INVESCO INCOME FUNDS INC, 485APOS, 1998-10-29

INVESCO INCOME FUNDS INC
485APOS, 1998-10-29

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File No. 2-57151

As filed on October 28, 1998

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No. ________
---
Post-Effective Amendment No. 38 X
--------- ---

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 27 X
------------ ---

INVESCO BOND FUNDS, INC.
(formerly, INVESCO Income Funds, Inc.)
(Exact Name of Registrant as Specified in Charter)

7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)

P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)

Registrant's Telephone Number, including Area Code: (303) 930-6300

Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
-------------------
Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th Street
New York, New York 10036
-------------------

Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.

It is proposed that this filing will become effective:

____ immediately upon filing pursuant to paragraph (b)
____ on _____________, pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)

__X_ on January 1, 1999 pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on _____________, pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

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

Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act.
Registrant's Rule 24f-2 Notice for the fiscal year ended August 31, 1998 will
be filed on or about November 21, 1998.

Page 1 of 506
Exhibit index is located at page 145
<PAGE>

INVESCO BOND FUNDS, INC.

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

CROSS-REFERENCE SHEET

Form N-1A
Item Caption
---- -------

Part A Prospectuses

1....................... Cover Page

2....................... Annual Fund Expenses;
Essential Information

3....................... Financial Highlights; Fund
Price And Performance

4....................... Investment Objective And
Strategy; Investment Policies
and Risks; The Funds And
Their Management

5....................... The Funds And Their
Management

5A...................... Not Applicable

6....................... Fund Services; Taxes,
Dividends And Other
Distributions; Additional
Information

7....................... How To Buy Shares; Fund Price
And Performance; Fund
Services; The Funds And
Their Management

8....................... Fund Services; How To Sell
Shares

9....................... Not Applicable

Part B Statement of Additional
Information

10....................... Cover Page

11....................... Table of Contents

<PAGE>

Form N-1A
Item Caption
---- -------

12....................... The Funds And Their
Management

13....................... Investment Policies And
Restrictions

14....................... The Funds And Their
Management

15....................... The Funds And Their
Management; Additional
Information

16....................... The Funds And Their
Management; Additional
Information

17....................... Investment Policies And
Restrictions

18....................... Additional Information

19....................... How Shares Can Be Purchased;
How Shares Are Valued;
Services Provided By The
Funds; Tax-Deferred Retirement
Plans; How To Redeem Shares

20....................... Dividends, Other Distributions
And Taxes

21....................... How Shares Can Be Purchased

22....................... Fund Performance

23....................... Additional Information

Part C Other Information

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

<PAGE>

PROSPECTUS
January 1, 1999

INVESCO Select Income Fund
INVESCO High Yield Fund
INVESCO U.S. Government Securities Fund

The three INVESCO Bond Funds (the "Funds") described in this Prospectus are
actively managed to seek high current income through investments in fixed-income
securities. The INVESCO Select Income Fund (the "Select Income Fund"), the
INVESCO High Yield Fund (the "High Yield Fund") and the INVESCO U.S. Government
Securities Fund (the "U.S. Government Securities Fund") seek as high a level of
current income as is consistent with the risk involved in investing in the types
of securities in which each Fund invests. The Select Income Fund, High Yield
Fund and U.S. Government Securities Fund each have a secondary objective of
capital appreciation. The Funds are a series of INVESCO Bond Funds, Inc.
(formerly, INVESCO Income Funds, Inc.) (the "Company"), a diversified, managed
no-load mutual fund consisting of four portfolios of investments. A separate
Prospectus is available upon request from INVESCO Distributors, Inc. for the
Company's other Fund, INVESCO Short-Term Bond Fund . Investors may purchase
shares of any or all of the Funds. Additional funds may be offered in the
future.

This Prospectus provides you with the basic information you should know
before investing in a Fund. You should read it and keep it for future reference.
A Statement of Additional Information containing further information about the
Funds, dated January 1, 1999, has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. To request a
free copy, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; call 1-800-525-8085; or visit our web site at
http://www.invesco.com.

THE SELECT INCOME FUND MAY INVEST UP TO 50% OF ITS TOTAL ASSETS IN LOWER
RATED BONDS, COMMONLY KNOWN AS "HIGH YIELD" OR "JUNK BONDS." THE HIGH YIELD FUND
INVESTS PRIMARILY IN SUCH BONDS. THESE INVESTMENTS ARE SUBJECT TO GREATER RISKS,
INCLUDING THE RISK OF DEFAULT, THAN HIGHER RATED SECURITIES. YOU SHOULD
CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THESE FUNDS. SEE
"INVESTMENT OBJECTIVE AND STRATEGY" AND "INVESTMENT POLICIES AND RISKS."

<PAGE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION , NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. SHARES OF EACH FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES OF EACH FUND
ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

<PAGE>

TABLE OF CONTENTS

ESSENTIAL INFORMATION.....................................................7

ANNUAL FUND EXPENSES......................................................8

FINANCIAL HIGHLIGHTS.....................................................11

INVESTMENT OBJECTIVE AND STRATEGY........................................17

INVESTMENT POLICIES AND RISKS............................................19

THE FUNDS AND THEIR MANAGEMENT...........................................26

FUND PRICE AND PERFORMANCE...............................................29

HOW TO BUY SHARES........................................................30

FUND SERVICES............................................................35

HOW TO SELL SHARES.......................................................36

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS.................................39

ADDITIONAL INFORMATION...................................................40

<PAGE>

ESSENTIAL INFORMATION

Investment Goals And Strategy: The Funds seek high current income. The High
Yield Fund invests substantially all of its assets in bonds and other debt
securities and in preferred stocks. Such securities ordinarily include those
rated in lower categories by established ratings services. The Select Income
Fund invests in securities whose maturities will vary with interest rates. The
U.S. Government Securities Fund invests primarily in bonds and other debt
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities, and in repurchase agreements and futures contracts with
respect to such securities. Capital appreciation is a secondary objective for
the Funds. There is no guarantee that the Funds will meet their investment
objective. See "Investment Objective And Strategy" and "Investment Policies And
Risks."

Designed For: The Select Income and the U.S. Government Securities Funds are
designed for investors seeking daily income, paid monthly. The High Yield Fund
is designed for investors seeking high daily income, paid monthly, who can
tolerate greater fluctuations in principal value than those associated with more
conservative bond funds. While not a complete investment program, one or more of
these Funds may be a valuable element of your investment portfolio. You may also
wish to consider one of the Funds as part of a Uniform Gifts/Transfers to Minors
Act Account or systematic investment strategy. Each Fund may be a suitable
investment for tax-deferred retirement programs such as various Individual
Retirement Accounts ("IRAs"), 401(k), Profit Sharing, Money Purchase Pension, or
403(b) plans.

Time Horizon: The Funds are primarily managed for current income but also
have a secondary potential for capital growth. Investors should not consider any
of the Funds as a suitable investment for the portion of their savings devoted
to capital appreciation, or for that portion focused on liquidity and stable
principal value.

Risks: The Funds focus on fixed-income securities. Each Fund's investments
are subject to both credit risk and market risk, both of which are increased by
investing in lower rated securities. High Yield and Select Income Fund may
experience rapid portfolio turnover that may result in higher brokerage
commissions and the acceleration of taxable capital gains. See "Investment
Policies And Risks" for specific risks associated with each Fund.

Organization and Management: Each Fund is a series of the Company. Each Fund
is owned by its shareholders. The Funds employ INVESCO Funds Group, Inc.
("INVESCO"), founded in 1932, to serve as investment adviser, administrator and
transfer agent. INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a
wholly-owned subsidiary of INVESCO, is the Funds' distributor.

Each Fund's investments are selected by its portfolio manager or managers.
See "The Funds And Their Management."

<PAGE>

INVESCO and IDI are indirect, wholly-owned subsidiaries of AMVESCAP PLC, an
international investment management company that managed approximately $261
billion in assets as of June 30, 1998. AMVESCAP PLC is based in London with
money managers located in Europe, North America, South America and the Far East.

The Funds offer all of the following services at no charge:
- -----------------------------------------------------------
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase, and Automatic Monthly Exchange
Periodic withdrawal plans

See "How To Buy Shares" and "How To Sell Shares."

Minimum Initial Investment: $1,000 per Fund, which is waived for regular
investment plans, including EasiVest and Direct Payroll Purchase, and certain
retirement plans.

Minimum Subsequent Investment: $50 per Fund (Minimums are lower for certain
retirement plans).

ANNUAL FUND EXPENSES

Each Fund is no-load; there are no fees to purchase, exchange or redeem
shares. Each Fund is authorized to pay a Rule 12b-1 distribution fee of up to
one quarter of one percent of that Fund's average net assets each year. (See
"How To Buy Shares --Distribution Expenses.")

Like any company, each Fund has operating expenses -- such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts, and other expenses. These expenses are paid from each Fund's assets.
Lower expenses therefore benefit investors by increasing a Fund's investment
return.

We calculate annual operating expenses as a percentage of each Fund's average
annual net assets. To keep expenses competitive, INVESCO voluntarily reimburses
the High Yield Fund, Select Income Fund and U.S. Government Securities Fund for
amounts in excess of 1.25%, 1.05% and 1.00% (excluding excess amounts that have
been offset by the expense offset arrangements described below), respectively,
of each Fund's average net assets.

<PAGE>

Annual Fund Operating Expenses
- ------------------------------
(as a percentage of average net assets)

High Yield Fund
- ---------------
Management Fee 0.42%
12b-1 Fees 0.25%
Other Expenses 0.19%
Total Fund Operating Expenses(1) 0.86%

Select Income Fund
- ------------------

Management Fee 0.53%
12b-1 Fees 0.25%
Other Expenses 0.28%
Total Fund Operating Expenses (1)(2) 1.06%

U.S. Government Securities Fund
- -------------------------------
Management Fee 0.55%
12b-1 Fees 0.25%
Other Expenses 0.21%
Total Fund Operating Expenses (1)(2) 1.01%

(1) It should be noted that each Fund's actual total operating expenses were
lower than the figures shown because each Fund's custodian expenses were reduced
under expense offset arrangement. However, as a result of an SEC requirement,
the figures shown above do not reflect these reductions. In comparing expenses
for different years, please note that the Ratios of Expenses to Average Net
Assets shown under "Financial Highlights" do reflect reductions for periods
prior to the fiscal year ended August 31, 1996. See "The Funds And Their
Management."

(2) Certain Fund expenses are being voluntarily absorbed by INVESCO. In the
absence of such absorbed expenses, "Other Expenses" and "Total Fund Operating
Expenses" for the fiscal year ended August 31, 1998 would have been 0.32% and
1.10%, respectively, for the Select Income Fund, and 0.61% and 1.41%,
respectively, for the U.S. Government Securities Fund. This is based on each
Fund's actual expenses for the fiscal year ended August 31, 1998. See "The Funds
And Their Management."

Example
- -------

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
each Fund's assets, and are deducted from the amount of income available for

<PAGE>

distribution to shareholders; they are not charged directly to shareholder
accounts.)

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

High Yield $ 9 $28 $48 $106
Select Income $11 $34 $59 $130
U.S. Government Securities $10 $32 $56 $124

The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR EXPENSES,
AND ACTUAL ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
For more information on each Fund's expenses, see "The Funds And Their
Management" and "How To Buy Shares - Distribution Expenses."

Because each Fund pays a 12b-1 distribution fee, investors who own shares
of the Funds for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.

<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------
(For a Fund Share Outstanding Throughout Each Period)

The following information has been audited by PricewaterhouseCoopers LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the Report of Independent Accountants thereon
appearing in the Funds' 1998 Annual Report to Shareholders, which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting IDI at the address or telephone number on
the back cover of this Prospectus. The Annual Report also contains more
information about each Fund's performance.

Period
Ended
Year Ended August 31 August 31 Year Ended December 31
------------------------------------------ --------- --------------------------------

1998 1997 1996 1995 1994 1993(a) 1992 1991 1990 1989

High Yield Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $7.45 $6.84 $6.73 $6.73 $7.32 $6.97 $6.66 $6.00 $7.16 $7.82
----------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.64 0.62 0.63 0.66 0.62 0.39 0.64 0.70 0.83 0.95
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) (0.29) 0.64 0.11 0.03 (0.59) 0.36 0.30 0.64 (1.14) (0.66)
----------------------------------------------------------------------------------------
Total from Investment
Operations 0.35 1.26 0.74 0.69 0.03 0.75 0.94 1.34 (0.31) 0.29
----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income(b) 0.64 0.62 0.63 0.66 0.62 0.40 0.63 0.68 0.85 0.95
Distributions from
Capital Gains 0.40 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

<PAGE>

In Excess of Capital Gains 0.00 0.00 0.00 0.03 0.00 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------
Total Distributions 1.04 0.65 0.63 0.69 0.62 0.40 0.63 0.68 0.85 0.95
----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $6.76 $7.45 $6.84 $6.73 $6.73 $7.32 $6.97 $6.66 $6.00 $7.16
========================================================================================
TOTAL RETURN 4.44% 19.27% 11.38% 11.12% 0.37% 11.01%(c) 14.53% 23.51% (4.57%) 3.72%

RATIOS
Net Assets - End of Period
($000 Omitted) $641,394 $470,965 $375,201 $288,959 $243,773 $308,945 $212,172 $99,103 $40,380 $49,017
Ratio of Expenses to
Average Net Assets(d) 0.86%(e) 1.00%(e) 0.99%(e) 1.00% 0.97% 0.97%(f) 1.00% 1.05% 0.94% 0.83%
Ratio of Net Investment
Income to Average
Net Assets(d) 8.72% 8.71% 9.13% 10.01% 8.70% 8.28%(f) 9.29% 10.57% 12.57% 12.27%
Portfolio Turnover Rate 282% 129% 266% 201% 195% 45%(c) 120% 64% 28% 53%
</TABLE>

(a) From January 1, 1993 to August 31, 1993.

(b) Distributions in excess of net investment income for the year ended August
31, 1996, aggregated less than $0.01 on a per share basis.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended August 31, 1996, 1995 and 1994. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
0.99%, 1.07% and 0.98%, respectively, and ratio of net investment income to
average net assets would have been 9.13%, 9.94% and 8.69%, respectively.

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.

(f) Annualized

<PAGE>

<TABLE>
<CAPTION>
Period
Ended
Year Ended August 31 August 31 Year Ended December 31
----------------------------------------- ------- --------------------------------
1998 1997 1996 1995 1994 1993(a) 1992 1991 1990 1989

Select Income Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period 6.66 $6.35 $6.54 $6.18 $6.80 $6.53 $6.50 $5.96 $6.26 $6.39
----------------------------------------- ------- --------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.43 0.45 0.47 0.47 0.47 0.33 0.52 0.53 0.59 0.63
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.19 0.34 (0.17) 0.36 (0.43) 0.27 0.13 0.53 (0.30) (0.13)
----------------------------------------- ------- --------------------------------
Total from Investment
Operations 0.62 0.79 0.30 0.83 0.04 0.60 0.65 1.06 0.29 0.50
----------------------------------------- ------- --------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.43 0.45 0.46 0.47 0.47 0.33 0.52 0.52 0.59 0.63
In Excess of Net
Investment Income(b) 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from
Capital Gains 0.17 0.03 0.02 0.00 0.09 0.00 0.10 0.00 0.00 0.00
In Excess of Capital Gains 0.00 0.00 0.00 0.00 0.10 0.00 0.00 0.00 0.00 0.00
----------------------------------------- ------- --------------------------------
Total Distributions 0.60 0.48 0.49 0.47 0.66 0.33 0.62 0.52 0.59 0.63
----------------------------------------- ------- --------------------------------
Net Asset Value -
End of Period $6.68 $6.66 $6.35 $6.54 $6.18 $6.80 $6.53 $6.50 $5.96 $6.26
========================================= ======= ================================
TOTAL RETURN 9.58% 12.89% 4.78% 14.01% 0.47% .42%(c) 10.38% 18.57% 4.86% 8.17%

<PAGE>

RATIOS
Net Assets - End of Period
($000 Omitted) $502,624 $287,618 $258,093 $216,597 $138,337 $158,780 $123,036 $93,827 $46,423 $32,783
Ratio of Expenses to
Average Net Assets(d) 1.06%(e) 1.03%(e) 1.01%(e) 1.00% 1.11% 1.15%(f) 1.14% 1.15% 1.01% 0.99%
Ratio of Net Investment
Income to Average
Net Assets(d) 6.36% 6.98% 7.14% 7.38% 7.22% 7.40%(f) 7.97% 8.57% 9.67% 9.92%
Portfolio Turnover Rate 140% 263% 210% 181% 135% 105%(c) 178% 117% 38% 121%
</TABLE>

(a) From January 1, 1993 to August 31, 1993.

(b) Distributions in excess of net investment income for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended August 31, 1998, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 1.10%, 1.21%, 1.16%, 1.22% and 1.15%, respectively, and ratio of net
investment income to average net assets would have been 6.32%, 6.80%, 6.99%,
7.16% and 7.18%, respectively.

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.

(f) Annualized

<PAGE>

<TABLE>
<CAPTION>
Period
Ended
Year Ended August 31 August 31 Year Ended December 31
----------------------------------------- --------- -------------------------------
1998 1997 1996 1995 1994 1993(a) 1992 1991 1990 1989

U.S. Government Securities Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $7.49 $7.15 $7.49 $7.10 $8.19 $7.61 $7.65 $7.09 $7.14 $6.87
----------------------------------------- --------- -------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.40 0.43 0.44 0.45 0.41 0.28 0.46 0.48 0.53 0.56
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.67 0.34 (0.34) 0.39 (0.93) 0.58 (0.04) 0.57 (0.05) 0.26
----------------------------------------- --------- -------------------------------
Total from Investment
Operations 1.07 0.77 0.10 0.84 (0.52) 0.86 0.42 1.05 0.48 0.82
----------------------------------------- --------- -------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.40 0.43 0.43 0.45 0.41 0.28 0.46 0.49 0.53 0.55
In Excess of Net
Investment Income(b) 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from
Capital Gains 0.17 0.00 0.00 0.00 0.16 0.00 0.00 0.00 0.00 0.00
----------------------------------------- --------- -------------------------------
Total Distributions 0.57 0.43 0.44 0.45 0.57 0.28 0.46 0.49 0.53 0.55
Net Asset Value -
End of Period $7.99 $7.49 $7.15 $7.49 $7.10 $8.19 $7.61 $7.65 $7.09 $7.14
========================================= ========= ===============================
TOTAL RETURN 14.75% 11.01% 1.31% 12.37% (6.53%) 11.61%(c) 5.68% 15.56% 7.23% 12.40%

<PAGE>

RATIOS

Net Assets - End of Period
($000 Omitted) $79,485 $51,581 $54,614 $38,087 $36,740 $36,391 $35,799 $29,229 $21,247 $19,293
Ratio of Expenses to
Average Net Assets(d) 1.01%(e) 1.01%(e) 1.02%(e) 1.00% 1.32% 1.40%(f) 1.27% 1.27% 1.07% 1.04%
Ratio of Net Investment
Income to Average
Net Assets# 5.22% 5.78% 5.76% 6.24% 5.46% 5.36%(f) 6.08% 6.78% 7.58% 7.98%
Portfolio Turnover Rate 323% 139% 212% 99% 95% 100%(c) 115% 67% 38% 159%
</TABLE>

(a) From January 1, 1993 to August 31, 1993.

(b) Distributions in excess of net investment income for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended August 31, 1998, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 1.41%, 1.32%, 1.48%, 1.51% and 1.42%, respectively, and ratio of net
investment income to average net assets would have been 4.82%, 5.47%, 5.30%,
5.73% and 5.36%, respectively.

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.

(f) Annualized

<PAGE>

INVESTMENT OBJECTIVE AND STRATEGY

The High Yield Fund seeks to achieve as high a level of current income as
is consistent with the risk involved in investing substantially all of its
assets in bonds and other debt securities and in preferred stocks. The Select
Income Fund seeks as high a level of current income as is consistent with the
risk involved in investing in bonds and marketable debt securities (including
convertible issues) of established companies. The U.S. Government Securities
Fund seeks a high level of income by investing in bonds and other debt
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, and in repurchase agreements and futures contracts with
respect to such securities. Potential capital appreciation is a secondary factor
in the selection of investments for the Funds. Each Fund's investment objective
is fundamental and cannot be changed without the approval of that Fund's
shareholders. There is no assurance that a Fund's investment objective will be
met.

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Funds; securities may be sold without regard to the time they
have been held when investment considerations warrant such action. Increased
turnover may result in greater brokerage commissions and acceleration of capital
gains that are taxable when distributed to shareholders. The Statement of
Additional Information includes an expanded discussion of each Fund's portfolio
turnover rate, its brokerage practices and certain federal income tax matters.

High Yield Fund

The Fund invests primarily in higher yielding corporate bonds (including
convertible issues) and preferred stocks with medium to lower credit ratings.
These securities are generally rated Ba or lower by Moody's or BB or lower by
S&P. However, under no circumstances will the Fund invest in any issue rated
lower than Caa by Moody's or CCC by S&P, or any issue that is in default.
Potential capital appreciation is a factor in the selection of investments, but
is secondary to the Fund's primary objective. (See "Investment Policies And
Risks" below and the Appendix to this Prospectus for a description of bond
ratings.)

The Fund also may invest in securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities (which may or may not be backed by
the full faith and credit of the United States) and bank certificates of
deposit. In addition, the Fund may invest in corporate short-term notes rated at
least A-1 by S&P or Prime-1 by Moody's. In addition, the Fund may invest in
municipal obligations, including municipal short-term notes rated at least SP-1
by S&P or MIG-1 by Moody's, when we believe that their potential returns are
better than those that might be achieved by investing in securities of corporate
or U.S. governmental issuers.

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As a matter of policy, which may be changed without a vote of
shareholders, at least 65% of the Fund's total assets normally will be invested
in debt securities maturing at least three years after they are issued. However,
there are no limitations on the maturities of the securities held by the Fund,
and the Fund's average maturity will vary as INVESCO responds to changes in
interest rates.

Select Income Fund

The Fund normally invests at least 90% of its assets in bonds and
marketable debt securities (including convertible issues) of established
companies which INVESCO believes may provide high current income and which,
consistent with this objective, may have the potential to provide capital
appreciation. Under normal circumstances, at least 50% of the Fund's assets are
invested in investment grade debt securities -- those rated Baa or higher by
Moody's Investors Service, Inc. ("Moody's") or BBB or higher by Standard &
Poor's , a division of The McGraw-Hill Companies, Inc. ("S&P"). No more than 50%
of the Fund's assets may consist of corporate bonds rated below investment
grade. (See the Appendix to this Prospectus for a description of bond ratings.)

U.S. Government Securities Fund

The Fund invests substantially all (and in no event less than 65%) of its
assets in government and government agency or government instrumentality debt
securities (including mortgage-backed securities issued or guaranteed by
government agencies or government-sponsored enterprises), government agency and
instrumentality securities. Some of these portfolio holdings --Treasury bonds,
bills, and notes -- may be issued directly by the U.S. government and are backed
by the full faith and credit of the federal government. Similar protection is
offered by securities of certain agencies, which include, among others, the
Government National Mortgage Association (GNMA), the Department of Housing and
Urban Development, the Small Business Administration, and the Farmers' Home

<PAGE>

Administration. In addition, the Fund may hold U.S.government agency securities
not supported by the U.S. government, but only by the creditworthiness of the
government-related issuer. These include securities issued by Fannie Mae
(formerly, the Federal National Mortgage Association), the Federal Home Loan
Mortgage Corporation ("Freddie Mac"), the Federal Home Loan Banks, the
Resolution Funding Corporation and the Student Loan Marketing Association.
The value of the Fund's shares is not guaranteed by the U.S. government.

When we believe market or economic conditions are adverse, the High Yield,
Select Income and U.S. Government Funds may assume a defensive position by
temporarily investing up to 100% of their respective assets in cash and debt
securities having maturities of less than three years at the time of issuance,
seeking to protect their assets until conditions stabilize.

INVESTMENT POLICIES AND RISKS

Investors generally should expect to see the price per share of a Fund
vary with movements in the fixed-income market, changes in economic conditions
and other factors. With respect to the High Yield and Select Income Funds,
INVESCO seeks to temper volatility by having each Fund invest in many different
securities and industries. This diversification may help reduce a Fund's
exposure to particular investment and market risks, but cannot eliminate these
risks.

Year 2000 Computer Issue. Due to the fact that many computer systems in
use today cannot recognize the Year 2000, but will, unless corrected, revert to
1900 or 1980 or cease to function at that time, the markets for securities in
which the Funds invest may be detrimentally affected by computer failures
affecting portfolio investments or trading of securities beginning January 1,
2000. Improperly functioning trading systems may result in settlement problems
and liquidity issues. In addition, corporate and governmental data processing
errors may result in production issues for individual companies and overall
economic uncertainties. Earnings of individual issuers may be affected by
remediation costs, which may be substantial. The Funds' investments may be
adversely affected.

Debt Securities. The High Yield and Select Income Funds may invest in
corporate debt securities. The U.S. Government Securities Fund may invest in

<PAGE>

debt securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. When we assess an issuer's ability to meet its interest rate
obligations and repay its debt when due, we are referring to "credit risk."
Debt securities issued by the U.S. government, its agencies and
instrumentalities carry a low level of credit risk compared to higher yielding
corporate bonds. Corporate debt obligations are rated based on their credit risk
as estimated by independent services such as Moody's, S&P, Fitch Investors
Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("D&P"). These ratings attempt
to evaluate the likelihood that principal and interest will be paid when due,
but do not evaluate the volatility of a debt obligation's value or its
liquidity and do not guarantee the performance of the issuer. "Market risk"
refers to sensitivity to changes in interest rates. For instance, when
interest rates go up, the market value of a previously issued bond generally
declines; on the other hand, when interest rates go down, bond prices generally
increase. All bonds, including government, government agency and government
instrumentality securities, are subject to market risk.

The High Yield and Select Income Funds may invest in issues rated below
investment grade quality (commonly called "junk bonds"), that is, rated Ba or
lower by Moody's or BB or lower by S&P, or, if unrated, are judged by INVESCO to
be of equivalent quality. These include issues which are of poorer quality and
may have some speculative characteristics according to the ratings services.

Risks of Lower Rated Bonds. The lower a bond's quality, the more it is
believed by the rating service to be subject to credit risk and market risk and
the more speculative it becomes; this is also true of most unrated securities.
To reduce these risks, at least 50% of the Select Income Fund's assets normally
are invested in debt securities rated Baa or above by Moody's or BBB or above by
S&P. In addition, the Select Income Fund may invest in corporate short-term
notes rated at least Prime-1 by Moody's or A-1 by S&P. Overall, these bonds and
notes enjoy strong to adequate capacity to pay principal and interest.

No more than 50% of the Select Income Fund's assets may be invested in
junk bonds. Investments in unrated securities may not exceed 25% of the Select
Income Fund's total assets. Never, under any circumstances, is the Select Income
Fund permitted to invest in bonds which are rated below B by Moody's or B- by
S&P. Bonds rated below B or B- generally lack characteristics of a desirable
investment and are deemed speculative with respect to the issuer's capacity to
pay interest and repay principal over a long period of time.

Because the High Yield Fund normally invests primarily in junk bonds, the
securities held by this Fund generally will be subject to greater credit and
market risks. Never, under any circumstances, is the High Yield Fund permitted
to invest in bonds that are in default or are rated below Caa by Moody's or CCC
by S&P or, if unrated, are judged by INVESCO to be of equivalent quality. Bonds

<PAGE>

rated Caa or CCC are predominantly speculative and may be in default or may have
present elements of danger with respect to the repayment of principal or
interest.

While INVESCO continuously monitors all of the corporate bonds in each
Fund's portfolio for the issuer's ability to make required principal and
interest payments and other quality factors, it may retain a bond whose rating
is changed to one below the minimum rating required for purchase of the
security. A Fund is not required to sell immediately debt securities that go
into default, but may continue to hold such securities until such time as
INVESCO determines it is in the best interests of the Fund to sell the
securities.

Because investment in medium and lower rated securities involves both
greater credit risk and market risk, achievement of each Fund's investment
objective may be more dependent on INVESCO's own credit analysis than is the
case for funds investing in higher quality securities. In addition, the share
price and yield of each Fund may be expected to fluctuate more than in the case
of funds investing in higher quality, shorter term securities. Moreover, a
significant economic downturn or major increase in interest rates may result in
issuers of lower rated securities experiencing increased financial stress, which
would adversely affect their ability to service their principal, dividend and
interest obligations, meet projected business goals, and obtain additional
financing. In this regard, it should be noted that while the market for high
yield corporate bonds has been in existence for many years and from time to time
has experienced economic downturns, there has been a significant increase in the
use of high yield corporate debt securities to fund highly leveraged corporate
acquisitions and restructurings. Past experience may not, therefore, provide an
accurate indication of future performance of the high yield bond market,
particularly during periods of economic recession. Furthermore, expenses
incurred to recover an investment in a defaulted security may adversely affect a
Fund's net asset value. Finally, while INVESCO attempts to limit purchases of
medium and lower rated securities to securities having an established secondary
market, the secondary market for such securities may be less liquid than the
market for higher quality securities. The reduced liquidity of the secondary
market for such securities may adversely affect the market price of, and ability
of a Fund to value, particular securities at certain times, thereby making it
difficult to make specific valuation determinations.

For the fiscal year ended August 31, 1998, the following percentages of
High Yield and Select Income Funds' total net assets were invested in corporate
bonds rated investment grade (Baa by Moody's or BBB by S&P and above) at the
time they were purchased: Aaa/AAA-- 0.00%; Aa/AA--0.00%; A--0.00% and
Baa/BBB--0.68% for the High Yield Fund and Aaa/AAA-- 7.03%; Aa/AA-- 0.78%; A--
16.05% and Baa/BBB-- 34.19% for the Select Income Fund. The following
percentages were invested in corporate bonds rated below investment grade at the

<PAGE>

time of purchase: Ba/BB-- 7.79%; B--66.87%; Caa/CCC--3.27% and D--0.00% for the
High Yield Fund and Ba/BB--20.77; B--16.24%; Caa/CCC--0.00% and D--0.00% for the
Select Income Fund. Finally, 7.02% and 1.56% of total assets were invested
in unrated corporate bonds for the High Yield and Select Income Funds,
respectively. All of these percentages were determined on a dollar-weighted
basis, calculated by averaging each Fund's month-end portfolio holdings during
the fiscal year. Keep in mind that a Fund's holdings are actively traded,
and bond ratings are occasionally adjusted by ratings services, so these
figures do not represent each Fund's actual holdings or quality ratings as of
August 31, 1998.

For a detailed description of corporate bond ratings, see the Appendix to
this Prospectus .

Foreign Securities. The High Yield and Select Income Funds' investments in
debt obligations may include securities issued by foreign governments and
foreign corporations. As a matter of policy, which may be changed without a vote
of shareholders, up to 25% of each Fund's total assets, measured at the time of
purchase, may be invested directly in foreign debt securities, provided that all
such securities are denominated and pay interest in U.S. dollars (such as
Eurobonds and Yankee bonds). Securities of Canadian issuers and American
Depository Receipts ("ADRs") are not subject to this 25% limitation. ADRs are
receipts representing shares of a foreign corporation held by a U.S. bank that
entitles the holder to all dividends and capital gains. ADRs are denominated in
U.S. dollars and trade in the U.S. securities markets. Investments in foreign
debt securities involve certain risks.

For U.S. investors, the returns on foreign debt securities are influenced
not only by the returns on the foreign investments themselves, but also by
currency fluctuations. That is, when the U.S. dollar generally rises against a
foreign currency, returns for a U.S. investor on foreign securities may
decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase. Each Fund attempts to minimize these risks by
limiting its investments in foreign debt securities to those which are
denominated and pay interest in U.S. dollars.

Other aspects of international investing to consider include:

-less publicly available information than is generally available about
U.S. issuers;

-differences in accounting, auditing and financial reporting standards;

-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;

<PAGE>

-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and

- investment income on certain foreign currencies may be subject to
foreign withholding taxes, which may reduce dividend income or capital gains
payable to shareholders.

There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility that each Fund may experience difficulties in pursuing legal
remedies and collecting judgments.

ADRs are subject to some of the same risks as direct investments in
foreign securities, including the risk that material information about the
issuer may not be disclosed in the United States and the risk that currency
fluctuations may adversely affect the value of the ADR.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
The Netherlands, Portugal and Spain are presently members of the European
Economic and Monetary Union (the "EMU"). The EMU has established a common
European currency for EMU countries which is known as the "euro." Each
participating country has adopted the euro as its currency effective
January 1, 1999. The old national currencies are sub-currencies of the euro
until July 1, 2002, at which time the old currencies will disappear entirely.
Other European countries may be permitted to join the EMU in the future.

The introduction of the euro presents some uncertainties and possible
risks, including whether the payment and operational systems of banks and other
financial institutions will have been ready by January 1, 1999; the
establishment of exchange rates for existing currencies and the euro; and the
creation of suitable clearing and settlement systems for the euro. These and
other factors may cause market disruptions after January 1, 1999 and could
adversely affect the value of securities held by the Funds.

Illiquid and Rule 144A Securities. The High Yield Fund may invest up to
15% of its net assets in securities that are illiquid because they are subject
to restrictions on resale ("restricted securities") or because they are not
readily marketable. The Fund may not be able to dispose of illiquid securities
at the time desired or at a reasonable price. In addition, if the securities are
not registered, their marketability and value could be adversely affected.

The Select Income Fund and U.S. Government Securities Fund may not
purchase securities that are not readily marketable. However, the Select Income

<PAGE>

and U.S. Government Securities Funds may purchase certain securities that are
not registered for sale to the general public but that can be resold to
institutional investors ("Rule 144A Securities"), if a liquid trading market
exists. The Company's board of directors has delegated to INVESCO the authority
to determine the liquidity of Rule 144A Securities pursuant to guidelines
approved by the board. In the event that a Rule 144A Security held by a Fund
is subsequently determined to be illiquid, the security will be sold as soon
as that can be done in an orderly fashion consistent with the best interests of
such Fund's shareholders. For more information concerning rule 144A Securities,
see "Investment Policies And Restrictions" in the Statement of Additional
Information.

Zero Coupon Bonds and Pay-in-Kind Bonds. The High Yield and Select Income
Funds may invest in zero coupon bonds and payment-in-kind ("PIK") bonds if
INVESCO determines that the risk of a default on the security, which could
result in adverse tax consequences, is not significant. Zero coupon bonds make
no periodic interest payments. Instead, they are sold at a discount from their
face value. The buyer of the security receives the rate of return by the gradual
appreciation in the price of the security, which is redeemed at face value at
maturity. PIK bonds pay interest in cash or additional securities, at the
issuer's option, for a specified period. Zero coupon and PIK bonds are more
sensitive to changes in interest rates than bonds that pay interest on a current
basis in cash. When interest rates fall, the value of these types of bonds will
increase more rapidly, and when interest rates rise, their value falls more
dramatically. A Fund may be required to distribute income recognized on these
bonds, even though no cash interest payments are received, which could reduce
the amount of cash available for investment by such Fund.

Interest Rate Futures Contracts. The U.S. Government Securities Fund may
buy and sell interest rate futures contracts relating to the debt securities in
which the Fund invests for the purpose of hedging the value of its securities
portfolio. These practices and their risks are discussed under "Investment
Policies And Restrictions" in the Statement of Additional Information.

Mortgage-Backed Securities. The U.S. Government Securities Fund may invest
in mortgage-backed securities issued or guaranteed as to principal and interest
by the U.S. government, federal agencies or instrumentalities such as GNMA,
Fannie Mae and Freddie Mac. Some of these securities, such as GNMA certificates,
are backed by the full faith and credit of the U.S. Treasury while others, such
as FHLMC certificates, are not. Mortgage-backed securities represent interests
in pools of mortgages which have been purchased from loan institutions such as
banks and savings and loan associations, and packaged for resale in the
secondary market. Interest and principal are "passed through" to the holders of
the securities. The timely payment of interest and principal is guaranteed by a
federal agency, but the market value of the security is not guaranteed and will
vary. When interest rates drop, many home buyers choose to refinance their

<PAGE>

mortgages. These prepayments may shorten the average weighted lives of mortgage-
backed securities and may lower their returns.

Delayed Delivery or When-Issued Purchases. Up to 10% of the value of the
High Yield and Select Income Funds' net assets may be committed to the purchase
or sale of securities on a when-issued or delayed-delivery basis -- that is,
with settlement taking place in the future. The payment obligation and the
interest rate that will be received on the securities generally are fixed at the
time a Fund enters into the commitment . Between the date of purchase and the
settlement date, the market value of the securities may vary. No interest is
payable to a Fund prior to settlement.

Repurchase Agreements. Each Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, a Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price and date. A Fund could incur costs or delays in seeking to
sell the security if the prior owner defaults on its repurchase obligation. To
reduce that risk, the securities that are the subject of the repurchase
agreement will be maintained with a Fund's custodian in an amount at least equal
to the repurchase price under the agreement (including accrued interest). These
agreements are entered into only with member banks of the Federal Reserve
System, registered brokers and dealers, and registered U.S. government
securities dealers that are deemed creditworthy under standards set by the
Company's board of directors.

Securities Lending. Each Fund may seek to earn additional income by
lending securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies And Restrictions" in the Statement of
Additional Information.

Investment Restrictions. Certain restrictions, which are identified in the
Statement of Additional Information, may not be altered without the approval of
each Fund's shareholders. For example, each Fund limits to 5% the portion of its
respective total assets that may be invested in any one issuer (other than cash
items and U.S. government securities). In addition, each Fund's ability to
borrow money is limited to borrowings from banks for temporary or emergency
purposes in amounts not exceeding 10% of net assets.

For a further discussion of risks associated with an investment in each
Fund, see "Investment Policies And Restrictions" and "Investment Practices" in
the Statement of Additional Information.

<PAGE>
THE FUNDS AND THEIR MANAGEMENT

The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on August 20, 1976, under the laws of Colorado and was
reorganized as a Maryland corporation on April 2, 1993.

The Company's board of directors has responsibility for overall
supervision of the Funds, and reviews the services provided by the investment
adviser . Under an agreement with the Company, INVESCO, 7800 E. Union Avenue,
Denver, Colorado 80237, serves as each Fund's investment adviser; it is
primarily responsible for providing the Funds with portfolio management and
various administrative services.

INVESCO and IDI are indirect, wholly-owned subsidiaries of AMVESCAP PLC.
AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest investment management businesses in the world. AMVESCAP PLC had
approximately $241 billion in assets under management as of September 30, 1998.
INVESCO was established in 1932 and, as of August 31, 1998, managed 14 mutual
funds, consisting of 49 separate portfolios, with combined assets of
approximately $17.1 billion on behalf of over 899,439 shareholders.

Prior to February 3, 1998, Institutional Trust Company, doing business as
INVESCO Trust Company ("ITC"), provided sub-advisory services to the Funds;
termination of ITC's sub-advisory services in no way changed the basis upon
which investment advice is provided to the Funds, the cost of those services to
the Funds or the persons actually performing the investment advisory and other
services previously provided by ITC. INVESCO provides such day-to-day portfolio
management services.

The Funds are managed by members of the INVESCO Fixed Income Team, which
is headed by Donovan J. (Jerry) Paul. The following individuals are primarily
responsible for the day-to-day management of the Fund's portfolio holdings:

Donovan J. (Jerry) Paul, a Chartered Financial Analyst and Certified
Public Accountant, has been the portfolio manager of the Select Income Fund
since 1994 and the portfolio manager of the High Yield Fund since 1994. Mr. Paul
also manages the INVESCO VIF-High Yield Fund and co-manages the INVESCO Short-
Term Bond Fund, INVESCO Industrial Income Fund, INVESCO VIF-Industrial Income
Fund, and INVESCO Balanced Fund. Mr. Paul is also a senior vice president,
portfolio manager, and director of fixed-income research of INVESCO . Mr. Paul
was previously a senior vice president and director of fixed-income research
(1989 to 1992) and portfolio manager (1987 to 1992) with Stein, Roe & Farnham
Inc. and president of Quixote Investment Management, Inc. (1993 to 1994). Mr.
Paul received an M.B.A. from the University of Northern Iowa and a B.B.A. from
the University of Iowa.

<PAGE>

Richard R. Hinderlie has been the portfolio manager of the INVESCO U.S.
Government Securities Fund since 1994 . Mr. Hinderlie also manages the INVESCO
U.S. Government Money Fund and INVESCO Cash Reserves Fund and co-manages the
INVESCO Short-Term Bond Fund, and is a vice president of INVESCO . Mr. Hinderlie
was previously a securities analyst with Bank Western from 1987 to 1993. Mr.
Hinderlie received an M.B.A. from Arizona State University and a B.A. in
Economics from Pacific Lutheran University.

INVESCO permits investment and other personnel to purchase and sell
securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires INVESCO's personnel to conduct their
personal investment activities in a manner that INVESCO believes is not
detrimental to the Fund or INVESCO's other advisory clients. See the Statement
of Additional Information for more detailed information.

Each Fund pays INVESCO a monthly management fee which is based upon a
percentage of each Fund's average net assets determined daily. With respect to
the Select Income and U.S. Government Securities Funds, the management fee is
computed at the annual rate of 0.55% on the first $300 million of each Fund's
average net assets; 0.45% on the next $200 million of each Fund's average net
assets; and 0.35% on each Fund's average net assets over $500 million. With
respect to the High Yield Fund, the management fee is computed at the annual
rate of 0.50% on the first $300 million of the Fund's average net assets; 0.40%
on the next $200 million of the Fund's average net assets; and 0.30% on the
Fund's average net assets over $500 million. For the fiscal year ended August
31, 1998, investment management fees paid by the High Yield, Select Income and
U.S. Government Securities Funds amounted to 0.42%, 0.53% and 0.55%,
respectively, of each Fund's average net assets (prior to the voluntary
absorption of certain Fund expenses by INVESCO).

