulations). If the
Company has elected to rely upon Rule 430A of the Rules and Regulations, it will
prepare and file a prospectus (or a term sheet meeting the requirements of Rule
434) pursuant to Rule 424(b) that discloses the information previously omitted
from the prospectus in reliance upon Rule 430A. Such registration statement as
amended at the time it is or was declared effective by the Commission, and, in
the event of any amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration statement as so
amended (but only from and after the effectiveness of such amendment), including
a registration statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the Act and
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rules 430A(b) and 434(d) of the Rules and
Regulations, is hereinafter called the "Registration Statement." The prospectus
included in the Registration Statement at the time it is or was declared
effective by the Commission is hereinafter called the "Prospectus," except that
if any prospectus (including any term sheet meeting the requirements of Rule 434
of the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 in order to meet the
requirements of Section 10(a) of the Rules and Regulations) filed by the Company
with the Commission pursuant to Rule 424(b) (and Rule 434, if applicable) of the
Rules and Regulations or any other such prospectus provided to the Underwriters
by the Company for use in connection with the offering of the Securities
(whether or not required to be filed by the Company with the Commission pursuant
to Rule 424(b) of the Rules and Regulations) differs from the prospectus on file
at the time the Registration Statement is or was declared effective by the
Commission, the term "Prospectus" shall refer to such differing prospectus
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) from and after the time such prospectus is filed with the
Commission or transmitted to the Commission for filing pursuant to such Rule
424(b) (and Rule 434, if applicable) or from and after the time it is first

2
<PAGE>

provided to the Underwriters by the Company for such use. The term "Preliminary
Prospectus" as used herein means any preliminary prospectus included in the
Registration Statement prior to the time it becomes or became effective under
the Act and any prospectus subject to completion as described in Rule 430A or
434 of the Rules and Regulations.

2. Representations and Warranties of the Company and the Selling
Shareholders.

(a) The Company represents and warrants to, and agrees with,
the several Underwriters as follows:

(i) 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, 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 the light of the circumstances under which they were made,
not misleading; except that the foregoing shall not apply to statements
in or omissions from any Preliminary Prospectus in reliance upon, and
in conformity with, written information furnished to the Company by
you, or by any Underwriter through you, specifically for use in the
preparation thereof.

(ii) As of the time the Registration Statement (or
any post-effective amendment thereto, including a registration
statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the
Act) is or was declared effective by the Commission, upon the filing or
first delivery to the Underwriters of the Prospectus (or any supplement
to the Prospectus (including any term sheet meeting the requirements of
Rule 434 of the Rules and Regulations)) and at the First Closing Date
and Second Closing Date (as hereinafter defined), (A) the Registration
Statement and Prospectus (in each case, as so amended and/or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the
Registration Statement (as so amended) did not or will not include 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 not misleading, and (C) the Prospectus (as so supplemented) did
not or will not include 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 in which
they are or were made, not misleading; except that the foregoing shall
not apply to statements in or omissions from any such document in
reliance upon, and in conformity with, written information furnished to
the Company by you, or by any Underwriter through you, specifically for
use in the preparation thereof. If the Registration Statement has been
declared effective by the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission.

3
<PAGE>

(iii) The financial statements of the Company,
together with the notes thereto, set forth in the Registration
Statement and Prospectus comply in all material respects with the
requirements of the Act and the Rules and Regulations and fairly
present the financial condition of the Company as of the dates
indicated and the results of operations and changes in cash flows for
the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein); and the supporting
schedules included in the Registration Statement present fairly the
information required to be stated therein and comply in all material
respects with the requirements of the Act and the Rules and
Regulations. No other financial statements or schedules are required to
be included in the Registration Statement or Prospectus. Deloitte &
Touche LLP, which has expressed its opinion with respect to the
financial statements and schedules filed as a part of the Registration
Statement and included in the Registration Statement and Prospectus,
are independent public accountants as required by the Act and the Rules
and Regulations.

(iv) Each of the Company and its subsidiaries has
been duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would
have a material adverse effect upon its business, condition (financial
or otherwise) or properties, taken as a whole.

(v) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and, except
as contemplated in the Prospectus, there has not been any change in the
capital stock (other than a change in the number of outstanding shares
of Common Stock due to the issuance of shares upon the exercise of
outstanding options or warrants or issuance of shares pursuant to the
Company's Piasano Program or the conversion of outstanding convertible
securities), or any material change in the short-term or long-term
debt, or any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock, of the Company or any of
its subsidiaries, or any material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise), business or results of operations of the
Company and its subsidiaries, taken as a whole.

(vi) Except as set forth in the Prospectus, there is
not pending or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company or
any of its subsidiaries is a party before or by any court or

4
<PAGE>

governmental agency, authority or body, or any arbitrator, which might
result in any material adverse change in the condition (financial or
otherwise), business, or results of operations of the Company and its
subsidiaries, taken as a whole.

(vii) There are no contracts or documents of the
Company or any of its subsidiaries that are required to be filed as
exhibits to the Registration Statement by the Act or by the Rules and
Regulations that have not been so filed.

(viii) This Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a valid, legal
and binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity hereunder may be limited by
federal or state securities laws and except as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
agreement or instrument to which the Company is a party or by which it
is bound or to which any of its property is subject, the Company's
charter or by-laws, or any order, rule, regulation or decree of any
court or governmental agency or body having jurisdiction over the
Company or any of its properties; no consent, approval, authorization
or order of, or filing with, any court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement or for the consummation of the transactions contemplated
hereby, including the issuance or sale of the Securities by the
Company, except such as may be required under the Act or state
securities or blue sky laws; and the Company has full power and
authority to enter into this Agreement and to authorize, issue and sell
the Securities as contemplated by this Agreement.

(ix) All of the issued and outstanding shares of
capital stock of the Company, including the outstanding shares of
Common Stock, are duly authorized and validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
securities, and the holders thereof are not subject to personal
liability by reason of being such holders; the Securities which may be
sold hereunder by the Company have been duly authorized and, when
issued, delivered and paid for in accordance with the terms hereof,
will have been validly issued and will be fully paid and nonassessable,
and the holders thereof will not be subject to personal liability by
reason of being such holders; and the capital stock of the Company
(including any adjustments to be effective as of the First Closing as
contemplated in the Prospectus), including the Common Stock, conforms
to the description thereof in the Registration Statement and
Prospectus. Upon the sale of the Securities at the First Closing as
contemplated by this Agreement, all issued and outstanding shares of
preferred stock of the Company will convert automatically into shares
of Common Stock as set forth in the Registration Statement and
Prospectus. Except as otherwise stated in the Registration Statement
and Prospectus, there

5
<PAGE>

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 Common Stock pursuant to the Company's charter, by-laws 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 sale of the Securities as contemplated by
this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the
Company, except for such rights which have been waived or fully
satisfied. All of the issued and outstanding shares of capital stock of
each of the Company's subsidiaries have been duly and validly
authorized and issued and are fully paid and nonassessable, and, except
as otherwise described in the Registration Statement and Prospectus and
except for any directors' qualifying shares, the Company owns of record
and beneficially, free and clear of any security interests, claims,
liens, proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock. Except as described in the
Registration Statement and the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any subsidiary of the Company
any shares of the capital stock of the Company or any subsidiary of the
Company. The Company has an authorized and outstanding capitalization
(including any adjustments to be effective as of the First Closing as
contemplated in the Prospectus) as set forth in the Registration
Statement and the Prospectus.

(x) The Company and each of its subsidiaries holds,
and is operating in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates
and orders of any governmental or self-regulatory body required for the
conduct of its business and all such franchises, grants,
authorizations, licenses, permits, easements, consents, certifications
and orders are valid and in full force and effect, except for such
failures to hold, to be in compliance, to be valid and in full force
and effect that would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
business or results of operations of the Company and its subsidiaries,
taken as a whole; and the Company and each of its subsidiaries is in
compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees, except for such failures to be so in
compliance that would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
business or results of operations of the Company and its subsidiaries,
taken as a whole.

(xi) The Company and its subsidiaries have good and
marketable title to all property described in the Registration
Statement and Prospectus as being owned by them, in each case free and
clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the
Prospectus or those that are not material in amount and do not
adversely affect the use made and proposed to be made of such property
by the Company and its subsidiaries; the property held under lease by
the Company and its subsidiaries is held by them under valid,
subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the Company or its
subsidiaries; the

6
<PAGE>

Company and each of its subsidiaries owns or possesses all patents,
patent applications, trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the
business of the Company and its subsidiaries as currently carried on
and as described in the Registration Statement and Prospectus; except
as stated in the Registration Statement and Prospectus, to the
Company's knowledge, no name which the Company or any of its
subsidiaries uses and no other aspect of the business of the Company or
any of its subsidiaries will involve or give rise to any infringement
of, or license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service
mark registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business of the Company
and neither the Company nor any of its subsidiaries has received any
notice alleging any such infringement or fee.

(xii) Neither the Company nor any of its subsidiaries
is in violation of its respective charter or by-laws or in breach of or
otherwise in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan
agreement or any other contract, lease or other instrument to which it
is subject or by which any of them may be bound, or to which any of the
material property or assets of the Company or any of its subsidiaries
is subject, except for such breaches or defaults that would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), business or results of operations
of the Company and its subsidiaries, taken as a whole.

(xiii) The Company and its subsidiaries have filed
all federal, state, local and foreign income and franchise tax returns
required to be filed and are not in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with
respect thereto, other than any which the Company or any of its
subsidiaries is contesting in good faith.

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

(xv) The Securities have been conditionally approved
for listing on the Nasdaq National Market System and, on the date the
Registration Statement became or becomes effective, the Company's
Registration Statement on Form 8-A or other applicable form under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
became or will become effective.

(xvi) Other than the subsidiaries of the Company
listed in Exhibit 21 to the Registration Statement, the Company owns no
capital stock or other equity or ownership or proprietary interest in
any corporation, partnership, association, trust or other entity.

7
<PAGE>

(xvii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.

(xviii) Other than as contemplated by this Agreement,
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.

(xix) Neither the Company nor any of its affiliates
is presently doing business with the government of Cuba or with any
person or affiliate located in Cuba.

(b) Each Selling Shareholder represents and warrants to, and
agrees with, the several Underwriters as follows:

(i) If such Selling Shareholder is selling Common
Stock issuable upon conversion of the Debentures, immediately prior to
the Effective Time, such Selling Shareholder was the record and
beneficial owner of the Debenture, free and clear of all security
interests, claims, liens, restrictions on transferability, legends,
proxies, equities or other encumbrances and as of the Effective Date,
such Selling Shareholder converted such Debenture into shares of Common
Stock. Such Selling Shareholder is the record and beneficial owner of,
and has, and on the First Closing Date will have, valid and marketable
title to the Common Stock (including any Common Stock issuable upon
conversion of the Debentures) and Warrants, if any, to be sold by such
Selling Shareholder, free and clear of all security interests, claims,
liens, restrictions on transferability, legends, proxies, equities or
other encumbrances; and upon delivery of and payment for such
Securities hereunder, the several Underwriters will acquire valid and
marketable title thereto, free and clear of any security interests,
claims, liens, restrictions on transferability, legends, proxies,
equities or other encumbrances. Such Selling Shareholder is selling the
Common Stock (including any Common Stock issuable upon conversion of
the Debentures) and Warrants to be sold by such Selling Shareholder for
such Selling Shareholder's own account and is not selling such
Securities, directly or indirectly, for the benefit of the Company, and
no part of the proceeds of such sale received by such Selling
Shareholder will inure, either directly or indirectly, to the benefit
of the Company other than as described in the Registration Statement
and Prospectus.

8
<PAGE>

(ii) Such Selling Shareholder has duly authorized,
executed and delivered a Letter of Transmittal and Custody Agreement
("Custody Agreement"), which Custody Agreement is a valid and binding
obligation of such Selling Shareholder, to Norwest Bank Minnesota N.A.,
as Custodian (the "Custodian"); pursuant to the Custody Agreement the
Selling Shareholder has placed in custody with the Custodian, for
delivery under this Agreement, the certificates representing the Common
Stock, the Debentures (for conversion into shares of Common Stock) and
Warrants, if any, to be sold by such Selling Shareholder; such
certificates represent validly issued, outstanding, fully paid and
nonassessable shares of Common Stock or validly issued and outstanding
Debentures or Warrants; when issued, the certificates representing
shares issuable upon conversion of the Debentures represent validly
issued, outstanding, fully paid and nonassessable shares of Common
Stock; and, in the case of Debentures, such certificates were
accompanied by all documents duly and properly executed that are
necessary to effect the conversion of such Debenture; and in the case
of Common Stock (including shares of Common Stock issuable upon
conversion of the Debentures) and Warrants, such certificates were duly
and properly endorsed in blank for transfer, or were accompanied by all
documents duly and properly executed that are necessary to validate the
transfer of title thereto, to the Underwriters, free of any legend,
restriction on transferability, proxy, lien or claim, whatsoever.

(iii) Such Selling Shareholder has the power and
authority to enter into this Agreement, the Letter of Transmittal and
the Custody Agreement and to sell, transfer and deliver the Securities
to be sold by such Selling Shareholder; and such Selling Shareholder
has duly authorized, executed and delivered to Greg A. Gadel and John
J. Motensbacher, as attorneys-in-fact (the "Attorneys-in-Fact"), an
irrevocable power of attorney (a "Power of Attorney") authorizing and
directing the Attorneys-in-Fact, or either of them, to effect the sale
and delivery of the Securities being sold by such Selling Shareholder,
to enter into this Agreement and to take all such other action as may
be necessary hereunder.

(iv) This Agreement, the Custody Agreement and the
Power of Attorney have each been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder and each
constitutes a valid and binding agreement of such Selling Shareholder,
enforceable in accordance with its terms, except as rights to indemnity
hereunder or thereunder may be limited by federal or state securities
laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or laws affecting the rights of creditors
generally and subject to general principles of equity. The execution
and delivery of this Agreement, the Custody Agreement and the Power of
Attorney and the performance of the terms hereof and thereof and the
consummation of the transactions herein and therein contemplated will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any agreement or instrument to which
such Selling Shareholder is a party or by which such Selling
Shareholder is bound, or any law, regulation, order or decree
applicable to such Selling Shareholder; no consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required for the execution, delivery and performance
of this Agreement, the Custody Agreement and

9
<PAGE>

the Power of Attorney or for the consummation of the transactions
contemplated hereby and thereby, including the sale of the Securities
being sold by such Selling Shareholder, except such as may be required
under the Act or state securities laws or blue sky laws.

(v) Such Selling Shareholder has not distributed and
will not distribute any prospectus or other offering material in
connection with the offering and sale of the Securities other than any
Preliminary Prospectus or the Prospectus or other materials permitted
by the Act to be distributed by such Selling Shareholder.

(vi) Such Selling Shareholder has reviewed the
Registration Statement and the Prospectus and to the best knowledge of
such Selling Shareholder neither the Registration Statement nor the
Prospectus 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 regarding such Selling
Shareholder, the other Selling Shareholders, the Company or otherwise.

(vii) To the knowledge of such Selling Shareholder,
the representations and warranties of the Company contained in
paragraph (a) of this Section 2 are true and correct.

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

3. Purchase, Sale and Delivery of Securities.

(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell 2,500,000 Firm Shares, and each
Selling Shareholder agrees, severally and not jointly, to sell the number of
Firm Shares set forth opposite the name of such Selling Shareholder in Schedule
I hereto, to the several Underwriters, and each Underwriter agrees, severally
and not jointly, to purchase from the Company and the Selling Shareholders the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II hereto. The purchase price for each Firm Share shall be $_________
per share. The obligation of each Underwriter to each of the Company and the
Selling Shareholders shall be to purchase from each of the Company and the
Selling Shareholders that number of Firm Shares (to be adjusted by the
Representatives to avoid fractional shares) which represents the same proportion
of the number of Firm Shares to be sold by each of the Company and the Selling
Shareholders pursuant to this Agreement as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto represents to the
total number of Firm Shares to be purchased by all Underwriters pursuant to this
Agreement. In making this Agreement, each Underwriter is contracting severally
and not jointly; except as provided in paragraph (c) of this

10
<PAGE>

Section 3 and in Section 8 hereof, the agreement of each Underwriter is to
purchase only the respective number of Firm Shares specified in Schedule II.

The Firm Shares will be delivered by the Company and the Custodian to
you for the accounts of the several Underwriters against payment of the purchase
price therefor by wire/same day funds payable to the order of the Company and
the Custodian, as appropriate, at the offices of U.S. Bancorp Piper Jaffray
Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota, or
such other location as may be mutually acceptable, at 9:00 a.m. Central time on
the third (or if the Securities are priced, as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business
day following the date hereof, or at such other time and date as you and the
Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, such time
and date of delivery being herein referred to as the "First Closing Date." If
the Representatives so elect, delivery of the Firm Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives. Certificates representing the Firm Shares, in
definitive form and in such denominations and registered in such names as you
may request upon at least two business days' prior notice to the Company and the
Custodian, will be made available for checking and packaging not later than
10:30 a.m., Central time, on the business day next preceding the First Closing
Date at the offices of U.S. Bancorp Piper Jaffray Inc., Piper Jaffray Tower, 222
South Ninth Street, Minneapolis, Minnesota, or such other location as may be
mutually acceptable.

(b) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company with respect to 399,622 of the Option Shares and a Selling
Shareholder, with respect to the number of Option Shares set forth opposite the
name of such Selling Shareholder in Schedule I hereto, hereby grants to the
several Underwriters an option to purchase all or any portion of the Option
Shares at the same purchase price as the Firm Shares, for use solely in covering
any over-allotments made by the Underwriters in the sale and distribution of the
Firm Shares. The option granted hereunder may be exercised at any time (but not
more than once) within 30 days after the effective date of this Agreement upon
notice (confirmed in writing) by the Representatives to the Company and to the
Attorneys-in-Fact setting forth the aggregate number of Option Shares as to
which the several Underwriters are exercising the option, the names and
denominations in which the certificates for the Option Shares are to be
registered and the date and time, as determined by you, when the Option Shares
are to be delivered, such time and date being herein referred to as the "Second
Closing" and "Second Closing Date," respectively; provided, however, that the
Second Closing Date shall not be earlier than the First Closing Date nor earlier
than the second business day after the date on which the option shall have been
exercised. If the option is exercised, the obligation of each Underwirter shall
be to purchase Option Shares from the Selling Shareholder and the Company, on a
pro rata basis, (to be adjusted by the Representatives to avoid fractional
shares). The number of Option Shares to be purchased by each Underwriter shall
be the same percentage of the total number of Option Shares to be purchased by
the several Underwriters as the number of Firm Shares to be purchased by such
Underwriter is of the total number of Firm Shares to be purchased by the several
Underwriters, as adjusted by the Representatives in such manner as the
Representatives deem

11
<PAGE>

advisable to avoid fractional shares. No Option Shares shall be sold and
delivered unless the Firm Shares previously have been, or simultaneously are,
sold and delivered.

The Option Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by wire/same day funds payable to the order of the Custodian or the
Company, as appropriate, at the offices of Piper Jaffray Inc., Piper Jaffray
Tower, 222 South Ninth Street, Minneapolis, Minnesota, or such other location as
may be mutually acceptable at 9:00 a.m., Central time, on the Second Closing
Date. If the Representatives so elect, delivery of the Option Shares may be made
by credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representatives. Certificates representing the Option
Shares in definitive form and in such denominations and registered in such names
as you have set forth in your notice of option exercise, will be made available
for checking and packaging not later than 10:30 a.m., Central time, on the
business day next preceding the Second Closing Date at the office of U.S.
Bancorp Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota, or such other location as may be mutually acceptable.

(c) It is understood that you, individually and not as
Representatives of the several Underwriters may (but shall not be obligated to)
make payment to the Company or the Selling Shareholders, on behalf of any
Underwriter for the Securities to be purchased by such Underwriter. Any such
payment by you shall not relieve any such Underwriter of any of its obligations
hereunder. Nothing herein contained shall constitute any of the Underwriters an
unincorporated association or partner with the Company or any Selling
Shareholder.

4. Covenants.

(a) The Company covenants and agrees with the several
Underwriters as follows:

(i) If the Registration Statement has not already
been declared effective by the Commission, the Company will use its
best efforts to cause the Registration Statement and any post-effective
amendments thereto to become effective as promptly as possible; the
Company will notify you promptly of the time when the Registration
Statement or any post-effective amendment to the Registration Statement
has become effective or any supplement to the Prospectus (including any
term sheet within the meaning of Rule 434 of the Rules and Regulations)
has been filed and of any request by the Commission for any amendment
or supplement to the Registration Statement or Prospectus or additional
information; if the Company has elected to rely on Rule 430A of the
Rules and Regulations, the Company will prepare and file a Prospectus
(or term sheet within the meaning of Rule 434 of the Rules and
Regulations) containing the information omitted therefrom pursuant to
Rule 430A of the Rules and Regulations with the Commission within the
time period required by, and otherwise in accordance with the
provisions of, Rules 424(b), 430A and 434, if applicable, of the Rules
and Regulations; if the Company has elected to rely upon Rule 462(b) of
the Rules and Regulations to increase the size of the offering
registered under the Act, the Company will prepare and file a
registration statement with respect to such

12
<PAGE>

increase with the Commission within the time period required by, and
otherwise in accordance with the provisions of, Rule 462(b); the
Company will prepare and file with the Commission, promptly upon your
request, any amendments or supplements to the Registration Statement or
Prospectus (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations) that, in your opinion, may be necessary or
advisable in connection with the distribution of the Securities by the
Underwriters; and the Company will not file any amendment or supplement
to the Registration Statement or Prospectus (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations) to which
you shall reasonably object by notice to the Company after having been
furnished a copy a reasonable time prior to the filing.

(ii) The Company will advise you, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose; and
the Company will promptly use its best efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order
should be issued.

(iii) Within the time during which a prospectus
(including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) relating to the Securities is required to be delivered
under the Act, the Company will comply as far as it is able with all
requirements imposed upon it by the Act, as now and hereafter amended,
and by the Rules and Regulations, as from time to time in force, so far
as necessary to permit the continuance of sales of or dealings in the
Securities as contemplated by the provisions hereof and the Prospectus.
If during such period any event occurs as a result of which the
Prospectus would include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend the Registration Statement
or supplement the Prospectus to comply with the Act, the Company will
promptly notify you and will amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.

(iv) The Company will use its best efforts to qualify
the Securities for sale under the securities laws of such jurisdictions
as you reasonably designate and to continue such qualifications in
effect so long as required for the distribution of the Securities,
except that the Company shall not be required in connection therewith
to qualify as a foreign corporation or to execute a general consent to
service of process in any state.

(v) The Company will furnish to the Underwriters
copies of the Registration Statement (three of which will be signed and
will include all exhibits), each Preliminary Prospectus, the
Prospectus, and all amendments and supplements (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) to
such documents,

13
<PAGE>

in each case as soon as available and in such quantities as you may
from time to time reasonably request.

(vi) During a period of five years commencing with
the date hereof, the Company will furnish to the Representatives, and
to each Underwriter, who may so request in writing, copies of all
periodic and special reports furnished to the shareholders of the
Company and all information, documents and reports filed with the
Commission, the National Association of Securities Dealers, Inc., The
Nasdaq National Market or any securities exchange.

(vii) The Company will make generally available to
its security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal quarter,
an earnings statement (which need not be audited) covering a 12-month
period beginning after the effective date of the Registration Statement
that shall satisfy the provisions of Section 11(a) of the Act and Rule
158 of the Rules and Regulations.

(viii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented
from becoming effective under the provisions of Section 9(a) hereof or
is terminated, will pay or cause to be paid (A) all expenses (including
transfer taxes allocated to the respective transferees) incurred in
connection with the delivery to the Underwriters of the Securities, (B)
all expenses and fees (including, without limitation, fees and expenses
of the Company's accountants and counsel but, except as otherwise
provided below, not including fees of the Underwriters' counsel) in
connection with the preparation, printing, filing, delivery, and
shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits
thereto), the Securities, each Preliminary Prospectus, the Prospectus,
and any amendment thereof or supplement thereto, and the printing,
delivery, and shipping of this Agreement and other underwriting
documents, including Blue Sky Memoranda, (C) all filing fees and fees
and disbursements of the Underwriters' counsel incurred in connection
with the qualification of the Securities for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of the
states and other jurisdictions which you shall designate in accordance
with Section 4(d) hereof, (D) the fees and expenses of any transfer
agent or registrar, (E) the filing fees incident to any required review
by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Securities, (F) listing fees, if any, and (G) all other
costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein. If
the sale of the Securities provided for herein is not consummated by
reason of action by the Company pursuant to Section 9(a) hereof which
prevents this Agreement from becoming effective, or by reason of any
failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform any agreement on its or their part to be
performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company or the
Selling Shareholders is not fulfilled (unless such failure to fulfill
any condition is due to the default or omission of any Underwriter),
the Company will reimburse the several Underwriters for

14
<PAGE>

all out-of-pocket disbursements (including fees and disbursements of
counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company
shall not in any event be liable to any of the Underwriters for loss of
anticipated profits from the transactions covered by this Agreement.
The provisions of this Section shall not affect any agreement that the
Company and the Selling Shareholders may make for the allocation or
sharing of such expenses or costs.

(ix) The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes set
forth in the Prospectus and will file such information with the
Commission with respect to the sale of the Securities and the
application of the proceeds therefrom as may be required in accordance
with Rule 463 of the Rules and Regulations.

(x) Except as contemplated by the Prospectus, the
Company will not, without your prior written consent, offer for sale,
sell, contract to sell, grant any option for the sale of or otherwise
issue or dispose of any Common Stock or any securities convertible into
or exchangeable for, or any options or rights to purchase or acquire,
Common Stock, except to the Underwriters pursuant to this Agreement,
the 1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Company, the
Stock Option Plan for Non-Employee Directors or the Piasano Partner
Program or issuances pursuant to the exercise of options, warrants or
convertible securities outstanding on the date hereof for a period of
180 days after the commencement of the public offering of the
Securities by the Underwriters.

(xi) The Company either has caused to be delivered to
you or will cause to be delivered to you prior to the effective date of
the Registration Statement a letter from each of the Company's
directors and officers and certain other shareholders of the Company
holding an aggregate of 6,828,039 shares of Common Stock of the Company
stating that such person agrees that he or she will not, without your
prior written consent, offer for sale, sell, contract to sell or
otherwise dispose of any shares of Common Stock or rights to purchase
Common Stock, except to the Underwriters pursuant to this Agreement,
for a period of 180 days after commencement of the public offering of
the Securities by the Underwriters.

(xii) The Company has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, and has not
effected any sales of Common Stock which are required to be disclosed
in response to Item 701 of Regulation S-K under the Act which have not
been so disclosed in the Registration Statement.

(xiii) The Company will not incur 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.

15
<PAGE>

(xiv) The Company will inform the Florida Department
of Banking and Finance at any time prior to the consummation of the
distribution of the Securities by the Underwriters if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba. Such information will be provided within 90
days after the commencement thereof or after a change occurs with
respect to previously reported information.

(b) Each Selling Shareholder covenants and agrees with the
several Underwriters as follows:

(i) Except as otherwise agreed to by the Company and
the Selling Shareholder, such Selling Shareholder will pay all taxes,
if any, on the transfer and sale, respectively, of the Securities being
sold by such Selling Shareholder, the fees of such Selling
Shareholder's counsel and such Selling Shareholder's proportionate
share (based upon the number of Securities being offered by such
Selling Shareholder pursuant to the Registration Statement) of all
costs and expenses (except for legal and accounting expenses and fees
of the registrar and transfer agent) incurred by the Company pursuant
to the provisions of Section 4(a)(viii) of this Agreement; provided,
however, that each Selling Shareholder severally agrees to reimburse
the Company for any reimbursement made by the Company to the
Underwriters pursuant to Section 4(a)(viii) hereof to the extent such
reimbursement resulted from the failure or refusal on the part of such
Selling Shareholder to comply under the terms or fulfill any of the
conditions of this Agreement.

(ii) If this Agreement shall be terminated by the
Underwriters because of any failure, refusal or inability on the part
of such Selling Shareholder to perform any agreement on such Selling
Shareholder's part to be performed, or because any other condition of
the Underwriters' obligations hereunder required to be fulfilled by
such Selling Shareholder is not fulfilled, such Selling Shareholder
agrees to reimburse the several Underwriters for all out-of-pocket
disbursements (including fees and disbursements of counsel for the
Underwriters) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Selling
Shareholder shall not in any event be liable to any of the Underwriters
for loss of anticipated profits from the transactions covered by this
Agreement.

(iii) The Securities to be sold by such Selling
Shareholder, represented by the certificates on deposit with the
Custodian pursuant to the Custody Agreement of such Selling
Shareholder, are subject to the interest of the several Underwriters
and the other Selling Shareholders; the arrangements made for such
custody are, except as specifically provided in the Custody Agreement,
irrevocable; and the obligations of such Selling Shareholder hereunder
shall not be terminated, except as provided in this Agreement or in the
Custody Agreement, by any act of such Selling Shareholder, by operation
of law, whether

16
<PAGE>

by the liquidation, dissolution or merger of such Selling Shareholder,
by the death, disability, or insolvency of such Selling Shareholder, or
by the occurrence of any other event. If any Selling Shareholder should
liquidate, dissolve or be a party to a merger (if such Selling
Shareholder is other than an individual) or die, become disabled or
become insolvent (if such Selling Shareholder is an individual) or if
any other such event should occur before the delivery of the Securities
hereunder, certificates for the Securities deposited with the Custodian
shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such liquidation, dissolution,
merger, death, incapacity, insolvency or other event had not occurred,
whether or not the Custodian shall have received notice thereof.

(iv) Such Selling Shareholder will not, without your
prior written consent, offer for sale, sell, contract to sell, grant
any option for the sale of or otherwise dispose of any Common Stock or
any securities convertible into or exchangeable for, or any options or
rights to purchase or acquire, Common Stock, except to the Underwriters
pursuant to this Agreement, for a period of 180 days after the
commencement of the public offering of the Securities by the
Underwriters.

(v) Such Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities, and has not effected any sales of
Common Stock which, if effected by the Company, would be required to be
disclosed in response to Item 701 of Regulation S-K.

(vi) Such Selling Shareholder shall immediately
notify you if any event occurs, or of any change in information
relating to such Selling Shareholder or the Company or any new
information relating to the Company or relating to any matter stated in
the Prospectus or any supplement thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), which
results in the Prospectus (as supplemented) including an untrue
statement of a material fact or omitting to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.

5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and the Second Closing Date (as if
made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company and the Selling Shareholders contained
herein, to the performance by the Company and the Selling Shareholders of their
respective obligations hereunder and to the following additional conditions:

(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central time, on the date of this Agreement, or such later
time and date as you, as

17
<PAGE>

Representatives of the several Underwriters, shall approve and all filings
required by Rules 424, 430A and 434 of the Rules and Regulations shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement or any amendment thereof shall have been issued; no proceedings for
the issuance of such an order shall have been initiated or threatened; and any
request of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been complied
with to your satisfaction.

(b) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations), contains an untrue statement of fact which, in your opinion,
is material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.

(c) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its subsidiaries
shall have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its capital
stock; and except as contemplated in the Prospectus, there shall not have been
any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or issuance of shares pursuant to
the Company's Piasano Program or the conversion of outstanding convertible
securities), or any material change in the short-term or long-term debt of the
Company, or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock of the Company or any of its subsidiaries,
or any material adverse change or any development involving a prospective
material adverse change (whether or not arising in the ordinary course of
business), in the condition (financial or otherwise), business or results of
operations of the Company and its subsidiaries, taken as a whole, that, in your
judgment, makes it impractical or inadvisable to offer or deliver the Securities
on the terms and in the manner contemplated in the Prospectus.

(d) On each Closing Date, there shall have been furnished to
you, as Representatives of the several Underwriters, the opinion of Faegre and
Benson LLP, counsel for the Company, dated such Closing Date and addressed to
you, to the effect that:

(i) Each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which it
owns or leases real property or in which the conduct of its business
makes such qualification necessary and in which the failure to so
qualify would have a material adverse effect upon

18
<PAGE>

the business, condition (financial or otherwise) or properties of the
Company and its subsidiaries, taken as a whole.

(ii) The capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus
under the caption "Description of Capital Stock." All of the issued and
outstanding shares of the capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, and
the holders thereof are not subject to personal liability by reason of
being such holders. The Securities to be issued and sold by the Company
hereunder have been duly authorized and, when issued, delivered and
paid for in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability by reason of
being such holders. Except as otherwise stated in the Registration
Statement and 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 Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument known
to such counsel to which the Company is a party or by which the Company
is bound. To the best of such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any rights
for or relating to the registration of any shares of Common Stock or
other securities of the Company, except for such rights which have been
waived or fully satisfied.

(iii) All of the issued and outstanding shares of
capital stock of each of the Company's subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, to the best of such counsel's knowledge, except as otherwise
described in the Registration Statement and Prospectus and except for
directors' qualifying shares, the Company owns of record and
beneficially, free and clear of any security interests, claims, liens,
proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock. To the best of such counsel's
knowledge, except as described in the Registration Statement and
Prospectus, there are no options, warrants, agreements, contracts or
other rights in existence to purchase or acquire from the Company or
any subsidiary any shares of the capital stock of the Company or any
subsidiary of the Company.

(iv) The Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or,
to the knowledge of such counsel, threatened by the Commission.

(v) The descriptions in the Registration Statement
and Prospectus of statutes, legal and governmental proceedings,
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel does not know of any
statutes or legal or governmental proceedings required to be described
in the Prospectus that are not described as required, or of any
contracts or documents of a character required to be

19
<PAGE>

described in the Registration Statement or Prospectus or included as
exhibits to the Registration Statement that are not described or
included as required.

(vi) The Company has full corporate power and
authority to enter into this Agreement, and this Agreement has been
duly authorized, executed and delivered by the Company and constitutes
a valid, legal and binding obligation of the Company enforceable in
accordance with its terms (except as rights to indemnity hereunder may
be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and subject
to general principles of equity); the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
applicable statute, rule or regulation, any agreement or instrument
known to such counsel to which the Company is a party or by which it is
bound or to which any of its property is subject, the Company's charter
or by-laws, or any order or decree known to such counsel of any court
or governmental agency or body having jurisdiction over the Company or
any of its respective properties; and no consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required for the execution, delivery and performance
of this Agreement or for the consummation of the transactions
contemplated hereby, including the issuance or sale of the Securities
by the Company, except such as may be required under the Act or state
securities laws.

(vii) To the best of such counsel's knowledge,
neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws.

(viii) The Registration Statement and the Prospectus,
and any amendment thereof or supplement thereto (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations),
comply as to form in all material respects with the requirements of the
Act and the Rules and Regulations; and on the basis of conferences with
officers of the Company, examination of documents referred to in the
Registration Statement and Prospectus and such other procedures as such
counsel deemed appropriate, nothing has come to the attention of such
counsel that causes such counsel to believe that the Registration
Statement or any amendment thereof, at the time the Registration
Statement became effective and as of such Closing Date (including any
Registration Statement filed under Rule 462(b) of the Rules and
Regulations), contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus (as of its date and as of such Closing Date), as amended or
supplemented, includes any untrue statement of 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;
it being understood that such counsel need express no opinion as to the
financial statements or other financial data included in or omitted
from any of the documents mentioned in this clause.

20
<PAGE>

In rendering such opinion such counsel may rely (i) as to matters of
law other than Minnesota and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Company and its subsidiaries
provided that the extent of such reliance is specified in such opinion.

(e) On the First Closing Date, there shall have been furnished
to you, as Representatives of the several Underwriters, the opinion of Maun &
Simon, counsel for the Selling Shareholders, dated such Closing Date and
addressed to you, to the effect that:

(i) Each of the Selling Shareholders is the sole
record and beneficial owner of the Securities to be sold by such
Selling Shareholder and delivery of the certificates for the Securities
to be sold by each Selling Shareholder pursuant to this Agreement, upon
payment therefor by the Underwriters, will pass marketable title to
such Securities to the Underwriters and the Underwriters will acquire
all the rights of such Selling Shareholder in the Securities (assuming
the Underwriters have no knowledge of an adverse claim), free and clear
of any security interests, claims, liens or other encumbrances.

(ii) Each of the Selling Shareholders has the power
and authority to enter into the Custody Agreement, the Power of
Attorney and this Agreement and to perform and discharge such Selling
Shareholder's obligations thereunder and hereunder; and this Agreement,
the Custody Agreements and the Powers of Attorney have been duly and
validly authorized, executed and delivered by (or by the
Attorneys-in-Fact, or either of them, on behalf of) the Selling
Shareholders and are valid and binding agreements of the Selling
Shareholders, enforceable in accordance with their respective terms
(except as rights to indemnity hereunder or thereunder may be limited
by federal or state securities laws and except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and subject to general
principles of equity).

(iii) The execution and delivery of this Agreement,
the Custody Agreement and the Power of Attorney and the performance of
the terms hereof and thereof and the consummation of the transactions
herein and therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, rule or regulation, or any 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
its property is subject, any such Selling Shareholder's charter or
by-laws, or any order or decree known to such counsel of any court or
government agency or body having jurisdiction over such Selling
Shareholder or any of its respective properties; and no consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Custody Agreement and the Power of
Attorney or for the consummation of the transactions contemplated
hereby and

21
<PAGE>

thereby, including the sale of the Securities being sold by such
Selling Shareholder, except such as may be required under the Act or
state securities laws or blue sky laws.

(iv) Such other matters as you may reasonably
request.

In rendering such opinion such counsel may rely (i) as to matters of
law other than Minnesota and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Selling Shareholders provided
that the extent of such reliance is specified in such opinion.

(f) On each Closing Date, there shall have been furnished to
you, as the Representatives of the several Underwriters, such opinion or
opinions from Dorsey & Whitney LLP, counsel for the Underwriters, dated such
Closing Date and addressed to you, with respect to the formation of the Company,
the validity of the Securities, the Registration Statement, the Prospectus and
other related matters as you reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.

(g) On each Closing Date you, as Representatives of the
several Underwriters, shall have received a letter of Deloitte & Touche LLP,
dated such Closing Date and addressed to you, confirming that they are
independent public accountants within the meaning of the Act and are in
compliance with the applicable requirements relating to the qualifications of
accountants under Rule 2-01 of Regulation S-X of the Commission, and stating, as
of the date of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of such letter), the conclusions and findings of said firm
with respect to the financial information and other matters covered by its
letter delivered to you concurrently with the execution of this Agreement, and
the effect of the letter so to be delivered on such Closing Date shall be to
confirm the conclusions and findings set forth in such prior letter.

(h) On each Closing Date, there shall have been furnished to
you, as Representatives of the several Underwriters, a certificate of the
Company, dated such Closing Date and addressed to you, signed by the chief
executive officer and by the chief financial officer of the Company, to the
effect that:

(i) The representations and warranties of the Company
in this Agreement are true and correct, in all material respects, as if
made at and as of such Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date;

22
<PAGE>

(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment thereof or
the qualification of the Securities for offering or sale has been
issued, and no proceeding for that purpose has been instituted or, to
the best of their knowledge, is contemplated by the Commission or any
state or regulatory body; and

(iii) The signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), and (A)
such documents contain all statements and information required to be
included therein, the Registration Statement, or any amendment thereof,
does not 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, and the Prospectus, as
amended or supplemented, does not include any untrue statement of
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, (B) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth, (C)
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business, or declared or
paid any dividends or made any distribution of any kind with respect to
its capital stock, and except as contemplated in the Prospectus, there
has not been any change in the capital stock (other than a change in
the number of outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants or issuance
of shares pursuant to the Company's Piasano Program or the conversion
of outstanding convertible securities), or any material change in the
short-term or long-term debt, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock,
of the Company, or any of its subsidiaries, or any material adverse
change or any development involving a prospective material adverse
change (whether or not arising in the ordinary course of business), in
the general affairs, condition (financial or otherwise), business or
results of operations of the Company and its subsidiaries, taken as a
whole, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the
Company or any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which might
result in any material adverse change in the condition (financial or
otherwise), business or results of operations of the Company and its
subsidiaries, taken as a whole.

(i) On the First Closing Date, there shall have been furnished
to you, as Representatives of the several Underwriters, a certificate or
certificates, dated such Closing Date and addressed to you, signed by each of
the Selling Shareholders or either of such Selling Shareholder's
Attorneys-in-Fact to the effect that the representations and warranties of such
Selling Shareholder

23
<PAGE>

contained in this Agreement are true and correct as if made at and as of such
Closing Date, and that such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on such Selling Shareholder's part
to be performed or satisfied at or prior to such Closing Date.

(j) The Company shall have furnished to you and counsel for
the Underwriters such additional documents, certificates and evidence as you or
they may have reasonably requested.

(k) The Nasdaq National Market shall have approved the
Securities for inclusion, subject only to official notice of issuance and
evidence of satisfactory distribution.

All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and counsel for the Underwriters. The Company will furnish you
with such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request.

6. Indemnification and Contribution.

(a)(i) The Company and the Selling Shareholders listed on
Schedule I(a), jointly and severally, agree to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company and/or such Selling
Shareholders, as the case may be), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness pursuant to Rules 430A and
434(d) of the Rules and Regulations, if applicable, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), 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, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by it in connection with investigating or defending against
such loss, claim, damage, liability or action; provided, however, that neither
the Company nor any Selling Shareholder shall be liable in any such case to the
extent that any such loss, claim, damage, liability or action 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,
the Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation thereof; and
further provided, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary Prospectus but
eliminated or remedied in the Prospectus, such indemnity agreement shall not
inure to the benefit of the Underwriter (or to the benefit of any person who
controls the Underwriter) if the person asserting any loss, claim, damage or
liability purchased the Securities from the Underwriter, and a

24
<PAGE>

copy of the Prospectus was not given to such person with, or prior to, the
written confirmation of the sale of such Securities to such person. However, in
no event shall any Selling Shareholder be liable under the provisions of this
Section 6 for any amount in excess of the aggregate amount of proceeds such
Selling Shareholder received from the sale of the Securities pursuant to this
Agreement.

(ii) In addition to their other obligations under this Section
6(a), the Company and each Selling Shareholder, jointly and severally, agree
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in this
Section 6(a), they will reimburse each Underwriter on a monthly basis for all
reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's and/or the Selling
Shareholder's obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Underwriter that
received such payment shall promptly return it to the party or parties that made
such payment, together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by US Bancorp (the "Prime Rate").
Any such interim reimbursement payments which are not made to an Underwriter
within 30 days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement shall be in
addition to any liabilities which the Company or the Selling Shareholder may
otherwise have.

(iii) Notwithstanding the foregoing, and without limiting in
any way the ability of the Underwriters to commence an action or proceeding
against any of the Selling Stockholders, no Selling Stockholder listed in
Schedule I(a) shall be required to make payment of any amount pursuant to
Section 6(a)(i) to any Underwriter with respect to any losses, claims, damages,
liabilities or judgments which fall within the scope of Section 6(a)(i) (and are
not based upon information furnished to the Company by such Selling Shareholder,
for inclusion in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto) unless and until (i) the
Underwriters make a written demand for indemnification from the Company and (ii)
the Company or any subsidiary has failed to pay any amount owed to any
Underwriter pursuant to this Section 6 (a) (i) with respect to any such losses,
claims, damages, liabilities and judgments, within twenty business days. In the
event that any Selling Stockholder fails to comply with its obligations with
respect to any such losses, claims, damages, liabilities or judgments, the
Underwriters further agree that (x) they will not commence any legal proceeding
against any such Selling Stockholder to recover such losses, claims, damages,
liabilities or judgments unless, prior to or concurrently therewith they shall
have commenced a legal proceeding against the Company or any of its subsidiaries
to recover the same, (y) the Underwriters will diligently and in good faith
prosecute any such legal proceeding against the Company and its subsidiaries for
as long as the Selling Stockholders are a party thereto, and (z) in the event
that judgments are entered in favor of the Underwriters against both the Company
or its subsidiaries and the Selling Stockholders in any such

25
<PAGE>

legal proceeding, (1) during the period of 45 days following the date on which
the judgment against the Company or its subsidiaries becomes final and is not
subject to appeal, the Underwriters will take commercially reasonable steps to
enforce the judgment entered against the Company or its subsidiaries and will
not seek to enforce the judgment entered against any Selling Stockholder and (2)
after the expiration of such period, the Underwriters may seek to enforce the
judgment entered against any such Selling Stockholder, but will continue to take
commercially reasonable steps to enforce the judgment entered against the
Company or its subsidiaries for so long as they are seeking to enforce the
judgment entered against the Selling Stockholders. Notwithstanding the
foregoing, the Selling Stockholders shall be liable in accordance with Section 6
(a) without regard to the provisions set forth in this paragraph immediately
after any Insolvency Event (as hereinafter defined).

(iv) For the purposes of the foregoing paragraph, an
"Insolvency Event" shall have occurred when the Company or any of its
subsidiaries has (i) commenced a voluntary proceeding under any Federal or state
bankruptcy, insolvency, reorganization or similar law, or other proceeding to be
adjudicated a bankrupt or insolvent, (ii) consented to the entry of a decree or
order for relief in any involuntary proceeding or to the commencement of any
similar proceeding against it, (iii) had entered against it any decree or order
for relief in any involuntary proceeding or adjudging the Company or any
subsidiary a bankrupt or insolvent or appointing a custodian, receiver or
similar official of the Company or any subsidiary or any substantial part of its
property, or had any such party appointed or take possession thereof, (iv) made
any assignment for the benefit or creditors, or (v) taken any corporate action
to authorize any of the foregoing actions.

(v) Each Selling Shareholder who is not listed in Schedule
I(a), severally and not jointly, agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject under the Act or otherwise
(including in settlement of any litigation if such settlement is effected with
the written consent of such Selling Stockholder), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, including the information deemed
to be a part of the Registration Statement at the time of effectiveness pursuant
to Rule 430A and 434(d) of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations), 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, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company or such Underwriter by such Selling Shareholder, specifically for
use in the preparation thereof, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action; provided, however, that the Selling Shareholder shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the

26
<PAGE>

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 you, or by any Underwriter through you,
specifically for use in the preparation thereof; and further provided, that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission or alleged
omission made in any Preliminary Prospectus but eliminated or remedied in the
Prospectus, such indemnity agreement shall not inure to the benefit of the
Underwriter (or to the benefit of any person who controls the Underwriter) if
the person asserting any loss, claim, damage or liability purchased the
Securities from the Underwriter, and a copy of the Prospectus was not given to
such person with, or prior to, the written confirmation of the sale of such
Securities to such person. However, in no event shall any Selling Shareholder be
liable under the provisions of this Section 6(a) (v) for any amount in excess of
the aggregate amount of proceeds such Selling Shareholder received from the sale
of the Securities pursuant to this Agreement.

(b) Each Underwriter will indemnify and hold harmless the
Company and each Selling Shareholder against any losses, claims, damages or
liabilities to which the Company and the Selling Shareholders may become
subject, under the Act or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of such Underwriter),
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations), 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 each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the 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 you, or by such Underwriter through you, specifically for use in the
preparation thereof, and will reimburse the Company and the Selling Shareholders
for any legal or other expenses reasonably incurred by the Company or any such
Selling Shareholder in connection with investigating or defending against any
such loss, claim, damage, liability or action.

(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party to the extent it is not prejudiced as
a proximate result of such failure. In case any such action 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
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the

27
<PAGE>

defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that if 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, the indemnified party
shall have the right to employ separate counsel at the expense of 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 6(a) 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 6(b). An
indemnifying party shall not be obligated under any settlement agreement
relating to any action under this Section 6 to which it has not agreed in
writing.

(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
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 Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above 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 that resulted in such losses,
claims, damages or liabilities, 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 bear 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, the Selling Shareholders or the Underwriters and the parties' relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue 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 subsection (d) were to be 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 in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any

28
<PAGE>

legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending against any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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 subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.

(e) The obligations of the Company and the Selling
Shareholders under this Section 6 shall be in addition to any liability which
the Company and the Selling Shareholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company or
any Selling Shareholder within the meaning of the Act.

7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company and the Selling
Shareholders contained herein or in certificates delivered pursuant hereto, and
the agreements of the several Underwriters, the Company and the Selling
Shareholders contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling person thereof, or the Company or any of its
officers, directors, or controlling persons, or any Selling Shareholders or any
controlling person thereof, and shall survive delivery of, and payment for, the
Securities to and by the Underwriters hereunder.

8. Substitution of Underwriters.

(a) If any Underwriter shall fail to take up and pay for the
amount of Firm Shares agreed by such Underwriter to be purchased hereunder, upon
tender of such Firm Shares in accordance with the terms hereof, and the amount
of Firm Shares not purchased does not aggregate more than 10% of the total
amount of Firm Shares set forth in Schedule II hereto, the other Underwriter
shall be obligated to take up and pay for the Firm Shares that the withdrawing
or defaulting Underwriter agreed but failed to purchase.

(b) If any Underwriter shall fail to take up and pay for the
amount of Firm Shares agreed by such Underwriter to be purchased hereunder, upon
tender of such Firm Shares in accordance with the terms hereof, and the amount
of Firm Shares not purchased aggregates more

29
<PAGE>

than 10% of the total amount of Firm Shares set forth in Schedule II hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination neither the Company nor any Selling
Shareholder shall be under any liability to any Underwriter (except to the
extent provided in Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof)
nor shall any Underwriter (other than an Underwriter who shall have failed,
otherwise than for some reason permitted under this Agreement, to purchase the
amount of Firm Shares agreed by such Underwriter to be purchased hereunder) be
under any liability to the Company or the Selling Shareholders (except to the
extent provided in Section 6 hereof).

If Firm Shares to which a default relates are to be purchased by the
non-defaulting Underwriter or by any other party or parties, the Representatives
or the Company shall have the right to postpone the First Closing Date for not
more than seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used herein, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 8.

9. Effective Date of this Agreement and Termination.

(a) This Agreement shall become effective at 10:00 a.m.,
Central time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; provided, that if the Registration Statement
is effective at the time this Agreement is executed, this Agreement shall become
effective at such time as you in your discretion shall first release the
Securities for sale to the public. For the purpose of this Section, the
Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except that the
provisions of Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at
all times be effective.

(b) You, as Representatives of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be canceled at any time prior to
the Second Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to such Closing Date, to perform any agreement on its part
to be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange or the American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange or the American Stock Exchange, by such Exchange or by order of the
Commission or any other governmental authority

30
<PAGE>

having jurisdiction, (v) a banking moratorium shall have been declared by
Federal, New York or Minnesota authorities, or (vi) there has occurred any
material adverse change in the financial markets in the United States or an
outbreak of major hostilities (or an escalation thereof) in which the United
States is involved, a declaration of war by Congress, any other substantial
national or international calamity or any other event or occurrence of a similar
character shall have occurred since the execution of this Agreement that, in
your judgment, makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Securities. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at
all times be effective.

(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company and an Attorney-in-Fact, on behalf of the Selling Shareholders, shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company elects to prevent this Agreement from becoming effective, you and an
Attorney-in-Fact, on behalf of the Selling Shareholders, shall be notified by
the Company by telephone or telegram, confirmed by letter.

10. Default by One or More of the Selling Shareholders or the Company.
If one or more of the Selling Shareholders shall fail at the First Closing Date
to sell and deliver the number of Securities which such Selling Shareholder or
Selling Shareholders are obligated to sell hereunder, and the remaining Selling
Shareholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Securities to be sold by them hereunder to the total
number of Securities to be sold by all Selling Shareholders as set forth in
Schedule I, then the Underwriters may at your option, by notice from you to the
Company and the non-defaulting Selling Shareholders, either (a) terminate this
Agreement without any liability on the part of any non-defaulting party or (b)
elect to purchase the Securities which the Company and the non-defaulting
Selling Shareholders have agreed to sell hereunder.

In the event of a default by any Selling Shareholder as referred to in
this Section, either you or the Company or, by joint action only, the
non-defaulting Selling Shareholders shall have the right to postpone the First
Closing Date for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements.

If the Company shall fail at the First Closing Date to sell and deliver
the number of Securities which it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party.

No action taken pursuant to this Section shall relieve the
Company or any Selling Shareholders so defaulting from liability, if any, in
respect of such default.

11. Information Furnished by Underwriters. The statements set forth in
the last paragraph of the cover page and under the caption "Underwriting" in any
Preliminary Prospectus and in the

31
<PAGE>

Prospectus constitute the written information furnished by or on behalf of the
Underwriters referred to in Section 2 and Section 6 hereof.

12. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to the Representatives c/o U.S. Bancorp
Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota 55402, except that notices given to an Underwriter pursuant to Section
6 hereof shall be sent to such Underwriter at the address stated in the
Underwriters' Questionnaire furnished by such Underwriter in connection with
this offering; if to the Company, shall be mailed, telegraphed or delivered to
it at BUCA, Inc., 1300 Nicollet Avenue, Suite 3043, Minneapolis, Minnesota
55402, Attention: Greg A. Gadel; if to any of the Selling Shareholders, at the
address of the Attorneys-in-Fact as set forth in the Powers of Attorney, or in
each case to such other address as the person to be notified may have requested
in writing. All notices given by telegram shall be promptly confirmed by letter.
Any party to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for such purpose.

13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the several Underwriters.

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

32
<PAGE>

Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the
Company, the Selling Shareholders and the several Underwriters in accordance
with its terms.

Very truly yours,

BUCA, Inc.

By
------------------------------
[Title]

Selling Shareholders

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

Confirmed as of the date first above mentioned, on behalf of themselves and the
other several Underwriters named in Schedule II hereto

U.S. Bancorp Piper Jaffray Inc.

By
-----------------------------
Managing Director

NationsBanc Montgomery Securities LLC

By
-----------------------------
Managing Director

33
<PAGE>

SCHEDULE I

Selling Shareholders

Number of
Shares to Be
Number of Sold upon Number of
Firm Number of Conversion Option
Shares Warrants of Shares to
Name To Be Sold To Be Sold Debenture Be Sold
- --------------------------- ---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Philip A. Roberts 50,000
Peter J. Mihajlov 50,000
Don W. Hays 50,000
Joseph P. Micatrotto 16,000
Sirrom Capital Corp.
Thomas R. Wuerzberger 4,500
Thomas Grossman 3,646
Timothy M. Alevizos 3,500
Dermot F. Rowland 2,000
Toby Silverman 1,811
Donn R. Osman 4,000
Marvin W. Schenk 2,500
Lloyd M. Sigel 7,246
Harvey and Doris Ernest 3,623
Wedgewood Capital Limited 7,246
Partnership
Kevin B. & Gerri Kuester 7,246
Howard Kuretsky 1,811
Michael Silverman 7,246
---------------- ----------------- ----------------- ---------------
Total
================ ================= ================= ===============
</TABLE>
<PAGE>

SCHEDULE I(a)

Philip A. Roberts
Peter J. Mihajlov
Don W. Hays
Joseph P. Micatrotto
<PAGE>

SCHEDULE II

Number of Firm
Underwriter Shares (1)
- --------------------------------------- ----------------

U.S. Bancorp Piper Jaffray Inc.
NationsBanc Montgomery Securities LLC

Total 2,770,819
=========

- -----------------
(1) The Underwriters may purchase up to an additional 415,622 Option
Shares, to the extent the option described in Section 3(b) of the
Agreement is exercised, in the proportions and in the manner described
in the Agreement.

<PAGE>

EXHIBIT 3.4

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BUCA, INC.

ARTICLE I

The name of this Corporation is BUCA, Inc.

ARTICLE II

The registered office of this Corporation is located at 1300 Nicollet Mall,
Minneapolis, Minnesota 55403.

ARTICLE III

(a) General. The aggregate number of shares of stock which the Corporation
-------
is authorized to issue is 25,000,000 shares, par value $.01 per share, of which
20,000,000 are designated as common shares (the "Common Stock"), and 5,000,000
------------
are undesignated (the "Undesignated Capital Stock"). The shares of Common Stock
--------------------------
and Undesignated Capital Stock are referred to herein collectively as the
"capital stock".

(b) Authority Relative to Undesignated Capital Stock. Authority is hereby
------------------------------------------------
expressly vested in the Board of Directors of the Corporation, subject to
limitations prescribed by law, to authorize the issuance from time to time of
one or more classes or series of Undesignated Capital Stock and, with respect to
each such class or series, to determine or fix the voting powers, full or
limited, if any, of the shares of such class or series and the designations,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations or restrictions thereof, including, without
limitation, the determination or fixing of the rates of and terms and conditions
upon which any dividends shall be payable on such class or series, any terms
under or conditions on which the shares of such class or series may be redeemed,
any provision made for the conversion or exchange of the shares of such class or
series for shares of any other class or classes or of any other series of the
same or any other class or classes of the Corporation's capital stock, and any
rights of the holders of the shares of such class or series upon the voluntary
or involuntary liquidation, dissolution or winding up of the Corporation.

ARTICLE IV

No holder of shares of capital stock of the Corporation shall have any
cumulative voting rights.
<PAGE>

ARTICLE V

No holder of shares of capital stock of the Corporation shall be entitled
as such, as a matter of right, to subscribe for, purchase or receive any part of
any new or additional issue of stock of any class or series whatsoever or other
securities, or of securities convertible into or exchangeable for or carrying
any other right to acquire any stock of any class or series whatsoever or other
securities, whether now or hereafter authorized and whether issued for cash or
other consideration or by way of dividend. This Corporation shall have the
power, however, in its discretion to grant such rights by agreement or other
instrument to any person or persons (whether or not they are shareholders).

ARTICLE VI

The business and affairs of the Corporation shall be managed by or under
the direction of a Board consisting of not less than three nor more than fifteen
persons, who need not be shareholders. Within such range, the number of
directors may be increased or decreased by the shareholders or Board of
Directors from the number of directors on the Board of Directors immediately
prior to the effective date of this Article VI; provided, however, that any
change in the number of directors on the Board of Directors (including, without
limitation, changes at annual meetings of shareholders) shall be approved by the
affirmative vote of not less than 75% of the voting power of all outstanding
shares entitled to vote, voting together as a single class, unless such change
shall have been approved by a majority of the entire Board of Directors. If such
change shall not have been so approved, the number of directors shall remain the
same. The directors shall be divided into three classes, designated Class I,
Class II and Class III. Each class shall consist, as nearly as may be possible,
of one-third of the total number of directors constituting the entire Board of
Directors.