Under a Distribution Agreement, IDI provides services relating to the
distribution and sale of the Funds' shares. IDI, established in 1997, is a
registered broker-dealer that acts as distributor for all retail funds advised
by INVESCO. Prior to September 30, 1997, INVESCO served as the Funds'
distributor.

Under a Transfer Agency Agreement, INVESCO acts as registrar, transfer
agent, and dividend disbursing agent for the Funds. Each Fund pays an annual fee
of $26.00 per shareholder account or where applicable, per participant in an
omnibus account. Registered broker-dealers, third party administrators of
tax-qualified retirement plans and other entities, including affiliates of
INVESCO, may provide equivalent services to the Funds. In these cases, INVESCO
may pay, out of the fee it receives from the Funds, an annual sub-transfer
agency fee or recordkeeping fee to the third party.

<PAGE>

Under an Administrative Services Agreement, INVESCO handles additional
administrative, recordkeeping and internal sub-accounting services for the
Funds. For the fiscal year ended August 31, 1998, the Funds paid INVESCO a fee
equal to the following percentages of each Fund's average net assets (prior to
the absorption of certain Fund expenses): High Yield Fund, 0.02%; Select Income
Fund, 0.02% and U.S. Government Securities Fund, 0.03% .

The management and custodial services provided to the Funds by INVESCO and
the Funds' custodian, and the services provided to shareholders by INVESCO and
IDI, depend on the continued functioning of their computer systems. Many
computer systems in use today cannot recognize the Year 2000, but will revert to
1900 or 1980 or will cease to function due to the manner in which dates were
encoded and are calculated. That failure could have a negative impact on the
handling of each Funds' securities trades, their share pricing and account
services. The Funds and their service providers have been actively working on
necessary changes to their computer systems to deal with the Year 2000 issue and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful. Furthermore, services may be impaired at
that time as a result of the interaction of their systems with the noncomplying
computer systems of others. INVESCO plans to test as many such interactions as
practicable prior to December 31, 1999 and to develop contingency plans for
reasonably anticipated failures.

Each Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of each Fund (prior to any
expense offset arrangements) for the fiscal year ended August 31, 1998,
including investment management fees (but excluding brokerage commissions, which
are a cost of acquiring securities), amounted to the following percentages of
each Fund's average net assets: High Yield Fund, 0.86%, Select Income Fund,
1.06%, and U.S. Government Securities Fund, 1.01% . Certain expenses of the
Select Income, High Yield and U.S. Government Securities Funds are absorbed
voluntarily by INVESCO pursuant to a commitment to each Fund to ensure that each
Fund's total operating expenses do not exceed the following percentages of each
Fund's average net assets: High Yield Fund, 1.25%; Select Income Fund, 1.05% and
U.S. Government Securities Fund, 1.00% . These commitments may be changed
following consultation with the Company's board of directors. In the absence of
this voluntary expense limitation, each Fund's total operating expenses would
have been 1.10% and 1.41% of their average net assets for Select Income and U.S.
Government Securities Funds, respectively.

<PAGE>

brokers or dealers that have entered into Dealer Agreements with INVESCO or IDI,
as the Funds' distributor. A Fund may place orders for portfolio transactions
with qualified brokers and dealers that recommend the Fund, or sell shares of
the Fund, to clients, or act as agent in the purchase of Fund shares for
clients, if INVESCO believes that the quality of the execution of the
transaction and level of commission are comparable to those available from other
qualified brokerage firms. For further information, see "Investment Practices --
Placement of Portfolio Brokerage" in the Statement of Additional Information.

FUND PRICE AND PERFORMANCE

Determining Price. The value of your investment in the Funds may vary
daily. The price per share is also known as the Net Asset Value ("NAV"). INVESCO
prices each Fund every day that the New York Stock Exchange is open, as of the
close of regular trading (generally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of all of a Fund's
assets, including accrued interest and dividends; subtracting liabilities,
including accrued expenses; and dividing that dollar amount by the total number
of shares outstanding.

Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise each Fund's total return and yield. Total return
figures show the average annual rate of return on a $1,000 investment in a Fund,
assuming reinvestment of all dividends and capital gain distributions for one-,
five- and ten-year periods. Cumulative total return shows the actual rate of
return on an investment for the periods cited; average annual total return
represents the average annual percentage change in the value of an investment.
Both cumulative and average annual total returns tend to "smooth out"
fluctuations in a Fund's investment results, because they do not show the
interim variations in performance over the periods cited.

With respect to the High Yield and Select Income Funds, the yield is
calculated by utilizing the Fund's calculated income, expenses and average
outstanding shares for the most recent 30-day or one-month period, dividing it
by the month-end net asset value and annualizing the resulting number. With
respect to the U.S. Government Securities Fund, the yield is computed by
dividing the net investment income per share earned during the period by the net
asset value per share at the end of the period, then adjusting the result to
provide for semi-annual compounding. More information about each Fund's recent
and historical performance is contained in the Company's Annual Report to
Shareholders. You can get a free copy by calling or writing to IDI using the
telephone number or address on the back cover of this Prospectus.

When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare each Fund to others in their category of

<PAGE>

Corporate Bond Funds -- High Current Yield Funds for the High Yield Fund, BBB
rated for the Select Income Fund and U.S. Government Funds for the U.S.
Government Securities Fund , as well as the broad-based Lipper general fund
groupings. These rankings allow you to compare each Fund to its peers. Other
independent financial media also produce performance- or service-related
comparisons, which you may see in our promotional materials. For more
information see "Fund Performance" in the Statement of Additional Information.

Performance figures are based on historical investment results and are not
intended to suggest future performance.

HOW TO BUY SHARES

The following chart shows several convenient ways to invest in a Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form. There is no charge to invest, exchange, or redeem
shares when you make transactions directly through INVESCO. However, if you
invest in a Fund through a securities broker, you may be charged a commission or
transaction fee. INVESCO may from time to time make payments from its revenues
to securities dealers and other financial institutions that provide
distribution-related and/or administrative services for the Funds. For all new
accounts, please send a completed application form. Please specify which Fund's
shares you wish to purchase.

INVESCO reserves the right to increase, reduce or waive the minimum
investment requirements in its sole discretion, when it determines this action
is in the best interests of a Fund. Further, INVESCO reserves the right in its
sole discretion to reject any order for the purchase of Fund shares (including
purchases by exchange) when, in its judgment, such rejection is in a Fund's best
interests.

<PAGE>

HOW TO BUY SHARES
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check
Mail to: INVESCO $1,000 for regular If your check does
Funds Group, Inc. account; $250 for not clear, you will
P.O. Box 173706 an IRA; $50 be responsible for
Denver, CO minimum for each any related loss a
80217-3706. Or you subsequent Fund or INVESCO
may send your check investment. incurs. If you are
by overnight already a
courier to: 7800 E. shareholder in the
Union Ave., Denver, INVESCO funds, a
CO 80237. Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 $1,000. Payment must be
to request your received within 3
purchase. Then send business days, or
your check by the transaction may
overnight courier be canceled. If a
to our street purchase is
address: 7800 E. canceled due to
Union Ave., Denver, nonpayment, you
CO 80237. Or you will be responsible
may transmit your for any related
payment by bank loss a Fund or
wire (call INVESCO incurs. If
INVESCO for you are already a
instructions). shareholder in the
INVESCO funds, a
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
With EasiVest or
Direct Payroll
Purchase
You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to invest continually,
when prices are low INVESCO. regardless of
and fewer shares varying price
when prices are levels, consider
high. This your financial
"dollar-cost ability to keep
averaging" may help buying through low
offset market price levels. And
fluctuations. Over remember that you
a period of time, will lose money if
your average cost you redeem your
per share may be shares when the
less than the market value of all
actual average your shares is less
price per share. than their cost.
- --------------------------------------------------------------------------------
By PAL(R)
Your "Personal $1,000; $250 for an Be sure to write
Account Line" is IRA. down the
available for confirmation number
subsequent provided by
purchases and PAL(R).
exchanges 24-hours Payment must be
a day. Simply call received within 3
1-800-424-8085. business days, or
the transaction may
be canceled. If a
telephone purchase
is canceled due to
nonpayment, you will
be responsible for
any related loss a
Fund or INVESCO
incurs. If you are
already a
shareholder in the
INVESCO funds, a
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------
By Exchange
Between a Fund and $1,000 to open a See "Exchange
another of the new account; $50 Policy" page 33.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service purchases requested
between two INVESCO by telephone.)
funds; call
INVESCO for further
details and the
correct form.
- --------------------------------------------------------------------------------

Your order to purchase shares of a Fund will not begin earning dividends
or other distributions until either your payment can be converted into available
federal funds under regular banking procedures or, if you are acquiring shares
in an exchange from another INVESCO fund, the Fund receives the proceeds of the
exchange. Checks normally are converted into federal funds (moneys held on
deposit within the Federal Reserve System) within two or three business days
after we receive them, although this period may be longer for checks drawn on
banks that are not members of the Federal Reserve System.

Exchange Policy. You may exchange your shares in a Fund for those in
another INVESCO fund, on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.

Please note these policies regarding exchanges of fund shares:

(1) The fund accounts must be identically registered.

(2) You may make four exchanges out of each fund during each calendar
year.

(3) An exchange is the redemption of shares from one fund followed by
the purchase of shares in another. Therefore, any gain or loss
realized on the exchange is recognizable for federal income tax
purposes (unless, of course, your account is tax-deferred).

(4) In order to prevent abuse of this policy to the disadvantage of
other shareholders, the Fund reserves the right to temporarily or
permanently terminate the exchange option of any shareholder who
requests more than four exchanges in a year, or at any time the Fund
determines the actions of the shareholder are detrimental

<PAGE>

to Fund performance and shareholders. The Fund will determine
whether to do so based on a consideration of both the number of
exchanges any particular shareholder, or group of shareholders, has
requested and the time period over which those exchange requests
have been made, together with the level of expense to the Fund which
will result from effecting additional exchange requests. The Fund is
intended to be a long-term investment vehicle and is not designed to
provide investors the means of speculation on short-term market
movements.

(5) Notice of all modifications to the policy or terminations that would
affect all Fund shareholders will be given at least 60 days prior to
the effective date of the change in policy, except in unusual
circumstances (such as when redemptions of the exchanged shares are
suspended under Section 22(e) of the Investment Company Act of 1940,
or when sales of the fund into which you are exchanging are
temporarily suspended).

Distribution Expenses. Each Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by each Fund to IDI to permit IDI, at its discretion, to engage in certain
activities and provide certain services approved by the board of directors of
the Company in connection with the distribution of each Fund's shares to
investors. These activities and services may include the payment of compensation
(including incentive compensation and/or continuing compensation based on the
amount of customer assets maintained in a Fund) to securities dealers and other
financial institutions and organizations, which may include INVESCO- and
IDI-affiliated companies, to obtain various distribution-related and/or
administrative services for the Funds. Such services may include, among other
things, processing new shareholder account applications, preparing and
transmitting to the Funds' Transfer Agent computer processable tapes of all
transactions by customers, and serving as the primary source of information to
customers in answering questions concerning a Fund and their transactions with a
Fund.

In addition, other permissible activities and services include
advertising, preparation, printing and distribution of sales literature,
printing and distribution of prospectuses to prospective investors and such
other services and promotional activities for the Funds as may from time to time
be agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of INVESCO, IDI or their affiliates or by third parties.

<PAGE>

Under the Plan, the Funds' payments to IDI are limited to an amount
computed at an annual rate of 0.25% of each Fund's average net assets. IDI is
not entitled to payment for overhead expenses under the Plan, but may be paid
for all or a portion of the compensation paid for salaries and other employee
benefits for the personnel of INVESCO or IDI whose primary responsibilities
involve marketing shares of the INVESCO funds, including the Funds. Payment
amounts by each Fund under the Plan, for any month, may be made to compensate
IDI for permissible activities engaged in and services provided by IDI during
the rolling 12-month period in which that month falls. Therefore, any
obligations incurred by IDI in excess of the limitations described above will
not be paid by the Funds under the Plan, and will be borne by IDI. In addition,
IDI and its affiliates may from time to time make additional payments from their
revenues to securities dealers, financial advisors and other financial
institutions that provide distribution-related and/or administrative services
for the Funds. No further payments will be made by the Funds under the Plan in
the event of the Plan's termination. Payments made by the Funds may not be used
to finance directly the distribution of shares of any other Fund of the Company
or other mutual fund advised by INVESCO and distributed by IDI. However,
payments received by IDI which are not used to finance the distribution of
shares of the Fund become part of IDI's revenues and may be used by IDI for
activities that promote distribution of any of the mutual funds advised by
INVESCO. Subject to review by the Company's directors, payments made by each
Fund under the Plan for compensation of marketing personnel, as noted above, are
based on an allocation formula designed to ensure that all such payments are
appropriate. IDI will bear any distribution-and service-related expenses in
excess of the amounts which are compensated pursuant to the Plan. The Plan also
authorizes any financing of distribution which may result from IDI's use of its
own resources, provided that such fees are legitimate and not excessive. For
more information see "How Shares Can Be Purchased --Distribution Plan" in the
Statement of Additional Information.

FUND SERVICES

Shareholder Accounts. INVESCO will maintain a share account that reflects
your current holdings. Share certificates will be issued only upon specific
request. You will have greater flexibility to conduct transactions if you do not
request certificates.

Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.

<PAGE>

Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.

Reinvestment of Distributions. Dividends and capital gain distributions
are automatically reinvested in additional fund shares at the NAV on the
ex-dividend or ex-distribution date, unless you choose to have dividends and/or
other distributions automatically reinvested in another INVESCO fund or paid by
check (minimum of $10.00).

Telephone Transactions. All shareholders may exchange and redeem shares of
the Funds by telephone, unless they expressly decline these privileges. By
signing the new account Application, a Telephone Transaction Authorization Form,
or otherwise using these privileges, the investor has agreed that, if a Fund has
followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.

Retirement Plans and IRAs. Shares of the Funds may be purchased for IRAs
and many other types of tax-deferred retirement plans. INVESCO can supply you
with information and forms to establish or transfer your existing plan or
account.

HOW TO SELL SHARES

The following chart shows several convenient ways to redeem your Fund
shares. Shares of the Funds may be redeemed at any time at their current NAV
next determined after a request in proper form is received at the Fund's office.
The NAV at the time of the redemption may be more or less than the price you
paid to purchase your shares, depending primarily upon a Fund's investment
performance.

Please specify from which INVESCO fund you wish to redeem shares.
Shareholders have a separate account for each fund in which they invest.

<PAGE>

HOW TO SELL SHARES
================================================================================
Method Minimum Redemption Please Remember
- --------------------------------------------------------------------------------
By Telephone
Call us toll-free $250 (or, if less, These telephone
at 1-800-525-8085. full liquidation of redemption
the account) for a privileges may be
redemption check; modified or
$1,000 for a wire terminated in the
to bank of record. future at
The maximum amount INVESCO's
which may be discretion.
redeemed by
telephone is
generally $25,000.
- --------------------------------------------------------------------------------
In Writing
Mail your request Any amount. The If the shares to be
to INVESCO Funds redemption request redeemed are
Group, Inc., P.O. must be signed by represented by
Box 173706 all registered stock certificates,
Denver, CO account owners. the certificates
80217-3706. You may Payment will be must be sent to
also send your mailed to your INVESCO.
request by address of record
overnight courier or to a
to 7800 E. Union pre-designated
Ave., Denver, CO bank.
80237.
- --------------------------------------------------------------------------------
By Exchange
Between a Fund and $1,000 to open a See "Exchange
another of the new account; $50 Policy" page 33.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call
INVESCO for further
details and the
correct form.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
Periodic Withdrawal
Plan
You may call us to $100 per payment, You must have at
request the on a monthly or least $10,000 total
appropriate form quarterly basis. invested with the
and more The redemption INVESCO funds, with
information at check may be made at least $5,000 of
1-800-525-8085. payable to any that total invested
party you in the fund from
designate. which withdrawals
will be made.
- --------------------------------------------------------------------------------
Payment To Third
Party
Mail your request Any amount. All registered
to INVESCO Funds account owners must
Group, Inc., P.O. sign the request,
Box 173706 with a signature
Denver, CO guarantee from an
80217-3706. eligible guarantor
financial
institution, such as
a commercial bank or
recognized national
or regional
securities firm.
- --------------------------------------------------------------------------------

While the Funds will attempt to process telephone redemptions promptly,
there may be times -- particularly in periods of severe economic or market
disruption -- when you may experience delays in redeeming shares by phone.

Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared, payment will be made promptly upon clearance of the
purchase check (which will take up to 15 days).

If you participate in EasiVest, the Fund's automatic monthly investment
program, and redeem all of the shares in your account, we will terminate any
further EasiVest purchases unless you instruct us otherwise.

Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Funds reserve the right to involuntarily redeem all shares in such
account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will

<PAGE>

be notified and given 60 days to increase the value of the account to $250 or
more.

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

Taxes. Each Fund intends to distribute to shareholders substantially all
of its net investment income, net capital gains and net gains from foreign
currency transactions, if any. Distribution of substantially all net investment
income to shareholders allows a Fund to maintain its tax status as a regulated
investment company. Each Fund does not expect to pay any federal income or
excise taxes because of its distribution policy and tax status as a regulated
investment company.

Shareholders must include all dividends and other distributions as taxable
income for federal, state and local income tax purposes unless their accounts
are exempt from income taxes. Dividends and other distributions are taxable
whether they are received in cash or automatically reinvested in shares of a
Fund or another fund in the INVESCO group.

Net realized capital gains of a Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. During 1997, the Taxpayer Relief Act established a new
maximum capital gains tax rate of 20%. Depending on the holding period of the
asset givng rise to the gain, a capital gain was taxable at a maximum rate of
either 20% or 28%. Beginning January 1, 1998, all long-term gains realized on
the sale of securities held more than 12 months will be taxable at a maximum
rate of 20%. In addition, legislation signed in October of 1998 provides that
all capital gain distributions from a mutual fund paid to shareholders during
1998 will be taxed at a maximum rate of 20%. Accordingly, all capital gain
distributions paid in 1998 will be taxable at a maximum rate of 20%. Note that
the rate of capital gains tax is dependent on the shareholder's marginal tax
rate and may be lower than the above rates. At the end of each year, information
regarding the tax status of dividends and other distributions is provided to
shareholders. Shareholders should consult their tax advisers as to the effect of
distributions by a Fund.

Shareholders may realize capital gains or losses when they sell their Fund
shares at more or less than the price originally paid. Capital gains on shares
held for more than one year will be long-term capital gains, in which event they
will be subject to federal income tax at the rates indicated above.

<PAGE>

The Fund may be subject to withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld may be
treated as an expense of the Fund.

Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital gain distributions and other
distributions and redemption proceeds. You can avoid backup withholding on your
account by ensuring that we have a correct, certified tax identification number,
unless you are subject to backup withholding for other reasons.

We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions And Taxes" in the
Statement of Additional Information.

Dividends and Other Distributions. Each Fund earns ordinary or net
investment income in the form of interest and dividends on investments.
Dividends paid by each Fund will be based solely on the net investment income
earned by it. Each Fund's policy is to distribute substantially all of this
income, less expenses, to shareholders. Dividends from net investment income are
declared daily and paid monthly at the discretion of the Company's board of
directors. Dividends are automatically reinvested in additional shares of the
Fund at the net asset value on the ex-dividend date unless otherwise requested.

In addition, each Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on certain foreign currency transactions,
if any, are distributed to shareholders at least annually, usually in December.
Capital gain distributions are automatically reinvested in additional shares of
a Fund at the net asset value on the ex- distribution date unless otherwise
requested.

Dividends and other distributions are paid to shareholders who hold shares
on the record date of distribution regardless of how long the Fund shares have
been held by the shareholder. The Fund's share price will then drop on the
ex-dividend or ex-distribution date by the amount of the distribution. If a
shareholder purchases shares immediately prior to the distribution, the
shareholder will, in effect, have "bought" the distribution by paying the full
purchase price, a portion of which is then returned in the form of a taxable
distribution.

ADDITIONAL INFORMATION

<PAGE>

to do so in writing by the holders of 10% or more of the outstanding shares of
the Company or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority
of the outstanding shares of the Company. The Company will assist shareholders
in communicating with other shareholders as required by the Investment Company
Act of 1940.

APPENDIX -- RATINGS SERVICES

There are several independent ratings services that analyze debt
obligations and preferred stock issued by corporations. The two most frequently
used services are Moody's and S&P.

The chart below shows the various ratings used by each service for the
categories of bonds and preferred stock in which the Funds may invest. There are
additional refinements to each rating system: Moody's may use the modifier 1 to
indicate that the security ranks in the higher end of its generic ratings
category; modifier 2 indicates a mid-range rank, and 3 indicates the issue ranks
at the lower end of its category. Similarly, S&P may use a + or - sign to
indicate a security's relative standing within its generic category. For a
further discussion of risks associated with the Funds, see "Investment Policies
And Risks" and "Investment Practices" in the Statement of Additional
Information.

Moody's S&P Bond Description
- ------- --- ----------------
Aaa AAA Highest quality, often referred to as
"gilt edged." Carries the smallest
degree of investment risk: Interest
payments are protected by a larger or
exceptionally stable margin and
principal is secure.
- --------------------------------------------------------------------------------
Aa AA High quality or high grade. Margins of
protection may be smaller than those
above, or fluctuation of protective
elements may be of greater amplitude.
Other elements may be present which
make long-term risks somewhat larger
than in Aaa or AAA securities.
- --------------------------------------------------------------------------------
A A Upper medium-grade obligations.
Adequate to strong capacity to pay
principal and interest, but somewhat
more susceptible to adverse effects of
changes in circumstances and economic
conditions.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
Baa BBB Medium-grade obligations. Neither
highly protected nor poorly secured.
Interest and principal security
currently appear adequate, but certain
protective elements may be lacking or
characteristically unreliable over the
longer-term. May have speculative
characteristics.
- --------------------------------------------------------------------------------
Ba BB Speculative, but less near-term
vulnerability to default than those
below. These bonds face major ongoing
uncertainties or exposure to adverse
business, financial or economic
conditions that could lead to
inadequate capacity to make timely
interest and principal payments.
- --------------------------------------------------------------------------------
B B Generally lack characteristics of a
desirable investment. Greater
vulnerability to default: currently
have capacity to meet timely interest
and principal payments, but assurance
of payments over any extended period of
time may be small, and/or other terms
of the bond contract may be in
jeopardy.
- --------------------------------------------------------------------------------
Caa CCC Bonds in poor standing. These bonds may be in
default or there may be present elements of
danger with respect to principal or interest.
- --------------------------------------------------------------------------------
aaa AAA Top-quality. Good asset protection and
extremely strong capacity for dividend
payment.
- --------------------------------------------------------------------------------
aa AA High-grade. Offers reasonable assurance
that earnings and asset protection will
remain relatively well-maintained in
the foreseeable future.
- --------------------------------------------------------------------------------
a A Upper medium-grade. Earnings and asset
protection are expected to remain at
adequate levels.
- --------------------------------------------------------------------------------
baa BBB Medium-grade. Neither highly protected
nor poorly secured. Backed by adequate
capacity to maintain dividend payments,
but susceptible to adverse economic
conditions or changing circumstances.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
ba BB Has speculative elements and its future
is not well assured. Earnings and
asset protection may be very moderate
and not well safeguarded during adverse
periods.
- --------------------------------------------------------------------------------
b B Lacks the characteristics of a desirable
investment. Assurance of dividend payments over
any extended period of time may be small.

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

<PAGE>

INVESCO BOND FUNDS, INC.

High Yield Fund
Select Income Fund
U.S. Government Securities Fund

No-load mutual funds
seeking a high level of
current income from investing
in fixed-income securities.

PROSPECTUS
January 1, 1999

INVESCO FUNDS

INVESCO Distributors, Inc.,(SM)
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706

1-800-525-8085
PAL(R), 1-800-424-8085
http://www.invesco.com

In Denver, visit one of our
convenient Investor Centers:

Cherry Creek,
155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue,
Lobby Level

In addition, all documents
filed by the Company with
the Securities and Exchange
Commission can be located on
a web site maintained by the
Commission at http://www.sec.gov.

<PAGE>

PROSPECTUS
January 1, 1999

INVESCO Short-Term Bond Fund

INVESCO Short-Term Bond Fund (the " Fund") seeks to achieve the highest
level of current income as is consistent with minimum fluctuation in principal
value and with maintaining liquidity.

The Fund is a series of INVESCO Bond Funds, Inc. (formerly, INVESCO Income
Funds, Inc.) (the "Company"), a diversified, managed no-load mutual fund,
consisting of four separate portfolios of investments. A separate Prospectus is
available upon request from INVESCO Distributors, Inc. for the Company's other
funds, INVESCO High Yield Fund, INVESCO Select Income Fund and INVESCO U.S.
Government Securities Fund. Investors may purchase shares of any or all of the
Funds. Additional funds may be offered in the future.

This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated January 1, 1999, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus. To
request a free copy, write to INVESCO Distributors, Inc., P.O. Box 173706,
Denver, Colorado 80217-3706; call 1-800-525-8085; or visit us on the world wide
web: http://www.invesco.com.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION , NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF EACH FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF EACH FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.

<PAGE>

TABLE OF CONTENTS

ESSENTIAL INFORMATION.......................................................47

ANNUAL FUND EXPENSES........................................................48

FINANCIAL HIGHLIGHTS........................................................50

INVESTMENT OBJECTIVE AND STRATEGY...........................................52

INVESTMENT POLICIES AND RISKS...............................................53

THE FUND AND ITS MANAGEMENT.................................................59

FUND PRICE AND PERFORMANCE..................................................62

HOW TO BUY SHARES...........................................................63

FUND SERVICES...............................................................68

HOW TO SELL SHARES..........................................................69

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS....................................72

ADDITIONAL INFORMATION......................................................73

<PAGE>

ESSENTIAL INFORMATION

Investment Goals And Strategy: The Short-Term Bond Fund seeks the highest
current income consistent with minimum fluctuations in principal value and with
maintaining liquidity; the Fund's investments are primarily in government and
government agency debt securities, with a dollar-weighted average maturity of
not more than three years. There is no guarantee that the Fund will meet its
investment objective. See "Investment Objective And Strategy" and "Investment
Policies And Risks."

Designed For: The Short-Term Bond Fund is designed for investors seeking
higher yields than those available from shorter-term, higher quality money
market funds and who can tolerate modest price fluctuations. While not a
complete investment program, the Fund may be a valuable element of your
investment portfolio. You may also wish to consider one of the Funds as part of
a Uniform Gifts/Transfers to Minors Act Account or systematic investment
strategy. Each Fund may be a suitable investment for tax-deferred retirement
programs , including various Individual Retirement Accounts ("IRAs"), 401(k),
Profit Sharing, Money Purchase Pension, or 403(b) plans.

Time Horizon: The Fund is primarily managed for current income. Investors
should not consider the Fund as a suitable investment for the portion of their
savings devoted to capital appreciation, or for that portion focused on
liquidity and stable principal value.

Risks: The Fund focuses on fixed-income securities. The Fund's investments
are subject to both credit risk and market risk, both of which are increased by
investing in lower rated securities. See "Investment Policies And Risks" for
specific risks associated with the Fund.

Organization and Management: The Fund is a series of the Company. The Fund
is owned by its shareholders. It employs INVESCO Funds Group, Inc. ("INVESCO"),
founded in 1932, to serve as investment adviser, administrator and transfer
agent. INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a wholly-owned
subsidiary of INVESCO, is the Funds' distributor.

The Fund's investments are selected by its portfolio manager or managers.
See "The Fund And Its Management."

INVESCO and IDI are indirect, wholly-owned subsidiaries of AMVESCAP PLC,
an international investment management company that manages approximately $261
billion in assets as of June 30, 1998. AMVESCAP PLC is based in London with
money managers located in Europe, North America, South America and the Far East.

<PAGE>

The Funds offer all of the following services at no charge:
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase, and Automatic Monthly Exchange
Periodic withdrawal plans

See "How To Buy Shares" and "How To Sell Shares."

Minimum Initial Investment: $1,000 per Fund, which is waived for regular
investment plans, including EasiVest and Direct Payroll Purchase, and certain
retirement plans.

Minimum Subsequent Investment: $50 per Fund (Minimums are lower for
certain retirement plans).

ANNUAL FUND EXPENSES

The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund is authorized to pay a Rule 12b-1 distribution fee of up to one
quarter of one percent of its average net assets each year. (See "How To Buy
Shares -- Distribution Expenses.")

Like any company, the Fund has operating expenses -- such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts, and other expenses. These expenses are paid from the Fund's assets.
Lower expenses therefore benefit investors by increasing the Fund's investment
return.

We calculate annual operating expenses as a percentage of the Fund's
average annual net assets. To keep expenses competitive, INVESCO voluntarily
reimburses the Fund for amounts in excess of 0.85% (excluding excess amounts
that have been offset by the expense offset arrangement described below) of the
Fund's average net assets.

Annual Fund Operating Expenses
(as a percentage of average net assets)

Short-Term Bond Fund
Management Fee 0.50%
12b-1 Fees 0.25%
Other Expenses 0.13%
Total Fund Operating Expenses (1)(2) 0.88%

(1) It should be noted that the Fund's actual total operating expenses were
lower than the figures shown because the Fund's custodian and pricing expenses
were reduced under an expense offset arrangement. However, as a result of an SEC
requirement, the figures shown above do not reflect these reductions.

<PAGE>

In comparing expenses for different years, please note that the Ratios of
Expenses to Average Net Assets shown under "Financial Highlights" do reflect
reductions for periods prior to the fiscal year ended August 31, 1996. See "The
Fund And Its Management."

(2) Certain Fund expenses are being voluntarily absorbed by INVESCO . In the
absence of such absorbed expenses, "Other Expenses" and "Total Fund Operating
Expenses" for the fiscal year ended August 31, 1998, would have been 1.11% and
1.86%, respectively, for the Fund. This is based on the Fund's actual expenses
for the fiscal year ended August 31, 1998. See "The Fund And Its Management."

Example

A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's assets, and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$9 $28 $49 $109

The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR EXPENSES,
AND ACTUAL ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
For more information on the Fund's expenses, see "The Fund And Its Management"
and "How To Buy Shares -- Distribution Expenses."

Because the Fund pays a distribution fee, investors who own shares of the
Fund for a long period of time may pay more than the economic equivalent of the
maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.

<PAGE>

FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)

The following information has been audited by PricewaterhouseCoopers LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the Report of Independent Accountants thereon
appearing in the Company's 1998 Annual Report to Shareholders, which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting IDI at the address or telephone number on
the back cover of this Prospectus. The Annual Report also contains more
information about each Fund's performance.

Period
Ended
Year Ended August 31 August 31
----------------------------------------------------- ---------
1998 1997 1996 1995 1994 (a)

Short-Term Bond Fund
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $9.51 $9.41 $9.54 $9.46 $10.00
----------------------------------------------------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.55 0.50 0.56 0.57 0.47
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 0.08 0.15 (0.13) 0.08 (0.54)
----------------------------------------------------- ---------
Total from Investment Operations 0.63 0.65 0.43 0.65 (0.07)
----------------------------------------------------- ---------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (b) 0.55 0.55 0.56 0.57 0.47
----------------------------------------------------- ---------
Net Asset Value - End of Period $9.59 $9.51 $9.41 $9.54 $9.46
===================================================== =========
TOTAL RETURN 6.76% 7.08% 4.63% 7.16% (0.72%)(c)

RATIOS
Net Assets - End of Period ($000 Omitted) $24,467 $12,344 $10,735 $8,979 $7,878
Ratio of Expenses to Average Net Assets(d) 0.88%(e) 0.83%(e) 0.80%(e) 0.46% 0.46%(f)

<PAGE>

Ratio of Net Investment Income to
Average Net Assets(d) 5.74% 5.82% 5.85% 6.05% 5.50%(f)
Portfolio Turnover Rate 135% 331% 103% 68% 169%(c)
</TABLE>

(a) From September 30, 1993, commencement of investment operations, to August
31, 1994.

(b) Distributions in excess of net investment income for the years ended August
31, 1996 and 1995, aggregated less than $0.01 on a per share basis.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO and/or
ITC for the years ended August 31, 1998, 1997, 1996, 1995 and for the period
ended August 31, 1994. If such expenses had not been voluntarily absorbed, ratio
of expenses to average net assets would have been 1.86%, 1.84%, 2.17%, 2.09% and
2.04%, respectively, and ratio of net investment income to average net assets
would have been 4.76%, 4.81%, 4.48%, 4.42% and 3.92%, respectively.

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.

(f) Annualized

<PAGE>

INVESTMENT OBJECTIVE AND STRATEGY

The Short-Term Bond Fund seeks to achieve the highest level of current
income as is consistent with minimum fluctuation in principal value and with
maintaining liquidity. The Fund's investment objective is fundamental and cannot
be changed without the approval of the Fund's shareholders. There is no
assurance that the Fund's investment objective will be met.

The Fund normally invests at least 65% of its total assets in bonds and
debentures. The Fund may invest in all types of variable and fixed rate
corporate, government and government agency debt securities. The government and
government agency securities in which the Fund invests may or may not be backed
by the full faith and credit of the United States.

Holdings are selected primarily from two maturity ranges: short-term
(obligations maturing in under three years) and intermediate-term (obligations
maturing in three to 10 years). The Fund maintains a diversified portfolio with
a dollar-weighted average maturity of three years or less. This average is based
on the actual stated maturity dates of the debt securities in the Fund's
portfolio, except for debt securities having special features that give them the
characteristics of shorter-term obligations. For example, variable rate
securities, on which coupon rates of interest are adjusted on specified dates in
response to changes in interest rates, are deemed to mature at their next
interest rate adjustment date. In addition, debt securities with "put" features
entitling the Fund to repayment of principal on specified dates are deemed to
mature at the next put exercise date. When INVESCO deems it appropriate, the
Fund may invest in debt securities having maturities in excess of 10 years.

Debt securities will be selected based on INVESCO's assessment of interest
rate trends and the liquidity of various instruments under prevailing market
conditions. The potential for capital appreciation is an incidental factor that
also may be considered.

Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Fund; securities may be sold without regard to the time they
have been held when investment considerations warrant such action. Increased
turnover may result in greater brokerage commissions and acceleration of capital
gains that are taxable when distributed to shareholders. The Statement of
Additional Information includes an expanded discussion of the Fund's portfolio
turnover rate, its brokerage practices and certain federal income tax matters.

<PAGE>

INVESTMENT POLICIES AND RISKS

Investors should expect to see the price per share of the Fund vary with
movements in the fixed-income market, economic conditions and other factors.
INVESCO seeks to temper volatility through diversification and credit analysis,
as well as by maintaining an average dollar-weighted maturity of three years or
less. This diversification may help reduce the Fund's exposure to particular
investment and market risks, but cannot eliminate these risks.

Year 2000 Computer Issue. Due to the fact that many computer systems in
use today cannot recognize the Year 2000, but will, unless corrected, revert to
1900 or 1980 or cease to function at that time, the markets for securities in
which the Fund invests may be detrimentally affected by computer failures
affecting portfolio investments or trading of securities beginning January 1,
2000. Improperly functioning trading systems may result in settlement problems
and liquidity issues. In addition, corporate and governmental data processing
errors may result in production issues for individual companies and overall
economic uncertainties. Earnings of individual issuers may be affected by
remediation costs, which may be substantial. The Fund's investments may be
adversely affected.

Debt Securities. The Fund may invest in corporate debt securities. When we
assess an issuer's ability to meet its interest rate obligations and repay its
debt when due, we are referring to "credit risk." Debt securities issued by the
U.S. government, its agencies and instrumentalities carry a low level of credit
risk compared to higher yielding corporate bonds. Corporate debt obligations are
rated based on their credit risk as estimated by independent services such as
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, a division of
the McGraw-Hill Companies, Inc. ("S&P"), Fitch Investors Service, Inc. ("Fitch")
or Duff & Phelps, Inc. ("D&P"). These ratings attempt to evaluate the likelihood
that principal and interest will be paid when due, but do not evaluate the
volatility of a debt obligation's value or its liquidity and do not guarantee
the performance of the issuer. "Market risk" refers to sensitivity to changes in
interest rates. For instance, when interest rates go up, the market value of a
previously issued bond generally declines; on the other hand, when interest
rates go down, bond prices generally increase. All bonds, including government,
government agency and government instrumentality securities, are subject to
market risk.

The Fund may invest in issues rated below investment grade quality
(commonly called "junk bonds"), that are rated Ba or lower by Moody's or BB or
lower by S&P, or, if unrated, are judged by INVESCO to be of equivalent quality.
These include issues which are of poorer quality and may have some speculative
characteristics according to the ratings services.

<PAGE>

The Fund does not invest in obligations it believes to be highly
speculative. As a result, the Fund invests primarily in corporate bonds rated
investment grade (BBB and above by S&P, Fitch or D&P or Baa and above by
Moody's) that are believed to enjoy strong to adequate capacity to pay principal
and interest. No more than 15% of the Fund's total assets may be invested in
junk bonds. Never, under any circumstances, does the Short-Term Bond Fund invest
in securities rated below B. Although bonds rated B are believed to have the
current capacity to meet principal and interest payments, they are believed to
be subject to a greater extent than higher rated instruments to the risk that
adverse business, financial or economic conditions will impair this capacity. In
addition, the Fund may invest in corporate short-term notes rated at least
Prime-1 by Moody's or A-1 by S&P and municipal short-term notes rated at least
MIG-1 by Moody's, SP-1 by S&P, F-1 by Fitch or Duff-1 by D&P (the highest rating
categories for such notes).

While INVESCO continuously monitors all of the corporate bonds in the
Fund's portfolio for the issuer's ability to make required principal and
interest payments and other quality factors, it may retain a bond whose rating
is changed to one below the minimum rating required for purchase of the
security. The Fund is not required to sell immediately debt securities that go
into default, but may continue to hold such securities until such time as
INVESCO determines it is in the best interests of the Fund to sell the
securities.

Because investment in medium and lower rated securities involves both
greater credit risk and market risk, achievement of the Fund's investment
objective may be more dependent on INVESCO's own credit analysis than is the
case for funds investing in higher quality securities. In addition, the share
price and yield of the Fund may be expected to fluctuate more than in the case
of funds investing in higher quality, shorter term securities. Moreover, a
significant economic downturn or major increase in interest rates may result in
issuers of lower rated securities experiencing increased financial stress, which
would adversely affect their ability to service their principal, dividend and
interest obligations, meet projected business goals, and obtain additional
financing. In this regard, it should be noted that while the market for high
yield corporate bonds has been in existence for many years and from time to time
has experienced economic downturns, there has been a significant increase in the
use of high yield corporate debt securities to fund highly leveraged corporate
acquisitions and restructurings. Past experience may not, therefore, provide an
accurate indication of future performance of the high yield bond market,
particularly during periods of economic recession. Furthermore, expenses
incurred to recover an investment in a defaulted security may adversely affect

<PAGE>

the Fund's net asset value. Finally, while INVESCO attempts to limit purchases
of medium and lower rated securities to securities having an established
secondary market, the secondary market for such securities may be less liquid
than the market for higher quality securities. The reduced liquidity of the
secondary market for such securities may adversely affect the market price
of, and ability of the Fund to value, particular securities at certain times,
thereby making it difficult to make specific valuation determinations.

For the fiscal year ended August 31, 1998, the following percentages of
the Short-Term Bond Fund's net assets were invested in corporate bonds rated
investment grade (Baa by Moody's or BBB by S&P and above) at the time they were
purchased: Aa/AA--0.00%; A--9.19%, Baa/BBB--1.85% and Ba--5.02%. The following
percentages were invested in corporate bonds rated below investment grade at the
time of purchase: B--8.27%; CCC--0.00% and D--0.00%. Finally, 0.18% of total
assets were invested in unrated corporate bonds . All of these percentages were
determined on a dollar-weighted basis, calculated by averaging the Fund's
month-end portfolio holdings during the fiscal year. Keep in mind that the
Fund's holdings are actively traded, and bond ratings are occasionally adjusted
by ratings services, so these figures do not represent the Fund's actual
holdings or quality ratings as of August 31, 1998.

For a detailed description of corporate bond ratings, see the Appendix to
this Prospectus and the Statement of Additional Information.

Foreign Securities. The Fund's investments in debt obligations may include
securities issued by foreign governments and foreign corporations. As a matter
of policy, which may be changed without a vote of shareholders, up to 25% of the
Fund's total assets, measured at the time of purchase, may be invested directly
in foreign debt securities, provided that all such securities are denominated
and pay interest in U.S. dollars (such as Eurobonds and Yankee bonds).
Securities of Canadian issuers and American Depository Receipts ("ADRs") are not
subject to this 25% limitation. ADRs are receipts representing shares of a
foreign corporation held by a U.S. bank that entitles the holder to all
dividends and capital gains. ADRs are denominated in U.S. dollars and trade in
the U.S. securities markets. Investments in foreign debt securities involve
certain risks.

For U.S. investors, the returns on foreign debt securities are influenced
not only by the returns on the foreign investments themselves, but also by
currency fluctuations. That is, when the U.S. dollar generally rises against a
foreign currency, returns for a U.S. investor on foreign securities may
decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase. The Fund attempts to minimize these risks by
limiting its investments in foreign debt securities to those which are
denominated and pay interest in U.S. dollars.