From and after the effective date of this Article VI, Class I directors
shall be David Yarnell and Don W. Hays and shall be elected for a term
concluding at the time of annual meeting of shareholders held in 2000, Class II
directors shall be Peter J. Mihajlov and Paul Zepf and shall be elected for a
term concluding at the time of the annual meeting of shareholders held in 2001,
and Class III directors shall be Joseph P. Micatrotto, Philip A. Roberts and
John P. Whaley and shall be elected for a term concluding at the time of the
annual meeting of shareholders held in 2002. At each succeeding annual meeting
of shareholders, successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class. In no case will a decrease in
the number of directors shorten the term of any incumbent director. A director
shall hold office until the annual meeting for the year in which the director's
term expires and until a successor shall be elected and qualify, subject,
however to prior death, resignation, retirement, disqualification or removal
from office. Removal of a director from office (including a director named by
the

-2-
<PAGE>

Board of Directors to fill a vacancy or newly created directorship), with or
without cause, shall require the affirmative vote of not less than 75% of the
voting power of all outstanding shares entitled to vote, voting together as a
single class. Any vacancy on the Board of Directors that results from an
increase in the number of directors shall be filled by a majority of the Board
of Directors then in office, and any other vacancy occurring in the Board of
Directors shall be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of such director's
predecessor.

Notwithstanding the foregoing, whenever the holders of any one or more
classes of preferred or preference stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of shareholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by or
pursuant to the applicable terms of the certificate of designation or other
instrument creating such class or series of preferred or preference stock, and
such directors so elected shall not be divided into classes pursuant to this
Article VI unless expressly provided by such terms.

Notwithstanding any other provisions of these Articles of Incorporation
(and notwithstanding the fact that a lesser percentage or separate class or
series vote may be specified by law or these Articles of Incorporation), the
affirmative vote of the holders of not less than 75% of the voting power of all
outstanding shares entitled to vote, voting together as a single class, shall be
required to amend or repeal, or adopt any provisions inconsistent with, this
Article VI.

ARTICLE VII

An action required or permitted to be taken by the Board of Directors of
this Corporation may be taken by written action signed by that number of
directors that would be required to take the same action at a meeting of the
Board at which all directors are present, except as to those matters requiring
shareholder approval, in which case the written action must be signed by all
members of the Board of Directors then in office.

ARTICLE VIII

To the full extent that Minnesota Statutes, Chapter 302A, as it exists on
the effective date of this Article VIII or may hereafter be amended, permits the
limitation or elimination of the liability of directors, a director of this
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director. Any amendment to or
repeal of this Article VIII shall not adversely affect any right or protection
as a director of the Corporation for or with respect to any acts or omission of
such director occurring prior to such amendment or repeal.

-3-

<PAGE>

AMENDED AND RESTATED
BY-LAWS
OF
BUCA, INC.

SHAREHOLDERS
------------

Section 1.01 Place of Meetings. Each meeting of the shareholders
------------ -----------------
shall be held at the principal executive office of the Corporation or at such
other place as may be designated by the Board of Directors or the Chief
Executive Officer; provided, however, that any meeting called by or at the
demand of a shareholder or shareholders shall be held in the county where the
principal executive office of the Corporation is located.

Section 1.02 Regular Meetings. Regular meetings of the shareholders
------------ ----------------
may be held on an annual or other less frequent basis as determined by the Board
of Directors; provided, however, that if a regular meeting has not been held
during the immediately preceding 15 months, a shareholder or shareholders
holding three percent or more of the voting power of all shares entitled to vote
may demand a regular meeting of shareholders by written demand given to the
Chief Executive Officer or Chief Financial Officer of the Corporation. At each
regular meeting the shareholders shall elect qualified successors for directors
who serve for an indefinite term or whose terms have expired or are due to
expire within six months after the date of the meeting and, subject to the
provisions of Section 1.13, may transact any other business, provided, however,
that no business with respect to which special notice is required by law shall
be transacted unless such notice shall have been given.

Section 1.03 Special Meetings. A special meeting of the
------------ ----------------
shareholders may be called for any purpose or purposes at any time by the Chief
Executive Officer; by the Chief Financial Officer; by the Board of Directors or
any two or more members thereof; or by one or more shareholders holding not less
than ten percent of the voting power of all shares of the Corporation entitled
to vote (except that a special meeting for the purpose of considering any action
to directly or indirectly facilitate or effect a business combination, including
any action to change or otherwise affect the composition of the Board for that
purpose, must be called by shareholders holding not less than 25 percent of the
voting power of all shares of the Corporation entitled to vote), who shall
demand such special meeting by written notice given to the Chief Executive
Officer or the Chief Financial Officer of the Corporation specifying the
purposes of such meeting.

Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days
------------ -------------------------------------
after receipt of a demand by the Chief Executive Officer or the Chief Financial
Officer from any shareholder or shareholders entitled to call a meeting of the
shareholders, it shall be the duty of the Board of Directors of the Corporation
to cause a special or regular meeting of shareholders, as the case may be, to be
duly called and held on notice no later than 90 days after receipt of such
demand. If the Board fails to cause such a meeting to be called and held as
required by
<PAGE>

this Section, the shareholder or shareholders making the demand may call the
meeting by giving notice as provided in Section 1.06 hereof at the expense of
the Corporation.

Section 1.05 Adjournments. Any meeting of the shareholders may be
------------ ------------
adjourned from time to time to another date, time and place. If any meeting of
the shareholders is so adjourned, no notice as to such adjourned meeting need be
given if the adjourned meeting is to be held not more than 120 days after the
date fixed for the original meeting and the date, time and place at which the
meeting will be reconvened are announced at the time of adjournment.

Section 1.06 Notice of Meetings. Unless otherwise required by law,
------------ ------------------
written notice of each meeting of the shareholders, stating the date, time and
place and, in the case of a special meeting, the purpose or purposes, shall be
given at least ten days and not more than 60 days prior to the meeting to every
holder of shares entitled to vote at such meeting except as specified in Section
1.05 or as otherwise permitted by law. The business transacted at a special
meeting of shareholders is limited to the purposes stated in the notice of the
meeting.

Section 1.07 Waiver of Notice. A shareholder may waive notice of
------------ ----------------
the date, time, place and purpose or purposes of a meeting of shareholders. A
waiver of notice by a shareholder entitled to notice is effective whether given
before, at or after the meeting, and whether given in writing, orally or by
attendance. Attendance by a shareholder at a meeting is a waiver of notice of
that meeting, unless the shareholder objects at the beginning of the meeting to
the transaction of business because the meeting is not lawfully called or
convened, or objects before a vote on an item of business because the item may
not lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.

Section 1.08 Voting Rights.
------------ -------------

Subdivision 1. A shareholder shall have one vote for each share held
which is entitled to vote. Except as otherwise required by law, a holder of
shares entitled to vote may vote any portion of the shares in any way the
shareholder chooses. If a shareholder votes without designating the proportion
or number of shares voted in a particular way, the shareholder is deemed to have
voted all of the shares in that way.

Subdivision 2. The Board of Directors may fix a date not more than 60
days before the date of a meeting of shareholders as the date for the
determination of the holders of shares entitled to notice of and entitled to
vote at the meeting. When a date is so fixed, only shareholders on that date are
entitled to notice of and permitted to vote at that meeting of shareholders.

Section 1.09 Proxies. A shareholder may cast or authorize the
------------ -------
casting of a vote by filing a written appointment of a proxy with an officer of
the Corporation at or before the meeting at which the appointment is to be
effective. The shareholder may sign or authorize the written appointment by
telegram, cablegram or other means of electronic transmission, provided that the
Corporation has no reason to believe that the telegram, cablegram or other
electronic transmission was not authorized by the shareholder. Any copy,
facsimile,

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<PAGE>

telecommunication or other reproduction of the original of either the writing or
transmission may be used in lieu of the original, provided that it is a complete
and legible reproduction of the entire original.

Section 1.10 Quorum. The holders of a majority of the voting power
------------ ------
of the shares entitled to vote at a shareholders meeting are a quorum for the
transaction of business. If a quorum is present when a duly called or held
meeting is convened, the shareholders present may continue to transact business
until adjournment, even though the withdrawal of a number of the shareholders
originally present leaves less than the proportion or number otherwise required
for a quorum.

Section 1.11 Acts of Shareholders.
------------ ---------------------

Subdivision 1. Except as otherwise required by law or specified in the
Articles of Incorporation of the Corporation, the shareholders shall take action
by the affirmative vote of the holders of the greater of (a) a majority of the
voting power of the shares present and entitled to vote on that item of business
or (b) a majority of the voting power of the minimum number of shares entitled
to vote that would constitute a quorum for the transaction of business at a duly
held meeting of shareholders.

Subdivision 2. A shareholder voting by proxy authorized to vote on
less than all items of business considered at the meeting shall be considered to
be present and entitled to vote only with respect to those items of business for
which the proxy has authority to vote. A proxy who is given authority by a
shareholder who abstains with respect to an item of business shall be considered
to have authority to vote on that item of business.

Section 1.12 Action Without a Meeting. Any action required or
------------ ------------------------
permitted to be taken at a meeting of the shareholders of the Corporation may be
taken without a meeting by written action signed by all of the shareholders
entitled to vote on that action. The written action is effective when it has
been signed by all of those shareholders, unless a different effective time is
provided in the written action.

Section 1.13 Advance Notice Requirements.
------------- ---------------------------

Subdivision 1. Only persons who are nominated in accordance with the
procedures set forth in this Subdivision 1 shall be eligible for election as
directors of the Corporation. Nominations of persons for election to the Board
of Directors of the Corporation may be made at a meeting of shareholders (a) by
or at the direction of the Board of Directors, or (b) by any shareholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Subdivision 1. Nominations
by shareholders shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, a shareholder's notice of
nominations to be made at an annual meeting of shareholders must be delivered to
the Secretary of the Corporation, or mailed and received at the principal
executive office of the Corporation, not less than 90 days before the first
anniversary of the date of the preceding year's annual meeting of shareholders.
If, however, the date of the annual meeting of shareholders is more than 30 days
before or after

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<PAGE>

such anniversary date (or if there was no annual meeting of shareholders in the
preceding year), notice by a shareholder shall be timely only if so delivered or
so mailed and received not less than 90 days before such annual meeting or, if
later, within ten days after the first public announcement of the date of such
annual meeting. If a special meeting of shareholders is called in accordance
with Section 1.03 for the purpose of electing one or more directors of the
Corporation or if a regular meeting other than an annual meeting is held, for a
shareholder's notice of nominations to be timely it must be delivered to the
Secretary of the Corporation, or mailed and received at the principal executive
office of the Corporation, not less than 90 days before such special meeting or
regular meeting or, if later, within ten days after the first public
announcement of the date of such special meeting or regular meeting. Except as
otherwise required by law, the adjournment of a regular or special meeting of
shareholders shall not commence a new time period for the giving of a
shareholder's notice as described above. A shareholder's notice of nominations
shall set forth (x) as to each person whom the shareholder proposes to nominate
for election or re-election as a director: (i) such person's name, (ii) all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended, including Rule 14a-11 thereof, if the Corporation is then
subject to Regulation 14A, and (iii) such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected; and (y) as to the shareholder giving the notice: (i) the name and
address, as they appear on the Corporation's books, of such shareholder, (ii)
the class or series and number of shares of the Corporation which are
beneficially owned by such shareholder, and (iii) a representation that the
shareholder is a holder of record of shares of the Corporation entitled to vote
for the election of directors and intends to appear in person or by proxy a the
meeting to nominate the person or persons specified in the notice. At the
request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a shareholder's notice
of nomination which pertains to a nominee. Notwithstanding anything in these By-
Laws to the contrary, no person shall be eligible for election as a director of
the Corporation unless nominated in accordance with the procedures set forth in
this Subdivision 1. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed in this Subdivision 1 and, if the
Chairman should so determine, the Chairman shall so declare to the meeting and
the defective nomination shall be disregarded.

Subdivision 2. At any regular or special meeting of shareholders of
the Corporation, only such business (other than the nomination and election of
directors, which shall be subject to Subdivision 1 of this Section 1.13) shall
be conducted as shall be appropriate for consideration at the meeting and as
shall have been brought before the meeting (a) by or at the direction of the
Board of Directors, or (b) by any shareholder of the Corporation who complies
with the notice procedures set forth in this Subdivision 2. For such business to
be properly brought before any regular or special meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a shareholder's notice of any such business to be
conducted at an annual meeting must be delivered to the Secretary of the
Corporation, or mailed and received at the principal executive office of the
Corporation, not less than 90 days before the first anniversary of the date of
the

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<PAGE>

preceding year's annual meeting of shareholders. If, however, the date of the
annual meeting of shareholders is more than 30 days before or after such
anniversary date (or if there was no annual meeting of shareholders in the
preceding year), notice by a shareholder shall be timely only if so delivered or
so mailed and received not less than 90 days before such annual meeting or, if
later, within ten days after the first public announcement of the date of such
annual meeting. If a special meeting of shareholders of the Corporation is
called in accordance with Section 1.03 for any purpose other than electing
directors of the Corporation or if a regular meeting other than an annual
meeting is held, for a shareholder's notice of any such business to be timely it
must be delivered to the Secretary of the Corporation, or mailed and received at
the principal executive office of the Corporation, not less than 90 days before
such special meeting or regular meeting or, if later, within ten days after the
first public announcement of the date of such special meeting or regular
meeting. Except to the extent otherwise required by law, the adjournment of a
regular or special meeting of shareholders shall not commence a new time period
for the giving of a shareholder's notice as required above. Any such
shareholder's notice shall set forth as to each matter the shareholder proposes
to bring before the regular or special meeting (w) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (x) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such business, (y) the class
or series and number of shares of the Corporation which are beneficially owned
by the shareholder, and (z) any material interest of the shareholder in such
business. Notwithstanding anything in these By-Laws to the contrary, no business
(other than the nomination and election of directors) shall be conducted at any
regular or special meeting except in accordance with the procedures set forth in
this Subdivision 2. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Subdivision 2 and,
if the Chairman should so determine, the Chairman shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.

Subdivision 3. For purposes of this Section 1.13, "public
announcement" means disclosure (a) when made in a press release reported by the
Dow Jones New Service, Associated Press, or comparable national news service,
(b) when contained in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, or (c) when mailed as the notice of
the meeting pursuant to Section 1.06 of these By-Laws.

DIRECTORS
---------

Section 2.01 Place of Meetings. Each meeting of the Board of
------------ -----------------
Directors shall be held at the principal executive office of the Corporation or
at such other place as may be designated from time to time by a majority of the
members of the Board or by the Chief Executive Officer. A meeting may be held
by conference among the directors using any means of communication through which
the directors may simultaneously hear each other during the conference.

-5-
<PAGE>

Section 2.02 Regular Meetings. Regular meetings of the Board of
------------ ----------------
Directors for the election of officers and the transaction of any other business
shall be held without notice at the place of and immediately after each regular
meeting of the shareholders.

Section 2.03 Special Meetings. A special meeting of the Board of
------------ ----------------
Directors may be called for any purpose or purposes at any time by any member of
the Board by giving not less than two days' notice to all directors of the date,
time and place of the meeting, provided that when notice is mailed, at least
four days' notice shall be given. The notice need not state the purpose of the
meeting.

Section 2.04 Waiver of Notice; Previously Scheduled Meetings.
------------ -----------------------------------------------

Subdivision 1. A director of the Corporation may waive notice of the
date, time and place of a meeting of the Board. A waiver of notice by a director
entitled to notice is effective whether given before, at or after the meeting,
and whether given in writing, orally or by attendance. Attendance by a director
at a meeting is a waiver of notice of that meeting, unless the director objects
at the beginning of the meeting to the transaction of business because the
meeting is not lawfully called or convened and thereafter does not participate
in the meeting.

Subdivision 2. If the day or date, time and place of a Board meeting
have been provided herein or announced at a previous meeting of the Board, no
notice is required. Notice of an adjourned meeting need not be given other than
by announcement at the meeting at which adjournment is taken of the date, time
and place at which the meeting will be reconvened.

Section 2.05 Quorum. The presence in person of a majority of the
------------ ------
directors currently holding office shall be necessary to constitute a quorum for
the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when a duly called or held
meeting is convened, the directors present may continue to transact business
until adjournment, even though the withdrawal of a number of the directors
originally present leaves less than the proportion or number otherwise required
for a quorum.

Section 2.06 Acts of Board. Except as otherwise required by law or
------------ -------------
specified in the Articles of Incorporation of the Corporation, the Board shall
take action by the affirmative vote of the greater of (a) a majority of the
directors present at a duly held meeting at the time the action is taken or (b)
a majority of the minimum proportion or number of directors that would
constitute a quorum for the transaction of business at the meeting.

Section 2.07 Participation by Electronic Communications. A director
------------ ------------------------------------------
may participate in a Board meeting by any means of communication through which
the director, other directors so participating and all directors physically
present at the meeting may simultaneously hear each other during the meeting. A
director so participating shall be deemed present in person at the meeting.

Section 2.08 Absent Directors. A director of the Corporation may
------------ ----------------
give advance written consent or opposition to a proposal to be acted on at a
Board meeting. If the director is

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<PAGE>

not present at the meeting, consent or opposition to a proposal does not
constitute presence for purposes of determining the existence of a quorum, but
consent or opposition shall be counted as the vote of a director present at the
meeting in favor of or against the proposal and shall be entered in the minutes
or other record of action at the meeting, if the proposal acted on at the
meeting is substantially the same or has substantially the same effect as the
proposal to which the director has consented or objected.

Section 2.09 Action Without a Meeting. An action required or
------------ ------------------------
permitted to be taken at a Board meeting may be taken without a meeting by
written action signed by all of the directors. Any action, other than an action
requiring shareholder approval, if the Articles of Incorporation so provide, may
be taken by written action signed by the number of directors that would be
required to take the same action at a meeting of the Board at which all
directors were present. The written action is effective when signed by the
required number of directors, unless a different effective time is provided in
the written action. When written action is permitted to be taken by less than
all directors, all directors shall be notified immediately of its text and
effective date.

Section 2.10 Committees.
------------ ----------

Subdivision 1. A resolution approved by the affirmative vote of a
majority of the Board may establish committees having the authority of the Board
in the management of the business of the Corporation only to the extent provided
in the resolution. Committees shall be subject at all times to the direction
and control of the Board, except as provided in Section 2.11 or otherwise
provided by law.

Subdivision 2. A committee shall consist of one or more natural
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present at a duly held Board meeting.

Subdivision 3. Section 2.01 and Sections 2.03 to 2.9 hereof shall
apply to committees and members of committees to the same extent as those
sections apply to the Board and directors.

Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.

Section 2.11 Special Litigation Committee. Pursuant to the
------------ ----------------------------
procedure set forth in Section 2.10, the Board may establish a committee
composed of one or more independent directors or other independent persons to
determine whether it is in the best interests of the Corporation to consider
legal rights or remedies of the Corporation and whether those rights and
remedies should be pursued. The committee, once established, is not subject to
the direction or control of, or (unless required by law) termination by, the
Board. To the extent permitted by law, a vacancy on the committee may be filled
by a majority vote of the remaining committee members. The good faith
determinations of the committee are binding upon the Corporation and its
directors, officers and shareholders to the extent permitted by law. The
committee terminates when it issues a written report of its determinations to
the Board.

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<PAGE>

Section 2.12 Compensation. The Board may fix the compensation, if
------------ ------------
any, of directors.

OFFICERS
--------

Section 3.01 Number and Designation. The Corporation shall have one
------------ ----------------------
or more natural persons exercising the functions of the offices of Chief
Executive Officer and Chief Financial Officer. The Board of Directors may elect
or appoint such other officers or agents as it deems necessary for the operation
and management of the Corporation, with such powers, rights, duties and
responsibilities as may be determined by the Board, including, without
limitation, a President, one or more Vice Presidents, a Secretary and a
Treasurer, each of whom shall have the powers, rights, duties and
responsibilities set forth in these By-Laws unless otherwise determined by the
Board. Any of the offices or functions of those offices may be held by the same
person.

Section 3.02 Chief Executive Officer. Unless provided otherwise by
------------ -----------------------
a resolution adopted by the Board of Directors, the Chief Executive Officer (a)
shall have general active management of the business of the Corporation; (b)
shall, when present, preside at all meetings of the shareholders and Board; (c)
shall see that all orders and resolutions of the Board are carried into effect;
(d) may maintain records of and certify proceedings of the Board and
shareholders; and (e) shall perform such other duties as may from time to time
be assigned by the Board.

Section 3.03 Chief Financial Officer. Unless provided otherwise by
------------ -----------------------
a resolution adopted by the Board of Directors, the Chief Financial Officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit all
monies, drafts and checks in the name of and to the credit of the Corporation in
such banks and depositories as the Board shall designate from time to time; (c)
shall endorse for deposit all notes, checks and drafts received by the
Corporation as ordered by the Board, making proper vouchers therefor; (d) shall
disburse corporate funds and issue checks and drafts in the name of the
Corporation, as ordered by the Board; (e) shall render to the Chief Executive
Officer and the Board, whenever requested, an account of all of such officer's
transactions as Chief Financial Officer and of the financial condition of the
Corporation; and (f) shall perform such other duties as may from time to time be
assigned by the Board or the Chief Executive Officer.

Section 3.04 President. Unless otherwise determined by the Board of
------------ ---------
Directors, the President shall be the Chief Executive Officer of the
Corporation. If an officer other than the President is designated Chief
Executive Officer, the President shall perform such duties as may from time to
time be assigned by the Board.

Section 3.05 Vice Presidents. Any one or more Vice Presidents, if
------------ ---------------
any, may be designated by the Board of Directors as Executive Vice Presidents or
Senior Vice Presidents. During the absence or disability of the President, it
shall be the duty of the highest ranking Executive Vice President, and, in the
absence of any such Vice President, it shall be the duty of the highest ranking
Senior Vice President or other Vice President, who shall be present at the time
and able to act, to perform the duties of the President. The determination of
who is the

-8-
<PAGE>

highest ranking of two or more persons holding the same office shall, in the
absence of specific designation of order of rank by the Board, be made on the
basis of the earliest date of appointment or election, or, in the event of
simultaneous appointment or election, on the basis of the longest continuous
employment by the Corporation.

Section 3.06 Secretary. The Secretary, unless otherwise determined
------------ ---------
by the Board of Directors, shall attend all meetings of the shareholders and all
meetings of the Board, shall record or cause to be recorded all proceedings
thereof in a book to be kept for that purpose, and may certify such proceedings.
Except as otherwise required or permitted by law or by these By-Laws, the
Secretary shall give or cause to be given notice of all meetings of the
shareholders and all meetings of the Board.

Section 3.07 Treasurer. Unless otherwise determined by the Board of
------------ ---------
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time to
time be assigned by the Board.

Section 3.08 Authority and Duties. In addition to the foregoing
------------ --------------------
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.

Section 3.09 Term.
------------ ----

Subdivision 1. All officers of the Corporation shall hold office
until their respective successors are chosen and have qualified or until their
earlier death, resignation or removal.

Subdivision 2. An officer may resign at any time by giving written
notice to the Corporation. The resignation is effective without acceptance when
the notice is given to the Corporation, unless a later effective date is
specified in the notice.

Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.

Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
office of Chief Executive Officer or Chief Financial Officer shall, be filled
for the unexpired portion of the term by the Board.

Section 3.10 Salaries. The salaries of all officers of the
------------ --------
Corporation shall be fixed by the Board of Directors or by the Chief Executive
Officer if authorized by the Board.

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<PAGE>

INDEMNIFICATION
---------------

Section 4.01 Indemnification. The Corporation shall indemnify its
------------ ---------------
officers and directors for such expenses and liabilities, in such manner, under
such circumstances, and to such extent, as required or permitted by Minnesota
Statutes, Section 302A.521, as amended from time to time, or as required or
permitted by other provisions of law.

Section 4.02 Insurance. The Corporation may purchase and maintain
------------ ---------
insurance on behalf of any person in such person's official capacity against any
liability asserted against and incurred by such person in or arising from that
capacity, whether or not the Corporation would otherwise be required to
indemnify the person against the liability.

SHARES
------

Section 5.01 Certificated and Uncertificated Shares.
------------ --------------------------------------

Subdivision 1. The shares of the Corporation shall be either
certificated shares or uncertificated shares. Each holder of duly issued
certificated shares is entitled to a certificate of shares.

Subdivision 2. Each certificate of shares of the Corporation shall
bear the corporate seal, if any, and shall be signed by the Chief Executive
Officer or the President or any Vice President, and the Chief Financial Officer
or the Secretary or any Assistant Secretary, but when a certificate is signed by
a transfer agent or a registrar, the signature of any such officer and the
corporate seal upon such certificate may be facsimiles, engraved or printed. If
a person signs or has a facsimile signature placed upon a certificate while an
officer, transfer agent or registrar of the Corporation, the certificate may be
issued by the Corporation, even if the person has ceased to serve in that
capacity before the certificate is issued, with the same effect as if the person
had that capacity at the date of its issue.

Subdivision 3. A certificate representing shares issued by the
Corporation shall, if the Corporation is authorized to issue shares of more than
one class or series, set forth upon the face or back of the certificate, or
shall state that the Corporation will furnish to any shareholder upon request
and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class or series authorized
to be issued, so far as they have been determined, and the authority of the
Board to determine the relative rights and preferences of subsequent classes or
series.

Subdivision 4. A resolution approved by the affirmative vote of a
majority of the directors present at a duly held meeting of the Board may
provide that some or all of any or all classes and series of the shares of the
Corporation will be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until the certificate is surrendered to
the Corporation.

-10-
<PAGE>

Section 5.02 Declaration of Dividends and Other Distributions. The
------------ ------------------------------------------------
Board of Directors shall have the authority to declare dividends and other
distributions upon the shares of the Corporation to the extent permitted by law.

Section 5.03 Transfer of Shares. Shares of the Corporation may be
------------ ------------------
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares, shares
shall be transferred only upon surrender and cancellation of certificates for a
like number of shares. The Board of Directors, however, may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect transfers of shares.

Section 5.04 Record Date. The Board of Directors may fix a time,
------------ -----------
not exceeding 60 days preceding the date fixed for the payment of any dividend
or other distribution, as a record date for the determination of the
shareholders entitled to receive payment of such dividend or other distribution,
and in such case only shareholders of record on the date so fixed shall be
entitled to receive payment of such dividend or other distribution,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date so fixed.

MISCELLANEOUS
-------------

Section 6.01 Execution of Instruments.
------------ ------------------------

Subdivision 1. All deeds, mortgages, bonds, checks, contracts and
other instruments pertaining to the business and affairs of the Corporation
shall be signed on behalf of the Corporation by the Chief Executive Officer or
the President or any Vice President, or by such other person or persons as may
be designated from time to time by the Board of Directors.

Subdivision 2. If a document must be executed by persons holding
different offices or functions and one person holds such offices or exercises
such functions, that person may execute the document in more than one capacity
if the document indicates each such capacity.

Section 6.02 Advances. The Corporation may, without a vote of the
------------ --------
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.

Section 6.03 Corporate Seal. The seal of the Corporation, if any,
------------ --------------
shall be a circular embossed seal having inscribed thereon the name of the
Corporation and the following words:

"Corporate Seal Minnesota".

Section 6.04 Fiscal Year. The fiscal year of the Corporation shall
------------ -----------
be determined by the Board of Directors.

-11-
<PAGE>

Section 6.05 Amendments. The Board of Directors shall have the
------------ ----------
power to adopt, amend or repeal the By-Laws of the Corporation, subject to the
power of the shareholders to change or repeal the same, provided, however, that
the Board shall not adopt, amend or repeal any By-Law fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors or
filling vacancies in the Board, or fixing the number of directors or their
classifications, qualifications or terms of office, but may, subject to the
Articles of Incorporation of the Corporation, adopt or amend a By-Law that
increases the number of directors.

-12-

<PAGE>

NUMBER SHARES

COMMON STOCK COMMON STOCK

See reverse for
certain definitions

CUSIP 11769 10 9

[LOGO]

INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA

THIS CERTIFIES that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE OF $.01 PER SHARE, OF
BUCA, Inc.

transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar.

WITNESS the facsimile signatures of its duly authorized officers.

Dated:

/s/ Greg A. Gadel /s/ Joseph P. Micatrotto
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER

CONTERSIGNED AND REGISTERED:
NORWEST BANK MINNESOTA, N.A.
(MINNEAPOLIS, MINNESOTA) TRANSFER AGENT AND REGISTRAR

AUTHORIZED SIGNATURE
<PAGE>

BUCA, INC.

THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER, UPON REQUEST AND WITHOUT
CHARGE, A FULL STATEMENT OF THE DEIGNATIONS, PREFERENCES, LIMITATIONS AND
RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR SERIES AUTHORIZED TO BE ISSUED,
SO FAR AS THEY HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE BOARD OF DIRECTORS
TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT CLASSES OR
SERIES.

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

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)

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

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

- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

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

- --------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
Attorney
- --------------------------------------------------------------------
to transfer the said shares on the books of the within-named Corporation with
full power of substitution in the premises

Dated
------------------------------------------------

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

NOTICE: THE SIGNATURE 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.

Signature Guaranteed

<PAGE>

Exhibit 5.1

[Faegre & Benson Letterhead]

March 23, 1999

BUCA, Inc.
1300 Nicollet Mall
Suite 3043
Minneapolis, MN 55403

Ladies and Gentlemen

In connection with the proposed registration under the Securities Act
of 1933, as amended, of 3,190,410 shares of Common Stock, par value $.01 per
share, of BUCA, Inc., a Minnesota corporation (the "Company"), we have examined
such corporate records and other documents, including the Registration Statement
on Form S-1 relating to such shares (the "Registration Statement"), and have
reviewed such matters of law as we have deemed necessary for this opinion, and
we advise you that in our opinion:

1. The Company is a corporation duly organized and existing
under the laws of the State of Minnesota.

2. When the Board of Directors of the Company (or a Stock
Committee appointed by the Board) determines the price and number of
the shares of Common Stock to be sold by the Company, all necessary
corporate action on the part of the Company will have been taken to
authorize the issuance and sale of such shares of Common Stock by the
Company, and, when issued and sold as contemplated in the Registration
Statement, such shares will be legally and validly issued and fully
paid and nonassessable.

We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus constituting a part of the Registration Statement and
to the reference to our firm wherever appearing therein.

Very truly yours,

/s/ Faegre & Benson LLP

FAEGRE & BENSON LLP

<PAGE>

EXHIBIT 10.4

WORKING COPY

(S) 401(K) PROTOTYPE

BASIC PLAN DOCUMENT #02

1989 RESTATEMENT

AND

As Amended By

The FIRST AMENDMENT Effective January 1, 1993

The SECOND AMENDMENT Effective January 1, 1993 and January 1, 1994

The THIRD AMENDMENT Effective January 1, 1994 and January 1, 1995

The FOURTH AMENDMENT Generally Effective December 12, 1994

Note: Material added or modified by the First, Second and Third Amendments is
shown in italics. Modified section numbers are not generally shown in
italics. Material deleted without replacement is indicated by a *.

-i-
<PAGE>

(S) 401(K) PROTOTYPE
BASIC PLAN DOCUMENT #02
1989 RESTATEMENT

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1 INTRODUCTION.................................................................... 1
1.1. Definitions.............................................................. 1
1.1.1. Accounts......................................................... 1
(a) Total Account................................................ 1
(b) Retirement Savings Account................................... 1
(c) Employer Matching Account.................................... 1
(d) Employer Contributions Account............................... 1
(e) Rollover Account............................................. 1
(f) Nondeductible Voluntary Account.............................. 1
(g) Deductible Voluntary Account................................. 2
(h) Transfer Account............................................. 2
(i) Suspense Account............................................. 2
1.1.2. Administrator's Representative................................... 2
1.1.3. Affiliate........................................................ 2
1.1.4. Annual Valuation Date............................................ 2
1.1.5. Beneficiary...................................................... 2
1.1.6. Board of Directors............................................... 3
1.1.7. Disability....................................................... 3
1.1.8. Effective Date................................................... 3
1.1.9. Eligibility Service.............................................. 3
1.1.10. Employee......................................................... 4
1.1.11. Employers........................................................ 6
1.1.12. Entry Date....................................................... 6
1.1.13. Event of Maturity................................................ 7
1.1.14. Fund............................................................. 7
1.1.15. Hours of Service................................................. 7
1.1.16. Investment Manager............................................... 9
1.1.17. Normal Retirement Age............................................ 10
1.1.18. One-Year Break in Service........................................ 10
1.1.19. Participant...................................................... 10
1.1.20. Plan............................................................. 10
1.1.21. Plan Statement................................................... 10
1.1.22. Plan Year........................................................ 10
1.1.23. Prior Plan Statement............................................. 10
1.1.24. Prototype Documents.............................................. 10
1.1.25. Prototype Sponsor................................................ 10
1.1.26. Recognized Compensation.......................................... 11
</TABLE>

-i-
<PAGE>

<TABLE>
<S> <C>
1.1.27. Recognized Employment............................................ 12
1.1.28. Retirement Savings Agreement..................................... 13
1.1.29. Trustee.......................................................... 13
1.1.30. Valuation Date................................................... 13
1.1.31. Vested........................................................... 13
1.1.32. Vesting Service.................................................. 13
1.2. Rules Of Interpretation................................................... 14
1.3. Establishment Of New Plan................................................. 15
1.4. Amendment And Change Of Trustee........................................... 15
1.5. Amendment And Continuation................................................ 15
1.6. Automatic Exclusion From Prototype Plan................................... 16
1.7. Special Requirements...................................................... 16
1.7.1. Discriminatory Benefits........................................... 16
1.7.2. Discriminatory Coverage........................................... 16
1.7.3. Control Defined................................................... 16

SECTION 2 ELIGIBILITY AND PARTICIPATION.................................................... 17
2.1. Initial Entry Into Plan................................................... 17
2.2. Special Rule For Former Participants...................................... 17
2.3. Enrollment................................................................ 17
2.4. Waiver Of Enrollment Procedures........................................... 17
2.5. Retirement Savings Agreement.............................................. 18
2.6. Modifications Of Retirement Savings Agreement............................. 18
2.6.1. Increase.......................................................... 18
2.6.2. Decrease.......................................................... 18
2.6.3. Voluntary Termination............................................. 18
2.6.4. Termination Of Recognized Employment.............................. 18
2.6.5. Form Of Agreement................................................. 19
2.7. Section 401(k) Compliance................................................. 19
2.7.1. Special Definitions............................................... 19
2.7.2. Special Rules..................................................... 20
2.7.3. The Tests......................................................... 22
2.7.4. Remedial Action................................................... 22
2.8. Annual Certification...................................................... 23

SECTION 3 CONTRIBUTIONS AND ALLOCATION THEREOF............................................. 24
3.1. Employer Contributions - General.......................................... 24
3.1.1. Source Of Employer Contributions.................................. 24
3.1.2. Limitation........................................................ 24
3.1.3. Form of Payment................................................... 24
3.2. Retirement Savings Contributions.......................................... 24
3.2.1. Amount............................................................ 24
3.2.2. Allocation........................................................ 24
3.3. Required Matching Contributions........................................... 24
3.3.1. Amount............................................................ 24
</TABLE>

ii
<PAGE>

<TABLE>
<S> <C>
3.3.2. Allocation....................................................... 25
3.4. Discretionary Employer Contributions..................................... 25
3.4.1. General.......................................................... 25
3.4.2. Curative Allocation - (S) 401(k)................................. 25
3.4.3. Discretionary Matching Contributions............................. 26
3.4.4. Curative Allocation - (S) 401(m)................................. 26
3.4.5. Discretionary Profit Sharing Contributions....................... 27
3.5. Eligible Participants.................................................... 29
3.6. Make-Up Contributions For Omitted Participants........................... 29
3.7. Rollover Contributions................................................... 29
3.7.1. Eligible Contributions........................................... 30
3.7.2. Specific Review.................................................. 30
3.7.3. Allocation....................................................... 30
3.8. Nondeductible Voluntary Contributions.................................... 30
3.8.1. Method Of Contribution........................................... 30
3.8.2. Payment To Trustee............................................... 30
3.8.3. Allocation....................................................... 31
3.9. Deductible Voluntary Contributions....................................... 31
3.10. Section 401(m) Compliance................................................ 31
3.10.1. Special Definitions............................................. 31
3.10.2. Special Rules................................................... 33
3.10.3. The Tests....................................................... 35
3.10.4. Remedial Action................................................. 35
3.11. Limitation On Allocations................................................ 36
3.12. Effect Of Disallowance Of Deduction Or Mistake Of Fact.................. 36

SECTION 4 INVESTMENT AND ADJUSTMENT OF ACCOUNTS........................................... 38
4.1. Establishment Of Subfunds................................................ 38
4.1.1. Establishing Commingled Subfunds................................. 38
4.1.2. Individual Subfunds.............................................. 38
4.1.3. Operational Rules................................................ 38
4.1.4. Revising Subfunds................................................ 38
4.1.5. ERISA Section 404(c) Compliance.................................. 39
4.2. Valuation And Adjustment Of Accounts..................................... 40
4.3. Management And Investment Of Fund........................................ 43

SECTION 5 VESTING......................................................................... 44
5.1. Employer Matching Account And Employer Contributions Account............. 44
5.1.1. Progressive Vesting.............................................. 44
5.1.2. Full Vesting..................................................... 44
5.1.3. Special Rule For Partial Distributions........................... 44
5.1.4. Effect Of Break On Vesting....................................... 45
5.2. Optional Vesting Schedule................................................ 45
5.2.1. Election......................................................... 45
5.2.2. Qualifying Participant........................................... 45
</TABLE>

iii
<PAGE>

<TABLE>
<S> <C>
5.2.3. Procedure For Election........................................... 45
5.2.4. Conclusive Election.............................................. 46
5.3. Other Accounts........................................................... 46

SECTION 6 MATURITY........................................................................ 47
6.1. Events Of Maturity....................................................... 47
6.2. Disposition Of Non-Vested Portion Of Account............................. 48
6.2.1. No Break......................................................... 48
6.2.2. A Break.......................................................... 48
6.2.3. Forfeiture Date.................................................. 48
6.3. Restoration Of Forfeited Accounts........................................ 48

SECTION 7 DISTRIBUTION.................................................................... 50
7.1. Application For Distribution............................................. 50
7.1.1. Application Required............................................. 50
7.1.2. Exception For Small Amounts...................................... 50
7.1.3. Exception for Required Distributions............................. 51
7.1.4. Direct Rollover.................................................. 51
7.1.5. Notices.......................................................... 52
7.1.6. Lost Distributees................................................ 52
7.2. Time of Distribution..................................................... 52
7.2.1. Earliest Beginning Date.......................................... 52
7.2.2. Required Beginning Date.......................................... 53
7.3. Forms Of Distribution.................................................... 54
7.3.1. Forms Available.................................................. 54
7.3.2. Substantially Equal.............................................. 55
7.3.3. Life Expectancy.................................................. 56
7.3.4. Presumptive Forms................................................ 57
7.3.5. Effect of Reemployment........................................... 60
7.3.6. TEFRA (S) 242(b) Transitional Rules.............................. 61
7.4. Designation Of Beneficiaries............................................. 61
7.4.1. Right To Designate............................................... 61
7.4.2. Spousal Consent.................................................. 61
7.4.3. Failure Of Designation........................................... 62
7.4.4. Definitions...................................................... 62
7.4.5. Special Rules.................................................... 63
7.5. Death Prior To Full Distribution......................................... 63
7.6. Distribution In Cash..................................................... 64
7.7. Deleted by the First Amendment........................................... 64
7.8. Withdrawals From Voluntary Accounts...................................... 64
7.8.1. When Available................................................... 64
7.8.2. Sequence of Accounts............................................. 64
7.8.3. Limitations...................................................... 65
7.8.4. Coordination With Section 4.1.................................... 65
7.9. In-Service Distributions................................................. 65
</TABLE>

iv
<PAGE>

<TABLE>
<S> <C>
7.9.1. When Available................................................... 65
7.9.2. Purposes......................................................... 65
7.9.3. Limitations...................................................... 66
7.9.4. Coordination With Retirement Savings Agreement................... 66
7.9.5. Sequence Of Accounts............................................. 67
7.9.6. Coordination With Section 4.1.................................... 67
7.10. Transitional Rules................................................ 67
7.11. Loans.................................................................... 68
7.11.1. General Rules................................................... 68
7.11.2. Interest Rate................................................... 69
7.11.3. Loans Made From Participant's Accounts.......................... 69
7.11.4. Loan Rules...................................................... 70
7.12. Corrective Distributions................................................. 70
7.12.1. Excess Deferrals ($7,000 Limit)................................. 70
7.12.2. Excess Contributions (Section 401(k) Test)...................... 71
7.12.3. Excess Aggregate Contributions (Section 401(m) Test)............ 73
7.12.4. Priority........................................................ 75
7.12.5. Matching Contributions.......................................... 75

SECTION 8 SPENDTHRIFT PROVISIONS.......................................................... 76

SECTION 9 AMENDMENT AND TERMINATION....................................................... 77
9.1. Amendment................................................................ 77
9.1.1. Amendment By Employer............................................ 77
9.1.2. Amendment By Prototype Sponsor................................... 78
9.1.3. Limitation On Amendments......................................... 78
9.1.4. Resignation Of Prototype Sponsor................................. 78
9.2. Discontinuance Of Contributions And Termination Of Plan.................. 78
9.3. Merger, Etc., With Another Plan.......................................... 78
9.4. Adoption By Affiliates................................................... 79
9.4.1. Adoption With Consent............................................ 79
9.4.2. Procedure For Adoption........................................... 79
9.4.3. Effect Of Adoption............................................... 79

SECTION 10 CONCERNING THE TRUSTEE......................................................... 81
10.1. Dealings With Trustee.................................................... 81
10.1.1. No Duty To Inquire.............................................. 81
10.1.2. Assumed Authority............................................... 81
10.2. Compensation Of Trustee.................................................. 81
10.3. Resignation And Removal Of Trustee....................................... 82
10.3.1. Resignation, Removal And Appointment............................ 82
10.3.2. Surviving Trustees.............................................. 82
10.3.3. Successor Organizations......................................... 82
10.3.4. Co-Trustee Responsibility....................................... 82
10.4. Accountings By Trustee................................................... 82
</TABLE>

v
<PAGE>

<TABLE>
<S> <C>
10.4.1. Periodic Reports................................................. 82
10.4.2. Special Reports.................................................. 83
10.4.3. Review Of Reports................................................ 83
10.5. Trustee's Power To Protect Itself On Account Of Taxes..................... 83
10.6. Other Trust Powers........................................................ 83
10.7. Investment Managers....................................................... 88
10.7.1. Appointment And Qualifications................................... 88
10.7.2. Removal.......................................................... 88
10.7.3. Relation To Other Fiduciaries.................................... 88
10.8. Fiduciary Principles...................................................... 88
10.9. Prohibited Transactions................................................... 89
10.10. Indemnity................................................................. 90
10.11. Investment In Insurance................................................... 90
10.11.1. Limitation On Payment Of Premiums............................... 90
10.11.2. Miscellaneous Rules For Purchase Of Contract.................... 91
10.11.3. Payment Of Expenses............................................. 91
10.11.4. Authority For Contract.......................................... 91
10.11.5. Payment Of Contract Upon Death.................................. 91
10.11.6. Payment Of Contract - Not Upon Death............................ 91
10.11.7. Value Of Contract............................................... 91
10.11.8. Interpretation.................................................. 92
10.12. Employer Directed Investments............................................. 92

SECTION 11 DETERMINATIONS - RULES AND REGULATIONS........................................... 93
11.1. Determinations............................................................ 93
11.2. Rules And Regulations..................................................... 93
11.3. Method Of Executing Instruments........................................... 93
11.3.1. Employer Or Administrator's Representative....................... 93
11.3.2. Trustee.......................................................... 93
11.4. Claims Procedure.......................................................... 93
11.4.1. Original Claim................................................... 93
11.4.2. Claims Review Procedure.......................................... 94
11.4.3. General Rules.................................................... 94
11.5. Information Furnished By Participants..................................... 95

SECTION 12 OTHER ADMINISTRATIVE MATTERS..................................................... 96
12.1. Employer.................................................................. 96
12.1.1. Officers......................................................... 96
12.1.2. Delegation....................................................... 96
12.1.3. Board Of Directors............................................... 96
12.2. Administrator's Representative............................................ 96
12.3. Limitation On Authority................................................... 98
12.4. Conflict Of Interest...................................................... 98
12.5. Dual Capacity............................................................. 98
12.6. Administrator............................................................. 98
</TABLE>

vi
<PAGE>

<TABLE>
<S> <C>
12.7. Named Fiduciaries...................................................... 98
12.8. Service Of Process..................................................... 98
12.9. Residual Authority..................................................... 99
12.10. Administrative Expenses........................................ 99

SECTION 13 IN GENERAL.................................................................... 100
13.1. Disclaimers............................................................ 100
13.1.1. Effect On Employment.......................................... 100
13.1.2. Sole Source Of Benefits....................................... 100
13.1.3. Co-Fiduciary Matters.......................................... 100
13.2. Reversion Of Fund Prohibited........................................... 101
13.3. Execution In Counterparts.............................................. 101
13.4. Continuity............................................................. 101
13.5. Contingent Top Heavy Plan Rules........................................ 101

APPENDIX A -- SECTION 415 LIMITATIONS ON ALLOCATIONS...................................... A-1
APPENDIX B -- CONTINGENT TOP HEAVY PLAN RULES............................................. B-1
APPENDIX C -- QUALIFIED DOMESTIC RELATIONS ORDERS......................................... C-1
APPENDIX D -- HIGHLY COMPENSATED EMPLOYEE................................................. D-1
APPENDIX E -- TEFRA (S) 242(B) TRANSITIONAL RULES......................................... E-1
APPENDIX F -- TRANSITIONAL DISTRIBUTION RULES............................................. F-1
APPENDIX G -- PLAN LOAN RULES............................................................. G-1
</TABLE>

vii
<PAGE>

(S) 401(K) PROTOTYPE
BASIC PLAN DOCUMENT #02

1989 RESTATEMENT

SECTION 1

INTRODUCTION

1.1. DEFINITIONS. When the following terms are used herein with initial
capital letters, they shall have the following meanings:

1.1.1. ACCOUNTS - the following Accounts will be maintained under this
Plan for Participants:

(a) TOTAL ACCOUNT - a Participant's entire interest in the Fund,
including his Retirement Savings Account, his Employer Matching
Account, his Employer Contributions Account, his Rollover
Account, his Nondeductible Voluntary Account, his Deductible
Voluntary Account, and his Transfer Account, if any, (but
excluding his interest in a Suspense Account).

(b) RETIREMENT SAVINGS ACCOUNT - the Account maintained for each
Participant to which are credited the Employer contributions made
in consideration of such Participant's earnings reductions
pursuant to Section 3.2 (or comparable provisions of the Prior
Plan Statement, if any) or made pursuant to Section 3.4.2,
together with any increase or decrease thereon.

(c) EMPLOYER MATCHING ACCOUNT - the Account maintained for each
Participant to which is credited his allocable share of the
Employer contributions and his allocable share of forfeited
Suspense Accounts made pursuant to Section 3.3 or Section 3.4.3
(or comparable provisions of the Prior Plan Statement, if any) or
made pursuant to Section 3.4.4, together with any increase or
decrease thereon.

(d) EMPLOYER CONTRIBUTIONS ACCOUNT - the Account maintained for each
Participant to which is credited his allocable share of the
Employer contributions and his allocable share of forfeited
Suspense Accounts made pursuant to Section 3.4.5 (or comparable
provisions of the Prior Plan Statement, if any), together with
any increase or decrease thereon.

(e) ROLLOVER ACCOUNT - the Account maintained for each Participant to
which are credited his rollover contributions made pursuant to
Section 3.7 (or comparable provisions of the Prior Plan
Statement, if any), together with any increase or decrease
thereon.

(f) NONDEDUCTIBLE VOLUNTARY ACCOUNT - the Account maintained for each
Participant to which are credited his nondeductible voluntary
contributions
<PAGE>

made pursuant to Section 3.8 (or comparable provisions of the
Prior Plan Statement, if any), together with any increase or
decrease thereon.

(g) DEDUCTIBLE VOLUNTARY ACCOUNT - the Account maintained for each
Participant to which are credited his deductible voluntary
contributions made pursuant to Section 3.6 of the Prior Plan
Statement (or other comparable provisions of the Prior Plan
Statement, if any), together with any increase or decrease
thereon.

(h) TRANSFER ACCOUNT - the Account maintained on behalf of a
Participant to which is credited the amount transferred to the
Trustee pursuant to Section 9.3, and not allocated to any other
Account pursuant to that section (or comparable provisions of the
Prior Plan Statement, if any), together with any increase or
decrease thereon.

(i) SUSPENSE ACCOUNT - the Account maintained for each Participant to
which is credited the portion of his Employer Matching Account
and his Employer Contributions Account which is not Vested in him
upon the occurrence of an Event of Maturity (pending reemployment
or forfeiture pursuant to Section 6.2), together with any
increase or decrease thereon.

1.1.2. ADMINISTRATOR'S REPRESENTATIVE - the person or committee
appointed to make administrative decisions and rules, to communicate on behalf
of the Employer and to take other actions specified in this Plan Statement and
which is selected pursuant to Section 12.2.

1.1.3. AFFILIATE - a business entity which is under "common control"
with the Employer or which is a member of an "affiliated service group" that
includes the Employer, as those terms are defined in section 414(b), (c) and (m)
of the Internal Revenue Code. A business entity which is a predecessor to the
Employer shall be treated as an Affiliate if the Employer maintains a plan of
such predecessor business entity or if, and to the extent that, such treatment
is otherwise required by regulations prescribed by the Secretary of the Treasury
under section 414(a) of the Internal Revenue Code. A business entity shall also
be treated as an Affiliate if, and to the extent that, such treatment is
required by regulations prescribed by said Secretary under section 414(o) of
said Code. In addition to such required treatment, the Employer may, in its
discretion, designate as an Affiliate any business entity which is not such a
"common control," "affiliated service group" or "predecessor" business entity
but which is otherwise affiliated with the Employer, subject to such
nondiscriminatory limitations as the Employer may impose.

1.1.4. ANNUAL VALUATION DATE - unless indicated otherwise in the
Adoption Agreement, the last day of the Employer's taxable year for federal
income tax purposes.

1.1.5. BENEFICIARY - a person designated by a Participant (or
automatically by operation of this Plan) to receive all or a part of the
Participant's Vested Total Account in the

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event of the Participant's death prior to full distribution thereof. A person so
designated shall not be considered a Beneficiary until the death of the
Participant.

1.1.6. BOARD OF DIRECTORS - the Board of Directors if the Employer is
a corporation, any general partner if the Employer is a partnership, or the
proprietor if the Employer is a sole proprietor. If the Employer is a
corporation, the Board of Directors shall also mean and refer to any properly
authorized committee of the directors. If there is more than one Employer under
this Plan, the Board of Directors shall be the Board of Directors of the
Employer which is the principal employer of this Plan.

1.1.7. DISABILITY - a medically determinable physical or mental
impairment which is of such a nature that it (i) renders the individual
incapable of performing any substantial gainful employment, (ii) can be expected
to be of long-continued and indefinite duration or result in death, and (iii) is
evidenced by a determination to this effect by a doctor of medicine approved by
the Administrator's Representative. The Administrator's Representative shall
determine the date on which the Disability shall have occurred if such
determination is necessary. In lieu of such a certification, the Employer may
accept, as proof of Disability, the official written determination that the
individual will be eligible for disability benefits under the federal Social
Security Act as now enacted or hereinafter amended (when any waiting period
expires).

1.1.8. EFFECTIVE DATE - the date set forth in the Adoption Agreement
as of which this Plan Statement is effective; provided, however, certain
provisions specified in this Plan Statement shall be applicable prior to that
date for any Employer maintaining a Plan prior to the first day of the Plan Year
beginning after December 31, 1988.

1.1.9. ELIGIBILITY SERVICE - a measure of an Employee's service with
the Employer and all Affiliates (stated as a number of years) which is equal to
the number of computation periods for which the Employee is credited with one
thousand (1,000) or more Hours of Service; subject, however, to such of the
following rules as are applicable under the Adoption Agreement:

(a) COMPUTATION PERIODS. The computation periods for determining the
Employee's Eligibility Service (and One-Year Breaks in Service as
applied to his Eligibility Service) shall be (i) unless (ii) is
indicated in the Adoption Agreement:

(i) the twelve (12) consecutive month period beginning with the
date the Employee first performs an Hour of Service plus
all Plan Years beginning after the date the Employee first
performs an Hour of Service (irrespective of any
termination of employment and subsequent reemployment), or

(ii) the twelve (12) consecutive month period beginning with the
date the Employee first performs an Hour of Service plus
all twelve (12) consecutive month periods commencing on the
annual anniversaries of

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<PAGE>

such date (irrespective of any termination of employment
and subsequent reemployment).

An Employee who is credited with 1,000 Hours of Service in both
the initial eligibility period described in (i) above and the
first Plan Year commencing prior to the end of such initial
eligibility period shall be credited with two years of
Eligibility Service.

(b) COMPLETION. A year of Eligibility Service shall be deemed
completed only as of the last day of the computation period
(irrespective of the date in such period that the Employee
completed one thousand Hours of Service). (Fractional years of
Eligibility Service shall not be credited.)

(c) PRE-EFFECTIVE DATE SERVICE. Eligibility Service shall be credited
for Hours of Service earned and computation periods completed
before the Effective Date as if the rules of this Plan Statement
were then in effect.

(d) BREAKS IN SERVICE - BEFORE EFFECTIVE DATE. Eligibility Service
cancelled before the Effective Date by operation of the Plan's
break in service rules as they existed before the Effective Date
shall continue to be cancelled on and after the Effective Date.

(e) BREAK IN SERVICE. Subject to Section 1.1.9(d), if the Employee
has any break in service occurring before or after the Effective
Date, his service both before and after such break in service
shall be taken into account in computing his Eligibility Service
for the purpose of determining his entitlement to become a
Participant in this Plan.

(f) PREDECESSOR EMPLOYER. If the Employer maintains a plan previously
maintained by a business entity that is merged with or becomes an
Affiliate of the Employer, then Eligibility Service that would
have been earned by persons employed by such predecessor employer
had the rules of this Plan been in effect, shall be counted as
Eligibility Service under this Plan.

1.1.10. EMPLOYEE each individual who is, with respect to the
Employer, or an Affiliate, or both, a Common Law Employee (including
Shareholder-Employee) or a Self-Employed Person (including an Owner-Employee) or
a Leased Employee, which shall be further defined as follows:

(a) COMMON LAW EMPLOYEE - an individual who performs services as an
employee of the Employer or an Affiliate (including, without
limiting the generality of the foregoing, a Shareholder-Employee)
but who is not a Self-Employed Person with respect to the
Employer.

(b) SHAREHOLDER-EMPLOYEE - an individual who owns, or is deemed with
attribution to own, more than five percent (5%) of the
outstanding stock of

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<PAGE>

the Employer on any one day of the taxable year of the Employer
with respect to which the Plan is established; provided, however,
that during any taxable year that the Employer is not an electing
small business corporation (S corporation) there shall be no
Shareholder-Employees. All Shareholder-Employees are Common Law
Employees.

(c) SELF-EMPLOYED PERSON - an individual who owns either a capital
interest or a profits interest in the Employer with respect to
which the Plan is maintained at a time when such Employer is
either a partnership or a proprietorship or an individual who has
earned income from such Employer (or would have had earned income
if the Employer had had net profits). A proprietor shall be
deemed to be an Employee of a proprietorship which is the
Employer and each partner shall be deemed to be an Employee of a
partnership which is the Employer.

(d) OWNER-EMPLOYEE - an individual who is a Self-Employed Person and
who is either the proprietor of the Employer (when it is a
proprietorship) or a partner owning more than ten percent (10%)
either of the capital interests or profits interest of the
Employer (when it is a partnership). All Owner-Employees are
Self-Employed Persons.

(e) LEASED EMPLOYEES - an individual (other than an employee) who,
pursuant to an agreement with a leasing organization has
performed services for the Employer, or for the Employer and
related persons (determined in accordance with section 414(n)(6)
of the Internal Revenue Code) on a substantially full-time basis
for a period of at least one (1) year and has performed services
which are of a type historically performed by employees of the
Employer or an Affiliate. For services performed prior to January
1, 1987, such an individual shall not be considered a Leased
Employee (with respect to the Employer or an Affiliate) if such
individual is covered by a money purchase pension plan which
provides for: (i) a nonintegrated employer contribution rate of
at least seven and one-half percent (7-1/2%) of compensation; and
(ii) immediate participation; and (iii) full and immediate
vesting. For services performed after December 31, 1986, such an
individual shall not be considered a Leased Employee (with
respect to the Employer or an Affiliate) if such individual is
covered by a money purchase pension plan which provides for: (i)
a nonintegrated employer contribution rate of at least ten
percent (10%) of "(S)415 compensation" as defined in Appendix A
to this Plan Statement, but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are
excludible from the individual's gross income under section 125,
section 402(a)(8), section 402(h) or section 403(b) of the
Internal Revenue Code; and (ii) immediate participation (except
for those individuals whose compensation from the leasing
organization in each plan year during the four-year period ending
with the plan year is less than one thousand dollars);

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<PAGE>

and (iii) full and immediate vesting; provided, however, that
such an individual will be considered a Leased Employee (with
respect to the Employer or an Affiliate) if Leased Employees
constitute more than twenty percent (20%) of the recipient's
nonhighly compensated work force as determined in accordance with
section 414(n)(5)(C)(ii) of the Internal Revenue Code. An
individual shall also be treated as a Leased Employee of the
Employer or an Affiliate if, and to the extent that, such
treatment is required by regulations prescribed by the Secretary
of the Treasury under section 414(o) of the said Code.
Contributions or benefits provided by the leasing organization to
a Leased Employee which are attributable to services performed
for the recipient Employer shall be treated as provided by the
recipient Employer.

1.1.11. EMPLOYERS - the business entity which establishes a Plan by
executing the Adoption Agreement and any Affiliate of any such business entity
that adopts this Plan with the consent of the Employer as provided in Section
9.4. If any such business entity adopts this Plan, the business entity that
executed the Adoption Agreement (the "principal employer") retains the sole
authority to amend the Adoption Agreement, terminate the Plan, act as the Plan
Administrator and take other actions as are described in Section 9.4. A sole
proprietor shall be treated as his or her own Employer. A partnership shall be
treated as the Employer of each partner.

1.1.12. ENTRY DATE - the dates (as indicated in the Adoption
Agreement) which shall be either:

(i) the first day of the Plan Year, or

(ii) the first day of the Plan Year and the first day of the
seventh month of the Plan Year, or

(iii) the first day of the Plan Year and the first day of the
fourth, seventh and tenth months of the Plan Year, or

(iv) the first day of the Plan Year and the first day of the
second through twelfth months of the Plan Year.

The Entry Date shall also include (i) the date upon which an individual who had
previously met the age and service requirements of Section 2.1 but who was not
then in Recognized Employment is transferred to Recognized Employment, (ii) the
date upon which an individual who had previously been a Participant is
reemployed in Recognized Employment, and (iii) such other dates as the
Administrator's Representative may by uniform, nondiscriminatory rules
established from time to time for the commencement of retirement savings under
Section 2.5.

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<PAGE>

1.1.13. EVENT OF MATURITY - any of the occurrences described in
Section 6 by reason of which a Participant or Beneficiary may become entitled to
a distribution from the Plan.