<PAGE>

Other aspects of international investing to consider include:

-less publicly available information than is generally available about
U.S. issuers;

-differences in accounting, auditing and financial reporting standards;

-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;

-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and

- investment income on certain foreign securities may be subject to
foreign withholding taxes, which may reduce dividend income or capital gains
payable to shareholders.

There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility that the Fund may experience difficulties in pursuing legal
remedies and collecting judgments.

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
The Netherlands, Portugal and Spain are presently members of the European
Economic and Monetary Union (the "EMU"). The EMU has established a common
European currency for EMU countries which is known as the "euro." Each
participating country presently plans to has adopted the euro as its currency
on January 1, 1999. The old national currencies are sub-currencies of the euro
until July 1, 2002, at which time the old currencies will disappear entirely.
Other European countries may adopt the euro in the future.

The introduction of the euro presents some uncertainties and possible
risks, including whether the payment and operational systems of banks and other
financial institutions will have been ready by January 1, 1999; whether
exchange rates for existing currencies and the euro will have been adequately
established; and whether suitable clearing and settlement systems for the euro
will be in operation. These and other factors may cause market disruptions after
January 1, 1999 and could adversely affect the value of securities held by the
Fund.

<PAGE>

Illiquid and Rule 144A Securities. The Fund may not purchase securities
that are not readily marketable. However, the Fund may invest in restricted
securities, including securities that are not registered for sale to the general
public but that may be resold to institutional investors ("Rule 144A
Securities"), if a liquid trading market exists. The Company's board of
directors has delegated to INVESCO the authority to determine the liquidity of
Rule 144A Securities pursuant to guidelines approved by the board. In the event
that a Rule 144A Security held by the Fund is subsequently determined to be
illiquid, the security will be sold as soon as that can be done in an orderly
fashion consistent with the best interests of the Fund's shareholders. For more
information concerning illiquid and rule 144A Securities, see "Investment
Policies And Restrictions" in the Statement of Additional Information.

Zero Coupon Bonds and Step-up Bonds. The Fund may invest in zero coupon
bonds if INVESCO determines that the risk of a default on the security, which
could result in adverse tax consequences, is not significant. Zero coupon bonds
make no periodic interest payments. Instead, they are sold at a discount from
their face value. The buyer of the security receives the rate of return by the
gradual appreciation in the price of the security, which is redeemed at face
value at maturity. In addition to zero coupon bonds, the Fund may invest in
step-up bonds. Step-up bonds initially make no (or low) cash interest payments,
but begin paying interest (or a higher rate of interest) at a fixed time after
issuance of the bond. Zero coupon and step-up bonds are more sensitive to
changes in interest rates than bonds that pay interest on a current basis in
cash. When interest rates fall, the value of these types of bonds will increase
more rapidly, and when interest rates rise, their value falls more dramatically.
The Fund may be required to distribute income recognized on these bonds, even
though no cash interest payments are received, which could reduce the amount of
cash available for investment by the Fund.

Interest Rate Futures Contracts. The Fund may buy and sell interest rate
futures contracts relating to the debt securities in which the Fund invests for
the purpose of hedging the value of its securities portfolio. These practices
and their risks are discussed under "Investment Policies And Restrictions" in
the Statement of Additional Information.

Mortgage-Backed and Asset-Backed Securities. The Fund may invest in
mortgage-backed securities issued or guaranteed as to principal and interest by
the U.S. government, federal agencies or instrumentalities such as GNMA, Fannie
Mae and Freddie Mac. Some of these securities, such as GNMA certificates, are
backed by the full faith and credit of the U.S. Treasury while others, such as
Freddie Mac certificates, are not. Mortgage-backed securities represent
interests in pools of mortgages which have been purchased from loan institutions
such as banks and savings and loans, and packaged for resale in the secondary
market.

<PAGE>

Interest and principal are "passed through" to the holders of the securities.
The timely payment of interest and principal is guaranteed by a federal agency,
but the market value of the security is not guaranteed and will vary. When
interest rates drop, many home buyers choose to refinance their mortgages.
These prepayments may shorten the average weighted lives of mortgage-backed
securities and may lower their returns.

In addition to being able to invest in mortgage-backed securities, the
Fund may also invest in asset-backed securities which represent interests in
pools of consumer loans. As with mortgage-backed securities, asset-backed
securities are structured as pass-through securities. Interest and principal
payments ultimately depend on payment of the underlying loans, although
securities may be supported, at least in part, by letters of credit or other
credit enhancements. As with mortgage-backed securities, underlying loans are
subject to prepayments that may shorten the securities' weighted average lives
and may lower their return.

The Fund may invest in stripped mortgage- or asset-backed securities, in
which the principal and interest payments on the underlying pool of loans are
separated or "stripped" to create two classes of securities. In general, the
interest-only, or IO, class receives all of the interest payments and the
principal-only, or PO, class receives all of the principal payments. The market
prices of these securities generally are more sensitive to changes in interest
and prepayment rates than traditional mortgage- and asset-backed securities.
Such purchases are used to help the Fund maintain stability.

Delayed Delivery or When-Issued Purchases. Up to 10% of the value of the
Fund's net assets may be committed to the purchase or sale of securities on a
when-issued or delayed-delivery basis --that is, with settlement taking place in
the future. The payment obligation and the interest rate that will be received
on the securities generally are fixed at the time the Fund enters into the
commitment . Between the date of purchase and the settlement date the market
value of the securities may vary. No interest is payable to the Fund prior to
settlement.

Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price and date. The Fund could incur costs or delays in seeking
to sell the security if the prior owner defaults on its repurchase obligation.
To reduce that risk, the securities that are the subject of the repurchase
agreement will be maintained with the Fund's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest).
These agreements are entered into only with member banks of the Federal Reserve
System, registered broker-dealers, and registered U.S. government securities
dealers that are deemed creditworthy under standards set by the Company's board
of directors.

<PAGE>

Securities Lending. The Fund may seek to earn additional income by lending
securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies And Restrictions" in the Statement of
Additional Information.

Investment Restrictions. Certain restrictions, which are identified in the
Statement of Additional Information, may not be altered without the approval of
the Fund's shareholders. For example, the Fund limits to 5% the portion of its
total assets that may be invested in any one issuer (other than cash items and
U.S. government securities). In addition, the Fund's ability to borrow money is
limited to borrowings from banks for temporary or emergency purposes in amounts
not exceeding 10% of net assets.

For a further discussion of risks associated with an investment in each
Fund, see "Investment Policies And Restrictions" and "Investment Practices" in
the Statement of Additional Information.

THE FUND AND ITS MANAGEMENT

The Company's board of directors has responsibility for overall
supervision of the Fund, and reviews the services provided by the investment
adviser . Under an agreement with the Company, INVESCO, 7800 E. Union Avenue,
Denver, Colorado 80237, serves as the Fund's investment adviser; it is primarily
responsible for providing the Fund with portfolio management and various
administrative services.

INVESCO and IDI are indirect wholly-owned subsidiaries of AMVESCAP, PLC.
AMVESCAP PLC is a publicly traded holding company that through its subsidiaries
engages in the business of investment management on an international basis.
INVESCO PLC changed its name to AMVESCO PLC on March 8, 1997 and to AMVESCAP PLC
on May 8, 1997 as part of a merger between a direct subsidiary of INVESCO PLC
and A.I.M. Management Group Inc., that created one of the largest independent
investment management businesses in the world. AMVESCAP PLC had approximately
$241 billion in assets under management as of September 30, 1998. INVESCO was
established in 1932 and, as of August 31, 1998, managed 14 mutual funds,
consisting of 49 separate portfolios, with combined assets of approximately
$17.1 billion on behalf of over 899,439 shareholders.

<PAGE>

Prior to February 3, 1998, Institutional Trust Company, doing business as
INVESCO Trust Company ("ITC"), provided sub-advisory services to the Fund;
termination of ITC's sub-advisory services in no way changed the basis upon
which investment advice is provided to the Fund, the cost of those services to
the Fund or the persons actually performing the investment advisory and other
services previously provided by ITC. INVESCO provides such day-to-day portfolio
management services.

The Fund is managed by members of the INVESCO Fixed Income Team, which is
headed by Donovan J. (Jerry) Paul. The following individuals are primarily
responsible for the day-to-day management of the Fund's portfolio holdings:

Donovan J. (Jerry) Paul, a Chartered Financial Analyst and Certified
Public Accountant, has been a co-portfolio manager of the Fund since 1994. Mr.
Paul also manages INVESCO High Yield Fund, INVESCO Select Income Fund, INVESCO
VIF-High Yield Fund, and co-manages INVESCO Industrial Income Fund, INVESCO
VIF-Industrial Income Fund, and INVESCO Balanced Fund. Mr. Paul is also a
senior vice president, portfolio manager, and director of fixed-income research
of INVESCO. Mr. Paul was previously a senior vice president and director of
fixed-income research (1989 to 1992) and portfolio manager (1987 to 1992) with
Stein, Roe & Farnham Inc. and president of Quixote Investment Management, Inc.
(1993 to 1994). Mr. Paul received an M.B.A. from the University of Northern Iowa
and a B.B.A. from the University of Iowa.

Richard R. Hinderlie has been a co-portfolio manager of the Fund since
1993. Mr. Hinderlie also manages INVESCO U.S. Government Securities Fund,
INVESCO U.S. Government Money Fund and INVESCO Cash Reserves Fund and is a vice
president of INVESCO . Mr. Hinderlie was previously a securities analyst with
Bank Western from 1987 to 1993. Mr. Hinderlie received an M.B.A. from Arizona
State University and a B.A. in Economics from Pacific Lutheran University.

The Fund pays INVESCO a monthly management fee which is based upon a
percentage of the Fund's average net assets determined daily. The management fee
is computed at the annual rate of 0.50% on the first $300 million of the Fund's
average net assets; 0.40% on the next $200 million of the Fund's average net
assets; and 0.30% on the Fund's average net assets over $500 million. For the
fiscal year ended August 31, 1998, investment management fees paid by the Fund
amounted to 0.50% of the Fund's average net assets (prior to the voluntary
absorption of certain Fund expenses by INVESCO).

<PAGE>

Under a Distribution Agreement, IDI provides services relating to the
distribution and sale of the Fund's shares. IDI, established in 1997, is a
registered broker-dealer that acts as distributor for all retail funds advised
by INVESCO. Prior to September 30, 1997, INVESCO served as the Funds'
distributor.

Under a Transfer Agency Agreement, INVESCO acts as registrar, transfer
agent, and dividend disbursing agent for the Fund. The Fund pays an annual fee
of $26.00 per shareholder account or where applicable, per participant in an
omnibus account. Registered broker-dealers, third party administrators of
tax-qualified retirement plans and other entities, including affiliates of
INVESCO, may provide equivalent services to the Funds. In these cases, INVESCO
may pay, out of the fee it receives from the Funds, an annual sub-transfer
agency fee or recordkeeping fee to the third party.

Under an Administrative Services Agreement, INVESCO handles additional
administrative, recordkeeping and internal sub-accounting services for the
Funds. For the fiscal year ended August 31, 1998, the Fund paid INVESCO a fee
equal to 0.09% of the Fund's average net assets for these services (prior to
the absorption of certain Fund expenses).

The management and custodial services provided to the Fund by INVESCO and
the Fund's custodian, and the services provided to shareholders by INVESCO and
IDI, depend on the continued functioning of their computer systems. Many
computer systems in use today cannot recognize the Year 2000, but will revert to
1900 or 1980 or will cease to function due to the manner in which dates were
encoded and are calculated. That failure could have a negative impact on the
handling of the Fund's securities trades, its share pricing and its account
services. The Fund and its service providers have been actively working on
necessary changes to their computer systems to deal with the Year 2000 issue and
expect that their computer systems will be adapted before that date, but there
can be no assurance that they will be successful. Furthermore, services may be
impaired at that time as a result of the interaction of their systems with
noncomplying computer systems of others. INVESCO plans to test as many such
interactions as practicable prior to December 31, 1999 and to develop
contingency plans for reasonably anticipated failures.

The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund (prior to any
expense offset arrangements) for the fiscal year ended August 31, 1998,
including investment management fees (but excluding brokerage commissions, which
are a cost of acquiring securities), amounted to 0.88% of the Fund's average net
assets. Certain expenses of the Fund are absorbed voluntarily by INVESCO
pursuant to a commitment to the Fund in order to ensure that the Fund's total

<PAGE>

operating expenses do not exceed 0.85% of its average net assets. This
commitment may be changed following consultation with the Company's board of
directors. In the absence of this voluntary expense limitation, the Fund's total
operating expenses would have been 1.86% of the Fund's average net assets.

INVESCO places orders for the purchase and sale of portfolio securities
with brokers and dealers based upon INVESCO's evaluation of such brokers' and
dealers' financial responsibility coupled with their ability to effect
transactions at the best available prices. As discussed under "How To Buy Shares
- -- Distribution Expenses," the Fund may market its shares through intermediary
brokers or dealers that have entered into Dealer Agreements with INVESCO or IDI,
as the Fund's distributor. The Fund may place orders for portfolio transactions
with qualified brokers and dealers that recommend the Fund, or sell shares of
the Fund, to clients, or act as agent in the purchase of Fund shares for
clients, if INVESCO believes that the quality of the execution of the
transaction and level of commission are comparable to those available from other

qualified brokerage firms. For further information, see "Investment Practices
- -- Placement of Portfolio Brokerage" in the Statement of Additional Information.

FUND PRICE AND PERFORMANCE

Determining Price. The value of your investment in the Fund may vary
daily. The price per share is also known as the Net Asset Value ("NAV"). INVESCO
prices the Fund every day that the New York Stock Exchange is open, as of the
close of regular trading (generally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of all of the Fund's
assets, including accrued interest and dividends; subtracting liabilities,
including accrued expenses; and dividing that dollar amount by the total number
of shares outstanding.

Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Fund's total return and yield. Total return
figures show the average annual rate of return on a $1,000 investment in the
Fund, assuming reinvestment of all dividends and capital gain distributions for
one-, five- and ten-year periods. Cumulative total return shows the actual rate
of return on an investment for the periods cited; average annual total return
represents the average annual percentage change in the value of an investment.
Both cumulative and average annual total returns tend to "smooth out"
fluctuations in the Fund's investment results, because they do not show the
interim variations in performance over the periods cited.

The Fund's yield is calculated by utilizing the Fund's calculated income,
expenses and average outstanding shares for the most recent 30-day or one-month

<PAGE>

period, dividing it by the month-end net asset value and annualizing the
resulting number. More information about the Fund's recent and historical
performance is contained in the Company's Annual Report to Shareholders. You can
get a free copy by calling or writing to IDI using the telephone number or
address on the back cover of this Prospectus.

When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the Fund to others in its category of Corporate
Bond Funds -- Short Investment Grade Debt Funds , as well as the broad-based
Lipper general fund groupings. These rankings allow you to compare the Fund to
its peers. Other independent financial media also produce performance- or
service-related comparisons, which you may see in our promotional materials. For
more information see "Fund Performance" in the Statement of Additional
Information.

Performance figures are based on historical investment results and are not
intended to suggest future performance.

HOW TO BUY SHARES

The following chart shows several convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form. There is no charge to invest, exchange, or redeem
shares when you make transactions directly through INVESCO. However, if you
invest in the Fund through a securities broker, you may be charged a commission
or transaction fee. INVESCO may from time to time make payments from its
revenues to securities dealers and other financial institutions that provide
distributions related and/or administrative services for the Company. For all
new accounts, please send a completed application form. Please specify which
fund's shares you wish to purchase.

INVESCO reserves the right to increase, reduce or waive the minimum
investment requirements in its sole discretion, when it determines this action
is in the best interests of the Fund. Further, INVESCO reserves the right in its
sole discretion to reject any order for the purchase of Fund shares (including
purchases by exchange) when, in its judgment, such rejection is in a Fund's best
interests.

<PAGE>

HOW TO BUY SHARES
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check
Mail to: INVESCO $1,000 for regular If your check does
Funds Group, Inc. account; $250 for not clear, you will
P.O. Box 173706 an IRA; $50 be responsible for
Denver, CO minimum for each any related loss
80217-3706. Or you subsequent the Fund or
may send your check investment. INVESCO incurs. If
by overnight you are already a
courier to: 7800 E. shareholder in the
Union Ave., Denver, INVESCO funds,
CO 80237. the Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 $1,000. Payment must be
to request your received within 3
purchase. Then send business days, or
your check by the transaction may
overnight courier be canceled. If a
to our street purchase is
address: 7800 E. canceled due to
Union Ave., Denver, nonpayment, you
CO 80237. Or you will be responsible
may transmit your for any related
payment by bank loss the Fund or
wire (call INVESCO incurs.
INVESCO for If you are already
instructions). a shareholder in
the INVESCO funds,
the Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.

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

<PAGE>

With EasiVest or
Direct Payroll
Purchase
You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to invest continually,
when prices are low INVESCO. regardless of
and fewer shares varying price
when prices are levels, consider
high. This your financial
"dollar-cost ability to keep
averaging" may help buying through low
offset market price levels. And
fluctuations. Over remember that you
a period of time, will lose money if
your average cost you redeem your
per share may be shares when the
less than the market value of all
actual average your shares is less
price per share. than their cost.
- --------------------------------------------------------------------------------
By PAL(R)
Your "Personal $1,000; $250 for an Be sure to write
Account Line" is IRA. down the
available for confirmation number
subsequent provided by
purchases and PAL(R). Payment
exchanges 24-hours must be received
a day. Simply call within 3 business
1-800-424-8085. days, or the
transaction may
be canceled. If a
telephone purchase
is canceled due to
nonpayment, you will
be responsible for
any related loss the
Fund or INVESCO
incurs. If you are
already a
shareholder in the
INVESCO funds, a
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- ---------------------------------------------------------------------------

<PAGE>

By Exchange
Between the Fund $1,000 to open a See "Exchange
and another of the new account; $50 Policy" page 66.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service purchases requested
between two INVESCO by telephone.)
funds; call
INVESCO for further
details and the
correct form.
- ---------------------------------------------------------------------------

Your order to purchase shares of the Fund will not begin earning dividends
or other distributions until either your payment can be converted into available
federal funds under regular banking procedures or, if you are acquiring shares
in an exchange from another INVESCO fund, the Fund receives the proceeds of the
exchange. Checks normally are converted into federal funds (moneys held on
deposit within the Federal Reserve System) within two or three business days
after we receive them, although this period may be longer for checks drawn on
banks that are not members of the Federal Reserve System.

Exchange Policy. You may exchange your shares in the Fund for those in
another INVESCO fund, on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.

Please note these policies regarding exchanges of fund shares:

(1) The fund accounts must be identically registered.

(2) You may make four exchanges out of a fund during each calendar year.

<PAGE>

performance and shareholders. The Fund will determine whether to
do so based on a consideration of both the number of
exchanges any particular shareholder, or group of shareholders, has
requested and the time period over which those exchange requests
have been made, together with the level of expense to the Fund which
will result from effecting additional exchange requests. The Fund is
intended to be a long-term investment vehicle and is not designed to
provide investors the means of speculation on short-term market
movements.

(5) Notice of all modifications of this policy or terminations that
would affect all Fund shareholders will be given at least 60 days
prior to the effective date of the change in policy, except in
unusual circumstances (such as when redemptions of the exchanged
shares are suspended under Section 22(e) of the Investment Company
Act of 1940, or when sales of the fund into which you are exchanging
are temporarily suspended).

Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to IDI to permit IDI, at its discretion, to engage in certain
activities and provide certain services approved by the board of directors of
the Company in connection with the distribution of the Fund's shares to
investors. These activities and services may include the payment of compensation
(including incentive compensation and/or continuing compensation based on the
amount of customer assets maintained in the Fund) to securities dealers and
other financial institutions and organizations, which may include INVESCO- and
IDI-affiliated companies, to obtain various distribution-related and/or
administrative services for the Fund. Such services may include, among other
things, processing new shareholder account applications, preparing and
transmitting to the Fund's Transfer Agent computer processable tapes of all
transactions by customers, and serving as the primary source of information to
customers in answering questions concerning the Fund and their transactions with
the Fund.

In addition, other permissible activities and services include
advertising, preparation, printing and distribution of sales literature,
printing and distribution of prospectuses to prospective investors and such
other services and promotional activities for the Fund as may from time to time
be agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of INVESCO, IDI or their affiliates or by third parties.

<PAGE>

Under the Plan, the Fund's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets. IDI is not entitled to payment for overhead expenses under the Plan,
but may be paid for all or a portion of the compensation paid for salaries and
other employee benefits for the personnel of IDI or INVESCO whose primary
responsibilities involve marketing shares of the INVESCO funds, including the
Fund. Payment amounts by the Fund under the Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided by
IDI during the rolling 12-month period in which that month falls. Therefore, any
obligations incurred by IDI in excess of the limitations described above will
not be paid by the Fund under the Plan, and will be borne by IDI. In addition,
IDI and its affiliates may from time to time make additional payments from their
revenues to securities dealers, financial advisors and other financial
institutions that provide distribution-related and/or administrative services
for the Fund. No further payments will be made by the Fund under the Plan in the
event of the Plan's termination. Payments made by the Fund may not be used to
finance directly the distribution of shares of any other Fund of the Company or
other mutual fund advised by INVESCO and distributed by IDI. However, payments
received by IDI which are not used to finance the distribution of shares of the
Fund become part of IDI's revenues and may be used by IDI for activities that
promote distribution of any of the mutual funds advised by INVESCO. Subject to
review by the Company's directors, payments made by the Fund under the Plan for
compensation of marketing personnel, as noted above, are based on an allocation
formula designed to ensure that all such payments are appropriate. IDI will bear
any distribution- and service-related expenses in excess of the amounts which
are compensated pursuant to the Plan. The Plan also authorizes any financing of
distribution which may result from IDI's use of its own resources, provided that
such fees are legitimate and not excessive. For more information see "How Shares
Can Be Purchased --Distribution Plan" in the Statement of Additional
Information.

FUND SERVICES

Shareholder Accounts.INVESCO will maintain a share account that reflects
your current holdings. Share certificates will be issued only upon specific
request. You will have greater flexibility to conduct transactions if you do not
request certificates.

<PAGE>

Telephone Transactions. All shareholders may exchange and redeem shares of
the Fund by telephone, unless they expressly decline these privileges. By
signing the new account Application, a Telephone Transaction Authorization Form,
or otherwise using these privileges, the investor has agreed that, if the Fund
has followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.

Retirement Plans and IRAs. Shares of the Fund may be purchased for IRAs
and many types of tax-deferred retirement plans. INVESCO can supply you with
information and forms to establish or transfer your existing plan or account.

HOW TO SELL SHARES

The following chart shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at their current NAV next
determined after a request in proper form is received at the Fund's office. The
NAV at the time of the redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.

Please specify from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.

<PAGE>

HOW TO SELL SHARES
================================================================================
Method Minimum Redemption Please Remember
- --------------------------------------------------------------------------------
By Telephone
Call us toll-free $250 (or, if less, These telephone
at 1-800-525-8085. full liquidation of redemption
the account) for a privileges may be
redemption check; modified or
$1,000 for a wire terminated in the
to bank of record. future at
The maximum amount INVESCO's
which may be discretion.
redeemed by
telephone is
generally $25,000.
- --------------------------------------------------------------------------------
In Writing
Mail your request Any amount. The If the shares to be
to INVESCO Funds redemption request redeemed are
Group, Inc., P.O. must be signed by represented by
Box 173706 all registered stock certificates,
Denver, CO account owners. the certificates
80217-3706. You may Payment will be must be sent to
also send your mailed to your INVESCO.
request by address of record
overnight courier or to a
to 7800 E. Union pre-designated
Ave., Denver, CO bank.
80237.
- --------------------------------------------------------------------------------
By Exchange
Between the Fund $1,000 to open a See "Exchange
and another of the new account; $50 Policy" page 66.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call
INVESCO for further
details and the
correct form.
- --------------------------------------------------------------------------------

<PAGE>

While the Fund will attempt to process telephone redemptions promptly,
there may be times -- particularly in periods of severe economic or market
disruption -- when you may experience delays in redeeming shares by phone.

Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances --for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared, payment will be made promptly upon clearance of the
purchase check (which will take up to 15 days).

Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to redeem all shares in such account, in
which case the account would be involuntarily liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.

<PAGE>

TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS

Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any. Distribution of all net investment income to shareholders
allows the Fund to maintain its tax status as a regulated investment company.
The Fund does not expect to pay any federal income or excise taxes because of
its tax status as a regulated investment company.

Shareholders must include all dividends and other distributions as taxable
income for federal, state and local income tax purposes unless they are exempt
from income taxes. Dividends and other distributions are taxable whether they
are received in cash or automatically reinvested in shares of the Fund or
another fund in the INVESCO group.

Net realized capital gains of the Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. During 1997, the Taxpayer Relief Act established a new
maximum capital gains tax rate of 20%. Depending on the holding period of the
asset giving rise to the gain, a capital gain was taxable at a maximum rate of
either 20% or 28%. Beginning January 1, 1998, all long-term gains realized on
the sale of securities held more than 12 months will be taxable at a maximum
rate of 20%. In addition, legislation signed in October of 1998 provides that
all capital gain distributions from a mutual fund paid to shareholders during
1998 will be taxed at a maximum rate of 20%. Accordingly, all capital gain
distributions paid in 1998 will be taxable at a maximum rate of 20%. Note that
the rate of capital gains tax is dependent on the shareholder's marginal tax
rate and may be lower than the above rates. At the end of each year, information
regarding the tax status of dividends and other distributions is provided to
shareholders. Shareholders should consult their tax advisers as to the effect of
distributions by the Fund.

<PAGE>

The Fund may be subject to withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund.

We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions And Taxes" in the
Statement of Additional Information.

Dividends and Other Distributions. The Fund earns ordinary or net
investment income in the form of interest and dividends on its investments.
Dividends paid by the Fund will be based solely on the net investment income
earned by it. The Fund's policy is to distribute substantially all of this
income, less Fund expenses, to shareholders. Dividends from net investment
income are declared daily and paid monthly at the discretion of the Company's
board of directors. Dividends are automatically reinvested in additional shares
of the Fund at the net asset value on the payable date unless otherwise
requested.

In addition, each Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on certain foreign currency transactions,
if any, are distributed to shareholders at least annually, usually in December.
Capital gain distributions are automatically reinvested in additional shares of
the Fund at the net asset value on the ex- distribution date unless otherwise
requested.

ADDITIONAL INFORMATION

Voting Rights. All shares of the Company have equal voting rights based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. The Company is not generally required and does not
expect to hold regular annual meetings of shareholders. However, when requested
to do so in writing by the holders of 10% or more of the outstanding shares of
the Company or as may be required by applicable law or the Company's Articles of
Incorporation,the board of directors will call special meetings of shareholders.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company. The Company will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.

<PAGE>

APPENDIX -- RATINGS SERVICES

There are several independent ratings services that analyze debt
obligations and preferred stock issued by corporations. The two most frequently
used services are Moody's and S&P.

Moody's S&P Bond Description
- --------------------------------------------------------------------------------
Aaa AAA Highest quality, often referred to as
"gilt edged." Carries the smallest
degree of investment risk: Interest
payments are protected by a larger or
exceptionally stable margin and
principal is secure.
- --------------------------------------------------------------------------------
Aa AA High quality or high grade. Margins of
protection may be smaller than those
above, or fluctuation of protective
elements may be of greater amplitude.
Other elements may be present which
make long-term risks somewhat larger
than in Aaa or AAA securities.
- --------------------------------------------------------------------------------
A A Upper medium-grade obligations.
Adequate to strong capacity to pay
principal and interest, but somewhat
more susceptible to adverse effects of
changes in circumstances and economic
conditions.
- --------------------------------------------------------------------------------

<PAGE>

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

<PAGE>

INVESCO BOND FUNDS, INC.

Short-Term Bond Fund

A no-load mutual fund
seeking a high level of
current income from investing
in fixed-income securities.

PROSPECTUS
January 1, 1999

INVESCO FUNDS

INVESCO Distributors, Inc.,(SM)
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706

1-800-525-8085
PAL(R), 1-800-424-8085
http://www.invesco.com

In Denver, visit one of our
convenient Investor Centers:

Cherry Creek,
155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue,
Lobby Level

In addition, all documents filed
by the Company with the
Securities and Exchange
Commission can be located on
a web site maintained by the
Commission at
http://www.sec.gov.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
January 1, 1999

INVESCO BOND FUNDS, INC.
INVESCO High Yield Fund
INVESCO Select Income Fund
INVESCO Short-Term Bond Fund
INVESCO U.S. Government Securities Fund

Address: Mailing Address:

7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706

Telephone:
In continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------

INVESCO BOND FUNDS, INC. (formerly, INVESCO Income Funds, Inc.) (the
"Company"), is an open-end, diversified, no-load management investment company
currently consisting of four separate portfolios of investments: INVESCO High
Yield Fund (the "High Yield Fund"), INVESCO Select Income Fund (the "Select
Income Fund"), INVESCO Short-Term Bond Fund (the " Short-Term Bond Fund") and
INVESCO U.S. Government Securities Fund (the "U.S. Government Securities Fund"),
(collectively, the "Funds" and individually, a "Fund").

The investment objective of each Fund is to provide investors with as high
a level of current income as is consistent with the risk involved in investing
in the types of securities in which each Fund invests. Potential capital
appreciation is a factor in the selection of investments, but is secondary to
the Select Income, High Yield and U.S. Government Funds' primary objective.
Investors may purchase shares of any or all Funds. Additional Funds may be added
in the future.

INVESCO HIGH YIELD FUND
The High Yield Fund seeks to achieve its investment objective through the
investment of substantially all of its assets in bonds and other debt securities
and in preferred stock. Such securities ordinarily include those rated in lower
categories by established rating services.

INVESCO SELECT INCOME FUND
The Select Income Fund seeks to achieve its investment
objective through the investment of substantially all of its assets in bonds and
other debt securities. It is anticipated that at least 50% of such securities
will be rated in medium and higher categories by an established rating service.

<PAGE>

INVESCO SHORT-TERM BOND FUND
The Short-Term Bond Fund (the "Fund") seeks to achieve the highest level
of current income as is consistent with minimum fluctuation in principal value
and with liquidity. The Fund invests primarily in short-term debt securities
(having maturities of 3 years or less) and intermediate-term debt securities
(having maturities of 3 to 10 years) and maintains a diversified portfolio with
a dollar-weighted average maturity of not more than three years. The Fund
pursues its investment objective by investing in a variety of debt securities
consistent with the policies of this Fund.

INVESCO U.S. GOVERNMENT SECURITIES FUND
The U.S. Government Securities Fund seeks to achieve its
investment objective by investing in bonds and other debt obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities and in
repurchase agreements and futures contracts with respect thereto.

A Prospectus for the High Yield, Select Income and U.S. Government
Securities Funds and a Prospectus for the Short-Term Bond Fund, each dated
January 1, 1999, which provide the basic information you should know before
investing in the Funds may be obtained without charge from INVESCO Distributors,
Inc., P.O. Box 173706, Denver, Colorado 80217-3706. This Statement of Additional
Information is not a prospectus, but contains information in addition to and
more detailed than that set forth in the Prospectuses. It is intended to provide
you with additional information regarding the activities and operations of the
Funds and should be read in conjunction with the Prospectuses.

Investment Adviser: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO DISTRIBUTORS, INC.

<PAGE>

TABLE OF CONTENTS Page

INVESTMENT POLICIES AND RESTRICTIONS........................................81

THE FUNDS AND THEIR MANAGEMENT..............................................94

HOW SHARES CAN BE PURCHASED................................................107

HOW SHARES ARE VALUED......................................................112

FUND PERFORMANCE...........................................................113

SERVICES PROVIDED BY THE FUND..............................................115

TAX-DEFERRED RETIREMENT PLANS..............................................116

HOW TO REDEEM SHARES.......................................................116

DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES...................................117

INVESTMENT PRACTICES.......................................................120

ADDITIONAL INFORMATION.....................................................123

APPENDIX - GNMA CERTIFICATES AND FUTURES CONTRACTS.........................129

<PAGE>

INVESTMENT POLICIES AND RESTRICTIONS

As discussed in the Funds' Prospectuses in the sections entitled
"Investment Objective And Strategy" and "Investment Policies And Risks," the
Select Income Fund and High Yield Fund may invest in bonds and other debt
securities. Such securities include corporate bonds and debentures (including
convertible issues), equipment trust certificates and promissory notes, and,
where the yields are competitive with those of corporate debt securities,
obligations issued or guaranteed by the U.S. government or its agencies, and
obligations of any state, municipality or political subdivision thereof.
Generally, corporate bonds and equipment trust certificates are secured
obligations, whereas debentures and notes are unsecured. In addition, the High
Yield Fund may invest in preferred stock. Preferred stock generally entitles
holders thereof to certain preferences in payment of dividends and assets in
priority to holders of common stock. As discussed in its Prospectus, the
Short-Term Bond Fund may invest in investment-grade debt securities of all types
in any proportion. The U.S. Government Securities Fund may invest in government
and government agency or government instrumentality debt securities (including
mortgage-backed securities issued or guaranteed by government agencies or
government-sponsored enterprises).

Subject to complying with applicable investment policies, in recognition
of changing fiscal policies and economic conditions, each of the Funds may vary
the proportions of its holdings in intermediate, long-term, and short-term
obligations, and they may dispose of any such securities prior to maturity and
reinvest on the basis of yield disparities. The value of the debt securities
held by each of the Funds will vary inversely with changes in prevailing
interest rates. Thus, when interest rates decline, the market value of a
portfolio security already invested at higher yields can be expected to rise if
such security is protected against early call. Conversely, when interest rates
increase, the market value of a portfolio security already invested at lower
yields can be expected to decline. When it appears to INVESCO, as investment
adviser to the Funds, that interest rates may change, the composition of a
Fund's portfolio may be adjusted should such anticipated changes offer the
opportunity to further the Fund's investment objectives.

Foreign Securities. As discussed in the Prospectuses in the section
entitled "Investment Policies And Risks -- Foreign Securities," the Select
Income Fund, Short-Term Bond Fund and High Yield Fund may invest up to 25% of
their respective total assets, measured at the time of purchase, in foreign
securities. Securities of Canadian issuers are not subject to this 25%
limitation. There is generally less publicly available information, reports and
ratings about foreign companies and other foreign issuers than that which is
available about companies and issuers in the United States. Foreign issuers are
also generally subject to fewer uniform accounting and auditing and financial
reporting standards, practices, and requirements as compared to those applicable
to United States issuers.

<PAGE>

For U.S. investors, the returns on foreign debt securities are influenced
not only by the returns on the foreign investments themselves, but also by
currency fluctuations. That is, when the U.S. dollar generally rises against
foreign currencies, returns on foreign securities for a U.S. investor may
decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase. The Select Income and High Yield Funds attempt to
minimize these risks by limiting their investments in foreign debt securities to
those which are denominated and pay interest in U.S.
dollars.

INVESCO will normally purchase foreign securities in over-the-counter
markets or on exchanges located in the countries in which the respective
principal offices of the issuers of the various debt securities are located, as
such markets or exchanges are generally the best available market for foreign
securities. Foreign securities markets are generally not as developed or
efficient as those in the United States. While growing in volume, they usually
have substantially less volume than the New York Stock Exchange, and securities
of some foreign issuers are less liquid and more volatile than securities of
comparable United States issuers. Fixed commissions on foreign exchanges are
generally higher than negotiated commissions on United States exchanges,
although the Funds will endeavor to achieve the most favorable net results on
their portfolio transactions. There is generally less government supervision and
regulation of securities exchanges, brokers and listed issuers in foreign
countries than in the United States.

With respect to certain foreign countries, there is the possibility of
adverse changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitations on the removal of funds or other assets,
political or social instability, or diplomatic developments which could affect
United States investments in those countries. Moreover, the economies of
individual countries may differ favorably or unfavorably from the United States'
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payment position.

The dividends and interest payable on certain of the Funds' foreign debt
securities may be subject to foreign withholding taxes, thus reducing the net
amount of income available for distribution to the Funds' shareholders .

Illiquid and 144A Securities. As discussed in the section of its
Prospectus entitled "Investment Policies And Risks," the High Yield Fund may
invest in securities that are illiquid because they are subject to restrictions
on their resale ("restricted securities") or because, based upon their nature or
the market for such securities, they are not readily marketable. However, the

<PAGE>

High Yield Fund will not purchase any such security if the purchase would cause
the Fund to invest more than 15% of its net assets, measured at the time of
purchase, in illiquid securities. Repurchase agreements maturing in more than
seven days will be considered as illiquid for purposes of this restriction.
Investments in illiquid securities involve certain risks to the extent that the
High Yield Fund may be unable to dispose of such securities at the time desired
or at a reasonable price. In addition, in order to resell a restricted security,
the High Yield Fund might have to bear the expense and incur the delays
associated with effecting registration.

Each Fund also may invest in restricted securities that can be resold to
institutional investors pursuant to Rule 144A under the Securities Act of 1933,
as amended (the "1933 Act") (hereinafter referred to as "Rule 144A Securities"),
if a liquid institutional trading market exists. The Company's board of
directors has delegated to INVESCO the authority to determine the liquidity of
Rule 144A Securities pursuant to guidelines approved by the board.

In recent years, a large institutional market has developed for Rule 144A
Securities. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend on an efficient
institutional market in which Rule 144A Securities can readily be resold or on
an issuer's ability to honor a demand for repayment. Therefore, the fact that
there are contractual or legal restrictions on resale to the general public or
certain institutions is not dispositive of the liquidity of such investments.

Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for Rule 144A Securities
may provide both readily ascertainable values for Rule 144A Securities and the
ability to liquidate an investment in order to satisfy share redemption orders.
An insufficient number of qualified institutional buyers interested in
purchasing a Rule 144A Security held by a Fund could adversely affect the
marketability of such security and the Fund might be unable to dispose of such
security promptly or at reasonable prices.

Euro/Yankee Bonds. The Select Income, High Yield and Short-Term Bond Funds
may invest in dollar-denominated bonds issued by foreign branches of domestic
banks ("Eurobonds") and dollar-denominated bonds issued by a U.S. branch of a
foreign bank and sold in the United States ("Yankee bonds"). Investments in
Eurobonds and Yankee bonds entail certain risks similar to investments in
foreign securities in general. For information on these risks see "Investment
Policies And Risks" in the Prospectuses.

<PAGE>

When-Issued and Delayed Delivery Securities. As discussed in the section
of the Funds' Prospectuses entitled "Investment Policies And Risks," the Funds
may purchase and sell securities on a when-issued or delayed delivery basis.
When-issued or delayed delivery transactions arise when securities (normally,
debt obligations of issuers eligible for investment by the Funds) are purchased
or sold by the Funds with payment and delivery taking place in the future in
order to secure what is considered to be an advantageous price and yield.
However, the yield on a comparable security available when delivery takes place
may vary from the yield on the security at the time that the when-issued or
delayed delivery transaction was entered into. When the Funds engage in when-
issued and delayed delivery transactions, they rely on the seller or buyer,
as the case may be, to consummate the sale. Failure to do so may result in the
Funds missing the opportunity of obtaining a price or yield considered to be
advantageous. When-issued and delayed delivery transactions generally may be
expected to settle within one month from the date a transaction is entered into,
but in no event later than 90 days after the transaction date. No payment or
delivery is made by the Funds until they receive delivery or payment from the
other party to the transaction. However, when a Fund purchases a security on
a when-issued or delayed delivery basis, it assumes the risk that the market
price of the security may fluctuate between the date of purchase and the date of
delivery.

To the extent that a Fund remains substantially fully invested at the same
time that it has purchased when-issued securities, as it would normally expect
to do, there may be greater fluctuations in its net assets than if the Fund sets
aside cash to satisfy its purchase commitments.

When a Fund purchases securities on a when-issued basis, it will maintain
in a segregated account cash or liquid securities having an aggregate value
equal to the amount of such purchase commitments, until payment is made. If
necessary, additional assets will be placed in the account daily so that the
value of the account will equal or exceed the amount of the Fund's purchase
commitments.

Repurchase Agreements. As discussed in the section of the Funds'
Prospectuses entitled "Investment Policies And Risks," the Funds may invest in
repurchase agreements with respect to debt instruments eligible for investment
by the Funds with member banks of the Federal Reserve System, registered
brokers-dealers and registered U.S. government securities dealers that are
believed to be creditworthy. A repurchase agreement is an agreement under which
a Fund acquires a debt instrument (generally a security issued by the U.S.
government or an agency thereof, a banker's acceptance or a certificate of
deposit) from a commercial bank, broker or dealer, subject to resale to the
seller at an agreed upon price and date (normally, the next business day). A
repurchase agreement may be considered a loan collateralized by securities. The
resale price reflects an agreed-upon interest rate effective for the period the
instrument is held by the Funds and is unrelated to the interest rate on the

<PAGE>

underlying instrument. In these transactions, the securities acquired by a Fund
(including interest earned thereon) must have a total value at least equal to
the value of the repurchase agreement, and are held as collateral by the Fund's
custodian bank until the repurchase agreement is completed. The Company's board
of directors monitors the Funds' repurchase agreement transactions and has
established guidelines and standards for review by INVESCO of the
creditworthiness of any bank, broker or dealer that is a party to a repurchase
agreement with the Funds. The High Yield Fund may enter into a repurchase
agreement maturing in more than seven days if as a result no more than 15% of
the High Yield Fund's net assets would be invested in such repurchase
agreements and other illiquid securities.

The use of repurchase agreements involves certain risks. For example, if
the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent the Funds may experience costs and delays in
realizing on the collateral. Finally, it is possible that a Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement. While INVESCO
acknowledges these risks, it is expected that they can be controlled through
careful monitoring procedures.