1.1.14. FUND - the assets of the Plan held by the Trustee from time to
time, including all contributions and the investments and reinvestments,
earnings, profits and losses thereon, whether invested under the general
investment authority of the Trustee or under the terms applicable to any
investment Subfund established pursuant to Section 4.1.

1.1.15. HOURS OF SERVICE - a measure of an Employee's service with the
Employer and all Affiliates, determined for a given computation period and equal
to the number of hours credited to the Employee according to the following
rules:

(a) PAID DUTY. An Hour of Service shall be credited for each hour
for which the Employee is paid, or entitled to payment, for the
performance of duties for the Employer or an Affiliate. These
hours shall be credited to the Employee for the computation
period or periods in which the duties are performed.

(b) PAID NONDUTY. An Hour of Service shall be credited for each hour
for which the Employee is paid, or entitled to payment, by the
Employer or an Affiliate on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence; provided, however, that:

(i) no more than five hundred one (501) Hours of Service shall
be credited on account of a single continuous period during
which the Employee performs no duties (whether or not such
period occurs in a single computation period),

(ii) no Hours of Service shall be credited on account of
payments made under a plan maintained solely for the
purpose of complying with applicable worker's compensation,
unemployment compensation or disability insurance laws,

(iii) no Hours of Service shall be credited on account of
payments which solely reimburse the Employee for medical or
medically related expenses incurred by the Employee, and

(iv) payments shall be deemed made by or due from the Employer
or an Affiliate whether made directly or indirectly from a
trust fund or an insurer to which the Employer or an
Affiliate contributes or pays premiums.

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<PAGE>

These hours shall be credited to the Employee for the computation
period for which payment is made or, if the payment is not
computed by reference to units of time, the hours shall be
credited to the first computation period in which the event, for
which any part of the payment is made, occurred.

(c) BACK PAY. An Hour of Service shall be credited for each hour for
which back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or an Affiliate. The
same Hours of Service credited under paragraph (a) or (b) shall
not be credited under this paragraph (c). The crediting of Hours
of Service under this paragraph (c) for periods and payments
described in paragraph (b) shall be subject to all the
limitations of that paragraph. These hours shall be credited to
the Employee for the computation period or periods to which the
award or agreement pertains rather than the computation period in
which the award, agreement or payment is made.

(d) UNPAID ABSENCES.

(i) LEAVES OF ABSENCE. If (and to the extent that) the
Employer so provides in written rules of nondiscriminatory
application which are in writing and approved by the
Employer before the date upon which they are effective, an
assumed eight (8) hour day and forty (40) hour week shall
be credited during each unpaid leave of absence authorized
by the Employer or an Affiliate for Plan purposes under
such rules; provided, however, that if the Employee does
not return to employment for any reason other than death,
Disability or attainment of Normal Retirement Age at the
expiration of the leave of absence, such Hours of Service
shall not be credited.

(ii) MILITARY LEAVES. If an Employee returns to employment with
the Employer or an Affiliate within the time prescribed by
law for the retention of veteran's reemployment rights, an
assumed eight (8) hour day and forty (40) hour week shall
be credited during service in the Armed Forces of the
United States if the Employee both entered such service and
returned to employment with the Employer or an Affiliate
from such service under circumstances entitling him to
reemployment rights granted veterans under federal law.

(iii) PARENTING LEAVES. To the extent not otherwise credited and
solely for the purpose of determining whether a One-Year
Break in Service has occurred, Hours of Service shall be
credited to an Employee for any period of absence from work
beginning after December 31, 1984, due to pregnancy of the
Employee, the birth of a child of the Employee, the
placement of a child with the Employee in connection with
the adoption of such child by the Employee, or for the
purpose of caring

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<PAGE>

for such child for a period beginning immediately following
such birth or placement. The Employee shall be credited
with the number of Hours of Service which otherwise would
normally have been credited to such Employee but for such
absence. If it is impossible to determine the number of
Hours of Service which would otherwise normally have been
so credited, the Employee shall be credited with eight (8)
Hours of Service for each day of such absence. In no event,
however, shall the number of Hours of Service credited for
any such absence exceed five hundred one (501) Hours of
Service. Such Hours of Service shall be credited to the
computation period in which such absence from work begins
if crediting all or any portion of such Hours is necessary
to prevent the Employee from incurring a One-Year Break in
Service in such computation period. If the crediting of
such Hours of Service is not necessary to prevent the
occurrence of a One-Year Break in Service in that
computation period, such Hours of Service shall be credited
in the immediately following computation period (even
though no part of such absence may have occurred in such
subsequent computation period). These Hours of Service
shall not be credited until the Employee furnishes timely
information which may reasonably be required by the
Administrator's Representative to establish that the
absence from work is for a reason for which these Hours of
Service may be credited.

(e) SPECIAL RULES. To the extent not inconsistent with other
provisions hereof, Department of Labor regulations 29 C.F.R. (S)
2530.200b-2(b) and (c) are hereby incorporated by reference
herein. For periods prior to the first day of the Plan Year
beginning after 1975, Hours of Service may be determined using
whatever records are reasonably accessible and by making whatever
calculations are necessary to determine the approximate number of
Hours of Service completed during such prior period.

(f) EQUIVALENCY FOR EMPLOYEES. Notwithstanding anything to the
contrary in the foregoing, if the Adoption Agreement shall so
provide, Hours of Service for an Employee shall be credited on
the basis that, without regard to actual hours, such Employee
shall be credited with ten (10) Hours of Service for a calendar
day, forty-five (45) Hours of Service for a calendar week,
ninety-five (95) Hours of Service for each semi-monthly pay
period, or one hundred ninety (190) Hours of Service for a
calendar month if, under the provisions of this section (other
than this paragraph), such Employee would be credited with at
least one (1) Hour of Service during such day, week, semi-monthly
pay period or month.

1.1.16. INVESTMENT MANAGER - that person other than the Trustee
appointed pursuant to Section 10.7 to manage all or a portion of the Fund.

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<PAGE>

1.1.17. NORMAL RETIREMENT AGE - the date a Participant attains the age
specified in the Adoption Agreement or, if none is specified in the Adoption
Agreement, age sixty-five (65) years. If the Employer enforces a mandatory
retirement age, the Normal Retirement Age is the lesser of that mandatory
retirement age or the age specified in the Adoption Agreement. WARNING:
Generally, federal and state law prohibits enforcement of a mandatory retirement
age for Common Law Employees.

1.1.18. ONE-YEAR BREAK IN SERVICE - a computation period for which an
Employee is not credited with more than five hundred (500) Hours of Service. (A
One-Year Break in Service shall be deemed to occur only on the last day of such
computation period.)

1.1.19. PARTICIPANT - an Employee who becomes a Participant in this
Plan in accordance with the provisions of Section 2. An Employee who has become
a Participant shall be considered to continue as a Participant in the Plan until
the date of his death or, if earlier, the date when he is no longer employed in
Recognized Employment and upon which the Participant no longer has any Account
under the Plan (that is, he has both received a distribution of all of his
Vested Total Account, if any, and his Suspense Account, if any, has been
forfeited and disposed of as provided in Section 6.2).

1.1.20. PLAN - the tax-qualified defined contribution profit sharing
plan of the Employer established for the benefit of Employees eligible to
participate therein, as set forth in the Prior Plan Statement and this Plan
Statement. (As used herein, "Plan" refers to the legal entity established by
the Employer and not to the instruments or documents pursuant to which the Plan
is maintained. Those instruments and documents are referred to herein as the
"Prior Plan Statement" and the "Plan Statement.") The Plan shall be referred to
by the name indicated in the Adoption Agreement.

1.1.21. PLAN STATEMENT - the Prototype Documents as completed and
adopted by the Employer and pursuant to which this Plan is maintained on and
after the Effective Date.

1.1.22. PLAN YEAR - the twelve (12) consecutive month period ending
on any Annual Valuation Date.

1.1.23. PRIOR PLAN STATEMENT - the written instrument or instruments
or the series of written instruments under which this Plan was established and
maintained from time to time prior to the Effective Date. (If this Plan was
first established by the Employer's adoption of this Plan Statement, there will
have been no Prior Plan Statement and all references thereto shall be
disregarded.)

1.1.24. PROTOTYPE DOCUMENTS - the unexecuted form of document entitled
"(S) 401(k) Prototype Basic Plan Document #02 1989 Restatement," including all
Appendices thereto, and the unexecuted and uncompleted form of Adoption
Agreement #001 used in connection with it, including the prototype documents
prior to this 1989 Restatement.

1.1.25. PROTOTYPE SPONSOR - First Trust National Association, a
national trust association of St. Paul, Minnesota (which has submitted the
Prototype Documents to the

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<PAGE>

National Office of the Internal Revenue Service for an opinion as to the
acceptability of the form of the Prototype Documents under the Internal Revenue
Code and has retained the right to amend as provided in Section 9).

1.1.26. Recognized Compensation - an amount determined for a
Participant for a Plan Year which is the Participant's "(S)415 compensation" as
defined in the Appendix A to this Plan Statement, subject, however, to the
following:

(a) INCLUDED ITEMS. In determining a Participant's Recognized
Compensation there shall be included elective contributions made
by the Employer on behalf of the Participant that are not
includible in gross income under sections 125, 402(a)(8), 402(h),
403(b), 414(h)(2) and 457 of the Internal Revenue Code including
elective contributions authorized by the Participant under a
Retirement Savings Agreement, a cafeteria plan or any other
qualified cash or deferred arrangement under section 401(k) of
the Internal Revenue Code.

(b) EXCLUDED ITEMS. For purposes of allocating the Employer's
discretionary profit sharing contribution, if any, under Section
3.4.5. and forfeited Suspense Accounts, if any, Recognized
Compensation shall not include remuneration excluded by the
Employer in the Adoption Agreement.

(c) PRE-PARTICIPATION EMPLOYMENT. Remuneration paid by the Employer
attributable to periods prior to the date the Participant became
a Participant in the Plan shall not be taken into account in
determining the Participant's Recognized Compensation.

(d) NON-RECOGNIZED EMPLOYMENT. Remuneration paid by the Employer for
employment that is not Recognized Employment shall not be taken
into account in determining a Participant's Recognized
Compensation.

(e) ATTRIBUTION TO PERIODS. A Participant's Recognized Compensation
shall be considered attributable to the period in which it is
actually paid and not when earned or accrued.

(f) ANNUAL MAXIMUM. A Participant's Recognized Compensation for a
Plan Year shall not exceed the annual compensation limit under
section 401(a)(17) of the Internal Revenue Code. In determining a
Participant's Recognized Compensation, the rules of section
414(q)(6) of the Internal Revenue Code apply, except that in
applying such rules, the term "family" shall include only the
spouse of the Participant and lineal descendants of the
Participant who have not attained age nineteen (19) years before
the close of the Plan Year; provided, however, that the rule in
this sentence shall not apply to the Seven Thousand Dollar
($7,000) limit specified in Section 2.5. If Participants are
aggregated as such family members (and do not otherwise agree in
writing), the Recognized Compensation of each family member

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<PAGE>

shall equal the annual compensation limit under section
401(a)(17) of the Internal Revenue Code multiplied by a fraction,
the numerator of which is such family member's Recognized
Compensation (before application of such annual compensation
limit) and the denominator of which is the total Recognized
Compensation (before application of such annual compensation
limit) of all such family members. For purposes of the foregoing,
the annual compensation limit under section 401(a)(17) of the
Internal Revenue Code shall be Two Hundred Thousand Dollars
($200,000) (as adjusted under the Internal Revenue Code for cost
of living increases) for Plan Years beginning before January 1,
1994, and shall be One Hundred and Fifty Thousand Dollars
($150,000) (as so adjusted) for Plan Years beginning on or after
January 1, 1994.

1.1.27. RECOGNIZED EMPLOYMENT - all employment with the Employer
excluding, however, employment classified by the Employer as:

(a) employment in a unit of Employees whose terms and conditions of
employment are subject to a collective bargaining agreement
between the Employer and employee representatives (for this
purposed, the term "employee representatives" does not include
any organization where more than half of its members are
Employees who are owners, officers or executives of the
Employer). If retirement benefits were the subject of good faith
bargaining and if two percent or less of the Employees who are
covered pursuant to such collective bargaining agreement are
professionals as defined in Treas. Reg. section 1.410(b)-9 unless
(and to the extent) such collective bargaining agreement provides
for the inclusion of those Employees in the Plan,

(b) employment of a nonresident alien (within the meaning of section
7701(b)(1)(B) of the Internal Revenue Code) who is not receiving
any earned income (within the meaning of section 911(d)(2) of the
Internal Revenue Code) from the Employer which constitutes income
from sources within the United States (within the meaning of
section 861(a)(3) of the Internal Revenue Code) unless and until
the Administrator's Representative shall declare such employment
to be Recognized Employment,

(c) employment in a division or facility of the Employer which is not
in existence on the Effective Date (that is, was acquired,
established, founded or produced by the liquidation or similar
discontinuation of a separate subsidiary after the Effective
Date) unless and until the Administrator's Representative shall
declare such employment to be Recognized Employment,

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<PAGE>

(d) employment of a United States citizen or a United States resident
alien outside the United States unless and until the
Administrator's Representative shall declare such employment to
be Recognized Employment,

(e) services of a person who is not a Common Law Employee of the
Employer including, without limiting the generality of the
foregoing, services of a Leased Employee, leased owner, leased
manager, shared employee, shared leased employee or other similar
classification unless and until the Administrator's
Representative shall declare such employment to be Recognized
Employment,

(f) employment of a highly compensated Employee (as defined in
Appendix D to the Plan Statement) to the extent agreed to in
writing by the Employee, and

(g) employment described as excluded in the Adoption Agreement.

1.1.28. RETIREMENT SAVINGS AGREEMENT - the agreement which may be
entered into by a Participant as provided in Section 2.

1.1.29. TRUSTEE - the Trustee originally named in the Adoption Agreement
and its successor or successors in trust.

1.1.30. VALUATION DATE - the Annual Valuation Date and each other date,
if any, specified in the Adoption Agreement. If so permitted in the Adoption
Agreement, Valuation Date for accounting purposes may be different than
Valuation Date for distribution purposes.

1.1.31. VESTED - nonforfeitable, i.e., a claim obtained by a Participant
or his Beneficiary to that part of an immediate or deferred benefit hereunder
which arises from the Participant's service, which is unconditional and which is
legally enforceable against the Plan.

1.1.32. VESTING SERVICE - a measure of an Employee's service with the
Employer and all Affiliates (stated as a number of years) which is equal to the
number of computation periods for which the Employee is credited with one
thousand (1,000) or more Hours of Service; subject, however, to such of the
following rules as are applicable under the Adoption Agreement:

(a) COMPUTATION PERIODS. The computation periods for determining the
Employee's Vesting Service (and One-Year Breaks in Service as
applied to his Vesting Service) shall be Plan Years.

(b) COMPLETION. A year of Vesting Service shall be deemed completed
as of the date in the computation period that the Employee
completes one thousand (1,000) Hours of Service. (Fractional
years of Vesting Service shall not be credited.)

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<PAGE>

(c) PRE-EFFECTIVE DATE SERVICE. Vesting Service shall be credited
for Hours of Service earned and computation periods completed
prior to the Effective Date as if the rules of this Plan
Statement were then in effect.

(d) BREAKS IN SERVICE - BEFORE EFFECTIVE DATE. Vesting Service
cancelled before the Effective Date by operation of the Plan's
break in service rules as they existed before the Effective Date
shall continue to be cancelled on and after the Effective Date.

(e) VESTING IN PRE-BREAK ACCOUNTS. If the Employee has five (5) or
more consecutive One-Year Breaks in Service, his service after
such One-Year Breaks in Service shall not be counted as years of
Vesting Service for the purpose of determining the Vested
percentage of that portion of his Employer contributions
allocated with respect to his service before such One-Year Breaks
in Service and separately accounted for under Section 5.1.4.

(f) VESTING IN POST-BREAK ACCOUNTS (VESTING RULE OF PARITY). Except
as provided in the following sentence and subject to Section
1.1.32(d), if the Employee has any break in service occurring
before or after the Effective Date, his service both before and
after such break in service shall be taken into account in
computing his Vesting Service for the purpose of determining the
Vested percentage of that portion of his Employer Matching
Account or Employer Contributions Account derived from Employer
contributions allocated with respect to his service after such
break in service and separately accounted for under Section
5.1.4. If the Employee does not have any Vested right to any
portion of an Employer Matching Account or Employer Contributions
Account, however, when he incurs a One-Year Break in Service,
Vesting Service completed before any One-Year Break in Service
shall be disregarded in determining his Vesting Service (upon a
subsequent return to employment) if the number of his One-Year
Breaks in Service equals or exceeds the greater of five (5) or
the aggregate number of his years of Vesting Service (whether or
not consecutive) completed before such One-Year Breaks in
Service. Such aggregate number of his years of Vesting Service
completed before such One-Year Breaks in Service shall not
include any years of Vesting Service which have been disregarded
under the preceding sentence by reason of any prior One-Year
Breaks in Service.

1.2. RULES OF INTERPRETATION. An individual shall be considered to
have attained a given age on his birthday for that age (and not on the day
before). The birthday of any individual born on a February 29 shall be deemed
to be February 28 in any year that is not a leap year. Notwithstanding any
other provision of this Plan Statement or any election or designation made under
the Plan, any individual who feloniously and intentionally kills a Participant
or Beneficiary shall be deemed for all purposes of this Plan and all elections
and designations made under this Plan to have died before such Participant or
Beneficiary. A final judgment

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<PAGE>

of conviction of felonious and intentional killing is conclusive for the
purposes of this section. In the absence of a conviction of felonious and
intentional killing, the Administrator's Representative shall determine whether
the killing was felonious and intentional for purposes of this section. Whenever
appropriate, words used herein in the singular may be read in the plural, or
words used herein in the plural may be read in the singular; the masculine may
include the feminine; and the words "hereof," "herein" or "hereunder" or other
similar compounds of the word "here" shall mean and refer to the entire Plan
Statement and not to any particular paragraph or section of this Plan Statement
unless the context clearly indicates to the contrary. The titles given to the
various sections of this Plan Statement are inserted for convenience of
reference only and are not part of this Plan Statement, and they shall not be
considered in determining the purpose, meaning or intent of any provision
hereof. Any reference in this Plan Statement to a statute or regulation shall be
considered also to mean and refer to any subsequent amendment or replacement of
that statute or regulation. This instrument has been executed and delivered in
the State where the Trustee has its principal place of business and has been
drawn in conformity to the laws of that State and shall, except to the extent
that federal law is controlling, be construed and enforced in accordance with
the laws of that State.

1.3. ESTABLISHMENT OF NEW PLAN. If the Employer's execution of the Adoption
Agreement is an establishment of a new Plan by the Employer, such approval and
adoption is conditioned upon the qualification of the Plan under the pertinent
provisions of the Internal Revenue Code. If this Plan is found not to so
qualify, the Employer may, at its election, amend the Plan Statement, terminate
the Plan in its entirety, or both. If the denial of qualification was in
response to an application for advance determination on the establishment of a
new Plan which was made by the time prescribed by law for filing the Employer's
tax return for the taxable year in which the Plan is adopted (or effective, if
later), the Trustee may be directed by the Employer to return all contributions
made under this Plan to the Participants or to the Employer, as the case may be,
adjusted for their pro rata share of earnings and market gains or losses which
accrued while they were held in the Fund. Such a return of the contribution
shall not be made, however, unless the return is made within one (1) year after
the date the initial qualification of the Plan is denied.

1.4. AMENDMENT AND CHANGE OF TRUSTEE. If the Employer's execution of the
Adoption Agreement is an amendment of a Prior Plan Statement of which the
Trustee was not the trustee, such execution shall not be considered to be a
termination of one plan and the establishment of another but, on the contrary,
shall be considered to be the express continuation of the Plan under new
documents. The Employer has caused, or will forthwith cause, the transfer of the
existing trust fund to the Trustee to be held in trust under this Plan
Statement.

1.5. AMENDMENT AND CONTINUATION. If the Employer's execution of the Adoption
Agreement is an amendment of a Prior Plan Statement of which the Trustee was the
trustee, such execution shall not be considered to be a termination of one plan
and the establishment of another but, on the contrary, shall be considered to be
the express continuation of the Plan under new documents.

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<PAGE>

1.6. AUTOMATIC EXCLUSION FROM PROTOTYPE PLAN. In the event an Employer
adopting these Prototype Documents fails to obtain or fails to retain qualified
status under sections 401(a) and 501(a) of the Internal Revenue Code, such
Employer shall immediately cease participation under these Prototype Documents
and, when applicable, will be deemed to maintain its Plan under an individually
designed successor retirement plan document.

1.7. SPECIAL REQUIREMENTS.

1.7.1. DISCRIMINATORY BENEFITS. If this Plan provides contributions
or benefits for one or more Owner-Employees who control both the business with
respect to which this Plan is established and one or more other trades or
businesses, this Plan and any plan established for such other trades or
businesses must, when looked at as a single plan, satisfy sections 401(a) and
(d) of the Internal Revenue Code for the employees of this and all other trades
or businesses.

1.7.2. DISCRIMINATORY COVERAGE. If this Plan provides contributions
or benefits for one or more Owner-Employees who control one or more other trades
or businesses, the employees of the other trades or businesses must be included
in a plan which satisfies sections 401(a) and (d) of the Internal Revenue Code
and which provides contributions and benefits not less favorable than provided
for Owner-Employees under this Plan. If an individual is covered as an Owner-
Employee under the plans of two (2) or more trades or businesses which are not
controlled and the individual controls a trade or business, the contributions or
benefits for the employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for the Owner-Employee under
the most favorable plan of the trade or business which is not controlled.

1.7.3. CONTROL DEFINED. For purposes of this Section 1.7, an Owner-
Employee, or two or more Owner-Employees, will be considered to control a trade
or business if the Owner-Employee, or two or more Owner-Employees together:

(i) own the entire interest in an unincorporated trade or
business, or

(ii) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in the
partnership.

An Owner-Employee, or two or more Owner-Employees, shall be treated as owning
any interest in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.

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<PAGE>

SECTION 2

ELIGIBILITY AND PARTICIPATION

2.1. INITIAL ENTRY INTO PLAN. If this Plan Statement is adopted as an
amendment of a Prior Plan Statement, each Employee who immediately before the
Effective Date was a Participant in the Plan prior to the Effective Date and who
continues in Recognized Employment on the Effective Date shall continue as a
Participant in this Plan.

On and after the Effective Date (without regard to whether this Plan Statement
is an amendment of a Prior Plan Statement or the establishment of a new Plan),
each other Employee shall become a Participant on the first Entry Date
coincident with or next following the date that such Employee has both:

(a) satisfied the age requirement set forth in the Adoption Agreement, if
any, and

(b) satisfied the service requirement set forth in the Adoption
Agreement, if any,

if he is then employed in Recognized Employment. If he is not then employed in
Recognized Employment, he shall become a Participant on the first date
thereafter upon which he is employed in Recognized Employment. In the Adoption
Agreement, the Employer may elect different service requirements for eligibility
to enroll for retirement savings contributions under Section 3.2 and to share in
the Employer required matching contributions and Employer discretionary
contributions under Sections 3.3 and 3.4.

2.2. SPECIAL RULE FOR FORMER PARTICIPANTS. A Participant whose employment with
the Employer terminates and who subsequently is reemployed by the Employer shall
immediately reenter the Plan as a Participant as of the date of his return to
Recognized Employment.

2.3. ENROLLMENT. Each Employee who is or will become a Participant as provided
in Section 2.1 or Section 2.2 may enroll for retirement savings by completing a
Retirement Savings Agreement and delivering it to the Administrator's
Representative at least fifteen (15) days (or some other time period specified
by the Administrator's Representative) prior to the Entry Date as of which the
Employee desires to make it effective. If an Employee does not enroll when first
eligible to do so, he may enroll as of any subsequent Entry Date by completing a
Retirement Savings Agreement and delivering it to the Administrator's
Representative at least fifteen (15) days (or some other time period specified
by the Administrator's Representative) prior to that Entry Date.

2.4. WAIVER OF ENROLLMENT PROCEDURES. The Administrator's Representative shall
have the authority to adopt rules that modify and waive the enrollment
procedures set forth in this Section 2 during the period beginning on the
Effective Date and ending twelve (12) months later, in order that an orderly
first enrollment might be completed. This authority to modify and waive the
enrollment procedures does not authorize the Administrator's Representative

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<PAGE>

to modify the minimum service, age or job classification requirements for
participation in the Plan.

2.5. RETIREMENT SAVINGS AGREEMENT. Subject to the following rules, the
Retirement Savings Agreement which each Participant may execute shall provide
for a reduction equal to not more than the percentage specified in the Adoption
Agreement of the amount of Recognized Compensation which otherwise would be paid
to him by the Employer each payday. Effective for Plan Years beginning after
December 31, 1986, the reduction in earnings agreed to by the Participant,
however, shall not exceed Seven Thousand Dollars ($7,000) for that Participant's
taxable year. Such Seven Thousand Dollar ($7,000) limit shall be adjusted for
cost of living at the same time and in the same manner as under section 415(d)
of the Internal Revenue Code. In the case of a Participant who is a Self-
Employed Person, the reduction in earnings shall be determined by multiplying
such Participant's Recognized Compensation (for the entire Plan Year) by the
enrollment percentage elected by the Participant and multiplying the resulting
amount by the fraction of the Plan Year that each election is in effect. The
Administrator's Representative may, from time to time under uniform,
nondiscriminatory rules, change the minimum and maximum allowable reductions in
earnings. The reductions in earnings agreed to by the Participant shall be made
by the Employer from the Participant's remuneration each payday on or after the
Effective Date for so long as the Retirement Savings Agreement remains in
effect.

2.6. MODIFICATIONS OF RETIREMENT SAVINGS AGREEMENT. The Retirement Savings
Agreement of a Participant may be modified. Unless modified or terminated, the
Retirement Savings Agreement will remain in effect.

2.6.1. INCREASE. A Participant whose Retirement Savings Agreement
does not provide for the full, allowable reduction may, upon giving fifteen (15)
days' prior written notice to the Administrator's Representative, amend his
Retirement Savings Agreement to increase the amount of reduction as of the first
payday on or after any subsequent Entry Date.

2.6.2. DECREASE. A Participant whose Retirement Savings Agreement
provides for more than the minimum allowable reduction may, upon giving fifteen
(15) days' prior written notice to the Administrator's Representative, amend his
Retirement Savings Agreement to decrease the amount of reduction as of the first
payday on or after any subsequent Entry Date.

2.6.3. VOLUNTARY TERMINATION. A Participant who has a Retirement Savings
Agreement in effect may, upon giving fifteen (15) days' prior written notice to
the Administrator's Representative, completely terminate the Retirement Savings
Agreement as of the first day of any payroll period. Thereafter, such
Participant may, upon giving fifteen (15) days' prior written notice to the
Administrator's Representative, enter into a new Retirement Savings Agreement
effective as of the first payday on or after any subsequent Entry Date if, on
that Entry Date, he is employed in Recognized Employment.

2.6.4. TERMINATION OF RECOGNIZED EMPLOYMENT. The Retirement Savings
Agreement of a Participant who ceases to be employed in Recognized Employment
(and who

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<PAGE>

thereby ceases to have Recognized Compensation) shall be terminated
automatically as of the date he ceased to be employed in Recognized Employment.
If such Participant returns to Recognized Employment, he may enter into a new
Retirement Savings Agreement effective as of any Entry Date following his return
to Recognized Employment upon giving fifteen (15) days' prior written notice to
the Administrator's Representative.

2.6.5. FORM OF AGREEMENT. The Administrator's Representative shall
specify the form of the Retirement Savings Agreement, the form of any notices
modifying the Retirement Savings Agreement and all procedures for the delivery
and acceptance of forms and notices.

2.7. SECTION 401(K) COMPLIANCE./1/

2.7.1. SPECIAL DEFINITIONS. For purposes of this Section 2.7, the
following special definitions shall apply:

(a) "COVERED EMPLOYEE" means an individual who was entitled to enter
into a Retirement Savings Agreement for all or a part of the Plan
Year (whether or not he did so).

(b) "HIGHLY COMPENSATED COVERED EMPLOYEES" means those covered
employees defined as highly compensated employees in Appendix D
to this Plan Statement.

(i) the total amount, for the Plan Year, of Employer
contributions credited to the covered employee's Retirement
Savings Account (excluding Employer contributions to the
Retirement Savings Account taken into account in determining
the contribution percentage in Section 3.10, provided the
401(k) test in this Section 2.7 is satisfied both with and
without exclusion of such Employer contributions, and
excluding Employer contributions to the Retirement Savings
Account returned to the covered employee pursuant to
Appendix A to this Plan Statement as an excess annual
addition), and if the Administrator's Representative elects,
all or a portion of the amount, for the Plan Year, of
Employer contributions credited to the covered employee's
Employer Matching Account or Employer Profit Sharing
Account, or both, to

(ii) the covered employee's compensation, as defined below, for
the portion of such Plan Year that the employee is a covered
employee.

_______________________

/1/ Except as otherwise specifically provided in this Section, the provisions of
this Section apply for Plan Years beginning after December 31, 1986.

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<PAGE>

For this purpose, Employer contributions will be considered made in the Plan
Year if they are allocated as of a date during such Plan Year and are delivered
to the Trustee within twelve (12) months after the end of such Plan Year. A
covered employee who did not enter into a Retirement Savings Agreement shall be
treated as having elected a deferred percentage of zero.

(d) "COMPENSATION" means compensation for services performed for the
Employer defined as "(S) 415 compensation" in Appendix A to this
Plan Statement. The Administrator's Representative may elect to
include as compensation any elective contributions made by the
Employer on behalf of the covered employee that are not
includible in gross income under sections 125, 402(a)(8), 402(h),
403(b), 414(h)(2) and 457 of the Internal Revenue Code.
Notwithstanding the definition of "(S) 415 compensation" in
Appendix A to this Plan Statement, compensation shall always be
determined on a cash (and not on an accrual) basis and
compensation shall be determined on a Plan Year basis (which is
not necessarily the same as the limitation year). A covered
employee's compensation for a Plan Year shall not exceed the
annual compensation limit under section 401(a)(17) of the
Internal Revenue Code. For purposes of the foregoing, the annual
compensation limit under section 401(a)(17) of the Internal
Revenue Code shall be Two Hundred Thousand Dollars ($200,000) (as
adjusted under the Internal Revenue Code for cost of living
increases) for Plan Years beginning before January 1, 1994, and
shall be One Hundred and Fifty Thousand Dollars ($150,000) (as so
adjusted) for Plan Years beginning on or after January 1, 1994.

(e) "AVERAGE DEFERRAL PERCENTAGE" means, for a specified group of
covered employees for the Plan Year, the average of the deferral
percentages for all covered employees in such group.

2.7.2. SPECIAL RULES. For purposes of this Section 2.7, the following
special rules apply:

(a) ROUNDING. Effective for Plan Years beginning after December 31,
1988, the deferral percentages and average deferral percentage
for each group of covered employees shall be calculated to the
nearest one-hundredth of one percent of the covered employee's
compensation.

(b) FAMILY MEMBER. If a highly compensated covered employee is
subject to the family aggregation rules of section 414(q)(6) of
the Internal Revenue Code because such employee is either a five
percent (5%) owner or one of the ten (10) most highly compensated
employees (as defined in Appendix D to this Plan Statement), the
combined deferral percentage for the family group (which is
treated as one highly compensated covered employee) shall be
determined by combining the amounts described in Section
2.7.1(c)(i) and by combining the compensation described in
Section 2.7.1(d) of all

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<PAGE>

family members who are covered employees. The family members who are
aggregated with respect to a highly compensated covered employee
shall be disregarded as separate covered employees in determining the
average deferral percentage of highly compensated covered employees
and the average deferral percentage of all other covered employees.
If a covered employee is required to be aggregated as a member of
more than one family group in the Plan, all covered employees who are
members of those family groups that include that covered employee are
aggregated as one family group. With respect to any highly
compensated covered employee, "family" shall mean the employee's
spouse and lineal ascendants and descendants and the spouses of such
lineal ascendants and descendants. The annual compensation limit
under section 401(a)(17) of the Internal Revenue Code applies to the
above deferral percentage determination except that for purposes of
that limit, the term "family" shall include only the spouse of the
covered employee and lineal descendants of the covered employee who
have not attained age nineteen (19) years before the close of that
Plan Year. For purposes of the foregoing, the annual compensation
limit under section 401(a)(17) of the Internal Revenue Code shall be
Two Hundred Thousand Dollars ($200,000) (as adjusted under the
Internal Revenue Code for cost of living increases) for Plan Years
beginning before January 1, 1994, and shall be One Hundred and Fifty
Thousand Dollars ($150,000) (as so adjusted) for Plan Years beginning
on or after January 1, 1994.

(c) MULTIPLE PLANS. The average deferral percentage for any Participant
who is a highly compensated covered employee for the Plan Year with
respect to two or more arrangements described in section 401(k) of
the Internal Revenue Code, that are maintained by the Employer, shall
be determined as if all such arrangements were a single arrangement.
If a highly compensated covered employee participates in two or more
such arrangements that have different Plan Years, all arrangements
ending with or within the same calendar year shall be treated as a
single arrangement. In the event that this Plan satisfies the
requirements of sections 401(k), 401(a)(4) or 410(b) of the Internal
Revenue Code only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of such sections of
the Internal Revenue Code only if aggregated with this Plan, then
this section 2.7.2(c) shall be applied by determining the average
deferral percentage of covered employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans
may be aggregated in order to satisfy section 401(k) of the Internal
Revenue Code only if they have the same Plan Year.

(d) RECORDS. The Employer shall maintain records sufficient to
demonstrate satisfaction of the average deferral percentage test and
the amount of matching contributions (as defined in section
401(m)(4)(A) of the Internal Revenue Code which meet the requirements
of section 401(k)(2)(B) and (C)

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<PAGE>

of the Internal Revenue Code) or qualified nonelective
contributions (within the meaning of section 401(m)(4)(C) of the
Internal Revenue Code), or both, used in such test. The
determination and treatment of the average deferral percentage
amounts of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.

2.7.3. THE TESTS. Notwithstanding the foregoing provisions, Retirement
Savings Agreements in effect for each Plan Year shall be limited and modified
under uniform and nondiscriminatory rules established by the Administrator's
Representative and by the rules hereinafter provided in order that all such
Retirement Savings Agreements (in the aggregate) will satisfy at least one of
the following two (2) tests for that Plan Year:

TEST 1: The average deferral percentage for the group of highly compensated
covered employees is not more than the average deferral percentage
of all other covered employees multiplied by one and twenty-five
hundredths (1.25).

TEST 2: The excess of the average deferral percentage for the group of
highly compensated covered employees over that of all other covered
employees is not more than two (2) percentage points, and the
average deferral percentage for the group of highly compensated
covered employees is not more than the average deferral percentage
of all other covered employees multiplied by two (2).

The Administrator's Representative shall maintain records to demonstrate
compliance with one of the two (2) tests described above, including the extent
to which qualified matching contributions (as defined in Section 2.7.1(c)) and
qualified nonelective contributions (as defined in Section 2.7.1(c)) are used in
determining the deferral percentage.

2.7.4. REMEDIAL ACTION. If the Administrator's Representative determines
that neither of the tests will be satisfied (or may not be satisfied) for a Plan
Year, then during such Plan Year, the following actions may be taken so that one
of the tests will be satisfied for such Plan Year:

(a) The highly compensated covered employees who have the highest
enrollment percentage under Section 2.5 shall be deemed for all
purposes of the Plan to have elected for that Plan Year a lower
enrollment percentage (and the amounts credited pursuant to Section
3.2, and the applicable amount, if any, credited pursuant to
Section 3.3, shall be reduced accordingly).

(b) If neither of the tests is satisfied after such adjustment, the
enrollment percentage under Section 2.5 of the highly compensated
covered employees who then have the highest enrollment percentage
(including any reduced under (a) above) shall be reduced to a lower
enrollment percentage.

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<PAGE>

(c) If neither of the tests is satisfied after such adjustment, this
method of adjustment shall be repeated one or more additional times
until one of the tests is satisfied.

The Administrator's Representative shall prescribe rules concerning such
adjustments, including the frequency of applying the tests and the commencement
and termination dates for any adjustments. Any amounts required to be
distributed as provided above which are distributed more than 2 1/2 months after
the close of the Plan Year being tested, will result in a ten percent (10%)
penalty tax on the Employer as provided in section 4979 of the Internal Revenue
Code.

2.8. ANNUAL CERTIFICATION. As of each Annual Valuation Date during the
continuance of the Plan, the Administrator's Representative shall certify in
writing the names of all Participants who are entitled to participate in the
Employer contribution for the Plan Year ending on that date and all other facts
that may be required to properly administer the provisions of this Plan.

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<PAGE>

SECTION 3

CONTRIBUTIONS AND ALLOCATION THEREOF/2/

3.1. EMPLOYER CONTRIBUTIONS - GENERAL.

3.1.1. SOURCE OF EMPLOYER CONTRIBUTIONS. All Employer contributions
to the Plan may be made without regard to profits.

3.1.2. LIMITATION. The contribution of the Employer to the Plan for
any year, when considered in light of its contribution for that year to all
other tax-qualified plans it maintains, shall, in no event, exceed the maximum
amount deductible by it for federal income tax purposes as a contribution to a
tax-qualified profit sharing plan under section 404 of the Internal Revenue
Code. Each such contribution to the Plan is conditioned upon its deductibility
for such purpose.

3.1.3. FORM OF PAYMENT. The appropriate contribution of the Employer
to the Plan, determined as herein provided, shall be paid to the Trustee and may
be paid either in cash or in other assets of any character of a value equal to
the amount of the contribution or in any combination of the foregoing ways.

3.2. RETIREMENT SAVINGS CONTRIBUTIONS.

3.2.1. AMOUNT. Within the time required by regulations of the United
States Department of Labor, the Employer shall contribute to the Trustee for
deposit in the Fund the reduction in Recognized Compensation which was agreed to
by each Participant pursuant to a Retirement Savings Agreement. The Retirement
Savings Agreement shall not apply retroactively.

3.2.2. ALLOCATION. The portion of this contribution made with respect to
each Participant shall be allocated to that Participant's Retirement Savings
Account for the Plan Year with respect to which it is made and, for the purposes
of Section 4, shall be credited as of the Valuation Date coincident with or
immediately following the date such contribution is received by the Trustee or,
if the Employer has selected daily Valuation Dates for accounting purposes in
the Adoption Agreement, as soon as practicable after such contribution is
received by the Trustee.

3.3. REQUIRED MATCHING CONTRIBUTIONS.

3.3.1. AMOUNT. The Employer shall contribute to the Trustee for deposit
in the Fund and for crediting to the Participant's Employer Matching Account
such amounts, if any, as are required pursuant to the Adoption Agreement as
Employer contributions to match

___________________

/2/ Minimum contribution and allocation requirements apply in any Plan Year is
top heavy. (See Appendix B, (S) 3.3)

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<PAGE>

each Participant's reduction in Recognized Compensation which was agreed to by
the Participant pursuant to a Retirement Savings Agreement; provided, however,
that a reduction in Recognized Compensation above a percentage of a
Participant's Recognized Compensation specified in the Adoption Agreement shall
not be used in allocating such contribution. Such contributions shall be made
only for Participants who are eligible Participants within the meaning of
Section 3.5. Such contributions shall be delivered to the Trustee for deposit in
the Fund not later than the time prescribed by federal law (including
extensions) for filing the federal income tax return of the Employer for the
taxable year in which the Plan Year ends.

3.3.2. ALLOCATION. The Employer matching contribution (including forfeited
Suspense Accounts, if any) which is made with respect to an eligible Participant
shall be allocated to that Participant's Employer Matching Account for the Plan
Year with respect to which it is made and, for the purposes of Section 4, shall
be credited as of the Valuation Date coincident with or immediately following
the date such contribution is received by the Trustee or, if the Employer has
selected daily Valuation Dates for accounting purposes in the Adoption
Agreement, as soon as practicable after such contribution is received by the
Trustee.

3.4. DISCRETIONARY EMPLOYER CONTRIBUTIONS.

3.4.1. GENERAL. If the Adoption Agreement so provides, the Employer may
(but shall not be required to) make discretionary contributions from year to
year during the continuance of the Plan in such amounts as the Employer shall
from time to time determine. Such contributions shall be delivered to the
Trustee for deposit in the Fund not later than the time prescribed by federal
law (including extensions) for filing the federal income tax return of the
Employer for the taxable year in which the Plan Year ends.

The Employer's discretionary contribution, including forfeited Suspense
Accounts, if any, to be included with that contribution or reallocated as of the
Annual Valuation Date of such Plan Year, for a Plan Year shall be allocated as
follows.

3.4.2. CURATIVE ALLOCATION - (S) 401(K). If, for any Plan Year, neither of
the tests set forth in Section 2.7 has been satisfied and a distribution of
"Excess Contributions" has not been made pursuant to Section 7, then all or a
portion of the Employer's discretionary contribution for that Plan Year shall be
allocated as provided in this Section 3.4.2. Forfeited Suspense Accounts,
however, will not be included in this allocation. The Participants eligible to
share in such allocation shall be only those Participants who, during such Plan
Year, were not "highly compensated covered employees" (as defined in Section
2.7) for that Plan Year and for whom some contribution was made pursuant to
Section 3.2 for such Plan Year. No other Participant shall be eligible to share
in this allocation of the Employer discretionary contribution under this Section
3.4.2. The allocation to be made under this Section 3.4.2 shall be made to the
eligible Participant with the least amount of compensation (as defined in
Section 2.7) and then, in ascending order of compensation (as defined in Section
2.7), to other eligible Participants. The amount of the Employer discretionary

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<PAGE>

contribution to be allocated under this Section 3.4.2 shall be that amount
required to cause the Plan to satisfy either of the tests set forth in Section
2.7 for the Plan Year; provided, however, that in no case shall amounts be
allocated to a Participant's Retirement Savings Account under this paragraph
which would cause that Participant's deferral percentage (as defined in Section
2.7) to exceed twenty percent (20%). The Employer discretionary contribution so
made under this Section 3.4.2 shall be allocated to that Participant's
Retirement Savings Account for the Plan Year with respect to which the
contribution is made and, for the purposes of Section 4, shall be credited as of
the Valuation Date coincident with or immediately following the date such
contribution is received by the Trustee or, if the Employer has selected daily
Valuation Dates for accounting purposes in the Adoption Agreement, as soon as
practicable after such contribution is received by the Trustee.

3.4.3. DISCRETIONARY MATCHING CONTRIBUTIONS. If the Adoption Agreement so
provides, any portion of the Employer's discretionary contribution not allocated
under Section 3.4.2 shall be allocable to the Employer Matching Accounts of
Participants eligible to share in the allocation pursuant to Section 3.5;
provided, however, that the Employer's discretionary contribution to be
allocated under this Section 3.4.3 shall be reduced by any amounts necessary to
make the curative allocation described in Section 3.4.4. The contribution, if
any, made by the Employer for a given Plan Year shall be allocated to the
Employer Matching Account of eligible Participants to match a percentage,
determined by the Employer, of each eligible Participant's reduction in
Recognized Compensation which was agreed to by the Participant pursuant to a
Retirement Savings Agreement; provided, however, that a reduction in Recognized
Compensation above a percentage of a Participant's Recognized Compensation
specified in the Adoption Agreement shall not be used in allocating such
contribution. The Employer matching contribution which is made with respect to
an eligible Participant shall be allocated to that Participant's Employer
Matching Account for the Plan Year with respect to which it is made and, for the
purposes of Section 4, shall be credited as of the Valuation Date coincident
with or immediately following the date such contribution is received by the
Trustee or, if the Employer has selected daily Valuation Dates for accounting
purposes in the Adoption Agreement, as soon as practicable after such
contribution is received by the Trustee.

3.4.4. CURATIVE ALLOCATION - (S) 401(M). If, for any Plan Year, neither of
the tests set forth in Section 3.10 has been satisfied and a distribution of
"Excess Aggregate Contributions" has not been made pursuant to Section 7, then
all or any portion of the Employer's discretionary contribution for that Plan
Year which has not been allocated under Section 3.4.2 above shall be allocated
as provided in this Section 3.4.4. Forfeited Suspense Accounts, however, will
not be included in this allocation. The Participants eligible to share in such
allocation shall be only those Participants who, during such Plan Year, were not
highly compensated eligible employees (as defined in Section 3.10) for that Plan
Year and who were entitled to receive an Employer matching contribution pursuant
to Section 3.3 or Section 3.4.3 (or would have been entitled to receive an
Employer matching contribution if one had been made). No other Participant shall
be eligible to share in this allocation of the Employer discretionary
contribution under this Section 3.4.4. The allocation to be made under this
Section 3.4.4 shall be made to the Participant with the least amount of

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<PAGE>

compensation (as defined in Section 3.10) and then, in ascending order of
compensation (as defined in Section 3.10), to other Participants. The amount of
the Employer discretionary contribution to be allocated under this Section 3.4.4
shall be that amount required to cause the Plan to satisfy either of the tests
set forth in Section 3.10 for the Plan Year. The Employer discretionary
contribution so allocated to a Participant shall be credited to that
Participant's Employer Matching Account as of the Annual Valuation Date in the
Plan Year for which this Employer discretionary contribution is made. The
Employer discretionary contribution so made under this Section 3.4.4 shall be
allocated to that Participant's Employer Matching Account for the Plan Year with
respect to which the contribution is made and, for the purposes of Section 4,
shall be credited as of the Valuation Date coincident with or immediately
following the date such contribution is received by the Trustee or, if the
Employer has selected daily Valuation Dates for accounting purposes in the
Adoption Agreement, as soon as practicable after such contribution is received
by the Trustee.

3.4.5. DISCRETIONARY PROFIT SHARING CONTRIBUTIONS. If the Adoption
Agreement so provides, any portion of the Employer's discretionary contribution
not allocated under Section 3.4.2, Section 3.4.3 and Section 3.4.4 shall be
allocated to the Employer Contributions Accounts of eligible Participants under
Section 3.5. The discretionary contribution for a Plan Year shall be allocated
to the Employer Contributions Accounts of eligible Participants under the
formula set forth in Section 3.4.5(a) or Section 3.4.5(b) as indicated in the
Adoption Agreement.

(a) STRAIGHT PERCENT OF PAY PROFIT SHARING ALLOCATION. If the
discretionary profit sharing contribution is adopted as a non-
integrated straight percent of pay profit sharing contribution, the
contribution, if any, made by the Employer for a given Plan Year
shall be allocated to the Employer Contributions Accounts of
eligible Participants in the ratio which the Recognized Compensation
of each such eligible Participant for the Plan Year bears to the
Recognized Compensation for such Plan Year of all such eligible
Participants.

(b) INTEGRATED PROFIT SHARING ALLOCATION. If the discretionary profit
sharing contribution is adopted as an integrated profit sharing
contribution, the contribution, if any, made by the Employer for a
given Plan Year shall be determined and allocated under the
following rules:

(i) BASE CONTRIBUTION PERCENTAGE. Subject to the rules in Section
3.4.5(b)(iii) and (iv), the Employer shall determine a uniform
base contribution percentage for the Plan Year and shall
contribute to each eligible Participant's Employer Profit
Sharing Account an amount equal to that base contribution
percentage multiplied by each such eligible Participant's
Recognized Compensation up to the Integration Level (as defined
in the Adoption Agreement) for that Plan Year.

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<PAGE>

(ii) EXCESS CONTRIBUTION PERCENTAGE. Subject to the rules in Section
3.4.5(b)(iii) and (iv), the Employer shall determine a uniform
excess contribution percentage for the Plan Year and shall
contribute to each eligible Participant's Employer Profit
Sharing Account an amount equal to that excess contribution
percentage multiplied by each such eligible Participant's
Recognized Compensation in excess of the Integration Level (as
defined in the Adoption Agreement) for that Plan Year.

(iii) RULES FOR NON-TOP HEAVY PLAN. The base contribution percentage
and the excess contribution percentage for a Plan Year in which
the Plan is not top heavy as defined in Appendix B to this Plan
Statement shall be determined as follows:

. TWO TIMES RULE. If the base contribution percentage is equal to or less
than the integration rate (as determined in the Adoption Agreement), the excess
contribution percentage shall not exceed the product of the base contribution
percentage multiplied by two (2).

. INTEGRATION LIMITATION. If the base contribution percentage is greater than
the integration rate (as determined in the Adoption Agreement), the excess
contribution percentage shall not exceed the sum of the base contribution
percentage plus the integration rate.

(iv) RULES FOR TOP HEAVY PLAN. The base contribution percentage and
the excess contribution percentage for a Plan Year in which the
Plan is top heavy as defined in Appendix B to this Plan
Statement shall be determined in accordance with the following
rules:

. LESS THAN THREE PERCENT RULE. If the base contribution percentage is less
than three percent (3%), the excess contribution percentage shall not exceed the
base contribution percentage.

. THREE PERCENT RULE. If the base contribution percentage is three percent
(3%), the excess contribution percentage may be a percentage between three
percent (3%) and six percent (6%).

. TWO TIMES RULE. If the base contribution percentage is greater than three
percent (3%) but not greater than the integration rate (as determined in the
Adoption Agreement), the excess contribution percentage shall not exceed the
product of the base contribution percentage multiplied by two (2).

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<PAGE>

The Employer discretionary profit sharing contribution which is made with
respect to an eligible Participant shall be allocated to that Participant's
Employer Contributions Account for the Plan Year with respect to which it is
made and, for the purposes of Section 4, shall be credited as of the Valuation
Date coincident with or immediately following the date such contribution is
received by the Trustee or, if the Employer has selected daily Valuation Dates
for accounting purposes in the Adoption Agreement, as soon as practicable after
such contribution is received by the Trustee.

3.5. ELIGIBLE PARTICIPANTS. A Participant shall be considered eligible to share
in the allocation of Employer matching or discretionary contributions pursuant
to Section 3.3, Section 3.4.3 and Section 3.4.5, if any, and forfeited Suspense
Accounts to be reallocated with such contributions as of the Annual Valuation
Date in such Plan Year, if any, only if such Participant satisfies all of the
following requirements:

(a) PARTICIPANT. The Participant was a Participant at some time during
the Plan Year.

(b) COMPENSATION. The Participant has Recognized Compensation for such
Plan Year.

(c) LAST DAY RULE. If the Adoption Agreement so provides, the
Participant was an Employee on the last day of the Plan Year
(including, for this purpose, individuals temporarily absent due to
illness, vacation or layoff and individuals inducted into the Armed
Forces of the United States during such Plan Year) or the Participant
died, became Disabled or retired at or after his Normal Retirement
Age during such Plan Year.

(d) HOURS OF SERVICE RULE. If the Adoption Agreement so provides, the
Participant has that number of Hours of Service in the Plan Year
required by the Adoption Agreement, or the Participant died, became
Disabled or retired at or after his Normal Retirement Age during such
Plan Year.

No other Participant shall be considered an eligible Participant for such Plan
Year.

3.6. MAKE-UP CONTRIBUTIONS FOR OMITTED PARTICIPANTS. If, after the Employer's
annual contribution for a Plan Year has been made and allocated, it should
appear that, through oversight or a mistake of fact or law, a Participant (or an
Employee who should have been considered a Participant) who should have been
entitled to share in such contribution, received no allocation or received an
allocation which was less than he should have received, the Employer may, at its
election, and in lieu of reallocating such contribution, make a special make-up
contribution for the Account of such Participant in an amount adequate to
provide for him the same addition to his Account for such Plan Year as he should
have received.

3.7. ROLLOVER CONTRIBUTIONS.

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<PAGE>

3.7.1. ELIGIBLE CONTRIBUTIONS. Unless the Adoption Agreement precludes it,
Employees (whether or not they are Participants) in Recognized Employment may
contribute to this Plan, within such time and in such form and manner as may be
prescribed by the Administrator's Representative in accordance with those
provisions of federal law relating to rollover contributions, property
acceptable to the Trustee (or cash proceeds thereof) received by them in
eligible rollover distributions from certain types of qualified plan or trusts,
employee annuities and individual retirement accounts or annuities. The
provisions of this Section shall be subject to such conditions and limitations
as the Administrator's Representative may prescribe from time to time for
administrative convenience and to preserve the tax-qualified status of this
Plan. Also, the Administrator's Representative may establish rules and
conditions regarding the acceptance of direct rollovers under section 401(a)(31)
of the Internal Revenue Code from trustees or custodians of other qualified
pension, profit sharing or stock bonus plans.

3.7.2. SPECIFIC REVIEW. The Administrator's Representative shall have the
right to reject or return any such rollover contribution if, in its opinion, the
acceptance thereof might jeopardize the tax-qualified status of this Plan or
unduly complicate its administration, but the acceptance of any such rollover
contribution shall not be regarded as an opinion or guarantee on the part of the
Employer, the Trustee, the Administrator's Representative or the Plan as to the
tax consequences which may result to the contributing Participant thereby.

3.7.3. ALLOCATION. All rollover contributions made by an Employee to this
Plan shall be allocated to a Rollover Account established for such Employee
except that any portion thereof which represents deductible voluntary employee
contributions shall be allocated to a Deductible Voluntary Account for such
Employee. For the purposes of Section 4, rollover contributions shall be
credited to such Employee's Rollover Account or Deductible Voluntary Account as
of the Valuation Date coincident with or immediately following the date such
contribution is received by the Trustee or, if the Employer has selected daily
Valuation Dates for accounting purposes in the Adoption Agreement, as soon as
practicable after such contribution is received by the Trustee.

3.8. NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS.

3.8.1. METHOD OF CONTRIBUTION. If the Adoption Agreement so provides, each
Participant may make a nondeductible voluntary contribution to this Plan that is
included in the Participant's gross income. Such contribution shall be either a
direct contribution in cash or pursuant to a payroll withholding arrangement
agreed to by the Employer. The provisions of this section shall be subject to
the provisions of Section 3.10 and shall also be subject to such uniform and
nondiscriminatory conditions and limitations as the Administrator's
Representative may prescribe from time to time for administrative convenience
and to preserve the tax-qualified status of this Plan.

3.8.2. PAYMENT TO TRUSTEE. The nondeductible voluntary contributions of
Participants shall be collected by the Employer by such means as the
Administrator's Representative shall specify. Within the time required by
regulations of the United States

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<PAGE>

Department of Labor, the Employer shall remit all such nondeductible voluntary
contributions to the Trustee for deposit in the Fund.

3.8.3. ALLOCATION. A nondeductible voluntary contribution made by a
Participant to this Plan shall be allocated to that Participant's Nondeductible
Voluntary Account for the Plan Year with respect to which it is made and, for
the purposes of Section 4, shall be credited as of the Valuation Date coincident
with or immediately following the date such contribution is received by the
Trustee or, if the Employer has selected daily Valuation Dates for accounting
purposes in the Adoption Agreement, as soon as practicable after such
contribution is received by the Trustee.

3.9. DEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Prior to January 1, 1987, the Plan
accepted deductible voluntary contributions made in accordance with Section 3.6
of the Prior Plan Statement. All such contributions held in the Deductible
Voluntary Account shall continue to share in any trust earnings or losses, and
be distributed in accordance with the provisions of Section 7. Effective January
1, 1987, however, the Plan shall not accept deductible voluntary contributions
for a taxable year of the Participant beginning after December 31, 1986.

3.10. SECTION 401(M) COMPLIANCE./3/

3.10.1. SPECIAL DEFINITIONS. For purposes of this Section 3.10, the
following special definitions shall apply:

(a) "ELIGIBLE EMPLOYEE" means an individual who is eligible to make
nondeductible voluntary contributions to this Plan for any
portion of the Plan Year (whether or not he does so) or an
individual who is eligible to receive an Employer matching
contribution for any portion of the Plan Year (whether or not he
does so).

(b) "HIGHLY COMPENSATED ELIGIBLE EMPLOYEES" means those eligible
employees defined as highly compensated employees in Appendix D
to this Plan Statement.

(i) the total amount, for the Plan Year, of nondeductible
voluntary contributions credited to the eligible
employee's Nondeductible Voluntary Account and the total
amount, for the Plan Year, of Employer matching
contributions credited to the eligible employee's Employer
Matching Account (but if the Administrator's
Representative

______________________

/3/ Except as otherwise specifically provided in this Section, the provisions of
this Section apply for Plan Years beginning after December 31, 1986.

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<PAGE>

elects to include the Employer matching contributions in
the section 401(k) test in Section 2, the Administrator's
Representative may elect to not include the Employer
matching contributions in this section 401(m) test), and
if the Administrator's Representative elects all or a
portion of the amount, for the Plan Year, of Employer
contributions credited to the eligible employee's
Retirement Savings Account or Employer Profit Sharing
Account, or both, to

(ii) the eligible employee's compensation, as defined below,
for the portion of such Plan Year that the employee is an
eligible employee.

For this purpose, nondeductible voluntary contributions are
considered to have been made in the Plan Year in which
contributed to the Fund. Also, for this purpose, Employer
contributions will be considered made in the Plan Year if they
are allocated as of a date during such Plan Year and are
delivered to the Trustee within twelve (12) months after the end
of such Plan Year. Such "contribution percentage" shall not
include Employer matching contributions that are forfeited either
to correct excess aggregate contributions or because the
contributions to which they relate are excess deferrals, excess
contributions or excess aggregate contributions pursuant to
Section 7.12.

(d) "COMPENSATION" means compensation for services performed for the
Employer defined as "(S) 415 compensation" in Appendix A to this
Plan Statement. The Administrator's Representative may elect to
include as compensation any elective contributions made by the
Employer on behalf of the eligible employee that are not
includible in gross income under sections 125, 402(a)(8), 402(h),
403(b), 414(h)(2) and 457 of the Internal Revenue Code.
Notwithstanding the definition of "(S) 415 compensation" in
Appendix A to this Plan Statement compensation shall always be
determined on a cash (and not on an accrual) basis and
compensation shall be determined on a Plan Year basis (which is
not necessarily the same as the limitation year). An eligible
employee's compensation for a Plan Year shall not exceed the
annual compensation limit under section 401(a)(17) of the
Internal Revenue Code. For purposes of the foregoing, the annual
compensation limit under section 401(a)(17) of the Internal
Revenue Code shall be Two Hundred Thousand Dollars ($200,000) (as
adjusted under the Internal Revenue Code for cost of living
increases) for Plan Years beginning before January 1, 1994, and
shall be One Hundred and Fifty Thousand Dollars ($150,000) (as so
adjusted) for Plan Years beginning on or after January 1, 1994.

(e) "AVERAGE CONTRIBUTION PERCENTAGE" means, for a specified group of
eligible employees for the Plan Year, the average of the
contribution percentage for all eligible employees in such group.

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<PAGE>

3.10.2. SPECIAL RULES. For purposes of this Section 3.10, the following
special rules apply:

(a) ROUNDING. Effective for Plan Years beginning after December 31,
1988, the contribution percentages and average contribution
percentage for each group of eligible employees shall be
calculated to the nearest one-hundredth of one percent of the
eligible employee's compensation.

(b) FAMILY MEMBER. If a highly compensated eligible employee is
subject to the family aggregation rules of section 4.14(q)(6) of
the Internal Revenue Code because such employee is either a five
percent (5%) owner or one of the ten (10) most highly compensated
employees (as defined in Appendix D), the combined contribution
percentage for the family group (which is treated as one highly
compensated eligible employee) shall be determined by combining
the amounts described in Section 3.10.1(c)(i) and by combining
the compensation described in Section 3.10.1(d) of all family
members who are eligible employees. The family members who are
aggregated with respect to a highly compensated eligible employee
shall be disregarded as separate eligible employees in
determining the average contribution percentage of highly
compensated eligible employees and the average contribution
percentage of all other eligible employees. If an eligible
employee is required to be aggregated as a member of more than
one family group in the Plan, all eligible employees who are
members of those family groups that include that eligible
employee are aggregated as one family group. With respect to any
highly compensated eligible employee, "family" shall mean the
employee's spouse and lineal ascendants and descendants and the
spouses of such lineal ascendants and descendants. The limit on
annual compensation under section 401(a)(17) of the Internal
Revenue Code applies to the above contribution percentage
determination except that for purposes of that limit, the term
"family" shall include only the spouse of the eligible employee
and lineal descendants of the eligible employee who have not
attained age nineteen (19) years before the close of that Plan
Year. For purposes of the foregoing, the annual compensation
limit under section 401(a)(17) of the Internal Revenue Code shall
be Two Hundred Thousand Dollars ($200,000) (as adjusted under the
Internal Revenue Code for cost of living increases) for Plan
Years beginning before January 1, 1994, and shall be One Hundred
and Fifty Thousand Dollars ($150,000) (as so adjusted) for Plan
Years beginning on or after January 1, 1994.

(c) MULTIPLE USE. Effective for Plan Years beginning after December
31, 1988, if one or more highly compensated employees (as defined
in Appendix D) are subject to the 401(k) test described in
Section 2.7 and to the 401(m) test described in this Section 3.10
and the sum of the average deferral percentage and the average
contribution percentage of those highly compensated employees
subject to either or both tests exceeds the aggregate limit (as

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<PAGE>

defined in this Section 3.10), then the average contribution
percentage of those highly compensated eligible employees who are
also subject to the 401(k) test described in Section 2.7 will be
reduced (beginning with such highly compensated eligible employee
whose contribution percentage is the highest) so that the
aggregate limit is not exceeded. The amount by which each highly
compensated eligible employee's contribution percentage is
reduced shall be treated as an Excess Aggregate Contribution (as
defined in Section 7). The average deferral percentage and the
average contribution percentage of the highly compensated
eligible employees are determined after any corrections required
to meet the tests described in Section 2.7 and in Section 3.10.
Multiple use does not occur if both the average deferral
percentage and the average contribution percentage of the highly
compensated employees does not exceed one and twenty-five
hundredths (1.25) multiplied by the average deferral percentage
and average contribution percentage of the other eligible
employees. For purposes of this Section 3.10, the "aggregate
limit" shall mean the sum of (i) one hundred twenty-five percent
(125%) of the greater of (A) the average deferral percentage of
employees other than the highly compensated covered employees for
the Plan Year, or (B) the average contribution percentage of
employees other than the highly compensated eligible employees
subject to the 401(m) test in this Section 3.10 for the Plan Year
and (ii) the lesser of two hundred percent (200%) or two (2) plus
the lesser of such average deferral percentage or average
contribution percentage.

(d) MULTIPLE PLANS. For purposes of this Section 3.10, the
contribution percentage for any highly compensated eligible
employee who participates in two or more arrangements described
in section 401(k) of the Internal Revenue Code that are
maintained by the Employer, shall be determined as if the total
of the amounts described in Section 3.10.1(c)(i) above was made
under each such plan. If a highly compensated eligible employee
participates in two or more such arrangements that have different
plan years, all arrangements ending with or within the same
calendar year shall be treated as a single arrangement. In the
event that this Plan satisfies the requirements of section
401(m), 401(a)(4) or 410(b) of the Internal Revenue Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Internal
Revenue Code only if aggregated with this Plan, then this Section
3.10 shall be applied by determining the contribution percentage
of eligible employees as if all such plans were a single plan.
For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy section 401(m) of the Internal
Revenue Code only if they have the same Plan Year.

(e) RECORDS. The Employer shall maintain records sufficient to
demonstrate satisfaction of one of the tests described in Section
3.10.3 and the amount of matching contributions (as defined in
section 401(m)(4)(A) of the Internal

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<PAGE>

Revenue Code which meet the requirements of section 401(k)(2)(B)
and (C) of the Internal Revenue Code) or qualified nonelective
contributions (within the meaning of section 401(m)(4)(C) of the
Internal Revenue Code). The determination and treatment of the
contribution percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.

3.10.3. THE TESTS. Notwithstanding the provisions of Section 3.3 or
Section 3.4.4 and Section 3.8, the nondeductible voluntary contributions and
Employer matching contributions made for each Plan Year shall be limited and
modified under uniform and nondiscriminatory rules established by the
Administrator's Representative and by the rules hereinafter provided in order
that one of the following two (2) tests is satisfied for that Plan Year:

TEST 1: The average contribution percentage for the group of highly
compensated eligible employees is not more than the average
contribution percentage of all other eligible employees
multiplied by one and twenty-five hundredths (1.25).

TEST 2: The excess of the average contribution percentage for the group
of highly compensated eligible employees over that of all other
eligible employees is not more than two (2) percentage points,
and the average contribution percentage for the group of highly
compensated eligible employees is not more than the average
contribution percentage of all other eligible employees
multiplied by two (2).

The Administrator's Representative shall maintain records to demonstrate
compliance with one of the two (2) tests described above, including the extent
to which Employer contributions credited to Retirement Savings Accounts and
qualified nonelective contributions (as defined in Section 3.10.1(c)) are used
in determining the contribution percentage.

3.10.4. REMEDIAL ACTION. If the Administrator's Representative
determines that neither of the tests will be satisfied (or may not be satisfied)
for a Plan Year, then during such Plan Year, the following actions may be taken
so that one of the tests will be satisfied for such Plan Year:

(a) The nondeductible voluntary contributions of the highly
compensated eligible employees who have the highest contribution
percentage shall be reduced to the extent necessary to reduce
their contribution percentage to the next lower percentage.

(b) If neither of the tests is satisfied after such adjustment, the
nondeductible voluntary contributions of the highly compensated
eligible employees who then have the highest contribution
percentage (including those reduced under

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<PAGE>

(a) above) shall be reduced to the extent necessary to reduce
their contribution percentage to the next lower percentage.

(c) If neither of the tests is satisfied after such adjustment, this
method of adjustment shall be repeated one or more additional
times until one of the tests is satisfied or until no further
adjustments can be made in the nondeductible voluntary
contributions of the highly compensated eligible employees.

(d) If neither of the tests is satisfied after adjusting the
nondeductible voluntary contributions of the highly compensated
eligible employees, then the Employer matching contributions for
the highly compensated eligible employees who have the highest
contribution percentage (including those reduced under (a)
through (c) above) shall be reduced to the extent necessary to
reduce their contribution percentage to the next lower
percentage.

(e) If neither of the tests is satisfied after such adjustment, the
Employer matching contributions for the highly compensated
eligible employees who then have the highest contribution
percentage (including those reduced under (d) above) shall be
reduced to the extent necessary to reduce their contribution
percentage to the next lower percentage.

(f) If neither of the tests is satisfied after such adjustment, this
method of adjustment shall be repeated one or more additional
times until one of the tests is satisfied.

The Administrator's Representative shall prescribe rules concerning such
adjustments, including the frequency of applying the tests and the commencement
and termination dates for any adjustments. Any amounts required to be
distributed as provided above which are distributed more than 2-1/2 months after
the close of the Plan Year being tested, will result in a ten percent (10%)
penalty tax on the Employer as provided in section 4979 of the Internal Revenue
Code.

3.11. LIMITATION ON ALLOCATIONS. In no event shall any amount be allocated to
the Account of any Participant if, or to the extent, such amounts would exceed
the limitations set forth in the Appendix A to this Plan Statement./4/

3.12. EFFECT OF DISALLOWANCE OF DEDUCTION OR MISTAKE OF FACT. All Employer
contributions to the Plan are conditioned on their qualification for deduction
for federal income tax purposes under section 404 of the Internal Revenue Code.
If the deduction for federal income tax purposes under section 404 of the
Internal Revenue Code should be disallowed, in whole or in part, for any
Employer contribution to this Plan for any year, or if

______________________

/4/ The provisions of Appendix A apply to Plan Years beginning after December
31, 1986.

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<PAGE>

any Employer contribution to this Plan is made by reason of a mistake of fact,
then there shall be calculated the excess of the amount contributed over the
amount that would have been contributed had there not occurred a mistake in
determining the deduction or a mistake of fact. The Employer, at its election,
may direct the Trustee to return such excess, adjusted for its pro rata share of
any net loss (but not any net gain) in the value of the Fund which accrued while
such excess was held therein, to the Employer within one (1) year of the
disallowance of the deduction or the mistaken payment of the contribution, as
the case may be. If the return of such amount would cause the balance of any
Account of any Participant to be reduced to less than the balance which would
have been in such Account had the mistaken amount not been contributed, however,
the amount to be returned to the Employer shall be limited so as to avoid such
reduction.

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<PAGE>

SECTION 4

INVESTMENT AND ADJUSTMENT OF ACCOUNTS

4.1. ESTABLISHMENT OF SUBFUNDS.

4.1.1. ESTABLISHING COMMINGLED SUBFUNDS. The Administrator's
Representative may (but is not required to) direct the Trustee in writing to
divide the Fund into two (2) or more investment Subfunds, which shall serve as
vehicles for the Investment of Participants' Accounts and which shall be managed
either by the Trustee or by one or more Investment Managers, as the
Administrator's Representative shall determine. The Administrator's
Representative shall determine the general investment characteristics and
objectives of each investment Subfund. The Trustee or Investment Manager, as
the case may be, shall have complete investment discretion over each investment
Subfund assigned to it, subject only to the general investment characteristics
and objectives established for the particular investment Subfund. The Account
of each investing Participant shall have a ratable interest in the Subfund.

4.1.2. INDIVIDUAL SUBFUNDS. The Administrator's Representative may
(but is not required to) direct the Trustee in writing to establish investment
Subfunds that consist solely of all or a part of the assets of a single
Participant's Total Account, whose assets the Participant controls by investment
directives to the Trustee and which may not be commingled with the assets of any
other Participant's Accounts. If any Participant is permitted to direct the
Trustee with regard to the investment of his individual investment Subfund, then
all Participants shall be permitted to direct the Trustee with respect to their
individual investment Subfunds. In no event, however, shall the Participant be
allowed to direct the investment of assets in such individual investment Subfund
in any work of art, rug or antique, metal or gem, stamp or coin, alcoholic
beverage or other similar tangible personal property if the investment in such
property shall have been prohibited by the Secretary of the Treasury.
Notwithstanding anything apparently to the contrary in Section 10.6, all voting
or similar rights exercisable with respect to assets held in an individually
directed subfund shall be exercisable solely by the Participant or Beneficiary
whose Account is invested in such individually directed subfund.

4.1.3. OPERATIONAL RULES. In accordance with uniform rules, the
Administrator's Representative shall determine the circumstances under which a
particular investment Subfund may be elected, or shall be automatically
utilized, the minimum or maximum amount or percentage of an Account which may be
invested in a particular investment Subfund, the procedures for making or
changing investment elections and the effect of a Participant's or Beneficiary's
failure to make an effective election with respect to all or any portion of an
Account.

4.1.4. REVISING SUBFUNDS. The Administrator's Representative shall
have the power, from time to time, to dissolve investment Subfunds, to direct
that additional investment Subfunds be established, to change Investment
Managers for any one or more of

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<PAGE>

the investment Subfunds, and, under uniform rules, to withdraw or limit
participation in a particular investment Subfund. In connection with the power
to commingle reserved to the Trustee under Section 10.6, the Administrator's
Representative shall also have the power to direct the Trustee to consolidate
any separate investment Subfunds hereunder with any other separate investment
Subfunds having the same investment objectives which are established under any
other retirement plan trust fund of the Employer or any corporation affiliated
in ownership or management with the Employer of which the Trustee is trustee and
which are managed by the Trustee or the same Investment Manager.

4.1.5. ERISA SECTION 404(C) COMPLIANCE. If the Administrator's
Representative and the Trustee agree, the Administrator's Representative may
establish investment subfunds and operational rules which are intended to
satisfy section 404(c) of the Employee Retirement Income Security Act of 1974
and the regulations thereunder. Such investment subfunds shall permit
Participants and Beneficiaries the opportunity to choose from at least three
investment alternatives, each of which is diversified, each of which present
materially different risk and return characteristics, and which, in the
aggregate, enable Participants and Beneficiaries to achieve a portfolio with
appropriate risk and return characteristics consistent with minimizing risk
through diversification. Such operational rules shall provide the following,
and shall otherwise comply with section 404(c) of the Employee Retirement Income
Security Act of 1974 and the regulations and rules promulgated thereunder from
time to time:

(a) Participants and Beneficiaries may give investment instructions to the
Trustee at least once every three months;

(b) the Trustee must follow the investment instructions of Participants
and Beneficiaries that comply with the Plan's operational rules,
provided that the Trustee may in any event decline to follow any
investment instructions that;

(i) would result in a prohibited transaction described in section
406 of the Employee Retirement Income Security Act of 1974 or
section 4975 of the Internal Revenue Code;

(ii) would result in the acquisition of an asset that might generate
income which is taxable to the Plan;

(iii) would not be in accordance with the documents and instruments
governing the Plan insofar as they are consistent with Title I
of the Employee Retirement Income Security Act of 1974;

(iv) would cause a fiduciary to maintain indicia of ownership of any
assets of the Plan outside of the jurisdiction of the district
courts of the United States other than as permitted by section
404(b) of the Employee Retirement Income Security Act of 1974
and Department of Labor regulation section 2050.404b-1;

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(v) would jeopardize the Plan's tax status under the Internal
Revenue Code;

(vi) could result in a loss in excess of a Participant's or
Beneficiary's Account balance;

(vii) would result in the acquisition or sale of any employer real
property or any employer security unless such employer security
acquisition satisfies the conditions of section 408(e) of the
Employee Retirement Income Security Act of 1974 and Department
of Labor regulation section 2550.404c-1.

(c) Participants and Beneficiaries shall be periodically informed of
transactional fees and expenses (e.g., commissions, sales loads,
deferred sales charges, redemption or exchange fees) that affect their
Accounts and are related to their Plan investment decisions;

(d) with respect to any subfund consisting of Employer securities and
intended to satisfy the requirements of section 404(c) of the Employee
Retirement Income Security Act of 1974, (i) Participants and
Beneficiaries shall be entitled to all voting, tender and other rights
appurtenant to the ownership of such securities, (ii) procedures shall
be established to ensure the confidential exercise of such rights,
except to the extent necessary to comply with federal and state laws
not preempted by the Employee Retirement Income Security Act of 1974,
and (iii) the Trustee shall ensure the sufficiency of and compliance
with such confidentiality procedures.

4.2. VALUATION AND ADJUSTMENT OF ACCOUNTS. The Trustee shall value each
investment Subfund as of each Valuation Date (which for purposes of this Section
4.2 shall include any Valuation Date which a distribution is to be made pursuant
to Section 7), which valuation shall reflect, as nearly as possible, the then
fair market value of the assets comprising such Subfund (including income
accumulations therein). In making such valuations, the Trustee may rely upon
information supplied by an Investment Manager having investment responsibility
over the particular Subfund.

As of each Valuation Date (the "current Valuation Date"), the value of each
Account or portion of an Account invested in a particular investment Subfund,
including Suspense Accounts, determined as of the last preceding Valuation Date
(the "initial Account value") shall be increased (or decreased) by the following
adjustments made in the following sequence:

(a) INTERMEDIATE DISTRIBUTIONS ADJUSTMENT. The initial Account value shall
be adjusted by the total amount:

(i) distributed in fact to (or with respect to) the Participant
from such Account, and

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(ii) loaned to the Participant, whether the loan was made before or
after the date on which the initial Account value is
determined, if the Adoption Agreement provides that loans shall
be made from the individual Account of the Participant who
received the loan, and

(iii) transferred from such Account to another Account of that
Participant (or any other Participant) within this Plan
(including amounts transferred to other investment Subfunds) or
to the trustee of another plan pursuant to an arrangement
contemplated under Section 9.3, and

(iv) transferred into such Account from another Account of that
Participant (or any other Participant) within this Plan
(including amounts transferred from other investment Subfunds),
or from the trustee of another plan pursuant to an arrangement
contemplated under Section 9.3, and

(v) paid as expenses incurred by the Plan which were charged
specifically against that Account (as distinguished from being
a general charge against the assets of the Fund),

as of a date subsequent to the last preceding Valuation Date but prior
to the current Valuation Date.

(b) INVESTMENT ADJUSTMENT. The initial Account value (as adjusted above)
shall be increased (or decreased), in the ratio that such Account
value bears to all Account Values, for the:

(i) realized and unrealized gains and losses on the assets of the
Fund, and

(ii) income earned by the Fund (excluding income, if any, allocated
as provided in item (iii) and the last sentence of this Section
4.2(b)), and

(iii) if the Adoption Agreement so provides, income earned on
contributions made to the Account in advance of the Valuation
Date as of which such contributions are allocated to the
Account, and

(iv) expenses incurred by the Plan and paid generally from the Fund
(rather than charged specifically against a particular
Account),

as of a date subsequent to the last preceding Valuation Date but not
later than the current Valuation Date. In addition, the initial value
of each Retirement Savings Account shall also be increased (or
decreased) for its proportionate share of income earned on retirement
savings contributions, as described in Section 3.2, deposited to the
Account as of any date subsequent to the last preceding Valuation Date
but before the current Valuation Date.

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(c) CONTRIBUTION ADJUSTMENT. The initial Account value (as adjusted above)
shall be increased by the total amount credited to such Account under
Section 3 as of a date subsequent to the last preceding Valuation Date
but not later than the current Valuation Date.

(d) FINAL DISTRIBUTIONS ADJUSTMENT. The initial Account value (as adjusted
above) shall be adjusted by the total amount:

(i) distributed in fact to (or with respect to) the Participant
from such Account, and

(ii) transferred from such Account to another Account of that
Participant (or any other Participant) within this Plan
(including amounts transferred to other investment Subfunds),
or to the trustee of another plan pursuant to an arrangement
contemplated under Section 9.3, and

(iii) paid as expenses incurred by the Plan which were charged
specifically against that Account (as distinguished from being
a general charge against the assets of the Fund),

as of the current Valuation Date.

(e) OTHER RULES. Notwithstanding the foregoing, the Administrator's
Representative and the Trustee may agree in writing to revised rules
or additional rules for the adjustment of Accounts including, without
limiting the generality of the foregoing, the times when contributions
shall be credited under Section 3 for the purposes of allocating gains
or losses under this Section 4.

(f) DAILY VALUATION RULES. Notwithstanding the foregoing, if the Employer
has selected daily Valuation Dates in the Adoption Agreement, the
following accounting rules will apply:

(i) VALUATION OF THE FUND. The Trustee shall value each Subfund
from time to time (but not less frequently than each Annual
Valuation Date), which valuation shall reflect, as nearly as
possible, the then fair market value of the assets comprising
such Subfund (including income accumulations therein). In
making such valuations, the Trustee may rely upon information
supplied by any Investment Manager having investment
responsibility over the particular Subfund.

(ii) ADJUSTMENT OF ACCOUNTS. The Employer shall cause the value of
each Account or portion of an Account invested in a particular
Subfund (including undistributed Total Accounts) to be
increased (or decreased) from time to time for distributions,
contributions, investment gains (or losses) and expenses
charged to the Account.

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4.3. MANAGEMENT AND INVESTMENT OF FUND. The Fund in the hands of the Trustee,
together with all additional contributions made thereto and together with all
net income thereof, shall be controlled, managed, invested, reinvested and
ultimately paid and distributed to Participants and Beneficiaries by the Trustee
with all the powers, rights and discretions generally possessed by trustees, and
with all the additional powers, rights and discretions conferred upon the
Trustee under the Plan Statement, except to the extent that the Trustee is
subject to the authorized and properly given investment directions of the
Employer, Participants, Beneficiaries or Investment Manager. Except to the
extent that the Trustee is subject to the authorized and properly given
investment directions of the Employer, Participants, Beneficiaries or Investment
Manager, and subject to the directions of the Administrator's Representative
with respect to the payment of benefits hereunder, the Trustee shall have the
exclusive authority to manage and control the assets of the Fund in its custody
and shall not be subject to the direction of any person in the discharge of its
duties, nor shall its authority be subject to delegation or modification except
by formal amendment of the Plan Statement.

If the Trustee is subject to the investment directions of the Employer,
Participants, Beneficiaries or Investment Manager, the Trustee shall not make
any investment or dispose of any investment in the Fund except upon the express
verbal or written direction of the Employer, Participants, Beneficiaries or
Investment Manager. Also, the Trustee shall be under no duty to question any
investment directions of the Employer, Participants, Beneficiaries or Investment
Manager, to review or monitor any securities or property held in the Fund or the
Participant's Accounts, or to give any advice to the Employer, Participants,
Beneficiaries or Investment Manager with respect to the investment, retention or
disposition of any assets held in the Fund or the Participants' Accounts.

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SECTION 5

VESTING

5.1. EMPLOYER MATCHING ACCOUNT AND EMPLOYER CONTRIBUTIONS ACCOUNT.

5.1.1. PROGRESSIVE VESTING./5/ The Employer Matching Account and Employer
Contributions Account of each Participant shall become Vested in him in
accordance with the schedule set forth in the Adoption Agreement; provided,
however, that the Vested percentage of a Participant's Employer Matching Account
and Employer Contributions Account determined as of the Effective Date (or the
date of the execution of the Adoption Agreement by the Employer, if later) shall
be not less than such Vested percentage computed under the Prior Plan Statement,
if any, as of that date.

5.1.2. FULL VESTING. Notwithstanding the foregoing, the entire Employer
Matching Account and Employer Contributions Account of each Participant shall be
fully Vested in him upon the earliest occurrence of any of the following events
while in the employment of the Employer or an Affiliate:

(a) his death,

(b) his attainment of age sixty-five (65) years or, if earlier, his
attainment of his Normal Retirement Age or his attainment of any
earlier age specified in the Adoption Agreement,

(d) a partial termination of the Plan which is effective as to him, or

(e) a complete termination of the Plan or a complete discontinuance of
Employer contributions hereto.

In addition, a Participant who is not in the employment of the Employer or an
Affiliate upon a complete termination of the Plan or a complete discontinuance
of Employer contributions hereto, shall be so fully Vested if, on the date of
such termination or discontinuance, such Participant has not had a "forfeiture
date" as described in Section 6.2.3.

5.1.3. SPECIAL RULE FOR PARTIAL DISTRIBUTIONS. If a distribution is made
of less than the entire Employer Contributions Account of a Participant who is
not then fully (100%) Vested, then until the Participant becomes fully Vested in
his Employer Contributions Account or until he incurs five (5) or more
consecutive One-Year Breaks in Service,

_________________

/5/ The vesting schedule in the Adoption Agreement may be superseded for a Plan
Year if the Plan becomes top heavy for that Plan Year. (See Appendix B,
(S)3.2.1.) The effect of this may continue for several years after the Plan
ceases to be top heavy. (See Appendix B, (S)3.2.2.)

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whichever first occurs, his Vested interest in such account at any relevant time
shall not be less than an amount ("X") determined by the formula: X=P(B+D)-D.
For the purpose of applying the formula, "P" is the Vested percentage at the
relevant time (determined pursuant to Section 5); "B" is the account balance at
the relevant time; and "D" is the amount of the distribution.

5.1.4. EFFECT OF BREAK ON VESTING. If a Participant who is not fully
(100%) Vested incurs five (5) or more consecutive One-Year Breaks in Service,
returns to Recognized Employment and is thereafter eligible for any additional
allocation of Employer contributions, his undistributed Employer Matching
Account or Employer Contributions Account, if any, attributable to Employer
contributions allocated as of a date before such five (5) consecutive One-Year
Breaks in Service. and in which he has a Vested interest by reason of such prior
service, and his new Employer Matching Account or Employer Contributions
Account, in which he may become Vested by reason of future service, shall be
separately maintained for vesting purposes until he is fully (100%) Vested in
each such Account under the rules of Section 1.1.32 and this Section 5.

5.2. OPTIONAL VESTING SCHEDULE.

5.2.1. ELECTION. If an amendment of this Plan's vesting schedule should be
adopted or the Plan is amended in any way that directly or indirectly affects
the computation of the Participant's Vested percentage, a qualifying Participant
may elect to have the Vested portion of his Employer Matching Account or
Employer Contributions Account determined under the vesting schedule as it
existed immediately before the adoption of such amendment. (In no event shall an
amendment of this Plan's vesting schedule reduce a Participant's Vested
percentage as of the date such amendment is adopted or, if later, the date such
amendment is effective.)

5.2.2. QUALIFYING PARTICIPANT. A Participant in this Plan qualifies
for the election described in this Section 5.2 only if, as of the expiration of
the period described in Section 5.2.3, he has five (5) or more years of Vesting
Service; provided, however, effective for Plan Years beginning after December
31, 1988, a Participant who has one (1) or more Hours of Service in any Plan
Year beginning after December 31, 1988, qualifies for the election described in
this Section 5.2, only if, as of the expiration of the period described in
Section 5.2.3, he has three (3) or more years of Vesting Service.

5.2.3. PROCEDURE FOR ELECTION. The election described in Section 5.2.1
shall be effective only if it is executed in writing upon forms to be prepared
by the Administrator's Representative and delivered to the Administrator's
Representative after the date upon which the amendment is formally adopted and
before the latest of:

(a) the date sixty (60) days after such formal adoption,

(b) the date sixty (60) days after the date such amendment becomes
effective, or

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5.2.4. CONCLUSIVE ELECTION. Failure to file an election will be deemed an
irrevocable waiver of the election. An election filed in accordance with this
provision will be irrevocable from the date it is filed.

5.3. OTHER ACCOUNTS. The Retirement Savings Account, Rollover Account,
Nondeductible Voluntary Account, Deductible Voluntary Account, and Transfer
Account of each Participant shall be fully (100%) Vested in him at all times.
Each Account will be credited with applicable contributions, forfeitures,
earnings and losses as provided in Section 4.

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SECTION 6

MATURITY

6.1. EVENTS OF MATURITY. A Participant's Total Account shall mature and the
Vested portion shall become distributable in accordance with Section 7 upon the
earliest occurrence of any of the following events while in the employment of
the Employer or an Affiliate:

(a) his death,

(b) his separation from service, whether voluntary or involuntary,

(d) crediting of any amount to his Account after his attainment of
age seventy and one-half (70-1/2) years,

(e) his Disability,

(f) termination of the Plan without the establishment or maintenance of
another defined contribution plan (other than an employee stock
ownership plan as defined in section 4975(e)(7) of the Internal
Revenue Code),

(g) the disposition by the Employer to an unrelated organization of
substantially all the assets (within the meaning of section
409(d)(2) of the Internal Revenue Code) used by the Employer in a
trade or business of the Employer, but only with respect to
employees who continue employment with the organization acquiring
such assets and only if the purchase and sale agreement
specifically authorizes distribution of this Plan's assets in
connection with such disposition and the Employer continues to
maintain the Plan after the disposition,

(h) the disposition by the Employer to an unrelated organization of the
Employer's interest in a subsidiary (within the meaning of section
409(d)(3) of the Internal Revenue Code), but only with respect to
employees who continue employment with such subsidiary and only if
the purchase and sale agreement specifically authorizes
distribution of this Plan's assets in connection with such
disposition and the Employer continues to maintain the Plan after
the disposition, or

(i) if the Adoption Agreement so provides, his attainment of age fifty-
nine and one-half (59-1/2) years.

provided, however, that a transfer from Recognized Employment to employment with
the Employer that is other than Recognized Employment or a transfer from the
employment of one Employer participating in this Plan to another such Employer
or to any Affiliate shall not

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constitute an Event of Maturity.

6.2. DISPOSITION OF NON-VESTED PORTION OF ACCOUNT. Upon the occurrence of a
Participant's Event of Maturity, if any portion of his Employer Matching Account
or his Employer Contributions Account is not Vested in him, such portion shall
be transferred to his Suspense Account as of the Valuation Date coincident with
or next following such Event of Maturity.

6.2.1. NO BREAK. If such former Participant is reemployed by the Employer
or an Affiliate on or before the Annual Valuation Date coincident with or
immediately following his "forfeiture date" (as defined in Section 6.2.3), the
portion of his Employer Matching Account or his Employer Contributions Account
which was not Vested in him upon his Event of Maturity (and therefore became his
Suspense Account) shall be transferred back to and held in his Employer Matching
Account or his Employer Contributions Account under the Plan as of the Valuation
Date coincident with or next following the reemployment date and it shall be
held there pending the occurrence of another Event of Maturity effective as to
him, during which period of subsequent employment he may earn a Vested interest
in some or all of such portion in accordance with the provisions of Section 5.

6.2.2. A BREAK. If, however, such former Participant is not reemployed by
the Employer or an Affiliate on or before the Annual Valuation Date coincident
with or immediately following his forfeiture date, the entire portion of his
Employer Matching Account or his Employer Contributions Account which was not
Vested in him upon his Event of Maturity (and therefore became his Suspense
Account) shall be forfeited as of such Annual Valuation Date and shall be used
to restore any forfeited Suspense Accounts as required in Section 6.3, to reduce
administrative expenses due on that Annual Valuation Date and not paid by the
Employer and to reduce any Employer contribution to be made as of that Annual
Valuation Date. Any remaining portion of the forfeiture shall be used to reduce
administrative expenses or any Employer contribution to be made as of any
Valuation Date in the succeeding Plan Year until disposed of. In all events, any
forfeitures otherwise not disposed of in the preceding sentences, shall be
allocated as of the Annual Valuation Date of the succeeding Plan Year as
provided in Section 3.4.

6.2.3. FORFEITURE DATE. For the purpose of the foregoing, a Participant's
forfeiture date shall be the date (following his Event of Maturity) as of which
occurred the earliest of:

(i) his fifth (5th) consecutive One-Year Break in Service
following his Event of Maturity,

(ii) the distribution of his entire Vested Total Account, or

(iii) his Event of Maturity if he has no Vested interest in his
Total Account (that is, his Vested interest. consisting of
zero, will be deemed to be distributed).

6.3. RESTORATION OF FORFEITED ACCOUNTS. If a Participant:

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(a) incurs an Event of Maturity at a time when he was not fully (100%)
Vested in his Employer Matching Account or Employer Contributions
Account, and

(b) has had his Suspense Account (which was established on account of
that Event of Maturity) forfeited and disposed of as provided in
Section 6.2, and

(c) becomes an employee of the Employer or an Affiliate before he has
five (5) consecutive One-Year Breaks in Service following the Event
of Maturity,

then there shall be restored to his Employer Matching Account or his Employer
Contributions Account an amount equal to the amount which was forfeited from his
Suspense Account (without any adjustment for income, gains or losses). This
restoration shall occur as of the Annual Valuation Date next following his
return to participation in the Plan and shall be conditioned upon his remaining
in employment with the Employer or Affiliate until that Annual Valuation Date.
The amount so restored shall be held in a separate account and shall become
Vested in accordance with the rules of Section 5.1.3. The amount necessary to
make the restoration shall come first from Suspense Accounts to be forfeited on
the Annual Valuation Date on which the restoration is to occur. If Suspense
Accounts to be forfeited as of that Annual Valuation Date are not adequate for
this purpose, the Employer shall make a contribution adequate to make the
restoration as of that Annual Valuation Date (in addition to any contributions
required to be made under Section 3).

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SECTION 7

DISTRIBUTION

7.1. APPLICATION FOR DISTRIBUTION.

7.1.1. APPLICATION REQUIRED. No distribution shall be made from the Plan
until the Administrator's Representative has received a written application for
distribution from the Participant or the Beneficiary entitled to receive
distribution (the "Distributee"). The Administrator's Representative may
prescribe rules regarding the form of such application, the manner of filing
such application and the information required to be furnished in connection with
such application.

Unless the Participant elects otherwise, distribution of the Participant's
Vested Total Account will begin no later than the 60th day after the latest of
the close of the Plan Year in which:

(a) The Participant attains age 65 (or Normal Retirement Age, if
earlier);

(b) occurs the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or

Notwithstanding the foregoing, the failure of the Participant (and, if
necessary, the Participant's spouse) to apply for a distribution after the
Participant has had an Event of Maturity shall be an election to defer payment
In satisfaction of the previous sentence.

Subject to Section 7.3.4, the requirements of Section 7.1 and 7.2 shall apply to
any distribution of a Participant's interest and will take precedence over any
inconsistent provisions of the Plan Statement. Unless otherwise specified,
these provisions apply to calendar years beginning after December 31, 1984. All
distributions required under the plan shall be made in accordance with the
provisions of this Section 7 and the regulations under section 401(a)(9) of the
Internal Revenue Code, including the minimum distribution incidental benefit
requirement of Treas. Reg. 1.401(a)(9)-2 (proposed).

7.1.2. EXCEPTION FOR SMALL AMOUNTS. A Vested Total Account which does
not exceed (and has never exceeded) Three Thousand Five Hundred Dollars ($3,500)
as of the Valuation Date permitted in Article X of the Adoption Agreement that
is coincident with or next following the occurrence of an Event of Maturity
effective as to a Participant, shall be distributed automatically in a single
lump sum as soon as administratively practicable after that Valuation Date
without a written application for distribution. A Participant who has no Vested
interest in the Participant's Total Account as of the Participant's Event of
Maturity shall be deemed to have received an immediate distribution of the
Participant's entire interest in the Plan as of such Event of Maturity.

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7.1.3. EXCEPTION FOR REQUIRED DISTRIBUTIONS. Any Vested Total Account for
which no application for distribution has been received prior to the required
beginning date effective as to the Distributee under Section 7.2.2, or, subject
to Section 9.2, following termination of the Plan, shall be distributed
automatically in a lump sum (if the Plan is not an exempt profit sharing plan,
however, the Vested Total Account shall be distributed in a form provided under
Section 7.3.4) on the required beginning date without a written application for
distribution.

7.1.4. DIRECT ROLLOVER. Effective for distributions made on or after
January 1, 1993, a Distributee who is eligible to elect a direct rollover may
elect, at the time and in the manner prescribed by the Administrator's
Representative, to have all or any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the Distributee in a
direct rollover. A Distributee who is eligible to elect a direct rollover
includes only a Participant, a Beneficiary who is the surviving spouse of a
Participant and a Participant's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Appendix C.

(a) ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any
portion of a Total Account to a Distributee who is eligible to
elect a direct rollover except (i) any distribution that is one of
a series of substantially equal installments payable not less
frequently than annually over the life expectancy of such
Distributee or the joint and last survivor life expectancy of such
Distributee and such Distributee's designated Beneficiary, and (ii)
any distribution that is one of a series of substantially equal
installments payable not less frequently than annually over a
specified period of ten (10) years or more, and (iii) any
distribution to the extent such distribution is required under
section 401(a)(9) of the Code, and (iv) the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities).

(b) ELIGIBLE RETIREMENT PLAN means (i) an individual retirement account
described in section 408(a) of the Code, or (ii) an individual
retirement annuity described in section 408(b) of the Code, or
(iii) an annuity plan described in section 403(a) of the Code, or
(iv) a qualified trust described in section 401(a) of the Code that
accepts the eligible rollover distribution. However, in the case of
an eligible rollover distribution to a Beneficiary who is the
surviving spouse of a Participant, an eligible retirement plan is
only an individual retirement account or individual retirement
annuity as described in section 408 of the Code.

(c) DIRECT ROLLOVER means the payment of an eligible rollover
distribution by the Plan to the eligible retirement plan specified
by the Distributee who is eligible to elect a direct rollover.

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7.1.5. NOTICES. The Administrator's Representative will issue such notices
as may be required under sections 402(f), 411(a)(11), 417(a)(3) and other
sections of the Internal Revenue Code in connection with distributions from the
Plan. No distribution will be made unless it is consistent with such notice
requirements. If the Plan is an exempt profit sharing plan as defined in Section
7.3.4 (d), distribution may commence less than thirty (30) days after the notice
required under section 1.411(a)-11(c) of the Income Tax Regulations or the
notice required under section 1.402(f)-2T of the Income Tax Regulations is
given, provided that:

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

(b) The Distributee, after receiving the notice, affirmatively elects
in the manner prescribed by the Administrator's Representative a
distribution.

7.1.6. LOST DISTRIBUTEES. In the event of Plan termination or a
distribution permitted under Section 7.1.2, if a Distributee cannot be found
after two (2) first class return receipt mailings to the Distributee's last
known address, then such Distributee's Vested Total Account shall be either
deposited into an interest-bearing savings account in the name of the
Distributee with a bank or similar financial institution, including the Trustee
or an affiliate of the Trustee or shall be treated as unclaimed property
pursuant to the laws of the State in which the Trustee is domiciled and shall be
turned over to such State in accordance with that State's unclaimed property
laws. After a lost Distributee's Vested Total Account has been deposited into
either a savings account or turned over to the State, the Distributee is no
longer a Participant in the Plan and has no right to a claim of benefits against
the Plan and has no claim whatsoever against the Trustee with respect to the
Plan. A Distributee whose Vested Total Account has been turned over to a State
because the Distributee could not be found may request distribution from the
State in accordance with the State's unclaimed property laws. A Distributee
whose Vested Total Account has been deposited with a bank or financial
institution because the Distributee could not be found may request distribution
from such bank or financial institution.

7.2. TIME OF DISTRIBUTION. Upon the receipt of a proper application
for distribution from the Distributee, and after the occurrence of an Event of
Maturity effective as to a Participant, and after the Participant's Vested Total
Account has been determined and the right of the Distributee to receive a
distribution has been established, the Administrator's Representative shall
cause the Trustee to make or commence distribution of such Vested Total Account
as soon as administratively feasible after the Valuation Date specified by the
Distributee which is permitted in Article X of the Adoption Agreement and which
is not earlier than nor later than the dates specified below.

7.2.1. EARLIEST BEGINNING DATE. Distribution to a Distributee shall not be
made or commenced earlier than the earliest beginning date.

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(a) PARTICIPANT. If the Distributee is a Participant, the earliest
beginning date is the Valuation Date permitted in Article X of the
Adoption Agreement that is coincident with or next following the
date of the Participant's Event of Maturity; provided, however,
that if daily Valuation Dates have been selected in Article X of
the Adoption Agreement, the earliest beginning date is the
Participant's Event of Maturity.

(b) BENEFICIARY. If the Distributee is a Beneficiary of a Participant,
the earliest beginning date is the Valuation Date permitted in
Article X of the Adoption Agreement that is coincident with or next
following the date of such Participant's death; provided, however,
that if daily Valuation Dates have been selected in Article X of
the Adoption Agreement, the earliest beginning date is the date of
such Participant's death.

In no event, however, shall distribution be made or commenced to a Distributee
earlier than the date the Administrator's Representative receives any required
application for distribution and the notice requirements identified in Section
7.1.5 have been satisfied.

7.2.2. REQUIRED BEGINNING DATE. Distribution shall be made or commenced as
soon as administratively feasible after the last Valuation Date permitted in
Article X of the Adoption Agreement occurring in the calendar year immediately
preceding the required beginning date effective as to the Distributee. In all
events, however, distribution shall be made or commenced not later than the
required beginning date.

(a) PARTICIPANT. If the Distributee is a Participant, the required
beginning date is the April 1 following the calendar year in which
the Participant attains age seventy and one-half (70-1/2) years.

(b) BENEFICIARY. If the Distributee is the Beneficiary of a Participant
who died on or after the April 1 following the calendar year in
which the Participant attained age seventy and one-half (70-1/2)
years, the required beginning date is the date or dates which
provide for distribution to such Beneficiary at a rate (considering
both time and amount) that is cumulatively at least as rapid as the
rate of distribution scheduled and commenced prior to the death of
the Participant.

(c) BENEFICIARY. If the Distributee is a Beneficiary of a Participant
who died before the April 1 following the calendar year in which
the Participant attained age seventy and one-half (70-1/2) years,
the required beginning date is the date or dates that allow
distribution of the entire amount to be completed not later than
December 31 of the calendar year in which occurs the fifth (5th)
anniversary of the Participant's death; provided, however, that:

(i) if the Beneficiary is an individual who is not the surviving
spouse of the Participant (or a trust for such individual's
benefit which satisfies the requirements of Treas. Reg.
1.401(a)(9)-1(b), Q & A D-5) and if

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distributions will be made to such individual Beneficiary
(or such trust) in substantially equal annual amounts over a
period of time not extending beyond the life expectancy of
such Beneficiary, distributions must commence not later than
December 31 of the year following the year of the
Participant's death, or

(ii) if the Beneficiary is the surviving spouse of the
Participant (or a trust for such spouse's benefit which
satisfies the requirements of Treas. Reg. 1.401(a)(9)-1(b),
Q & A D-5) and if distributions will be made to such
surviving spouse in substantially equal annual amounts over
a period of time not extending beyond the life expectancy of
the surviving spouse (or such trust), distributions must
commence not later than the date specified in paragraph (i)
above or, if later, the December 31 of the calendar year in
which the Participant would have attained age seventy and
one-half (70-1/2) years.

If distributions are made to a Beneficiary in installments, the
second and all subsequent distributions must be made on or before
December 31 of the year for which the distribution is made. A
Beneficiary must elect the method of distribution no later than the
earlier of (a) December 31 of the calendar year in which
distributions would be required to begin under this Section 7.2.2,
or (b) December 31 of the calendar year in which occurs the fifth
(5th) anniversary of the Participant's death. If a Beneficiary
makes no election, distribution of the Beneficiary's entire
interest must be completed by December 31 of the calendar year
containing the fifth (5th) anniversary the Participant's death.

7.3. FORMS OF DISTRIBUTION.

7.3.1. FORMS AVAILABLE. At the direction of the Administrator's
Representative (subject to Section 7.3.4), the Trustee shall make distribution
of the Participant's Vested Total Account to the Distributee in one of the
following optional forms of benefit as permitted in the Adoption Agreement and
as designated by the Distributee in writing:

(a) LUMP SUM. If the Distributee is either a Participant or a
Beneficiary, in a lump sum as described in the Adoption Agreement.

(b) FIXED INSTALLMENTS TO PARTICIPANT. If the Distributee is a
Participant, in a series of substantially equal installments
payable annually over a fixed period selected by the Participant
before the first payment which does not exceed the life expectancy
of the Participant. The election to recalculate life expectancy
described in Section 7.3.3 does not apply to this form of
distribution.

(c) MINIMUM INSTALLMENTS TO PARTICIPANTS. If the Distributee is a
Participant, in a series of substantially equal installments
payable annually over the life

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expectancy of the Participant or the joint and last survivor life
expectancy of the Participant and his Beneficiary determined as of
the date of the first such installment payment; provided, however,
that the amount of such installments shall automatically be
increased if the series of substantially equal installments payable
annually over the life expectancy of the Participant or the joint
and last survivor life expectancy of the Participant and his
Beneficiary determined again as of the Participant's required
beginning date (see Section 7.2.2(a)) and based on the facts then
in existence is greater than the amount determined as of the first
such installment payment. For calendar years beginning before
January 1, 1989, if the Participant's spouse is not the
Beneficiary, then the method of distribution selected must assure
that at least fifty percent (50%) of the Vested Total Account is
paid within the life expectancy of the Participant.

(d) INSTALLMENTS TO BENEFICIARY. If the Distributee is an individual
who is a Beneficiary of a deceased Participant who died before the
April 1 following the calendar year in which the Participant would
have attained age seventy and one-half (70-1/2) years, in a series
of substantially equal installments payable annually over a period
selected by the Beneficiary which does not exceed the period
permitted by the Adoption Agreement. If the Distributee is an
individual who is a Beneficiary of a deceased Participant who died
on or after the April 1 following the calendar year in which the
Participant attained age seventy and one-half (70-1/2) years, in a
series of substantially equal installments which are a continuation
of the payments commenced (or scheduled) prior to the date of the
Participant's death (or in a lump sum if the Adoption Agreement
permits such a payment to the Beneficiary).

7.3.2. SUBSTANTIALLY EQUAL. Distributions shall be considered to be
substantially equal if the distributions are determined in whichever of the
following manners is applicable:

(a) FIXED INSTALLMENTS. If distributions are in the form of
installments payable over a fixed period, the amount of the
distribution required to be made for each calendar year (the
"distribution year") shall be determined by dividing the amount of
the Vested Total Account as of the last Valuation Date in the
calendar year immediately preceding the distribution year (such
preceding calendar year being the "valuation year") by the number
of remaining installment payments to be made (including the
distribution being determined). The amount of the Vested Total
Account as of such Valuation Date shall be increased by the amount
of any contributions and forfeitures allocated to the Vested Total
Account during the valuation year and after such Valuation Date
(including contributions and forfeitures, if any, made after the
end of the valuation year which are allocated as of dates in the
valuation year). The amount of the Vested Total Account shall be
decreased by the amount of any distributions made in the valuation
year and after such Valuation Date.

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(b) LIFETIME INSTALLMENTS. If distributions are in the form of
installments over the life expectancy of the recipient or the joint
and last survivor life expectancy of the Participant and his
Beneficiary, the amount of the distribution required to be made for
each calendar year (the "distribution year") shall be determined by
dividing the amount of the Vested Total Account as of the last
Valuation Date in the calendar year immediately preceding the
distribution year (such preceding calendar year being the
"valuation year") by the remaining life expectancy as of the
distribution year. The amount of the Vested Total Account as of the
last Valuation Date in the valuation year shall be increased by the
amount of any contributions and forfeitures allocated to the Vested
Total Account during the valuation year and after such Valuation
Date (including contributions and forfeitures, if any, made after
the end of the valuation year which are allocated as of dates in
the valuation year). The amount of the Vested Total Account shall
be decreased by distributions made in the valuation year and after
such Valuation Date.

7.3.3. LIFE EXPECTANCY. Life expectancy and joint and last survivor
expectancy shall be determined by use of the expected return multiples in Tables
V and VI of Treas. Reg. 1.72-9. An individual's life expectancy shall be based
upon the individual's attained age on his birthday in the calendar year for
which life expectancy is first being determined and, in the absence of an
election as provided below, shall be reduced by one (1) year in each succeeding
calendar year.

(a) ELECTION TO RECALCULATE LIFE EXPECTANCY. In the case of a
Participant or a Beneficiary who is the surviving spouse of a
Participant (but not in the case of any other individual), the
Participant or such Beneficiary may elect to have life expectancy
redetermined for each succeeding calendar year that a distribution
is required to be made. The election must be made no later than the
time of the first required distribution. The election is
irrevocable and must apply to all subsequent years.

(b) JOINT AND LAST SURVIVOR. Joint and last survivor life expectancy
shall be determined for the Participant and the individual who is
the Participant's Beneficiary in accordance with the rules of
section 401(a)(9) of the Internal Revenue Code and the regulations
thereunder.

(c) MINIMUM DISTRIBUTION INCIDENTAL BENEFIT REQUIREMENT. In the case of
a Participant and a Beneficiary who is not a spouse of the
Participant, the life expectancy factor used to compute the amount
of the substantially equal payment during the Participant's
lifetime shall not be greater than the factor determined under
Treas. Reg. 1.401(a)(9)-2 (the minimum distribution incidental
benefit requirement).

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7.3.4. PRESUMPTIVE FORMS. The selection of a form of distribution shall be
subject, however, to the following rules:

(a) REQUIRED LUMP SUM. As provided in Section 7.1.2, if the value of
the Participant's Vested Total Account is not greater than Three
Thousand Five Hundred Dollars ($3,500) when distributed, the
distribution shall be made in a single lump sum.

(b) QJ&SA CONTRACT. A QJ&SA contract is an immediate, nontransferable
annuity contract issued as an individual policy or under a master
or group contract which provides for an annual or more frequent
annuity payable to and for the lifetime of the Participant
beginning as of a date designated by the Participant which is not
later than the dates specified in Section 7.2.2, with a survivor
annuity payable on an annual or more frequent basis after the death
of the Participant to and for the lifetime of the surviving spouse
of the Participant (to whom the Participant was married on the
Valuation Date as of which such contract is issued) in an amount
equal to fifty percent (50%) of the amount payable during the joint
lives of the Participant and the surviving spouse. If payments had
started to the Participant prior to his death, payments of the
survivor annuity shall commence immediately after death. If
payments had not started prior to the Participant's death, the
surviving spouse shall designate the commencement date which shall
not be later than the date the Participant would have attained age
seventy and one-half (70-1/2) years. The contract shall be a QJ&SA
contract only if it is issued on a premium basis which does not
discriminate on the basis of the sex of the Participant or the
surviving spouse and if it complies with the requirements of this
Plan and section 401(a)(9) of the Internal Revenue Code and the
regulations thereunder.

(c) LIFE ANNUITY CONTRACT. A Life Annuity contract is an immediate,
nontransferable annuity contract issued as an individual policy or
under a group or master contract which provides for an annual or
more frequent annuity payable to and for (i) the lifetime of an
unmarried Participant beginning as of a date designated by the
Participant which is not later than the dates specified in Section
7.2.2, or (ii) the lifetime of the surviving spouse of a
Participant beginning as of the first day of the month following
the Participant's death or any later date designated by the
surviving spouse which is not later than the date the Participant
would have attained age seventy and one-half (70-1/2) years. The
contract shall be a Life Annuity contract only if it is issued on a
premium basis which does not discriminate on the basis of the sex
of the Participant or the surviving spouse and if it complies with
the requirements of this Plan and section 401(a)(9) of the Internal
Revenue Code and the regulations thereunder.

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(d) EXEMPT PROFIT SHARING PLAN. This Plan is an exempt profit sharing
plan if the following conditions are satisfied:

(i) *

(ii) no Participant under this Plan can elect to receive payments
in the form of a lifetime annuity, and

(iii) this Plan is not a direct or indirect transferee of assets
from a defined benefit pension plan, money purchase pension
plan or target benefit money purchase pension plan, and

(iv) this Plan is not a direct or indirect transferee from a
stock bonus plan or a profit sharing plan which was
otherwise required to make available to Participants with
respect to whom assets and liabilities were transferred
distribution in the form of a lifetime annuity.

(e) MARRIED PARTICIPANT. In the case of any distribution which is to be
made:

(i) if this Plan is not an exempt profit sharing plan, and

(ii) when paragraph (a) above is not applicable, and

(iii) to a Participant who is married on the Valuation Date as of
which such distribution is to be made or commenced to him,
and

(iv) to a Participant who has not rejected distribution in the
form of a QJ&SA contract,

distribution shall be effected for such Participant by applying the
entire Vested Total Account to purchase and distribute to such
Participant a QJ&SA contract. A Participant may reject distribution
in the form of a QJ&SA contract by filing with the Administrator's
Representative an affirmative written rejection of distribution in
that form not more than ninety (90) days before the Valuation Date
as of which the distribution is made or commenced. Such a rejection
may be made or revoked at any time and any number of times until
the Valuation Date as of which the distribution to the Participant
is made or commenced. A rejection shall not be effective unless the
Participant's spouse consents. To be valid, the consent of the
spouse must be in writing, must acknowledge the effect of the
distribution, must be witnessed by a notary public, must be given
during the ninety (90) day period before the Valuation Date as of
which the distribution is made or commenced and must relate to that
specific distribution. The consent of the spouse must be to a
specific form of distribution (other than the QJ&SA contract) which
may not be changed without further spousal consent unless

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the Participant elects a QJ&SA contract, or alternatively, the
consent of the spouse must expressly permit the Participant to
elect and to change the form of distribution (other than the QJ&SA
contract) without any requirement of further spousal consent. The
consent of the spouse shall be irrevocable and shall be effective
only with respect to that spouse. No less than thirty (30) days and
no more than ninety (90) days prior to the date distribution is to
be made or commenced to the Participant, there shall be furnished
to the Participant a written explanation of the terms and
conditions of the QJ&SA contract, the Participant's right to
reject, and the effect of a rejection of distribution in the form
of the QJ&SA contract, the requirement for the consent of the
Participant's spouse, the right to revoke a prior rejection of
distribution in the form of a QJ&SA contract, and the right to make
any number of further revocations or rejections until the Valuation
Date as of which the distribution actually is made or commenced.
Notwithstanding the consent requirement described above, if the
Participant establishes to the satisfaction of the Administrator's
Representative that such written consent cannot be obtained because
there is no spouse, or the spouse cannot be located, a
Participant's rejection shall be deemed a valid rejection.

(f) UNMARRIED PARTICIPANT. In the case of any distribution which is to
be made:

(i) if this Plan is not an exempt profit sharing plan, and

(ii) when paragraph (a) above is not applicable, and

(iii) to a Participant who is not married on the Valuation Date as
of which such distribution is to be made or commenced to
him, and

(iv) to a Participant who has not rejected distribution in the
form of a Life Annuity contract,

distribution shall be effected for such Participant by applying the
entire Vested Total Account to purchase and distribute to such
Participant a Life Annuity contract. A Participant may reject
distribution in the form of a Life Annuity contract by filing with
the Administrator's Representative an affirmative written rejection
of distribution in that form not more than ninety (90) days before
the Valuation Date as of which the distribution is made or
commenced. Such a rejection may be made or revoked at any time and
any number of times until the Valuation Date as of which the
distribution to the Participant is made or commenced. No less than
thirty (30) days and no more than ninety (90) days prior to the
date distribution is to be made or commenced to the Participant,
there shall be furnished to the Participant a written explanation
of the terms and conditions of the Life Annuity contract, the
Participant's right to reject and the effect of a rejection of,
distribution in the form of the Life Annuity contract, the right to
revoke a

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prior rejection of distribution in the form of a Life Annuity
contract, and the right to make any number of further revocations
or rejections until the Valuation Date as of which distribution
actually is made or commenced.

(g) SURVIVING SPOUSE. In the case of a distribution which is made:

(i) if this Plan is not an exempt profit sharing plan, and

(ii) when paragraph (a) above is not applicable, and

(iii) to the surviving spouse of a deceased Participant, and

(iv) when such surviving spouse has not rejected distribution in
the form of a Life Annuity contract,

distribution shall be effected for such surviving spouse by
applying the entire Vested Total Account to purchase and distribute
to such surviving spouse a Life Annuity contract as soon as
administratively feasible after the Participant's death; but in no
event earlier than the date upon which the surviving spouse makes
application for the distribution, or, if earlier, the date upon
which the Participant (if he continued to live) would have attained
age seventy and one half (70-1/2) years. A surviving spouse may
reject distribution in the form of a Life Annuity contract by
filing with the Administrator's Representative an affirmative
written rejection of distribution in that form not more than ninety
(90) days before the Valuation Date as of which the distribution is
made or commenced. Any number of rejections and revocations of
rejections may be made at any time until the Valuation Date as of
which the distributions are made or commence to such surviving
spouse. No less than thirty (30) days and no more than ninety (90)
days prior to the date distribution is to be made or commenced to
the surviving spouse, there shall be furnished to the surviving
spouse a written explanation of the terms and conditions of the
contract, the surviving spouse's right to reject, and the effect of
a rejection of distribution in the form of the Life Annuity
contract, the right to revoke a prior rejection of distribution in
the form of the Life Annuity contract, and the right to make any
number of further revocations or rejections until the Valuation
Date as of which distribution actually is made or commenced.

7.3.5. EFFECT OF REEMPLOYMENT. If a Participant is reemployed by the
Employer or an Affiliate after distribution has been made or commenced to him
but before his Normal Retirement Age, further distribution of his Vested Total
Account shall be suspended and the undistributed remainder of his Vested Total
Account shall continue to be held in the Fund until another Event of Maturity
effective as to him shall occur after his reemployment. It is the general intent
of this Plan that no distribution shall be made while a Participant is
maintaining an employment relationship with the Employer or an Affiliate.

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7.3.6. TEFRA (S) 242(B) TRANSITIONAL RULES. Notwithstanding the other
provisions of this Section 7, distributions to or with respect to each
individual eligible to make a designation (before January 1, 1984) of a method
of distribution pursuant to section 242(b) of the Tax Equity and Fiscal
Responsibility Act of 1982 shall be made on and after the first day of the Plan
Year beginning in 1984 in accordance with the provisions set forth in the
Appendix E to this Plan Statement; provided, however, that if the Plan is not an
exempt profit sharing plan, the QJ&SA contract or Life Annuity contract has been
rejected as described in Section 7.3.4.

7.4. DESIGNATION OF BENEFICIARIES.

7.4.1. RIGHT TO DESIGNATE. Each Participant may designate, upon forms to be
furnished by and filed with the Administrator's Representative, one or more
primary Beneficiaries or alternative Beneficiaries to receive all or a specified
part of his Vested Total Account in the event of his death and may change or
revoke any such designation from time to time. No such designation, change or
revocation shall be effective unless executed by the Participant and accepted by
the Administrator's Representative during the Participant's lifetime. If,
however, the Plan is not an exempt profit sharing plan and such designation is
made to a nonspouse Beneficiary before the first day of the Plan Year in which
the Participant attains age thirty-five (35) years and the Participant dies on
or after that date while married, the beneficiary designation is void.

7.4.2. SPOUSAL CONSENT. Notwithstanding the foregoing, a designation will
not be valid for the purpose of paying benefits from the Plan to anyone other
than a surviving spouse of the Participant (if there is a surviving spouse)
unless that surviving spouse consents in writing to the designation of another
person as Beneficiary. To be valid, the consent of such spouse must be in
writing, must acknowledge the effect of the designation of the Beneficiary and
must be witnessed by a notary public. The consent of the spouse must be to the
designation of a specific named Beneficiary which may not be changed without
further spousal consent, or alternatively, the consent of the spouse must
expressly permit the Participant to make and to change the designation of
Beneficiaries without any requirement of further spousal consent. The consent of
the spouse to a nonspouse Beneficiary is a waiver of the spouse's rights to
benefits under the Plan. In a plan that is not an exempt profit sharing plan,
these benefits are known as a qualified preretirement survivor annuity. The
consent of the surviving spouse need not be given at the time the designation is
made. The consent of the surviving spouse need not be given before the death of
the Participant. The consent of the surviving spouse will be required, however,
before benefits can be paid to any person other than the surviving spouse. The
consent of a spouse shall be irrevocable and shall be effective only with
respect to that spouse.

In the case of a distribution to which Section 7.3.4(g) applies, the
Administrator's Representative shall provide each Participant within the
applicable period for such Participant a written explanation of the Life Annuity
Contract in such terms and in such manner as would be comparable to the
explanation provided for meeting the requirements of Section 7.3.4(e) applicable
to a QJ & SA contract.

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The applicable period for a Participant is whichever of the following
periods ends last: (i) the period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age 35; (ii) a
reasonable period ending after the individual becomes a Participant; and (iii) a
reasonable period ending after this paragraph first applies to the Participant.
Notwithstanding the foregoing, notice must be provided within a reasonable
period ending after separation from service in the case of a Participant who
separates from service before attaining age 35.