Securities Lending. As described in the section of the Funds' Prospectuses
entitled "Investment Policies And Risks," the Funds may lend their portfolio
securities to qualified brokers, dealers, banks and other financial
institutions, provided that such loans are callable at any time by a Fund and
are at all times secured by collateral consisting of cash, letters of credit or
securities issued or guaranteed by the U. S. government or its agencies , or any
combination thereof, equal to the market value, determined daily, of the loaned
securities. The advantage of such loans is that a Fund continues to have the
benefits (and risks) of ownership of the loaned securities, while at the same
time receiving income from the borrower of the securities. Loans will be made
only to firms deemed by INVESCO (under procedures established by the Company's
board of directors) to be creditworthy and when the amount of interest to be
received justifies the inherent risks. A loan may be terminated by the borrower
on one business day's notice, or by a Fund at any time. A Fund will not lend any
security if, as a result of such loan, the aggregate value of securities then on
loan would exceed 33-1/3% of the Fund's net assets (taken at market value).
While voting rights may pass with the loaned securities, if a material event
(e.g., proposed merger, sale of assets, or liquidation) is to occur affecting an
investment on loan, the loan must be called and the securities voted. Loans of
securities made by a Fund will comply with all applicable regulatory
requirements.

<PAGE>

At the present time, a Fund may pay reasonable negotiated
finder fees in connection with loaned securities, so long as such

fees are set forth in a written contract and are in compliance with guidelines
with respect to such fees established by the Company's directors .

U.S. Government Obligations. These securities consist of treasury bills,
treasury notes, and treasury bonds, which differ only in their interest rates,
maturities, and dates of issuance. Treasury bills have a maturity of one year or
less. Treasury notes generally have a maturity of one to ten years, and treasury
bonds generally have maturities of more than ten years. As discussed in each
Fund's Prospectus, U.S. government obligations also include securities issued or
guaranteed by agencies or instrumentalities of the U.S. government.

Some obligations of United States government agencies, which are
established under the authority of an act of Congress, such as Government
National Mortgage Association (GNMA) participation certificates, are supported
by the full faith and credit of the United States Treasury. GNMA Certificates
are mortgage-backed securities representing part ownership of a pool of mortgage
loans. These loans -- issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations -- are either insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. A "pool" or
group of such mortgages is assembled and, after being approved by GNMA, is
offered to investors through securities dealers. Once approved by GNMA, the
timely payment of interest and principal on each mortgage is guaranteed by GNMA
and backed by the full faith and credit of the United States government. The
market value of GNMA Certificates is not guaranteed. GNMA Certificates differ
from bonds in that principal is paid back monthly by the borrower over the term
of the loan rather than returned in a lump sum at maturity. GNMA Certificates
are called "pass-through" securities because both interest and principal
payments (including prepayments) are passed through to the holder of the
Certificate. Upon receipt, principal payments will be used by each Fund to
purchase additional securities under its investment objective and investment
policies.

Other United States government obligations, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury to repay its obligations. Still others, such as bonds issued by the
Federal National Mortgage Association, a federally chartered private
corporation, are supported only by the credit of the instrumentality, although
the underlying mortgage may be guaranteed as to principal and interest.

Obligations of Domestic Banks. These obligations consist of certificates
of deposit ("CDs") and bankers' acceptances issued by domestic banks (including
their foreign branches) having total assets in excess of $5 billion, which meet
the Funds' minimum rating requirements. CDs are issued against deposits in a
commercial bank for a specified period and rate and are normally negotiable.
Eurodollar CDs are certificates issued by a foreign branch (usually London) of
a U.S. Domestic bank, and, as such, the credit is deemed to be that of the
domestic bank.

<PAGE>

Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.

Commercial Paper. These obligations are short-term promissory notes issued
by domestic corporations to meet current working capital requirements. Such
paper may be unsecured or backed by a bank letter of credit. Commercial paper
issued with a letter of credit is, in effect, "two party paper," with the issuer
directly responsible for payment, plus a bank's guarantee that if the note is
not paid at maturity by the issuer, the bank will pay the principal and interest
to the buyer. Commercial paper is sold either as interest-bearing or on a
discounted basis, with maturities not exceeding 270 days.

Futures Contracts. As discussed in the Funds' Prospectuses, the U.S.
Government Securities and Short-Term Bond Funds may engage in buying and selling
interest rate futures contracts; however, the U.S. Government Securities Fund
may buy and sell only interest rate futures contracts relating to U.S.
government securities ("Government Securities Futures"). This limitation on this
Fund's engaging in interest rate futures contracts to those relating to U.S.
government securities is a fundamental policy which may be changed only by
holders of a majority, as defined in the Investment Company Act of 1940 (the
"1940 Act"), of the Fund's outstanding shares. The Short-Term Bond Fund may
engage in buying and selling interest rate futures contracts relating to the
debt securities in which it invests for the purpose of hedging the value of its
securities portfolio. The U.S. Government Securities and Short-Term Bond Funds
have no other fundamental policies as to their use of futures contracts and thus
no fundamental policy as to a percentage limit thereon; however, see below for
limitations relating to the Commodity Futures Trading Commission (the "CFTC")
and a percentage restriction adopted by the board of directors.

In connection with hedging (a "long futures position"), the U.S.
Government Securities and Short-Term Bond Funds, respectively, would take a long
futures position with the intention of doing so as a temporary substitute for
the purchase of long-term U.S. government securities, and any debt securities in
which the Short-Term Bond Fund invests, which may then be purchased in an
orderly fashion. These Funds expect that they would, in the ordinary course,
purchase such long-term securities upon termination of the long futures position
a substantial majority of the time, but under unusual market conditions, a long
futures position may be terminated without the corresponding purchase of
long-term U.S. government securities or other long-term debt securities. These

<PAGE>

Funds will deposit in a segregated account with their custodian bank
U.S. government securities maturing in one year or less, or cash,
in an amount equal to the fluctuating market value of long futures contracts
they have purchased, less any margin deposited on their long position. They may
hold cash or acquire such government securities for the purpose of making these
deposits.

The "sale" of a Government Securities Future by the U.S. Government
Securities Fund or "sale" of a debt security future by the Short-Term Bond Fund
means the acquisition by these Funds of an obligation to deliver the related
U.S. government securities or other debt securities (i.e., those called for by
the contract) at a specified price on a specified date. The "purchase" of a
Government Securities Future by the U.S. Government Securities Fund or
"purchase" of a debt security future by the Short-Term Bond Fund means the
acquisition by these Funds of an obligation to acquire the related U.S.
government securities or other debt securities at a specified price on a
specified date.

Unlike when the U.S. Government Securities Fund purchases or sells a U.S.
government security, or when the Short-Term Bond Fund purchases or sells a debt
security, no price is paid or received by these Funds upon the purchase or sale
of a Government Securities Future or a debt security future. Initially, these
Funds will be required to deposit with the futures commission merchant (the
"broker") an amount of cash or U.S. Treasury Bills equal to a varying specified
percentage of the contract amount. This amount is known as initial margin.
Subsequent payments, called variation margin, to and from the broker, will be
made on a daily basis as the price of the underlying U.S. Government Securities
Future or debt securities future fluctuates, making the Government Securities
Future or debt security future more or less valuable, a process known as marking
to market. Changes in variation margin are recorded by these Funds as unrealized
gains or losses. Initial margin payments will be deposited in the Company's
custodian bank in an account registered in the broker's name; access to the
assets in that account may be made by the broker only under specified
conditions. At any time prior to expiration of the Government Securities Future
or debt security future, a Fund may elect to close the position by taking an
opposite position which will operate to terminate the Funds' position on the
Government Securities Future or debt security future. A final determination of
variation margin is then made, additional cash is required to be paid by or
released to these Funds, and the Funds realize a loss or a gain. Although
Government Securities Futures or debt security futures by their terms call for
the actual delivery or acquisition of the related U.S. government securities or
debt securities, in most cases the contractual obligation is so fulfilled
without having to make or take delivery of the related U.S. government
securities or debt securities. These Funds do not intend to make or take
delivery of these securities. All transactions in the futures markets, including
transactions in Government Securities Futures or debt security futures, are
made, offset or fulfilled through a clearing house associated with the exchange
on which the contracts are traded.

<PAGE>

One risk in employing Government Securities Futures or debt security
futures to attempt to protect against the price volatility of the U.S.
government securities or debt securities held in the U.S. Government Securities
Fund or Short-Term Bond Fund is the prospect that the prices of Government
Securities Futures or debt security futures will correlate imperfectly with the
behavior of the cash (i.e., market value) prices of a Fund's U.S. government
securities or debt securities. For a hedge to be completely effective, the price
change of the hedging instrument should equal the price change of the security
being hedged. Such equal price changes are not always possible because the
investment underlying the hedging instrument may not be the same investment that
is being hedged. The adviser or sub-adviser will attempt to create a closely
correlated hedge, but hedging activity may not be completely successful in
eliminating market value fluctuation. The ordinary spreads between prices in the
cash and futures markets, due to differences in the natures of those markets,
may be subject to distortions in the following manners. First, all participants
in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close future contracts through offsetting transactions which could
distort the normal relationship between the cash and futures markets. Second,
the liquidity of the futures market depends on participants entering into
offsetting transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced, thus producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct forecast of general
interest trends by INVESCO may still not result in a successful transaction.

Another risk is that INVESCO would be incorrect in its expectations as to
the extent of various interest rate movements or the time span within which the
movements take place. For example, if the U.S. Government Securities Fund sold a
Government Securities Future, or the Short-Term Bond Fund sold a debt security
future in anticipation of an increase in interest rates, and then interest rates
went down instead, these Funds would lose money on the sale. Any gains or losses
on futures transactions will not be tax-exempt.

The use of futures to attempt to protect against the market risk of a
decline in the value of portfolio securities is referred to as having a "short
futures position." The use of futures to attempt to protect against the market
risk that portfolio securities are not fully included in an increase
in value is referred to as having a "long futures position." The
U.S. Government Securities and Short-Term Bond Fund must operate within

<PAGE>

certain restrictions as to their long and short positions in futures under a
rule (the "CFTC Rule") adopted by the CFTC under the Commodity Exchange Act (the
"CEA") to be eligible for the exclusion provided by the CFTC Rule from
registration by these Funds with the CFTC as a "commodity pool operator" (as
defined under the CEA), and they must represent to the CFTC that they will
operate within such restrictions. Under these restrictions, these Funds will
not, as to any positions, whether long, short or a combination thereof, enter
into futures for which the aggregate initial margins exceed 5% of the fair
market value of the Funds' assets.

Although these Funds have no fundamental policy restricting the use of
futures, the Company's board of directors has adopted a restriction that the
aggregate market value of the Futures Contracts the U.S. Government Securities
Fund or the Short-Term Bond Fund holds cannot exceed 20% of the market value of
the respective Fund's total assets. This restriction would not be changed by the
Company's board of directors without considering the policies and concerns of
federal and state regulatory agencies.

Investment Restrictions

As described in the section of the Funds' Prospectuses entitled
"Investment Policies And Risks," the Funds operate under certain investment
restrictions. For purposes of the Funds' investment restrictions and their
investment policies, all percentage limitations apply immediately after a
purchase or initial investment. Any subsequent change in a particular percentage
resulting from fluctuations in value does not require elimination of any
security from a Fund.

The following restrictions are fundamental and may not be changed with
respect to a particular Fund without the prior approval of the holders of a
majority of the outstanding voting securities of that Fund, as defined in the
1940 Act. Under these fundamental investment restrictions, each Fund may not:

(1) sell short or buy on margin;

(2) mortgage, pledge or hypothecate portfolio securities or borrow money,
except from banks for temporary or emergency purposes (but not for
investment) and then in an amount not exceeding 10% of the value of
its total net assets. A Fund will not purchase additional securities
while any borrowings on behalf of such Fund exist; provided, however,
that this restriction shall not be deemed to affect the U.S.
Government Securities Fund's entering into futures contracts in
accordance with that Fund's investment policies, or the Short-Term
Bond Fund's entering into futures contracts or options transactions
in accordance with that Fund's investment policies.

<PAGE>

(3) invest in the securities of any other investment company except for a
purchase or acquisition in accordance with a plan of reorganization,
merger or consolidation;

(4) purchase securities if the purchase would cause the Fund to have at
the time more than 5% of the value of its total assets invested in
securities of any one issuer or to own more than 10% of the
outstanding voting securities of any one issuer (except obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities*). For this purpose, all indebtedness of an issuer
shall be deemed a single class of security;

(5) make loans to any person, except through the purchase of debt
securities in accordance with the investment policies of the Funds,
or the lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System, registered
broker-dealers and registered government securities dealers. The
aggregate value of all portfolio securities loaned may not exceed
33-1/3% of a Fund's total net assets (taken at current value). [No
more than 10% of a Fund's total net assets may be invested in
repurchase agreements maturing in more than seven days;]

(6) other than the U.S. Government Securities Fund entering into futures
contracts or the Short-Term Bond Fund entering into futures contracts
or options transactions in accordance with those Funds' investment
policies, buy or sell commodities, commodity contracts or real estate
(however, securities of companies investing in real estate may be
purchased);

(7) invest in any company for the purpose of exercising control or
management;

(8) other than the High Yield Fund, buy other than readily marketable
securities;

(9) engage in the underwriting of any securities;

(10) purchase securities of any company in which any officer or director
of the Fund or of its investment adviser beneficially owns more than
1/2 of 1% of the outstanding securities or in which all of the
officers or directors of the Fund and its investment adviser, as a
group, own more than 5% of such securities;

(11) purchase equity securities; provided, however, that the High Yield
Fund may purchase convertible and non-convertible preferred stock.
This shall not be deemed to prohibit the acquisition of equity
securities resulting from the ownership of debt securities, as, for

<PAGE>

example, the conversion of convertible bonds or an exchange in
connection with a corporate reorganization;

(12) other than the High Yield Fund, purchase the securities of any issuer
having a record, together with predecessors, of less than three years
continuous operation;

(13) buy or sell oil, gas or other mineral interest or exploration
programs;

(14) participate on a joint or joint and several basis in any securities
trading account, or purchase warrants, or, except for the Short-Term
Bond Fund, write, purchase or sell puts, calls, straddles or any
other option contract or combination thereof;

(15) other than the High Yield Fund, enter into repurchase agreements
maturing in more than seven days if, as a result, such repurchase
agreements, together with securities for which there are no readily
available market quotations, would constitute more than 10% of that
Fund's total net assets;

(16) invest more than 25% of that Fund's total assets in any one industry,
excluding government securities. Telephone utilities, water, gas, and
electric utilities shall be considered separate industries.

*If an entity, other than the U.S. government, its agencies or
instrumentalities, guarantees a security, such guarantee is considered a
separate security which must be valued and included in the five percent
limitation, subject to those exceptions allowed by Rule 5b-2 under the 1940 Act.

In applying this restriction (16) above, the Funds use a modified S&P
industry code classification schema which uses various sources to classify
securities.

In applying restriction (8) above, the Funds also include illiquid
securities (those which cannot be sold in the ordinary course of business within
seven days at approximately the valuation given to them by the Fund) among the
securities subject to the limitations of that paragraph. The Company's board of
directors has delegated to INVESCO the authority to determine that a liquid
market exists for securities eligible for resale pursuant to Rule 144A under the
1933 Act, or any successor to such rule, and that such securities are not
subject to the Funds' limitations on investing in illiquid securities or
securities that are not readily marketable. Under guidelines established by the
board of directors, INVESCO will consider the following factors, among others,
in making this determination: (1) the unregistered nature of a Rule 144A
security, (2) the frequency of trades and quotes for the security; (3) the
number of dealers willing to purchase or sell the security and the number of

<PAGE>

other potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer).

In applying restriction (11) above, the Funds consider acquisitions of
equity securities as components of units which consist primarily of debt
securities as permissible acquisitions resulting from the ownership of debt
securities.

In applying restriction (14) above, the Funds consider warrants acquired
as components of units consisting primarily of debt securities to be permissible
investments as contemplated by restriction (11) above.

The Short-Term Bond Fund does not currently intend to buy or sell put or
call options or option contracts, and will not do so until the Company's board
of directors adopts an investment policy governing such purchases or sales.

In addition to the foregoing, the Funds may not issue preference shares or
create any funded debt. "Fund shares," the only means of participating in the
ownership of a Fund, are all nonassessable, and have equal rights, within each
class, as to dividends, voting power and asset value. No shareholder of a Fund,
as such, has any preemptive right to purchase or subscribe for any Fund shares
which may be issued; however, the board of directors, in its discretion, may
extend purchase or subscription rights pro rata to all shareholders.

Additional investment restrictions adopted by the Company on behalf of the
Funds and which may be changed by the directors, at their discretion, without
shareholder approval, include the following:

(1) The High Yield Fund will not purchase any security or enter into a
repurchase agreement if, as a result, more than 15% of its net assets
would be invested in repurchase agreements not entitling the holder
to payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or contractual
restrictions on resale that offered liquidity or the absence of a
readily available market. The board of directors, or the Fund's
investment adviser acting pursuant to authority delegated by the
board of directors, may determine that a readily available market
exists for securities that are not registered under the Securities
Act of 1933 but are nevertheless eligible for resale pursuant to Rule
144A under the Securities Act of 1933, or any successor to such rule,
and therefore that such securities are not subject to the foregoing
limitation.

<PAGE>

With respect to the non-fundamental investment restriction (1)
above, the board of directors has delegated to the Fund's investment
adviser the authority to determine whether a liquid market exists
for securities eligible for resale pursuant to Rule 144A under the
1933 Act, or any successor to such rule, and whether such securities
are subject to the non-fundamental restriction (1) above. Under
guidelines established by the board of directors, the adviser will
consider the following factors, among others, in making this
determination: (1) the unregistered nature of a Rule 144A security;
(2) the frequency of trades and quotes for the security; (3) the
number of dealers willing to purchase or sell the security and the
number of other potential purchasers; (4) dealer undertakings to
make a market in the security; and (5) the nature of the security
and the nature of marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the
mechanics of transfer).

(2) The High Yield Fund will not purchase securities of any issuer (other
than the U.S. government, its agencies and instrumentalities or
instruments guaranteed by the U.S. government or any such agency or
instrumentality) with a record of less than three years' continuous
operation (including that of predecessors) if such purchase would
cause the Fund's investments in all such issuers to exceed 5% of the
Fund's total assets taken at market value at the time of such
purchases.

THE FUNDS AND THEIR MANAGEMENT

The Company. The Company was incorporated on April 2, 1993, under the laws
of Maryland.

The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Company's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to INVESCO Blue
Chip Growth Fund, Inc. (formerly, INVESCO Growth Fund, Inc.), INVESCO
Combination Stock and Bond Funds, Inc. (formerly, INVESCO Flexible Funds, Inc.),
INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds, Inc., INVESCO Sector Fund, Inc. (formerly, INVESCO Strategic
Portfolios, Inc.), INVESCO Specialty Funds, Inc., INVESCO Stock Funds, Inc.
(formerly, INVESCO Equity Funds, Inc.), INVESCO Tax-Free Income Funds, Inc.,
INVESCO Value Trust, and INVESCO Variable Investment Funds, Inc.

The Distributor. Effective September 30, 1997, INVESCO
Distributors, Inc. ("IDI") is the Funds' distributor. IDI,
established in 1997, is a registered broker-dealer that acts as

<PAGE>

distributor for all retail mutual funds advised by INVESCO. Prior to September
30, 1997, INVESCO served as the Funds' distributor.

INVESCO and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC, a
publicly-traded holding company that, through its subsidiaries, engages in the
business of investment management on an international basis. INVESCO PLC changed
its name to AMVESCO PLC on March 3, 1997 and to AMVESCAP PLC on May 8, 1997, as
part of a merger between a direct subsidiary of INVESCO PLC and A I M Management
Group, Inc. that created one of the largest investment management businesses in
the world with approximately $241 billion in assets under management as of
September 30, 1998. INVESCO was established in 1932 and as of August 31, 1998,
managed 14 mutual funds, consisting of 49 separate portfolios, on behalf of over
899,000 shareholders.

AMVESCAP PLC's North American subsidiaries include the following:

--INVESCO Retirement and Benefit Services, Inc. ("IRBS") of Atlanta,
Georgia, develops and provides domestic and international defined contribution
retirement plan services to plan services to sponsors, institutional
retirement plan sponsors, institutional plan providers and foreign governments.

--INVESCO Retirement Plan Services ("IRPS") of Atlanta, Georgia, a
division of IRBS, provides recordkeeping and investment selection services to
defined contribution plan sponsors of plans with between $2 million and $200
million in assets. Additionally, IRPS provides investment consulting services to
institutions seeking to provide retirement plan products and services.

--Institutional Trust Company, doing business as INVESCO Trust Company
("ITC") of Denver, Colorado, a division of IRBS, provides retirement account
custodian and/or trust services for individual retirement accounts ("IRAs") and
other retirement plan accounts. These include services such as recordkeeping,
tax reporting and compliance. ITC acts as trustee or custodian to these plans.
ITC accepts contributions and provides, through INVESCO, complete transfer
agency functions: correspondence, sub-accounting, telephone communications and
processing of distributions.

--INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer .

--INVESCO Management & Research, Inc. of Boston, Massachusetts primarily
manages pension and endowment accounts.

<PAGE>

--PRIMCO Capital Management, Inc. of Louisville, Kentucky specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.

--INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for pension plans
and public pension funds, as well as endowment and foundation accounts.

--INVESCO (NY), Inc. of New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans, Taft-Hartley
Plans, insurance companies, charitable institutions and private individuals.
INVESCO NY also offers the opportunity for its clients to invest both directly
and indirectly through partnerships in primarily private investments or
privately negotiated transactions. INVESCO NY further serves as investment
adviser to several closed-end investment companies, and as subadviser with
respect to certain commingled employee benefit trusts. INVESCO NY specializes in
the fundamental research investment approach, with the help of quantitative
tools.

--A I M Advisors, Inc. of Houston, Texas provides investment advisory and
administrative services for retail and institutional mutual funds.

--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
variable insurance companies.

--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.

The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire
Square, London, EC2M4YR, England.

As indicated in the Funds' Prospectuses, INVESCO permits investment and
other personnel to purchase and sell securities for their own accounts in
accordance with a compliance policy governing personal investing by directors,
officers and employees of INVESCO and its North American affiliates. The policy
requires officers, inside directors, investment and other personnel of INVESCO
and its North American affiliates to pre-clear all transactions in securities
not otherwise exempt under the policy. Requests for trading authority will be
denied when, among other reasons, the proposed personal transaction would be
contrary to the provisions of the policy or would be deemed to adversely affect
any transaction then known to be under consideration for or to have been
effected on behalf of any client accounts, including the Funds.

<PAGE>

In addition to the pre-clearance requirement described above, the policy
subjects officers, inside directors, investment and other personnel of INVESCO
and its North American affiliates to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The provisions of the policy are administered by and subject to
exceptions authorized by INVESCO.

Investment Advisory Agreement. INVESCO serves as investment adviser to the
Funds pursuant to an investment advisory agreement dated February 28, 1997 (the
"Agreement") with the Company which was approved by the board of directors on
November 6, 1996, by a vote cast in person by a majority of the directors of the
Company, including a majority of the directors who are not "interested persons"
of the Company or INVESCO at a meeting called for such purpose. The Agreement
was approved by the Funds' shareholders on January 31, 1997, for an initial term
expiring February 28, 1999. On May 13, 1998, this period was extended by the
Company's board of directors to May 15, 1999. Thereafter, the Agreement may be
continued from year to year with respect to each Fund as long as each such
continuance is specifically approved at least annually by the board of directors
of the Company, or by a vote of the holders of a majority, as defined in the
1940 Act, of the outstanding shares of the applicable Fund. Any such continuance
also must be approved by a majority of the Company's directors who are not
parties to the Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such continuance. The Agreement may be terminated at any time without penalty by
either party, or by a Fund with respect to that Fund, upon sixty (60) days'
written notice and terminates automatically in the event of an assignment to the
extent required by the 1940 Act and the rules thereunder.

The Agreement provides that INVESCO shall manage the investment portfolios
of the Funds in conformity with the Funds' investment policies (either directly
or by delegation to a sub-adviser, which may be a party affiliated with
INVESCO). Further, INVESCO shall perform all administrative, internal accounting
(including computation of net asset value), clerical, statistical, secretarial
and all other services necessary or incidental to the administration of the
affairs of the Funds excluding, however, those services that are the subject of
separate agreement between the Company and INVESCO or any affiliate thereof,
including the distribution and sale of Fund shares and provision of transfer
agency, dividend disbursing agency, and registrar services, and services
furnished under an Administrative Services Agreement with INVESCO discussed
below. Services provided under the Agreement include, but are not limited to:
supplying the Company with officers, clerical staff and other employees, if any,
who are necessary in connection with the Funds' operations; furnishing office
space, facilities, equipment, and supplies; providing personnel and facilities
required to respond to inquiries related to shareholder accounts; conducting
periodic compliance reviews of the Funds' operations; preparation and review

<PAGE>

of required documents, reports and filings by INVESCO's in-house legal and
accounting staff (including the prospectus, statement of additional information,
proxy statements, shareholder reports, tax returns, reports to the SEC, and
other corporate documents of the Funds), except insofar as the assistance of
independent accountants or attorneys is necessary or desirable; supplying basic
telephone service and other utilities; and preparing and maintaining certain of
the books and records required to be prepared and maintained by the Funds under
the 1940 Act. Expenses not assumed by INVESCO are borne by the Funds.

As full compensation for its advisory services to the Company, INVESCO
receives a monthly fee. The fee with respect to the Select Income and U.S.
Government Securities Funds is calculated daily at an annual rate of: 0.55% of
average net assets of each such Fund up to $300 million; reduced to 0.45% of
average net assets of each such Fund exceeding $300 million but not exceeding
$500 million; and further reduced to 0.35% of average net assets of each such
Fund in excess of $500 million. The fees for the High Yield and Short-Term Bond
Funds also are calculated daily but are reduced by 0.05% at each level in the
above fee schedule.

Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the Funds pursuant to an Administrative Services
Agreement dated February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved by the board of directors on November 6,
1996, by a vote cast in person by all of the directors of the Company, including
all of the directors who are not "interested persons" of the Company or INVESCO
at a meeting called for such purpose. The Administrative Agreement was for an
initial term expiring February 28, 1998, and has been continued by action of the
board of directors until May 15, 1999. The Administrative Agreement may be
continued from year to year as long as each such continuance is specifically
approved by the board of directors of the Company, including a majority of the
directors who are not parties to the Administrative Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Administrative
Agreement may be terminated at any time without penalty by INVESCO on sixty (60)
days' written notice, or by the Company upon thirty (30) days' written notice,
and terminates automatically in the event of an assignment unless the Company's
board of directors approves such assignment.

The Administrative Agreement provides that INVESCO shall provide the
following services to the Funds: (a) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Funds; and (b) such sub-accounting, recordkeeping, and administrative services
and functions, which may be provided by affiliates of INVESCO, as are

<PAGE>

reasonably necessary for the operation of Fund shareholder accounts maintained
by certain retirement plans and employee benefit plans for the benefit of
participants in such plans.

As full compensation for services provided under the Administrative
Agreement, each Fund pays a monthly fee to INVESCO consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.015% per year of the average net assets of the
Fund.

Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the Funds pursuant to a Transfer
Agency Agreement dated February 28, 1997, which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1997, for an initial term expiring February 28, 1998
, which has been extended by action of the board of directors until May 15,
1999. Thereafter, the Transfer Agency Agreement may be continued from year to
year as to each Fund as long as such continuance is specifically approved at
least annually by the board of directors of the Company, or by a vote of the
holders of a majority of the outstanding shares of each Fund. Any such
continuance also must be approved by a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or interested persons (as
defined by the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Transfer Agency Agreement may
be terminated at any time without penalty by either party upon sixty (60) days'
written notice and terminates automatically in the event of assignment.

The Transfer Agency Agreement provides that the Funds will pay to INVESCO
an annual fee of $26.00 per shareholder account or, where applicable, per
participant in an omnibus account. This fee is paid monthly at a rate of 1/12 of
the annual fee and is based upon the number of shareholder accounts and omnibus
account participants in existence at any time during each month.

Set forth below is a table showing the advisory fees, administrative
services fees, and transfer agency fees paid by each of the Funds for the
periods shown.

<PAGE>

Year Ended Year Ended Year Ended
August 31, 1998(1) August 31, 1997(1) August 31, 1996(1)
------------------ ----------------- ------------------
Adminis- Adminis- Adminis-
Transfer trative Transfer trative Transfer trative
Advisory Agency Services Advisory Agency Services Advisory Agency Services
Fees Fees Fees Fees Fees Fees Fees Fees Fees
---- ---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield $2,842,990 $ 778,174 $ 112,212 $1,964,043 $ 651,471 $ 72,410 $1,671,610 $ 532,180 $ 61,443
Select Income 2,023,679 895,360 67,475 1,477,302 786,616 50,289 1,410,937 614,471 48,480
Short-Term Bond 68,131 68,560 12,044 61,150 61,050 11,833 44,394 51,685 11,332
U.S. Government
Securities 284,609 186,705 17,762 312,851 178,192 18,532 233,025 177,086 16,355

</TABLE>

(1) These amounts do not reflect the voluntary expense limitations described in
the Funds' Prospectuses.

<PAGE>

Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of each of the Funds are carried out and that the Funds are properly
administered. The officers of the Company, all of whom are officers and
employees of, and paid by, INVESCO, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
each Fund has the primary responsibility for making investment decisions on
behalf of that Fund. These investment decisions are reviewed by the investment
committee of INVESCO.

All of the officers and directors of the Company hold comparable positions
with INVESCO Blue Chip Growth Fund, Inc. (formerly, INVESCO Growth Fund, Inc.),
INVESCO Combination Stock and Bond Funds, Inc. (formerly, INVESCO Flexible
Funds, Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity
Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds,
Inc., INVESCO Money Market Funds, Inc., INVESCO Sector Funds, Inc. (formerly,
INVESCO Strategic Portfolios, Inc.), INVESCO Specialty Funds, Inc., INVESCO
Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.), INVESCO Tax-Free
Income Funds, Inc. and INVESCO Variable Investment Funds, Inc. All of the
directors and officers of the Company also serve as trustees of INVESCO
Treasurer's Series Trust and INVESCO Value Trust. Set forth below is information
with respect to each of the Company's officers and directors. Unless otherwise
indicated, the address of the directors and officers is Post Office Box 173706,
Denver, Colorado 80217-3706. Their affiliations represent their principal
occupations during the past five years.

CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of AMVESCAP PLC, London, England, and of various subsidiaries thereof.
Chairman of the Board of INVESCO Global Health Sciences Fund. Address: 1315
Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935.

FRED A. DEERING,+# Vice Chairman of the Board. Trustee of INVESCO Global
Health Sciences Fund. Formerly, Chairman of the Executive Committee and Chairman
of the Board of Security Life of Denver Insurance Company, Denver, Colorado;
Director of ING America Life Insurance Company. Address: Security Life Center,
1290 Broadway, Denver, Colorado. Born: January 12, 1928.

VICTOR L. ANDREWS,**@ Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); since October 1984, Director of the Center for the Study of
Regulated Industry at Georgia State University; formerly, member of the
faculties of the Harvard Business School and the Sloan School of Management of
MIT. Dr. Andrews is also a Director of the Southeastern Thrift and Bank Fund,
Inc. and The Sheffield Funds, Inc. Address: 34 Seawatch Drive, Savannah,
Georgia. Born: June 23, 1930.

<PAGE>

BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. Address: 1600
Pierce Street, Lakewood, Colorado. Born: August 7, 1936.

LAWRENCE H. BUDNER,#@@ Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.

WENDY L. GRAMM, Ph.D.,**@ Director. Self-employed (since 1993); Professor
of Economics and Public Administration, University of Texas at Arlington.
Formerly, Chairman, Commodity Futures Trading Commission from 1988 to 1993,
administrator for Information and Regulatory Affairs at the Office of Management
and Budget from 1985 to 1988, Executive Director of the Presidential Task Force
on Regulatory Relief and Director of the Federal Trade Commission's Bureau of
Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange,
Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life
Insurance Company, Independent Women's Forum, International Republic Institute,
and the Republican Women's Federal Forum. Dr. Gramm is also a member of the
Board of Visitors, College of Business Administration, University of Iowa, and a
member of the Board of Visitors, Center for Study of Public Choice, George Mason
University. Address: 4201 Yuma Street, N.W., Washington, D.C. Born: January 10,
1945.

KENNETH T. KING,+#@@ Director. Formerly, Chairman of the Board of Th
Capitol Life Insurance Company, Providence Washington Insurance Company, and
Director of numerous subsidiaries thereof in the U.S. Formerly, Chairman of the
Board of The Providence Capitol Companies in the United Kingdom and Guernsey.
Chairman of the Board of the Symbion Corporation (a high technology company)
until 1987. Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born:
November 16, 1925.

JOHN W. MCINTYRE,+#@@ Director. Retired. Formerly, Vice Chairman of the
Board of Directors of The Citizens and Southern Corporation and Chairman of the
Board and Chief Executive Officer of The Citizens and Southern Georgia
Corporation and Citizens and Southern National Bank. Trustee of INVESCO Global
Health Sciences Fund and Gables Residential Trust. Address: 7 Piedmont Center,
Suite 100, Atlanta, Georgia. Born: September 14, 1930.

LARRY SOLL, Ph.D.,**@ Director. Retired. Formerly, Chairman of the Board
(1987 to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and
President (1982 to 1989) of Synergen Corp. Director of Synergen since
incorporation in 1982. Director of ISI Pharmaceuticals, Inc., Trustee of
INVESCO Global Health Sciences Fund. Address: 345 Poorman Road, Boulder,
Colorado. Born: April 26, 1942.

<PAGE>

MARK H. WILLIAMSON, +* President, CEO and Director. President, CEO and
Director of IDI; President, CEO and Director of INVESCO and President of INVESCO
Global Health Sciences Fund. Formerly, Chairman and CEO of NationsBanc Advisors,
Inc. (1995 to 1997) and Chairman of NationsBanc Investments, Inc. (1997 to
1998). Born: May 24, 1951.

GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel (since 1989) and Secretary (since 1989) of INVESCO and Senior Vice
President, Secretary and General Counsel of IDI (since 1997); Vice President
(May 1989 to April 1995) of INVESCO; Senior Vice President (1995 to 1998),
Secretary (1989 to 1998) and General Counsel (1989 to 1998) of ITC. Formerly,
employee of a U.S. regulatory agency, Washington, D.C., (June 1973 through May
1989). Born: September 25, 1947.

RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of
INVESCO (since 1988). Senior Vice President and Treasurer of IDI (since 1997).
Senior Vice President and Treasurer of ITC (1988 to 1998). Born: October 1,
1946.

WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO (since 1995) and of IDI (since 1997) and formerly, Trust Officer of ITC
(1995 to 1998) and Vice President of INVESCO (1992 to 1995). Formerly, Vice
President of 440 Financial Group from June 1990 to August 1992; Assistant Vice
President of Putnam Companies from November 1986 to June 1990. Born: August 21,
1956.

ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO (since
1984) . Formerly, Trust Officer of ITC. Born: September 14, 1941.

JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO (since 1984)
and of IDI (since 1997) . Formerly, Trust Officer of ITC. Born: February 3,
1948.

*These directors are "interested persons" of the Company as defined in the
1940 Act.

#Member of the audit committee of the Company's board of directors.

@Member of the derivatives committee of the Company's board of directors.

@@Member of the soft dollar brokerage committee of the Company's board of
directors.

<PAGE>

+Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.

**Member of the management liaison committee of the Company's board of
directors.

As of October 16, 1998, officers and directors of the Company, as a group,
beneficially owned less than 1% of the Company's outstanding shares and less
than 1% of the Funds' outstanding shares.

Director Compensation

The following table sets forth, for the fiscal year ended August 31, 1998,
the compensation paid by the Company to its eligible independent directors for
services rendered in their capacities as directors of the Company; the benefits
accrued as Company expenses with respect to the Defined Benefit Deferred
Compensation Plan discussed below; and the estimated annual benefits to be
received by these directors upon retirement as a result of their service to the
Company. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by IDI and advised by INVESCO (including the
Company), INVESCO Treasurer's Series Trust and INVESCO Global Health Sciences
Fund (collectively, the "INVESCO Complex") to these directors for services
rendered in their capacities as directors or trustees during the year ended
December 31, 1997. As of December 31, 1997, there were 49 funds in the INVESCO
Complex.

<PAGE>

Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
tion From Company Upon Paid To
Company(1) Expenses(2) Retirement(3) Directors(1)
-------- --------- ----------- ----------

Fred A. Deering, $6,464 $2,112 $1,356 $113,350
Vice Chairman of
the Board

Victor L. Andrews 6,305 1,996 1,569 92,700

Bob R. Baker 6,518 1,783 2,103 96,050

Lawrence H. Budner 6,189 1,996 1,569 91,000

Daniel D. Chabris(4) 6,344 2,158 1,171 89,350

Wendy L. Gramm 6,067 0 0 39,000

Kenneth T. King 5,957 2,194 1,230 94,350

John W. McIntyre 6,108 0 0 104,000

Larry Soll 6,108 0 0 78,000
------ ------- ------ --------

Total $56,060 $12,239 $8,998 $797,800

% of Net Assets 0.0044%(5) 0.0010%(5) 0.0046%(6)

(1)The vice chairman of the board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committees and the
members of the executive and valuation committees each receive compensation for
serving in such capacities in addition to the compensation paid to all
independent directors.

(2)Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.

(3)These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding INVESCO Global Health
Sciences Fund which does not participate in this retirement plan) upon the
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to the
directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex, and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.

<PAGE>

This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of Mr. McIntyre and Drs. Gramm and Soll, each of
these directors has served as a director/trustee of one or more of the funds in
the INVESCO Complex for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan.

(4)Mr. Chabris retired as a director effective September 30, 1998.

(5)Total as a percentage of the Company's net assets as of August 31, 1998

(6)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1997.

Messrs. Brady and Williamson, as "interested persons" of the Company, the
Funds and other funds in the INVESCO Complex, receive compensation as officers
or employees of INVESCO or its affiliated companies, and do not receive any
director's fees or other compensation from the Company or other funds in the
INVESCO Complex for their services as directors.

The boards of directors/trustees of the mutual funds managed by INVESCO
and INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred
Compensation Plan for the non-interested directors and trustees of the funds.
Under this plan, each director or trustee who is not an interested person of the
funds (as defined in the 1940 Act) and who has served for at least five years (a
"qualified director") is entitled to receive, upon termination of service as a
director (normally at the retirement age of 72, or the retirement age of 73 to
74, if the retirement date is extended by the boards for one or two years, but
less than three years) continuation of payment for one year (the "first year
retirement benefit") of the annual basic retainer and annualized board meeting
fees payable by the funds to the qualified director at the time of his or her
retirement (the "basic retainer"). Commencing with any such director's second
year of retirement, and commencing with the first year of retirement of a
director whose retirement has been extended by the board for three years, a
qualified director shall receive quarterly payments at an annual rate equal to
50% of the basic retainer and annualized board meeting fees. These payments will
continue for the remainder of the qualified director's life or ten years,
whichever is longer (the "reduced retainer payments"). If a qualified director
dies or becomes disabled after age 72 and before age 74 while still a director
of the funds, the first year retirement benefit and the reduced retainer
payments will be made to him or her or to his or her beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during his
or her 74th year while still a director of the funds, the director will not be
entitled to receive the first year retirement benefit; however, the reduced
retainer payments will be made to his or her beneficiary or estate. The plan is

<PAGE>

administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the INVESCO and Treasurer's Series Trust funds in a manner
determined to be fair and equitable by the committee. The Company began making
plan payments to Mr. Chabris on October 1, 1998. The Company has no stock
options or other pension or retirement plans for management or other personnel
and pays no salary or compensation to any of its officers.

The independent directors have contributed to a deferred compensation
plan, pursuant to which they have deferred receipt of a portion of the
compensation which they would otherwise have been paid as directors of selected
INVESCO Funds. The deferred amounts are being invested in the shares of all of
the INVESCO and Treasurer's Series Trust Funds. Each independent director is,
therefore, an indirect owner of shares of each INVESCO and INVESCO Treasurer's
Series Trust Fund.

The Company has an audit committee that is comprised of four of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the Company, the adequacy of internal controls,
the responsibilities and fees of the independent accountants, and other matters.

The Company has a management liaison committee which meets quarterly with
various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Company, and (b) to review
legal and operational matters which have been assigned to the committee by the
board of directors, in furtherance of the board of directors' overall duty of
supervision.

The Company has a soft dollar brokerage committee. The committee meets
periodically to review soft dollar brokerage transactions by the Funds, and to
review policies and procedures of the Funds' adviser with respect to soft dollar
brokerage transactions. It reports on these matters to the Company's board of
directors.

The Company has a derivatives committee. The committee meets periodically
to review derivatives investments made by the Funds. It monitors derivatives
usage by the Funds and the procedures utilized by the Funds' adviser to ensure
that the use of such instruments follows the policies on such instruments
adopted by the Company's board of directors. It reports on these matters to the
Company's board of directors.

HOW SHARES CAN BE PURCHASED

Shares of each Fund are sold on a continuous basis at the respective net
asset value per share of the Fund next calculated after receipt of a purchase
order in good form. The net asset value per share is computed separately for
each Fund and is determined once each day that the New York Stock
Exchange is open as of the close of regular trading on that Exchange, but
may also be computed at other times. See "How Shares Are Valued."