For the purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (ii) and (iii) is the end of the
two-year period beginning one year prior to the date the applicable event
occurs, and ending one year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35 is attained, notice
shall be provided within the two-year period beginning one year prior to
separation and ending one year after separation. If such a Participant
thereafter returns to employment with the employer, the applicable period for
such Participant shall be redetermined.

7.4.3. FAILURE OF DESIGNATION. If a Participant:

(a) falls to designate a Beneficiary,

(b) designates a Beneficiary and thereafter revokes such designation
without naming another Beneficiary, or

such Participant's Vested Total Account, or the part thereof as to which such
Participant's designation fails, as the case may be, shall be payable to the
first class of the following classes of automatic Beneficiaries with a member
surviving the Participant and (except in the case of his surviving issue) in
equal shares if there is more than one member in such class surviving the
Participant:

Participant's surviving spouse
Participant's surviving issue per stirpes and not per capita
Participant's surviving parents
Participant's surviving brothers and sisters
Representative of Participant's estate.

7.4.4. DEFINITIONS. When used herein and, unless the Participant has
otherwise specified in his Beneficiary designation, when used in a Beneficiary
designation, "issue" means all persons who are lineal descendants of the person
whose issue are referred to, including legally adopted descendants and their
descendants but not including illegitimate descendants and their descendants;
"child" means an issue of the first generation; "per stirpes" means in equal
shares among living children of the person whose issue are referred

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to and the issue (taken collectively) of each deceased child of such person,
with such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Participant.

7.4.5. SPECIAL RULES. Unless the Participant has otherwise specified in his
Beneficiary designation, the following rules shall apply:

(a) If there is not sufficient evidence that a Beneficiary was living
after the death of the Participant, it shall be deemed that the
Beneficiary was not living after the death of the Participant.

(b) The automatic Beneficiaries specified in Section 7.4.3 and the
Beneficiaries designated by the Participant shall become fixed as of
the Participant's death so that, if a Beneficiary survives the
Participant but dies before the receipt of all payments due such
Beneficiary hereunder, such remaining payments shall be payable to
the representative of such Beneficiary's estate.

(c) If the Participant designates as a Beneficiary the person who is the
Participant's spouse on the date of the designation, either by name
or by relationship, or both, the dissolution, annulment or other
legal termination of the marriage between the Participant and such
person shall automatically revoke such designation. (The foregoing
shall not prevent the Participant from designating a former spouse
as a Beneficiary on a form executed by the Participant and received
by the Committee after the date of the legal termination of the
marriage between the Participant and such former spouse, and during
the Participant's lifetime.)

(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the Participant
shall be given effect without regard to whether the relationship to
the Participant exists either then or at the Participant's death.

(e) Any designation of a Beneficiary only by statement of relationship
to the Participant shall be effective only to designate the person
or persons standing in such relationship to the Participant at the
Participant's death.

A Beneficiary designation is permanently void if it either is executed or is
filed by a Participant who, at the time of such execution or filing, is then a
minor under the law of the state of his legal residence. The Committee (and not
the Trustee) shall be the sole judge of the content, interpretation and validity
of a purported Beneficiary designation.

7.5. DEATH PRIOR TO FULL DISTRIBUTION. If a Participant dies after his
Event of Maturity but before distribution of his Vested Total Account has been
completed, the remainder of his undistributed Vested Total Account shall be
distributed in the same manner as hereinbefore provided in the Event of Maturity
by reason of death. If, at the death of the Participant, any payment to the
Participant was due or otherwise pending but not actually paid, the amount of

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such payment shall be included in the Vested Total Account which is payable to
the Beneficiary (and shall not be paid to the Participant's estate).

7.6. DISTRIBUTION IN CASH. Subject to the requirements of Section
7.3 for a Plan that is not an exempt profit sharing plan, distribution of a
Participant's Vested Total Account shall be made in cash. If, however, (i) the
Vested Total Account to be distributed consists in whole or in part of a
Participant's unpaid promissory note, the Trustee shall cause distribution of
that portion of the Vested Total Account to be made in the form of that unpaid
promissory note, or (ii) the Vested Total Account to be distributed consists in
whole or in part of a life insurance contract acquired pursuant to the
Participant's direction under Section 10.11, the Trustee shall cause
distribution of that portion of the Vested Total Account to be made in the form
of the life insurance contract so acquired, or (iii) the Vested Total Account to
be distributed consists in whole or in part of a Participant's individually
directed Subfund established pursuant to Section 4.1.2, the Trustee shall cause
distribution of that portion of the Vested Total Account to be made in the form
of the assets held in the individually directed Subfund.

7.7. DELETED BY THE FIRST AMENDMENT.

7.8. WITHDRAWALS FROM VOLUNTARY ACCOUNTS.

7.8.1. WHEN AVAILABLE. If the Adoption Agreement so provides, a
Participant (whether or not then employed by the Employer) may make withdrawals
from time to time from the Participant's Nondeductible Voluntary Account (if
any) and the Participant's Deductible Voluntary Account (if any). To receive
such a withdrawal, the Participant must file a written application specifying
the dollar amount to be withdrawn. Such withdrawal application shall be
approved by the Administrator's Representative to be made in a lump sum cash
payment as soon as administratively practicable after the Valuation Date
permitted in Article X of the Adoption Agreement that is coincident with or next
following approval of the completed application by the Administrator's
Representative.

7.8.2. SEQUENCE OF ACCOUNTS. The amount of such withdrawals by a
Participant shall be deemed to first come from the aggregate amount of voluntary
contributions theretofore made by him and only thereafter from the earnings or
gains in, or attributable to, either Voluntary Account. Notwithstanding the
foregoing, any such withdrawal shall be deemed to have been first taken from the
Participant's nondeductible voluntary contributions made prior to, January 1,
1987, to the extent of the aggregate amount not previously withdrawn.
Thereafter, the withdrawal shall be deemed to have been taken from a combination
of (i) the Participant's nondeductible voluntary contributions made after
December 31, 1986, to the extent of the aggregate amount thereof not previously
withdrawn, and (ii) a portion of the earnings in the Nondeductible Voluntary
Account. The portion of each such withdrawal that is deemed to be earnings will
be in the same ratio as the total earnings of the Nondeductible Voluntary
Account bear to the total Nondeductible Voluntary Account. All withdrawals
shall be deemed to come first from the Nondeductible Voluntary Account, and only
after the amount which may be withdrawn from the Nondeductible

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Voluntary Account is exhausted will a withdrawal come from the Deductible
Voluntary Account.

7.8.3. LIMITATIONS. Notwithstanding the foregoing, no distribution shall be
made pursuant to this Section 7.8 unless this Plan is an exempt profit sharing
plan (as defined in Section 7.3.4) or the spouse of the Participant, if any,
consents in writing to the distribution. To be valid, the consent of such spouse
must be in writing, must acknowledge the effect of the withdrawal and must be
witnessed by a notary public. The consent of the spouse must be given within
ninety (90) days prior to the Valuation Date as of which the withdrawal is made
and must relate to that specific withdrawal. The consent given by one spouse
shall be effective only with respect to that spouse.

7.8.4. COORDINATION WITH SECTION 4.1. If a withdrawal is made from an
Account which is invested in more than one (1) investment Subfund authorized and
established under Section 4.1, the amount withdrawn shall be charged to each
such investment Subfund in the same proportions as the Account is invested in
such investment Subfunds, unless otherwise directed by the Administrator's
Representative.

7.9. IN-SERVICE DISTRIBUTIONS.

7.9.1. WHEN AVAILABLE. If the Adoption Agreement so provides, a Participant
(whether or not then employed by the Employer) may receive an in-service
distribution from the Vested portion of the Participant's Total Account (unless
the Adoption Agreement specifically prohibits in-service distributions from a
particular Account) if the Administrator's Representative determines that such
in-service distribution is for one of the purposes described in Section 7.9.2
and the conditions in Sections 7.9.3 and 7.9.4 have been fulfilled. To receive
an in-service distribution, the Participant must file an in-service distribution
application with the Administrator's Representative. In the application, the
participant shall specify the dollar amount to be distributed. Such in-service
distribution application shall be approved by the Administrator's Representative
to be made in a lump sum cash payment as soon as administratively practicable
after the Valuation Date permitted in Article X of the Adoption Agreement that
is coincident with or next following approval of the completed application by
the Administrator's Representative.

7.9.2. PURPOSES. In-service distributions shall be allowed under Section
7.9.1 for only such of the following purposes as are permitted in the Adoption
Agreement and only if the Participant establishes that the in-service
distribution is to be made for one of the following permitted purposes:

(a) expenses for medical care described in section 213(d) of the
Internal Revenue Code previously incurred by the Participant, the
Participant's spouse or any dependents of the Participant (as
defined in section 152 of the Internal Revenue Code) or necessary
for these persons to obtain medical care described in section 213(d)
of the Internal Revenue Code,

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(b) costs directly related to the purchase of a principal residence for
the Participant (excluding mortgage payments),

(c) payment of tuition, room and board and related educational fees for
the next twelve (12) months of post-secondary education for the
Participant, or the Participant's spouse, children or dependents (as
defined in section 152 the Internal Revenue Code), or

(d) payments necessary to prevent the eviction of the Participant from
the Participant's principal residence or foreclosure on the mortgage
of that principal residence.

Such purposes shall be considered to be an immediate and heavy financial need of
the Participant.

7.9.3. LIMITATIONS. In no event shall the cumulative amount of in-service
distributions withdrawn from a Participant's Retirement Savings Account exceed
the amount of contributions to that Account made pursuant to Section 3.2 (i.e.,
in-service distributions from that Account shall not include any earnings on
such contributions or any curative allocations or earnings on curative
allocations made pursuant to Section 3.4.2). The amount of the in-service
distribution shall not exceed the amount of the Participant's immediate and
heavy financial need; provided, however, that the amount of the immediate and
heavy financial need may include amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably anticipated to result from the
distribution. In addition, a hardship distribution which includes a portion of
the Participant's Retirement Savings Account shall not be allowed unless the
Participant has obtained all distributions, other than hardship distributions,
and all nontaxable loans (at the time of the loan) currently available under all
plans maintained by the Employer and Affiliates. Other funds are not currently
available unless the funds are available prior to or coincidentally with the
date the hardship distribution is available.

Notwithstanding the foregoing, no distribution shall be made pursuant to this
Section 7.9 unless the Plan is an exempt profit sharing plan (as defined in
Section 7.3.4) or the spouse of the Participant, if any, consents in writing to
the distribution. To be valid, the consent of the spouse must be in writing,
must acknowledge the effect of the distribution and must be witnessed by a
notary public. The consent of the spouse must be given within ninety (90) days
prior to the date as of which the distribution is made and must relate to the
specific distribution. The consent of the spouse shall be irrevocable and shall
be effective only with respect to that spouse.

7.9.4. COORDINATION WITH RETIREMENT SAVINGS AGREEMENT. The Participant's
Retirement Savings Agreement shall be cancelled for twelve (12) months after
receipt of an in-service distribution and shall not be automatically reinstated.
Thereafter, such Participant may, upon giving fifteen (15) days' prior written
notice to the Plan Administrator, enter into a new Retirement Savings Agreement
effective as of the payday on or after any subsequent Enrollment Date following
such twelve (12) month period, provided he is in Recognized

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Employment on that date. Also, a Participant shall not be allowed to make
nondeductible voluntary contributions to this Plan for such twelve (12) month
period. In addition, such a Participant shall not be allowed to make retirement
savings contributions for the Participant's taxable year Immediately following
the taxable year of the in-service distribution which exceeds the adjusted Seven
Thousand Dollar ($7,000) limit (as described in Section 2.5) for such next
taxable year less the amount of such Participant's retirement savings
contributions for the taxable year of the in-service distribution. The rules
described in this Section 7.9.4 only apply if the hardship distribution includes
a portion of the Participant's Retirement Savings Account.

7.9.5. SEQUENCE OF ACCOUNTS. Each and every accelerated distribution made
pursuant to this Section 7.9 shall first be taken from and charged to the
Participant's Accounts (if the Adoption Agreement permits distribution from such
Account) in the following sequence:

(i) Nondeductible Voluntary Account

(ii) Rollover Account

(iii) Transfer Account

(iv) Employer Contributions Account

(v) Employer Matching Account

(vi) Deductible Voluntary Account

(vii) Retirement Savings Account.

Distributions from the Participant's Nondeductible Voluntary Account shall be
distributed in the sequence described in Section 7.8.

7.9.6. COORDINATION WITH SECTION 4.1. If a withdrawal is made from an
Account which is invested in more than one (1) investment Subfund authorized and
established under Section 4.1, the amount withdrawn shall be charged to each
such investment Subfund in the same proportions as the Account is invested in
such investment Subfunds, unless otherwise directed by the Administrator's
Representative.

7.10. TRANSITIONAL RULES. Participants or Beneficiaries who have actually
started receiving installment payments before January 1, 1989, shall continue to
receive such payments under the rules specified in the Plan Statement prior to
the adoption of the rules described in Appendix F to this Plan Statement to the
extent such rules are not inconsistent with the current Plan Statement and
current laws and regulations including, specifically, section 401(a)(9) and
section 411(d)(6) of the Internal Revenue Code. The rules in Section 7.1,
through and including, Section 7.9 to this Plan Statement are effective for Plan
Years beginning after December 31, 1988.

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7.11. LOANS. Unless the Adoption Agreement precludes it, loans may be made to
Participants from this Plan who are not Owner-Employees or Shareholder-Employees
subject to this Section 7.11.

7.11.1. GENERAL RULES. The Trustee shall, at the direction of the
Administrator's Representative, make a loan or loans to a Participant or
Beneficiary (other than an Owner-Employee or a Shareholder-Employee). To receive
a loan from the Plan, a Participant or Beneficiary must submit a written request
to the Administrator's Representative. The written request must specify the
amount of the loan, term of loan and, if required, include spousal consent. The
amount of such loan to any Participant or Beneficiary, when added to the
outstanding balance of the other loans to the borrower from the Plan, shall not
exceed the lesser of: (i) fifty percent (50%) of the Vested amount of the
Participant's Total Account, or (ii) Fifty Thousand Dollars ($50,000). The Fifty
Thousand Dollar ($50,000) limitation shall be reduced by the excess (if any) of:
(i) the highest outstanding balance of loans from the Plan during the one-year
period ending on the day before the new loan is made, over (ii) the outstanding
balance of all loans from the Plan on the day the new loan is made (but not
including the new loan).

By acceptance of such loan, the Participant or Beneficiary automatically
(by operation of the rules of this Plan Statement) grants a lien upon such of
his Accounts from which monies were withdrawn to make up the loan in an amount
not less than the amount of such loans (including unpaid interest). The
borrower may grant a security interest in his or her "qualified residence" as
defined in section 163(h) of the Code if the borrower's unrestricted equity
interest is adequate to do so. No other security shall be required or permitted
as a condition of granting any such loans. Any such loan shall provide that it
shall be repaid within a definite period of time, which period shall not exceed
five (5) years unless such loan is used to acquire any dwelling unit which
within a reasonable time (determined at the time the loan is made) is to be used
as a principal residence of the Participant in which event such period shall not
exceed fifteen (15) years. Any such loan must be repaid in substantially level
amounts including principal and interest, over the term of the loan; provided,
however, that a loan may be prepaid or accelerated prior to the end of the term
of the loan. Loan payments must be made at least once each Plan Year quarter.

Notwithstanding the foregoing, no loan shall be made pursuant to this
Section 7.11 unless this Plan is an exempt profit sharing plan (as defined in
Section 7.3.4) or the spouse of the Participant, if any, consents to the loan.
To be valid, the consent of such spouse must be in writing, must acknowledge the
effect of the loan and the use of the Account as security for the loan and must
be witnessed by a notary public. The consent of the spouse must be given within
ninety (90) days prior to the date the loan is made and must relate to a
specific loan. The consent given by the spouse to whom the Participant was
married at the time the loan was made shall be effective with respect to that
spouse and each subsequent spouse of the Participant. A new consent shall be
required if the Account is used for renegotiation, extension, renewal or other
revision of the loan. If a valid spousal consent has been obtained as described
above or such consent is not required, then, notwithstanding any other
provisions of this Plan Statement, the portion of the Participant's Vested Total
Account used

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as a security interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the amount
of the Vested Total Account payable at the time of death or distribution, but
only if the reduction is used as repayment of the loan. If less than one hundred
percent (100%) of the Participant's Vested Total Account (determined without
regard to the preceding sentence) is payable to the surviving spouse of the
Participant, then the Vested Total Account shall be adjusted by first reducing
the Vested Total Account by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the surviving spouse.

7.11.2. INTEREST RATE. The interest rate on each loan must be a reasonable
interest rate determined on the first business day of the calendar month
immediately preceding the date as of which the loan is issued.

7.11.3. LOANS MADE FROM PARTICIPANT'S ACCOUNTS. If the Adoption Agreement
so provides, each loan will be made from the individual Accounts of the
Participant who receives the loan and the following rules will apply:

(a) ACCOUNTING FOR LOAN. For the purpose of determining the extent to
which such Participant's Total Account is entitled to share in
income, gains or losses of the Fund under Section 4, the same shall
be deemed to be reduced by the unpaid balance of any outstanding
loans to the Participant, and the interest payments on such loans
shall be credited to his Total Account.

(b) COORDINATION WITH SECTION 4.1. If a loan is made from an Account
which is invested in more than one investment Subfund authorized
and established under Section 4.1, the amount withdrawn in order to
make the loan shall be charged pro rata to each investment Subfund.
All repayments of principal and interest shall be allocated among
the investment Subfunds that the borrower has elected for
investment at the time repayment is received.

(c) SEQUENCE OF ACCOUNTS. If a loan is made to a Participant who has
assets in more than one Account, such loan shall be deemed to have
been made from the Participant's Accounts in the following sequence:

(i) Rollover Account

(ii) Transfer Account

(iii) Employer Contributions Account

(iv) Employer Matching Account

(v) Deductible Voluntary Account

(vi) Nondeductible Voluntary Account

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(vii) Retirement Savings Account (but see the last sentence of
this subsection (c)).

Repayments of principal and payments of interest shall be
apportioned among the Accounts from which the loan was made in
proportion to the amounts by which the Accounts were initially
reduced in order to make the loan. If the borrower's "qualified
residence" as defined in section 163(h) of the Code is given as
security for the loan, then no portion of the borrowed amount may
come from the Participant's Retirement Savings Account.

7.11.4. LOAN RULES. All loans must comply with the loan rules
established by the Trustee from time to time. If the Employer adopts other loan
rules inconsistent with the rules established by the Trustee, the Employer will
have made an unauthorized amendment to the Plan and will be governed by the
provisions of Section 9.1.1.

7.12. CORRECTIVE DISTRIBUTIONS.

7.12.1. EXCESS DEFERRALS ($7,000 LIMIT).

(a) IN GENERAL. A Participant may assign to this Plan any excess
deferrals made during a taxable year of the Participant by
notifying the Administrator's Representative in writing not later
than the March 1 following such taxable year of the amount of the
excess deferral to be assigned to the Plan. A Participant shall be
deemed to have notified the Plan of excess deferrals to the extent
the Participant has excess deferrals for the taxable year
calculated by taking into account only the amount of elective
contributions allocated to the Participant's Retirement Savings
Account and to any other plan of the Employer and Affiliates.
Notwithstanding any other provision of the Plan Statement, a
Participant's excess deferrals, plus any income and minus any loss
allocable thereto, shall be distributed to the Participant no
later than the first April 15 following the close of the
Participant's taxable year.

(b) DEFINITIONS. For purposes of this Section, "excess deferrals"
shall mean the amount of elective contributions allocated to the
Participant's Retirement Savings Account for a Participant's
taxable year and which the Participant or the Employer, where
applicable, allocates to this Plan pursuant to the claim procedure
described below.

(c) CLAIMS. The Participant's claim shall be in writing; shall be
submitted to the Administrator's Representative not later than
March 1 with respect to the immediately preceding taxable year;
shall specify the amount of the Participant's excess deferrals for
the preceding taxable year; and shall be accompanied by the
Participant's written statement that if such amounts are not
distributed, such excess deferrals, when added to amounts deferred
under other plans or arrangements described in sections 401(k),
408(k), 457, 501(c)(18) or 403(b) of the Internal Revenue Code,
will exceed the limit

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imposed on the Participant by section 402(g) of the Internal
Revenue Code for the taxable year in which the deferral occurred.
The Employer shall notify the Plan on behalf of the Participant
where the excess deferrals occur in the Plan or the combined plans
of the Employer and Affiliates.

(d) DETERMINATION OF INCOME OR LOSS. The excess deferrals shall be
adjusted for income or loss. Unless the Administrator's
Representative and the Trustee agree otherwise in writing, the
income or loss allocable to excess deferrals shall be determined by
multiplying the income or loss allocable to the Participant's
elective contributions for the Plan Year ending within such
preceding taxable year by a fraction, the numerator of which is the
excess deferrals on behalf of the Participant for such preceding
taxable year and the denominator of which is the Participant's
Retirement Savings Account balance attributable to elective
contributions on the Valuation Date coincident with or immediately
before the last day of such preceding taxable year without regard
to any income or loss occurring during such taxable year. Also,
unless the Administrator's Representative and the Trustee agree
otherwise in writing, the excess deferral shall not be adjusted for
income or loss for the period between the Valuation Date coincident
with or immediately before the last day of such preceding taxable
year and the date of distribution of the excess deferral. If the
Administrator's Representative and the Trustee agree in writing to
adjust for income or loss for the period between the Valuation Date
coincident with or immediately before the last day of such
preceding taxable year, the income or loss allocable for such
period shall be equal to ten percent (10%) of the income or loss
allocable to the distributable excess deferral for the applicable
taxable year multiplied by the number of whole calendar months that
have elapsed since the Valuation Date coincident with or
immediately before the last day of such taxable year, including the
month of distribution of distribution occurs after the fifteenth
(15th) of such month.

(e) ACCOUNTING FOR EXCESS DEFERRALS. Excess deferrals shall be
distributed from the Participant's Retirement Savings Account.

7.12.2. EXCESS CONTRIBUTIONS (SECTION 401(K) TEST).

(a) IN GENERAL. Notwithstanding any other provision of the Plan
Statement, excess contributions for a Plan Year, plus any income
and minus any loss allocable thereto, shall be distributed no later
than the last day of the following Plan Year, to Participants to
whose accounts elective contributions, and if used to determine the
deferral percentage under Section 2, matching contributions (as
defined in section 401(m)(4)(A) of the Internal Revenue Code which
meet the requirements of sections 401(k)(2)(B) and 401(k)(2)(C) of
the Internal Revenue Code) or qualified nonelective contributions
(within the meaning of

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section 401(m)(4)(C) of the Internal Revenue Code), or both, were
allocated. If such excess contributions are distributed more than two
and one half (2-1/2) months after the last day of the Plan Year in
which such excess contributions arose, a ten percent (10%) excise tax
will be imposed on the Employer maintaining the Plan with respect to
such excess contributions. Such distributions shall be made to highly
compensated eligible employees (as defined in Section 2) on the basis
of the respective portions of the excess contributions attributable
to each of such employees.

(b) EXCESS CONTRIBUTIONS. For purposes of this Section, "excess
contributions" shall mean, with respect to any Plan Year, the excess
of:

(i) the aggregate amount of Employer contributions taken into
account in computing the average deferral percentage (as defined
in Section 2) of highly compensated covered employees (as
defined in Section 2) for such Plan Year, over

(ii) the maximum amount of such contributions permitted by the
section 401(k) test described in Section 2 (determined by
reducing contributions made on behalf of the highly compensated
covered employees in order of the deferral percentage, as
defined in Section 2, beginning with the highest such
percentage).

(c) DETERMINATION OF INCOME OR LOSS. The excess contributions shall be
adjusted for income or loss. Unless the Administrator's
Representative and the Trustee agree otherwise in writing, the income
or loss allocable to excess contributions shall be determined by
multiplying income or loss allocable to the Participant's elective
contributions, and if used to determine an eligible employee's
deferral percentage under Section 2, matching contributions (as
defined in section 401(m)(4) of the Internal Revenue Code which meet
the requirements of sections 401(k)(2)(B) and 401(k)(2)(C) of the
Internal Revenue Code) or qualified nonelective contributions (within
the meaning of section 401(m)(4)(C) of the Internal Revenue Code), or
both, for the Plan Year by a fraction, the numerator of which is the
excess contributions on behalf of the Participant for the Plan Year
and the denominator of which is the sum of the Participant's account
balances attributable to elective contributions and such matching
contributions or qualified nonelective contributions, or both, on the
last day of the Plan Year, without regard to any income or loss
occurring during such Plan Year. Also, unless the Administrator's
Representative and the Trustee agree otherwise in writing, excess
contributions shall not be adjusted for income or loss for the period
between the Valuation Date coincident with or immediately before the
last day of such preceding taxable year and the date of distribution
of the excess contributions. If the Administrator's Representative
and the Trustee agree in writing to adjust for income or loss for the
period between the Valuation

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Date coincident with or immediately before the last day of such
preceding taxable year, the income or loss allocable for such
period shall be equal to ten percent (10%) of the income or loss
allocable to the distributable excess contributions for the
applicable taxable year multiplied by the number of whole calendar
months that have elapsed since the Valuation Date coincident with
or immediately before the last day of such taxable year, including
the month of distribution if distribution occurs after the
fifteenth (15th) of such month.

(d) ACCOUNTING FOR EXCESS CONTRIBUTIONS. Excess contributions shall be
distributed from the Participant's Retirement Savings Account and
Employer Matching Account, if applicable, in proportion to the
Participant's elective contributions and matching contributions, if
applicable, (as defined in section 401(m)(4)(A) of the Internal
Revenue Code which meet the requirements of sections 401(k)(2)(B)
and 401(k)(2)(C) of the Internal Revenue Code) for the Plan Year.
Excess contributions shall be distributed from the Participant's
Employer Contributions Account, if applicable (but only applicable
if qualified nonelective contributions within the meaning of
section 401(m)(4)(C) of the Internal Revenue Code are held in the
Employer Contributions Account), only to the extent such excess
contributions exceed the balance in the Participant's Retirement
Savings Account and Employer Matching Account.

(e) SPECIAL FAMILY MEMBER RULE. If the deferral percentage of a highly
compensated covered employee is determined under Section 2.7.2(b),
then the deferral percentage is reduced as required under this
Section and the excess contributions for the family group shall be
allocated among the family members in proportion to the elective
contributions of each family member that are combined to determine
the deferral percentage.

7.12.3. EXCESS AGGREGATE CONTRIBUTIONS (SECTION 401(M) TEST).

(a) IN GENERAL. Subject to Section 7.12.3(f), but otherwise
notwithstanding any other provision of the Plan Statement, excess
aggregate contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last day
of the following Plan Year to Participants to whose accounts
nondeductible voluntary contributions or Employer matching
contributions, and if used to determine the contribution percentage
under Section 3, elective contributions or qualified nonelective
contributions (within the meaning of section 401(m)(4)(C) of the
Internal Revenue Code), or both, were allocated. Such distributions
shall be made to highly compensated eligible employees (as defined
in Section 3) on the basis of the respective portions of the excess
aggregate contributions attributable to each of such employees.

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(b) EXCESS AGGREGATE CONTRIBUTIONS. For purposes of this Section,
"excess aggregate contributions" shall mean, with respect to any Plan
Year, the excess of:

(i) the aggregate amount of contributions taken into account in
computing the average contribution percentage (as defined in
Section 3) of highly compensated eligible employees (as defined
in Section 3) for such Plan Year, over

(ii) the maximum amount of such contributions permitted by the
section 401(m) test described in Section 3 (determined by
reducing contributions made on behalf of the highly compensated
eligible employees in order of the contribution percentage, as
defined in Section 3, beginning with the highest such
percentage).

(c) DETERMINATION OF INCOME. The excess aggregate contributions shall be
adjusted for income or loss. Unless the Administrator's
Representative and the Trustee agree otherwise in writing, the income
or loss allocable to excess aggregate contributions shall be
determined by multiplying the income or loss allocable to the
Participant's nondeductible voluntary contributions and Employer
matching contributions (to the extent used to determine the eligible
employee's contribution percentage under Section 3), and if used to
determine an eligible employee's contribution percentage under
Section 3, elective contributions or qualified nonelective
contributions (within the meaning of section 401(m)(4)(C) of the
Internal Revenue Code), or both, for the Plan Year by a fraction, the
numerator of which is the excess aggregate contributions on behalf of
the Participant for the Plan Year and the denominator of which is the
sum of the account balances attributable to nondeductible voluntary
contributions, Employer matching contributions and such elective
contributions or qualified nonelective contributions, or both, on the
last day of the Plan Year without regard to any income or loss
occurring during such Plan Year. Also, unless the Administrator's
Representative and the Trustee agree otherwise in writing, excess
aggregate contributions shall not be adjusted for income or loss for
the period between the Valuation Date coincident with or immediately
before the last day of such preceding taxable year and the date of
distribution of the excess contributions. If the Administrator's
Representative and the Trustee agree in writing to adjust for income
or loss for the period between the Valuation Date coincident with or
immediately before the last day of such preceding taxable year, the
income or loss allocable for such period shall be equal to ten
percent (10%) of the income or loss allocable to the distributable
excess aggregate contributions for the applicable taxable year
multiplied by the number of whole calendar months that have elapsed
since the Valuation Date coincident with or immediately before the
last day of such taxable year, including the month of distribution if
distribution occurs after the fifteenth (15th) of such month.

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(d) ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS. Excess aggregate
contributions shall be distributed from the Participant's Voluntary
Account, the Participant's Employer Matching Account (and, if
applicable, the Participant's Retirement Savings Account or
Employer Contributions Account, or both) in proportion to the
Participant's nondeductible voluntary contributions, Employer
matching contributions, and if used to determine the contribution
percentage under Section 3, elective contributions or qualified
nonelective contributions (within the meaning of section
401(m)(4)(C) of the Internal Revenue Code), or both, for the Plan
Year.

(e) SPECIAL FAMILY MEMBER RULE. If the contribution percentage of a
highly compensated eligible employee is determined under Section
3.10.2(b), then the contribution percentage is reduced as required
under this Section and the excess aggregate contributions for the
family group shall be allocated among the family members in
proportion to the nondeductible voluntary contributions and
Employer matching contributions of each family member that are
combined to determine the contribution percentage.

(f) SPECIAL RULE FOR PARTIAL VESTING. If the Participant is not fully
(100%) Vested in the Employer Matching Account as of the last day
of the Plan Year to which the excess aggregate contributions
relate, then the distribution of the Participant's excess aggregate
contributions under this Section shall be deemed to have been
distributed from the fully (100%) Vested portion of the Employer
Matching Account and such Account shall become Vested in accordance
with the special rule for partial distributions in Section 5.1.3.
To the extent the excess aggregate contributions exceed the fully
(100%) Vested portion of the Participant's Employer Matching
Account, the excess aggregate contributions shall be forfeited and
reallocated as provided in Section 6.2.

7.12.4. PRIORITY. The determination of the excess aggregate
contributions shall be made after first determining the excess deferrals, and
then determining the excess contributions. The amount of excess contributions
shall be reduced by excess deferrals previously distributed to such Participant
for the Participant's taxable year ending with or within such Plan Year.

7.12.5. MATCHING CONTRIBUTIONS. If excess deferrals, excess
contributions or elective contributions treated as excess aggregate
contributions are distributed pursuant to this Section 7.12, applicable matching
contributions under Section 3.3 or 3.4 shall be treated as forfeitures and
reallocated as provided in Section 6.2.

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SECTION 8

SPENDTHRIFT PROVISIONS

No Participant or Beneficiary shall have any transmissible interest in any
Account nor shall any Participant or Beneficiary have any power to anticipate,
alienate, dispose of, pledge or encumber the same while in the possession or
control of the Trustee, nor shall the Trustee, the Administrator's
Representative or the Employer recognize any assignment thereof, either in whole
or in part, nor shall any Account herein be subject to attachment, garnishment,
execution following judgment or other legal process while in the possession or
control of the Trustee.

The power to designate Beneficiaries to receive the Vested Total Account of a
Participant in the event of his death shall not permit or be construed to permit
such power or right to be exercised by the Participant so as thereby to
anticipate, pledge, mortgage or encumber his Account or any part thereof, and
any attempt of a Participant so to exercise said power in violation of this
provision shall be of no force and effect and shall be disregarded by the
Trustee, the Administrator's Representative and the Employer.

This section shall not prevent the Trustee, the Administrator's Representative
or the Employer from exercising, in their discretion, any of the applicable
powers and options granted to them upon the occurrence of an Event of Maturity,
as such powers may be conferred upon them by any applicable provision hereof,
nor prevent the Plan from foreclosing on the lien granted to secure any and all
loans made to him as a Participant from the Fund. (In the event of a default on
a Participant loan, foreclosure on the promissory note and the attachment of the
security interest in the Account will not occur until an Event of Maturity
occurs with respect to such Participant.) This section does not prevent the
Administrator's Representative or Trustee from observing the forms of a
qualified domestic relations order as provided in the Appendix C to this Plan
Statement.

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SECTION 9

AMENDMENT AND TERMINATION

9.1. AMENDMENT.

9.1.1. AMENDMENT BY EMPLOYER. The Employer reserves the right to
amend the designations and elections made by it under the Adoption Agreement
from time to time by making and delivering a new Adoption Agreement to the
Trustee, to add overriding language in the Adoption Agreement when such language
is necessary to satisfy the requirements of section 415 of the Internal Revenue
Code or to avoid duplication of minimum benefits under section 416 of the
Internal Revenue Code because of the required aggregation of multiple plans,
which amendment shall become effective only if expressly accepted in writing by
the Trustee, and to add certain model amendments published by the Internal
Revenue Service, which specifically provide that their adoption will not cause
the plan to be treated as individually designed. An Employer that amends the
Plan for any other reason, will no longer participate In these Prototype
Documents and will be considered to have an individually designed plan. The
Employer further reserves the right to amend its plan in its entirety by the
adoption of another master, prototype or individually designed successor
retirement plan document in place of this Plan Statement, and by entering into
such agreement with the Trustee or with a successor trustee, or other successor
funding medium selected by the Employer as may be required for the purpose of
carrying such successor retirement plan document into effect. The Employer may
not amend the Prototype Documents (as distinguished from amending its elections
in the Adoption Agreement). If an Employer should take action to:

(i) remove and replace the Trustee originally designated in this
Plan Statement, or name a Trustee who is not the Prototype
Sponsor (or a Trustee approved by the Prototype Sponsor), or

(ii) amend this Plan Statement by the adoption of another document
in lieu of this Plan Statement, or

(iii) attempt to amend the Prototype Documents, or

(iv) attempt to complete the Adoption Agreement in a manner not
permitted by the Adoption Agreement, or

(v) affirmatively refuse to consent to an amendment effected by
the Prototype Sponsor under Section 9.1.2,

such action shall not be considered a termination of the Plan adopted or
continued under this Plan Statement. Upon the occurrence of such action, the
Employer shall no longer be considered to be maintaining a Plan under these
Prototype Documents but rather under an individually designed document. No
amendment shall be effective so as to increase the duties of the Trustee without
its consent and provided, further, that the right of the Employer

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to designate a successor retirement plan or funding medium shall be subject to
the notice requirements affecting the removal of the Trustee set forth in
Section 10.3.

9.1.2. AMENDMENT BY PROTOTYPE SPONSOR. The Employer has delegated to the
Prototype Sponsor the right to amend this Plan Statement (either as to its form
or the elections specified in the Adoption Agreement). Although it is intended
that this power of amendment will be used principally to assure compliance with
applicable provisions of the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code as they may be now or hereafter amended, this power of
amendment may be exercised for any purpose deemed appropriate by the Prototype
Sponsor. Any such amendment shall be effective only upon notice in writing to
the Employer. The Employer shall be deemed to have consented to such amendment
unless prior to the expiration of thirty (30) days after notice is sent to the
Employer, the Employer exercises its reserved power of amendment by adopting a
successor retirement plan and funding medium, as provided in Section 9.1.

9.1.3. LIMITATION ON AMENDMENTS. No amendment shall be effective to reduce
or divest the Account of any Participant unless the same shall have been adopted
with the consent of the Secretary of Labor pursuant to section 412(c)(8) of the
Internal Revenue Code. No amendment shall eliminate an optional form of
distribution with respect to benefits attributable to service before the
amendment was adopted, unless such amendment is adopted pursuant to regulations
issued by the Secretary of the Treasury.

9.1.4. RESIGNATION OF PROTOTYPE SPONSOR. By giving the Employer thirty
(30) days' written notice of its intention to do so, the Prototype Sponsor may
withdraw its consent to the Employer's use of the Prototype Documents. Upon the
occurrence of such action, the Employer shall no longer be considered to be
maintaining a Plan under these Prototype Documents but rather under an
individually designed document.

9.2. DISCONTINUANCE OF CONTRIBUTIONS AND TERMINATION OF PLAN. The Employer also
reserves the right to reduce, suspend or discontinue its contributions to this
Plan and to terminate the Plan herein embodied in its entirety. If the Plan is
terminated, the assets will be distributed as soon as administratively feasible.

9.3. MERGER, ETC., WITH ANOTHER PLAN. The Employer may cause all or a part of
this Plan to be merged with all or a part of any other plan and may cause all or
a part of the assets and liabilities to be transferred from this Plan to another
plan. In the case of merger or consolidation of this Plan with, or transfer of
assets and liabilities of this Plan to, any other plan, each Participant shall
(if such other plan were then terminated) receive a benefit immediately after
the merger, consolidation or transfer which is not less than the benefit he
would have been entitled to receive immediately before the merger, consolidation
or transfer (if this Plan had then terminated). If the Employer agrees to a
transfer of assets and liabilities to or from another plan, the agreement under
which such transfer is concluded shall specify the Accounts to which the
transferred amounts are to be credited.

In no event shall assets be transferred from any other plan to this Plan unless
this Plan complies (or has been amended to comply) with the optional form of
benefit requirements of

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section 411(d)(6)(B)(ii) of the Internal Revenue Code (or, where applicable, the
distribution rules of section 401(k) of the Internal Revenue Code) with respect
to such transferred assets.

In no event shall assets be transferred from this Plan to any other plan unless
such other plan complies (or has been amended to comply) with the optional form
of benefit requirements of section 411(d)(6)(B)(ii) of the Internal Revenue Code
and the distribution rules of section 401(k) of the Internal Revenue Code with
respect to such transferred assets.

Notwithstanding any provision of the Plan to the contrary, to the extent that
any optional form of benefit under this Plan permits a distribution prior to the
Employee's retirement, death disability or severance from employment, and prior
to Plan termination, the optional form of benefit is not available with respect
to benefits attributable to assets (Including post-transfer earning thereon) and
liabilities that are transferred within the meaning of (S)414(l) of the Internal
Revenue Code, to this Plan from a money purchase pension plan qualified under
(S)401(a) of the Internal Revenue Code (other than any portion of those assets
and liabilities attributable to voluntary employee contributions).

9.4. ADOPTION BY AFFILIATES.

9.4.1. ADOPTION WITH CONSENT. The Employer executing the Adoption Agreement
(herein called the "principal employer") may consent to the adoption of this
Plan by any business entity affiliated in ownership with the principal employer
(subject to such conditions as the principal employer may impose).

9.4.2. PROCEDURE FOR ADOPTION. Any such adopting business entity shall
initiate its adoption of this Plan by delivery of a certified copy of the action
of its directors (if a corporation), general partner (if a partnership) or
proprietor (if a sole proprietorship), adopting this Plan Statement to the
principal employer. Upon the consent by said principal employer of the adoption
by the adopting business entity, and the delivery to the Trustee of written
evidence of the principal employer's consent, the adoption of this Plan by the
adopting business entity shall be effective as of the date specified by the
principal employer.

9.4.3. EFFECT OF ADOPTION. Upon the adoption of this Plan by an adopting
business entity as heretofore provided, the adopting business entity shall be an
Employer hereunder in all respects. Each adopting business entity (and each
other business entity joining the principal employer in the execution of the
Adoption Agreement), as a condition of continued participation in this Plan,
delegates to the principal employer the sole power and authority:

(a) to terminate the Plan (except that each adopting business entity
shall have the power to terminate this Plan as applied to it); to
amend the Plan Statement (except that each adopting business entity
shall have the power to amend the Plan Statement as applied to it by
establishing a successor plan to which assets and liabilities may be
transferred as provided in Section 9.3),

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(b) to appoint, remove and accept the resignation of a Trustee; to
appoint or remove the Administrator's Representative; to appoint or
remove an Investment Manager; to act as the plan administrator,

(d) to consent to the adoption of this Plan by affiliated employers; to
establish conditions and limitations upon such adoption of this Plan
by affiliated employers, and

(e) to cause this Plan to be merged with another plan and to transfer
assets and liabilities between this Plan and another.

Each reference herein to the Employer shall include the principal employer and
all adopting business entities unless the context clearly requires otherwise.
Employment with the principal employer and all adopting business entities shall
be credited with each other and all Affiliates of any of them for the purposes
of determining Eligibility Service, Vesting Service, One-Year Breaks in Service
and the minimum annual service requirement for allocation of contributions and
forfeited Suspense Accounts. Contributions of the principal employer and each
adopting business entity shall be identical, as a percentage of each
Participant's Recognized Compensation, as determined by the principal employer,
but shall be allocated only among those persons who were the Employees during
the Plan Year of the particular business entity making the contribution.
Notwithstanding Section 6.2 to the contrary, forfeited Suspense Accounts shall
only be used, first, to restore prior forfeitures for an Employee of the
particular business entity for which a current forfeiture occurs, second, to
reduce the required matching contribution, if any, for such business entity,
and, finally, to reduce the discretionary contributions of such business entity.
If necessary, the foregoing steps shall be followed in Plan Years subsequent to
the Plan Year in which the forfeiture occurs until such Suspense Accounts are
exhausted. Any unallocated Suspense Accounts remaining at the termination of
the Plan shall be allocated to the Employer Contributions Accounts of all
Participants then employed by the principal employer and all adopting business
entities, in proportion to the relative value of each such Account.

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SECTION 10

CONCERNING THE TRUSTEE

10.1. DEALINGS WITH TRUSTEE.

10.1.1. NO DUTY TO INQUIRE. No person, firm or corporation dealing with
the Trustee shall be required to take cognizance of the provisions of this Plan
Statement or be required to make inquiry as to the authority of the Trustee to
do any act which the Trustee shall do hereunder. No person, firm or corporation
dealing with the Trustee shall be required to see either to the administration
of the Plan or Fund or to the faithful performance by the Trustee of its duties
hereunder (except to the extent otherwise provided by the Employee Retirement
Income Security Act of 1974). Any such person, firm or corporation shall be
entitled to assume conclusively that the Trustee is properly authorized to do
any act which it shall do hereunder. Any such person, firm or corporation shall
be under no liability to anyone whomsoever for any act done hereunder pursuant
to the written direction of the Trustee.

10.1.2. ASSUMED AUTHORITY. Any such person, firm or corporation may
conclusively assume that the Trustee has full power and authority to receive and
receipt for any money or property becoming due and payable to the Trustee. No
such person shall be bound to inquire as to the disposition or application of
any money or property paid to the Trustee or paid in accordance with the written
directions of the Trustee.

10.2. COMPENSATION OF TRUSTEE. The corporate Trustee shall be entitled to
receive compensation for its services as Trustee hereunder as may be agreed upon
from time to time by the Administrator's Representative and the Trustee. The
Trustee shall be entitled to receive reimbursement for reasonable expenses,
fees, costs and other charges incurred by it or payable by it on account of the
administration of the Plan and the Fund to the extent approved by the
Administrator's Representative, except to the extent that the Employer, in its
discretion, directly pays the Trustee, such items of expense and compensation
shall be payable out of:

(i) the annual Employer contribution to the Fund, or

(ii) the income of the Fund, or

(iii) the principal of the Fund, including any accumulations of
income that have been added thereto, or

(iv) to or out of any combination of the foregoing sources in
the event the service in question has been for the
benefit, protection or administration of more than one
such source of payment.

The Trustee's determination in such respect made in good faith of the amount so
to be allocated and charged to each such source of payment shall be binding and
conclusive upon

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all persons interested or becoming interested in the Plan or the Fund. Each such
charge of the Trustee shall be a lien upon the Fund, and, ratably, in accordance
with the method of allocation used as aforesaid, shall be a lien upon the
interest of Participants in the source of payment to which the same is charged
until the same is paid and discharged in full.

10.3. RESIGNATION AND REMOVAL OF TRUSTEE.

10.3.1. RESIGNATION, REMOVAL AND APPOINTMENT. The Trustee may resign by
giving the Employer thirty (30) days' written notice of its intention so to do.
The Employer may agree in writing to a lesser period of notice. The notice
period shall begin on the date such notice is mailed. The Employer may remove
any Trustee or successor Trustee hereunder by giving such Trustee thirty (30)
days' written notice of removal. The Trustee may agree in writing to a lesser
period of notice. The notice period shall begin on the date such notice is
mailed. The Employer shall have the power to appoint one or more individual or
corporate Trustees, or both, as additional or successor Trustees. Such
appointments shall not be effective until a written acceptance of trusteeship is
filed with the then acting Trustee.

10.3.2. SURVIVING TRUSTEES. When any person or corporation appointed,
qualified and serving as a Trustee hereunder shall cease to be a Trustee of the
Fund, the remaining Trustee or Trustees then serving hereunder, or the successor
Trustee or Trustees appointed hereunder, as the case may be, shall thereupon be
and become vested with full title and right to possession of all assets and
records of the Plan and Fund in the possession or control of such prior Trustee,
and the prior Trustee shall forthwith account for and deliver the same to such
remaining or successor Trustee or Trustees.

10.3.3. SUCCESSOR ORGANIZATIONS. By designating a corporate Trustee,
original or successor, hereunder, there is included in such designation and as a
part thereof any other corporation possessing trust powers and authorized by law
to accept the Plan and Fund into which or with which the designated corporate
Trustee, original or successor, shall be converted, consolidated or merged, and
the corporation into which or with which any corporate Trustee hereunder shall
be so converted, consolidated or merged shall continue to be the corporate
Trustee of the Plan and Fund.

10.3.4. CO-TRUSTEE RESPONSIBILITY. No Trustee shall be or become liable
for any act or omission of a co-trustee serving hereunder with him or it (except
to the extent that liability is imposed under the Employee Retirement Income
Security Act of 1974) or of a prior Trustee hereunder, it being the purpose and
intent that each Trustee shall be liable only for his or its own acts or
omissions during his or its term of service as Trustee hereunder.

10.4. ACCOUNTINGS BY TRUSTEE.

10.4.1. PERIODIC REPORTS. The Trustee shall render to the Employer and
to the Administrator's Representative an account and report as soon as
practicable after the Annual Valuation Date in each year (and as soon as may be
practicable after each other Valuation Date) showing all transactions affecting
the administration of the Plan and the Fund, including, but not necessarily
limited to, such information concerning the Plan and the Fund

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and the administration thereof by the Trustee as shall be requested in writing
by the Employer.

10.4.2. SPECIAL REPORTS. The Trustee shall also render such further
reports from time to time as may be requested by the Employer and shall submit
its final report and account to the Employer when it shall cease to be Trustee
hereunder, whether by resignation or other cause.

10.4.3. REVIEW OF REPORTS. After giving Participants and other persons
interested therein a reasonable opportunity to examine the annual account of the
Trustee to the Employer as provided in Section 10.4.1, provided that no
exceptions are asserted thereto by any person (including the Employer)
interested therein, the Employer may settle and allow such accounts by agreement
with the Trustee. Except as may be otherwise required by the Employee Retirement
Income Security Act of 1974 the Trustee shall upon such settlement and allowance
be released and relieved of all liability for all matters set forth therein.

10.5. TRUSTEE'S POWER TO PROTECT ITSELF ON ACCOUNT OF TAXES. The Trustee, as a
condition to the making of distribution of a Participant's Vested Total Account
during his lifetime, may require the Participant, or in the event of his death
may require the person or persons entitled to receive his Vested Total Account
in such event, to furnish the Trustee with proof of payment of all income,
inheritance, estate, transfer, legacy and/or succession taxes and all other
taxes of any different type or kind that may be imposed under or by virtue of
any state or federal statute or law upon the payment, transfer, descent or
distribution of such Vested Total Account and for the payment of which the
Trustee may, in its judgment, be directly or indirectly liable. In lieu of the
foregoing, the Trustee may deduct, withhold and transmit to the proper taxing
authorities any such tax which it may be permitted or required to deduct and
withhold and the Vested Total Account to be distributed in such case shall be
correspondingly reduced.

10.6. OTHER TRUST POWERS. Except to the extent that the Trustee is subject to
the authorized and properly given investment directions of a Participant,
Beneficiary or Investment Manager (and in extension, but not in limitation, of
the rights, powers and discretions conferred upon the Trustee herein), the
Trustee shall have and may exercise from time to time in the administration of
the Plan and the Fund, for the purpose of distribution after the termination
thereof, and for the purpose of distribution of Vested Total Accounts, without
order or license of any court, any one or more or all of the following rights,
powers and discretions:

(a) To invest and reinvest any investment Subfunds established
pursuant to Section 4.1 in accordance with the investment
characteristics and objectives determined therefor and to invest
and reinvest the assets of the Fund in any securities or
properties in which an individual could invest his own funds and
which it deems for the best interest of the Fund, without
limitation by any statute, rule of law or regulation of any
governmental body prescribing or limiting the investment of
trust assets by corporate or individual trustees,

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in or to certain kinds, types or classes of investments or
prescribing or limiting the portion of the Fund which may be
invested in any one property or kind, type or class of
investment. Specifically and without limiting the generality of
the foregoing, the Trustee may invest and reinvest principal and
accumulated income of the Fund in any real or personal property;
preferred or common stocks of any kind or class of any
corporation, including but not limited to investment and small
business investment companies of all types; voting trust
certificates; interests in investment trusts; interests in any
limited or general partnership or other business enterprise,
however organized and for whatever purpose; group or individual
annuity contracts (which may involve investment in the issuer's
general account or any of its separate accounts); interests in
common or collective trusts, variable interest notes or any other
type of collective fund maintained by a bank or similar
institution (whether or not the Trustee hereunder); shares of any
regulated investment company (mutual fund) provided, however, if
the Trustee or any of its affiliates acts as investment advisor
or other service provider for such mutual fund (including the
First American Funds, Inc. and the First American Investment
Funds, Inc.), then the Employer (or other fiduciary independent
of the Trustee) must first acknowledge that it has received the
current prospectus for the mutual fund and a detailed written
disclosure of the investment advisory and other fees charged or
to be paid by the Plan or the mutual fund and the Employer (or
such other fiduciary) must approve the investment advisory fee
and other fees paid by the Plan directly or through the mutual
fund and the investment of Plan assets in the mutual funds; any
interest-bearing certificates, accounts or similar interest-
bearing instruments in a bank or similar financial institution,
including the Trustee or an affiliate of the Trustee, provided
such certificates, accounts or instruments bear a reasonable rate
of interest; bonds, notes and debentures, secured or unsecured;
mortgages, leases or other interests in real or personal
property; interests in mineral, gas, oil or timber properties or
other wasting assets; options; commodity or financial futures
contracts; foreign currency; insurance contracts on the life of
any "keyman" or shareholder of the Employer; or conditional sales
contracts. The Plan may not acquire or hold any securities issued
by an Employer or real estate leased to an Employer except that
the Trustee acting pursuant to the express written directions of
the Employer as provided in Section 10.12 may acquire and hold
Employer securities which are "qualifying employer securities"
(within the meaning of section 407(d)(5) of the Employee
Retirement Income Security Act of 1974) and Employer real
property which is "qualifying employer real property" (within the
meaning of section 407(d)(4) of the aforesaid Act); and, provided
further, that the Plan may acquire any such Employer securities
or Employer real property only if immediately after such
acquisition the aggregate fair market value of Employer
securities and Employer real property held by the Plan does not
exceed the lesser of (i) the percentage indicated in the Adoption
Agreement of the fair market value of the assets of the Plan, or

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(ii) the then value of all Employer Matching Accounts and
Employer Contributions Accounts. If the Trustee determines to
invest in any "qualifying employer security," such securities
shall be held only in the Employer Matching Accounts or Employer
Contributions Accounts or in the Suspense Accounts attributable
to such Accounts. Investment of the entire Fund in common stocks
shall be deemed appropriate at any phase of the economic business
cycle, but it is not, however, the purpose hereof to direct that
the Fund shall be invested either entirely or to any extent
whatsoever in such common stocks. Prior to maturity and
distribution of the Vested Total Accounts of Participants, the
Trustee shall commingle the Accounts of Participants and former
Participants in each investment Subfund and invest, reinvest,
control and manage each of the same as a common trust fund.

(b) To sell, exchange or otherwise dispose of any asset of whatsoever
character at any time held by the Trustee in trust hereunder.

(c) To segregate any part or portion of the Fund for the purpose of
administration or distribution thereof and, in its sole
discretion, to hold the Fund uninvested whenever and for so long
as, in the Trustee's discretion, the same is likely to be
required for the payment in cash of Accounts normally expected to
mature in the near future, or whenever, and for as long as,
market conditions are uncertain, or for any other reason which,
in the Trustee's discretion, requires such action or makes such
action advisable.

(d) In connection with the Trustee's power to hold uninvested
reasonable amounts of cash whenever it is deemed advisable to do
so, to deposit the same, with or without interest, in the
commercial or savings departments of any corporate Trustee
serving hereunder or of any other bank, trust company or other
financial institution including those affiliated in ownership
with the Trustee named in the Adoption Agreement.

(e) To register any investment held in the Fund in the name of the
Trustee, without trust designation, or in the name of a nominee
or nominees, and to hold any investment in bearer form, but the
records of the Trustee shall at all times show that all such
investments are part of the Fund, and the Trustee shall be as
responsible for any act or default of any such nominee as for its
own.

(f) To retain and employ such attorneys, agents and servants as may
be necessary or desirable, in the opinion of the Trustee, in the
administration of the Fund, and to pay them such reasonable
compensation for their services as may be agreed upon as an
expense of administration of the Fund, including power to employ
and retain counsel upon any matter of doubt as to the meaning of
or interpretation to be placed upon this Plan Statement or any
provisions thereof with reference to any question arising in the

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administration of the Fund or pertaining to the rights and
liabilities of the Trustee hereunder. The Trustee, in any such
event, may act in reliance upon the advice, opinions, records,
statements and computations of any attorneys and agents and on
the records, statements and computations of any servants so
selected by it in good faith and shall be released and exonerated
of and from all liability to anyone in so doing (except to the
extent that liability is imposed under the Employee Retirement
Income Security Act of 1974).

(g) To institute, prosecute and maintain, or to defend, any
proceeding at law or in equity concerning the Plan or Fund or the
assets thereof or any claims thereto, or the interests of
Participants and Beneficiaries hereunder at the sole cost and
expense of the Fund or at the sole cost and expense of the Total
Account of the Participant that may be concerned therein or that
may be affected thereby as, in the Trustee's opinion, shall be
fair and equitable in each case, and to compromise, settle and
adjust all claims and liabilities asserted by or against the Plan
or Fund or asserted by or against the Trustee, on such terms as
the Trustee, in each such case, shall deem reasonable and proper.
The Trustee shall be under no duty or obligation to institute,
prosecute, maintain or defend any suit, action or other legal
proceeding unless it shall be indemnified to its satisfaction
against all expenses and liabilities which it may sustain or
anticipate by reason thereof.

(h) To institute, participate and join in any plan of reorganization,
readjustment, merger or consolidation with respect to the issuer
of any securities held by the Trustee hereunder, and to use any
other means of protecting and dealing with any of the assets of
the Fund which it believes reasonably necessary or proper and, in
general, to exercise each and every other power or right with
respect to each asset or investment held by it hereunder as
individuals generally have and enjoy with respect to their own
assets and investment, including power to vote upon any
securities or other assets having voting power which it may hold
from time to time, and to give proxies with respect thereto, with
or without power of substitution or revocation, and to deposit
assets or investments with any protective committee, or with
trustees or depositaries designated by any such committee or by
any such trustees or any court. Notwithstanding the foregoing, an
Investment Manager shall have any or all of such powers and
rights with respect to Plan assets for which it has investment
responsibility but only if (and only to the extent that) such
powers and rights are expressly given to such Investment Manager
in a written agreement signed by it with a copy delivered to the
Trustee.*

(i) in any matter of doubt affecting the meaning, purpose or intent
of any provision of this Plan Statement which directly affects
its duties, to determine such meaning, purpose or intent; and the
determination of the Trustee in any such respect shall be binding
and conclusive upon all persons interested or who may become
interested in the Plan or the Fund.

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(j) To require, as a condition to distribution of any Vested Total
Account, proof of identity or of authority of the person entitled
to receive the same, including power to require reasonable
indemnification on that account as a condition precedent to its
obligation to make distribution hereunder.

(k) To collect, receive, receipt and give quittance for all payments
that may be or become due and payable on account of any asset in
trust hereunder which has not, by act of the Trustee taken
pursuant thereto, been made payable to others; and payment
thereof by the company issuing the same, or by the party
obligated thereon, as the case may be, when made to the Trustee
hereunder or to any person or persons designated by the Trustee,
shall acquit, release and discharge such company or obligated
party from any and all liability on account thereof.

(l) To determine from time to time, as required for the purpose of
distribution or for the purpose of allocating trust income or for
any other purpose of the Plan, the then value of the Fund and the
Accounts in the Fund, the Trustee, in each such case, using and
employing for that purpose the fair market value of each of the
assets constituting the Fund. Each such determination so made by
the Trustee in good faith shall be binding and conclusive upon
all persons interested or becoming interested in the Plan or the
Fund.

(m) To receive and retain contributions made in a form other than
cash in the form in which the same are received until such time
as the Trustee, in its sole discretion, deems it advisable to
sell or otherwise dispose of such assets.

(n) To commingle, for investment purposes, the assets of the Fund
with the assets of any other qualified retirement plan trust fund
of the Employer, provided that the records of the Trustee shall
reflect the relative interests of the separate trusts in such
commingled fund.

(o) To grant an option or options for the sale or other disposition
of a trust asset, including the issuance of options for purchase
of common stock held by the Trust in return for the receipt of a
premium from the optionee (it being expressly intended that said
options may be in such form and terms as to permit their being
freely traded on an option exchange) and including the repurchase
of any such option granted, or in lieu thereof, the repurchase of
an option identical in terms to the one issued.

(p) To have and to exercise such other and additional powers as may
be advisable or proper in its opinion for the effective and
economical administration of the Fund.

(q) If so provided in the Adoption Agreement, one (1) or more
declarations of trust executed by the Trustee (or by banks or
trust companies affiliated in ownership with the Trustee) shall
be incorporated by reference into this

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Agreement and not withstanding any other provision of the
Agreement to the contrary, the Trustee may cause all or any part
of the Fund, without limitation as to amount, to be commingled
with the money of trusts created by others by causing such money
to be invested as a part of any or all of the funds created by
said declarations of trust and the Fund so added to any of said
funds shall be subject to all of the provisions of said
declarations of trust as the same may be amended from time to
time.