<PAGE>

The Company has authorized one or more brokers to accept purchase orders
on the Funds' behalf. Such brokers are authorized to designate other
intermediaries to accept purchase orders on the Funds' behalf. The Funds will be
deemed to have received a purchase order when an authorized broker, or, if
applicable, a broker's authorized designee, accepts the order. A purchase order
will be priced at a Fund's net asset value next calculated after the order has
been accepted by an authorized broker or the broker's authorized designee.

IDI acts as the Funds' distributor under a distribution agreement with the
Funds and bears all expenses, including the costs of printing and distributing
prospectuses, incident to direct sales and distribution of Fund shares on a
no-load basis.

Distribution Plan. As described in the section of the Funds' Prospectuses
entitled "How To Buy Shares - Distribution Expenses," the Company has adopted a
Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1 under the
1940 Act. The Plan provides that the Funds may make monthly payments to IDI of
amounts computed at an annual rate no greater than 0.25% of each Fund's average
net assets to permit IDI, at its discretion, to engage in certain activities and
provide services in connection with the distribution of a Fund's shares to
investors. Payment by a Fund under the Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided by
IDI during the rolling 12-month period in which that month falls. For the fiscal
year ended August 31 1998, the High Yield, Select Income, Short-Term Bond and
U.S. Government Securities Funds made payments to INVESCO (the predecessor of
IDI as distributor of shares of the Funds) and IDI under the 12b-1 Plan in the
amount of $1,648,632, $920,502, $33,386 and $130,124, respectively. In addition,
as of August 31, 1998, $153,387, $97,910, $3,270 and $12,020 of additional
distribution accruals had been incurred under the Plan for the High Yield,
Select Income, Short-Term Bond and U.S. Government Securities Funds,
respectively, and will be paid to IDI during the fiscal year ended August 31,
1999. As noted in the Prospectuses, one type of expenditure is the payment of
compensation to securities companies and other financial institutions and
organizations, which may include INVESCO-affiliated companies, in order to
obtain various distribution-related and/or administrative services for the
Funds. Each Fund is authorized by the Plan to use its assets to finance the
payments made to obtain those services. Payments will be made by IDI to
broker-dealers who sell shares of a Fund and may be made to banks, savings and
loan associations and other depository institutions. Although the Glass-Steagall
Act limits the ability of certain banks to act as underwriters of mutual fund
shares, the Company does not believe that these limitations would affect the

<PAGE>

ability of such banks to enter into arrangements with IDI, but can give no
assurance in this regard. However, to the extent it is determined otherwise in
the future, arrangements with banks might have to be modified or terminated,
and, in that case, the size of one or more of the Funds possibly could decrease
to the extent that the banks would no longer invest customer assets in a
particular Fund. Neither the Company nor its investment adviser will give any
preference to banks or other depository institutions which enter into such
arrangements when selecting investments to be made by each Fund.

For the fiscal year ended August 31, 1998, allocations of 12b-1 amounts
paid by the High Yield Fund for the following categories of expenses were:
advertising-- $576,525; sales literature, printing, and postage-- $158,225;
direct mail-- $76,686 public relations/promotion-- $66,740; compensation to
securities dealers and other organizations-- $523,938; marketing personnel--
$246,518. For the fiscal year ended August 31, 1998, allocations of 12b-1
amounts paid by the Select Income Fund for the following categories of expenses
were: advertising-- $250,643; sales literature, printing and postage-- $95,059;
direct mail-- $63,831; public relations/promotion-- $34,325; compensation to
securities dealers and other organizations-- $370,771; marketing personnel--
$105,873. For the fiscal year ended August 31, 1998, allocations of 12b-1
amounts paid by the Short-Term Bond Fund were: advertising-- $9,634; sales
literature, printing and postage-- $6,006; direct mail-- $2,090; public
relations/promotion-- $1,861; compensation to securities dealers and other
organizations-- $6,633; marketing personnel-- $7,162. For the fiscal year ended
August 31, 1998, allocation of 12b-1 amounts paid by the U.S. Government
Securities Fund were: advertising-- $23,343; sales literature, printing and
postage-- $14,712; direct mail-- $6,182; public relations/promotion-- $5,178;
compensation to securities dealers and other organizations-- $58,130; marketing
personnel-- $22,579.

The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Company's Transfer Agent computer-processable tapes of each Fund's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning each Fund, and assisting in other
customer transactions with each Fund.

The initial Plan was approved on April 21, 1993, at a meeting called for
such purpose by a majority of the directors of the Company, including a majority
of the directors who neither are "interested persons" of the Company nor have
any financial interest in the operation of the Plan ("independent directors").
The board of directors, on February 4, 1997, approved amending the Plan to a
compensation type 12b-1 plan. This amendment of the Plan did
not result in increasing the amount of the Funds' payments thereunder.
The Plan has been continued by action of the board of directors

<PAGE>

until May 15, 1999. Pursuant to authorization granted by the Company's board of
directors on September 2, 1997, a new Plan became effective on September 30,
1997, under which IDI assumed all obligations related to distribution which were
previously performed by INVESCO.

The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan can also be terminated at
any time with respect to any Fund, without penalty, if a majority of the
independent directors, or shareholders of such Fund, vote to terminate the Plan.
The Company may, in its absolute discretion, suspend, discontinue or limit the
offering of the shares of any Fund at any time. In determining whether any such
action should be taken, the board of directors intends to consider all relevant
factors including, without limitation, the size of the Funds, the investment
climate for any particular Fund, general market conditions, and the volume of
sales and redemptions of Fund shares. The Plan may continue in effect and
payments may be made under the Plan following any such temporary suspension or
limitation of the offering of a Fund's shares; however, the Company is not
contractually obligated to continue the Plan for any particular period of time.
Suspension of the offering of a Fund's shares would not, of course, affect a
shareholder's ability to redeem his or her shares. So long as the Plan is in
effect, the selection and nomination of persons to serve as independent
directors of the Company shall be committed to the independent directors then in
office at the time of such selection or nomination. The Plan may not be amended
to increase materially the amount of any Fund's payments thereunder without
approval of the shareholders of that Fund, and all material amendments to the
Plan must be approved by the board of directors of the Company, including a
majority of the independent directors. Under the agreement implementing the
Plan, INVESCO or the Funds, the latter by vote of a majority of the 12b-1
directors or of the holders of a majority of a Fund's outstanding voting
securities, may terminate such agreement as to that Fund without penalty upon 30
days' written notice to the other party. No further payments will be made by a
Fund under the Plan in the event of its termination as to that Fund.

To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so
as to authorize the use of each Fund's assets in the amounts and for the
purposes set forth therein, notwithstanding the occurrence of an assignment, as
defined by the 1940 Act, and rules thereunder. To the extent it constitutes an
agreement pursuant to a plan, each Fund's obligation to make payments to IDI
shall terminate automatically, in the event of such "assignment," in which case
the Funds may continue to make payments, pursuant to the Plan, to IDI or another
organization only upon the approval of new arrangements, which may or may not be
with IDI, regarding the use of the amounts authorized to be paid by it

<PAGE>

under the Plan, by the directors, including a majority of the 12b-1 directors,
by a vote cast in person at a meeting called for such purpose.

Information regarding the services rendered under the Plan and the amounts
paid therefor by each Fund are provided to, and reviewed by, the directors on a
quarterly basis. On an annual basis, the directors consider the continued
appropriateness of the Plan at the level of compensation provided therein.

The only directors or interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, of the Company who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Company listed herein under the section entitled "The Funds And Their
Management -Officers and Directors of the Company" who are also officers either
of IDI or companies affiliated with IDI. The benefits which the Company believes
will be reasonably likely to flow to the Funds and their shareholders under the
Plan include the following:

(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Funds;

(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the Funds in
amounts and at times that are disadvantageous for investment
purposes;

(3) The positive effect which increased Fund assets will have on its
revenues could allow INVESCO and its affiliated companies:

(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),

(b) To increase the number and type of mutual funds available to
investors from INVESCO and its affiliated companies (and
support them in their infancy), and thereby expand the
investment choices available to all shareholders, and

(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.

<PAGE>

HOW SHARES ARE VALUED

As described in the section of the Funds' Prospectuses entitled "Fund
Price And Performance," the net asset value of shares of each Fund of the
Company is computed once each day that the New York Stock Exchange is open as of
the close of regular trading on that Exchange (generally, 4:00 p.m., New York
time) and applies to purchase and redemption orders received prior to that time.
Net asset value per share is also computed on any other day on which there is a
sufficient degree of trading in the securities held by a Fund that the current
net asset value per share of such Fund might be materially affected by changes
in the value of the securities held, but only if on such day that Fund receives
a request to purchase or redeem shares. Net asset value per share is not
calculated on days the New York Stock Exchange is closed, such as federal
holidays, including New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas.

The net asset value per share of each Fund is calculated by dividing the
value of all securities held by that Fund plus its other assets (including
dividends and interest accrued but not collected), less that Fund's liabilities
(including accrued expenses), by the number of outstanding shares of the Fund.
Securities traded on national securities exchanges, the NASDAQ National Market
System, the NASDAQ Small Cap Market and foreign markets are valued at their last
sale prices on the exchanges or markets where such securities are primarily
traded. Securities traded in the over-the-counter market for which last sale
prices are not available, and listed securities for which no sales were reported
on a particular date, are valued at their highest closing bid prices (or, for
debt securities, yield equivalents thereof) obtained from one or more dealers
making markets for such securities. If market quotations are not readily
available, securities or other assets will be valued at their fair values as
determined in good faith by the Company's board of directors or pursuant to
procedures adopted by the board of directors. The above procedures may include
the use of valuations furnished by a pricing service which employs a matrix to
determine valuations for normal institutional-size trading units of debt
securities. Prior to utilizing a pricing service, the Company's board of
directors reviews the methods used by such service to assure itself that
securities will be valued at their fair values. The Company's board of directors
also periodically monitors the methods used by such pricing services. Debt
securities with remaining maturities of 60 days or less at the time of purchase
are normally valued at amortized cost.

The value of securities held by each Fund, and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Because regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing

<PAGE>

prices for foreign securities usually are available for purposes of computing a
Fund's net asset value on a particular day. However, in the event that the
closing price of a foreign security is not available in time to calculate a
Fund's net asset value on a particular day the Company's board of directors has
authorized the use of the market price for the established time during the day
which may be prior to the close of regular trading in the security. The value of
all assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the spot rates of such currencies against U.S.
dollars provided by an approved pricing service.

FUND PERFORMANCE

As discussed in the section of the Funds' Prospectuses entitled "Fund
Price And Performance," the Company advertises the yield and total return
performance of the Funds. In calculating yield quotations for the Funds, except
for asset-backed securities, such as GNMA certificates, interest earned is
determined by computing yield to maturity (or yield to call, if applicable) of
each obligation held by a Fund, based upon market value of each obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to an obligation purchased during
the month, the purchase price plus accrued interest. The resultant yield to
maturity is divided by 360 and multiplied by the market value of the obligation
(including actual accrued interest), and the result is multiplied by the number
of days in the subsequent month that the obligation is in the Fund (assuming
that each month has 30 days). Dividends received on the preferred stocks held by
the High Yield Fund are recognized, for purposes of yield calculations, on a
daily accrual basis. As discussed in the Prospectuses, and in the Appendix of
this Statement of Additional Information, the GNMA Certificates held by the U.S.
Government Securities and Select Income Funds are generally subject to monthly
payments of principal and interest ("paydowns"). In computing these Funds'
yields, gain or loss attributable to actual monthly paydowns is accounted for as
an increase or decrease to interest income during the period. The Funds amortize
the discount and premium on the remaining security, based on the cost of the
security, to the weighted average maturity date, if such information is
available, or to the remaining term of the GNMA Certificate, if the weighted
average maturity date is not available. Yield quotations for each Fund for the
30 days ended August 31, 1998, were as follows: High Yield Fund, 9.60%; Select
Income Fund, 6.08%; Short-Term Bond Fund, 5.49% and U.S.
Government Securities Fund, 4.83%.

Average annual total return performance for each of the Funds for the
indicated periods ended August 31, 1998, was as follows:

1 3 5 10
Fund Year Years Years Years
- ---- ---- ----- ----- -----
INVESCO High Yield 4.44% 11.53% 9.12% 9.41%
INVESCO Select Income 9.58% 9.03% 8.22% 9.49%

<PAGE>

INVESCO Short-Term

Bond 6.76% 6.15% NA 5.02%(1)
INVESCO U.S. Government
Securities 14.75% 8.87% 6.27% 8.65%

- ---------------------------
(1) Inception date: September 30, 1993.

Average annual total return performance for each of the periods indicated
was computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:

P(1 + T)exponent n = ERV

where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment

The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and Fund
indicated.

In conjunction with performance reports and/or analyses for the Funds,
comparative data between a Fund's performance for a given period and recognized
indices of investment results for the same period, and/or assessments of the
quality of shareholder service, may be provided to shareholders. Such indices
include indices provided by Dow Jones & Company, Standard & Poor's, Lipper
Analytical Services, Inc., Lehman Brothers, National Association of Securities
Dealers Automated Quotations, Frank Russell Company, Value Line Investment
Survey, the American Stock Exchange, Morgan Stanley Capital International,
Wilshire Associates, the Financial Times Stock Exchange, the New York Stock
Exchange, the Nikkei Stock Average and Deutcher Aktienindex, all of which are
unmanaged market indicators. In addition, rankings, ratings, and comparisons of
investment performance and/or assessments of the quality of shareholder service
made by independent sources may be used in advertisements, sales literature or
shareholder reports, including reprints of, or selections from, editorials or
articles about the Funds. These sources utilize information compiled (i)
internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by other
recognized analytical services. The Lipper Analytical Services, Inc. mutual fund
rankings and comparisons which may be used by the Funds in performance reports
will be drawn from the mutual fund groupings listed in each Fund's prospectus,
in addition to the broad-based Lipper general fund groupings. Sources for Fund
performance information and articles about the Funds include, but are not
limited to, the following:

American Association of Individual Investors' Journal
Banxquote
Barron's

<PAGE>

Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth

SERVICES PROVIDED BY THE FUND

Periodic Withdrawal Plan. As described in the section of the Funds'
Prospectuses entitled "How To Sell Shares," each Fund offers a Periodic
Withdrawal Plan. All dividends and other distributions on shares owned by
shareholders participating in this Plan are reinvested in additional shares.
Because withdrawal payments represent the proceeds from sales of shares, the
amount of shareholders' investments in a Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.

The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such Plan do not represent income or a return
on investment.

<PAGE>

Participation in the Periodic Withdrawal Plan may be terminated at any
time by sending a written request to INVESCO. Upon termination, all future
dividends and capital gain distributions will be reinvested in additional shares
unless a shareholder requests otherwise.

Exchange Policy. As discussed in the section of the Funds' Prospectuses
entitled "How To Buy Shares - Exchange Policy," each Fund offers shareholders
the ability to exchange shares of the Funds for shares of another Fund or for
shares of certain other no-load mutual funds advised by INVESCO. Exchange
requests may be made either by telephone or by written request to INVESCO using
the telephone number or address on the cover of this Statement of Additional
Information. Exchanges made by telephone must be in an amount of at least $250,
if the exchange is being made into an existing account of one of the INVESCO
funds. All exchanges that establish a new account must meet the fund's
applicable minimum initial investment requirements. Written exchange requests
into an existing account have no minimum requirements other than the fund's
applicable minimum subsequent investment requirements. Any gain or loss realized
on such an exchange is recognized for federal income tax purposes. This ability
is not an option or right to purchase securities and is not available in any
state or other jurisdiction where the shares of the mutual fund into which
transfer is to be made are not qualified for sale, or when the net asset value
of the shares presented for exchange is less than the minimum dollar purchase
required by the appropriate prospectus.

TAX-DEFERRED RETIREMENT PLANS

As described in the section of the Funds' Prospectuses entitled "Fund
Services," shares of a Fund may be purchased as the investment medium for
various tax-deferred retirement plans. Persons who request information regarding
these plans from INVESCO will be provided with prototype documents and other
supporting information regarding the type of Plan requested. Each of these plans
involves a long-term commitment of assets and is subject to possible regulatory
penalties for excess contributions, premature distributions or for insufficient
distributions after age 70-1/2. The legal and tax implications may vary
according to the circumstances of the individual investor. Therefore, the
investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.

HOW TO REDEEM SHARES

Normally, payments for shares redeemed will be mailed within seven days
following receipt of the required documents as described in the section of the
Funds' Prospectuses entitled "How To Sell Shares." The right of redemption may
be suspended and payment postponed when: (a) the New York Stock Exchange is
closed for other than customary weekends and holidays; (b) trading
on that exchange is restricted; (c) an emergency exists as a result of

<PAGE>

which disposal by a Fund of securities owned by it is not reasonably practicable
or it is not reasonably practicable for the Fund fairly to determine the value
of its net assets; or (d) the SEC by order so permits.

The Company has authorized one or more brokers to accept redemption orders
on the Funds' behalf. Such brokers are authorized to designate other
intermediaries to accept redemption orders on the Funds' behalf. The Funds will
be deemed to have received a redemption order when an authorized broker, or, if
applicable, a broker's authorized designee, accepts the order. A redemption
order will be priced at a Fund's net asset value next calculated after the order
has been accepted by an authorized broker or the broker's authorized designee.

It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company is obligated under the 1940 Act to redeem for cash
all shares of a Fund presented for redemption by any one shareholder having a
value up to $250,000 (or 1% of the Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are selected
entirely by the investment adviser based on what is in the best interests of the
Fund and its shareholders, and are valued at the value assigned to them in
computing the Fund's net asset value per share. Shareholders receiving such
securities are likely to incur brokerage costs on their subsequent sales of the
securities.

DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES

Each Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets, distribution and source of income
requirements to qualify as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Each
Fund so qualified for the taxable year ended August 31, 1998, and intends to
continue to qualify during its current taxable year. As a result of their
distribution policies and qualification as RICs, it is anticipated that the
Funds will pay no federal income or excise taxes and that the Funds will be
accorded conduit or "pass through" treatment for federal income tax purposes.

Dividends paid by the Funds from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
each Fund sends shareholders information regarding the amount and character of
dividends paid in the year.

<PAGE>

Distributions by each Fund of net capital gain (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
of how long a shareholder has held shares of the Fund. Long-term gains realized
between May 7, 1997 and July 28, 1997 on the sale of securities held for more
than 12 months are taxable at the maximum rate of 20%. Long-term gains realized
between July 29, 1997 and December 31, 1997 on the sale of securities held for
more than one year but not for more than 18 months are taxable at the maximum
rate of 28%. Long-term gains realized between July 29, 1997 and December 31,
1997 on the sale of securities held for more than 18 months are taxable at the
maximum rate of 20%. Beginning January 1, 1998, the IRS Restructuring and Reform
Act of 1998, signed into law on July 24, 1998, lowers the holding period for
long-term capital gains entitled to the 20% capital gains tax rate from 18
months to 12 months. Accordingly, all long-term gains realized after December
31, 1997 on the sale of securities held for more than 12 months will be taxable
at a maximum rate of 20%. Note that the rate of capital gains tax is dependent
on the shareholder's marginal tax rate and may be lower than the above rates. At
the end of each year, information regarding the tax status of dividends and
other distributions is provided to shareholders. Shareholders should consult
their tax advisers as to the effect of distributions by a Fund .

All dividends and other distributions are regarded as taxable to the
investor, regardless whether such dividends and distributions are reinvested in
additional shares of one of the Funds or another fund in the INVESCO group. The
net asset value of Fund shares reflects accrued net investment income and
undistributed realized capital and foreign currency gains; therefore, when a
distribution is made, the net asset value is reduced by the amount of the
distribution. If the net asset value of Fund shares were reduced below a
shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. If shares are purchased shortly before a distribution, the
full price for the shares will be paid and some portion of the price may then be
returned to the shareholder as a taxable dividend or capital gain. However, the
net asset value per share will be reduced by the amount of the distribution,
which would reduce any gain (or increase any loss) for tax purposes on any
subsequent redemption of shares .

INVESCO may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders and will
not be reported to the Internal Revenue Service (the "IRS"). The
IRS permits the use of several methods to determine the cost basis of
mutual fund shares. The cost basis information provided by INVESCO will
be computed using the single-category average cost method, although
neither INVESCO nor the Fund recommends any particular method of

<PAGE>

determining cost basis. Other methods may result in different tax consequences.
If a shareholder has reported gains or losses for a Fund in past years, the
shareholder must continue to use the cost basis method previously used unless
the shareholder applies to the IRS for permission to change the method.

If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as a long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.

Each Fund will be subject to a non-deductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.

Dividends and interest received by each Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not imposes taxes on capital gains in
respect of investments by foreign investors. Foreign taxes withheld may be
treated as an expense of the Fund.

The Fund may invest in the stock of "passive foreign investment companies"
(PFICs). A PFIC is a foreign corporation (other than a controlled foreign
corporation) that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under certain
circumstances, a Fund will be subject to federal income tax on a portion of any
"excess distribution" received on the stock of a PFIC or of any gain on
disposition of the stock (collectively "PFIC income"), plus interest thereon,
even if the Fund distributes the PFIC income as a taxable dividend to its
shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to the
Fund to the extent that income is distributed to its shareholders.

Each Fund may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
a Fund's adjusted tax basis therein as of the end of that year. Once the
election has been made, a Fund also will be allowed to deduct from ordinary
income the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the end of the year, but only to
the extent of any net mark-to-market gains with respect to that PFIC
stock included by the Fund for prior taxable years beginning after
December 31, 1997. A Fund's adjusted tax basis in each PFIC's stock with respect

<PAGE>

to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election.

Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time
the Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of the Fund's investment company taxable income to be
distributed to its shareholders.

Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and other
distributions generally will be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Code for federal
income tax purposes does not entail government supervision of management or
investment policies.

INVESTMENT PRACTICES

Portfolio Turnover. There are no fixed limitations regarding the portfolio
turnover of the Funds. The rate of portfolio turnover has fluctuated under
constantly changing economic conditions and market circumstances. During the
fiscal years ended August 31, 1998, 1997 and 1996, the High Yield Fund's
portfolio turnover rates were 282%, 129% and 266%, respectively, the Select
Income Fund's turnover rates were 140%, 263% and 210%, respectively, the
Short-Term Bond Fund's portfolio turnover rates were 135%, 331% and 103%,
respectively and the U.S. Government Securities Fund's portfolio turnover rates
were 323%, 139% and 212%, respectively. Securities initially satisfying the
basic policies and objectives of a Fund may be disposed of when they are no
longer suitable. Brokerage costs to these Funds are commensurate with the rate
of portfolio activity. In computing the above portfolio turnover rates, all
investments with maturities or expiration dates at the time of acquisition of
one year or less were excluded. Subject to this exclusion, the turnover rate was
calculated by dividing (a) the lesser of purchases or sales of portfolio
securities for the fiscal year by (b) the monthly average of the value of
portfolio securities owned by the Fund during the fiscal year.

Placement of Portfolio Brokerage. INVESCO, as the Company's investment
adviser, places orders for the purchase and sale of securities with brokers and
dealers based upon INVESCO's evaluation of such brokers' and
dealers' financial responsibility subject to their ability to effect
transactions at the best available prices. INVESCO evaluates the overall

<PAGE>

reasonableness of brokerage commissions or underwriting discounts (the
difference between the full acquisition price to acquire the new offering and
the discount offered to members of the underwriting syndicate) paid by reviewing
the quality of executions obtained on each Fund's portfolio transactions, viewed
in terms of the size of transactions, prevailing market conditions in the
security purchased or sold, and general economic and market conditions. In
seeking to ensure that the commissions or discounts charged the Fund are
consistent with prevailing and reasonable commissions or discounts, INVESCO also
endeavors to monitor brokerage industry practices with regard to the commissions
or discounts charged by brokers and dealers on transactions effected for other
comparable institutional investors. While INVESCO seeks reasonably competitive
rates, the Funds do not necessarily pay the lowest commission, spread or
discount available.

Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which the Funds effect securities transactions may be used by
INVESCO in servicing all of their respective accounts and not all such services
may be used by INVESCO in connection with the Funds.

In recognition of the value of the above-described brokerage and research
services provided by certain brokers, INVESCO , consistent with the standard of
seeking to obtain the best execution on portfolio transactions, may place orders
with such brokers for the execution of transactions for the Funds on which the
commissions or discounts are in excess of those which other brokers might have
charged for effecting the same transactions.

Portfolio transactions may be effected through qualified broker-dealers
who recommend the Funds to their clients, or that act as agent in the purchase
of any of the Fund's shares for their clients. When a number of brokers and
dealers can provide comparable best price and execution on a particular
transaction, the Company's adviser may consider the sale of Fund shares by a
broker or dealer in selecting among qualified broker-dealers.

Certain financial institutions (including brokers who may sell shares of
the Funds, or affiliates of such brokers) are paid a fee (the "Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Funds through no transaction fee
programs ("NTF Programs") offered by the financial institution or its affiliated
broker (an "NTF Program Sponsor"). The Services Fee is based on the average
daily value of the investments in each Fund made in the name of such NTF Program
Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program.

<PAGE>

With respect to certain NTF Programs, the directors of the Company have
authorized the Funds to apply dollars generated from the Company's Plan and
Agreement of Distribution pursuant to Rule 12b-1 under the 1940 Act (the "Plan")
to pay the entire Services Fee, subject to the maximum Rule 12b-1 fee permitted
by the Plan. With respect to other NTF Programs, the Company's directors have
authorized the Funds to pay transfer agency fees to INVESCO based on the number
of investors who have beneficial interests in the NTF Program Sponsor's omnibus
accounts in the Funds. INVESCO, in turn, pays these transfer agency fees to the
NTF Program Sponsor as a sub-transfer agency or recordkeeping fee in payment of
all or a portion of the Services Fee. In the event that the sub-transfer agency
or recordkeeping fee is insufficient to pay all of the Services Fee with respect
to these NTF Programs, the directors of the Company have authorized the Company
to apply dollars generated from the Plan to pay the remainder of the Services
Fee, subject to the maximum Rule 12b-1 fee permitted by the Plan. INVESCO itself
pays the portion of each Fund's Services Fee, if any, that exceeds the sum of
the sub-transfer agency or recordkeeping fee and Rule 12b-1 fee. The Company's
directors have further authorized INVESCO to place a portion of each Fund's
brokerage transactions with certain NTF Program Sponsors or their affiliated
brokers, if INVESCO reasonably believes that, in effecting the Fund's
transactions in portfolio securities, the broker is able to provide the best
execution of orders at the most favorable prices. A portion of the commissions
earned by such a broker from executing portfolio transactions on behalf of the
Funds may be credited by the NTF Program Sponsor against its Services Fee. Such
credit shall be applied first against any sub-transfer agency or recordkeeping
fee payable with respect to the Funds, and second against any Rule 12b-1 fees
used to pay a portion of the Services Fee, on a basis which has resulted from
negotiations between INVESCO or IDI and the NTF Program Sponsor. Thus, the Funds
pay sub-transfer agency or recordkeeping fees to the NTF Program Sponsor in
payment of the Services Fee only to the extent that such fees are not offset by
a Fund's credits. In the event that the transfer agency fee paid by the Funds to
INVESCO with respect to investors who have beneficial interests in a particular
NTF Program Sponsor's omnibus accounts in a Fund exceeds the Services Fee
applicable to the Fund, after application of credits, INVESCO may carry forward
the excess and apply it to future Services Fees payable to that NTF Program
Sponsor with respect to that Fund. The amount of excess transfer agency fees
carried forward will be reviewed for possible adjustment by INVESCO prior to
each fiscal year-end of the Funds. The Company's board of directors has also
authorized the Funds to pay to IDI the full Rule 12b-1 fees contemplated by the
Plan in compensate IDI for expenses incurred by IDI in engaging in the
activities and providing the services on behalf of the Funds contemplated by the
Plan, subject to the maximum Rule 12b-1 fee permitted by the Plan,
notwithstanding that credits have been applied to reduce the portion of the
12b-1 fee that would have been used to compensate IDI for payments to such NTF
Program Sponsor absent such credits.

<PAGE>

The aggregate dollar amount of underwriting discounts and brokerage
commissions paid by the Company for the fiscal years ended August 31, 1998, 1997
and 1996 , were $4,011,552, $4,191,369 and $3,611,046 , respectively. For the
fiscal year ended August 31, 1998, brokers providing research services received
$5,225 in commissions on portfolio transactions effected for the Funds. On a
Fund-by-Fund basis this figure breaks down as follows: High Yield Fund, $4,750;
Select Income Fund, $475; Short-Term Bond Fund, $0 and U.S. Government
Securities Fund, $0. The aggregate dollar amount of such portfolio transactions
was $2,243,520. As a result of selling shares of the Fund, brokers received $0
in commissions on portfolio transactions effected for the Funds during the
fiscal year ended August 31, 1998.

At August 31, 1998, the Funds held securities of their regular brokers or
dealers, or their parents, as follows:

Value of
Securities
Fund Broker or Dealer at 08/31/98
- ---- ---------------- -----------

High Yield Fund American General $7,444,000

Select Income Fund Lehman Brothers 10,545,000
American General 13,997,000

Short-Term Bond Fund State Street Capital 4,372,000
Market

U.S. Government State Street Capital 3,450,000
Securities Fund Market

INVESCO does not receive any brokerage commissions on portfolio
transactions effected on behalf of the Funds, and there is no affiliation
between INVESCO or any person affiliated with INVESCO or the Funds and any
broker or dealer that executes transactions for the Funds.

ADDITIONAL INFORMATION

Common Stock. The Company has 600,000,000 authorized shares of common
stock with a par value of $0.01 per share. Of such shares, 300,000,000 have been
allocated to the High Yield Fund and 100,000,000 each have been allocated to the
Select Income Fund, Short-Term Bond Fund and U.S. Government Securities Fund. As
of August 31, 1998, 75,300,011 shares of the Select Income Fund; 94,943,777
shares of the High Yield Fund; 9,950,826 shares of the U.S. Government
Securities Fund; and 2,550,753 shares of the Short-Term Bond Fund were
outstanding. All shares issued and outstanding are, and all shares offered
hereby, when issued, will be fully paid and nonassessable. The board of
directors has the authority to designate additional classes of common stock
without seeking the approval of shareholders, and may classify and reclassify
any authorized but unissued shares.

<PAGE>

Shares of each series represent the interests of the shareholders of such
series in a particular portfolio of investments of the Company. Each series of
the Company's shares is preferred over all other series with respect to the
assets specifically allocated to that series, and all income, earnings, profits
and proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that series. The assets of each series are segregated on
the books of account and are charged with the liabilities of that class and with
a share of the Company's general liabilities. The board of directors determines
those assets and liabilities deemed to be general assets or liabilities of the
Company, and those items are allocated among series in a manner deemed by the
board to be fair and equitable. Generally, such allocation will be made based
upon the relative total net assets of each series. In the unlikely event that a
liability allocable to one series exceeds the assets belonging to the series,
all or a portion of such liability may have to be borne by the holders of shares
of the Company's other series.

All dividends on shares of a particular series shall be paid only out of
the income belonging to that series, pro rata to the holders of that series. In
the event of the liquidation or dissolution of the Company or of a particular
series, the shareholders of each series that is being liquidated shall be
entitled to receive, as a series, when and as declared by the board of
directors, the excess of the assets belonging to that series over the
liabilities belonging to that series. The holders of shares of any series shall
not be entitled to any distribution upon liquidation of any other series. The
assets so distributable to the shareholders of any particular series shall be
distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Company.

All Fund shares, regardless of series, have equal voting rights. Voting
with respect to certain matters, such as ratification of independent accountants
or election of directors, will be by all series of the Company. When not all
series are affected by a matter to be voted upon, such as approval of an
investment advisory contract or changes in a Fund's investment policies, only
shareholders of the series affected by the matter will be entitled to vote.
Company shares have noncumulative voting rights, which means that the holders of
a majority of the shares voting for the election of directors of the Company can
elect 100% of the directors if they choose to do so. In such event, the holders
of the remaining shares voting for the election of directors will not be able to
elect any person or persons to the board of directors. After they have been
elected by shareholders, the directors will continue to serve until their
successors are elected and have qualified or they are removed from office, in
either case by a shareholder vote, or until death, resignation or retirement.
They may appoint their own successors, provided that always at least a majority
of the directors have been elected by the Company's shareholders. It is the
intention of the Company not to hold annual meetings of shareholders. The
directors will call annual or special meetings of shareholders
for action by shareholder vote as may be required by the 1940
Act or the Company's Articles of Incorporation, or at their discretion.

<PAGE>

Principal Shareholders. As of October 1, 1998 the following entities held
more than 5% of the outstanding securities of the Funds listed below.

Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ------------ --------

High Yield Fund

Charles Schwab & Co., Inc. 36,826,433.3300 36.35%
Special Custody Acct. For The
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

Nat'l. Financial Services Corp. 7,476,899.4420 7.38%
The Exclusive Benefit of Customers
One World Financial Center
200 Liberty Street 5th Floor
Attn: Kate Recon
New York, NY 10181-5500

Select Income Fund

Charles Schwab & Co., Inc. 11,938,703.8590 15.85%
Special Custody Acct. For The
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

INVESCO Trust Company TR 5,819,376.7690 7.72%
Morris Communications Corp.
Employees' Profit Sharing Ret. Plan
725 Broad St.
Augusta, GA 30901-1336

Nat'l. Financial Services Corp. 4,236,014.9610 5.62%
The Exclusive Benefit of Customers
One World Financial Center
200 Liberty Street 5th Floor
Attn: Kate Recon
New York, NY 10181-5500

<PAGE>

Short-Term Bond Fund

Merrill Lynch 223,554.5200 9.61%
Security #97MLO
4800 Deer Lake Dr. East
Jacksonville, FL 32246-6486

FTC & Co. 193,745.1010 8.33%
Attn: Datalynx #035
PO Box 173736
Denver, CO 80217-3736

Charles Schwab & Co., Inc. 177,564.0090 7.63%
Special Custody Acct. For The
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122

U.S. Government Securities Fund

Resources Trust Co. Cust. For 1,501,232.5630 14.94%
The Exclusive Benefit of The
Various Customers of IMS
P.O. Box 3865
Englewood, CO 80155

Charles Schwab & Co., Inc. 912,730.9980 9.08%
Special Custody Acct. For The
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104

<PAGE>

Independent Accountants. PricewaterhouseCoopers LLP, 950 Seventeenth
Street, Denver, Colorado, has been selected as the independent accountants of
the Company. The independent accountants are responsible for auditing the
financial statements of the Company.

Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Company. The bank is also responsible for, among other things,
receipt and delivery of the investment securities of the Company's Funds in
accordance with procedures and conditions specified in the custody agreement.
Under its contract with the Company, the custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Funds to be held outside the United States in branches of U.S. banks and, to
the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.

Transfer Agent. The Company is provided with transfer agent, registrar,
and dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E.
Union Avenue, Denver, Colorado 80237, pursuant to the Transfer Agency Agreement
described herein. Such services include the issuance, cancellation and transfer
of shares of the Funds, and the maintenance of records regarding the ownership
of such shares.

Reports to Shareholders. The Company's fiscal year ends on August
31. The Company distributes reports at least semiannually to its
shareholders. Financial statements regarding the Company, audited by
the independent accountants, are sent to shareholders annually.

<PAGE>

Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington, D.C. is
legal counsel for the Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Company.

Financial Statements. The Company's audited financial statements and the
notes thereto for the fiscal year ended August 31, 1998, and the report of
PricewaterhouseCoopers LLP with respect to such financial statements, are
incorporated herein by reference from the Company's Annual Report to
Shareholders for the fiscal year ended August 31, 1998.

Prospectuses. The Company will furnish, without charge, a copy of the
Funds' Prospectuses upon request. Such requests should be made to the Company at
the mailing address or telephone number set forth on the first page of this
Statement of Additional Information.

Registration Statement. This Statement of Additional Information and the
Prospectuses do not contain all of the information set forth in the Registration
Statement the Company has filed with the SEC. The complete Registration
Statement may be obtained from the SEC upon payment of the fee prescribed by the
rules and regulations of the SEC.

<PAGE>

APPENDIX - GNMA CERTIFICATES AND FUTURES CONTRACTS

GNMA Certificates

Government National Mortgage Association. The Government National Mortgage
Association is a wholly-owned corporate instrumentality of the United States
within the U.S. Department of Housing and Urban Development. GNMA's principal
programs involve its guarantees of privately issued securities backed by pools
of mortgages.

Nature of GNMA Certificates. GNMA Certificates are mortgage-backed
securities. The Certificates evidence part ownership of a pool of mortgage
loans. The Certificates which the Company purchases are of the modified
pass-through type. Modified pass-through Certificates entitle the holder to
receive all interest and principal payments owed on the mortgage pool, net of
fees paid to the GNMA Certificate issuer and GNMA, regardless of whether or not
the mortgagor actually makes the payment.

GNMA Certificates are backed by mortgages and, unlike most bonds, their
principal amount is paid back by the borrower over the length of the loan rather
than in a lump sum at maturity. Principal payments received by the Company will
be reinvested in additional GNMA Certificates or in other permissible
investments.

GNMA Guarantee. The National Housing Act authorizes GNMA to guarantee the
timely payment of principal of and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. The GNMA guarantee
is backed by the full faith and credit of the United States. GNMA is also
empowered to borrow without limitation from the U.S. Treasury if necessary to
make any payments required under its guarantee.

Life of GNMA Certificates. The average life of a GNMA Certificate is
likely to be substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will result in the return of a portion of principal invested before
the maturity of the mortgages in the pool.

As prepayment of individual mortgage pools will vary widely, it is not
possible to predict accurately the average life of a particular issue of GNMA
Certificates. However, statistics published by the Federal Housing
Administration are normally used as an indicator of the expected average life of
GNMA Certificates. These statistics indicate that the average life of
single-family dwelling mortgages with 25-30 year maturities (the type of
mortgages backing the vast majority of GNMA Certificates) is approximately 12
years. For this reason, it is customary for pricing purposes to consider GNMA
Certificates as 30-year mortgage-backed securities which prepay fully in the
twelfth year.

<PAGE>

Yield Characteristics of GNMA Certificates. The coupon rate of interest of
GNMA Certificates is lower than the interest rate paid on the VA-guaranteed or
FHA-insured mortgages underlying the Certificates, but only by the amount of the
fees paid to GNMA and the GNMA Certificate issuer. For the most common type of
mortgage pool, containing single-family dwelling mortgages, GNMA receives an
annual fee of 0.06 of 1% of the outstanding principal for providing its
guarantee, and the GNMA Certificate issuer is paid an annual servicing fee of
0.44 of 1% for assembling the mortgage pool and for passing through monthly
payments of interest and principal to Certificate holders.

The coupon rate by itself, however, does not indicate the yield which will
be earned on the Certificates for the following reasons:

1. Certificates are usually issued at a premium or discount, rather than
at par.

2. After issuance, Certificates usually trade in the secondary market at a
premium or discount.

3. Interest is paid monthly rather than semiannually as is the case for
traditional bonds. Monthly compounding has the effect of raising the effective
yield earned on GNMA Certificates.

4. The actual yield of each GNMA Certificate is influenced by the
prepayment experience of the mortgage pool underlying the Certificate. If
mortgagors prepay their mortgages, the principal returned to Certificate holders
may be reinvested at higher or lower rates.

In quoting yields for GNMA Certificates, the customary practice is to
assume that the Certificates will have a 12-year life. Compared on this basis,
GNMA Certificates have historically yielded roughly 1/4 of 1% more than high
grade corporate bonds and 1/2 of 1% more than U.S. Government and U.S.
Government agency bonds. As the life of individual pools may vary widely,
however, the actual yield earned on any issue of GNMA Certificates may differ
significantly from the yield estimated on the assumption of a 12-year life.

Market for GNMA Certificates. Since the inception of the GNMA
mortgage-backed securities program in 1970, the amount of GNMA Certificates
outstanding has grown rapidly. The size of the market and the active
participation in the secondary market by securities dealers and many types of
investors make GNMA Certificates highly liquid instruments. Quotes for GNMA
Certificates are readily available from securities dealers and depend on, among
other things, the level of market rates, the Certificates' coupon rates and the
prepayment experience of the pool of mortgages backing each Certificate.

<PAGE>

Futures Contracts

A futures contract is an agreement between two parties for the future
acquisition or delivery of fixed income securities. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities called for by the contract at a specified price on a specified date.
A "purchase" of a futures contract means the acquisition of a contractual
obligation to acquire the securities called for by the contract at a specified
price on a specified date. The purpose of the acquisition or sale of a futures
contract, in the case of a Fund holding long-term debt securities, is to protect
the portfolio from fluctuations in interest rates without actually buying or
selling long-term debt securities. For example, when a Fund owns long-term U.S.
treasury bonds, if interest rates were expected to increase, the Fund might
enter into futures contracts for the sale of such bonds. Such a sale would have
much the same effect as selling some of the long-term U.S. treasury bonds owned
by the Fund. If interest rates did increase, the value of the bonds in the Fund
would decline, but the value of the Fund's futures contracts would increase at
approximately the same rate, thereby keeping the net asset value of the Fund
from declining as much as it otherwise would have. Similarly, when it is
expected that interest rates may decline, futures contracts may be purchased to
hedge against anticipated purchases of long-term bonds at higher prices. Since
fluctuations in the value of futures contracts should be similar to that of
long-term bonds, the Fund could take advantage of the anticipated rise in the
value of long-term bonds without actually buying them until the market had
stabilized. At that time, the futures contracts could be liquidated and the
Fund's cash reserves could then be used to buy long-term bonds on the cash
market. The Fund could accomplish similar results by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase. However, since the futures contract market is more liquid
than the cash market, the use of futures contracts as an investment technique
allows the Fund to maintain a defensive position without having to sell its
portfolio securities.

<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:
Page in
Prospectus
----------

(1) Financial statements and schedules included
in Prospectus (Part A):

Financial Highlights for INVESCO Select 13
Income Fund for the fiscal years ended
August 31, 1998, 1997, 1996, 1995 and 1994,
the eight-month period ended August 31, 1993
and for each of the four years in the period
ended December 31, 1992.

Financial Highlights for INVESCO High Yield 11
Fund for the fiscal years ended August 31,
1998, 1997, 1996, 1995 and 1994, the
eight-month period ended August 31, 1993 and
for each of the four years in the period
ended December 31, 1992.

Financial Highlights for INVESCO U.S. 15
Government Securities Fund for the fiscal
years ended August 31, 1998, 1997, 1996,
1995 and 1994, the eight-month period ended
August 31, 1993 and each of the four years
in the period ended December 31, 1992.

Financial Highlights for INVESCO Short-Term 50
Bond Fund for the fiscal years ended August
31, 1998, 1997, 1996 and 1995 and the
11-month period from September 30, 1993
(commencement of operations) to August 31,
1994.

Page in
Statement
of Addi-
tional In-
formation
---------

(2) The following audited financial statements
of the INVESCO Select Income Fund, the
INVESCO High Yield Fund, the INVESCO U.S.
Government Securities Fund and the INVESCO
Short-Term Bond Fund and the
notes thereto for the fiscal year

<PAGE>

ended August 31, 1998 and the report of
PricewaterhouseCoopers LLP with respect to
such financial statements, are incorporated
in the Statement of Additional Information
by reference from the Company's Annual
Report to Shareholders for the fiscal year
ended August 31, 1998: Statement of
Investment Securities as of August 31, 1998;
Statement of Assets and Liabilities as of
August 31, 1998; Statement of Operations for
the year ended August 31, 1998; Statement of
Changes in Net Assets for each of the two
years in the period ended August 31, 1998;
Financial Highlights for each of the five
years in the period ended August 31, 1998.

(3) Financial statements and schedules included
in Part C:

None: Schedules have been omitted as all
information has been presented in the
financial statements.

(b) Exhibits:

(1) Articles of Incorporation (Charter)
filed April 2, 1993.(1)

(a) Articles Supplementary
to Articles of Incorporation
filed October 28, 1998.

(2) Bylaws, as amended July 21, 1993.(1)

(3) Not applicable.

(4) Not required to be filed on EDGAR.

(5) (a) Investment Advisory Agreement
between Registrant and INVESCO

Funds Group, Inc. dated February
28, 1997.(2)

(b) Sub-Advisory Agreement between
INVESCO Funds Group, Inc. and
INVESCO Trust Company dated
February 28, 1997.(2)

(6) (a) General Distribution Agreement
between Registrant and INVESCO
Funds Group, Inc. dated February
28, 1997.(2)

<PAGE>

(b) General Distribution Agreement
between Registrant and INVESCO

Distributors, Inc. dated September
30, 1997.(2)

(7) (a) Defined Benefit Deferred
Compensation Plan for
Non-Interested Directors and
Trustees.

(b) Amended Defined
Compensation Plan for
Non-Interested Directors and
Trustees.

(8) Custody Agreement between the
Company and State Street Bank and
Trust Company dated July 1, 1994.(1)

(a) Amendment to Custody Agreement
dated October 25, 1995.(1)

(b) Data Access Addendum dated May
19, 1997.(2)

(9) (a) Transfer Agency Agreement
between Registrant and INVESCO

Funds Group, Inc. dated February
28, 1997.(2)

(b) Administrative Services
Agreement between Registrant and
INVESCO Funds Group, Inc. dated
February 28, 1997.(2)

(10) Opinion and consent of counsel as to the
legality of the securities being registered,
indicating whether they will, when sold, be
legally issued, fully paid and non-
assessable.(2)

(11) Consent of Independent Accountants.

(12) Not applicable.

(13) Not applicable.

(14) Copies of model plans used in the
establishment of retirement plans as
follows:

(a) Non-standardized Profit Sharing Plan;

<PAGE>

(b) Non-standardized Money Purchase Pension
Plan;

(d) Standardized Money Purchase Pension
Plan;

(e) Non-standardized 401(k) Plan Adoption
Agreement;

(f) Standardized 401(k) Paired Profit
Sharing Plan;

(g) Standardized Simplified Profit Sharing
Plan;

(h) Defined Contribution Master Plan & Trust
Agreement.

(15) Plan and Agreement of Distribution pursuant
to Rule 12b-1 under the Investment Company
Act of 1940 dated April 30, 1993.(2)

(a) Amendment of Plan and Agreement of
Distribution pursuant to 12b-1 under the
Investment Company Act of 1940 dated July
19, 1995.(1)

(b) Amended Plan and Agreement of
Distribution adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940
dated January 1, 1997.(2)

(c) Amended Plan and Agreement of
Distribution adopted pursuant to rule 12b-1
under the Investment Company Act of 1940
dated September 30, 1997.(2)

(16) Schedule for computation of performance
data.(2)

(17) (a) Financial Data Schedule for the period
ended August 31, 1998 for INVESCO Select
Income Fund.

(b) Financial Data Schedule for the period
ended August 31, 1998 for INVESCO High Yield
Fund.

<PAGE>

(d) Financial Data Schedule for the period
ended August 31, 1998 for INVESCO Short-Term
Bond Fund.

(18) Not Applicable.

(1)Previously filed on EDGAR with Post-Effective Amendment No. 36 to the
Registrant's Registration Statement on October 30, 1996 and incorporated herein
by reference.

(2)Previously filed on EDGAR with Post-Effective Amendment No. 37 dated October
30, 1997 and incorporated by reference herein.

Item 25. Persons Controlled by or Under Common Control with
Registrant

No person is presently controlled by or under common control with
the INVESCO Select Income Fund, INVESCO High Yield Fund, INVESCO U.S. Government
Securities Fund, or INVESCO Short-Term Bond Fund of the Registrant.

Item 26. Number of Holders of Securities

Number of Record
Holders as of
Title of Class September 30, 1998
-------------- -------------------

Common Stock

INVESCO Select Income Fund 14,328
INVESCO High Yield Fund 21,041
INVESCO U.S. Government Securities Fund 4,688
INVESCO Short-Term Bond Fund 1,647

Item 27. Indemnification

Indemnification provisions for officers and directors of Registrant
are set forth in Article VII, Section 2 of the Articles of Incorporation, and
are hereby incorporated by reference. See Item 24(b)(1) above. Under these
Articles, officers and directors will be indemnified to the fullest extent
permitted to directors by the Maryland General Corporation Law, subject only to
such limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
Fund directors and officers cannot be protected against liability to the Company
or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also maintains liability insurance policies covering
its directors and officers.

<PAGE>

Item 28. Business and Other Connections of Investment Adviser

See "The Fund And Its Management" in the Prospectuses and "The Funds And
Their Management" in the Statement of Additional Information for information
regarding the business of the investment adviser, INVESCO.

Following are the names and principal occupations of each director and
officer of the investment adviser, INVESCO, and who, with the exception of
Richard W. Healey, have during the past two fiscal years, held positions with
Institutional Trust Company doing business as INVESCO Trust Company, an
affiliate of INVESCO.

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- -------------------

Dan J. Hesser Chairman Chairman
and INVESCO Funds Group, Inc.
Director 7800 East Union Avenue
Denver, CO 80237

Mark H. Williamson Officer & President & Chief
Director Executive Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ronald L. Grooms Officer Senior Vice President &
Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Richard W. Healey Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Daniel B. Leonard Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- -------------------

Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Glen A. Payne Officer Senior Vice President,
Secretary & General
Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Gerard F. Hallaren, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- -------------------

Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

James F. Lummanick Officer Vice President &
Assistant General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Frederick R. (Fritz) Officer Vice President
Meyer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- -------------------

John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ronald C. Lively Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
17406 Brown Road
Odessa, FL 33556

Scott E. Stapley Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
1615 Arch Bay Drive
Newport Beach, CA 92660

David B. McElroy Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Ryland K. Pruett, Jr. Officer Regional Vice President
INVESCO Funds Group, Inc.
2337 Mirow Place
Charlotte, NC 28270

Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854

Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

<PAGE>

Position
with Principal Occupation and
Name Adviser Company Affiliation
---- ------- -------------------

Stephen A. Moran Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship
Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Tane' T. Tyler Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237

Item 29. Principal Underwriters

(a)
INVESCO Combination Stock and Bond Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.

<PAGE>

(b)

Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------

William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President & Secretary
Denver, CO 80237 Ass't. Treasurer

Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President & Chief Fin'l
Denver, CO 80237 Treasurer Officer, and
Chief Acctg.
Off.

Richard W. Healey Senior Vice
7800 E. Union Avenue President
Denver, CO 80237

Dan J. Hesser Chairman of
7800 E. Union Avenue the Board,
Denver, CO 80237 & Director

Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237

Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel

Judy P. Wiese Vice President Asst. Treas.
7800 E. Union Avenue & Assistant
Denver, CO 80237 Treasurer

Mark H. Williamson President, Chief President,
7800 E. Union Avenue Executive CEO &
Denver, CO 80237 Officer & Director
Director

Item 30. Location of Accounts and Records

Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237

Item 31. Management Services

Not applicable.

<PAGE>

Item 32. Undertakings

(a) The Registrant hereby undertakes that the board of directors
will call such meetings of shareholders for action by
shareholder vote, including acting on the question of removal
of a director or directors, as may be requested in writing by
the holders of at least 10% of the outstanding shares of the
Company or any of its Funds, or as may be required by
applicable law or the Company's Articles of Incorporation, and
to assist in communications with other shareholders as
required by Section 16(c) of the Investment Company Act of
1940.

(b) The Registrant shall furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

<PAGE>

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the 29th day of October, 1998.

Attest: INVESCO Bond Funds, Inc.
(formerly INVESCO Income
Funds, Inc.)

/s/ Glen A. Payne /s/Mark H. Williamson
- ---------------------- ---------------------------------
Glen A. Payne, Secretary Mark H. Williamson, President

Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this 29th day of
October, 1998.

/s/ Mark H. Williamson /s/ Lawrence H. Budner
- ---------------------- ----------------------------------
Mark H. Williamson, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)

/s/ Ronald L. Grooms /s/ Fred A. Deering
- ----------------------- ---------------------------------
Ronald L. Grooms, Treasurer Fred A. Deering, Director
(Chief Financial and
Accounting Officer)

/s/ Victor L. Andrews /s/ Larry Soll
- ----------------------- ---------------------------------
Victor L. Andrews, Director Larry Soll, Director

/s/ Bob R. Baker /s/ Kenneth T. King
- ----------------------- ---------------------------------
Bob R. Baker, Director Kenneth T. King, Director

/s/ Charles W. Brady /s/ John W. McIntyre
- ----------------------- ---------------------------------
Charles W. Brady, Director John W. McIntyre, Director

/s/ Wendy L. Gramm
- -----------------------
Wendy L. Gramm, Director

By* By* /s/ Glen A. Payne
--------------------------------- ---------------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact

* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission
on January 9, 1990, January 16, 1990, May 22, 1992, March 31, 1994, October 23,
1995 , October 30, 1996 and October 30, 1997.

<PAGE>

Exhibit Index

Page in
Exhibit Number Registration Statement
- -------------- ----------------------

1(a) 146
7(b) 148
11 156
14(a) 157
14(b) 195
14(c) 231
14(d) 264
14(e) 294
14(f) 348
14(g) 391
14(h) 400
17(a) 503
17(b) 504
17(c) 505
17(d) 506

ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INVESCO INCOME FUNDS, INC.

INVESCO Income Funds, Inc., a corporation organized and existing under
the General Corporation Law of the State of Maryland (the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:

FIRST: Article I of the Articles of Incorporation of the Company is
hereby amended to read as follows:

ARTICLE I

NAME AND TERM

The name of the corporation is "INVESCO BOND FUNDS, INC," and it shall
have perpetual existence.

SECOND: The foregoing amendment, in accordance with the requirements
of Section 2-605 of the General Corporation Law of the State of
Maryland, was approved by a majority of the Board of Directors of the
Company on October 11, 1998.

THIRD: The foregoing amendment was duly adopted in accordance with
the requirements of Section 2-408 of the General Corporation Law of the
State of Maryland.

The undersigned, Secretary of the Company, who is executing on behalf
of the Company the foregoing Articles of Amendment, of which this paragraph is
made a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles of Amendment to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties of perjury.

IN WITNESS WHEREOF, INVESCO Income Funds, Inc. has caused these
Articles of Amendment to be signed in its name and on its behalf by its
President and witnessed by its Secretary on the 28th day of October, 1998.

<PAGE>

These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.

INVESCO BOND FUNDS, INC.

By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
[SEAL]

WITNESSED:

By: /s/ Ronald L. Grooms
---------------------------
Ronald L. Grooms, Treasurer

CERTIFICATION

I, Michael T. Branstiter, a notary public in and for the City and
County of Denver, and State of Colorado, do hereby certify that Mark H.
Williamson, personally known to me to be the person whose name is subscribed to
the foregoing Articles of Amendment, appeared before me this date in person and
acknowledged that he signed, sealed and delivered said instrument as his full
and voluntary act and deed for the uses and purposes therein set forth.

Given my hand and official seal this 28th day of October, 1998.

/s/ Michael T. Branstiter
---------------------------
Notary Public

My Commission Expires: 03/14/2002

DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
AS AMENDED EFFECTIVE JULY 1, 1998

The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").

1. Eligibility

Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, for an aggregate of at least five years at the time of his/her Service
Termination Date (as defined in paragraph 2) will be entitled to receive
benefits under the Plan. An Independent Director's period of Eligible Service
commences on the date of election to the board of directors or trustees of any
one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.

2. Service Termination and Service Termination Date

a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his/her Service Termination Date.

b. Service Termination Date. An Independent Director's Service Termination
Date is that date upon which he or she no longer serves as a director. Normally,
an Independent Director's Service Termination Date will be the last day of the
calendar quarter in which such Director's seventy-second birthday occurs. A
majority of the Board of a Fund may annually extend a Director's Service
Termination Date for a maximum period of three years, through the date not later
than the last day of the calendar quarter in which such Director's seventy-fifth
birthday occurs.

As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean the date upon which the Director no longer serves as a director.

<PAGE>

3. Defined Payments and Benefit

a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his/her
Service Termination Date (the "First Year Retirement Payments"), with each
payment to be equal to 25 percent of the sum of the annual basic retainer and
annualized quarterly Board meeting fees payable by each Fund to the Independent
Director on his/her Service Termination Date (excluding any fees relating to
attending or chairing committee meetings or other fees payable to an Independent
Director).

b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his/her life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 12.50 percent of the sum of the annual basic retainer and
annualized quarterly Board meeting fees payable by each Fund to the Independent
Director on his/her Service Termination Date (excluding any fees relating to
attending or chairing committee meetings or other fees payable to an Independent
Director.

Example: As of July 1, 1998, the annual Benefit would be $34,000 (annual
basic retainer of $56,000 plus annualized quarterly Board meeting fees of
$12,000 times 12.50 percent of the total each quarter: $56,000 + $12,000 =
$68,000 x .125 = $8,500 x 4 = $34,000). As of July 1, 1998, the vice chairman of
the Funds receives an aggregate annual retainer of $62,000. The vice chairman's
annual Benefit would be $37,000. The annual Benefit may increase or decrease in
the future in accordance with changes in the Independent Directors' annual basic
retainer and/or Board meeting fees.

c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his/her death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to

<PAGE>

the lastday of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.

If an Independent Director's service as a Director is terminated because of
his/her death prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.

d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his/her disability subsequent to the last day
of the calendar quarter in which such Director's seventy-second birthday
occurred and prior to the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for the remainder of his/her life, with quarterly
payments to be made to the disabled Independent Director. If the disabled
Independent Director should die before the First Year Retirement Payments are
completed and before forty quarterly Benefit payments are made, such payments
will continue to be made to the Independent Director's designated beneficiary
until the aggregate of the First Year Retirement Payments and forty quarterly
Benefit payments have been made to the disabled Independent Director and the
Director's designated beneficiary.

If an Independent Director's service as a Director is terminated
because of his/her disability prior to the last day of the calendar quarter in
which such Director's seventy-second birthday occurs or subsequent to the last
day of the calendar quarter in which such Director's seventy-fourth birthday
occurred, the Independent Director shall receive the Benefit for the remainder
of his/her life, with quarterly payments to be made to the disabled Independent

<PAGE>

Director commencing in the first quarter following the Director's termination
for disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.

e. Death of Independent Director and Beneficiary. If, subsequent to the
death of the Independent Director, his/her designated beneficiary should die
before the First Year Retirement Payments and/or a total of forty quarterly
Benefit payments are made, the remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit (which Benefit shall in no event
exceed the value of forty quarterly payments minus the number of payments made)
shall be determined as of the date of the death of the Independent Director's
designated beneficiary and shall be paid to the estate of the designated
beneficiary in one lump sum or in periodic payments, with the determinations
with respect to the value of the First Year Retirement Payments and/or Benefit
and the method and frequency of payment to be made by the Committee (as defined
in paragraph 8.a.) in its sole discretion.

4. Designated Beneficiary

The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee (or its designee as described on the form) before the Independent
Director's death. If no such beneficiary shall have been designated, or if no
designated beneficiary shall survive the Independent Director, the value or
remaining value of the Independent Director's First Year Retirement Payments
and/or Benefit (which Benefit shall in no event exceed the value of forty
quarterly payments minus the number of payments made) shall be determined as of
the date of the death of the Independent Director by the Committee and shall be
paid as promptly as possible in one lump sum to the Independent Director's
estate.

5. Disability

An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally

<PAGE>

or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.

6. Time of Payment

The First Year Retirement Payments and/or the Benefit for each year will be
paid in quarterly installments that are as nearly equal as possible.

7. Payment of First Year Retirement Payments and/or Benefit: Allocation
of Costs

Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.

8. Administration

a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.

<PAGE>

b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.

9. Miscellaneous Provisions

a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.

b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.

c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.

d. Consulting. Subsequent to his/her Service Termination Date, an
Independent Director may render such services for any Fund, for such
compensation, as may be agreed upon from time to time by such Independent
Director and the Board of the Fund which desires to procure such services.

e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will

<PAGE>

become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.

Adopted October 20, 1993.
Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
Amended May 13, 1998, effective July 1, 1998.

<PAGE>

SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES

INVESCO Capital Appreciation Funds, Inc.

INVESCO Diversified Funds, Inc.

INVESCO Emerging Opportunity Funds, Inc.

INVESCO Growth Fund, Inc.

INVESCO Income Funds, Inc.

INVESCO Industrial Income Fund, Inc.

INVESCO International Funds, Inc.

INVESCO Money Market Funds, Inc.

INVESCO Multiple Asset Funds, Inc.

INVESCO Specialty Funds, Inc.

INVESCO Strategic Portfolios, Inc.

INVESCO Tax-Free Income Funds, Inc.

INVESCO Value Trust

INVESCO Variable Investment Funds, Inc.

INVESCO Treasurer's Series Trust

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting parts of this Post-Effective Amendment No.38
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated October 2, 1998, relating to the financial statements and
financial highlights appearing in the August 31, 1998 Annual Report to
Shareholders of the INVESCO Income Funds, Inc., (now known as, INVESCO Bond
Funds, Inc.) which is also incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings
"Independent Accountants" and "Financial Statements" in the Statement of
Additional Information.

/s/ Price Waterhouse LLP
- -------------------------

Price Waterhouse LLP
Denver, Colorado
October 27, 1998

Adoption Agreement #001
Letter Serial No. D346278a

Nonstandardized Profit Sharing Plan

Nonstandardized Profit Sharing Plan Features
- - Flexible Employer Contributions
- - Ability to exclude classifications of employees
- - May enforce last day requirement for employer contribution
- - Allows integrated contribution formula

Provided by:
The Financial Funds

Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC

<PAGE>

Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.

<PAGE>

ADOPTION AGREEMENT #001
NONSTANDARDIZED PROFIT SHARING PLAN

The undersigned, __________________________ ("Employer"), by executing this
Adoption Agreement, elects to become a participating Employer in the INVESCO
Trust Company Defined Contribution Master Plan (basic plan document #01) by
adopting the accompanying Plan and Trust in full as if the Employer were a
signatory to that Agreement. The employer makes the following elections granted
under the provisions of the Master Plan.

ARTICLE I
DEFINITIONS

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

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

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

1.03 PLAN. The name of the Plan as adopted by the Employer is:
_________________________________________________.

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

(a) No exclusions.

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

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

(d) Commission Salesmen.

(e) Any Employee compensated on a salaried basis.

(f) Any Employee compensated on an hourly basis.

(g) (Specify) ____________________________________________

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

(h) Not eligible to participate in the Plan.

<PAGE>

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

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

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

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

1.12 COMPENSATION

Treatment of elective contributions. (Choose (a) or (b)

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

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

Modifications to Compensation definition. (Choose (c) or at least
one of (d) through (j))

(d) The Plan excludes Compensation in excess of $___________.

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

(f) The Plan excludes bonuses.

(g) The Plan excludes overtime.

(h) The Plan excludes Commissions.

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

<PAGE>

(j) (Specify) _____________________________________________.

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

1.17 PLAN YEAR/LIMITATION YEAR.

Plan Year. Plan Year means: (Choose (a) or (b))

(a) The 12 consecutive month period ending every ___________.

(b) (Specify) ___________________________________________

Limitation Year. The Limitation year is: (Choose (C) or (d))

(d) The 12 consecutive month period ending every __________.

1.18 EFFECTIVE DATE.

New Plan. The "Effective Date" of the Plan is _______________.

Restated Plan. The restated Effective Date is ______________.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established __________________.
(Note: See the Effective Date Addendum.)

1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))

(a) The actual method.

(b) The ____________________________ equivalency method, except:

(1) No exceptions.

(2) The actual method applies for purposes of: (Choose at least
one)

(i) Participation under Article II.

(ii) Vesting under Article V.

(iii)Accrual of benefits under Section 3.06.

[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly.")

1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section
1.29 of the Plan, the Plan credits Service with the following

<PAGE>

predecessor employer(s): _______________________________________________________
_______________________________________________________________________________.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b); (C) is available only in
addition to (a) or (b))

(a) For purposes of participation under Article II.

(b) For purposes of vesting under Article V.

[Note: If the Plan does not credit any predecessor service under
this provision, insert "N/A" in the first blank line. The
Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 1.29, designating additional
predecessor employers and the applicable service crediting
elections.]

1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in
the Plan and also participates in a Plan maintained by the
leasing organization: (Choose (a) or (b))

(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation, if any, under the leasing organization's plan.

(b) The Advisory Committee will reduce a Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the leasing organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the Employer. The
leasing organization's plan:

(1) Must be a money purchase plan which would satisfy the definition
under Section 1.31 of a safe harbor plan, irrespective of whether the
safe harbor exception applies.

(2) Must satisfy the features and, if a defined benefit plan, the
method of reduction described in an addendum to this Adoption
Agreement, numbered 1.31.

ARTICLE II
EMPLOYEE PARTICIPANTS

2.01 ELIGIBILITY.

Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)

(a) Attainment of age _____________ (Specify age, not exceeding 21).

<PAGE>

(b) Service requirement. (Choose one of (1) through (4))

(1) One Year of Service.

(2) Two Years of Service, without an intervening Break in Service. See
Section 2.03(A) of the Plan.

(3) _____________ months (not exceeding 24) following the Employee's
Employment Commencement Date.

(4) One Hour of Service.

Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))

(d) The first day of the Plan Year.

(e) (Specify entry dates) ___________________________________.

Time of Participation. An Employee will become a Participant, unless excluded
under Adoption Agreement Section 1.07, on the Plan Entry Date (if employed on
that date):

(f) immediately following

(g) immediately preceding

(h) nearest __________________________________________ the date the
Employer completes the eligibility conditions described in Options (a) and (b)
of this Adoption Agreement Section 2.01. [Note: The Employer must coordinate the
selection of (f), (g) or (h) with the "Plan Entry Date" selection in (c), (d) or
(e). Unless otherwise excluded under Section 1.07, the Employee must become a
Participant by the earlier of: (1) the first day of the Plan Year beginning
after the date the Employee completes the age and service requirements of Code
ss.410(a); or (2) 6 months after the date the Employee completes those
requirements.]

Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (I) or (j))

(i) All Employees of the Employer, except: (Choose (1) or (2))

(1) No exceptions.

(2) Employees who are Participants in the Plan as of the Effective
Date.

(j) Solely to an Employee employed by the Employer after ____________. If

<PAGE>

If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))

(1) On the latest of the Effective Date, his Employment Commencement
Date or the date he attains age ___________ (not to exceed 21).

(2) Under the eligibility conditions in effect under the Plan prior to
the restated Effective Date. [For restated plans only]

(3) (Specify) _____________________________________.

2.02 YEAR OF SERVICE - PARTICIPATION.

Hours of Service. An Employee must complete: (Choose (a) or (b))

(a) 1,000 Hours of Service

(b) ____________________ Hours of Service
during an eligibility computation period to receive credit
for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

Eligibility computation period. After the initial eligibility computation period
described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))

(d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.

2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the Plan: (Choose (a) or (b))

(a) Does not apply to the Employer's Plan.

(b) Applies to the Employer's Plan.

2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))

(a) Does not permit an eligible Employee or a Participant to elect not to
participate.

(b) Does permit an eligible Employee or a Participant to elect not to
participate in accordance with Section 2.06 and with the following rules:
(Complete (1), (2), (3) and (4))

(1) An election is effective for Plan Year if filed no later than
_________________________.

<PAGE>

(2) An election not to participate must be effective for at least
___________________ Plan Year(s).

(3) Following a re-election to participate, the Employee or
Participant:

(i) May not again elect not to participate for any subsequent
Plan Year.

(ii) May again elect not to participate, but not earlier than
the __________ Plan Year following the Plan Year in which the
re-election first was effective.

(Specify) ____________________________________________ [Insert "N/A" if
no other rules apply].

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

3.01 AMOUNT. The amount of the Employer's annual contribution to the Trust will
equal: (Choose (a), (b), (c), (d) or (e))

(a) The amount (or additional amount) the Employer may from time to time
deem advisable.

(b) The amount (or additional amount) the Employer may from time to time
deem advisable, separately determined for each of the following classifications
of Participants: (Choose (1) or (2))

(1) Nonhighly Compensated Employees and Highly Compensated Employees.

(2) (Specify classifications) _________________________________________
_______________________________________________________________________

Under this Option (b), the Advisory Committee will allocate the amount
contributed for each Participant classification in accordance with Adoption
Agreement Section 3.04, as if the Participants in that classification were the
only Participants in the Plan.

(c) _________% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for which it
makes the contribution. [Note: The percentage selected may not
exceed 15%.]

(d) _________% of Net Profits but not more than $___________.

(e) This Plan is a frozen Plan effective ____________________. The Employer will
not contribute to the Plan with respect to any period following the stated date.

<PAGE>

Net Profits. The Employer: (Choose (f) or (g))

(f) Need not have Net Profits to make its annual contribution under this Plan.

(g) Must have current or accumulated Net Profits exceeding $____________ to make
the contributions described in Option _______.

The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each participating
member separately will determine Net Profits. "Net Profits" include both current
and accumulated Net Profits. The term "Net Profits" specifically excludes ______
_______________________________________________________________________________.
[Note: Enter "N/A" if no exclusions apply.

3.04 CONTRIBUTION ALLOCATION.

Method of Allocation. Subject to any restoration allocation required under
Section 5.04, the Advisory Committee will allocate and credit each annual
Employer contribution (and Participant forfeitures, if any) to the Account of
each Participant who satisfies the conditions of Section 3.06, in accordance
with the allocation method selected under this Section 3.04. If the Employer
elects Option (a)(2) or Option (d), for the first 3% of Compensation allocated
to all Participants, "Compensation" does not include any exclusion of elective
contributions), and the Advisory Committee must take into account the
Participant's Compensation for the entire Plan Year. (Choose an allocation
method under (a), (b), (c) or (d); (e) is mandatory of the Employer elects (b),
(c) or (d); (f) is optional in addition to any other election.)

(a) Nonintegrated Allocation Formula. (Choose (1) or (2))

(1) The Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.

(2) The Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. For purposes of
this Option (2), "Participant" means, in addition to a participant who

<PAGE>

satisfies the requirements of Section 3.06 for the Plan Year, any other
Participant entitled to a top heavy minimum allocation under Section
3.04(B), but such Participant's allocation will not exceed 3% of his
Compensation for the Plan Year.

(b) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual Employer contributions (and
Participant forfeitures) in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (e).

The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.

(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the plan Year bears to
the total Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation may not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (e). Solely for purposes of the allocation in
this first paragraph, "Participant" means, in addition to a Participant who
satisfies the requirements of Section 3.06 for the Plan Year. (Choose (1) or
(2))

(1) No other Participant.

(2) Any other Participant entitled to a top heavy minimum allocation
under Section 3.04(B), but such Participant's allocation under this
Option (c) will not exceed 3% of his Compensation for the Plan Year.

As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Excess Compensation, may not
exceed the allocation percentage in the first paragraph.

Finally, the Advisory Committee will allocate any remaining annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.

<PAGE>

(d) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year, but not exceeding
3% of each Participant's Compensation. Solely for purposes of this first tier
allocation, a "Participant" means, in addition to any Participant who satisfies
the requirements of Section 3.06 for the Plan Year, any other Participant
entitled to a top heavy minimum allocation under Section 3.04(B) of the Plan.

As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.

As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under the Maximum Disparity Table following Option
(e).

(e) Excess Compensation. For purposes of Option (b), (c) or (d), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))

(1) ______% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act, in effect on
the first day of the Plan Year: (Choose any combination of (I) and (ii)
or choose (iii))

(i) Rounded to ________ (but not exceeding the taxable
wage base).

(ii) But not greater than $_____________.

(iii)Without any further adjustment or limitation.

(2) $_______________ [Note: Not exceeding the taxable wage base for the
Plan Year in which this Adoption Agreement first is effective.]

<PAGE>

Maximum Disparity Table. For purpose of Options (b), (c) and (d),
the applicable percentage is:

Integration Level Applicable Applicable
(as percentage of Percentages for Percentages
taxable wage base) Option (b) or Option (c) for Option (d)

100% 5.7% 2.7%

More than 80% but
less than 100% 5.4% 2.4%

More than 20% (but
not less than $10,001)
and not more than 80% 4.3% 1.3%

20% (or $10,000, if
greater) or less 5.7% 2.7%

(f) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under this Section 3.04 by the Participant's
allocation under the following qualified plan(s) maintained by the Employer:
________________________.

The Advisory Committee will determine this allocation reduction:
(Choose (1) or (2))

(1) By treating the term "Employer contribution" as including all
amounts paid or accrued by the Employer during the plan Year to the
qualified plan(s) referenced under this Option (f). If a Participant
under this Plan also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes for or during
a Plan Year on behalf of a particular Participant under such other plan
as an amount allocated under this Plan to that Participant's Account
for that Plan Year. The Advisory committee will make the computation of
allocation required under the immediately preceding sentence before
making any allocation required by this Section 3.04.

(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(f).

Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (g) or (h))

(g) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section e.04(B)(7)(a) of the Plan.

<PAGE>

(h) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ___________________. However, the Employer will
make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (h). See Section 3.04(B)(7)(b) of the Plan.

If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code 416.

(i) Without regard to which contributing related group member employs the
Participant.

(j) Only to the Participants directly employed by the contributing Employer. If
a Participant receives Compensation from more than one contributing Employer,
the Advisory Committee will determine the allocations under this Adoption
Agreement Section 3.04 by prorating among the participating Employers the
Participant's Compensation and, if applicable, the Participant's Integration
Level under Option (e).

3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required under
Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))

(a) As an Employer contribution for the Plan Year in which the forfeiture
occurs, as if the Participant forfeiture were an additional Employer
contribution for that Plan Year.

(b) To reduce the Employer contribution for the Plan Year: (Choose (1) or (2))

(1) in which the forfeiture occurs.

(2) immediately following the Plan Year in which the forfeiture occurs.

(c) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a) or in Option (b), whichever applies.

<PAGE>

3.06 ACCRUAL OF BENEFIT.

Compensation Taken Into Account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation
under Adoption Agreement Section 3.04 by taking into account: (Choose (a) or
(b))

(a) The Employee's Compensation for the entire Plan Year.

(b) The Employee's Compensation only for the portion of the Plan Year in
which the Employee actually is a Participant in the Plan.

Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of Employer contributions
and Participant forfeitures, if any, for the Plan Year, a Participant must
satisfy the conditions described in the following elections: (Choose (c) or at
least one of (d) through (f))

(c) Safe Harbor rule. If the Participant is employed by the Employer on the last
day of the Plan Year, the Participant must complete at least one Hour of Service
for that Plan Year. If the Participant is not employed by the Employer on the
last day of the Plan Year, the Participant must complete at least 501 Hours of
Service during the Plan Year.

(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service for the Plan Year: (Choose at least one of (1
through (4))

(1) 1,000 Hours of Service.

(2) (Specify, but the number of Hours of Service may not exceed 1,000)
______________.

(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of:
(Choose (i) through (iii)

(i) Death.

(ii) Disability.

(iii) Attainment of Normal Retirement Age in the current Plan
Year or in a prior Plan Year.

(4) _________ Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan Year, subject
to any election in Option (3).

(e) Employment conditions. The Participant must be employed by the Employer on
the last day of the Plan year, irrespective of whether he satisfies any Hours of
Service condition under Option (d), unless his employment terminates because of:
(Choose (1) or at least one of (2) through (4))

<PAGE>

(1) No exceptions.

(2) Death.

(3) Disability.

(4) Attainment of Normal Retirement Age in the current Plan Year or in
a prior Plan Year.

(f) (Specify other conditions, if applicable): ________________.

Suspension of Accrual Requirements. The suspension of accrual
requirements of Section 3.06(E) of the Plan: (Choose (g), (h) or
(i))

(g) Applies to the Employer's Plan.

(h) Does not apply to the Employer's Plan.

(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).

3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15 apply, the
Excess Amount attributed to this Plan equals:
(Choose (a), (b) or (c))

(a) The product of:

(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415) times

(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount allocated as
of such date under all qualified defined contribution plans (determined
without regard to the limitations of Code ss.415).

(b) The total Excess Amount.

3.18 DEFINED BENEFIT PLAN LIMITATION.

Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))

(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.

(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))

<PAGE>

(1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.

(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under
the defined benefit plan under which the Participant participates.

[Note: If the Employer selects (a), the remaining options in this Section 3.18
do not apply to the Employer's Plan.]

Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c) or at least one of (d) or (e))

(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting _____% (not less than 4%) for "3%", except: (Choose (1) or (2))

(1) No exceptions.

(2) Plan Years in which the top heavy ratio exceeds 90%.

(e) For Non-Key Employees also participating in the defined benefit plan, the
top heavy minimum is: (Choose (1) or (2))

(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))

(i) No exceptions.

(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.

(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code 416 for these Non-Key
Employees.]

Actuarial Assumptions for Top Heavy Calculation. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
___________________________.

<PAGE>

If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code 416, the
Employer must provide the appropriate provisions in an addendum to this Adoption
Agreement.

ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT

5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))

(a) ____________ [State age, but may not exceed age 65].

(b) The later of the date the Participant attains _______ years of age or the
__________________ anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan. [The age selected may not
exceed age 65 and the anniversary selected may not exceed the 5th.]

5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section 5.02
of the Plan: (Choose (a) or choose one or both of (b) and (c))

(a) Does not apply.

(b) Applies to death.

5.03 VESTING SCHEDULE. The Employer elects the following vesting schedule:
(Choose (a) or (b); (C) and (d) are available only in addition to (b))

(a) Immediate vesting, 100% Nonforfeitable at all times. [Note: The
Employer must elect Option (a) if the eligibility conditions under Adoption
Agreement Section 2.01(b) require 2 years of service or more than 12 months of
employment.]

(b) Graduated Vesting Schedules.

Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)

Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage

Less than 1 ________ Less than 1 ________
1 ________ 1 ________
2 ________ 2 ________
3 ________ 3 ________

<PAGE>

4 ________ 4 ________
5 ________ 5 ________
6 or more 100% 6 ________
7 or more ________

(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $__________ or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.

[Note: Under Option (b), the Employer must complete a Top Heavy Schedule which
satisfies Code ss.416. The Employer, at its option, may complete a Non Top Heavy
Schedule. The Non Top Heavy Schedule must satisfy Code ss.411(a)(2). Also see
Section 7.05 of the Plan.]

(d) The Top Heavy Schedule under Option (b) applies: (Choose (1)
or (2))

(1) Only in a Plan Year for which the Plan is top heavy.

(2) In the Plan Year for which the Plan first is top heavy
and then is all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]

Life Insurance Investments. The Participant's Accrued Benefit attributable to
insurance contracts purchased on his behalf under Article XI is: (Choose (e) or
(f))

(e) Subject to the vesting election under Options (a), or (b).

(f) 100% Nonforfeitable at all times, irrespective of the vesting election under
Option (b).

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))

(a) Does not apply.

(b) Will apply to determine the timing of forfeitures for 0% vested
Participants.

5.06 YEAR OF SERVICE - VESTING.

Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))

(a) Plan Years.

(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each

<PAGE>

successive 12 consecutive month period measured from each anniversary of that
Employment Commencement Date.

Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (Choose (c) or (d))

(d) ___________ Hours of Service. [Note: The Hours of Service requirement
may not exceed 1,000.]

5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically excludes the
following Years of Service: (Choose (a) or at least one of (b) through (e))

(a) None other than as specified in Section 5.08(a) of the Plan.

(b) Any Year of Service before the Participant attained the age
of _______________. [Note: The age selected may not exceed age 18.]

(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Bread in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service no required to be taken into account under this exception by reason of
any prior Break in Service.

(e) Any Year of Service earned prior to the effective date of ERISA if the Plan
would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.

ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS

Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.

<PAGE>

6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.

Distribution date. A distribution date under the Plan means
_______________________________________________________________________________.

[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]

Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the limitations
of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c),
(d) or (e))

(a) ______________ of the _____________ Plan Year beginning after the
Participant's Separation from Service.

(b) _________________ following the Participant's Separation from Service.

(c) _________________ of the Plan Year after the Participant incurs
___________________ Break(s) in Service (as defined in Article V).

(d) _________________ following the Participant's attainment of Normal
Retirement Age, but not earlier than _________ days following his Separation
from Service.

(e) (Specify) _________________________________________________.

Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections
under Section 6.03.

Disability. The distribution date, subject to Section 6.01(A)(3), is: (Choose
(f), (g) or (h))

(f) _________________ after the Participant terminates employment because of
disability.

(g) The same as if the Participant had terminated employment without disability.

(h) (Specify) ________________________________________________.

Hardship. (Choose (i) or (j))

(i) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.

(j) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy. State in:
(Choose (1) or (2))

(1) Section 6.01(A)(4) of the Plan.

<PAGE>

(2) The addendum to this Adoption Agreement, numbered Section 6.01, in
lieu of the policy stated in Section 6.01(A)(4) of the Plan.

Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))

(k) Treats the default as a distributable event. The Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.

(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) of the Plan's
security interest in that Nonforfeitable Accrued Benefit.

(m) (Specify) ________________________________________________.

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will apply
Section 6.02 of the Plan with the following modifications: (Choose (a) or at
least one of (b) (c), (d) and (e))

(a) No modifications.

(b) Except as required under Section 6.01 of the Plan, a lump sum distrib-
ution is not available: ____________________________.

(1) Is not available under the Plan.

(2) May not exceed the lesser of _________________ years of the maximum
period permitted under Section 6.02.

(3) (Specify) ____________________________________________.

(d) The Plan permits the following annuity options: _______________________
Any Participant who elects a life annuity option is subject to the requirements
of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section 6.04(E). [Note:
The Employer may specify additional annuity options in an addendum to this
Adoption Agreement, numbered 6.02(d).]

(e) If the Plan invests in qualifying Employer securities, as described in
Section 10.03(F), a Participant eligible to elect distribution under Section
6.03 may elect to receive that distribution in Employer securities only in
accordance with the provision of the addendum to this Adoption Agreement,
numbered 6.02(e).

<PAGE>

6.03 BENEFIT PAYMENT ELECTIONS.

Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose at least
one of (a) through (c))

(a) As of any distribution date, but no earlier than __________ of
the _________________________________ Plan Year beginning after the
Participant's Separation from Service.

(b) As of the following date(s): (Choose at least one of Options (1) through
(6))

(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.

(2) Any distribution date following his Separation from Service.

(3) Any distribution date in the ________________________ Plan Year(s)
beginning after his Separation from Service.

(4) Any distribution date in the Plan Year after the Participant incurs
________ Break(s) in Service (as defined in Article V).

(5) Any distribution date following attainment of age ___________ and
completion of at least ____________ Years of Service (as defined in
Article V).

(6) (Specify) ___________________________________________.

Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (d) or
at least one of (e) through (h))

(d) No distribution options prior to Separation from Service.

(e) Attainment of Specified Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his Nonforfeitable
Accrued Benefit after he attains: (Choose (1) or (2))

(1) Normal Retirement Age.

<PAGE>

(2) _______________ years of age and is at least _________%
vested in his Accrued Benefit. [Note: If the percentage is
less than 100%, see the special vesting formula in Section
5.03.]

(f) After a Participant has participated in the Plan for a period of not less
than _______ years and he is 100% vested in his Accrued Benefit, until he
retires, the Participant has a continuing election to receive all or any portion
of his Accrued Benefit. [Note: The number in the blank space may not be less
than 5.]