10.7. INVESTMENT MANAGERS.

10.7.1. APPOINTMENT AND QUALIFICATIONS. The Employer shall have the
power to appoint from time to time one or more Investment Managers to direct the
Trustee in the investment of, or to assume complete investment responsibility
over, all or any portion of the Fund. An Investment Manager may be any person
or firm (a) which is either (1) registered as an investment adviser under the
Investment Advisers Act of 1940, (2) a bank, or (3) an insurance company which
is qualified to perform the services of an Investment Manager under the laws of
more than one state; and (b) which acknowledges in writing that it is a
fiduciary with respect to the Plan because it has been appointed as an
Investment Manager with respect to the Plan. The conditions prescribed in the
preceding sentence shall apply to the issuer of any group annuity contract
hereunder only if, and to the extent that, such issuer would otherwise be
considered a "fiduciary" with respect to the Plan, within the meaning of the
Employee Retirement Income Security Act of 1974.

10.7.2. REMOVAL. The Employer may remove any such Investment Manager
and shall have the power to appoint a successor or successors from time to time
in succession to any Investment Manager who shall be removed, shall resign or
shall otherwise cease to serve hereunder. The Employer shall furnish the
Trustee with such written evidence as the Trustee may require of the
appointment, removal and scope of the authority of the Investment Manager.

10.7.3. RELATION TO OTHER FIDUCIARIES. The Trustee shall comply with
all investment directions given to the Trustee with respect to the designated
portion of the Fund, and the Trustee shall be released and exonerated of and
from all liability for or on account of any action taken or not taken by it
pursuant to the directions of such Investment Manager, except to the extent that
liability is imposed under the Employee Retirement Income Security Act of 1974.
Neither the Employer, nor any officer, director or Employee thereof, nor any
member of the Administrator's Representative shall be liable for the acts or
omissions of the Trustee or of any Investment Manager appointed hereunder. The
fees and expenses of any Investment Manager, as agreed upon from time to time
between the Investment Manager and the Employer, shall be charged to and paid
from the Fund in a fair and equitable manner, except to the extent that the
Employer, in its discretion, may pay such directly to the Investment Manager.

10.8. FIDUCIARY PRINCIPLES. The Trustee and each other fiduciary hereunder, in
the exercise of each and every power or discretion vested in them by the
provisions of this Plan

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Statement shall (subject to the provisions of the Employee Retirement Income
Security Act of 1974) discharge their duties with respect to the Plan solely in
the interest of the Participants and Beneficiaries and:

(a) for the exclusive purpose of:

(i) providing benefits to Participants and Beneficiaries, and

(ii) defraying reasonable expenses of administering the Plan,

(b) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims,

(c) by diversifying the investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is
clearly prudent not to do so, and

(d) in accordance with the documents and instruments governing the
Plan, insofar as they are consistent with the provisions of the
Employee Retirement Income Security Act of 1974.

Notwithstanding anything in this Plan Statement to the contrary, any provision
hereof which purports to relieve a fiduciary from responsibility or liability
for any responsibility, obligation or duty under Part 4 of Subtitle B of Title I
of the Employee Retirement Income Security Act of 1974 shall, to the extent the
same is inconsistent with said Part 4, be deemed void.

10.9. PROHIBITED TRANSACTIONS. Except as may be permitted by law, no Trustee or
other fiduciary hereunder shall permit the Plan to engage, directly or
indirectly, in any of the following transactions with a person who is a
"disqualified person" (as defined in section 4975 of the Internal Revenue Code)
or a "party in interest" (as defined in section 3(14) of the Employee Retirement
Income Security Act of 1974):

(a) sale, exchange or leasing of any property between the Plan and
such person,

(b) lending of money or other extension of credit between the Plan
and such person,

(d) transfer to, or use by or for the benefit of, such person of the
income or assets of the Plan,

(e) act by such person who is a fiduciary hereunder whereby he deals
with the income or assets of the Plan in his own interest or for
his own account, or

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(f) receipt of any consideration for his own personal account by such
person who is a fiduciary from any party dealing with the Plan in
connection with a transaction involving the income or assets of
the Plan.

10.10. INDEMNITY. The Trustee, and directors, officers and employees of the
Employer shall, except as prohibited by law, be indemnified and held harmless by
the Employer from any and all liabilities, costs and expenses (including legal
fees), to the extent not covered by liability insurance, arising out of any
action taken by such Trustee or individuals as Trustee, fiduciary or in any
other capacity with respect to this Plan, whether imposed under the Employee
Retirement Income Security Act of 1974 or otherwise unless such liability arises
from the proven gross negligence, the bad faith or, if such Trustee or
individuals have reasonable cause to believe their conduct was unlawful, the
criminal misconduct of such Trustee, director, officer or employee. This
indemnification shall continue as to a Trustee, director, officer or employee
after such Trustee or individual ceases to be a Trustee, director, officer or
employee.

10.11. INVESTMENT IN INSURANCE. If the Employer shall so designate in the
Adoption Agreement, a Participant may, with the consent of the Administrator's
Representative and subject to such conditions as the Administrator's
Representative may impose, elect to have a portion of his Vested Total Account
(excluding any Deductible Voluntary Account) invested in life insurance
contracts issued by any insurance company licensed to do business in the State
of where the Trustee has its principal place of business (any such insurance
contract held for a Participant hereunder being herein referred to as a
"contract").

10.11.1. LIMITATION ON PAYMENT OF PREMIUMS. No more than fifty percent
(50%) of the aggregate Employer contributions allocated to a Participant's
Employer Matching Account and Employer Contributions Account may be used to
purchase ordinary life insurance contracts. Ordinary life insurance contracts
are contracts with both nondecreasing death benefits and nonincreasing premiums.
No more than twenty-five percent (25%) of the aggregate Employer contributions
allocated to the Participant's Employer Matching Account and Employer
Contributions Account may be used to purchase term life insurance contracts,
universal life insurance contracts and all other life insurance contracts which
are not ordinary life insurance contracts. If both ordinary life insurance
contracts and other insurance contracts are required, the sum of one-half (1/2)
of the premiums paid to acquire ordinary life insurance contracts plus one
hundred percent (100%) of all premiums paid to acquire other forms of life
insurance contracts shall not be permitted to exceed twenty-five percent (25%)
of the aggregate Employer contributions allocated to the Participant's Employer
Matching Account and Employer Contributions Account. All amounts used to
purchase term life insurance, to fund "P.S. 58" costs or to acquire any other
non-cash value benefits under this section shall be deemed to come from the
Employer Matching Account and then from the Employer Contributions Accounts
subject to the limits specified above. If the Participant's Employer Matching
Account and Employer Contributions Account are insufficient within the
limitations herein contained to pay any premium on a contract when the same
becomes due, the Trustee shall, unless the Participant directs the Trustee to
use his Nondeductible Voluntary Account, Rollover Account or Transfer Account
for this purpose or pays to the

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Trustee a sum sufficient to pay such premium (any such payment being deemed a
nondeductible voluntary contribution hereunder), cause such contract to be
rewritten for its then paid-up value, if any, and retain the same for the
Participant, in which event no further premium payments shall thereafter be made
thereon. All dividends on a contract shall be used to reduce premiums.

10.11.2. MISCELLANEOUS RULES FOR PURCHASE OF CONTRACT. The Participant
shall take such physical examinations and furnish such information as may be
necessary to procure a contract. To the extent possible, all contracts shall
have a uniform premium due date. The Trustee shall be the owner of all
contracts, with full power to execute all insurance applications and to exercise
all available options, and shall be the death beneficiary thereunder.

10.11.3. PAYMENT OF EXPENSES. Any charge or expense of the Trustee in
handling a Participant's contract shall be paid from that Participant's Total
Account; provided, that the Employer may, in its discretion, directly pay such
charge or expense.

10.11.4. AUTHORITY FOR CONTRACT. Any insurance company issuing contracts
may deal with the Trustee alone and without the consent of any Participant or
Beneficiary and shall not be required to examine the provisions of this Plan
Statement or any amendment thereto, nor shall it be responsible for the failure
of the Trustee to perform its duties, nor shall it be obliged to see to the
application or disposition of any money paid by it to the Trustee, and any such
payment shall fully discharge such insurance company for the amount so paid.

10.11.5. PAYMENT OF CONTRACT UPON DEATH. Upon the death of the
Participant, the proceeds of the contracts held for him hereunder shall be
deemed a death benefit under this Plan and shall be added to the Vested Total
Account and distributed to his Beneficiary or Beneficiaries in the manner
prescribed in Section 7.

10.11.6. PAYMENT OF CONTRACT - NOT UPON DEATH. Upon the occurrence of an
Event of Maturity other than the death of the Participant, the Trustee shall, as
directed by the Administrator's Representative, either: (i) surrender the
contracts held for him hereunder for cash and distribute the proceeds in the
manner described in Section 7, (ii) distribute the contracts to the Participant
(provided, however, that the optional modes of settlement under any such
contract shall be limited to those available under this Plan), or (iii) convert
the contracts into an annuity contract or contracts of the type described in
Section 7.3 and distribute the same to the Participant, or (iv) any combination
of the foregoing. In no event, however, shall any such contract be distributed
in a manner which is inconsistent with the requirements in Section 7.3.

10.11.7. VALUE OF CONTRACT. For the purpose of determining the value of
a contract hereunder, such contract shall be valued at the greater of the
premiums theretofore paid thereon or its then cash value, but such contract
shall not be considered a part of the Fund for the purpose of allocating income,
market gains and losses of the Fund in accordance with Section 4.

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10.11.8. INTERPRETATION. If any provision of any contract is
inconsistent with any provision of the Plan Statement, the provision of the Plan
Statement shall control.

10.12. EMPLOYER DIRECTED INVESTMENTS. If so indicated in the Adoption Agreement,
the Trustee shall be subject in the investment, management and control of the
Fund to the properly given directions of the person, persons or committee
identified in the Adoption Agreement or certified to the Trustee by an officer
of the Employer. The Trustee shall not make any investment or dispose of any
investments in the Fund except upon the express verbal or written direction of
the Employer. The Trustee shall be under no duty to question any investment
direction of the Employer, to review or monitor any securities or property held
in the Fund, or to advice the Employer with respect to the investment, retention
or disposition of any assets in the Fund. The Trustee is acting pursuant to and
in reliance on such directions shall be fully and completely indemnified and
held harmless by the Employer from any liability, loss or expense (including
legal fees) arising out of its actions so directed notwithstanding that such
directions, and the Trustee's conduct pursuant thereto, may constitute a breach
of fiduciary obligations to the Plan, the Participants and Beneficiaries. The
Employer may direct the Trustee to purchase shares of any regulated investment
company (mutual fund) for which the Trustee or any of its affiliates acts as
investment advisor or other service provider, provided, however, that the
Employer (or other fiduciary independent of the Trustee) must first acknowledge
it has received the current prospectus for the mutual fund (including the First
American Funds, Inc. and the First American Investment Funds, Inc.) and a
detailed disclosure of the investment advisory and other fees charged or to be
paid by the Plan and the Employer must approve the investment advisory fee and
other fees paid by the Plan directly or through the mutual funds and the
investment of Plan assets in the mutual fund.

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SECTION 11

DETERMINATIONS - RULES AND REGULATIONS

11.1. DETERMINATIONS. The Administrator's Representative shall make such
determinations as may be required from time to time in the administration of
this Plan. The Trustee and other interested parties may act and rely upon all
information reported to them hereunder and need not inquire into the accuracy
thereof, nor be charged with any notice to the contrary.

11.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Administrator's Representative.

11.3. METHOD OF EXECUTING INSTRUMENTS.

11.3.1. EMPLOYER OR ADMINISTRATOR'S REPRESENTATIVE. Information to be
supplied or written notices to be made or consents to be given by the Employer
or the Administrator's Representative pursuant to any provision of this Plan
Statement may be signed in the name of the Employer by any officer thereof who
has been authorized to make such certification or to give such notices or
consents or by the Administrator's Representative.

11.3.2. TRUSTEE. Any instrument or written notice required, necessary or
advisable to be made or given by the Trustee may be signed by any Trustee, if
all Trustees serving hereunder are individuals, or by any authorized officer or
Employee of the Trustee, if a corporate Trustee shall be acting hereunder as
sole Trustee, or by any such officer or Employee of the corporate Trustee or by
an individual Trustee acting hereunder, if corporate and individual Trustees
shall be serving as co-trustees hereunder.

11.4. CLAIMS PROCEDURE. The Administrator's Representative shall establish
procedures for the resolution of disputes and disposition of claims arising
under this Plan. An application for a distribution under Section 7 shall be
considered as a claim for the purposes of this Section 11.4. Until modified by
the Administrator's Representative, this claims procedure is as described below.

11.4.1. ORIGINAL CLAIM. Any Employee, former Employee or Beneficiary of
such Employee or former Employee may, if he so desires, file with the
Administrator's Representative a written claim for benefits under this Plan.
Within ninety (90) days after the filing of such a claim, the Administrator's
Representative shall notify the claimant in writing whether his claim is upheld
or denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred eighty days from the date the
claim was filed) to reach a decision on the claim. If the claim is denied in
whole or in part, the Administrator's Representative shall state in writing:

(a) the specific reasons for the denial,

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

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

(d) an explanation of the claims review procedure set forth in this
section.

11.4.2. CLAIMS REVIEW PROCEDURE. Within sixty (60) days after
receipt of notice that his claim has been denied in whole or in part, the
claimant may file with the Administrator's Representative a written request for
a review and may, in conjunction therewith, submit written issues and comments.
Within sixty (60) days after the filing of such a request for review, the
Administrator's Representative shall notify the claimant in writing whether,
upon review, the claim was upheld or denied in whole or in part or shall furnish
the claimant a written notice describing specific special circumstances
requiring a specified amount of additional time (but not more than one hundred
twenty days from the date the request for review was filed) to reach a decision
on the request for review.

11.4.3. GENERAL RULES.

(a) No inquiry or question shall be deemed to be a claim or a request
for a review of a denied claim unless made in accordance with the
claims procedure. The Administrator's Representative may require
that any claim for benefits and any request for a review of a
denied claim be filed on forms to be furnished by the
Administrator's Representative upon request.

(b) All decisions on claims and on requests for a review of denied
claims shall be made by the Administrator's Representative.

(c) The Administrator's Representative may, in its discretion, hold
one or more hearings on a claim or a request for a review of a
denied claim.

(d) Claimants may be represented by a lawyer or other representative
(at their own expense), but the Administrator's Representative
reserves the right to require the claimant to furnish written
authorization. A claimant's representative shall be entitled to
copies of all notices given to the claimant.

(e) The decision of the Administrator's Representative on a claim and
on a request for a review of a denied claim shall be served on the
claimant in writing. If a decision or notice is not received by a
claimant within the time specified, the claim or request for a
review of a denied claim shall be deemed to have been denied.

(f) Prior to filing a claim or a request for a review of a denied
claim, the claimant or his representative shall have a reasonable
opportunity to review a

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copy of the Plan Statement and all other pertinent documents in
the possession of the Employer, the Administrator's
Representative and the Trustee.

11.5. INFORMATION FURNISHED BY PARTICIPANTS. Neither the Employer nor the
Administrator's Representative nor the Trustee shall be liable or responsible
for any error in the computation of the Account of a Participant resulting from
any misstatement of fact made by the Participant, directly or indirectly, to the
Employer, the Administrator's Representative or the Trustee and used by them in
determining his Account. Neither the Employer nor the Administrator's
Representative nor the Trustee shall be obligated or required to increase the
Account of such Participant which, on discovery of the misstatement, is found to
be understated as a result of such misstatement of the Participant. However, the
Account of any Participant which is overstated by reason of any such
misstatement shall be reduced to the amount appropriate for him in view of the
truth. Any refund received upon reduction of an Account so made shall be used to
reduce the next succeeding contribution of the Employer to the Plan.

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SECTION 12

OTHER ADMINISTRATIVE MATTERS

12.1. EMPLOYER.

12.1.1. OFFICERS. Except as hereinafter provided, functions generally
assigned to the Employer shall be discharged by its officers or delegated and
allocated as provided herein.

12.1.2. DELEGATION. Except as hereinafter provided, the Board of
Directors may delegate or redelegate and allocate and reallocate to one or more
persons or to a committee of persons jointly or severally, and whether or not
such persons are directors, officers or Employees, such fiduciary and other
functions assigned to it or to the Employer hereunder as it may from time to
time deem advisable.

12.1.3. BOARD OF DIRECTORS. The Board of Directors shall have the
exclusive authority, which authority may not be delegated, to act for the
Employer:

(a) to adopt the Plan, to terminate the Plan, and

(b) to appoint or remove a Trustee, to appoint or remove an
Investment Manager, to appoint or remove the Administrator's
Representative.

12.2. ADMINISTRATOR'S REPRESENTATIVE. The Employer shall designate an
Administrator's Representative to act for the Employer. The Administrator's
Representative may be one person or a committee of such members as may be
determined and appointed from time to time by the Employer and shall serve at
the pleasure of the Employer. The Administrator's Representative shall serve
without compensation, but its reasonable expenses shall be an expense of the
administration of the Fund and shall be paid by the Trustee from and out of the
Fund except to the extent the Employer, in its discretion, directly pays such
expenses. If it is a committee, the Administrator's Representative may elect
such officers as the Administrator's Representative may decide upon. The
Administrator's Representative shall:

(a) if a committee, establish rules for the functioning of the
Administrator's Representative, including the times and places
for holding meetings, the notices to be given in respect of such
meetings and the number of members who shall constitute a quorum
for the transaction of business,

(b) If a committee, organize and delegate to such of its members as
it shall select authority to execute or authenticate rules,
advisory opinions or instructions, and other instruments adopted
or authorized by the Administrator's Representative; adopt such
bylaws or regulations as it deems desirable for the conduct of
its affairs: appoint a secretary, who need not be a member of
the Administrator's Representative, to keep its records and
otherwise assist the Administrator's Representative in the
performance of its duties.

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(c) keep a record of all its proceedings and acts and keep all books of
account, records and other data as may be necessary for the proper
administration of the Plan; notify the Trustee and the Employer of
any action taken by the Administrator's Representative and, when
required, notify any other interested person or persons,

(d) determine from the records of the Employer the compensation,
service records, status and other facts regarding Participants and
other Employees,

(e) cause to be compiled at least annually, from the records of the
Administrator's Representative and the reports and accountings of
the Trustee, a report and accounting of the status of the Plan and
the Accounts of the Participants, and make it available to each
Participant who shall have the right to examine that part or
portion of such report and accounting (or a true and correct copy
of such part) which sets forth his benefits and his ratable
interest in the Fund,

(f) prescribe forms to be used for applications for participation,
distributions, withdrawals, notifications, etc., as may be required
in the administration of the Plan,

(g) set up such rules, applicable to all Participants similarly
situated, as are deemed necessary to carry out the terms of the
Plan Statement,

(h) perform all other acts reasonably necessary for administering the
Plan and carrying out the provisions of the Plan Statement and
performing the duties imposed on it by the Employer.

(i) interpret and construe the Plan Statement,

(j) resolve questions of eligibility and status under the Plan, and the
rights of Employees, Participants and Beneficiaries and the amounts
of their interests,

(k) resolve all questions of administration of the Plan not
specifically referred to in this section, and

(l) delegate or redelegate to one or more persons, jointly or
severally, and whether or not such persons are members of a
committee which is the Administrator's Representative or Employees
of the Employer, such functions assigned to the Administrator's
Representative hereunder as it may from time to time deem
advisable.

If the Administrator's Representative is a committee and there shall at any time
be three (3) or more members serving hereunder who are qualified to perform a
particular act, the same may be performed, on behalf of all, by a majority of
those qualified, with or without the concurrence of the minority. No person who
failed to join or concur in such act shall be held

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liable for the consequences thereof, except to the extent that liability is
imposed under the Employee Retirement Income Security Act of 1974.

If the Employer does not designate an Administrator's Representative, the
President (or other chief executive officer) of the Employer shall be the
Administrator's Representative.

12.3. LIMITATION ON AUTHORITY. No action taken by any fiduciary, if authority
to take such action has been delegated or redelegated to it hereunder, shall be
the responsibility of any other fiduciary except as may be required by the
provisions of the Employee Retirement Income Security Act of 1974. Except to the
extent imposed by the Employee Retirement Income Security Act of 1974, no
fiduciary shall have the duty to question whether any other fiduciary is
fulfilling all of the responsibility imposed upon such other fiduciary by this
Plan Statement or by the Act or by any regulations or rulings issued thereunder.
The Trustee shall have no authority or duty to determine or enforce payment of
any Employer contribution under this Plan or to determine the existence, nature
or extent of any individual's rights in the Fund or under the Plan or question
any determination made by the Employer or the Administrator's Representative
regarding the same. The responsibilities and obligations of the Trustee shall be
strictly limited to those set forth in this Plan Statement.

12.4. CONFLICT OF INTEREST. If any Trustee, any Administrator's Representative,
any member of the Board of Directors or any officer or Employee of the Employer
to whom authority has been delegated or redelegated hereunder shall also be a
Participant in this Plan, he shall have no authority as such Trustee, member,
officer or Employee with respect to any matter specially affecting his
individual interest hereunder (as distinguished from the interests of all
Participants and Beneficiaries or a broad class of Participants and
Beneficiaries), all such authority being reserved exclusively to the other
Trustees, members, officers or Employees, as the case may be, to the exclusion
of such Participant, and such Participant shall act only in his individual
capacity in connection with any such matter.

12.5. DUAL CAPACITY. Individuals, firms, corporations or partnerships
identified herein or delegated or allocated authority or responsibility
hereunder may serve in more than one fiduciary capacity.

12.6. ADMINISTRATOR. The principal employer shall be the administrator for
purposes of section 3(16)(A) of the Employee Retirement Income Security Act of
1974.

12.7. NAMED FIDUCIARIES. The Trustee, the Employer, the Board of Directors and
the Administrator's Representative shall be named fiduciaries for the purpose of
section 402(a) of the Employee Retirement Income Security Act of 1974.

12.8. SERVICE OF PROCESS. In the absence of any designation to the contrary by
the principal employer, the President of the principal employer is designated as
the appropriate and exclusive agent for the receipt of service of process
directed to the Plan in any legal proceeding, including arbitration, involving
the Plan.

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12.9. RESIDUAL AUTHORITY. In the event the principal employer, Administrator's
Representative, Board of Directors, or other person designated as having the
authority to act or a duty to act on any matter hereunder, is prevented by
death, dissolution, incapacity or other similar cause from acting hereunder and
there is no other person then empowered to act on such matter, the Trustee shall
be empowered to act in its place.

12.10. ADMINISTRATIVE EXPENSES. The reasonable expenses of administering the
Plan shall be payable out of the Fund except to the extent that the principal
employer, in its discretion, directly pays the expenses.

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SECTION 13

IN GENERAL

13.1. DISCLAIMERS.

13.1.1. EFFECT ON EMPLOYMENT. Neither the terms of this Plan Statement
nor the benefits hereunder nor the continuance thereof shall be a term of the
employment of any Employee, and the Employer shall not be obliged to continue
this Plan. The terms of this Plan Statement shall not give any Employee the
right to be retained in the employment of the Employer.

13.1.2. SOLE SOURCE OF BENEFITS. Neither the Trustee nor the
Administrator's Representative nor the Employer or any of its officers or
members of its Board of Directors in any way guarantee the Fund against loss or
depreciation, nor do they guarantee the payment of any benefit or amount which
may become due and payable hereunder to any Participant or to any Beneficiary or
to any creditor of a Participant, a Beneficiary or the Trustee. Each
Participant, Beneficiary or other person entitled at any time to payments
hereunder shall look solely to the assets of the Fund for such payments or to
the Vested Total Account distributed to any Participant or Beneficiary, as the
case may be, for such payments. In each case where a Vested Total Account shall
have been distributed to a former Participant or a Beneficiary or to the person
or any one of a group of persons entitled jointly to the receipt thereof and
which purports to cover in full the benefit hereunder, such former Participant
or Beneficiary, or such person or persons, as the case may be, shall have no
further right or interest in the other assets of the Fund.

13.1.3. CO-FIDUCIARY MATTERS. Neither the Employer nor any of its
officers or members of its Board of Directors nor the Administrator's
Representative shall in any manner be liable to any Participant, Beneficiary or
other person for any act or omission of the Trustee (except to the extent that
liability is imposed under the Employee Retirement Income Security Act of 1974).
Neither the Trustee nor the Administrator's Representative nor the Employer or
any of its officers or members of its Board of Directors shall be under any
liability or responsibility (except to the extent that liability is imposed
under the Employee Retirement Income Security Act of 1974) for failure to effect
any of the objectives or purposes of this Plan by reason of loss or fluctuation
in the value of Fund or for the form, genuineness, validity, sufficiency or
effect of any Fund asset at any time held hereunder, or for the failure of any
person, firm or corporation indebted to the Fund to pay such indebtedness as and
when the same shall become due or for any delay occasioned by reason of any
applicable law, order or regulation or by reason of any restriction or provision
contained in any security or other, asset held by the Fund. Except as is
otherwise provided in the Employee Retirement Income Security Act of 1974, the
Employer, its officers and the members of its Board of Directors, the Trustee,
the Administrator's Representative and other fiduciaries shall not be liable for
an act or omission of another person with regard to a fiduciary responsibility
that has been allocated to or delegated to such other person pursuant to the
terms of this Plan Statement or pursuant to procedures set forth in this Plan
Statement.

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13.2. REVERSION OF FUND PROHIBITED. The Fund from time to time hereunder shall
at all times be a trust fund separate and apart from the assets of the Employer,
and no part thereof shall be or become available to the Employer or to creditors
of the Employer under any circumstances other than those specified in Section
1.3, Section 3.12, Section 11.5 and Appendix A hereof. It shall be impossible
for any part of the corpus or income of the Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and Beneficiaries
(except as provided in Section 1.3, Section 3.12, Section 11.5 and Appendix A).

13.3. EXECUTION IN COUNTERPARTS. This Plan Statement may be executed in any
number of counterparts, each of which, without production of the others, shall
be deemed to be an original.

13.4. CONTINUITY. If this Plan Statement is adopted as an amendment of a Prior
Plan Statement, the tenure and membership of the any committee previously
appointed, the rules of administration adopted and the Beneficiary designations
in effect under the Prior Plan Statement immediately before the Effective Date
shall, to the extent not inconsistent with this Plan Statement, continue in full
force and effect until altered as provided herein.

13.5. CONTINGENT TOP HEAVY PLAN RULES. The rules set forth in the Appendix B to
this Plan Statement (concerning additional provisions that apply if the Plan
becomes top heavy) are incorporated herein./6/

____________

/6/ Except as otherwise specifically provided in Appendix B, the provisions of
Appendix B apply for Plan Years beginning after December 31, 1986.

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APPENDIX A

SECTION 415 LIMITATIONS ON ALLOCATIONS

SECTION 1

INTRODUCTION

Terms defined in the Plan Statement shall have the same meanings when used
in this Appendix. References to the "Code" shall mean the Internal Revenue Code,
as amended from time to time. In addition, when used in this Appendix, the
following terms shall have the following meanings:

1.1. ANNUAL ADDITION. Annual addition means, with respect to any Participant
for a limitation year, the sum of:

(i) all employer contributions (including employer contributions
of the Participant's earnings reductions under section
401(k), section 403(b) and section 408(k) of the Code)
allocable as of a date during such limitation year to the
Participant under all defined contribution plans,

(ii) all forfeitures allocable as of a date during such
limitation year to the Participant under all defined
contribution plans,

(iii) all Participant contributions made as of a date during such
limitation year to all defined contribution plans,

(iv) all amounts allocated after March 31, 1984, to an individual
medical account which is part of a pension or annuity plan
maintained by the employer,

(v) all amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date,
under a welfare benefit fund, and

(vi) all amounts allocable as of a date during such limitation
year to Participant under Section 2.4, Section 3.6, Section
4 or Section 5 of this Appendix A.

1.1.1. SPECIFIC INCLUSIONS. With regard to a plan which contains a
qualified cash or deferred arrangement or matching contributions or employee
contributions, excess deferrals and excess contributions and excess aggregate
contributions (whether or not distributed during or after the limitation year)
shall be considered annual additions in the year contributed.

A-1
<PAGE>

1.1.2. SPECIFIC EXCLUSIONS. The annual addition shall not, however,
include any portion of a Participant's rollover contributions or any additions
to accounts attributable to a plan merger or a transfer of plan assets or
liabilities or any other amounts excludible under law.

1.1.3. ESOP RULE. In the case of an employee stock ownership plan within
the meaning of section 4975(e)(7) of the Code under which no more than one-third
(1/3rd) of the Employer contributions for a limitation year which are deductible
under section 404(a)(9) of the Code are allocated to highly compensated
employees (as defined in section 414(q) of the Code), annual additions shall not
include forfeitures of employer securities under the employee stock ownership
plan if such securities were acquired with the proceeds of an exempt loan or
employer contributions to the employee stock ownership plan which are deductible
by the Employer under section 404(a)(9)(B) of the Code and charged against the
Participant's account (i.e. interest payments).

1.2. CONTROLLED GROUP MEMBER. Controlled group member means the Employer and
each member of a controlled group of corporations (as defined in section 414(b)
and as modified by Code section 415(h) of the Code), all commonly controlled
trades or businesses (as defined in section 414(c) and as modified by Code
section 415(h) of the Code) and affiliated service groups (as defined in section
414(m) of the Code) of which the Employer is a part.

1.3. DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS. Defined benefit plan and
defined contribution plan have the meanings assigned to those terms by section
415(k)(1) of the Code. Whenever reference is made to defined benefit plans and
defined contribution plans in this Appendix, it shall include all such plans
maintained by the Employer and all controlled group members.

1.4. DEFINED BENEFIT FRACTION.

1.4.1. GENERAL RULE. Defined benefit fraction means a fraction the
numerator of which is the sum of the Participant's projected annual benefits
under all defined benefit plans (whether or not terminated) determined as of the
close of the limitation year, and the denominator of which is the lesser of:

(i) one hundred twenty-five percent (125%)/1/ of the dollar
limitation in effect under sections 415(b) and (d) of the
Code as of the close of such limitation year (i.e., 125% of
$90,000 as adjusted for cost of living, commencement dates,
length of service and other factors), or

(ii) one hundred forty percent (140%) of the dollar amount which
may be taken into account under section 415(b)(1)(B) of the
Code with respect

_______________

/1/ Lower limitations may apply in any Plan Year that this Plan is super top
heavy. (See Appendix B, (S) 3.5.)

A-2
<PAGE>

to such Participant as of the close of such limitation year
(i.e., 140% of the Participant's highest average
compensation as adjusted for cost of living, length of
service and other factors).

1.4.2. TRANSITION RULE. Notwithstanding the above, if the Participant was
a participant as of the first day of the first limitation year beginning after
December 31, 1986, in one or more defined benefit plans which were in existence
on May 6, 1986, the denominator of this fraction will not be less than one
hundred twenty-five percent (125%) of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the last limitation
year beginning before January 1, 1987, disregarding any changes in the terms and
conditions of the Plan after May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate satisfied the
requirements of Code section 415 for all limitation years beginning before
January 1, 1987.

1.5. DEFINED CONTRIBUTION FRACTION.

1.5.1. GENERAL RULE. Defined contribution fraction means a fraction, the
numerator of which is the sum of the Participant's annual additions (including
Employer contributions which are allocated to a separate account established for
the purpose of providing medical benefits or life insurance benefits with
respect to a key employee (as defined in Appendix B) under a welfare benefit
fund or individual medical account) as of the close of the limitation year and
for all prior limitation years, and the denominator of which is the sum of the
amounts determined under paragraph (i) or (ii) below, whichever is the lesser,
for such limitation year and for each prior limitation year in which the
Participant had any service with the employer (regardless of whether that or any
other defined contribution plan was in existence during those years or continues
in existence):

(i) one hundred twenty-five percent (125%)/2/ of the dollar
limitation determined under sections 415(b) and (d) of the
Code and in effect under section 415(c)(1)(A) of the Code
for such limitation year determined without regard to
section 415(c)(6) of the Code (i.e., 125% of $30,000 as
adjusted for cost of living), or

(ii) one hundred forty percent (140%) of the dollar amount which
may be taken into account under section 415(c)(1)(B) of the
Code with respect to such individual under the Plan for such
limitation year (i.e., 140% of 25% of the Participant's (S)
415 compensation for such limitation year).

1.5.2. TEFRA TRANSITION RULE. The Employer may elect that the amount
taken into account for each Participant for all limitation years ending before
January 1, 1983 under paragraphs (i) and (ii) above shall be determined pursuant
to the special transition rule provided in section 415(e)(6) of the Code.

____________

/2/ Lower Limitations may apply in any Plan Year that this Plan is super top
heavy. (See Appendix B, (S) 3.5.)

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<PAGE>

1.5.3. EMPLOYEE CONTRIBUTIONS. Notwithstanding the definition of "annual
additions," for the purpose of determining the defined contribution fraction in
limitation years beginning before January 1, 1987, employee contributions shall
not be taken into account to the extent that they were not required to be taken
into account under section 415 of the Code prior to the Tax Reform Act of 1986.

1.5.4. ANNUAL DENOMINATOR. The amounts to be determined under paragraphs
(i) or (ii) above for the limitation year and for all prior limitation years in
which the Participant had any service with the employer shall be determined
separately for each such limitation year on the basis of which amount is the
lesser for each such limitation year.

1.5.5. RELEVANT LAW. For all limitation years ending before January 1,
1976, the dollar limitation under section 415(c)(1)(A) of the Code is Twenty-
five Thousand Dollars ($25,000). For limitation years ending after December 31,
1975 and before January 1, 1990, the amount shall be:

<TABLE>
<CAPTION>
For limitation years The (S) 415(c)(1)(A)
ending during: dollar amount is:
---------------------- ----------------------
<S> <C>
1976 $26,825
1977 $28,175
1978 $30,050
1979 $32,700
1980 $36,875
1981 $41,500
1982 $45,475
1983 - 1989 $30,000
</TABLE>

1.5.6. RELIEF RULE. If the Participant was a participant as of the end of
the first day of the first limitation year beginning after December 31, 1986, in
one or more defined contribution plans which were in existence on May 6, 1986,
the numerator of this fraction will be adjusted if the sum of this fraction and
the defined benefit fraction would otherwise exceed one (1.0) under the terms of
this Plan Statement. Under the adjustment, an amount equal to the product of the
excess of the sum of the fractions over one (10), times the denominator of this
fraction, will be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would be computed as of
the end of the last limitation year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the plan made after May
5, 1986, but using the section 415 limitations applicable to the first
limitation year beginning on or after January 1, 1987.

1.6. HIGHEST AVERAGE COMPENSATION. Highest average compensation means the
average (S) 415 compensation for the three (3) consecutive years of service with
the controlled group members that produce the highest average. A year of service
with the controlled group members is the Plan Year.

A-4
<PAGE>

1.7. INDIVIDUAL MEDICAL ACCOUNT. Individual medical account means an account,
as defined in section 415(1)(2) of the Code, maintained by the Employer or an
Affiliate which provides an annual addition.

1.8. LIMITATION YEAR. The limitation year shall be the Plan Year, unless the
Adoption Agreement specifies a different limitation year. All qualified plans
maintained by the Employer must use the same limitation year. If the limitation
year is amended to a different 12-consecutive month period, the new limitation
year must begin on a date within the limitation year in which the amendment is
made.

1.9. MASTER OR PROTOTYPE PLAN. A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.

1.10. MAXIMUM PERMISSIBLE ADDITION.

1.10.1. GENERAL RULE. The maximum permissible addition (to defined
contribution plans) for any one (1) limitation year shall be the lesser of:

(i) Thirty Thousand Dollars ($30,000), or if greater, one-
fourth (1/4) of the defined benefit limitation set forth
in section 415(b)(1) of the Code as in effect for the
limitation year, or

(ii) Twenty-five percent (25%) of the Participant's (S) 415
compensation for such limitation year.

The compensation limitation referred to in (ii) shall not apply to any
contribution for medical benefits (within the meaning of section 401(h) or
section 419A(f)(2) of the Code) which is otherwise treated as an annual addition
under section 415(l)(1) or 419A(d)(2) of the Code.

1.10.2. ESOP RULE. In the case of an employee stock ownership plan
within the meaning of section 4975(e)(7) of the Code under which no more than
one third (1/3rd) of the Employer contributions for a limitation year are
allocated to highly compensated employees (as defined in section 414(q) of the
Code), the dollar limitation in (i) above (after adjustment for cost of living)
shall be increased to be equal to the sum of:

(i) the dollar limitation in (i) above (after adjustment for
cost of living), and

(ii) the lesser of the dollar limitation in (i) above (after
adjustment for cost of living) or the amount of employer
securities contributed or purchased with cash contributed
to the employee stock ownership plan.

1.10.3. MEDICAL BENEFITS. The dollar limitation in (i) above (after
adjustment for cost of living) shall be reduced by the amount of Employer
contributions which are allocated to a separate account established for the
purpose of providing medical benefits or life

A-5
<PAGE>

insurance benefits with respect to a key employee (as defined in Appendix B)
under a welfare benefit fund or an individual medical account.ending during:

1.10.4. SHORT YEAR. If a short limitation year is created because of an
amendment changing the limitation year to a different 12-consecutive month
period, the maximum permissible amount will not exceed the amount described in
Section 1.10.1(i) multiplied by the following fraction:

Number of months in the short limitation year
---------------------------------------------
12

1.11. PROJECTED ANNUAL BENEFIT. Projected annual benefit means the annual
annuity benefit payable to the Participant at his normal retirement age (as
defined in the defined benefit plan) adjusted to an actuarially equivalent
straight life annuity form (or, if it would be a lesser amount, to any
actuarially equivalent qualified joint and survivor annuity form that is
available under the defined benefit plan) assuming that:

(i) the Participant continues employment and participation
under the defined benefit plan until his normal retirement
age (as defined in the defined benefit plan) or until the
current age if later, and

(ii) the Participant's (S) 415 compensation and all other
factors used to determine benefits under the defined
benefit plan remain unchanged for all future limitation
years.

1.12. (S)415 COMPENSATION.

1.12.1. (S)415 COMPENSATION. Section 415 compensation (sometimes,
"(S)415 compensation") shall mean, with respect to any limitation year, the
wages, tips and other compensation paid to the Participant by the Employer and
reportable in the box designated "wages, tips, other compensation" on Treasury
Form W-2 (or any comparable successor box or form) for the limitation year but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in section 3401(a)(2) of
the Internal Revenue Code). For limitation years beginning after December 31,
1991, (S)415 compensation shall be determined on a cash basis.

1.12.2. EARNED INCOME. Section 415 compensation for a Self-Employed
Person shall be such Self-Employed Person's earned income. Earned income is a
Self-Employed Person's net earnings from self-employment in the trade or
business indicated in the Adoption Agreement as the trade or business of the
Employer with regard to which this Plan is established (but only if such trade
or business is one in which personal services of the Self-Employed Person is a
material income-producing factor) for a Plan Year during which the Self-Employed
Person is a Participant, reduced by the amount of the Employer contributions
made under the terms of this Plan for Common Law Employees. Earned income shall
include gains (other than any gain which is treated as gain from the sale or

A-6
<PAGE>

exchange of a capital asset for the purpose of determining the self-employed
individual's federal income tax) and net earnings derived from the sale or other
disposition of, the transfer of any interest in, or the licensing of the use of
property (other than good will) by an individual whose personal efforts created
such property. Earned Income shall be determine without regard to items not
included in gross income and the deductions allocable to such items. Net
earnings shall be determined with regard to the deduction allowed to the Self-
Employed Person by section 164(f) of the Code for taxable years beginning after
December 31, 1989.

1.13. WELFARE BENEFIT FUND. Welfare benefit fund means a fund as defined in
section 419(e) of the Code which provides post-retirement medical benefits
allocated to separate accounts for key employees as defined in section
419A(d)(3).

SECTION 2

THIS PLAN ALONE

This Section 2 applies only if the Participant does not participate in
and has never participated in another qualified plan or a welfare benefit fund
or an individual medical account maintained by any controlled group member.

2.1. GENERAL RULE. The amount of annual additions which may be credited to the
Participant's Account under this Plan for any limitation year will not exceed
the maximum permissible amount. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's Account would cause
the annual additions for the limitation year to exceed the maximum permissible
amount, the amount contributed or allocated will be reduced so that the annual
additions for the limitation year will equal the maximum permissible amount.

2.2. ESTIMATION. Prior to determining the Participant's actual total
compensation for the limitation year, the Employer may determine the maximum
permissible amount for a Participant on the basis of a reasonable estimation of
the Participant's total compensation for the limitation year, uniformly
determined for all Participants similarly situated.

2.3. FINAL DETERMINATION. As soon as is administratively feasible after the
end of the limitation year, the maximum permissible amount for the limitation
year will be determined by the Employer on the basis of the Participant's actual
total compensation for the limitation year.

2.4. REMEDIAL ACTION. If the Participant's annual additions for a limitation
year would exceed the maximum permissible additions applicable to defined
contribution plans alone, the Employer shall, to the extent they cause such
excess to occur, cause the following to occur until such excess is eliminated:

A-7
<PAGE>

(i) return any unmatched employee contributions made by the
Participant for the limitation year to the Participant
(adjusted for their proportionate share of gains but not
losses while held in the Plan), and

(ii) distribute unmatched elective deferrals (within the meaning of
section 402(g)(3) of the Code) made for the limitation year to
the Participant (adjusted for their proportionate share of
gains but not losses while held in the Plan), and

(iii) return any matched employee contributions made by the
Participant for the limitation year to the Participant
(adjusted for their proportionate share of gains but not
losses while held in the Plan), and

(iv) distribute matched elective deferrals (within the meaning of
section 402(g)(3) of the Code) made for the limitation year to
the Participant (adjusted for their proportionate share of
gains but not losses while held in the Plan).

To the extent either matched employee contributions are returned or matched
elective deferrals are distributed, any matching contribution made with respect
thereto shall be forfeited and reallocated to Participants as provided in the
Plan Statement.

If, after returning such employee contributions to the Participant and
distributing elective deferrals to the Participant, an excess still exists, the
Employer shall cause such excess to be used to reduce Employer contributions for
the next limitation year ("second limitation year") (and succeeding limitation
years, as necessary) for that Participant if that Participant is covered by the
Plan at the end of the second limitation year (or succeeding limitation years).
If the Participant is not covered by the Plan at the end of the second
limitation year (or succeeding limitation years), however, then the excess
amounts must be held unallocated in an "excess account" for the second
limitation year (or succeeding limitation years) and allocated and reallocated
in the second limitation year (or succeeding limitation year) to all the
remaining Participants in the Plan as if an employer contribution for the second
limitation year (or succeeding limitation year). However, if the allocation or
reallocation of the excess amounts pursuant to the provisions of the Plan causes
the limitations of this Appendix to be exceeded with respect to each Participant
for the second limitation year (or succeeding limitation years), then these
amounts must be held unallocated in an excess account. If an excess account is
in existence at any time during the second limitation year (or any succeeding
limitation year), all amounts in the excess account must be allocated and
reallocated to Participants' accounts (subject to the limitations of this
Appendix) as if they were additional Employer contributions before any employer
contribution and any Participant contributions which would constitute annual
additions may be made to the Plan for that limitation year. Furthermore, the
excess amounts must be used to reduce Employer contributions for the second
limitation year (and succeeding limitation years, as necessary) for all of the
remaining Participants. Excess amounts may not be distributed from the Plan to
Participants or former Participants. If an excess account is in

A-8
<PAGE>

existence at any time during a limitation year, the gains and losses and other
income attributable to the excess account shall be allocated to such excess
account. To the extent that investment gains or other income or investment
losses are allocated to the excess account, the entire amount allocated to
Participants from the excess account, including any such gains or other income
or less any losses, shall be considered as an annual addition. If the Plan
should be terminated prior to the date any such temporarily held, unallocated
excess can be allocated to the Accounts of Participants, the date of termination
shall be deemed to be an Annual Valuation Date for the purpose of allocating
such excess and, if any portion of such excess cannot be allocated as of such
deemed Annual Valuation Date by reason of the limitations of this Appendix, such
remaining excess shall be returned to the Employer.

SECTION 3

THIS PLAN AND ANOTHER PROTOTYPE DEFINED CONTRIBUTION PLAN

This Section 3 applies only if, in addition to this Plan, the Participant
is covered under another master or prototype qualified defined contribution
plan, a welfare benefit fund or an individual medical account maintained by any
controlled group member.

3.1. GENERAL RULE. The annual additions which may be credited to a
Participant's Account under this Plan for any limitation year will not exceed
the maximum permissible amount reduced by the annual additions credited to a
Participant's account under the other plans and welfare benefit funds for the
same limitation year. If the annual additions with respect to the Participant
under other defined contribution plans and welfare benefit funds maintained by
any controlled group member are less than the maximum permissible amount and the
Employer contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the annual additions for the
limitation year to exceed this limitation, the amount contributed or allocated
will be reduced so that the annual additions under all such plans and funds for
the limitation year will equal the maximum permissible amount. If the annual
additions with respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount will be contributed or allocated to
the Participant's Account under this Plan for the limitation year.

3.2. ESTIMATION. Prior to determining the Participant's actual total
compensation for the limitation year, the Employer may determine the maximum
permissible amount for a Participant on the basis of a reasonable estimation of
the Participant's compensation for the limitation year, uniformly determined for
all Participants similarly situated.

3.3. FINAL DETERMINATION. As soon as is administratively feasible after the
end of the limitation year, the maximum permissible amount for the limitation
year will be determined by the Employer on the basis of the Participant's actual
total compensation for the limitation year.

3.4. PRIORITY. If, pursuant to Section 3.3 of this Appendix or as a result of
the allocation of forfeitures, a Participant's annual additions under this Plan
and such other plans would

A-9
<PAGE>

result in an excess amount for a limitation year and the allocations to accounts
under such plans are made as of more than one (1) date during the limitation
year, the excess amount will be deemed to consist of the annual additions last
allocated during the limitation year, except that the annual additions
attributable to a welfare benefit fund or individual medial account will be
deemed to have been allocated first regardless of the actual allocation date.

3.5. APPORTIONMENT. If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of another
plan, the excess amount attributed to this Plan will be the product of,

(a) the total excess amount allocated as of such date, multiplied by

(b) the ratio of (i) the annual additions allocated to the Participant
for the limitation year as of such date under this Plan to (ii) the
total annual additions allocated to the Participant for the
limitation year as of such date under this Plan and all the other
master or prototype qualified defined contribution plans.

3.6. REMEDIAL ACTION. Any excess amount attributed to this Plan will be
disposed in the manner described in Section 2.4 of this Appendix.

SECTION 4

THIS PLAN AND A NON-PROTOTYPE DEFINED CONTRIBUTION PLAN

If the Participant is covered under another qualified defined contribution
plan maintained by any controlled group member which is not a master or
prototype plan, annual additions which may be credited to the Participant's
Account under this Plan for any limitation year will be limited in accordance
with Section 3.1 through 3.6 of this Appendix as though the other plan was a
master or prototype qualified defined contribution plan unless the Employer
provides other limitations In the Adoption Agreement.

SECTION 5

THIS PLAN AND A DEFINED BENEFIT PLAN

If any controlled group member maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
a Participant's defined benefit plan fraction and defined contribution plan
fraction will not exceed one (1.0) at the close of any limitation year. The
annual additions which may be credited to the Participant's Account under this
Plan for any limitation year will be limited in accordance with the Adoption
Agreement.

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<PAGE>

APPENDIX B

CONTINGENT TOP HEAVY PLAN RULES

Notwithstanding any of the foregoing provisions of the Plan Statement, if,
after applying the special definitions set forth in Section 1 of this Appendix,
this Plan is determined under Section 2 of this Appendix to be a Top Heavy Plan
for a Plan Year, then the special rules set forth in Section 3 of this Appendix
shall apply. For so long as this Plan is not determined to be a Top Heavy Plan,
the special rules in Section 3 of this Appendix shall be inapplicable to this
Plan.

SECTION 1

SPECIAL DEFINITIONS

Terms defined in the Plan Statement shall have the same meanings when used in
this Appendix References to the "Code" shall mean the Internal Revenue Code, as
amended from time to time. In addition, when used in this Appendix, the
following terms shall have the following meanings:

1.1. AGGREGATED EMPLOYERS - the Employer and each other corporation,
partnership or proprietorship which is a "predecessor" to the Employer, or is
under "common control" with the Employer, or is a member of an "affiliated
service group" that includes the Employer, as those terms are defined in section
414(b), (c), (m) or (o) of the Code.

1.2. AGGREGATION GROUP - a grouping of this Plan and:

(a) if any Participant in the Plan is a Key Employee, each other
qualified pension, profit sharing or stock bonus plan of the
Aggregated Employers in which a Key Employee is a Participant (and
for this purpose, a Key Employee shall be considered a Participant
only during periods when he is actually accruing benefits and not
during periods when he has preserved accrued benefits attributable
to periods of participation when he was not a Key Employee); and

(b) each other qualified pension, profit sharing or stock bonus plan of
the Aggregated Employers which is required to be taken into account
for this Plan or any plan described in paragraph (a) above to
satisfy the qualification requirement that this Plan cover a
nondiscriminatory group of employees (i.e., either the so-called
"70% test," the "70%/80% test" or the "nondiscriminatory
classification test") or the requirement that benefits be
nondiscriminatory under section 401(a)(4) of the Code; and

(c) each other qualified pension, profit sharing or stock bonus plan of
the Aggregated Employers which is not included in paragraph (a) or
(b) above, but which the Employer elects to include in the
Aggregation Group and

B-1
<PAGE>

which, when included, would not cause the Aggregation Group to fail
to satisfy the qualification requirement that the Aggregation Group
of plans cover a nondiscriminatory group of employees (i.e., either
the so-called "70% test," the "70%/80% test" or the
"nondiscriminatory classification test") and the requirement that
benefits be nondiscriminatory under section 401(a)(4) of the Code.

1.3. DETERMINATION DATE - for the first (1st) plan year of a plan, the last day
of such first (1st) plan year, and for each subsequent plan year, the last day
of the immediately preceding plan year.

1.4. FIVE PERCENT OWNER - for each Aggregated Employer that is a corporation,
any person who owns (or is considered to own within the meaning of the
Shareholder Attribution Rules) more than five percent (5%) of the value of the
outstanding stock of the corporation or stock possessing more than five percent
(5%) of the total combined voting power of the corporation, and, for each
Aggregated Employer that is not a corporation, any person who owns more than
five percent (5%) of the capital interest or the profits interest in such
Aggregated Employer. For the purposes of determining ownership percentages,
each corporation, partnership and proprietorship otherwise required to be
aggregated shall be viewed as a separate entity.

1.5. KEY EMPLOYEE - each Participant (whether or not then an employee) who at
any time during a plan year (or any of the four preceding plan years) is:

(a) an officer of any Aggregated Employer (excluding persons who have
the title of an officer but not the authority and including persons
who have the authority of an officer but not the title) having an
annual compensation from all Aggregated Employers for any such plan
year in excess of fifty percent (50%) of the amount in effect under
section 415(b)(1)(A) of the Internal Revenue Code for any such plan
year, or

(b) one (1) of the ten (10) employees (not necessarily Participants)
owning (or considered to own within the meaning of the Shareholder
Attribution Rules) both more than one-half of one percent (1/2%)
ownership interest in value and the largest percentage ownership
interests in value of any of the Aggregated Employers (which are
owned by employees) and who has an annual compensation from all the
Aggregated Employers in excess of the limitation in effect under
section 415(c)(l)(A) of the Internal Revenue Code for any such plan
year, or

(d) a One Percent Owner having an annual compensation from the
Aggregated Employers of more than One Hundred Fifty Thousand Dollars
($150,000):

B-2
<PAGE>

provided, however, that no more than fifty (50) employees (or, if lesser, the
greater of three of all the Aggregated Employers' employees or ten percent of
all the Aggregated Employers' employees) shall be treated as officers. The
determination of whether a Participant is a Key Employee will be made in
accordance with this definition and section 416(i)(1) of the Code and
regulations thereunder. For the purposes of determining ownership percentages,
each corporation, partnership and proprietorship otherwise required to be
aggregated shall be viewed as a separate entity. For purposes of paragraph (b)
above, if two (2) employees have the same interest in any of the Aggregated
Employers, the employee having the greatest annual compensation from that
Aggregated Employer shall be treated as having a larger interest. For the
purpose of determining compensation, however, all compensation received from all
Aggregated Employers shall be taken into account. The term "Key Employee" shall
include the beneficiaries of a deceased Key Employee. Annual compensation means
"(S)415 compensation" as defined in Appendix A to this Plan Statement but
including amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludible from the Participant's gross income under section
125, section 402(a)(8), section 402(h) or section 403(b) of the Internal Revenue
Code.

1.6. ONE PERCENT OWNER - for each Aggregated Employer that is a corporation,
any person who owns (or is considered to own within the meaning of the
Shareholder Attribution Rules) more than one percent (1%) of the value of the
outstanding stock of the corporation or stock possessing more than one percent
(1%) of the total combined voting power of the corporation, and, for each
Aggregated Employer that is not a corporation, any person who owns more than one
percent (1%) of the capital or the profits interest in such Aggregated Employer.
For the purposes of determining ownership percentages, each corporation,
partnership and proprietorship otherwise required to be aggregated shall be
viewed as a separate entity.

1.7. SHAREHOLDER ATTRIBUTION RULES - the rules of section 318 of the Code,
(except that subparagraph (C) of section 318(a)(2) of the Code shall be applied
by substituting "5 percent" for "50 percent") or, if the Employer is not a
corporation, the rules determining ownership in such Employer which shall be set
forth in regulations prescribed by the Secretary of the Treasury.

1.8. TOP HEAVY AGGREGATION GROUP - any Aggregation Group for which, as of the
Determination Date, the sum of:

(i) the present value of the cumulative accrued benefits for Key
Employees under all defined benefit plans included in such
Aggregation Group; and

(ii) the aggregate of the accounts of Key Employees under all
defined contribution plans included in such Aggregation Group,

exceed sixty percent (60%) of a similar sum determined for all employees. In
applying the foregoing, the following rules shall be observed:

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<PAGE>

(a) For the purpose of determining the present value of the cumulative
accrued benefit for any employee under a defined benefit plan, or
the amount of the account of any employee under a defined
contribution plan, such present value or amount shall be increased
by the aggregate distributions made with respect to such employee
under the plan during the five (5) year period ending on the
Determination Date.

(b) Any rollover contribution (or similar transfer) initiated by the
employee, made from a plan maintained by one employer to a plan
maintained by another employer and made after December 31, 1983 to
a plan shall not be taken into account with respect to the
transferee plan for the purpose of determining whether such
transferee plan is a Top Heavy Plan (or whether any Aggregation
Group which includes such plan is a Top Heavy Aggregation Group).
Any rollover contribution (or similar transfer) not described in
the preceding sentence shall be taken into account with respect to
the transferee plan for the purpose of determining whether such
transferee plan is a Top Heavy Plan (or whether any Aggregation
Group which includes such plan is a Top Heavy Aggregation Group).

(c) If any individual is not a Key Employee with respect to a plan for
any plan year, and was not a Key Employee for any of the four
preceding plan years, but such individual was a Key Employee with
respect to a plan for any prior plan year, the cumulative accrued
benefit of such employee and the account of such employee shall not
be taken into account.

(d) The determination of whether a plan is a Top Heavy Plan shall be
made once for each plan year of the plan as of the Determination
Date for that plan year.

(e) In determining the present value of the cumulative accrued benefits
of employees under a defined benefit plan, the determination shall
be made as of the actuarial valuation date last occurring during
the twelve (12) months preceding the Determination Date and shall
be determined on the assumption that the employees terminated
employment on the valuation date except as provided in section 416
of the Code and the regulations thereunder for the first and second
plan years of a defined benefit plan. The accrued benefit of any
employee (other than a Key Employee) shall be determined under the
method which is used for accrual purposes for all plans of the
employer or if there is no method which is used for accrual
purposes under all plans of the employer, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted
under Code section 411(b)(1)(C). Unless otherwise specified in the
Adoption Agreement, in determining this present value, the
mortality and interest assumptions shall be those which would be
used by the Pension Benefit Guaranty Corporation in valuing the
defined benefit plan if it terminated on such valuation date. The
accrued benefit to be valued shall be the benefit expressed as a
single life annuity.

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(f) In determining the accounts of employees under a defined
contribution plan, the account values determined as of the most
recent asset valuation occurring within the twelve (12) month
period ending on the Determination Date shall be used. In addition,
amounts required to be contributed under either the minimum funding
standards or the plan's contribution formula shall be included in
determining the account. In the first year of the plan,
contributions made or to be made as of the Determination Date shall
be included even if such contributions are not required.

(g) If any individual has not performed any services for any employer
maintaining the plan at any time during the five (5) year period
ending on the Determination Date, any accrued benefit of the
individual under a defined benefit plan and the account of the
individual under a defined contribution plan shall not be taken
into account.

(h) For this purpose, a terminated plan shall be treated like any other
plan and must be aggregated with other plans of the employer if it
was maintained within the last five (5) years ending on the
determination date for the plan year in question and would, but for
the fact that it terminated, be part of the Aggregation Group for
such plan year.

1.9. TOP HEAVY PLAN - a qualified plan under which (as of the Determination
Date):

(i) if the plan is a defined benefit plan, the present value of
the cumulative accrued benefits for Key Employees exceeds
sixty percent (60%) of the present value of the cumulative
accrued benefits for all employees; and

(ii) if the plan is a defined contribution plan, the aggregate of
the accounts of Key Employees exceeds sixty percent (60%) of
the aggregate of all of the accounts of all employees.

In applying the foregoing, the following rules shall be observed:

(a) Each plan of an Employer required to be included in an Aggregation
Group shall be a Top Heavy Plan if such Aggregation Group is a Top
Heavy Aggregation Group.

(b) For the purpose of determining the present value of the cumulative
accrued benefit for any employee under a defined benefit plan, or
the amount of the account of any employee under a defined
contribution plan, such present value or amount shall be increased
by the aggregate distributions made with respect to such employee
under the plan during the five (5) year period ending on the
Determination Date.

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<PAGE>

one employer to a plan maintained by another employer and made
after December 31, 1983 to a plan shall not be taken into account
with respect to the transferee plan for the purpose of determining
whether such transferee plan is a Top Heavy Plan (or whether any
Aggregation Group which includes such plan is a Top Heavy
Aggregation Group). Any rollover contribution (or similar transfer)
not described in the preceding sentence shall be taken into account
with respect to the transferee plan for the purpose of determining
whether such transferee plan is a Top Heavy Plan (or whether any
Aggregation Group which includes such plan is a Top Heavy
Aggregation Group).