(g) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
(Choose (1) or (2))

(1) Under Section 6.01(A)(4) of the Plan. In no event may a
Participant receive a hardship distribution under this
Option (g) before he is at least _________________$ vested
in his Accrued Benefit. [Note: If the percentage in the
blank is less than 100%, see the special vesting formula in
Section 5.03.]

(2) Provided in the addendum to this Adoption Agreement, numbered
Section 6.03.

(h) (Specify) _____________________________________________.

[Note: The Employer may use an addendum, numbered 6.03, to provide additional
language authorized by Options (b)(6), (c), (g)(2) or (h) of this Adoption
Agreement Section 6.03.]

6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The annuity
distribution requirements of Section 6.04: (Choose (a) or (b))

(a) Apply only to a Participant described in Section 6.04(E) of the
Plan (relating to the profit sharing exception to the joint and survivor
requirements).

(b) Apply to all Participants.

ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT
TO PARTICIPANTS' ACCOUNTS

9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account) occurs more than 90 days after the most
recent valuation date, the distribution will include interest at: (Choose (a),
(b) or (c))

(a) __________% per annum. [Note: The percentage may equal 0%.]

<PAGE>

(b) The 90 day Treasury bill rate in effect at the beginning of the
current valuation period.

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.03 INVESTMENT POWERS. Pursuant to Section 10.03[F] of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))

(a) May not exceed 10% of Plan assets.

(b) May not exceed ______________% of Plan assets. [Note: the
percentage may not exceed 100%.]

10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee must
value the Trust Fund on the following valuation date(s): (Choose (a) or (b))

(a) No other mandatory valuation dates.

(b) (Specify) ________________________________________________.

EFFECTIVE DATE ADDENDUM
(Restated Plans Only)

The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)

(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
_____________________________. [Note: May not be effective later than the first
day of the first Plan Year beginning after the Employer executes this Adoption
Agreement to restate the Plan for the Tax Reform Act of 1986, if applicable.]

(b) Eligibility conditions. The eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
______________________.

(c) Suspension of Years of Service. The suspension of Years of Service
rule elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after _____________________.

<PAGE>

(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
_____________________.

(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ______________.

(f) Employment condition. The employment condition of Section 3.06 is
effective for Plan Years beginning after ______________.

(g) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ________________. [Note: The date specified may not be earlier
than December 31, 1985.]

(h) Vesting Schedule. The vesting schedule elected under Adoption
Agreement Section 5.03 is effective for Plan Years beginning after
_______________.

(i) (Specify) ________________________________________________.

For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.

Execution Page

The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ___________ day of
________________, 19________.

Name and EIN of Employer: _____________________________________

Signed: _______________________________________________________

Name(s) of Trustee: ___________________________________________

_______________________________________________________________

Signed: _______________________________________________________

_______________________________________________________________

Name of Custodian: ____________________________________________

<PAGE>

Signed: _______________________________________________________

[Note: A Trustee is mandatory, but a Custodian is optional. See Section 10.03 of
the Plan.]

Plan Number. The 3-digit plan number the Employer assigns to this Plan for ERISA
reporting purposes (Form 5500 Series) is: ____________________.

Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of any amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 E. Union Ave., Denver, Colorado,
(303 779-0731).

Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.

PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)

The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, the Signatory Employer to the Execution Page of the Adoption
Agreement.

1. The Effective Date of the undersigned Employer's participation in the
designated Plan is ___________________.

2. The undersigned Employer's adoption of this Plan constitutes:

(a) The adoption of a new plan by the Participating Employer.

<PAGE>

(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as _________________________,
and having an original effective date of __________________________.

Dated this ___________ day of ______________________, 19______.

Name of Participating Employer: _______________________________

Signed: _______________________________________________________

Participating Employer's EIN: _________________________________

Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.

Name of Signatory Employer: ___________________________________

Accepted: _____________________________________________________
[Date]

Signed: _______________________________________________________

Name(s) of Trustee: ___________________________________________

Accepted: _____________________________________________________
[Date]

Signed: _______________________________________________________

[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]

NS PSP AA Instructions

Complete the first blank in the paragraph by writing in the business' name in
its entirety.

1.02 Trustee

Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 17
for further explaination of Non-discretionary Trustee.

1.03 Plan

Enter the plan name. Example: ABC Inc. Profit Sharing Plan.

<PAGE>

1.07 Employee

If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) or (g).

Leased Employees

You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 410(b) and 401(a)(26),
consult your legal or financial counsel.

Related Employers

You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.

1.12 Compensation

Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective contributions to compensation for purposes of allocating
employer contributions, forfeitures and for non-discrimination testing.

Modifications to Compensation - You must choose option (C) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination. Your accountant may want to test for any discriminatory effect
of excluding any type of compensation.

1.17 Plan Year

You must define the "plan year." Usually it will follow the business tax year.

Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account). For administrative convenience
it should match the plan year.

1.18 Effective Date

New Plan - Enter the first day of your plan year (usually January 1) and the
year.

Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Original established date
- - Enter the original effective date of your plan from your prior Adoption
Agreement.

<PAGE>

1.27 Hours of Service

Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.

1.29 Service for Predecessor Employer

Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)

1.31 Leased Employees

The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.

2.01 Eligibility

a. An employee must attain this age to become a participant (cannot
exceed age 21).

b. Pick how long (service) an employee must work to become a
participant.

Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.

Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.

Dual Eligibility - This section allows you to grandfather into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually chose
(i)(2).

2.02 Year of Service

Option (b) should only be chosen if you wish to require less than 1000 hours to
be worked by an employee for eligibility, contributions and vesting. Usually
Option (a) is chosen.

Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
Plan Year is chosen for administrative convenience.

<PAGE>

2.03 Break In Service

This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.

2.06 Election Not to Participate

This option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.

3.01 Contributions and Forfeitures

Option (a) provides for a discretionary formula. Option (b) allows the employer
to determine the contribution separately for different catagories of
participants. Options (c) and (d) allow the employer to choose a fixed
contribution formula.

Net Profits - An employer may require net profits to make its contribution or
may disregard profits to determine the contribution. If the employer selects
option (g), it must also complete the three blanks.

3.04 Contribution Allocation

Allocation formula. The primary allocation formulas are in Options (a), (b), (c)
and (d). Option (a) is a Nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (b), (c) and (d) are
alternatives for integrated plans. Usually option (a)(2) is chosen for non
integrated plans.

The two-tiered formula under Option (b) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4%, or 4.3%) described in he second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.

Under the three-tiered formula under Option (c), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.

<PAGE>

The four-tier allocation under Option (d) is a hybrid of Options (b) and (c).
The sole purpose of Option (d) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (b). The fourth tier is a prorata allocation
based on total compensation.

3.05 Forfeiture Allocation

3.06 Compensation Taken Into Account

If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).

Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.

Suspension of Accrual Requirements

This section allows you to suspend some or all of the accrual requirements found
in Section 3.06(E) of the plan for participants to receive allocations. This
would apply in plan years when a plan may not satisfy coverage and participation
requirements. For administrative convenience choose option (g).

3.15 More than One Plan

This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.

3.18 Defined Benefit Limitation

Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.

<PAGE>

5.01 Normal Retirement Age

Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).

5.02 Vesting Death/Disability

You may choose to allow 100% vesting to participants that terminate from service
because of death option (b) or disability option (c).

5.03 Vesting Schedule

Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.

Complete the Top Heavy Schedule based upon the following:

Year of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)

Optional: Complete the Non Top Heavy Schedule based upon the
following:

Years of Service
1
2 3 (not less than 20%) 4 (not less than 40%) 5 (not less than 60%) 6 (not less
than 80%) 7 (not less than 100%)

5.04 Cash-Out Rule

If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.

5.06 Years of Service

Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).

<PAGE>

5.08 Prior Years of Service

By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.

Article 6

The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit. Under a restated plan, the elections under Article VI, to the extent
they differ from previous plan provisions regarding optional forms of benefit,
may not eliminate an optional form of benefit with respect to the account
balance accrued as of the date the Employer executes the restated adoption
agreement (or, if later, the effective date of that restated adoption
agreement). An optional form of benefits includes the form of payment (e.g.,
lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g., right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).

With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.

6.01 Distribution Date

A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k) plans are semi-annual dates or quarterly dates.

Nonforfeitable Accrued Benefit Not Exceeding #3500

When a separate participants vested balance does not exceed $3500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.

Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h).

<PAGE>

Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.

Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.

6.02 Method of Payment

You may choose the standard forms of payment if this is a brand new plan and not
a restatement. Elect any one or combination of options (b) through (e). If no
modifications are necessary, elect option (a).

6.03 Participant Elections After Separation From Service

You must choose when an employee who has separated from service, with a vested
benefit greater than $3500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.

Participant Elections Prior to Separation from Service

The following distribution elections apply to employer discretionary account
regardless of vested account balances, prior to employment separation. If you
prefer not to allow any distribution options from these accounts prior to
separation, select option (d).

6.04 Annuity Distributions

the law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants that are subject to this
requirement are identified in section 6.04(E) of the Plan. For administrative
convenience choose option (a). If you are restating a plan that was subject to
the joint and survivor annuity rules, you must select Option (b).

9.10 Value of Benefit

This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.

<PAGE>

10.03 Investment Powers

Complete this section if you (the employer) wish to allow the plan to invest in
qualifying employer securities, you should consult your legal counsel. The term
"qualifying employer securities" has a specific meaning under ERISA and may not
include all securities.

10.14 Valuation of Trust

You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.

Instructions for Effective Date Addendum

You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
the few provisions (if any) that have later effective dates must specify when
they are effective.

a. Compensation definition may not be later than the first day of your
1991 plan year.

b. Eligibility conditions may not be later than the first day of your
1989 plan year.

c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.

d. Contribution/allocation formula may not be earlier than the first day
of your 1989 plan year.

e. Accrual requirements may not be earlier than the first day of your 1989
plan year.

f. Employment condition may not be earlier than the first day of your 1991
plan year.

g. Elimination of Net Profits may not be earlier than December 31, 1985.

h. Vesting schedule may not be later than the first day of your 1989 plan
year.

i. Allocation of Earnings may not be earlier than the first day of the
1990 plan year.

Execution Page

<PAGE>

Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.

Trustee.

If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as custodian.

If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non-discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investment.

The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.

Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
necessarily correspond to the 3-digit adoption agreement number specified at the
top of the first page of the adoption agreement. Consult your Counsel if unsure
what 3-digit plan number to use.

Instructions for the Participation Agreement

This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.

<PAGE>

(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute tot he plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). The addendum instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Under approach
(2), the plan will retain its qualified status, but contributions the Employer
makes on behalf of a nonparticipating related group member's employees may not
be deductible (even if otherwise within the limitations of Code ss.404),
resulting in an excise tax to the contributing Employer.

Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the plan).

legal\adop-agr\nspspaa.001

Adoption Agreement #002
Letter Serial No. D346279a

Nonstandardized Money Purchase Pension Plan

Nonstandardized Money Purchase Pension Plan Features - Maximum employer
contributions - Ability to exclude classifications of employees - May enforce
last-day requirement for employer contribution - Allows integrated contribution
formula

Provided by:
The Financial Funds

Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC

<PAGE>

ADOPTION AGREEMENT #002
NONSTANDARDIZED MONEY PURCHASE PLAN

The undersigned, _______________________________________ ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.

ARTICLE I
DEFINITIONS

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

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

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

1.03 PLAN. The name of the Plan as adopted by the Employer is
- ---------------------------------------------------------------.

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

(a) No exclusions.

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

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

(d) Commission Salesmen.

(e) Any Employee compensated on a salaried basis.

(f) Any Employee compensated on an hourly basis.

(g) (Specify)

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

<PAGE>

(h) Not eligible to participate in the Plan.

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

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

1.12 COMPENSATION

Treatment of elective contributions. (Choose (a) or (b))

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

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

Modifications to Compensation definition. (Choose (c) or at least
one of (d) through (j))

(d) The plan excludes Compensation in excess of $_____________.

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

(f) The Plan excludes bonuses.

(g) The Plan excludes overtime.

(h) The Plan excludes Commissions.

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

<PAGE>

(j) (Specify) _______________________________________________.

1.17 PLAN YEAR/LIMITATION YEAR.

Plan Year. Plan Year means: (Choose (a) or (b))

(a) The 12 consecutive month period ending every _____________.

(b) (Specify) ________________________________________________.

Limitation Year. The Limitation Year is: (Choose (c) or (d))

(d) The 12 consecutive month period ending every ______________.

1.18 EFFECTIVE DATE.

New Plan. The "Effective Date" of the Plan is __________________.

Restated Plan. The restated Effective Date is _________________.

This Plan is a substitution and amendment of an existing retirement plan(s)
originally established _____________________.
(Note: See the Effective Date Addendum.)

1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))

(a) The actual method.

(b) The ___________________________ equivalency method, except:

(1) No exceptions.

(2) The actual method applies for purposes of: (Choose at least
one)

(i) Participation under Article II.

(ii) Vesting under Article V.

(iii)Accrual of benefits under Section 3.06.

[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly."]

<PAGE>

1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section
1.29 of the Plan, the Plan credits Service with the following
predecessor employer(s): _____________________________________
______________________________________________________________.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b); (c) is available only in
addition to (a) or (b))

(a) For purposes of participation under Article II.

(b) For purposes of vesting under Article V.

[Note: If the Plan does not credit any predecessor service under this provision,
insert "N/A" in the first blank line. The Employer may attach a schedule to this
Adoption Agreement, in the same format as this Section 1.29, designating
additional predecessor employers and the applicable service crediting
elections.]

1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the Plan and
also participates in a plan maintained by the leasing organization: (Choose (a)
or (b))

(a) The Advisory Committee will determine the Leased Employee's
allocation of Employer contributions under Article III without taking into
account the Leased Employee's allocation, if any, under the leasing
organization's plan.

(b) The Advisory committee will reduce a Leased Employee's
allocation of Employer contributions under this Plan by the Leased Employee's
allocation under the leasing organization's plan, but only to the extent that
allocation is attributable to the Leased Employee's service provided to the
Employer. The leasing organization's plan:

(1) Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan, irrespective of
whether the safe harbor exception applies.

(2) Must satisfy the features and, if a defined benefit plan,
the method of reduction described in an addendum to this
Adoption Agreement, numbered 1.31.

ARTICLE II
EMPLOYEE PARTICIPANTS

2.01 ELIGIBILITY.

Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)

<PAGE>

(a) Attainment of age ___________________ (specify age, not exceeding 21).

(b) Service requirement. (Choose one of (1) through (4))

(1) One Year of Service.

(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.

(3) ________________ months (not exceeding 24) following the
Employee's Employment Commencement Date.

(4) One Hour of Service.

Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))

(d) The first day of the Plan Year.

(e) (Specify entry dates) ____________________________________.

Time of Participation. An Employee will become a Participant,
unless excluded under Adoption Agreement Section 1.07, on the
Plan Entry Date (if employed on that date): (Choose (f), (g) or
(h))

(f) immediately following

(g) immediately preceding

(h) nearest __________________________________________________
the date the Employee completes the eligibility conditions
described in Options (a) and (b) of this Adoption Agreement
Section 2.01. [Note: The Employer must coordinate the selection
of (f), (g) or (h) with the "Plan Entry Date" selection in (c),
(d) or (e). Unless otherwise excluded under Section 1.07, the
Employee must become a Participant by the earlier of: 91) the
first day of the Plan Year beginning after the date the Employee
completes the age and service requirements of Code ss.410(a); or
(2) 6 months after the date the Employee completes those
requirements.]

Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (i) or (j))

(i) All Employees of the Employer, except: (Choose (1) or (2))

(1) No exceptions.

(2) Employees who are Participants in the Plan as of the
Effective Date.

<PAGE>

(j) Solely to an Employee employed by the Employer after ________________.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))

(1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age ___________ (not to exceed
21).

(2) Under the eligibility conditions in effect under the Plan
prior to the restated Effective Date. [For restated plans only]

(3) (Specify) ____________________________________________.

2.02 YEAR OF SERVICE - PARTICIPATION.

Hours of Service. An Employee must complete: (Choose (a) or (b))

(a) 1,000 Hours of Service

(b) ___________ Hours of Service during an eligibility
computation period to receive credit for a Year of Service.
[Note: The Hours of Service requirement may not exceed 1,000.]

Eligibility computation period. After the initial eligibility
computation period described in Section 2.02 of the Plan, the
Plan measures the eligibility computation period as: (Choose (c)
or (d))

(d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.

2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the plan: (Choose (a) or (b))

(a) Does not apply to the Employer's Plan.

(b) Applies to the Employer's Plan.

2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))

(a) Does not permit an eligible Employee or a Participant to
elect not to participate.

(b) Does permit an eligible Employee or a Participant to elect not
to participate in accordance with Section 2.06 and with the following
rules: (Complete (1), (2) (3) and (4))

<PAGE>

(1) An election is effective for Plan Year if filed no later
than ________________.

(2) An election not to participate must be effective for at
least ___________________ Plan Year(s).

(3) Following a re-election to participate, the Employee
or Participant:

(i) May not again elect not to participate for any
subsequent Plan Year.

(ii) May again elect not to participate, but not earlier
than the ___________ Plan Year following the Plan Year in
which the re-election first was effective.

(4) (Specify) ____________________________________________
[Insert "N/A" if no other rules apply].

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

3.01 AMOUNT. The amount of the Employer's annual contribution to the Trust will
equal: (Choose (a), (b), (c), (d) or (e); (f) is mandatory if the Employer
elects (b) or (c), or Adoption Agreement Section 3.04(b)(2))

(a) Nonintegrated Contribution Formula. ___________% of each Participant's
Compensation for the Plan Year.

(b) Integrated Contribution Formula. (Complete both percentages) _____% of
each Participant's Compensation for the Plan Year in excess of the Integration
Level. [Note: The second percentage may not exceed the lesser of the first
percentage or the applicable percentage described in the Maximum Disparity
Table.]

(c) Step-rate Integrated Contribution Formula. (Complete both
percentages) ___________% of each Participant's Compensation for the Plan Year
which does not exceed the Integration Level, plus __________________% of each
Participant's Compensation for the Plan Year in excess of the Integration Level.
[Note: The difference between the second percentage and the first percentage may
not exceed the lesser of the first percentage or the applicable percentage
described in the Maximum Disparity Table.]

(d) Flat Contribution Formula. (Choose (1), (2) or (3); (4) is
optional only in addition to (2) or (3))

(1) $_____________, subject to the limitations of Part 2 of
Article III of the Plan.

(2) For each Participant, $_______________ for each
________________________________________________________.

<PAGE>

(3) For each Participant, _________% of Compensation for each
_____________________________________________________.

(4) The contribution on behalf of any Participant: (Choose
(i) or (iii)

(i) May not exceed _____________________________.

(ii) May not be less than _______________________.

(e) Frozen Plan Formula. This Plan is a frozen Plan effective ________________.
The Employer will not contribute to the Plan with respect to any period
following that stated date.

(f) Integration Level. The Integration Level under the Plan is:
(Choose (1) or (2))

(1) __________% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act in effect on
the first day of the Plan Year. (Choose any combination of (i) and (ii)
or choose (iii))

(i) Rounded to _____________ (but not exceeding the
taxable wage base).

(ii) But not greater than $_________________.

(iii)Without any further adjustment or limitation.

(2) $______________ [Note: Not exceeding the taxable wage base for the
Plan Year in which this Adoption Agreement first is effective.

Maximum Disparity Table. For purposes of Options (b) and (c) and
Adoption Agreement Section 3.04(b)(2), the applicable percentage
is:

Integration Level (as Applicable
percentage of taxable wage base) Percentage

100% 5.7%

More than 80% but less than 100% 5.4%

More than 20% (but not less than
$10,001) and not more than 80% 4.3%

20% (or $10,000, if greater) or less 5.7%

Application of contribution formula. The Employer will determine its
contribution under Options (a), (b), (c) or (d) by taking into account only the
Participants who satisfy the conditions under Section 3.06 for an allocation of
Employer contributions and only the Participant's Compensation taken into

<PAGE>

account under Section 3.06. The Employer contribution on behalf of a Participant
may not exceed the Participant's annual additions limitation described in Part 2
of Article III, even if the contribution formula otherwise would require a
larger contribution. The Employer will reduce its contribution for a Plan Year
if an allocation offset elected by the Employer under Section 3.04 requires
reduction of that contribution.

Coordination with defined benefit plan. If the Employer maintains a defined
benefit plan under which at least one Participant in this Plan participates, the
Employer will determine its contribution under Options (a), (b), (c) or (d) by
reducing the total contribution, if necessary, to equal the maximum deductible
amount under Code ss.404(a)(7). If the Employer must reduce its contribution,
the Employer determines its contribution with respect to each Participant by
adjusting each percentage under Options (a), (b), (c) or (d) by the same ratio
as the reduced total Employer contribution for the Plan Year bears to the total
Employer contribution determined without application of Code ss.404(a)(7). The
Employer may modify this paragraph by attaching an addendum to this Adoption
Agreement, numbered 3.01, setting forth the modified provision.

Related Employers. Unless obligated by the joint and several liability
provisions of the Code or of ERISA, a related group member, as defined in
Section 1.30 of the Plan, may not contribute to this Plan unless it executes a
Participation Agreement, even if its Employees are Participants in the Plan. The
signatory Employer and any Participating Employer(s) will satisfy the annual
contribution under this Section 3.01 as agreed upon by those Employers. A
Participating Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 3.01 and Section 3.04, designating separate
contribution and allocation formulas. If a Participating Employer attaches a
separate contribution/allocation schedule, the contributions, and attributable
Participant forfeitures, made by that Participating Employer are allocable only
to the Employees of that Participating Employer. If a Participant receives
Compensation from more than one contributing Employer and that Participant is
subject to two or more contribution/allocation formulas, the Advisory Committee
will apply the contribution/allocation formulas, the Advisory Committee will
apply the contribution/allocation formulas by prorating among the separate
formulas the Participant's Compensation and any integration level applicable to
the Participant.

3.04 CONTRIBUTION ALLOCATION

Method of Allocation. (Choose (a) or (b); (c) is optional to (a)
or (b))

(a) Incorporation of Contribution Formula. Subject to any restoration allocation
required under Section 5.04, the Advisory Committee will allocate and credit

<PAGE>

each annual Employer contribution to the account of each Participant who
satisfies the conditions of Section 3.06, in accordance with the contribution
formula adopted by the Employer under Adoption Agreement Section 3.01. [Note:
The Employer must elect this Option (a) if it elects Adoption Agreement Section
3.01(b), (c), (d)(2) or (d)(3). The Employer may not elect this Option (a) with
Adoption Agreement Section 3.01(d)(1).]

(b) Allocation Formula Different From Contribution Formula. (Choose (1) or (2))
[Note: The Employer must elect this Option (b) if it elected Adoption Agreement
Section 3.01(d)(1). The Employer may not elect this Option (b) if it elected
Adoption Agreement Section 3.01(b), (c), (d)(2) or (d)(3).

(1) Nonintegrated Allocation Formula. The Advisory Committee will
allocate the annual Employer contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.

(2) Two-Tiered Integrated Allocation Formula - Maximum Disparity.
First, the Advisory Committee will allocate the annual Employer
contributions in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation plus Excess Compensation, must not exceed
the applicable percentage (5.6% or 4.3%) listed under the Maximum
Disparity Table in Adoption Agreement Section 3.01. A Participant's
"Excess Compensation" is his Compensation for the Plan Year in excess
of the Integration Level elected under Adoption Agreement Section
3.01(f).

The Advisory Committee then will allocate any remaining Employer
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.

(c) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under this Section 3.04 by the Participant's
allocation under the following qualified plan(s) maintained by the Employer:
________________________________________________________________________________
_______________________________________________________________________________.

(1) By treating the term "Employer contribution" as including all
amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (c). If a Participant
under this Plan also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes for or during
a Plan Year on behalf of a Particular Participant under such other plan
as an amount allocated under this Plan to that Participant's Account

<PAGE>

for that Plan Year. The Advisory Committee will make the computation
of allocation required under the immediately preceding sentence before
making any allocation required by this Section 3.04.

(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(c).

Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the top
heavy minimum allocation to which he is entitled under Section
3.04(B): (Choose (d) or (e))

(d) the Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.

(e) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ______________________. However, the Employer
will make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (e). See Section 3.04(B)(7)(b) of the Plan.

3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required under
Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture: (Choose (a) or (b); (c) is optional in addition to (a) or (b))

(a) Reduction of Employer contribution. In accordance with Section 3.04, to
reduce the Employer contribution for the Plan Year: (Choose (1) or (2))

(1) in which the forfeiture occurs.

(2) immediately following the plan Year in which the forfeiture occurs.

(b) Increased allocation. In addition to the Employer contribution for the Plan
Year in which the forfeiture occurs. The Advisory Committee will allocate the
Participant forfeitures for a Plan Year to the Account of each Participant who
satisfies the conditions of Section 3.06: (Choose (1) or (2))

(1) in the same ratio that such Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan
Year.

<PAGE>

(2) as an Employer contribution for the Plan Year, in accordance with
Option (b) of Adoption Agreement Section 3.04, as if the Participant
forfeiture were an additional Employer contribution for that Plan
Year.

(c) First to reduce the Plan's ordinary and necessary administrative
expenses for the Plan Year, and then will allocate any remaining
forfeitures in the manner described in Option (a) or in Option (b),
whichever applies.

3.06 ACCRUAL OF BENEFIT.

Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the contribution/allocation under Adoption Agreement
Sections 3.01 and 3.04 by taking into account: (Choose (a) or
(b))

(a) The Employee's Compensation for the entire Plan Year.

(b) The Employee's Compensation for the portion of the Plan Year in which the
Employee actually is a Participant in the Plan.

(c) Safe harbor rule. If the Participant is employed by the Employer on the last
day of the Plan Year, the Participant must complete at least one Hour of Service
for that Plan Year. If the Participant is not employed by the Employer on the
last day of the Plan Year, the Participant must complete at least 501 Hours of
Service during the Plan Year.

(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service for the Plan Year: (Choose at least one of
(1) through (4))

(1) 1,000 Hours of Service.

(2) (Specify, but the number of Hours of Service may not exceed 1,000)
_____________________________________.

(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose at least one of
(i) through iii))

(i) Death.

(ii) Disability.

(iii)Attainment of Normal Retirement Age in the current
Plan Year or in a prior Plan Year.

<PAGE>

(4) _________________ Hours of Service (not exceeding 1,000) if the
Participant terminates employment with the Employer during the Plan
Year, subject to any election in Option (3).

(e) Employment condition. The Participant must be employed by the Employer on
the last day of the Plan Year, irrespective of whether he satisfies any Hours of
Service condition under Option (c), unless his employment terminates because of:
(Choose (1) or at least one of (2) through (4))

(1) No exceptions.

(2) Death.

(3) Disability.

(4) Attainment of Normal Retiement Age in the current Plan Year or in a
prior Plan Year.

(f) (Specify other conditions, if applicable):
_____________________________________________________.

Suspension of Accrual Requirements. The suspension of accrual requirements of
Section 3.06(E) of the Plan: (Choose (g), (h) or (i))

(g) Applies to the Employer's Plan.

(h) Does not apply to the Employer's Plan.

(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).

3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15 apply, the
Excess Amount attributed to this Plan equals:
(Choose (a), (b) or (c))

(a) The product of:

(i) the total Excess Amount allocated as of such date (including
any amount which the Advisory Committee would have allocated
but for the limitations of Code ss.415, times

(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount
allocated as of such date under all qualified defined
contribution plans (determined without regard to the
limitations of Code ss.415).

<PAGE>

(b) The total Excess Amount.

3.18 DEFINED BENEFIT PLAN LIMITATION.

Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))

(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.

(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))

(1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.

[Note: If the Employer selects (a), the remaining options in this Section 3.18
do not apply to the Employer's Plan.]

(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting _________% (not less than 4%) for "3%", except: (Choose (i) or
(ii))

(i) No exceptions.

(ii) Plan Years in which the top heavy ratio exceeds 90%.

(e) For Non-Key Employees also participating in the defined benefit plan, the
top heavy minimum is: (Choose (1) or (2))

(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))

(i) No exceptions.

<PAGE>

(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.

(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code ss.416 for these Non-Key
Employees.]

If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.

ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING

5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))

(a) ____________________ [State age, but may not exceed age 65.]

(b) The later of the date the Participant attains __________ years of age or the
_________ anniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]

5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section 5.02
of the Plan: (Choose (a) or choose one or both of (b) and (c))

(a) Does not apply.

(b) Applies to death.

5.03 VESTING SCHEDULE. The Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only in addition to (b))

(a) Immediate vesting. 100% Nonforfeitable at all times. [Note: The Employer
must elect Option (a) if the eligibility conditions conditions under Adoption
Agreement Section 2.01(b) require 2 years of service or more than 12 months of
employment.]

<PAGE>

(b) Graduated Vesting Schedules.

Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)

Years of Nonforfeitable Years of Nonforfeitable
Service Percentage Service Percentage

Less than 1 _______ Less than 1 _______
1 _______ 1 _______
2 _______ 2 _______
3 _______ 3 _______
4 _______ 4 _______
5 _______ 5 _______
6 or more _______ 6 _______
7 or more _______

(d) The Top Heavy Schedule under Option (b) applies: (Choose (1) or (2))

(1) Only in a Plan Year for which the Plan is top heavy.

(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]

Life Insurance Investments. The Participant's Accrued Benefit attributable to
insurance contracts purchased on his behalf under Article XI is: (Choose (e) or
(f))

(e) Subject to the vesting election under Options (a) or (b).

(f) 100% Nonforfeitable at all times, irrespective of the vesting election under
Option (b).

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))

(a) Does not apply.

(b) Will apply to determine the timing of forfeitures for 0% vested
Participants.

<PAGE>

5.06 YEAR OF SERVICE - VESTING.

Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))

(a) Plan Years.

(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.

Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (Choose (c) or (d))

(d) __________ Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer
specifically excludes the following Years of Service: (Choose (a)
or at least one of (b) through (e))

(a) None other than as specified in Section 5.08(a) of the Plan.

(b) Any Year of Service before the Participant attained the age
of _________________. [Note: The age selected may not exceed age
18.]

(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Bread in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.

<PAGE>

ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS

Code ss.(d)(6) Protected Benefits. The elections under this Article VI may not
eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.

6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.

Distribution date. A distribution date under the Plan means
___________________________________________________________.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]

(a) _________________ of the ______________ Plan Year beginning after the
Participant's Separation from Service.

(b) _________________ following the Participant's Separation from Service.

(c) ___________________ of the Plan Year after the Participant incurs
___________________ Break(s) in Service (as defined in Article V).

(d) ____________________ following the Participant's attainment of Normal
Retirement Age, but not earlier than _____________ days following his Separation
from Service.

(e) (Specify) ______________________________________________.

Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections
under Section 6.03.

Disability. The distribution date, subject to Section 6.01(A)(3),
is: (Choose (f), (g) or (h))

(f) ______________________________________ after the Participant terminates
employment because of disability.

(g) The same as if the Participant had terminated employment without disability.

(h) (Specify) ______________________________________________.

<PAGE>

Hardship. (Choose (i) or (j)

(i) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.

(j) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in:
(Choose (1) or (2))

(1) Section 6.01(A)(4) of the Plan.

(2) The addendum to this Adoption Agreement, numbered Section 6.01, in
lieu of the policy stated in Section 6.01(A)(4) of the Plan.

Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))

(k) Treats the default as a distributable event only if the Participant has
incurred a Separation from Service or has attained Normal Retirement Age. If
either condition applies, the Trustee, at the time of the default or, if later,
at the time either condition first occurs, will reduce the Participant's
nonforfeitable Accrued Benefit by the lesser of the amount in default (plus
accrued interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit.

(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.

(m) (Specify) _______________________________________________.
[Note: Option (m) may not treat default as a distributable event
earlier than the Participant's Separation from Service unless the
Participant has attained Normal Retirement Age.]

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will apply
Section 6.02 of the Plan with the following modifications: (Choose (a) or at
least one of (b), (c) and (d))

(a) No modifications.

(b) Except as required under Section 6.01 of the Plan, a lump sum distribution
is not available: _________________________.

(1) Is not available under the Plan.

<PAGE>

(2) May not exceed the lesser of ________________ years or the maximum
period permitted under Section 6.02.

(3) (Specify) ___________________________________________.

(d) The Plan permits the following annuity options: ___________.
[Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(d).]

6.03 BENEFIT PAYMENT ELECTIONS.

(a) As of any distribution date, but not earlier than ________________ of the
______________ Plan Year beginning after the Participant's Separation from
Service.

(b) As of the following date(s): (Choose at least one of Options (1) through
(6))

(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.

(2) Any distribution date following his Separation from Service.

(3) Any distribution date in the _________________ Plan Year(s)
beginning after his Separation from Service.

(4) Any distribution date in the Plan Year after the Participant incurs
__________________ Break(s) in Service
(as defined in Article V).

(5) Any distribution date following attainment of age ________________
and completion of at least _____________ Years of Service (as defined
in Article V).

(6) (Specify) _________________________________________.

(d) No distribution options prior to Separation from Service.

<PAGE>

(e) Attainment of Normal Retirement Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable Accrued
Benefit after he attains Normal Retirement Age.

(f) Specify) ____________________________________. [Note: Option (f) may not
permit in service distributions prior to attainment of Normal Retirement Age.]

ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICI-
PANTS' ACCOUNTS

(a) _________________% per annum. [Note: The percentage may equal 0%.)

(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee must
value the Trust Fund on the following valuation date(s): (Choose (a) or (b))

(a) No other mandatory valuation dates.

(b) (Specify) _____________________________________________.

EFFECTIVE DATE ADDENDUM
(Restated Plans Only)

(a) Compensation definition. The Compensation definition of Section 1.12 (other
than the $200,000 limitation) is effective for Plan Years beginning after
____________________________. [Note: May not be effective later than the first
day of the first Plan Year beginning after the Employer executes this Adoption
Agreement to restate the Plan for the Tax Reform Act of 1986, if applicable.]

<PAGE>

(b) Eligibility conditions. the eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
______________________________.

(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning ___________________________.

(e) Reallocation of Forfeitures. The reallocation of forfeitures under Section
3.05 applies to Plan Years beginning after ________________________________.
[Note: The date specified may not be earlier than December 31, 1985.]

(f) Accrual requirements. The accrual requirements of Section 3.06 are effective
for Plan Years beginning after _____________________________.

(g) Employment condition. The employment condition of Section 3.06 is effective
for Plan Years beginning after _____________________________.

(h) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after
______________________________.

(i) (Specify) ______________________________________________.

Execution Page

The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance on this _______________ day of
______________________, 19_____.

<PAGE>

Name and EIN of Employer: ____________________________________

Signed: ______________________________________________________

Name(s) of Trustee: __________________________________________

______________________________________________________________

Signed: ______________________________________________________

______________________________________________________________

Name of Custodian: ___________________________________________

Signed: ______________________________________________________

[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]

Plan Number. The 3-digit plan number the Employer assigns to this Plan for ERISA
reporting purposes (Form 5500 Series) is: ____________.

Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employees of any amendment of this
Master Plan of any abandonment or discontinuance by the Master Plan Sponsor of
its maintenance of this Master Plan. For inquiries regarding the adoption of the
Master Plan, the Master Plan Sponsor's intended meaning of any plan provisions
or the effect of the opinion letter issued to the Master Plan Sponsor, please
contact the Master Plan Sponsor, please contact the Master Plan Sponsor at the
following address and telephone number: INVESCO Trust Company, 7800 E. Union
Ave., Denver, Colorado (303) 799-0731.

<PAGE>
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)

1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: __________________________.

2. The undersigned Employer's adoption of this Plan constitutes:

(a) The adoption of a new plan by the Participating Employer.

(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as __________________, and
having an original effective date of
--------------------.

Dated this ________ day of _____________________, 19_________.

Name of Participating Employer: ________________________________

Signed: ________________________________________________________

Participating Employer's EIN:___________________________________

Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.

Name of Signatory Employer: ____________________________________

Accepted: ______________________________________________________
[Date]

Signed: ________________________________________________________

Name(s) of Trustee: ____________________________________________

Accepted: ______________________________________________________
[Date]

Signed: ________________________________________________________

[note: Each Participating Employer must execute a separate
Participation Agreement. See the Execution Page of the Adoption
Agreement for important Master Plan information.]

<PAGE>

NS MP AA Instructions

Complete the first blank in the paragraph by writing in the business' name in
its entirety.

1.02 Trustee

Option (a) should be chosen when the employer will be the trustee. INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 16
for further explaination of Non-discretionary Trustee.

1.03 Plan

Enter the plan name. Example: ABC Inc. Money Purchase Pension Plan.

1.07 Employee

If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) through (g). When a retirement plan excludes employees in options (d)
through (g) from participation, the plan is subject to a minimum coverage test
to maintain its "tax qualified" status. Your accounting firm should be notified
to perform the test annually.

Leased Employees

You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 410(b) and 401(a)(25),
consult your legal or financial counsel.

Related Employers

1.12 Compensation

Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k), contributions to compensation for purposes of
allocating employer contributions, forfeitures and for non-discrimination
testing.

Modifications to Compensation

Modifications to Compensation - You must choose option (C) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination, your accountant may want to test for any discriminatory effect
of excluding any type of compensation.

<PAGE>

1.17 Plan Year

You must define the "plan year," usually it will follow the business tax year.

Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.

1.18 Effective Date

New Plan - Enter the first day of your plan year (usually January 1) and the
year.

Restated Plan - Effective date - if you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Original established date
- - Enter the original effective date of your plan from your prior Adoption
Agreement.

1.27 Hours of Service

1.29 Service for Predecessor Employer

1.31 Leased Employees

2.01 Eligibility

a. An employee must attain this age to become a participant (cannot exceed
age 21).

b. Pick how long (service) an employee must work to become a
participant.

<PAGE>

Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi- annual entry dates, is chosen.

Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.

Dual Eligibility - This section allows you to include the plan current employees
who have not met the eligibility requirements and apply the eligibility
requirements to newly hired employees.
Restated plans usually chose (i)(2).

2.02 Years of Service

Option (b) should only be chosen if you wish to require less than 1000 hours to
be worked by an employee for eligibility. Usually Option (a) is chosen.

Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.

2.03 Break In Service

This option may impose a complicated re-entry date for employees who have
termination or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.

2.06 Election Not To Participate

this option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.

3.01 Contributions and Forfeitures

Amount - The employer must select a definite contribution formula under a money
purchase pension plan. Options (a) and (d) are nonintegrated formulas, options
(b) and (c) are integrated formulas.

Option (d) allows the employer to choose a fixed amount for the contribution
regardless of compensation (options (d)(1) or (d)(2). Alternatively, the
employer may choose a fixed percentage of compensation, based upon units of
time, (option (d)(3)). The employer may choose optoin (d)(4) only in addition to
options (d)(2) or (d)(3). Option (d)(4) allows the employer to establish both a
maximum and/or a minimum contribution.

Options (b) and (c) are two approaches to allowing permitted disparity in he
contribution formula. Option (b) applies the first percentage to a participant's
total compensation. Option (C) applies the first percentage only to compensation
not exceeding an integration level.

<PAGE>

3.04 Contribution Allocation

There are two approaches for allocating (dividing up) the contribution to
participants. Option (a) mirrors the contribution formula chosen in Section
3.01. Option (a) must be chosen if the employer chose either integrated
contribution formula 3.01(a) or (b) of if the employer chose 3.01(d)(2) or
(d)(3).

Option (b) allows the employer to take a "profit sharing" approach to allocating
the contribution if the employer chose a fixed percentage or amount in Section
3.01. Under option (b) the employer has the choice of pro-rate (nonintegrated)
or a two-tiered integrated formula.

Option (c) is available only in addition to options (a) and (b). Option (c)
reduces a participant's allocation under this plan by an amount accrued under
the employer's other specified plan.

3.05 Forfeiture Allocation

Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures to reduce
employer contributions. Option (b) allocates forfeitures to increase employer
allocations.

3.06 Compensation Taken Into Account

If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
Option (b).

Suspension of Accrual Requirements

3.15 More Than One Plan

<PAGE>

3.18 Defined Benefit Limitation

5.01 Normal Retirement Age

Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).

5.02 Vesting: Death/Disability

You may choose to allow 100% vesting to participants that terminate from service
because of death, option (b) or disability, option (c).

5.03 Vesting Schedule

Complete the Top Heavy Schedule based upon the following:

Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)

Optional: Complete the Non Top Heavy Schedule based upon the
following:

Years of Service or
1 1 0%
2 2 0
3 (not less than 20%) 3 0
4 (not less than 40% 4 0
5 (not less than 60%) 5 100
6 (not less than 80%)
7 (not less than 100%)

<PAGE>

5.04 Cash-Out Rule

If option (b) is chosen, the plan treats a 0% vested terminated participant has
having received a distribution, allowing for forfeitures to be reallocated to
active participants.

5.06 Years of Service

Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).

5.08 Prior Years of Service - Vesting

By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.

Article 6

The employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Option Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An optional form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation from service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g., right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).

6.01 Distribution Date

A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. A
typical distribution date for money purchase plans would be 60 days after the
plan year end.

Nonforfeitable Accrued Benefit Not Exceeding $3500.

<PAGE>

When a separated participants vested balance does not exceed $3500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan. Usually an employer chooses Option (a) and
writes in "the first distribution date" of the "first" plan year beginning after
the Participant's separation from service.

Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h). Usually an
employer chooses Option (g).

6.02 Method of Payment

Money purchase pension plans require payouts to be in the form of a commercial
annuity unless properly waived. The employer may in options (b) and (c), if this
is a new plan, limit the alternative method of payment. Caution: an employer
cannot eliminate a prior method of payment by restating the plan onto this
document.

6.03 Participant Elections after Separation from Service

Participant Elections Prior to Separation from Service

9.10 Value of Benefit

<PAGE>

10.14 Valuation of Trust

You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.