(d) If any individual is not a Key Employee with respect to a plan for
any plan year, and was not a Key Employee for any of the four
preceding plan years, but such individual was a Key Employee with
respect to the plan for any prior plan year, the cumulative accrued
benefit of such employee and the account of such employee shall not
be taken into account.

(e) The determination of whether a plan is a Top Heavy Plan shall be
made once for each plan year of the plan as of the Determination
Date for that plan year.

(f) In determining the present value of the cumulative accrued benefits
of employees under a defined benefit plan, the determination shall
be made as of the actuarial valuation date last occurring during
the twelve (12) months preceding the Determination Date and shall
be determined on the assumption that the employees terminated
employment on the valuation date except as provided in section 416
of the Code and the regulations thereunder for the first and second
plan years of a defined benefit plan. The accrued benefit of any
employee (other than a Key Employee) shall be determined under the
method which is used for accrual purposes for all plans of the
employer or if there is no method which is used for accrual
purposes under all plans of the employer, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted
under Code section 411(b)(1)(C). Unless otherwise specified In the
Adoption Agreement, in determining this present value, the
mortality and interest assumptions shall be those which would be
used by the Pension Benefit Guaranty Corporation in valuing the
defined benefit plan if it terminated on such valuation date. The
accrued benefit to be valued shall be the benefit expressed as a
single life annuity.

(g) In determining the accounts of employees under a defined
contribution plan, the account values determined as of the most
recent asset valuation occurring within the twelve (12) month
period ending on the Determination Date shall be used. In addition,
amounts required to be contributed under either the minimum funding
standards or the plan's contribution formula shall be included in
determining the account. In the first year of the plan,
contributions made or to be made as of the Determination Date shall
be included even if such contributions are not required.

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<PAGE>

(h) If any individual has not performed any services for any employer
maintaining the plan at any time during the five (5) year period
ending on the Determination Date, any accrued benefit of the
Individual under a defined benefit plan and the account of the
individual under a defined contribution plan shall not be taken into
account.

(i) For this purpose, a terminated plan shall be treated like any other
plan and must be aggregated with other plans of the employer if it
was maintained within the last five (5) years ending on the
determination date for the plan year in question and would, but for
the fact that it terminated, be part of the Aggregation Group for
such plan year.

SECTION 2

DETERMINATION OF TOP HEAVINESS

Once each Plan Year, as of the Determination Date for that Plan Year, the
administrator of this Plan shall determine if this Plan is a Top Heavy Plan.

SECTION 3

CONTINGENT PROVISIONS

3.1. WHEN APPLICABLE. If this Plan is determined to be a Top Heavy Plan for any
Plan Year, the following provisions shall apply for that Plan Year (and, to the
extent hereinafter specified, for subsequent Plan Years), notwithstanding any
provisions to the contrary in the Plan Statement.

3.2. VESTING REQUIREMENT.

3.2.1. GENERAL RULE. During any Plan Year that the Plan is determined to
be a Top Heavy Plan, then all accounts of all Participants in a defined
contribution plan that is a Top Heavy Plan and the accrued benefits of all
Participants in a defined benefit plan that is a Top Heavy Plan shall be vested
and nonforfeitable in accordance with the following schedule if, and to the
extent, that it is more favorable than other provisions of the Plan Statement:

<TABLE>
<CAPTION>
If the Participant Has His Vested
Completed the Following Years Percentage
of Vesting Service: Shall Be:
------------------------------- ------------
<S> <C>
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
</TABLE>

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<PAGE>

<TABLE>
<S> <C>
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</TABLE>

The above vesting schedule, if applicable, shall apply to all accounts and
benefits within the meaning of section 411(a)(7) of the Code except those
attributable to employee contributions including contributions made and benefits
accrued before the effective date of section 416 of the Code and before the Plan
was a Top Heavy Plan. However, this Section 3.2.1 does not apply to the
accounts of any Participant who does not have an Hour of Service after the Plan
has initially become a Top Heavy Plan, and such Participant's Vested interests
shall be determined without regard to this Section 3.2.1. The minimum
allocation required (to the extent required to be Vested under section 416(b) of
the Code) may not be forfeited under section 411(a)(3)(B) or 411(a)(3)(D) of the
Code, and will be determined without regard to any contribution by the Employer
for the Participant under the Federal Insurance Contribution Act.

3.2.2. SUBSEQUENT YEAR. In each subsequent Plan Year that the Plan is
determined not to be a Top Heavy Plan, the other nonforfeitability provisions of
the Plan Statement (and not this section) shall apply in determining the vested
and nonforfeitable rights of Participants who do not have five (5) or more years
of Vesting Service (three (3) or more years of Vesting Service for Participants
who have one (1) or more Hours of Service in any Plan Year beginning after
December 31, 1988) as of the beginning of such subsequent Plan Year; provided,
however, that they shall not be applied in a manner which would reduce the
vested and nonforfeitable percentage of any Participant. The accounts and
accrued benefits of all other Participants shall be vested and nonforfeitable in
accordance with the more favorable of the schedule in Section 3.2.1 above or
other provisions of the Plan Statement. If the Vesting Schedule under the Plan
shifts in or out of the schedule set forth in Section 3.2.1 for any Plan Year
(because of the Plan's status as a Top Heavy Plan), such shift is an amendment
to the Vesting schedule and the election described in Section 5.2 of the Plan
Statement shall apply.

3.3. DEFINED CONTRIBUTION PLAN MINIMUM BENEFIT REQUIREMENT.

3.3.1. GENERAL RULE. If this Plan is a defined contribution plan, then
for any Plan Year that this Plan is determined to be a Top Heavy Plan, the
Employer shall make a contribution for allocation to the account of each
employee who is a Participant for that Plan Year and who is not a Key Employee
in an amount (when combined with other Employer contributions and forfeited
accounts allocated to his account) which is at least equal to three percent (3%)
of such Participant's compensation attributable to Recognized Employment while a
Participant. This contribution shall be made for each Participant who has not
separated from service with the Employer at the end of the Plan Year (including
for this purpose any Participant who is then on temporary layoff or authorized
leave of absence or who, during such Plan Year, was inducted into the Armed
Forces of the United States from employment with the Employer) including, for
this purpose, each employee of the Employer who would have been a Participant if
he had:

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<PAGE>

(a) completed one thousand (1,000) Hours of Service (or the equivalent)
during the Plan Year, and

(b) made any mandatory contributions to the Plan, and

The provision in this Section 3.3.1 shall not apply to any Participant to the
extent the Participant is covered under any other plan or plans of the Employer
and the Employer has provided in Article XIV of the Adoption Agreement that the
minimum allocation or benefit requirement applicable to top-heavy plans will be
met in the other plan or plans.

3.3.2. SPECIAL RULE. Subject to the following rules, the percentage
referred to in Section 3.3.1 of this Appendix shall not exceed the percentage at
which contributions are made (or required to be made) under this Plan for the
Plan Year for that Key Employee for whom that percentage is the highest for the
Plan Year.

(a) The percentage referred to above shall be determined by dividing
the Employer contributions for such Key Employee for such Plan Year
by so much of his compensation for such Plan Year as does not
exceed One Hundred and Fifty Thousand Dollars ($150,000) (as
adjusted for cost of living in accordance with section
401(a)(17)(B) of the Internal Revenue Code).

(b) For the purposes of this Section 3.3, all defined contribution
plans required to be included in an Aggregation Group shall be
treated as one (1) plan.

(c) The exception contained in this Section 3.3.2 shall not apply to
(be available to) this Plan if this Plan is required to be included
in an Aggregation Group if including this Plan in an Aggregation
Group enables a defined benefit plan to satisfy the qualification
requirement that the defined benefit plan cover a nondiscriminatory
group of employees (i.e., either the so-called "70% test," the
"70%/80% test" or the "nondiscriminatory classification test").

3.3.3. SALARY REDUCTION AND MATCHING CONTRIBUTIONS. For the purpose of
this Section 3.3, all Employer contributions attributable to a salary reduction
or similar arrangement shall be taken into account both for the purpose of
determining the minimum percentage contribution required to be made for a
particular Plan Year for a Participant who is not a Key Employee and for the
purpose of determining whether that minimum contribution requirement has been
satisfied. Effective for Plan Years beginning after December 31, 1988, for the
purpose of this Section 3.3, all Employer contributions attributable to a salary
reduction or similar arrangement and all Employer matching contributions shall
be taken into account for the purpose of determining the minimum percentage
contribution required to be made for a particular Plan Year for a Participant
who

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<PAGE>

is not a Key Employee but not for the purpose of determining whether that
minimum contribution requirement has been satisfied.

3.4. PRIORITIES AMONG PLANS. In applying the minimum benefit provisions of
this Appendix in any Plan Year that this Plan is determined to be a Top Heavy
Plan, the following rules shall apply:

(a) If an employee participates only in this Plan, the employee shall
receive the minimum benefit applicable to this Plan.

(b) If an employee participates in both a defined benefit plan and a
defined contribution plan and only one (1) of such plans is a Top
Heavy Plan for the Plan Year, the employee shall receive the
minimum benefit applicable to the plan which is a Top Heavy Plan.

(c) If an employee participates in both a defined contribution plan
and a defined benefit plan and both are Top Heavy Plans, then the
employee, for that Plan Year, shall receive the defined benefit
plan minimum benefit unless for that Plan Year the employee has
received employer contributions and forfeitures allocated to his
account in the defined contribution plan in an amount which is at
least equal to five percent (5%) of his compensation.

(d) If an employee participates in this Plan, and other defined
contribution plans that are Top Heavy, the minimum benefit shall
be made in the plan according to chronological order as determined
by the effective date of each plan (using the original effective
date of the plan) beginning with the most recently established
plan. Any contribution required under this Section 3.5 for this
Plan is reduced by any contribution made to any other plan
sponsored by the Employer.

3.5. ANNUAL CONTRIBUTION LIMITS.

3.5.1. GENERAL RULE. Notwithstanding anything apparently to the contrary
in the Appendix A to the Plan Statement, for any Plan Year that this Plan is a
Top Heavy Plan, the defined benefit fraction and defined contribution fraction
of the Appendix A to the Plan Statement shall be one hundred percent (100%) and
not one hundred twenty-five percent (125%).

3.5.2. SPECIAL RULE. Section 3.5.1 of this Appendix shall not apply to
any Top Heavy Plan if such Top Heavy Plan satisfies the following requirements:

(a) MINIMUM BENEFIT REQUIREMENT. The Top Heavy Plan (and any plan
required to be included in an Aggregation Group with such plan)
satisfies the requirements of section 416(c)(1)(B) of the Code is
applied by substituting three percent (3%) for two percent (2%)
and by increasing (but by no more than ten percentage points)
twenty percent (20%) by one percentage point

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<PAGE>

for each year for which the plan was taken into account under this
Section 3.5. Section 3.3.1 of this Appendix shall be applied by
substituting "four percent (4%)" for "three percent (3%)." Section
3.4(c) of this Appendix shall be applied by substituting "seven
and one-half percent (7-1/2%)" for "five percent (5%)."

(b) NINETY PERCENT RULE. A Top Heavy Plan would not be a Top Heavy
Plan if "ninety percent (90%)" were substituted for "sixty percent
(60%)" each place that it appears in the definitions of Top Heavy
Plan and Top Heavy Aggregation Group.

3.5.3. TRANSITION RULE. If, but for this Section 3.5.3, Section 3.5.1 of
this Appendix would begin to apply with respect to this Plan because it is a Top
Heavy Plan, the application of Section 3.5.1 of this Appendix shall be suspended
with respect to any individual so long as there are no:

(a) employer contributions, forfeitures or voluntary nondeductible
contributions allocated to such individual (if this Plan is a
defined contribution plan), or

(b) accruals for such individual (if this Plan is a defined benefit
plan).

3.5.4. COORDINATING CHANGE. If this Plan is a Top Heavy Plan for any Plan
Year, then for purposes of the Appendix A to the Plan Statement, section
415(e)(6)(i) of the Code shall be applied by substituting "Forty-one Thousand
Five Hundred Dollars ($41,500)" for "Fifty-one Thousand Eight Hundred Seventy-
five Dollars ($51,875)."

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APPENDIX C

QUALIFIED DOMESTIC RELATIONS ORDERS

SECTION 1

GENERAL MATTERS

Terms defined in the Plan Statement shall have the same meanings when used in
this Appendix.

1.1. GENERAL RULE. The Plan shall not honor the creation, assignment or
recognition of any right to any benefit payable with respect to a Participant
pursuant to a domestic relations order unless that domestic relations order is a
qualified domestic relations order.

1.2. ALTERNATE PAYEE DEFINED. The only persons eligible to be considered
alternate payees with respect to a Participant shall be that Participant's
spouse, former spouse, child or other dependent.

1.3. DRO DEFINED. A domestic relations order is any judgment, decree or order
(including an approval of a property settlement agreement) which relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child or other dependent of a Participant and which is
made pursuant to a state domestic relations law (including a community property
law).

1.4. QDRO DEFINED. A qualified domestic relations order is a domestic
relations order which creates or recognizes the existence of an alternate
payee's right to (or assigns to an alternate payee the right to) receive all or
a portion of the Account of a Participant under the Plan and which satisfies all
of the following requirements.

1.4.1. NAMES AND ADDRESSES. The order must clearly specify the name and
the last known mailing address, if any, of the Participant and the name and
mailing address of each alternate payee covered by the order.

1.4.2. AMOUNT. The order must clearly specify the amount or percentage of
the Participant's Account to be paid by the Plan to each such alternate payee or
the manner in which such amount or percentage is to be determined.

1.4.3. PAYMENT METHOD. The order must clearly specify the number of
payments or period to which the order applies.

1.4.4. PLAN IDENTITY. The order must clearly specify that it applies to
this Plan.

1.4.5. SETTLEMENT OPTIONS. Except as provided in Section 1.4.8 of this
Appendix, the order may not require the Plan to provide any type or form of
benefits or any option not otherwise provided under the Plan.

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<PAGE>

1.4.6. INCREASED BENEFITS. The order may not require the Plan to provide
increased benefits.

1.4.7. PRIOR AWARDS. The order may not require the payment of benefits to
an alternate payee which are required to be paid to another alternate payee
under another order previously determined to be a qualified domestic relations
order.

1.4.8. EXCEPTIONS. Notwithstanding Section 1.4.5 of this Appendix:

(a) The order may require payment of benefits be made to an alternate
payee before the Participant has separated from service:

(i) If the order requires payment as of a date that is on or after
the date on which the Participant attains (or would have
attained) the earliest payment date described in Section
1.4.10 of this Appendix, or

(ii) If the order requires (A) that payment of benefits be made to
an alternate payee in a single lump sum as soon as is
administratively feasible after the order is determined to be
a qualified domestic relations order, and (B) does not contain
any of the provisions described in Section 1.4.9 of this
Appendix, and (C) provides that the payment of such single
lump sum fully and permanently discharges all obligations of
the Plan to the alternate payee.

(b) The order may require that payment of benefits be made to an
alternate payee as if the Participant had retired on the date on
which payment is to begin under such order (but taking into account
only the present value of benefits actually accrued).

(c) The order may require payment of benefits to be made to an
alternate payee in any form in which benefits may be paid under the
plan to the Participant (other than in the form of a joint and
survivor annuity with respect to the alternate payee and his or her
subsequent spouse).

1.4.9. DEEMED SPOUSE. Notwithstanding the foregoing:

(a) The order may provide that the former spouse of a Participant shall
be treated as a surviving spouse of such Participant for the
purposes of Section 7 of the Plan Statement (and that any
subsequent or prior spouse of the Participant shall not be treated
as a spouse of the Participant for such purposes), and

(b) The order may provide that, if the former spouse has been married
to the Participant for at least one (1) year at any time, the
surviving former spouse shall be deemed to have been married to the
Participant for the one (1) year period ending on the date of the
Participant's death.

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<PAGE>

1.4.10. PAYMENT DATE DEFINED. For the purpose of Section 1.4.8 of this
Appendix, the earliest payment date means the earlier of:

(a) The date on which the Participant is entitled to a distribution
under the Plan, or

(b) The later of (i) the date the Participant attains age fifty (50)
years, or (ii) the earliest date on which the Participant could
begin receiving benefits under the plan if the Participant
separated from service.

SECTION 2

PROCEDURES

2.1. ACTIONS PENDING REVIEW. During any period when the issue of whether a
domestic relations order is a qualified domestic relations order is being
determined by the Administrator's Representative, the Administrator's
Representative shall cause the Plan to separately account for the amounts which
would be payable to the alternate payee during such period if the order were
determined to be a qualified domestic relations order.

2.2. REVIEWING DRO'S. Upon the receipt of a domestic relations order, the
Administrator's Representative shall determine whether such order is a qualified
domestic relations order.

2.2.1. RECEIPT. A domestic relations order shall be considered to have
been received only when the Administrator's Representative shall have received a
copy of a domestic relations order which is complete in all respects and is
originally signed, certified or otherwise officially authenticated.

2.2.2. NOTICE TO PARTIES. Upon receipt of a domestic relations order, the
Administrator's Representative shall notify the Participant and all persons
claiming to be alternate payees and all prior alternate payees with respect to
the Participant that such domestic relations order has been received. The
Administrator's Representative shall include with such notice a copy of this
Appendix.

2.2.3. COMMENT PERIOD. The Participant and all persons claiming to be
alternate payees and all prior alternate payees with respect to the Participant
shall be afforded a comment period of thirty (30) days from the date such notice
is mailed by the Administrator's Representative in which to make comments or
objections to the Administrator's Representative concerning whether the domestic
relations order is a qualified domestic relations order. By the unanimous
written consent of the Participant and all persons claiming to be alternate
payees and all prior alternate payees with respect to the Participant, the
thirty (30) day comment period may be shortened.

2.2.4. INITIAL DETERMINATION. Within a reasonable period of time after
the termination of the comment period, the Administrator's Representative shall
give written

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<PAGE>

notice to the Participant and all persons claiming to be alternate payees and
all prior alternate payees with respect to the Participant of its decision that
the domestic relations order is or is not a qualified domestic relations order.
If the Administrator's Representative determines that the order is not a
qualified domestic relations order or if the Administrator's Representative
determines that the written objections of any party to the order being found a
qualified domestic relations order are not valid, the Administrator's
Representative shall include in its written notice:

(i) the specific reasons for its decision,

(ii) the specific reference to the pertinent provisions of this
Plan Statement upon which its decision is based,

(iii) a description of additional material or information, if any,
which would cause the Administrator's Representative to
reach a different conclusion, and

(iv) an explanation of the procedures for reviewing the initial
determination of the Administrator's Representative.

2.2.5. APPEAL PERIOD. The Participant and all persons claiming to be
alternate payees and all prior alternate payees with respect to the Participant
shall be afforded an appeal period of sixty (60) days from the date such an
initial determination and explanation is mailed in which to make comments or
objections concerning whether the original determination of the Administrator's
Representative is correct. By the unanimous written consent of the Participant
and all persons claiming to be alternate payees and all prior alternate payees
with respect to the Participant, the sixty (60) day appeal period may be
shortened.

2.2.6. FINAL DETERMINATION. In all events, the final determination of the
Administrator's Representative shall be made not later than eighteen (18) months
after the date on which first payment would be required to be made under the
domestic relations order if it were a qualified domestic relations order. The
final determination shall be communicated in writing to the Participant and all
persons claiming to be alternate payees and all prior alternate payees with
respect to the Participant.

2.3. FINAL DISPOSITION. If the domestic relations order is finally determined
to be a qualified domestic relations order and all comment and appeal periods
have expired, the Plan shall pay all amounts required to be paid pursuant to the
domestic relations order to the alternate payee entitled thereto. If the
domestic relations order is finally determined not to be a qualified domestic
relations order and all comment and appeal periods have expired, benefits under
the Plan shall be paid to the person or persons who would have been entitled to
such amounts if there had been no domestic relations order.

2.4. ORDERS BEING SOUGHT. If the Administrator's Representative has notice
that a domestic relations order is being or may be sought but has not received
the order, the

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Administrator's Representative shall not (in the absence of a written request
from the Participant) delay payment of benefits to a Participant or beneficiary
which otherwise would be due. If the Administrator's Representative has
determined that a domestic relations order is not a qualified domestic relations
order and all comment and appeal periods have expired, the Administrator's
Representative shall not (in the absence of a written request from the
Participant) delay payment of benefits to a Participant or beneficiary which
otherwise would be due even if the Administrator's Representative has notice
that the party claiming to be an alternate payee or the Participant or both are
attempting to rectify any deficiencies in the domestic relations order.

SECTION 3

PROCESSING OF AWARD

3.1. GENERAL RULES. If a benefit is awarded to an alternate payee pursuant to
an order which has been finally determined to be a qualified domestic relations
order, the following rules shall apply.

3.1.1. SOURCE OF AWARD. If a Participant shall have a Vested interest in
more than one Account under the Plan, the benefit awarded to an alternate payee
shall be withdrawn from the Participant's Accounts in proportion to his Vested
interest in each of them.

3.1.2. EFFECT ON ACCOUNT. For all purposes of the Plan, the Participant's
Account (and all benefits payable under the Plan which are derived in whole or
in part by reference to the Participant's Account) shall be permanently
diminished by the portion of the Participant's Account which is awarded to the
alternate payee. The benefit awarded to an alternate payee shall be considered
to have been a distribution from the Participant's Account for the limited
purpose of applying the rules of Section 5.1.3 of the Plan Statement.

3.1.3. AFTER DEATH. After the death of an alternate payee, all amounts
awarded to the alternate payee which have not been distributed to the alternate
payee and which continue to be payable shall be paid in a single lump sum
distribution to the personal representative of the alternate payee's estate as
soon as administratively feasible unless the qualified domestic relations order
clearly provides otherwise. The Participant's beneficiary designation shall not
be effective to dispose of any portion of the benefit awarded to an alternate
payee unless the qualified domestic relations order clearly provides otherwise.

3.1.4. IN-SERVICE BENEFITS. The in-service distribution and the loan
provisions of Section 7 of this Plan Statement shall not be applicable to the
benefit awarded to an alternate payee.

3.2. SEGREGATED ACCOUNT. If the Administrator's Representative determines that
it would facilitate the administration or the distribution of the benefit
awarded to the alternate payee or if the qualified domestic relations order so
requires, the benefit awarded to the alternate payee shall be established on the
books and records of the Plan as a separate account belonging to the alternate
payee.

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<PAGE>

3.3. FORMER ALTERNATE PAYEES. If an alternate payee has received all benefits
to which the alternate payee is entitled under a qualified domestic relations
order, the alternate payee will not at any time thereafter be deemed to be an
alternate payee or prior alternate payee for any substantive or procedural
purpose of this Plan.

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APPENDIX D

HIGHLY COMPENSATED EMPLOYEE

SECTION 1

GENERAL RULE

1.1. HIGHLY COMPENSATED EMPLOYEE. A "highly compensated employee" is any
employee who, during the "determination year" or the "look-back year":

(i) was at any time a five percent (5%) owner;

(ii) received compensation from the Employer in excess of Seventy-
Five Thousand Dollars ($75,000);

(iii) received compensation from the Employer in excess of Fifty
Thousand Dollars ($50,000) and was in the top-paid group of
employees for such year; or

(iv) was at any time an officer and received compensation greater
than 50 percent (50%) of the amount in effect under section
415(b)(1)(A) of the Code for such year.

The group of employees (including former employees) who are highly compensated
employees consists of both highly compensated active employees and highly
compensated former employees. The determination of who is a highly compensated
employee will be made in accordance with this Appendix D and section 414(q) of
the Code and the regulations thereunder.

1.2. DETERMINATION YEAR. The determination year is the current Plan Year (that
is, the Plan Year for which the determination of which employees are highly
compensated employees is being made).

1.3. LOOK-BACK YEAR. The look-back year is the twelve-month period immediately
preceding the determination year (generally, the preceding Plan Year). The
Employer does not elect to make the look-back year calculation on the basis of
the calendar year ending with or within the determination year.

1.4. SPECIAL RULE FOR DETERMINATION YEAR. An employee not described in Section
1.1 (ii), (iii) or (iv) for the look-back year shall not be treated as described
in Section 1.1 (ii), (iii) or (iv) for the determination year unless such
employee is a member of the group consisting of the one hundred (100) employees
paid the greatest compensation during the determination year. If there is no
difference in compensation between the 100th employee and the 101st employee,
then those employees receiving the same compensation as the 100th employee shall
be ranked in descending order of seniority, with the employee with the greatest
seniority being ranked first.

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<PAGE>

1.5. HIGHLY COMPENSATED ACTIVE EMPLOYEE. A highly compensated active employee
is any highly compensated employee who performs services for the Employer during
the determination year.

1.6. HIGHLY COMPENSATED FORMER EMPLOYEE. A highly compensated former employee
is any former employee who had a "separation year" (as defined in Section 2.9)
prior to the determination year and was a highly compensated active employee for
either (1) such employee's separation year or (2) any determination year ending
on or after the employee's 55th birthday. An employee who performs no services
for the Employer during a determination year is treated as a former employee.

SECTION 2

SPECIAL RULES & DEFINITIONS

2.1. INCORPORATED DEFINITIONS. Terms defined in the Plan Statement shall have
the same meanings when used in this Appendix. References to the "Code" shall
mean the Internal Revenue Code, as amended from time to time.

2.2. FIVE PERCENT OWNER. An employee shall be treated as a five percent (5%)
owner for any determination year or look-back year if at any time during such
year such employee was a five percent (5%) owner (as defined in the Appendix B
to this Plan Statement) of the Employer.

2.3. TOP-PAID GROUP. An employee is in the top-paid group of employees for any
determination year or look-back year if such employee is in the group consisting
of the top twenty percent (20%) of the employees when ranked on the basis of
compensation paid during such year, excluding those employees described in
Section 2.10. For purposes of the preceding sentence, the top twenty percent
(20%) shall be determined by disregarding fractional numbers (i.e., the top 20%
of 118 employees shall be the top 23 employees). Employees who perform no
services for the Employer during the year are not included in determining the
top-paid group of employees for that year.

2.4. SPECIAL RULES FOR OFFICERS.

2.4.1. NOT MORE THAN 50 OFFICERS. For purposes of Section 1.1(iv) of this
Appendix, no more than fifty (50) employees (or, if lesser, the greater of three
employees or ten percent of the employees) shall be treated as officers. If the
actual number of officers exceeds this limit, then the officers who will be
considered as includible officers under Section 1.1 (iv) are those who receive
the greatest compensation from the Employer during the determination year or the
look-back year.

2.4.2. AT LEAST 1 OFFICER. If for any determination year or look-back
year no officer of the Employer is described in Section 1.1(iv) of this
Appendix, the highest paid officer of the Employer for such year shall be
treated as described in such Section 1.1(iv).

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<PAGE>

This is true whether or not such employee is also a highly compensated employee
on any other basis.

2.5. FORMER EMPLOYEES EXCLUDED FOR CERTAIN PURPOSES. Former employees are not
included in the top-paid group, the group consisting of the one hundred (100)
employees paid the greatest compensation or the group of includible officers for
purposes of determining who are highly compensated active employees. In
addition, former employees are not counted as employees for purposes of
determining the number of employees in the top-paid group.

2.6. EMPLOYEES DESCRIBED IN SEVERAL GROUPS. An employee who is a highly
compensated active employee for a determination year by reason of being
described in one group under Section 1.1 for either the determination year or
the look-back year, shall not be disregarded in determining whether another
employee is a highly compensated active employee by reason of being described in
another group under Section 1.1.

2.7. CERTAIN FAMILY MEMBERS.

2.7.1. IN GENERAL. If any individual is a member of the family of a five
percent (5%) owner or of a highly compensated employee in the group consisting
of the ten (10) highly compensated employees paid the greatest compensation
during the determination year or the look-back year, then:

(i) such individual shall not be considered a separate employee;
and

(ii) any compensation paid to such individual (and any applicable
contribution or benefit on behalf of such individual) shall
be treated as if it were paid to (or on behalf of) the five
percent (5%) owner or highly compensated employee.

Family members are subject to this aggregation rule whether or not they may be
excluded under Section 2.10 for purposes of determining the top-paid group and
whether or not they are highly compensated employees when considered separately.

2.7.2. FAMILY. For purposes of Section 2.7.1 of this Appendix, the term
"family" means, with respect to any employee, such employee's spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants or
descendants.

2.7.3. PRIORITY. The determination of which employees are highly
compensated employees and which highly compensated employees are among the ten
highly compensated employees paid the greatest compensation during the
determination year or the look-back year shall be made prior to the application
of the family aggregation rules. Similarly, the determination of the number and
identity of employees in the top-paid group for a determination year or a look-
back year and the identity of the group of employees consisting of the 100
employees paid the greatest compensation for a determination year shall be made

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<PAGE>

prior to the application of the family aggregation rules. The family aggregation
rules apply separately to the determination year and the look-back year.

2.7.4. CHANGE IN FAMILY RELATIONSHIP. An individual is a family member
with respect to an employee or former employee if such individual is a family
member on any day during the determination year or the look-back year, even
though such relationship changes during such year as a result of death or
divorce.

2.8. COMPENSATION. For purposes of this Appendix the term "compensation" means
"(S) 415 compensation" as defined in Appendix A to this Plan Statement but
including amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludible from the Participant's gross income under section
125, section 402(a)(8), section 402(h) or section 403(b) of the Code.
Compensation for any employee who performed services for only part of a year is
not annualized for purposes of determining such employee's compensation for the
determination year or the look-back year.

2.9. SEPARATION YEAR. Generally the "separation year" is the determination
year during which the employee separates from service with the Employer. An
employee who performs no services for the Employer during a determination year
will be treated as having separated from service in the year in which that
employee last performed services for the Employer.

2.9.1. DEEMED SEPARATION. Solely for the purpose of determining whether
an employee is a highly compensated former employee after the employee actually
separates from service, an employee may be deemed to have separated from service
during a determination year in which the employee actually performs some
services for the Employer. An employee will be deemed to have a separation year
if, in a determination year prior to the employee's attaining the age of 55, the
employee receives compensation in an amount less than 50% of the employee's
average annual compensation for the three consecutive calendar years preceding
such determination year during which the employee received the greatest amount
of compensation from the Employer (or the total period of the employee's service
with the Employer, if less). This deemed separation from service may occur
without regard to whether the reduction in compensation occurs on account of the
employee's leave of absence from service with the Employer.

2.9.2. DEEMED RESUMPTION. An employee who is treated as having a deemed
separation year by reason of Section 2.9.1 will not be treated as a highly
compensated former employee after such employee actually separates from service
with the Employer if, after such deemed separation year, and before the year of
actual separation, such employee's compensation from the Employer for a
particular determination year increased significantly so that such employee is
treated as having a deemed resumption of employment. In order for a deemed
resumption of employment to occur, there must be an increase in compensation
from the Employer to the extent that such compensation would not result in a
deemed separation year under Section 2.9.1 using the same three-year period
taken into account for purposes of that Section.

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<PAGE>

2.10. EXCLUDED EMPLOYEES.

2.10.1. GENERAL EXCLUSIONS. For purposes of determining the number of
employees in the top-paid group for a determination year or a look-back year
under Section 2.3 of this Appendix, the following employees shall be excluded:

(i) employees who have not completed six (6) months of service
by the end of the year;

(ii) employees who normally work less than seventeen and one-half
(17-1/2) hours per week;

(iii) employees who normally work during less than six (6) months
during the year; and

(iv) employees who have not attained age twenty-one (21) by the
end of the year.

For purposes of computing months of service, an employee's service in the
immediately preceding year is added to service in the current year to determine
whether an employee is excluded in the current year.

2.10.2. EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS. In general,
employees who are included in a unit of employees covered by a collective
bargaining agreement are included in determining the number of employees in the
top-paid group. However, if ninety percent (90%) or more of all employees are
covered under collective bargaining agreements and this Plan covers only
employees who are not covered under such agreements, then the employees who are
covered under such collective bargaining agreements shall not be counted in
determining the number of employees who will be included in the top-paid group.
In addition, the employees covered by such agreements will not be included in
the top-paid group.

2.10.3. MINIMUM HOUR RULE. An employee who works at least 17-1/2 hours a
week for 50% or more of the total weeks worked by such employee during a
determination year or look-back year is deemed to normally work more than 17-1/2
hours a week. An employee who works less than 17-1/2 hours a week for fifty
percent (50%) or more of the total weeks worked by such employee during a
determination year or look-back year is deemed to normally work less than 17-1/2
hours a week. The foregoing determinations may be made separately with respect
to each employee or on the basis of groups of employees who fall within
particular job categories as established by the Employer on a reasonable basis.
In general, eighty percent (80%) of the positions within a particular job
category must be filled by employees who normally work less than 17-1/2 hours a
week before any employees may be excluded under this rule on the basis of their
membership in that job category. Alternatively, an Employer may exclude
employees who are members of a particular job category if the median number of
hours credited to employees in that category during a determination year or
look-back year is 500 or less.

D-5
<PAGE>

2.10.4. MINIMUM PERIOD OF TIME RULE. The determination of whether an
employee normally works during less than six months in any determination year or
look-back year is made on the basis of the facts and circumstances of the
Employer as evidenced by the Employer's customary experience in the years
preceding such year. An employee who works on one day during a month is deemed
to have worked during that month.

2.10.5. NONRESIDENT ALIENS. Employees who are nonresident aliens and who
receive no earned income (within the meaning of section 911(d)(2) of the Code)
from the employer which constitutes income from sources within the United States
(within the meaning of section 861(a)(3) of the Code) are excluded for all
purposes of this Appendix.

2.11. ADJUSTMENTS TO DOLLAR AMOUNTS. The dollar amounts described in Section 1.1
(ii) and (iii) shall be adjusted for cost-of-living increases as provided by
regulations or other rulings by the Secretary of the Treasury. The applicable
dollar amount for a particular determination year shall be the dollar amount for
the calendar year in which the determination year begins. For determination
years beginning before January 1, 1987, the dollar amounts in Section 1.1 (ii)
and (iii) shall be $75,000 and $50,000 respectively.

2.12. ELECTION TO INCLUDE LEASED EMPLOYEES. The term "employee" shall include
all leased employees of the Employer, whether or not such leased employees are
covered by a "safe-harbor plan" as described in section 414(n)(5) of the Code.

2.13. AGGREGATION. Subsections (b), (c), (m), (n), and (o) of section 414 of
the Code shall be applied before the application of the rules in this Appendix.

2.14. ELECTION OF SPECIAL RULE FOR EMPLOYEES WHO SEPARATED FROM SERVICE BEFORE
JANUARY 1, 1987. For purposes of determining who is a highly compensated former
employee for this Plan and for all plans of the Employer with respect to all
situations for which section 414(q) of the Code is applicable to the Employer, a
former employee who separated from service prior to January 1, 1987, shall be
considered a highly compensated former employee if, during the employee's
separation year (or the year preceding such separation year) or during any year
ending on or after such employee's 55th birthday (or the last year ending before
such employee's 55th birthday), the employee was a five percent (5%) owner of
the Employer, at any time during such year, or the employee received
compensation in excess of $50,000 during such year. This determination may be
made on the basis of the calendar year, the Plan Year or any other twelve month
period selected by the Employer and applied on a reasonable and consistent
basis.

D-6
<PAGE>

APPENDIX E

TEFRA (S) 242(B) TRANSITIONAL RULES

Section 1. IN GENERAL. Prior to January 1, 1984, each individual who was
either:

(a) an actively employed Participant having an Account (or a contribution
accrued to an Account) as of December 31, 1983.

(b) a Participant not actively employed but having an Account (or a
contribution accrued to an Account) as of December 31, 1983, or

(c) a Beneficiary of a deceased Participant having an Account (or a
contribution accrued to an Account) as of December 31, 1983

was given the opportunity to make a designation (before January 1, 1984) of a
method of distribution, that would not have disqualified the Plan under section
401(a)(9) of the Code as in effect prior to amendment by the Deficit Reduction
Act of 1984, pursuant to (S) 242(b) of the Tax Equity and Fiscal Responsibility
Act of 1982 (hereinafter a "(S) 242(b) designation"). Some of those individuals
elected to make a (S) 242(b) designation and some did not. The distribution
rules set forth in this Appendix shall, notwithstanding any provisions of
Section 7 of the Plan Statement to the contrary, determine the distributions
made with respect to all individuals entitled to make a (S) 242(b) designation,
provided that if the Plan is not an exempt profit sharing plan, the QJ&SA
contract or Life Annuity contract has been rejected as described in Section 7 of
the Plan Statement. Distributions made with respect to individuals not entitled
to make a (S) 242(b) designation shall be governed solely by Section 7 of the
Plan Statement.

SECTION 2. NO DESIGNATION. In the case of distributions to an individual where
no (S) 242(b) designation was made, distributions after December 31, 1983 shall
be made as follows:

(a) If such individual is a Participant whose benefits were in pay status
on December 31, 1983, and the method of distribution in effect for
such Participant was consistent with the provisions of the Plan
Statement at the time such distribution commenced, then distribution
shall continue to be made to such Participant in accordance with the
method of distribution in effect on December 31, 1983, notwithstanding
that distribution could not have commenced under such method after
December 31, 1983.

(b) If such individual is a Beneficiary whose benefits were in pay status
on December 31, 1983, and the method of distribution in effect for
such Beneficiary was consistent with the provisions of the Plan
Statement at the time such distribution commenced, then distribution
shall continue to be made to such Beneficiary in accordance with the
method of distribution in effect on December 31, 1983, notwithstanding
that distribution could not have

E-1
<PAGE>

commenced under such method after December 31, 1983.

(c) If such individual is a Participant or a Beneficiary whose benefits
were not in pay status on December 31, 1983, distribution shall be
made in accordance with Section 7 of the Plan Statement and, to the
extent distribution cannot then be made upon terms which are
consistent with the provisions of Section 7 of the Plan Statement,
distribution shall be made as soon as practicable after December 31,
1983 in a single lump sum.

(d) For the purpose of the foregoing, benefits shall be considered to have
been in pay status on December 31, 1983 if distribution had commenced
on or prior to that date and was being made under a written instrument
signed by the Participant or Beneficiary which fixed the person to
whom such benefits were payable, the time or times at which
distributions would be made and the amount (or formula pursuant to
which the amount would be determined) of each distribution and was not
subject to variation at the discretion of the Participant or the
Administrator's Representative unless such variation would cause the
acceleration of distributions.

(e) Examples of circumstances in which distribution could not be made upon
terms consistent with the provisions of Section 7 of the Plan
Statement (and therefore would have to be made in a single lump sum)
include, but are not be limited to, distribution to a Participant who
was a key employee in a top heavy plan and who had attained age
seventy and one-half (70-1/2) years before 1984, distribution to a
Beneficiary who was not the surviving spouse of the Participant if the
Participant died prior to 1979, and distribution to a Beneficiary who
is the surviving spouse of a Participant who dies after December 31,
1983 at a time when distributions were being made to such Participant
for a term certain which extended beyond the life expectancy of such
Participant and surviving spouse.

SECTION 3. DESIGNATION MADE. In the case of distributions to an individual
where a (S) 242(b) designation was made before January 1, 1984, the
Administrator's Representative shall honor such (S) 242(b) designation in making
distributions hereunder to all individuals identified in such (S) 242(b)
designation. For this purpose:

(a) A (S) 242(b) designation shall, to the extent necessary, be deemed to
incorporate by reference either the written beneficiary designation
filed by the Participant prior to or coincident with the filing of a
(S) 242(b) designation or, if no such written beneficiary designation
has been filed, the automatic sequence of Beneficiaries provided under
the Plan document in effect on December 31, 1983.

(b) An individual who made a (S) 242(b) designation shall have the right
to revoke any (S) 242(b) designation filed by him at any time by a
written instrument delivered to the Employer. Upon such revocation,
distribution
<PAGE>

shall be made in accordance with the provisions of Section 7 of the
Plan Statement. To the extent that distribution cannot then be made
upon terms consistent with the provisions of Section 7 of the Plan
Statement, distribution shall be made, as soon as practicable after
such revocation, in a single lump sum.

(c) A Beneficiary entitled to distribution under this Plan shall have the
right to revoke the (S) 242(b) designation insofar as it applies to
such Beneficiary. Upon such revocation, distribution shall be made in
accordance with the provisions of Section 7 of the Plan Statement. If
a designation is revoked subsequent to the date distributions are
required to begin under Section 7 of the Plan Statement, the trust
must distribute by the end of the calendar year following the calendar
year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to
satisfy Section 7 of the Plan Statement, but for the (S) 242(b)
election. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in Treas. Reg. 1.401(a)(9)-2 (proposed). Any changes in
the (S) 242(b) designation will be considered to be a revocation of
the (S) 242(b) designation. However, the mere substitution or addition
of another beneficiary (one not named in the (S) 242(b) designation)
under the (S) 242(b) designation will not be considered to be a
revocation of the (S) 242(b) designation, so long as such substitution
or addition does not alter the period over which distribution are to
be made under the (S) 242(b) designation, directly or indirectly (for
example, by altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 of Treas. Reg. 1.401(a)(9)-1
(proposed) shall apply.

(d) If a Participant shall have filed a (S) 242(b) designation and shall
subsequently file (or amend) a written beneficiary designation under
the Plan, the (S) 242(b) designation shall not be deemed to be revoked
and the relevant measuring life or lives for purposes of the (S)
242(b) designation shall continue to be determined as described in
paragraph (a) above, without regard to any subsequent filing (or
amendment) of a written beneficiary designation or any subsequent
amendment of the automatic sequence of Beneficiaries under the Plan
Statement.

(e) A distribution to a Beneficiary will be governed by Section 7 of the
Plan Statement, unless the (S) 242(b) designation identifies the
Beneficiary, specifies the time at which distribution will commence
and the period over which distribution will be made with respect to
the distribution to be made upon the death of the Participant.

(f) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Participant or the Beneficiary,
to whom such

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<PAGE>

distribution is being made, will be presumed to have designated the
method of distribution under which the distribution is being made if
the method of distribution was specified in writing and the
distribution satisfied the requirements in Section 1 and Section 3(e)
of this Appendix.

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<PAGE>

APPENDIX F

TRANSITIONAL DISTRIBUTION RULES

The Prototype Sponsor adopted the following memorandum and amendment:

MEMORANDUM AND AMENDMENT

TO: Sponsoring Employers of 401(k) Prototype

FROM: First Trust National Association ("Prototype Sponsor")

RE: Distributions from Plan

DATE: December 23, 1988

The Internal Revenue Service recently issued regulations which limit the
existence or the use of any Employer, Trustee, Administrator's Representative or
other similar discretion over the benefit forms under qualified plans. In
response to those regulations, the Prototype Sponsor decided to amend the 401(k)
Prototype pursuant to its reserved power of amendment. This amendment is being
adopted to protect and preserve the sponsoring Employer's ability to design its
own distribution rules for its Plan. If the Prototype Sponsor did not take this
action, all the options and decisions would be surrendered to Participants or
Beneficiaries. Accordingly, the Prototype Sponsor's decision to amend the
401(k) Prototype gives sponsoring Employers time to decide how to respond to
these regulations.

Pursuant to Section 9.1.2 of the Basic Plan Document, the Prototype Sponsor
hereby amends the Basic Plan Document (and corresponding Adoption Agreement)
effective as of January 1, 1989, as follows:

SMALL AMOUNT DISTRIBUTIONS. A Vested Total Account which does not exceed Three
Thousand Five Hundred Dollars ($3,500) on the Annual Valuation Date immediately
following a Participant's Event of Maturity shall be automatically distributed
to the Participant in a lump sum as of that Annual Valuation Date without a
written application. The sponsoring Employer may in a written agreement with
the Prototype Sponsor modify this rule to increase the number of times each year
that a small amount distribution can be made (within limitations established by
the Prototype Sponsor).

TIME OF DISTRIBUTION. Distributions from the Plan may only be made as of an
Annual Valuation Date coincident with or following a Participant's Event of
Maturity. Thus, distributions shall only be made once a Plan Year. The
sponsoring Employer may in a written agreement with the Prototype Sponsor modify
this rule to increase the number of times each year that distributions can be
made (within limitations established by the Prototype Sponsor).

FORM OF DISTRIBUTION. Distributions from the Plan shall only be made in a lump
sum payment. This rule shall not apply to Participants and Beneficiaries
currently receiving

F-1
<PAGE>

payments under a specified plan of installment payments or to Participants who
have made a valid designation of a method of distribution pursuant to section
242(b) of the Tax Equity and Fiscal Responsibility Act of 1982. The sponsoring
Employer may in a written agreement with the Prototype Sponsor modify this rule
to increase the distribution options (within limitations established by the
Prototype Sponsor).

ELECTION TO DEFER. The election to defer described in Section 7.2.3 of the
Basic Plan Document and all references to that Section are deleted.

DISTRIBUTION IN CASH. All distributions from the Plan shall be made in cash.
If, however, the Vested Total Account to be distributed consists in whole or in
part of a Participant's unpaid promissory note, the distribution of that portion
of the Vested Total Account shall be made in the form of that promissory note.
If the Vested Total Account to be distributed consists in whole or in part of a
Participant's individually directed investments, the distribution of that
portion of the Vested Total Account shall be made in the form of the assets held
pursuant to that individual direction.

WITHDRAWALS FROM VOLUNTARY ACCOUNTS. If the Adoption Agreement allows
Participants to withdraw their nondeductible voluntary contributions and
deductible voluntary contributions, a Participant must submit a written
application specifying the amount of the withdrawal. The withdrawal will be
made as of the Annual Valuation Date coincident with or next following the
approval of a completed application and such withdrawal shall be made in a lump
sum cash payment as soon as practicable after such Annual Valuation Date. The
sponsoring Employer may in a written agreement with the Prototype Sponsor modify
this rule to increase the number of times each year that withdrawals can be made
(within limitations established by the Prototype Sponsor).

WITHDRAWALS FROM RETIREMENT SAVINGS ACCOUNT (401(K)). Notwithstanding the
elections made in the previously completed Adoption Agreement; distributions
from the Retirement Savings Account during employment shall not be allowed. The
sponsoring Employer may in a written agreement with the Prototype Sponsor modify
this rule to allow in-service distributions in limited circumstances (within
limitations established by the Prototype Sponsor).

WITHDRAWALS FROM OTHER ACCOUNTS. Notwithstanding the elections made in the
previously completed Adoption Agreement, distributions from accounts (other than
from the Retirement Savings Account) during employment shall not be allowed.
The sponsoring Employer may in a written agreement with the Prototype Sponsor
modify this rule to allow in-service distributions in limited circumstances
(within limitations established by the Prototype Sponsor).

Section 9.1.2 of the Basic Plan Document provides that an Employer shall be
deemed to have consented to the amendment described in this memorandum unless
prior to thirty (30) days after the date this memorandum is sent, the Employer
exercises its reserved power of amendment by adopting a successor retirement
plan. You will note that a number of the rules described in this memorandum
allow the sponsoring Employer and the Prototype

F-2
<PAGE>

Sponsor to agree to modifications. If you want to modify those rules, please
contact your Trust Officer to discuss possible modifications.

F-3
<PAGE>

APPENDIX G

PLAN LOAN RULES

Until the Employer adopts rules for the administration of Plan loans, this
Appendix G shall apply to all loans from the Plan.

(1) All Plan loans shall be administered by the Administrator's
Representative. Applications for loans shall be made to the
Administrator's Representative on forms available from the
Administrator's Representative.

(2) Loans shall be made available to all Participants and Beneficiaries on
a reasonably equivalent basis. Loans may be made for any purpose, and
all applications for loans that comply with Section 7.11 of the Plan
Statement will be granted. For this purpose, Participant shall
include only Participants who are active employees, a person shall be
a Beneficiary only after the death of the Participant who designated
such person as a Beneficiary, and an alternate payee shall be
considered a Beneficiary after the domestic relations order has been
finally determined to be a qualified domestic relations order.

(3) Loans shall not be made available to highly compensated employees (as
defined in Appendix D) in an amount (expressed as a percentage of
Vested Total Account) greater than the amount made available to other
Employees.

(4) No loans will be made to any Shareholder-Employee or Owner-Employee.

(5) All loans shall be secured by that portion of the Participant's Vested
Total Account equal to the lesser of (i) the amount of the loan, or
(ii) 50% of the Vested Total Account determined immediately before the
loan and reduced by the amount of any unpaid principal and interest on
any other loans secured by the Vested Total Account. The borrower may
grant a security interest in his or her "qualified residence" as
defined in section 163(h) of the Code if the borrower's unrestricted
equity interest is adequate to do so. No other security will be
permitted.

THIRD AMENDMENT-EFFECTIVE JANUARY 1, 1995

(6) All loans shall bear a reasonable rate of interest determined on the
first business day of the calendar month immediately preceding the
date as of which the loan is issued.

(7) Loans shall be for any term not to exceed 5 years except that loans to
acquire a dwelling unit which within a reasonable time (determined at
the time the loan is made) is to be used as the principal residence of
the Participant may be for any term that does not exceed 15 years.

G-1
<PAGE>

(8) Loans shall be issued effective as of the first business day following
each Valuation Date for the Plan as selected by the Employer in the
Adoption Agreement.

(9) Applications for loans must be received at least fifteen (15) days
before the date as of which the loan is issued.

(10) Loans will be made only in multiples of $100.

(11) All loans must be repaid no less frequently than quarterly. The
Administrator's Representative may establish uniform and
nondiscriminatory rules governing the frequency and method of loan
payments.

(12) All loans must be repaid in substantially level amounts including
principal and interest over the term of the loan.

(13) Loans may be prepaid in their entirety (and not otherwise) on any
regular payment date.

(14) No loan shall be made to a married Participant without the consent of
the Participant's spouse, unless the Plan is an exempt profit sharing
plan as defined in Section 7.3.4 of the Plan Statement. To be valid,
the spouse's consent must be in writing, must acknowledge the effect
of the loan and the use of the Account as security, must be witnessed
by a notary public and must be given within ninety (90) days of the
date the loan is made. Spousal consent shall never be required for a
loan to a Beneficiary.

(15) Loans will be in default upon the occurrence of one of the following
"events of default": (a) the death of the borrower, and (b) the
failure to make any payment when it is due.

(16) Upon an event of default, the following procedures shall be followed:

(a) The Administrator's Representative shall notify the borrower of
the event of default as soon as reasonably possible after it has
occurred.

(b) If, but only if, this is the borrower's first default for this
particular loan, the borrower shall have ten (10) days after
receipt of notice or twenty (20) days after notice is mailed,
whichever occurs first, to cure the default.

(d) If the default is not or cannot be cured, the entire outstanding
principal and accrued interest shall be immediately due and
payable. If not paid

G-2
<PAGE>

within five (5) days after demand for
payment is made, the loan shall be in actual default.

(17) If the actual default of a loan occurs after an Event of Maturity has
occurred for the Participant, the trustee shall foreclose on the
promissory note and attach the security therefor. If an Event of
Maturity has not then occurred, the trustee shall foreclose on the
promissory note and attach the security therefor as soon as the first
Event of Maturity occurs for the Participant.

(18) While any loan is outstanding, no distribution shall be made from the
Participant's Account which would result in the remaining assets
(exclusive of a borrower's promissory notes) having a value less than
one hundred percent (100%) of the outstanding principal and accrued
but unpaid interest on all outstanding loans.

(19) Loans in default which have not been foreclosed shall continue to
accrue interest until paid or foreclosed.

(20) No loan shall be made to a borrower who has any loan in default.

(21) If required by applicable law, the Trustee shall file reports with the
taxing authorities regarding loans in default, treat such loans as
taxable distributions to the Participant or Beneficiary and withhold
tax payments from the Participant's Accounts.

(22) If a loan is made from the individual Account of a Participant and the
Account is invested in more than one investment Subfund authorized and
established under Section 4.1 of the Plan Statement, the borrower may
specify the Subfunds from which the loan shall be taken, and the
amount from each. If the borrower does not specify, the amount
withdrawn to make the loan shall be charged to each investment Subfund
in accordance with the priority rules established by the
Administrator's Representative to be applied in a uniform and
nondiscriminatory manner.

G-3
<PAGE>

ADOPTION AGREEMENT #001
FOR USE WITH

401(K) PROTOTYPE
BASIC PLAN DOCUMENT #02
1989 RESTATEMENT

______________

ARTICLE I. PLAN ADOPTED

By execution of this Adoption Agreement, the Employer and the Trustee agree
that this Adoption Agreement and the related document entitled "(S) 401(k)
Prototype Basic Plan Document #02 (1989 Restatement)" as amended, are adopted as
the formal written instrument under which the Employer will maintain a defined
contribution profit sharing plan (the "Plan") for the benefit of its Employees
who are eligible to participate. The Plan which the Employer maintains is
intended to qualify under Internal Revenue Code section 401(a) and to be funded
through a fund exempt from federal income taxes under Internal Revenue Code
section 501(a).

(i) The Prototype Sponsor will furnish the Employer a copy of the opinion
letter issued by the Internal Revenue Service with respect to the
form of the Prototype Documents.

(ii) If the Prototype Sponsor amends the Prototype Documents, the
Prototype Sponsor will furnish the Employer a copy of the amendment
and a copy of any opinion letter issued by the Internal Revenue
Service with respect to the form of such amendment.

(iii) If the Employer desires a determination letter from the IRS on the

qualification of the Plan, the Employer (and not the Trustee or the
Prototype Sponsor) is responsible for obtaining the determination
letter.

(iv) The Employer will furnish the Trustee with a copy of any
determination letter it receives on the Plan created by the Employer
under the Prototype Documents.

(v) The Employer (and not the Trustee or the Prototype Sponsor) is
responsible for the compliance with all laws regarding the filing of
the Annual Report/Return with the government and distributing the
Summary Plan Description, Summary Annual Report and Summary of
Material Modifications to Participants and Beneficiaries.
<PAGE>

(vi) The Employer hereby directs the Trustee to withhold federal income
taxes from distributions from the Plan subject to the Employer's
obligation to furnish the Trustee with all information necessary for
the Trustee to properly withhold federal income taxes from
distributions.

(vii) The Employer understands that failure to properly fill out or amend
this Adoption Agreement may result in disqualification of the Plan.

(viii) If the Prototype Sponsor discontinues or abandons the Prototype
Documents, the Prototype Sponsor will inform the Employer.

(ix) This Adoption Agreement is not effective unless the Prototype
Sponsor (or its authorized representative) has consented, in
writing, to the use of this Adoption Agreement and the Prototype
Documents.

(x) The Employer understands that this is a legal document with
significant tax and other legal effects and represents that this
document has been reviewed by the Employer's own legal counsel.

ARTICLE II. THE EMPLOYER

A. The Employer's/1/ name and address is:

BUCA, Inc.
------------------------------------

2908 Hennepin Avenue South
------------------------------------

Minneapolis, Minnesota 55408
------------------------------------

____________________________________

[(S) 1.1.11]

B. The Employer is organized under the laws of the state of Minnesota as a
(check one):

X corporation.
-----

S corporation.
_____

partnership.
_____

proprietorship.
_____

other (specify) ______________________________.
_____

______________________

/1/ Under the Internal Revenue Code, all Employees of corporations, partnerships
and proprietorships which constitute a controlled group of businesses are
treated as if they were employed by a single employer. Accordingly, the
exclusion of Employees of corporations, partnerships or proprietorships which
are affiliated with the Employer may result in prohibited discrimination.

-2-
<PAGE>

[(S) 1.1.11]

C. The Employer's principal trade or business with respect to which this
Plan is established is: Restaurant./2/

D. The Employer's annual accounting period (federal income tax year) ends:
December 31.

E. The Employer's federal taxpayer identification number is: 41-1802364.

F. The Employer designates the following person(s) as the Administrator's
Representative.

KAREN LIBKE
-----------------------------------

___________________________________

[(S) 1.1.2]

ARTICLE III. THE TRUSTEE

A. The name and address of the Trustee to be used for reporting and disclosure
purposes is:

U.S. Bank National Association
--------------------------------------
180 East Fifth Street
--------------------------------------
P.O. Box 64488
--------------------------------------
St. Paul, Minnesota 55164-0488
--------------------------------------

[(S) 1.1.29]

B. Effective date of appointment of the Trustee listed above: October 1, 1998.

C. The Prototype Sponsor's Authorized Representative for inquiries regarding
the adoption of the Prototype Documents, intended meaning of the Prototype
Documents and effect of the opinion letter is:

_____________________

/2/ Describe the business and insert the proper business code from the current
instructions to IRS Form 5500.

-3-
<PAGE>

ARTICLE IV. HISTORY OF THE PLAN

A. The execution of this Adoption Agreement is intended to (check one):

_____ create a new
Plan.
X amend an existing Plan (complete the following).
-----

The existing Plan which is being amended was:

_____ maintained under this prototype or another prototype also
sponsored by the same Trustee as this Plan.

X maintained under some other master, prototype or
----- individually designed document.

[(S) 1.1.23]

The name of the Plan under the earlier Plan document was: BUCA, Inc.
Employee Savings Plan./3/

The original effective date of the Plan was: October 1, 1996.

The Trustee under the earlier Plan document was: Peter J. Mihajlov,
Don W. Hays and Philip A. Roberts.

The date that the earlier Plan document was executed (or most
recently amended) was: October 1, 1996.

[(S) 1.1.23]

B. Upon the execution of this Adoption Agreement, the Plan name for reporting
and disclosure purposes will be: BUCA, Inc. Employee Savings Plan./4/

_____________________
/3/ Do not insert the name of an earlier prototype document but rather the name
of the Plan.

/4/ Use a name that combines the Employer's name and words like "Retirement
Savings Plan" or "Savings Plan" or "401(k) Plan." Do not use "Prototype" in
the Plan name. Whatever name is chosen must be consistently used for
reporting and disclosure purposes.

-4-
<PAGE>

[(S) 1.1.20]

C. The three digit Plan serial number ("PN") which will be used by the
Employer for reporting and disclosure purposes is: 001./5/

D. The Effective Date (the date upon which this Adoption Agreement is to be
effective) is: October 1, 1998./6/

[(S) 1.1.8]

E. The last day of the Plan Year (the fiscal year of the Plan) is: December
31./7/

[(S) 1.1.22]

F. Is this Plan an exempt profit sharing plan as defined in (S) 7.3.4(d) of
the Basic Plan Document and, therefore, exempt from the qualified joint and
survivor annuity rules?

X Yes
------

______ No

[(S) 7.3.4(d)]

ARTICLE V. ELIGIBILITY REQUIREMENTS

A. AGE. The minimum age which each Employee must satisfy before becoming a
Participant in the Plan is (check one and complete):

______ No minimum age requirement.

X Minimum age 21 years (not greater than 21).
------

[(S) 2.1, (S) 1.2]

B. SERVICE FOR 401(K) PARTICIPATION. To become a Participant in the Plan for
the purpose of enrolling for retirement savings 401(k) participation, each
Employee must complete at least (check one):/8/

_____________________

/5/ Select a number such as "001", "002", "003", etc. This number must never
have been previously used by the Employer to identify any plan but this
Plan. The number must be used consistently to identify only this Plan.

/6/ If this is a new Plan, enter the first day of the Plan Year in which the
Adoption Agreement is signed (or any later date). The Effective Date
should be no earlier than the first day of the first Plan Year beginning
after December 31, 1988, or the first day of the Plan Year in which the
Plan is adopted if this is a new Plan or if the Plan has been previously
amended for the Tax Reform Act of 1986 and received an IRS determination
letter regarding that amendment; provided, however, certain provisions
specified in the Plan Statement shall be applicable prior to that date for
any Employer maintaining a Plan prior to January 1, 1989.

/7/ It is generally recommended that the Plan Year coincide with the Employer's
tax year, but this is not required. If the Employer's tax year is changed,
the Plan Year does not automatically change.

-5-
<PAGE>

_______ No years of Eligibility Service.

X One year of Eligibility Service with at least 1,000 Hours of
-------
Service.

_______ One year of Eligibility Service with at least 1,000 Hours of
Service or ___________ months (less than 12) of continuous
service without regard to Hours of Service credited.

[(S) 2.1, (S) 1.1.9]

C. SERVICE FOR EMPLOYER CONTRIBUTIONS. To become a Participant in the Plan
for purposes of receiving Employer matching contributions and Employer
profit sharing contributions each Employee must complete at least (check
one):/9/

_______ No years of Eligibility Service.

X One year of Eligibility Service with at least 1,000 Hours of
-------
Service.

_______ One year of Eligibility Service with at least 1,000 Hours of
Service or __________ months (less than 12) of continuous service
without regard to Hours of Service credited.

_______ Two years of Eligibility Service without an intervening One-Year
Break in Service.

[(S) 2.1, (S) 1.1.9]

D. COMPUTATION PERIOD. The computation period for Eligibility Service will be:

X The year beginning with the date the Employee first performs
--------
an Hour of Service and then Plan Years./10/

[(S) 1.1.9]

________ Successive years beginning on the date the Employee first
performs an Hour of Service and annual anniversaries of that
date.

__________________

/8/ Each Employee eligible to enroll for retirement savings 401(k)
contributions prior to completing the necessary Eligibility Service for
Employer contributions shall be treated as a Participant solely with
respect to such retirement savings 401(k) contributions during the period
prior to an Employee completing such Eligibility Service.

/9/ Unless the Adoption Agreement provides that the Employer Contributions
Accounts and Employer Matching Accounts are fully (100%) Vested and
nonforfeitable at all times, no more than one year of Eligibility Service
may be required.

/10/ This is the easier rule to administer but it does result in counting some
of the same Hours of Service in both "the year beginning on the date the
Employee first performs an Hour of Service" and the overlapping next "Plan
Year." Accordingly, the other rule may be more appropriate when more than
one year of Eligibility Service is required.

-6-
<PAGE>

E. RECOGNIZED EMPLOYMENT. Recognized Employment is all service in the
employment of the Employer except employment by Employees covered under
collective bargaining agreements (unless the agreement provides for the
inclusion of such Employees), non-resident aliens and the following
classifications or categories (check the classifications to be
excluded):/11/

_________ Salaried Employees.

_________ Hourly Employees.

_________ Employees compensated principally on a commissioned basis.

_________ Owner Employees (including Partners who own more than a 10%
interest).

_________ Partners.

_________ The following described groups, classifications or individual
employees:

_____________________________________________________________

[(S) 1.1.27]

F. ENTRY DATE(S). The Entry Date(s) shall be (check one):

_________ the first day of the Plan Year./12/

X the first day of the Plan Year and the first day of the 7th
---------
calendar month of the Plan Year.

_________ the first day of the Plan Year and the first day of the 4th, 7th
and 10th calendar months of the Plan Year.

_________ the first day of the Plan Year and the first day of the 2nd
through the 12th calendar months of the Plan Year.

[(S) 1.1.12]

G. VALUATION DATE(S). The Valuation Date(s) for accounting and valuation
purposes shall be (check only one):/13/

__________________________

/11/ More than one exclusion may be checked. Certain exclusions may, in
operation, discriminate in favor of officers, shareholders or highly compensated
Employees. If discrimination results, the Plan will cease to be qualified.
Employers may not directly or by subterfuge indicate exclusions which are really
exclusions of Employees because they are part-time Employees.

/12/ If an age or service requirement must be satisfied before becoming a
Participant in the Plan, this Entry Date cannot be used.

/13/ The Valuation Date(s) selected here will be used whenever the term
"Valuation Date" is used in the Basic Plan Document except Sections 7.1.2,
7.1.3, 7.2, 7.3.4, 7.8 and 7.9 and Article X of the Adoption Agreement. For the
definition of Valuation Date for those Sections and Article X, see Article X
item A of this Adoption Agreement.

-7-
<PAGE>

_________ the Annual Valuation Date.

_________ the Annual Valuation Date and the last day of the 6th month of
the Plan Year.

_________ the Annual Valuation Date and the last day of the 3rd, 6th and
9th months of the Plan Year.

_________ the Annual Valuation Date and the last day of the 1st through
the 11th months of the Plan Year.

X the Annual Valuation Date and each other business day of the
---------
Plan Year.

[(S) 1.1.30]

ARTICLE VI. RETIREMENT SAVINGS (401(K)) CONTRIBUTIONS/14/

A Participant may enter into a Retirement Savings Agreement with the Employer to
reduce his or her Recognized Compensation by any amount the Participant chooses
between 1% and 15% of such Participant's Recognized Compensation./15/

[(S) 3.2]

ARTICLE VII. EMPLOYER CONTRIBUTIONS AND FORFEITURES/16/

A. REQUIRED MATCHING CONTRIBUTIONS. Will Employer required matching
contributions be allowed?

X No
---------

_________ Yes (check only and complete):

_________ FIXED MATCH WITH % LIMIT. An amount equal ______% of
each Participant's retirement savings contributions,
ignoring,
_______________________

/14/ Federal law limits the amount which may be contributed to a Participant's
Retirement Savings Account per taxable year of the Participant (the adjusted
limit for 1994 is $9,240). This limit also includes any similar contributions
made by the Participant to any other retirement plan sponsored by the Employer
or any other employer.

/15/ The amount of such reduction will be considered the contribution of the
Employer. The Plan must meet the nondiscrimination requirements of Internal
Revenue Code section 401(k) (see (S) 2.7 of the Basic Plan Document). The
Employer (and not the Trustee) is responsible for testing and complying with
those requirements unless the Employer and the Trustee agree otherwise. Any
amounts contributed by a Participant through pay reduction shall be 100% Vested
at all times and shall be held in a separate Retirement Savings Account. Under
no circumstances may pay reduction elections be made retroactively.

/16/ If Employer matching contributions and/or nondeductible voluntary employee
contributions are permitted, the Plan must meet the nondiscrimination
requirements of Internal Revenue Code section 401(m) (see (S) 3.10 of the Basic
Plan Document). The Employer (and not the Trustee) is responsible for testing
and complying with those requirements unless the Employer and the Trustee agree
otherwise.

-8-
<PAGE>

however, retirement savings contributions in excess of ___%
of the Participant's Recognized Compensation.

________ FIXED MATCH WITH DOLLAR LIMIT. An amount equal to ____% of
each Participant's retirement savings contributions,
ignoring, however, retirement savings in excess of $
_______.

________ GRADED MATCH. An amount determined as follows:/17/

<TABLE>
<CAPTION>
If the Participant has The Employer will contribute
contributed this percentage this percentage of the
of Recognized Compensation: Participant's contribution:
----------------------------- ------------------------------
<S> <C>
Up to ____ % ____% (50 to 100)

From ____% to ____% ____% (25 to 50)

From ____% to ____% ____% (1 to 25)
</TABLE>

[(S) 3.3]

B. DISCRETIONARY CONTRIBUTIONS. Will Employer discretionary contributions be
allowed?/18/

_______ No

X Yes (check one or both and complete):
-------

X DISCRETIONARY MATCHING CONTRIBUTIONS. Employer
-----
discretionary matching contributions will be allocated to
the Employer Matching Accounts of eligible Participants to
match a percentage, determined by the Employer, of each
eligible Participant's retirement savings contribution,
ignoring, however, retirement savings contributions in
excess of 20 % of the Participant's Recognized
Compensation.

X DISCRETIONARY PROFIT SHARING CONTRIBUTIONS. (check only
-----
one)/19/

_____________________

/17/ The percentages in the left column should be increasing. Each percentage in
the right column must be within the range indicated in the parenthesis, but
these percentages do not have to total 100%. The third line is optional; it does
not have to be completed.

/18/ The allocation described here is the allocation which would follow the
curative allocations described in (S) 3.4.2 or (S) 3.4.4. Normally, if the Plan
is carefully administered and the requirements of (S) 2.7 and (S) 3.10 are
closely observed during the year, there will be no curative allocations under
(S) 3.4.2 or (S) 3.4.4. Either discretionary matching contributions or
discretionary profit sharing contributions, or both may be elected.

-9-
<PAGE>

X STRAIGHT PERCENT OF PAY. Employer discretionary
------
profit sharing contributions are not integrated with
Social Security contributions. Employer
discretionary profit sharing contributions will be
allocated to the Employer Contributions Accounts of
eligible Participants (whether or not they are
making retirement savings contributions) pursuant to
(S) 3.4.5(a) of the Basic Plan Document.

______ INTEGRATED WITH SOCIAL SECURITY. Employer discretionary
profit sharing contributions are integrated with Social
Security contributions. Employer discretionary profit
sharing contributions will be allocated to the Employer
Contributions Accounts of eligible Participants (whether
or not they are making retirement savings contributions)
pursuant to (S) 3.4.5(b) of the Basic Plan Document.

The Integration Level will be equal to (check one)/20/

____________ The Taxable Wage Base

____________ $ ________ (a dollar amount not greater
than the TWB)

[(S) 3.4.3, (S) 3.4.5]

/19/ Minimum contribution and allocation requirements apply in any Plan Year
that the Plan is "top heavy" as defined in Appendix B to the Basic Plan
Document.

/20/ The integration rate is determined as follows:

<TABLE>
<CAPTION>
If the Integration
Level is more than but not greater than then the integration rate is:
------------------- -------------------- -----------------------------
<S> <C> <C>
$0 X* 5.7%
X* 80% of TWB 4.3%
80% of TWB Y** 5.4%
</TABLE>

* X = the greater of $10,000 or 20% of the TWB
** Y = any amount more than 80% of the TWB but less than 100% of the
TWB.

If the Integration Level is the TWB, then the excess contribution percentage
cannot exceed the base contribution percentage by more than the lesser of the
base contribution percentage or 5.7%.

If the Integration Level is less than the TWB, then the excess contribution
percentage cannot exceed the base contribution percentage by more than the
lesser of the base contribution percentage or the integration rate determined by
the chart above.

-10-
<PAGE>

C. LAST DAY RULE. Will Participants be required to be in employment on the
last day of a Plan Year to share in the Employer contributions (and
forfeited Suspense Accounts, if any) to be allocated for that Plan
Year?/21/

<TABLE>
<CAPTION>
EMPLOYER REQUIRED EMPLOYER DISCRETIONAY EMPLOYER DISCRETIONARY
MATCHING CONTRIBUTIONS MATCHING CONTRIBUTIONS PROFIT SHARING CONTRIBUTIONS
- ---------------------- ---------------------- ----------------------------
<S> <C> <C>
_______ Yes _______ Yes X Yes
-----
_______ No X No _____ No
-------
X Not Applicable _______ Not Applicable _______ Not Applicable
- -------
</TABLE>

[(S) 3.5]

D. HOUR RULE EMPLOYER REQUIRED MATCHING CONTRIBUTIONS. To be eligible to
share in the Employer required matching contributions to be allocated for
that Plan Year, a Participant must have performed at least (check one):/22/

_______ No service requirement.

_______ Five Hundred (500) Hours of Service in that Plan Year.

_______ One Thousand (1,000) Hours of Service in that Plan Year.

X Not Applicable.
-------

[(S) 3.5]

E. HOUR RULE EMPLOYER DISCRETIONARY MATCHING CONTRIBUTIONS. To be eligible to
share in the Employer discretionary matching contributions and forfeited
Suspense Accounts, if any, to be allocated for that Plan Year, a
Participant must have performed at least (check one):22

X No service requirement.
-------

_______ Five Hundred (500) Hours of Service in that Plan Year.

_______ One Thousand (1,000) Hours of Service in that Plan Year.

_______ Not Applicable.

________________________

/21/ An Employee who left employment during the Plan Year and who performed more
than 500 Hours of Service before leaving, must be included for testing the
Plan's compliance with the Internal Revenue Code (S) 410(b) coverage
requirements, whether or not such person is eligible to share in the
contribution. Accordingly, if the Plan requires employment on the last day of
the Plan Year or 1,000 Hours of Service to be eligible to share in the
contribution there is some risk that the Plan will fail the (S) 410(b) coverage
requirements.

/22/ If the Plan is (or becomes) "top heavy" as defined in Appendix B to the
Basic Plan Document, this rule will be subject to the special provisions in
Appendix B.

-11-
<PAGE>

[(S) 3.5]

F. HOUR RULE EMPLOYER DISCRETIONARY PROFIT SHARING CONTRIBUTIONS. To be
eligible to share in the Employer discretionary profit sharing contribution
and forfeited Suspense Accounts, if any, to be allocated for that Plan
Year, a Participant must have performed at least (check one):22

X No service requirement.
--------

________ Five Hundred (500) Hours of Service in that Plan Year.

________ One Thousand (1,000) Hours of Service in that Plan Year.

________ Not Applicable.

[(S) 3.5]

G. EARNINGS ON ADVANCE CONTRIBUTIONS. If the Employer makes a required or
discretionary contribution in advance of the Valuation Date as of which the
contribution is allocated to Participant's Accounts, then the earnings on
such advance contribution will be (check only one):

_______ Added to the Employer's contribution and allocated as part of the
contribution (which may serve to reduce the Employer's total
contribution for the Plan Year).

X Added to the general earnings of the fund and allocated as
-------
part of such earnings.

This does not affect the treatment of earnings on advance retirement
savings (401(k)) contributions, which are always allocated to the electing
Participant's Retirement Savings Account.

[(S) 4.2]

H. RECOGNIZED COMPENSATION. For purposes of allocating the Employer's
required or discretionary matching contributions and discretionary profit
sharing contributions, if any, a Participant's Recognized Compensation
shall not include (check all applicable choices):/23/

_____________________

/23/ If any exclusions operate in fact to discriminate in favor of highly
compensated employees, the Plan will cease to be qualified. If you elect any
exclusions other than the first exclusion, you must test the Plan's definition
of Recognized Compensation each year to determine if it discriminates in favor
of highly compensated employees. These exclusions will not affect the
compensation that must be included for purposes of performing the
nondiscrimination tests under Internal Revenue Code sections 401(k) and 401(m).

-12-
<PAGE>

<TABLE>
<CAPTION>
FOR EMPLOYER FOR EMPLOYER PROFIT
MATCHING CONTRIBUTIONS SHARING CONTRIBUTIONS
- --------------------------------------------- ------------------------------------------------
<S> <C>
X Reimbursements or other expense X Reimbursements or other expense
- ---- -----
allowances; welfare and fringe benefits; allowances; welfare and fringe benefits;
moving expenses and deferred compensation moving expenses and deferred compensation
(both when deferred and when received). (both when deferred and when received).

____ Overtime. _____ Overtime.

____ Holiday and Vacation Pay. _____ Holiday and Vacation Pay.

____ Shift differential. _____ Shift differential.

____ Bonuses. _____ Bonuses.

____ Commissions in excess of $___________. _____ Commissions in excess of $___________.

____ All Recognized Compensation in _____ All Recognized Compensation in
excess of $ _____________. excess of $__________.

____ Other (Specify): ____________________ _____ Other (Specify): _______________________
_____________________________________ ________________________________________
_____________________________________ ________________________________________
</TABLE>

ARTICLE VIII. PARTICIPANT CONTRIBUTIONS

A. NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Will Participants be allowed to
make nondeductible voluntary contributions?

________ Yes

X No
--------

[(S) 3.8]

B. WITHDRAWALS FROM VOLUNTARY ACCOUNT. Will Participants be allowed to
withdraw their nondeductible voluntary contributions and deductible
voluntary contributions (and earnings thereon) before an Event of Maturity?

________ Yes

________ No

X Not Applicable.
--------

[(S) 7.8]

C. ROLLOVER CONTRIBUTIONS. Will Employees in Recognized Employment be allowed
to make rollover contributions?

-13-
<PAGE>

X Yes
--------

________ No

[(S) 3.7]

ARTICLE IX. VESTING OF EMPLOYER MATCHING
ACCOUNTS AND EMPLOYER CONTRIBUTIONS ACCOUNTS

A. EMPLOYER MATCHING ACCOUNT. Effective for Participants who perform one or
more Hours of Service on or after the Effective Date, each Participant's
Employer Matching Account shall become Vested as follows (check one):/24/

________ NOT APPLICABLE.

________ FULL VESTING. Each Participant's Employer Matching Account shall
be fully (100%) Vested at all times.

X GRADUATED OR CLIFF VESTING./25/ Each Participant's Employer
--------
Matching Account shall be Vested in accordance with the following
schedule:

<TABLE>
<CAPTION>
The Vested Portion of the
When the Participant has Completed the Participant's Employer
Following Vesting Service: Matching Account will be:/26/
- -------------------------------------- -------------------------
Not Top Heavy Top Heavy
------------- ---------
3 to 7 5 year cliff 2 to 6 3 year
------ ------------ ------ ------
<S> <C> <C> <C> <C>
Less than 1 year 0 % (0%) (0%) (0%) (0%)
---
1 year but less than 2 years 0 % (0%) (0%) (0%) (0%)
2 years but less than 3 years 0 % (0%) (0%) (20%) (0%)
3 years but less than 4 years 20 % (20%) (0%) (40%) (100%)
4 years but less than 5 years 40 % (40%) (0%) (60%)
5 years but less than 6 years 60 % (60%) (100%) (80%)
6 years but less than 7 years 80 % (80%) (100%)
7 years or more 100 %
</TABLE>

______________________

/24/ If contributions allocated to the Employer Matching Account are to be used
in the 401(k) test (pursuant to Section 2.7 of the Basic Plan Document), the
Employer Matching Account must be fully (100%) Vested at all times and not be
subject to any in-service distributions.

/25/ This Vesting provision can be elected only if the Adoption Agreement
provides for an Eligibility Service requirement of 1 year or no years.

/26/ If the Plan is not top-heavy, the percentage at every level must not be
less than the percentages in the 3 to 7 year column or the 5 year cliff column.
If the Plan is top-heavy, the percentage at every level must not be less than
the 2 to 6 year column or the 3 year cliff column.

-14-
<PAGE>

[(S) 5.1.1]

B. EMPLOYER CONTRIBUTIONS ACCOUNT. Effective for Participants who perform one
or more Hours of Service on or after the Effective Date, each Participant's
Employer Contributions Account shall become Vested as follows (check one):

______ Not Applicable.

______ FULL VESTING. Each Participant's Employer Contributions Account
shall be fully (100%) Vested at all times.

X GRADUATED OR CLIFF VESTING./25/ Each Participant's Employer
------
Contributions Account shall be Vested in him in accordance with
the following schedule:

Not Top Heavy Top Heavy
------------------------------------------ -----------------------------------
3 to 7 5 year cliff 2 to 6 3 year
----------------- ----------------------- ------------------- --------------
<S> <C> <C> <C> <C>
Less than 1 year 0 % (0%) (0%) (0%) (0%)
-----
1 year but less than 2 years 0 % (0%) (0%) (0%) (0%)
-----
2 years but less than 3 years 0 % (0%) (0%) (20%) (0%)
------
3 years but less than 4 years 20 % (20%) (0%) (40%) (100%)
------
4 years but less than 5 years 40 % (40%) (0%) (60%)
------
5 years but less than 6 years 60 % (60%) (100%) (80%)
------
6 years but less than 7 years 80 % (80%) (100%)
------
7 years or more 100 %
------
</TABLE>

[(S) 5.1.1]

C. FULL VESTING SERVICE. Notwithstanding any of the foregoing, each
Participant's Employer Matching Account and Employer Contributions Account
shall become 100% Vested upon the Participant's death, disability or
attainment of Normal Retirement Age or, if earlier, attainment of age N/A
-----
years while in the employment of the Employer.

[(S) 5.1.2]

D. NORMAL RETIREMENT AGE. The Normal Retirement Age for each Participant is:

X The Participant's 65th birthday (not greater than 65th).
-----

_____ The Participant's _____ birthday (not greater than 65th) or, if later,
the _______ anniversary (not greater than 5th) of the first day of the
Plan Year in which the Participant first became a Participant.

[(S) 1.1.17]

-15-
<PAGE>

E. VESTING SERVICE EXCLUSION. Will Vesting Service earned before the Employer
established this Plan be counted to determine the Vested portion of the
Participant's Employer Matching Account and Employer Contributions Account?

_______ Yes

X No/27/**
-------

[(S) 1.1.32, (S) 5.1.1]
-----------------------

**SERVICE WITH PARASOLE RESTAURANT & HOLDING, INC. PRIOR TO OCTOBER 1, 1996 WILL
ONLY BE CREDITED FOR THOSE PARTICIPANTS FOR WHOM BALANCES WERE TRANSFERRED TO
- ----------------
THE BUCA, INC. EMPLOYEE SAVINGS PLAN ON OCTOBER 1, 1996. EMPLOYEES WHO WORKED
FOR PARASOLE PRIOR TO, BUT FOR WHOM NO BALANCE WAS TRANSFERRED, BEGIN EARNING
VESTING CREDIT UPON THE HIRE DATE WITH BUCA, INC.

ARTICLE X. DISTRIBUTIONS

A. VALUATION DATES. For distribution purposes, the Valuation Dates for the
Plan shall be (check only one):/28/

________ the Annual Valuation Date.

________ the Annual Valuation Date and the last day of the 6th month of
the Plan Year.

________ the Annual Valuation Date and the last day of the 3rd, 6th, 9th
months of the Plan Year.

________ the Annual Valuation Date and the last day of the 1st through
11th months of the Plan Year.

X the Annual Valuation Date and each other business day of the
--------
Plan Year.

[(S) 1.1.30]

B. EVENT OF MATURITY. Will the Participant's attainment of age 59-1/2 be an
Event of Maturity (in addition to the other Events of Maturity listed in
Section 6.1 of the Plan Statement)?

X Yes
------

_____________________

/27/ If this is an amendment of an existing Plan, the Employer (i) may not
reduce the Vested percentage of any Participant's Employer Matching Account or
Employer Contributions Account, and (ii) the Plan must comply with the rules in
Section 5.2 of the Basic Plan Document.

/28/ The Valuation Date(s) selected here will only be used for purposes of
Sections 7.1.2, 7.1.3, 7.2, 7.3.4, 7.8 and 7.9 of the Basic Plan Document and
this Article X of the Adoption Agreement. The term Valuation Date used
throughout the remaining Sections of the Basic Plan Document will be used in
reference to the Valuation Dates selected in Article V item G of this Adoption
Agreement.

-16-
<PAGE>

_______ No

[(S) 6.1]

C. TIME OF DISTRIBUTION. Distribution will occur (check only one):/29/

X As of any Valuation Date specified in writing by the Participant
-------
or Beneficiary which is coincident with or following a
Participant's Event of Maturity and following the filing of any
required application for distribution.

_______ As of a date specified in writing by the Participant or
Beneficiary which is the Valuation Date coincident with or
immediately preceding the Participant's Event of Maturity or any
following Valuation Date preceding the filing of any required
application for distribution./30/

_______ As of a date specified in writing by the Participant or
Beneficiary which is the Valuation Date immediately preceding or
coincident with the Participant's Event of Maturity or any
Valuation Date following a Participant's Event of Maturity and
the filing of any required application for distribution./30/

[(S) 7.2]

D. FORM OF DISTRIBUTION. Participants will be allowed to receive distributions
in the following forms (check one or more):

***SEE ATTACHED PRESUMPTIVE FORMS OF DISTRIBUTION.

X LUMP SUM (check only one of the lump sum options):
-------

X Lump sum single payment as of the Valuation Date
----- specified by the Participant and allowed in item C.

_____ Lump sum including if the Participant requests, a
partial advance payment not to exceed the value of
the Vested Total Account on the Valuation Date
immediately preceding the Participant's Event of
Maturity./31/

_________________

/29/ These rules only applies if a written application for distribution is
required. See Sections 7.1.2 and 7.1.3 of the Basic Plan Document for the
rules that apply to small amount distributions and required beginning date
distributions.

/30/ The selection of this option carries with it the risk of adverse
selection for investment performance that will be borne by the remaining
Participants and Beneficiaries and not the Distributee. This option cannot be
selected if the Plan is subject to the qualified joint and survivor annuity
rules. (See Article IV, item F of the Adoption Agreement.)

/31/ This option can only be selected if the Plan provides Annual Valuations.
If the Distributee requests a partial payment, the Distributee may limit the
possible tax treatment of the distribution unless the partial payment is

-17-
<PAGE>

-------- FIXED INSTALLMENTS - substantially equal annual installments, the
number of such installments to be specified by the Participant
before the first payment is made, but not to exceed the
Participant's life expectancy./32/

-------- MINIMUM INSTALLMENTS - substantially equal annual installments,
the number of such installments to be determined by the
Participant's life expectancy or the joint and last survivor life
expectancy of the Participant and his or her Beneficiary./32/

Beneficiaries will be allowed to receive distributions in one of the
following forms (check one or more):

X LUMP SUM - (check only one of the lump sum options):
________

X Lump sum - single payment as of the Valuation Date
------
specified by the Beneficiary and allowed in item C.

______ Lump sum including if the Beneficiary requests, a partial
advance payment not to exceed the value of the Vested
Total Account on the Valuation Date immediately preceding
the Participant's death./31/

______ INSTALLMENTS/33/

______ 5 years of substantially equal annual installments
commencing within one year of the Participant's death.

______ Substantially equal annual installments based on the
Beneficiary's life expectancy commencing within one year
of the Participant's death.

______ Substantially equal annual installments payable to the
Participant's spouse (if such spouse is a Beneficiary)
based on the spouse's life expectancy commencing not
later than when the Participant would have attained age
70-1/2 years.

[(S) 7.3]

________________________________________________________________________________

received in the same taxable year as the remaining payment. The selection of
this option carries with it the risk of adverse selection for investment
performance that will be borne by the remaining Participants and Beneficiaries
and not the Distributee.

/32/ Substantially equal and life expectancy are defined in the Basic Plan
Document.

/33/ This can only be selected if Installments to Participants are allowed. If
the Participant died on or after the April 1 following the calendar year
in which the Participant attained age seventy and one-half (70-1/2)
years, the only installment payments that will be allowed to such a
Beneficiary are a continuation of installment payments scheduled (or
commenced) prior to the death of the Participant. No other form of
installment payments shall be allowed to such a Beneficiary.
Substantially equal and life expectancy are defined in the Basic Plan
Document.

-18-
<PAGE>

E. HARDSHIP DISTRIBUTIONS. Hardship distributions during employment are
available to Participants for the following purposes (one or more may be
checked):/34/

X medical expenses described in section 213(d) of the Internal
______
Revenue Code incurred by the Participant, the Participant's
spouse or any dependents of the Participant (as defined in
section 152 of the Internal Revenue Code)./35/

X the purchase (excluding mortgage payments) of a principal
______
residence of the Participant./35/

X payment of tuition and related educational fees for the next 12
______
months of post-secondary education for the Participant, his or
her spouse, children or dependents./35/

X the need to prevent the eviction of the Participant from his
______
principal residence or foreclosure on the mortgage of the
Participant's principal residence. /35/

[(S) 7.9]

F. SOURCE OF HARDSHIP DISTRIBUTIONS. Hardship distributions during employment
will not be allowed from the following Accounts (one or more may be
--------
checked):

______ Retirement Savings Account

_____________________

/34/ More than one may be checked. A Participant must submit a written
application specifying the amount of the hardship distribution. The application
shall require a Participant to establish his or her entitlement to the
distribution. The distribution shall be made as soon as administratively
feasible after the Valuation Date coincident with or next following the approval
of a completed application.

/35/ The following conditions must be satisfied to receive a hardship
distribution from the Retirement Savings Account during employment:

(i) the distribution shall not exceed the amount of the Participant's
immediate and heavy financial need;

(ii) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans currently available under all
plans maintained by the Employer;

(iii) the Plan, and all other plans maintained by the Employer, provide
that the Participant's elective contributions and employee
contributions (as defined in regulations issued by the Secretary of
the Treasury) will be suspended until the first Entry Date 12 months
after receipt of the hardship distribution; and

(iv) the Plan, and all other plans maintained by the Employer, provide
that the Participant may not make elective contributions (as defined
in regulations issued by the Secretary of the Treasury) for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under
section 402(g) of the Internal Revenue Code for such next taxable
year less the amount of such Participant's elective contributions for
the taxable year of the hardship distribution.

These conditions do not apply unless part of the distribution comes
from a Retirement Savings Account.

-19-
<PAGE>

X Employer Contributions Account
---

X Employer Matching Account
---

___ Nondeductible Voluntary Account

X Rollover Account
---

___ Transfer Account

___ Deductible Voluntary Account

[(S) 7.9]

G. SOURCE OF HARDSHIP DISTRIBUTIONS. May the Participant request a partial
advance of up to fifty percent (50%) of the amount approved as a hardship
distribution./36/

___ Yes

X No
___

[(S) 7.9]

ARTICLE XI. INVESTMENT OPTIONS

A. LIFE INSURANCE. Will Participants be permitted to direct the investment
of a part of their Accounts into life insurance contracts?

___ Yes

X No
---

[(S) 4.1, (S) 10.11]

B. COMMINGLED INVESTMENT SUBFUNDS. Can commingled investment Subfunds be
created so that Participants can control the investment of their Accounts?

X Yes/37/
---

___ No

[(S) 4.1.1]

C. INDIVIDUALLY DIRECTED ACCOUNTS. Will individual investment Subfunds be
created so that all Participants can control the investment of their
Accounts?

___________________

/36/ If advances are not allowed, the entire hardship distribution shall be
made as soon as administratively feasible after the Valuation Date coincident
with or next following the approval of a completed application.

/37/ If commingled investment Subfunds or individual investment Subfunds are
created, the Employer must agree with the Trustee, in writing, on the
operational rules for the Subfunds.

-20-
<PAGE>

____ Yes/37/

X No
----

[(S) 4.1.2]

D. EMPLOYER DIRECTION. Will the Employer have the authority to direct the
Trustee in the investment of the Fund?

X Yes
----

____ No

If yes, enter name and title of the person(s) who is (or are) authorized to
communicate such directions to the Trustee in writing: Greg Gadel-CFO
----------------

[(S) 10.12]

E. EMPLOYER SECURITIES OR REAL ESTATE. Will the Trustee be subject to the
directions of the above-named person(s) to purchase qualifying employer
securities or qualifying employer real estate?

____ Yes

X No
____

If yes, the maximum percentage of the Fund which may be invested in
qualifying employer securities and qualifying employer real estate is:

____ percent

[(S) 10.12, (S) 10.6(a)]

F. ERISA (S) 404(C). Does the Plan intend to comply with ERISA (S) 404(c)?

X Yes
----

____ No

[(S) 4.1.5]

G. MUTUAL FUNDS. By execution of this Adoption Agreement, the Employer
authorizes the Trustee to invest the Plan's assets in mutual funds
affiliated with the Trustee (First American Funds, Inc. and First American
Investment Funds, Inc.) and approves the investment advisory and other fees
to be paid by such mutual funds in relation to the fees paid by the Plan,
as set forth in the prospectuses and written disclosure described in (S)
10.6(a) and (S) 10.12 of the Basic Plan Document.

ARTICLE XII. LOANS

A. Will loans from the Plan be available to Participants and Beneficiaries
(other than Owner-Employees and Shareholder-Employees)?

-21-
<PAGE>

X Yes
----

____ No

[(S) 7.11]

B. Will each loan be made from the individual Accounts of the recipient (as
opposed to the general trust assets)?

X Yes
----

____ No

[(S) 7.11]

ARTICLE XIII. INTERNAL REVENUE CODE (S) 415 LIMITATIONS/38/

A. Does any controlled group member now maintain or has any controlled group
member ever maintained another qualified plan in which any Participant in
this Plan is (or was) a participant or could possibly become a participant
or does the Employer maintain a welfare benefit fund or an individual
medical account (as defined in Appendix A) under which amounts are treated
as annual additions with respect to any Participant in this Plan?

X No [complete only E below]
----

____ Yes [complete the rest of this Article XIII]

[Appendix A]

B. Such other qualified plan was or is a [select one or more as appropriate]:

____ Master or prototype defined contributions plan/39/ [complete E
below]

____ Master or prototype defined benefit plan [complete D and E below]

____ Individually designed defined contribution plan/39/ [complete C
and E below]

____ Individually designed defined benefit plan [complete D and E below]

____ Welfare benefit fund [complete C and E below]

____ Individual medical account [complete C and E below]

________________

/38/ See footnote 21.

/39/ For purposes of Appendix A, nondeductible employee contributions to a
qualified defined benefit plan are treated as a separate defined contribution
plan.

-22-
<PAGE>

C. To the extent that any Participant in this Plan is, may become or ever has
been a participant in another qualified defined contribution plan, welfare
benefit fund or individual medical account maintained by any controlled
group member, other than a master or prototype qualified defined
contribution plan:

____ The provisions of Section 3 of Appendix A will apply, as if the other
plan was a master or prototype plan.

____ The method under which the plans will limit total annual additions to
the maximum permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer discretion is set forth
in an attachment to this Adoption Agreement.

D. To the extent that any Participant is, may become or ever has been a
participant in another qualified defined benefit plan maintained by any
controlled group member:

____ In any limitation year, the annual additional credited to the
Participant under this Plan may not cause the sum of the defined
benefit plan fraction and the defined contribution plan fraction to
exceed 1.0. If the Employer contributions that would otherwise be
allocated to the Participant's Account under the Plan during such
year would cause the 1.0 limitation to be exceeded, the allocation
will be reduced so that the sum of the fractions equals 1.0. Any
contributions not allocated because of the preceding sentence will be
allocated to the remaining Participants in this plan under the
allocation formula under this Plan. If the 1.0 limitation is exceeded
because of an excess amount, such excess amount will be reduced in
accordance with Section 2.4 of Appendix A.

____ The method under which the plans involved will satisfy the 1.0
limitation in a manner that precludes Employer discretion is set
forth in an attachment to this Adoption Agreement.

E. The limitation year is the following 12-consecutive month period:

X the Plan Year
----

____ the calendar year

____ other (specify): ____________________________________________________

ARTICLE XIV. INTERNAL REVENUE CODE (S) 416 LIMITATIONS

A. To avoid duplication of minimum benefits under section 416 of the Internal
Revenue Code because of the required aggregation of multiple plans, 401(k)
Prototype Basic Plan Document #02 is amended as follows:/40/

_______________________

/40/ If the Employer only sponsors this Plan, it is unnecessary to complete this
section. Also, if the Employer maintains other plans, it may be unnecessary
to complete this section.

-23-
<PAGE>

[(S) 9.1.1 and Appendix B]

B. For purposes of establishing the present value to compute the top heavy
ratio, any benefit under a defined benefit plan shall be discounted only
for mortality and interest based on the following:40

Interest rate (select only one): ____ PBGC Interest Assumption as if
Plan terminated on valuation
date.

____ Other

Mortality table (section only one): ____ PBGC Mortality Assumption as if
Plan terminated on valuation
date.

____ Other __________________________

[Appendix B]

ARTICLE XV. HOURS OF SERVICE

FOR THE PURPOSE OF DETERMINING THE EMPLOYEE'S ONE-YEAR BREAKS IN SERVICE,
VESTING SERVICE, ELIGIBILITY SERVICE AND MINIMUM ANNUAL SERVICE REQUIREMENT TO
SHARE IN THE EMPLOYER CONTRIBUTION MADE FOR A PLAN YEAR, HOURS OF SERVICE SHALL
BE DETERMINED ON THE FOLLOWING BASIS:

X On the basis of actual recorded hours for which an Employee
----
is paid or entitled to payment.

____ On the basis that, without regard to his actual recorded hours, an
Employee shall be credited with 10 Hours of Service for a day if
under Section 1.1.15 such Employee would be credited with at least 1
Hour of Service during the day.

____ On the basis that, without regard to his actual recorded hours, an
Employee shall be credited with 45 Hours of Service for a calendar
week if under Section 1.1.15 such Employee would be credited with at
least 1 Hour of Service during that calendar week.

____ On the basis that, without regard to his actual recorded hours, an
Employee shall be credited with 95 Hours of Service for a semi-
monthly pay period if under Section 1.1.15 such Employee would be
credited with at least 1 Hour of Service during that semi-monthly
pay period.

____ On the basis that, without regard to his actual recorded hours, an
Employee shall be credited with 190 Hours of Service for a calendar
month if under Section 1.1.15 such Employee would be credited with
at least 1 Hour of Service during that calendar month.

[(S) 1.1.15]

-24-
<PAGE>

ARTICLE XVI. COLLECTIVE INVESTMENTS

The Trustee's collective investment fund or funds incorporated by reference into
this Plan Statement are:

The Plans and Declaration of Trust - U.S. Bank National Association
Collective and Pooled Investment Funds for Employee Retirement Benefit
Trusts, as amended from time to time.

[(S) 10.6(q)]

IN WITNESS WHEREOF, I have hereunto subscribed my name this 15 day of January,
1999.

FOR THE EMPLOYER

/s/ Karen Libke Payroll & Benefits Mgr
----------------------------------------
(Signature and official capacity)

The Employer may NOT rely on an opinion letter issued by the National Office of
the Internal Revenue Service as evidence that the Employer's Plan is qualified
under section 401 of the Internal Revenue Code. In order to obtain reliance
with respect to plan qualification, the Employer must apply to the appropriate
key district director of the IRS for a determination letter. This Adoption
Agreement may be used only in conjunction with 401(k) Prototype Basic Plan
Document #02 1989 Restatement.

ACCEPTED this 15 day of January, 1999.

FOR THE PROTOTYPE SPONSOR FOR THE TRUSTEE

By /s/ Susan Gullickson By /s/ William Ware
-------------------- ------------------

Its Asst. Vice Pres. Its Trust Officer
------------------ ---------------

And /s/ Susan Gullickson
--------------------

Its Asst. Vice Pres
------------------

First Trust National Association
First Trust Center
P.O. Box 64367
St. Paul, Minnesota 55164
Prototype Sponsor
(612) 223-7559

-25-

<PAGE>

Exhibit 10.20
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, is made as of this 17th
day of February 1999 by and between BUCA, Inc., a Minnesota corporation (the
"Company") and Joseph P. Micatrotto (the "Employee") and amends and restates in
its entirety that Employment Agreement dated as of July 22, 1996, as previously
amended to the date hereof, between the Company and the Employee.

WHEREAS, the Company desires to employ Employee to devote full time
service to the business of the Company and Employee desires to be so employed.

NOW THEREFORE, IN CONSIDERATION of the premises and the terms and
conditions hereinafter set forth, the parties hereto agree as follows:

1. Employment. Subject to the terms and conditions hereof, the Company
shall employ Employee and Employee agrees to be so employed in the capacity of
President and Chief Executive Officer for a term commencing the date hereof and
ending on December 31, 2003.

2. Duties. Employee shall diligently and conscientiously devote his
full time and attention to the discharge of his duties as President and Chief
Executive Officer. In such capacity, Employee shall at all times discharge said
duties in consultation with and under the supervision of the Board of Directors
of the Company. Employee shall perform such duties as may from time to time be
given to him by the Board of Directors. In addition, so long as Employee shall
be employed in the capacity of President and Chief Executive Officer, the Board
of Directors shall use its best efforts to cause Employee to be elected to the
Board of Directors.

3. Base Salary. Commencing at the effective date hereof and continuing
through and including December 31, 2003, the Company shall pay to Employee for
services rendered hereunder as base compensation:

Period Annualized Salary
------ -----------------
February 15, 1999 to December 31, 1999 $325,000
January 1, 2000 to December 31, 2000 $335,000
January 1, 2001 to December 31, 2001 $350,000
January 1, 2002 to December 31, 2002 To be determined by
Board of Directors,but not
less than $350,000
January 1, 2003 to December 31, 2003 To be determined by Board of
Directors, but not less than
base salary paid in 2002
<PAGE>

The base salary is payable in accordance with the Company's standard
payroll practices as in effect from time to time.

4. Bonuses. The Employee shall be entitled to receive annual incentive
compensation equal to a percentage of his annual base salary. For the years
ended December 31, 1999, 2000 and 2001, the maximum percentage of such incentive
compensation shall be 30%, 35% and 40%, respectively. For the years ended
December 31, 2001 and 2002, the maximum percentage shall be determined by the
Board of Directors, but shall not be less than that established for the prior
year. Payment of any incentive compensation shall be based upon the Company
attaining certain performance targets selected by the Board of Directors and
based upon the budget for the applicable year. The Board of Directors shall, at
the beginning of each year, select five of the following six performance
criteria for measuring the amount of any incentive compensation to be received
by the Employee for that year: (i) number of new restaurant openings, (ii)
number of operating weeks, (iii) restaurant operating profit, (iv) total sales,
(v) general and administrative expenses, and (vi) comparable restaurant sales.
Each of the selected criteria shall represent 20% of the maximum bonus amount.
The maximum 20% for any performance criteria will be deemed earned only if the
actual results for a performance criteria are at least equal to 95% of the
budgeted amount for such criteria; provided, however, that with respect to
restaurant operating profit, the Employee will be entitled to 10% of maximum
incentive compensation percentage if the actual results are greater than 95% but
less than 100% of the budgeted amount, and with respect to total sales, the
maximum 20% will be deemed earned only if actual results equal at least 98% of
the budgeted amount. If actual results for any performance criteria are less
than 95% of the corresponding budgeted amounts (or less than 98% with respect to
total sales), no incentive compensation shall be payable in respect of such
performance criteria.

5. Stock Option. As an incentive to the Employee, the Company has
granted to Employee stock options under the 1996 Stock Incentive Plan of Buca,
Inc. and Affiliated Entities, as amended from time to time (the "Incentive
Plan"), to purchase 126,666 shares of the Company's common stock, exercisable at
$11.25 per share (the fair market value of the common stock at the date hereof,
as determined by the Board of Directors) and vesting on the following terms: (i)
6,666 shares on each of December 31, 1999, 2000 and 2001, and (ii) 53,334 shares
on each of December 31, 2002 and December 31, 2003. All such stock options shall
terminate 10 years after the date of grant. The terms of such stock options are
more fully set forth in the form of non-qualified stock option agreement
attached as Exhibit A. Notwithstanding the above, these options are subject to
shareholder adoption of an amendment to the Plan to increase the number of
shares reserved thereunder, all as more specifically set forth in the stock
option agreement attached as Exhibit A.

6. Limitation on Stock Transfers. All of the shares of common stock of
the Company which may be granted to Employee under this Agreement or which may
be issued to Employee upon exercise of any option granted hereunder may not be
sold or transferred in the absence of registration under the Securities Act of
1933 or an exemption therefrom. Unless there is a public market for the common
stock of the Company, Employee shall not sell or transfer any shares of common
stock of the Company without first offering such shares to the Company. The
Company shall have sixty (60) days from the date of receipt of

2
<PAGE>

any offer from Employee to sell his shares to purchase the stock so offered. If
the Company fails to purchase such shares, Employee may sell the shares free of
the restriction provided herein on terms not less favorable than the offer made
to the Company. If the sale is not completed within sixty (60) days following
the expiration of the offer to the Company, the shares shall thereafter be
subject to the rights of the Company to purchase such shares.

7. Expenses. The Company shall reimburse Employee for all reasonable
and necessary expenses incurred by him in carrying out his duties under this
Agreement. Employee shall present to the Company from time to time an itemized
statement of account of such expenses in such form as may be required by the
Company. In recognition of Employee's need for an automobile for business
purposes, the Company will provide Employee with a $700 per month automobile
allowance.

8. Fringe Benefits. Employee shall be entitled to participate in such
fringe benefit programs maintained by the Company as are available for other
employees similarly situated. The Company shall (i) provide Employee with term
life insurance having a death benefit of $1,000,000; (ii) obtain and pay the
premium for standard family coverage for Employee and his family in the
Company's group health plan; and (iii) provide Employee with long-term
disability insurance with a benefit equal to 60% of his base salary. The Company
shall also pay college tuition costs (excluding room and board) for Employee's
son Justin, directly to the college or university attended by Justin at or
before such time that tuition is due, so long as the Company is presented with a
fee or other statement by Employee in adequate time for the Company to make such
payment, up to a maximum of $20,000 per year and $80,000 in aggregate, provided
that the college program shall be completed by December 31, 2001.

9. Termination. Employee's employment hereunder shall be terminated
upon the happening of any of the following events;

(a) Expiration of the term of this Agreement, without renewal;

(b) Death of the Employee;

(c) Notice to Employee that his employment is terminated due to
Employee's inability to perform his usual and customary duties by reason of
physical or mental disability;

(d) Without cause by the Company at any time upon thirty (30) days
prior written notice to Employee;

(e) By Employee upon thirty (30) days prior written notice to the
Company;

(f) By Employee, if, following a Change in Control of the Company as
defined below, Employee's duties are Substantially Reduced or Negatively
Altered, as defined below, without his prior written consent, upon thirty (30)
days prior written notice to the Company; or

3
<PAGE>

(g) At any time without notice by the Company for cause.

For purposes of this Section, "Cause" means (i) Employee's conviction
of a felony which constitutes a crime involving moral turpitude; (ii) Employee's
misappropriation of funds, fraud or embezzlement; or (iii) Employee's willful or
gross and repeated neglect of duties hereunder, or willful or gross repeated
misconduct in the performance of such duties, so as to have a material adverse
effect on the business, operations, assets, properties, or financial condition
of Company, taken as a whole, determined in good faith by two-thirds of the
Company's Board of Directors.

For purposes of this Section, "Physical or Mental Disability" means any
ailment or incapacity which prevents Employee from performing the duties
incident to the Employee's employment hereunder which continued for a period of
either (i) 90 consecutive days in any 12-month period or (ii) 180 days in any
12-month period, and which is expected to be of permanent duration.

For purposes of this section, "Change of Control" with respect to the
Company shall have occurred on the earliest of the following dates:

(i) the date after the date of this Agreement that any entity
or person (including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act")) shall have become
the beneficial owner of, or shall have obtained voting control over,
fifty percent (50%) of more of the outstanding common shares of the
Company;

(ii) the date the shareholders of the Company approve a
definitive agreement: (A) to merge or consolidate the Company with or
into another corporation, or to merge another corporation into the
Company, in which the Company is not the continuing or surviving
corporation or pursuant to which any common shares of the Company would
be converted into cash, securities of another corporation, or other
property, other than a merger or consolidation of the Company in which
holders of common shares of the Company immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation or its parent corporation immediately after the merger as
immediately before; or (B) to sell or otherwise dispose of
substantially all of the assets of the Company; or

(iii) the date there shall have been a change in a majority of
the Board of Directors of the Company within a twelve (12) month period
unless the nomination for election by the Company's shareholders of
each new director was approved by the vote of two-thirds of the
directors then still in office who were in office at the beginning of
the twelve (12) month period.

Notwithstanding the foregoing, a "Change in Control" with respect to the Company
shall not be deemed to have occurred by reason of a private placement of
securities of the Company that is authorized by the Board of Directors, or by a
change in the directors occurring as a

4
<PAGE>

result of the exercise of rights conferred in any agreement between the Company
and investors in any such private placement of securities.

"Substantially Reduced or Negatively Altered" means, without Employee's express
written consent:

(i) the assignment to Employee of any duties inconsistent with
Employee's positions, duties, responsibilities and status with the
Company or a change in Employee's reporting responsibilities, titles or
offices, or any removal of Employee from, or any failure to re-elect
Employee to, any of such positions, except in connection with the
termination of Employee's employment for cause, upon the physical or
mental disability or death of Employee, or upon the voluntary
termination by Employee;

(ii) a reduction in Employee's Base Salary below the minimum
Base Salary in Section 3 hereof;

(iii) requiring Employee to move his residence more than 100
miles;

(iv) the failure by Company to continue in effect benefit
plans substantially equivalent to the benefit plans in effect at the
effective date of this Agreement or established during the term of this
Agreement; the taking of any action by Company not required by law
which would adversely affect Employee's participation in or materially
reduce Employee's benefits under any of such plans or deprive Employee
of any material fringe benefit enjoyed by Employee; or the failure by
Company to provide Employee with the number of paid vacation days,
holidays and personal days to which Employee was then entitled in
accordance with Company' normal leave policy in effect the effective
date of this Agreement; or

(v) failure of any successor to the Company not otherwise
bound by this Agreement to expressly assume and agree to perform the
obligations of the Company under this Agreement.

10. Effect of Termination. If Employee is terminated by the Company for
cause as defined in Section 9(g) or if Employee terminates employment under
Section 9(e), Employee shall be paid only to the date of actual termination of
employment and Employee shall not be entitled to any additional compensation for
the year in which termination of employment occurs or any other termination
payment.

If Employee is terminated by reason of death or physical or mental
disability, Employee or his estate shall be entitled to a termination payment
equal to two (2) year's base salary then in effect and any options granted under
this Agreement (including those granted as of the date hereof and those
previously granted prior to this amendment and restatement) and remaining
outstanding shall be fully vested, immediately exercisable and non-forfeitable.
The termination payment in the case of termination due to physical or mental
disability shall

5
<PAGE>

be made in 24 substantially equal monthly installments and shall be reduced by
all disability insurance payments received by Employee during such period under
disability insurance policies provided by the Company under Section 8 hereof.

If Employee terminates employment for the reason specified in Section
9(f) or Employee is terminated by the Company without cause following a "Change
in Control," or within one-hundred eighty (180) days prior to a "Change in
Control" and such termination is related to the "Change in Control," Employee
shall be entitled to a termination payment equal to eighteen (18) month's base
salary then in effect, payable in eighteen (18) equal installments, beginning on
the first day of the month following termination of employment, all stock
options previously granted to Employee under this Agreement shall be fully
vested, immediately exercisable and non-forfeitable, and the Company shall
continue Employee's health benefits for one (1) year or, at its option, pay
Employee's COBRA coverage premiums during the COBRA period. If Employee
terminates employment as a result of a "Change in Control" but Employee's duties
have not been "substantially reduced or negatively altered," Employee shall be
entitled to a termination payment equal to twelve (12) month's base salary then
in effect, payable in twelve (12) equal installments beginning the first day of
the month following termination of employment and the stock options previously
granted to Employee under this Agreement shall be full vested, immediately
exercisable and non-forfeitable.

If Employee is terminated by the Company without cause and other than
associated with a "Change in Control" as outlined above, Employee shall be
entitled to a termination payment equal to eighteen (18) months base salary then
in effect, payable in eighteen (18) equal installments beginning on the first
day of the month following termination of employment, and the options previously
granted under this Agreement shall be fully vested, immediately exercisable and
non-forfeitable.

11. Excise Tax. Unless otherwise prohibited by applicable law, if an
amount paid to Employee under this Agreement is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code, or any successor provision
thereto, the Company shall pay to Employee an additional amount in cash equal to
the amount necessary to cause the aggregate remuneration received by Employee
under this Agreement, including such additional cash payment (net of all
federal, state, and local income taxes and all taxes payable as a result of the
application of Section 280G and 4999 of the Internal Revenue Code or any
successor provisions thereto) to be equal to the aggregate remuneration
executive would have received, excluding such additional payment (net of all
federal, state, and local income taxes), if Section 280G and 4999 (and any
successors thereto) have not been enacted into law. The adjustments, if any,
required by this section shall be determined by tax counsel selected by
Company's independent accountants with Employee's approval.

12. Confidentiality. "Confidentiality Information" means any
information or compilation of information possessed by the Company that derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by other persons who can
obtain economic value from its disclosure or use, including by not limited to:
(a) any information not generally known in the

6
<PAGE>

industry of the Company regarding the Company's pricing of services, research,
development, marketing, servicing, business systems, and techniques; (b)
financial information concerning the Company; and (c) any information that the
Company may from time to time designate as "confidential," "proprietary," or
"trade secrets" which is not generally known in the industry of the Company.

Employee may have access to Confidential Information which the Company
desires to protect at all times. The Employee understands, acknowledges, and
agrees that the Company has expended substantial sums of money, time and effort
in developing such Confidential Information and the Company will be
substantially harmed in the competitive marketplace if the Confidential
Information is used to its detriment or to the benefit of others.

In recognition of the foregoing, Employee agrees that:

(a) Employee will not, during or after employment with the
Company, directly or indirectly knowingly use or disclose any
Confidential Information to any other person, firm or company, or in
any way use for his benefit, or to the detriment of the Company, any
information or knowledge obtained during the course of his employment
with the Company, except as required in the conduct of the Company's
business or as authorized in writing by the Company; and

(b) All memoranda, notes, records, papers and other documents
and all copies thereof relating to the Company's operations and all
objects related thereto are and remain the property of the Company;
including, but not limited to, those developed, investigated, or
considered by the Company. Employee will not copy or duplicate any of
the aforementioned documents or objects nor use any information
contained therewith, except for the Company's benefit, either during or
after his employment.

13. Covenant Not to Compete. The parties agree that the Company would
be substantially harmed if Employee competes with the Company during employment
with the Company or after termination of employment with the Company. Therefore,
in exchange for the benefits provided to Employee hereunder, Employee agrees
that during his employment with the Company and for a period of one (1) year
after termination of such employment for any reason, Employee will not directly
or indirectly, without the written consent of the Company;

(a) Own, operate or render services to any entity engaged,
directly or indirectly, in owning or operating Italian restaurants
within fifty (50) miles of any restaurant owned or managed by the
Company; or

(b) Hire, offer to hire, entice away, or in any other way,
persuade or attempt to persuade any entity or any employee, officer,
agent, independent contractor, supplier, customer, or subcontractor of
the Company to discontinue their relationship with the Company.

7
<PAGE>

14. Disparagement. The Company and Employee agree that during and after
the term of this Agreement, they will not knowingly vilify, disparage, slander
or defame the other party or, in the case of the Company, its officers,
directors, employees, business or business practices.

15. Relocation Allowance. At the time of Employee's relocation for the
Company, Employee shall be entitled to a relocation allowance of $50,000. In
addition, until such relocation or such time as the Board determines otherwise,
Employee shall be entitled to a living allowance of $1,500 per month. The
allowance shall be payable by the Company on the last day of the month for said
month.

16. Remedy. Employee and the Company acknowledge that in the event of a
breach of this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate remedy at law. Accordingly, in
the event of any controversy concerning the rights or obligations under this
Agreement, such rights or obligations shall be enforceable in a court of equity
by a decree of specific performance. Such remedy, however, shall be cumulative
and nonexclusive and shall be in addition to any other remedy to which the
parties may be entitled to by law.

17. Notices. All notices required or permitted to be given under this
Agreement shall be given by certified mail, return receipt requested, to the
parties at the following addresses or to such other addresses as either may
designate in writing to the other party:

If to Company: BUCA, INC.
1300 Nicollet Avenue
Suite 3043
Minneapolis, MN 55403

If to Employee: Joseph P. Micatrotto
8352 Suffolk Drive
Chanhassen, MN 55317

18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.

19. Entire Contract. This Agreement constitutes the entire
understanding and agreement between the Company and Employee with regard to the
matters stated herein. There are no other agreements, conditions or
representations, oral or written, express or implied, with regard to the
employment of Employee by the Company.
This Agreement may be amended only in writing, signed by both parties hereto.

20. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, and shall inure to the
benefit of and be binding upon the Employee, his heirs, distributees and
personal representatives. In the event

8
<PAGE>

of Employee's death, any amounts payable hereunder shall be paid in accordance
with the terms of this Agreement to Employee's designee, or if there is no such
designee, to Employee's estate.

IN WITNESS WHEREOF, the parties have executed this Agreement the date
and year first above written.

BUCA, INC.

By: /s/ Greg A. Gadel
Its: Chief Financial Officer

/s/ Joseph P. Micatrotto
Joseph P. Micatrotto

<PAGE>

Exhibit 21.1

SUBSIDIARIES OF BUCA, INC.

1. BUCA (DT Minneapolis), Inc., a Minnesota corporation*
2. BUCA (Eden Prairie), Inc., a Minnesota corporation*
3. BUCA (Gannon Road), Inc., a Minnesota corporation*
4. BUCA (DT Milwaukee), Inc., a Minnesota corporation*
5. BUCA (Lakeview Chicago), Inc., a Minnesota corporation*
6. BUCA (Wheeling), Inc., a Minnesota corporation*
7. BUCA (Indianapolis), Inc., a Minnesota corporation*
8. BUCA (Encino), Inc., a Minnesota corporation*
9. BUCA (Pasadena), Inc., a Minnesota corporation*
10. BEPPO (DT San Francisco), Inc., a Minnesota corporation*
11. UNA FAMIGLIA (Palo Alto), Inc., a Minnesota corporation*
12. BUCA (Campbell), Inc., a Minnesota corporation*
13. UNA FAMIGLIA (DT Seattle), Inc., a Minnesota corporation*
14. BUCA (Lynnwood), Inc., a Minnesota corporation*
15. BUCA Restaurants, Inc., a Minnesota corporation
16. BUCA (Kansas), Inc., a Kansas corporation*
17. BUCA (Nevada), Inc., a Nevada corporation*
18. BUCA (Kentucky), Inc., a Kentucky corporation*

* The name under which each of these subsidiaries of BUCA, Inc. does
business is "BUCA di BEPPO."

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of this
registration statement.

/s/ Arthur Andersen LLP
Minneapolis, Minnesota ARTHUR ANDERSEN LLP
March 23, 1999

<PAGE>

Exhibit 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 1 to Registration Statement No. 333-
72593 of BUCA, Inc. and Subsidiaries on Form S-1 of our report dated February
17, 1999 appearing in the Prospectus, which is part of this Registration
Statement.

We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.

Minneapolis, Minnesota
March 23, 1999

/s/ Deloitte & Touche LLP

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUCA, INC
AND SUBSIDIARIES FOR THE FISCAL YEAR ENDED DECEMBER 27, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> DEC-27-1998
<CASH> 6,576
<SECURITIES> 0
<RECEIVABLES> 1,160
<ALLOWANCES> 0
<INVENTORY> 935
<CURRENT-ASSETS> 9,256
<PP&E> 27,697
<DEPRECIATION> 2,767
<TOTAL-ASSETS> 37,560
<CURRENT-LIABILITIES> 6,100
<BONDS> 7,661
36,973
0
<COMMON> 19
<OTHER-SE> (13,559)
<TOTAL-LIABILITY-AND-EQUITY> 37,560
<SALES> 38,483
<TOTAL-REVENUES> 38,483
<CGS> 40,376
<TOTAL-COSTS> 40,376
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,036
<INCOME-PRETAX> (2,929)
<INCOME-TAX> 17
<INCOME-CONTINUING> (2,946)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,946)
<EPS-PRIMARY> (2.04)
<EPS-DILUTED> (2.04)

</TABLE>