Instructions for Effective Date Addendum

a. Compensation definition may not be later than the first day of your 1991 plan
year.

b. Eligibility conditions may not be later than the first day of your 1989 plan
year.

c. Suspension of years of service may not be earlier than the first day of your
1990 plan year.

d. Contribution/allocation formula may not be earlier than the first day of your
1989 plan year.

e. Reallocation of forfeitures may not be earlier than December 31, 1985.

f. Accrual requirements may not be earlier than the first day of your 1989 plan
year.

g. Employment condition may not be earlier than the first day of your 1991 plan
year.

h. Vesting schedule may not be later than the first day of your 1989 plan year.

i. Allocation of Earnings may not be earlier than the first day of the 1990 plan
year.

Execution Page

The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.

<PAGE>

Trustee

If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as custodian.

If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non-discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investment.

The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.

Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.

Instructions for the Participation Agreement

<PAGE>

related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.

legal\adop-agr\nsmpaa.002

Adoption Agreement #003
Letter Serial No. D246280a

Standardized Profit Sharing Plan Adoption Agreement

Features of Standardized Profit Sharing Plan

- - Allows for integration of contributions with Social Security
- - Incorporates top-heavy vesting schedule
- - May be paired with INVESCO Money Purchase Pension Plans

Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.

Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC

<PAGE>

ADOPTION AGREEMENT #003
STANDARDIZED PROFIT SHARING PLAN
(PAIRED PROFIT SHARING PLAN)

The undersigned, --------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.

ARTICLE I
DEFINITIONS

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

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

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

1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.

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

(a) No exclusions.

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

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

Related Employers/Leased Employees. An Employee of any member of the
Employer's related group (as defined in Section 1.30 of the Plan), and any
Leased Employee treated as an Employee under Section 1.31 of the Plan, is
eligible to participate in the Plan, unless excluded by reason of Options (b) or
(c). [Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants in
the Plan.]

<PAGE>

1.12 COMPENSATION

Treatment of elective contributions. (Choose (a) or (b))

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

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

Modifications to Compensation definition. (Choose (c) or at least one of
(d) and (e))

(d) The Plan excludes Compensation in excess of $-----------------.

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

1.17 PLAN YEAR/LIMITATION YEAR.

Plan Year. Plan Year means: (Choose (a) or (b))

(a) The 12 consecutive month period ending every ---------------.

(b) (Specify) --------------------------------------------------.

Limitation Year. The Limitation Year is: (Choose (c) or (d))

(d) The 12 consecutive month period ending every ---------------.

1.18 EFFECTIVE DATE.

New Plan. The "Effective Date" of the Plan is ------------------.

Restated Plan. The restated Effective Date is ------------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ----------------------.
(Note: See the Effective Date Addendum.)

1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))

(a) The actual method.

(b) The ------------------------ equivalency method, except:

(1) No exceptions.

(2) The actual method applies for purposes of: (Choose at
least one)

<PAGE>

(i) Participation under Article II.

(ii) Vesting under Article V.

(iii)Accrual of benefits under Section 3.06.

[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]

1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition tot he predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s):
- -------------------------. Service with the designated predecessor employer(s)
applies: (Choose at least one of (a) or (b))

(a) For purposes of participation under Article II.

(b) For purposes of vesting under Article V.

[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]

1.31 LEASED EMPLOYEES.

If a Leased Employee participates in a save harbor money purchase plan (as
described in Section 1.31) maintained by the leasing organization, but the
Employer is not eligible for the safe harbor plan exception: (Choose (a) or (b))

(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the safe harbor plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. [Note: The Employer may
not elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]

ARTICLE II
EMPLOYEE PARTICIPANTS

2.01 ELIGIBILITY.

Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:

<PAGE>

(Choose (a) or (b) or both)

(a) Attainment of age -------------------- (specify age, not exceeding 21).

(b) Service requirement. (Choose one of (1) through (4))

(1) One Year of Service.

(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.

(3) ------------months (not exceeding 24) following the Employee's
Employment Commencement Date.

(4) One Hour of Service.

Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(c), (d) or (e))

(d) The first day of the Plan Year.

(e) (Specify entry dates) -------------------------------.

Time of Participation. An Employee will become a Participant, unless
excluded under Adoption Agreement Section 1.07, on the Plan Entry Date (if
employed on that date): (Choose (f), (g) or (h))

(f) immediately following

(g) immediately preceding

(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) of (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]

Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))

(I) All Employees of the Employer, except: (Choose (1) or (2))

(1) No exceptions

<PAGE>

(2) Employees who are Participants in the Plan as of the
Effective Date.

(j) Solely to an Employee employed by the Employer after ----------------------.
If the Employee was employed by the specified date, the Employee will become a
Participant: (Choose (1) or (2))

(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age ------------------- (not to exceed 21).

(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]

2.02 YEAR OF SERVICE - PARTICIPATION.

Hours of Service. An Employee must complete: (Choose (a) or (b))

(a) 1,000 Hours of Service

(b) ------------------------ Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.

Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))

(d) The Plan year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.

2.03 BREAK IN SERVICE - PARTICIPATION.

The Break in Service rule described in Section 2.03(B) of the Plan: (Choose
(a) or (b))

(a) Does not apply to the Employer's Plan.

(b) Applies to the Employer's Plan.

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

3.01 AMOUNT.

The amount of the Employer's annual contribution to the Trust will equal:
(Choose (a), (b), (c) or (d))

(a) The amount (or additional amount) the Employer may from time to time deem
advisable.

<PAGE>

(b) -----------------% of the Compensation of all Participants under the Plan,
determined for the Employer's taxable year for which it makes the contribution,
[Note: The percentage selected may not exceed 15%.]

(d) This Plan is a frozen Plan effective ---------------. The Employer will not
contribute to the Plan with respect to any period following the stated date.

Net Profits. The Employer: (Choose (e) or (f))

(e) Need not have Net Profits to make its annual contribution under this Plan.

(f) Must have current or accumulated Net Profits exceeding
$----------------- to make the contributions described in Option
- ------------------.

The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each participating
member separately will determine Net Profits. "Net Profits" includes both
current and accumulated net profits. The term "net Profits" specifically
excludes:
- ---------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]

3.04 CONTRIBUTION ALLOCATION.

(a) Nonintegrated Allocation Formula. The Advisory Committee will allocate the
annual Employer contributions (and Participant forfeitures) in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.

<PAGE>

(b) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First,
the Advisory Committee will allocate the annual Employer contributions (and
Participant forfeitures) in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (e).

(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation must
not exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the
Maximum Disparity Table following Option (e).

Finally, the advisory Committee will allocate any remaining annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.

As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.

<PAGE>

As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants for the Plan
year. The allocation under this paragraph, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under the Maximum Disparity Table following Option
(e).

(e) Excess Compensation. For purposes of Option (b), (c) or (d), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))

(1) -------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))

(i) Rounded to ------------------------- (but not exceeding
the taxable wage base).

(ii) But not greater than $----------------.

(iii) Without any further adjustment or limitation.

(2) $------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]

Maximum Disparity Table. For purposes of Options (b), (c) and
(d), the applicable percentage is:

Integration Level Applicable Percentages Applicable
(as percentage of for Option (b) or Percentages
taxable wage base) Option (c) For Option (d)
- --------------------------------------------------------------------------------
100% 5.7% 2.7%

More than 80% but
less than 100% 5.4% 2.4%

More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%

20% (or $10,000, if
greater) or less 5.7% 2.7%

<PAGE>

Top Heavy Minimum Allocation - Eligible Participant. A Participant is
entitled to the top heavy minimum allocation in Section 3.04(B) of the Plan if
he is employed by the Employer on the last day of the Plan Year, unless: (Choose
(f) or (g))

(f) No exceptions.

(g) The Participant is a Key Employee for the Plan Year.

[Note: If the Employer selects this Option (g), it will have to determine
for each Plan Year who are the Key Employees under the Plan.]

Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the
top heavy minimum allocation to which he is entitled under
Section 3.04(B): (Choose (h) or (i))

(h) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.

(i) The Employer will satisfy the top heavy minimum allocation under the Paired
Pension Plan the Employer also maintains under this Master Plan. However, the
Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Pension Plan. See Section 3.04(B)(7)(b) of the Plan.

If the Employer maintains another plan which is not a Paired Pension Plan
offered under this Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.

Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04, without regard to
which contributing related group member employs the Participant. A Participant's
Compensation includes Compensation from all related employers, irrespective of
which related employers are contributing to the Plan.

3.05 FORFEITURE ALLOCATION.

Subject to any restoration allocation required under Sections 5.04 or 9.14,
the Advisory Committee will allocate a Participant forfeiture in accordance with
Section 3.04: (Choose (a) or (b); (c) is optional in addition to (a) or (b))

(a) As an Employer contribution for the Plan Year in which the forfeiture
occurs, as if the Participant forfeiture were an additional Employer
contribution for that Plan Year.

<PAGE>

(b) To reduce the Employer contribution for the Plan Year:
(Choose (1) or (2))

(1) in which the forfeiture occurs.

(2) immediately following the Plan Year in which the
forfeiture occurs.

3.06 ACCRUAL OF BENEFIT.

Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the allocation under Adoption Agreement Section 3.04 by
taking into account: (Choose (a) or (b))

(a) The Employee's Compensation for the entire Plan Year.

(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan, except (Choose (1) or (2))

(1) No exceptions.

(2) For purposes of the first 3% of Compensation allocated to all
Participants under Options (a), (c) or (d) of Adoption Agreement Section
3.04, whichever applies, the Advisory Committee will take into account the
Employee's
Compensation for the entire Plan Year.

Accrual Requirements. To receive an allocation of Employer contributions and
Participant forfeitures, if any, for the Plan year, a Participant must satisfy
the accrual requirements of this paragraph. If the Participant is employed by
the Employer on the last day of the Plan Year, the Participant must complete at
least one hour of Service for that Plan Year. If the Participant terminates
employment with the Employer during the Plan year, the Participant must complete
at least ------------- Hours of Service (not exceeding 501) during the Plan
Year, except: (Choose (C) or (d))

(d) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose at least
one of (1), (2) and (3))

(1) Death.

(2) Disability.

<PAGE>

(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.

3.15 MORE THAN ONE PLAN LIMITATION.

If the provisions of Section 3.15 apply, the Excess Amount attributed to
this Plan equals: (Choose (a), (b) or (c))

(a) The product of:

(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times

(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).

(b) The total Excess Amount.

[Note: If the Employer adopts Paired Plans available under this Master
Plan, the Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]

3.18 DEFINED BENEFIT PLAN LIMITATION.

Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))

(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.

(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))

(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.

(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.

[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]

Override of 100% Limitation. The Employer elects: (Choose (c) or 9d))

<PAGE>

(c) To apply the 100% limitation described in Section 3.19(1) of the Plan
in all Limitation Years. [Note: This election will avoid having to calculate the
Plan's top heavy ratio for any year.]

(d) Not to apply the 100% limitation for Limitation Years in which the Plan's
top heavy ratio (as determined under Section 1.33 of the Plan) does not exceed
90%, but only if the defined benefit plan satisfies the extra minimum benefit
requirements of Code ss.415(h)(2) (and the applicable Treasury regulations)
after taking into account the Employer's election under Options (e), (f), (g) or
(h) of this Section 3.18. To determine the top heavy ratio, the Advisory
Committee will use the following interest rate and mortality assumptions to
value accrued benefits under a defined benefit plan:
- ---------------------------------------. [Note: This election will require the
Advisory Committee to calculate the Plan's top heavy ratio.]

(e) No modifications.

(f) By substituting 4% for 3% in Paragraph 9b) of Section 3.04(B)(1) of the
Plan, but only for any Plan Year in which Option (d) applies to override the
100% limitation.

(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest Participant
contribution rate for the Plan Year is less than that increased percentage.

(h) By eliminating the top heavy minimum allocation. [Note: The Employer
may not select this Option (h) if the defined benefit plan does not guarantee
the top heavy minimum benefit under Code ss.416 for every Participant in this
Plan who is a Non-Key Employee.]

<PAGE>

ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING

5.01 NORMAL RETIREMENT.

Normal Retirement Age under the Plan is: (Choose (a) or (b))

(a) ---------------------------------- [State age, but may not exceed age
65].

(b) The later of the date the Participant attains -------- years of age or the
- -----------nniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]

5.02 PARTICIPANT DEATH OR DISABILITY.

The 100% vesting rule under Section 5.02 of the Plan: (Choose (a) or choose
one or both of (b) and (c))

(a) Does not apply.

(b) Applies to death.

5.03 VESTING SCHEDULE.

The Employer elects the following vesting schedule: (Choose (a) or (b); (c)
is available only in addition to (b))

(a) Immediate vesting. 100% Nonforfeitable at all times.

[Note: The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of service or more than
12 months of employment.]

(b) Graduated Vesting Schedules. (Choose (1), (2) or (3))

(1) 6-year graded (2) 3-year cliff (3) Modified Top

Year of Nonforfeitable Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage Service Percentage
- --------------------------------------------------------------------------------
Less Less Less
than 2 0% than 3 0% than 1 ------
2 20% 3 or more 100% 1 ------
3 40% 2 ------
4 60% 3 ------
5 80% 4 ------
6 or more 100% 5 ------

6 or more 100%

[Note: Under Option (b)(3), the vesting schedule must satisfy the
top heavy requirements of Code ss.416.]

<PAGE>

(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $------------- or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT.

The deemed cash-out rule described in Section 4.04(C) of the Plan: (Choose
(a) or (b))

(a) Does not apply.

(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.

5.06 YEAR OF SERVICE - VESTING.

Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))

(a) Plan Years.

Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))

(d) ----------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

5.08 INCLUDED YEARS OF SERVICE - VESTING.

The Employer specifically excludes the following Years of Service: (Choose
(a) or at least one of (b), (c) and (d))

(a) None other than as specified in Section 5.08(a) of the Plan.

(b) Any Year of Service before the Participant attained the age of
- --------------------. [Note: The age selected may not exceed age 18.]

(

<PAGE>

d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This exception
applies only if the Participant is 0% vested in his Accrued Benefit derived from
Employer contributions at the time he has a Break in Service. Furthermore, the
aggregate number of Years of Service before a Break in Service do not include
any Years of Service not required to be taken into account under this exception
by reason of any prior Break in Service.

ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS

Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption ate
or the Effective Date of this Adoption Agreement.

6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.

Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]

Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))

(a) ---------- of the ---------------- Plan Year beginning after the
Participant's Separation from Service.

(b) ------------------ following the Participant's Separation from
Service.

(c) ------------------------ of the Plan Year after the Participant incurs
- ---------------------------- Break(s) in Service (as defined in Article V).

(d) following the Participant's attainment of Normal Retirement Age, but
not earlier than --------------- days following his Separation from Service.

Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.

Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))

<PAGE>

(e) ------------------ after the Participant terminates employment because of
disability.

(f) The same as if the Participant had terminated employment without
disability.

Hardship. (Choose (g) or (h))

(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.

(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
Section 6.01(A)(4) of the Plan.

Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i) or (j))

(i) Treats the default as a distributable event. The Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.

(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT.

The Advisory Committee will apply Section 6.02 of the Plan with the
following modifications: (Choose (a) or (b))

(a) No modifications.

(b) The Plan permits the following annuity options:
- ----------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]

6.03 BENEFIT PAYMENT ELECTIONS.

<PAGE>

(a) As of any distribution date, but not earlier than -------------- of the
- -------- Plan Year beginning after the Participant's Separation from Service.

(b) As of the following date(s): (Choose at least one of Options
(1) and (5))

(1) As of any distribution date after the close of the Plan Year in which
the Participant attains Normal Retirement Age.

(2) Any distribution date following his Separation from
Service.

(3) Any distribution date in the -------------- Plan Year(s) beginning
after his Separation from Service.

(4) Any distribution date in the Plan Year after the Participant incurs
------------ Break(s) in Service (as defined in Article V).

(5) Any distribution date following attainment of age --------- and
completion of at least --------- Years of Service (as defined in Article
V).

(d) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable Accrued
Benefit after he attains: (Choose (1) or (2))

(1) Normal Retirement Age.

(2) ------------------- years of age and is at least ----------%
vested in his Accrued Benefit. [Note: If the percentage is
less than 100%, see the special vesting formula in Section
5.03.]

(e) After a Participant has participated in the Plan for a period of not
less than ------------ years and he is 100% vested in his Accrued Benefit, until
he retires, the Participant has a continuing election to receive all or any
portion of his Accrued Benefit. [Note: The number in the blank space may not be
less than 5.]

(f) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy
under Section 6.01(A)(4) of the Plan. In no event may a Participant receive a

<PAGE>

hardship distribution under this Option (f) before he is at least
- ---------% vested in his Accrued Benefit. [Note: If the percentage in the
blank space is less than 100%, see the special vesting formula in Section 5.03.]

6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.

The annuity distribution requirements of Section 6.04: (Choose
(a) or (b))

(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).

(b) Apply to all Participants.

ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS

9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT.

If a distribution (other than a distribution from a segregated Account)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b))

(a) --------------% per annum. [Note: The percentage may equal 0%.]

(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.14 VALUATION OF TRUST.

In addition to each Accounting Date, the trustee must value the Trust Fund
on the following valuation date(s): (Choose (a) or (b))

(a) No other mandatory valuation dates.

(b) (Specify) -------------------------------------------.

EFFECTIVE DATE ADDENDUM
(Restated Plans Only)

<PAGE>

(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- ----------. [Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption Agreement to
restate the Plan for the Tax Reform Act of 1986, if applicable.]

(b) Eligibility conditions. The eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
- -------------.

(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after -------------------.

(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ----------. [Note: If the effective
date is later than Plan Years beginning after December 31, 1989, the accrual
requirements in the Plan prior to its restatement may not be more restrictive
for post-1989 Plan Years than the requirements permitted under Adoption
Agreement Section 3.06.]

(f) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ---------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]

(g) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ---------------------.

Execution Page

The Trustee (and custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan

<PAGE>

and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this ---------- day of
- -----------------, 19----.

Name and EIN of Employer: --------------------------------------

Signed: --------------------------------------------------------

Name(s) of Trustee: --------------------------------------------

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

Signed: ---------------------------------------------------------

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

Name of Custodian: ----------------------------------------------

Signed: ---------------------------------------------------------

[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]

Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number:
- -----------------------------------------------------------------

Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: 7800 E. Union Ave., Denver, Colorado 80201, (303) 779- 0731.

<PAGE>

another plan if this Plan, or the Paired Pension Plan, amended and restated that
prior plan and the prior plan was the same type of plan as the restated plan. If
the Employer maintains or has maintained another plan other than a Paired
Pension Plan, including a welfare benefit fund, as defined in Code ss.419(e),
which provides post-retirement medical benefits for key employees (as defined in
Code ss.419A(d)(3)), or an individual medical account (as defined in Code
ss.415(1)(2)), the Employer may not rely on this Plan's qualified status unless
it obtains a determination letter from the applicable IRS Key District office.

PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)

The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, --------------------------------------------
- --------------------------------------------------- the Signatory Employer to
the Execution Page of the Adoption Agreement.

1. The Effective Date of the undersigned Employer's
participation in the designated Plan is -------------------------------.

2. The undersigned Employer's adoption of this Plan
constitutes:

(a) The adoption of a new plan by the Participating Employer.

(b) The adoption of an amendment and restatement of a plan currently maintained
by the Employer, identified as ------------------------------------- and having
an original effective date of ---------------------------------------.
Dated this ---------------- day of ------------------, 19------.

Name of Participating Employer: ----------------------------------

Signed: ----------------------------------------------------------

Participating Employer's EIN: -------------------------------------

Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.

Name of Signatory Employer: -------------------------------------

Signed: --------------------------------------------------

Accepted:--------------------------------------------------
[Date]

<PAGE>

Name(s) of Trustee: --------------------------------------------

Signed: --------------------------------------------------

Accepted: ------------------------------------------------
[Date]

[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]

STN PSP AA Instructions

Complete the first blank in the paragraph by writing in the business' name in
its entirety.

1.02 Trustee

Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 14 for further explaination of Non-discretionary
Trustee.

1.03 Plan

Enter the plan name. Example: ABC Inc. Profit Sharing Plan.

1.07 Employee

If you want the plan to cover all employees, select option (a). If you want to
exclude from the plan any group(s) of employees, select any combination of (b)
or (c).

Related Employers/Leased Employers

You may not exclude leased employees or related employers from participation
unless they are excluded under options (b) or (c) of Section 1.07.

1.12 Compensation

Treatment of elective contributions

Choose option (a) if you prefer to "add back" employee elective 401(k)
contributions to compensation for purposes of allocating employer contributions,
forfeitures and for non-discrimination testing.

<PAGE>

Modifications to Compensation - You must choose option (c) or any
combination of (d) or (e). Any exclusion of compensation may result in
unallowable discrimination.

1.17 Plan Year

You must define the "plan year," usually it will follow the business tax year.

Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.

1.18 Effective Date

New Plan - Enter the first day of your plan year (usually January
1) and the year.

Restated Plan 0 Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.

1.27 Hours of Service

Choose which method you wish to use for counting hours worked by an
employee to accrue benefits. Option (b), the equivalency method, is explained in
Section 1.27 of the plan. Usually Option (a) is chosen.

1.29 Service for Predecessor Employer

1.31 Leased Employees

2.01 Eligibility

a. An employee must attain this age to become a participant (cannot exceed
age 21).

b. Pick how long (service) an employee must work to become a participant.

<PAGE>

Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.

Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.

Dual Eligibility - This section allows you to include in the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees.
Restated plans usually choose (i)(2).

2.02 Years of Service

Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.

Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary (Option (c) or the plan year
(Option (d)). Option (d) is chosen for administrative convenience.

2.03 Break in Service

This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.

Article III

3.01 Amount

Option (a) provides for a discreationary formula. Option (b) allows the employer
to determine the contribution separately for different catagoaries of
participants. Options (c) and (d) allow the employer to choose a fixed
contribution formula.

Net Profits - An employer may require net profits to make it's contribution or
may disregard profits to determine the contribution. If the employer selects
Option (f) it must also complete the two blanks.

3.04 Contribution Allocation

Allocation formula. The primary allocation formulas are in Options (a), (b), (c)
and (d). Option (a) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (b), (c) and (d) are
alternatives for integrated plans. Usually option (a) is chosen for
non-integrated plans.

<PAGE>

The two-tiered formula under Option (b) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4% or 4.3%) described in the second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.

Under the three-tiered formula of Option (c), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.

The four-tiered allocation under Option (d) is a hybrid of Options (b) and (c).
The sole purpose of Option (d) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (c). The fourth tier is a prorata allocation
based on total compensation.

3.05 Forfeiture Allocation

3.06 Compensation Taken Into Account

If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).

Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive an employer contribution
and forfeitures if they meet either of the two requirements below.

<PAGE>

Requirement #1

If the Participant was employed on the last day of the plan year and worked for
at least one hour during the plan year, or

Requirement #2

If the Participant terminates employment during the plan year after working at
least 501 hours for the employer.

3.15 More Than One Plan

3.18 Defined Benefit Limitation

Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit plan. Choose under option (b), which plan's benefit would be reduced if
a participant's total allocations for a year were to exceed the allowable limit.

5.01 Normal Retirement Age

Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).

5.02 Vesting Death/Disability

You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).

5.03 Vesting Schedule

Complete the Modified Top Heavy schedule based upon the following:

Years of Service

1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)

<PAGE>

5 (not less than 80%)
6 (not less than 100%)

5.04 Cash-Out Rule

If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.

5.06 Years of Service

Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).

5.08 Prior Years of Service

By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.

Article VI

The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Optional Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An option form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g. right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).

6.01 Distribution Date

<PAGE>

"administratively reasonable period of time" from the distribution date. A
typical distribution date for a Profit Sharing plan is 90 days after the plan
year end.

Nonforfeitable Accrued Benefit Not Exceeding $3,500

When a separated participant's vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" an therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.

Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).

6.02 Method of Payment

You may choose the standard forms of payment if this is a brand new plan and not
a restatment. If the plan is not subject to the annuity requirements of Section
6.04, usually option (a) is chosen. If you choose to allow annuities, option (b)
special waivers and consent rules apply to all distributions.

6.03 Participant Elections After Separation from Service

You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly tot he "distribution date" defined earlier.

Participant Elections Prior to Separation from Service

The following distribution elections apply to employer contributions regardless
of vested account balances, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to separation, select
option (c).

<PAGE>

6.04 Annuity Distributions

The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).

9.10 Value of Benefit

10.14 Valuation of Trust

You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally option (a) is chosen.

Instructions for Effective Date Addendum

You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (g) have an effective date other than your
restated effective date in Adoption Agreement Section 1.18. Some provisions in
the Tax Reform Act of 1986 were not effective until 1988 or 1989. The few
provisions, if any, that have later effective dates must specify when they are
effective.

a. Compensation definition may not be later than the first day of your 1991
plan year.

b. Eligibility conditions may not be later than the first day of your 1989
plan year.

c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.

d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.

e. Accrual requirements may not be earlier than the first day of your 1989
plan year.

f. Elimination of Net Profits may not be earlier than December 31, 1985.

g. Vesting schedule may not be later than the first day of your 1989 plan
year.

<PAGE>

Execution Page

The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides one
line above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, he or she should
execute as Employer. If the Employer is a corporation or a partnership, an
officer or a partner, as applicable, should execute the adoption agreement on
behalf of the Employer.

Trustee

If you selected option (a) of Section 1.02 then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.

If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.

The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.

Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if you are unsure
what 3-digit plan number to use.

Instructions for the Participation Agreement

<PAGE>

is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, he Employer may take one or two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.

legal\adop-agr\stnpspaa.003

Adoption Agreement #004
Letter Serial No. D246281a

Standardized Money Purchase Pension Plan

Standardized Money Purchase Pension Features

- - Allows for integration of contributions with Social Security
- - Allows for top-heavy vesting schedule
- - May be paired with INVESCO Profit Sharing Plans

Provided by:
The Financial Funds

Managed & Distributed by
INVESCO Funds Group, Inc.

Custodian:
INVESCO Trust Company

A Subsidiary of INVESCO MIM PLC

<PAGE>

Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement progrma will operate. Each section of
the Adoption Agreemetn requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace completent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.

<PAGE>

ADOPTION AGREEMENT #004
STANDARDIZED MONEY PURCHASE PLAN
(PAIRED PENSION PLAN)

The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.

ARTICLE I
DEFINITIONS

1.02 Trustee.

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

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

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

1.03 PLAN.

The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.

1.07 EMPLOYEE.

The following Employees are not eligible to participate in the Plan:
(Choose (a) or at least one of (b) or (c))

(a) No exclusions.

(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan).

[Note: If the Employer excludes union employees from the Plan, the Employer
must be able to provide evidence that retirement benefits were the subject of
good faith bargaining.]

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

[Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants in
the Plan.]

<PAGE>

1.12 COMPENSATION

Treatment of elective contributions. (Choose (a) or (b))

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

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

Modifications to Compensation definition. (Choose (c) or at least
one of (d) and (e))

(d) The Plan excludes Compensation in excess of $--------------.

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

1.17 PLAN YEAR/LIMITATION YEAR.

Plan Year. Plan Year means: (Choose (a) or (b))

(a) The 12 consecutive month period ending every --------------.

(b) (Specify) -------------------------------------------------.

Limitation Year. The Limitation Year is: (Choose (c) or (d))

(d) The 12 consecutive month period ending every --------------.

1.18 EFFECTIVE DATE.

New Plan. The "Effective Date" of the Plan is -------------------.

Restated Plan. The restated Effective Date is -------------------. This
Plan is a substitution and amendment of an existing retirement plan(s)
originally established -----------------------. (Note: See the Effective Date
Addendum.)

1.27 HOUR OF SERVICE.

The crediting method for Hours of Service is: (Choose (a) or (b))

(a) The actual method.

(b) The ----------------------- equivalency method, except:

(1) No exceptions.

<PAGE>

(2) The actual method applies for purposes of: (Choose at
least one)

(i) Participation under Article II.

(ii) Vesting under Article V.

(iii) Accrual of benefits under Section 3.06.

[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]

1.29 SERVICE FOR PREDECESSOR EMPLOYER.

In addition to the predecessor service the Plan must credit by reason of
Section 1.29 of the Plan, the Plan credits Service with the following
predecessor employer(s): --------------------------. Service with the designated
predecessor employer(s) applies: (Choose at least one of (a) or (b))

(a) For purposes of participation under Article II.

(b) For purposes of vesting under Article V.

[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]

1.31 LEASED EMPLOYEES.

ARTICLE II
EMPLOYEE PARTICIPANTS

<PAGE>

2.01 ELIGIBILITY.

Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)

(a) Attainment of age -------------------- (specify age, not exceeding 21).

(b) Service requirement. (Choose one of (1) through (4))

(1) One Year of Service.

(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.

(3) --------- months (not exceeding 24) following the Employee's
Employment Commencement Date.

(4) One Hour of Service.

Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))

(d) The first day of the Plan Year.

(e) (Specify entry dates) --------------------------------.

Time of Participation. An Employee will become a Participant, unless
excluded under Adoption Agreement Section 1.07, on the Plan Entry Date (if
employed on that date): (Choose (f), (g) or (h))

(f) immediately following

(g) immediately preceding

Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))

(i) All Employees of the Employer, except: (Choose (1) or (2))

<PAGE>

(1) No exceptions

(2) Employees who are Participants in the Plan as of the
Effective Date.

(j) Solely to an Employee employed by the Employer after ---------------------.
If the Employee was employed by the specified date, the Employee will become a
Participant: (Choose (1) or (2))

(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age --------------------- (not to exceed 21).

(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]

2.02 YEAR OF SERVICE - PARTICIPATION.

Hours of Service. An Employee must complete: (Choose (a) or (b))

(a) 1,000 Hours of Service

(b) ------------------------ Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.

Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))

(d) The Plan year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.

2.03 BREAK IN SERVICE - PARTICIPATION.

The Break in Service rule described in Section 2.03(B) of the Plan: (Choose
(a) or (b))

(a) Does not apply to the Employer's Plan.

(b) Applies to the Employer's Plan.

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

3.01 AMOUNT.

The amount of the Employer's annual contribution to the Trust will equal:
(Choose (a), (b), (c) or (d); (e) is mandatory if the Employer elects (b) or
(c))

<PAGE>

(a) Nonintegrated Contribution Formula. ---------------% of each Participant's
Compensation for the Plan Year.

(b) Integrated Contribution Formula. (Complete both percentages)
- ---------% of each Participant's Compensation for the Plan Year plus
- ---------% of each Participant's Compensation for the Plan Year in excess of
the Integration Level.

[Note: The second percentage may not exceed the lesser of the first
percentage or the applicable percentage described in the Maximum Disparity
Table.]

(c) Step-rate Integrated Contribution Formula. (Complete both percentages)
- --------% of each Participant's Compensation for the Plan Year which does not
exceed the Integration Level, plus ---------% of each Participant's Compensation
for the Plan Year in excess of the Integration Level. [Note: The difference
between the second percentage and the first percentage may not exceed the lesser
of the first percentage or the applicable percentage described in the Maximum
Disparity Table.]

[Note: If the Employer maintains Paired Plans, the Employer may not elect
Option (b) or Option (c) if the Paired Plan uses an integrated formula.]

(d) Frozen Plan Formula. This Plan is a frozen Plan effective
- -----------------------------. The Employer will not contribute to the Plan with
respet to any period following that stated date.

(e) Integration Level. The Integration Level under the Plan is:
(Choose (1) or (2))

(1) ------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))

(i) Rounded to -------------------- (but not exceeding
the taxable wage base).

(ii) But not greater than $----------------------.

(iii)Without any further adjustment or limitation.

(2) $------------- [Note: Not esceeding the taxable wage
base for the Plan Year in which this Adoption Agreement
first is effective.]

Maximum Disparity Table. For purposes of Options (b) and (c), the
applicable percentage is:

<PAGE>

Inegration Level (as Applicable
percentage of taxable wage base) Percentage
-----------------------------------------------------------

100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% (but not less than $10,001)
and not more than 80% 4.3%
20% (or $10,000, if greater) or less 5.7%

Application of contribution formula. The Employer will determine its
contribution under Options (a), (b) or (c) by taking into account only the
Participants who satisfy the conditions under Section 3.06 for an allocation of
Employer contributions and only the Participant's Compensation taken into
account under Section 3.06. The Empoyer contribution on behalf of a Participant
may not exceed the Participant's annual additions limitation described in Part 2
of Article III, even if the contribution formula otherwise would require a
larger contribution.

Coordination with defined benefit plan. If the Employer maintains a defined
benefit plan under which at least one Participant in this Plan participates, the
Employer will determine its contribuion under Options (a), (b) or (c) by
reducign the total contibution, if necessary to equal the maximum deductible
amount under Code ss.404(a)(7). If the Employer must reduce its contribution,
the Employer determines its contibution with respect to each Participant by
adjusting each percentage under Options (a), (b) or (c) by the same ratio as the
reduced total Employer contribution for the Plan Year bears to the total
Employer contribution determined without applciation of Code ss.404(a)(7).

Related Employers. Unless obligated by the joint and several liability
provisions of the code or of ERISA, a related group member, as defined in
Section 1.30 of the Plan, may not contribute tot his Plan unless it executes a
Participation Agreement, even if its Employees are Participants in the Plan. The
signatory Employer and any Participaing Employer(s) will satisfy the annual
contribution under this Section 3.01 as agreed upon by those Employers.

3.04 CONTRIBUTION ALLOCATION.

Method of Allocation. Subject to any restoration allocation required under
Section .04, the Advisory Committee will allocate and credit each annual
Employer contribution to the Account of each Participant who satisfies the
conditions of Section 3.06, in accordance with the contribution formula adopted
by the Employer under Adoption Agreement Section 3.01.

(a) No exceptions.

<PAGE>

(b) The Participant is a Key Employee for the Plan Year. [Note: If the
Employer selects this Option (b), it will need to identify the Key Employees
under the Plan.]

Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under thsi Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (c) or (d))

(c) The employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.

(d) The Employer will satisfy the top heavy minimum allocation under the Paired
Profit Sharing Plan the Employer also maintains under this Master Plan. However,
the Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Profit Sharing Plan. See Section 3.04(B)(7)(b) of the Plan.

If the Employer maintains another plan which is not a Paired Profit Sharing Plan
offered under thsi Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.

3.05 FORFEITURE ALLOCATION.

Subject to any restoration allocation required under Sections 5.04 or 9.14,
the Advisory Committee will allocate a Participant forfeiture: (Choose (a) or
(b); (c) is optional in addition to (a) or (b))

(a) Reduction of Employer contribution. In accordance with Section 3.04, to
reduce the Employer contribution for the Plan Year: (Choose (1) or (2))

(1) in which the forfeiture occurs.

(2) immediately following the Plan Year in which the
forfeiture occurs.

(b) Increased allocation. In addition to the Employer contribution for the Plan
Year in which the forfeiure occurs. The Advisory Committee will allocate the
Participant forfeitures for a Plan Year to the Account of each Participant who
satisfies the conditions of Section 3.06, in the same ratio that such
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.

<PAGE>

3.06 ACCRUAL OF BENEFIT.

Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory committee will detemine the contribution
under Section 3.01, and, if applicable, the allocation under Option (b) of
Section 3.05, by taking into account: (Choose (a) or (b))

(a) The Employee's Compensation for the entire Plan Year.

(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan.

(d) No Hour of Service requirement if the Participant terminates employment
during the Plan Year on account of: (Choose at least one of (1), (2) and (3))

(1) Death.

(2) Disability.

(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.

3.15 MORE THAN ONE PLAN LIMITATION.

If the provisions of Section 3.15 apply, the Excess Amount attributed to
this Plan equals: (Choose (a), (b) or (c))

(a) The product of:

(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times

(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).

(b) The total Excess Amount.

<PAGE>

[Note: If the Employer adopts Paired Plans available under this Master
Plan, the Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]

3.18 DEFINED BENEFIT PLAN LIMITATION.

Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))

(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.

(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))

(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.

(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.

[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]

Override of 100% Limitation. The Employer elects: (Choose (c) or 9d))

c) To apply the 100% limitation described in Section 3.19(1) of the Plan
in all Limitation Years.

[Note: This election will avoid having to calculate the Plan's top heavy
ratio for any year.]

(d) Not to apply the 100% limitation for Limitation Years in which the
Plan's top heavy ratio (as determined under Section 1.33 of the Plan) does not
exceed 90%, but only if the defined benefit plan satisfies the extra minimum
benefit requirements of Code ss.416(h)(2) (and the applicable Treasury
regulations) after taking into account the Employer's election under Options
(e), (f), (g) or (h) of this Section 3.18. To determine the top heavy ratio, the
Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
- -------------------------.

[Note: This election will require the Advisory Committee to calculate the
Plan's top heavy ratio.]

<PAGE>

(e) No modifications.

(f) By substituting 4% for 3% in Paragraph 9b) of Section 3.04(B)(1) of the
Plan, but only for any Plan Year in which Option (d) applies to override the
100% limitation.

(h) By eliminating the top heavy minimum allocation.

[Note: The Employer may not select this Option (h) if the defined benefit
plan does not guarantee the top heavy minimum benefit under Code ss.416 for
every Participant in this Plan who is a Non-Key Employee.]

ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING

5.01 NORMAL RETIREMENT.

Normal Retirement Age under the Plan is: (Choose (a) or (b))

(a) ------------------------------- [State age, but may not exceed age
65].

(b) The later of the date the Participant attains ---------(------) years of
age or the --------(---------) anniversary of the first day of the Plan Year in
which the Participant commenced participation in the Plan. [The age selected may
not exceed age 65 and the anniversary selected may not exceed the 5th.]

5.02 PARTICIPANT DEATH OR DISABILITY.

The 100% vesting rule under Section 5.02 of the Plan: (Choose (a) or choose
one or both of (b) and (c))

(a) Does not apply.

<PAGE>

(b) Applies to death.

5.03 VESTING SCHEDULE.

The Employer elects the following vesting schedule: (Choose (a) or (b); (c)
is available only in addition to (b))

(a) Immediate vesting. 100% Nonforfeitable at all times.

[Note: The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of service or more than
12 months of employment.]

(b) Graduated Vesting Schedules. (Choose (1), (2) or (3))

(1) 6-year graded (2) 3-year cliff (3) Modified Top
Heavy Schedule

[Note: Under Option (b)(3), the vesting schedule must satisfy the
top heavy requirements of Code ss.416.]

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT.

The deemed cash-out rule described in Section 4.04(C) of the Plan: (Choose
(a) or (b))

(a) Does not apply.

(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.

5.06 YEAR OF SERVICE - VESTING.

Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))

<PAGE>

(a) Plan Years.

Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))

(d) ---------------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

5.08 INCLUDED YEARS OF SERVICE - VESTING.

The Employer specifically excludes the following Years of Service: (Choose
(a) or at least one of (b), (c) and (d))

(a) None other than as specified in Section 5.08(a) of the Plan.

(b) Any Year of Service before the Participant attained the age of
- --------------------.

[Note: The age selected may not exceed age 18.]

(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.

ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS

Code ss.411(d)(6) Protected Benefits. The election under this Article VI may not
eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.

<PAGE>

6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.

Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))

(a) ----------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.

(b) ---------------------- following the Participant's Separation from
Service.

(c) ------------------------- of the Plan Year after the Participant incurs
- -------------------- Break(s) in Service (as defined in Article V).

(d) ------------- following the Participant's attainment of Normal
Retirement Age, but not earlier than -------------- days following his
Separation from Service.

Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.

Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))

(e) ----------------- after the Participant terminates employment because
of disability.

(f) The same as if the Participant had terminated employment without
disability.

Hardship. (Choose (g) or (h))

(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.

(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
Section 6.01(A)(4) of the Plan.

Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i) or (j))

<PAGE>

(i) Treats the default as a distributable event only if the
Participant has incurred a Separation from Service or has attained Normal
Retirement Age. If either conditions applies, the Trustee, at the time of
the default or, if later, at the time either conditions first occurs, will
reduce the Participant's Nonforfeitable Accrued Benefit by the lesser of
the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.

(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Setion 6.03
of the Plan, the Trustee will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit.

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT.

The Advisory Committee will apply Section 6.02 of the Plan with the
following modifications: (Choose (a) or (b))

(a) No modifications.

(b) The Plan permits the following annuity options:
- ----------------------------------------------------------------.
[Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]

6.03 BENEFIT PAYMENT ELECTIONS.

(a) As of any distribution date, but not earlier than -------- of the --------
Plan Year beginning after the Participant's Separation from Service.

(b) As of the following date(s): (Choose at least one of Options
(1) through (5))

(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.

(2) Any distribution date following his Separation from
Service.

(3) Any distribution date in the ----------------- Plan Year(s) beginning
after his Separation from Service.

(4) Any distribution date in the Plan Year after the
Participant incurs --------------------- Break(s) in Service (as
defined in Article V).

<PAGE>

(5) Any distribution date following attainment of age ----------- and
completion of at least -------- Years of Service (as defined in Article
V).

(d) Attainment of Normal Retirement Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his Nonforfeitable
Accrued Benefit after he attains Normal Retirement Age.

ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS

9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT.

If a distribution (other than a distribution from a segregated Account)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b))

(a) --------------% per annum. [Note: The percentage may equal 0%.]

(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.14 VALUATION OF TRUST.

In addition to each Accounting Date, the Trustee must value the Trust Fund
on the following valuation date(s): (Choose (a) or (b))

(a) No other mandatory valuation dates.

(b) (Specify) --------------------------------------.

EFFECTIVE DATE ADDENDUM
(Restated Plans Only)

The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)

<PAGE>

(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -----------------.

[Note: May not be effective later than the first day of the first Plan Year
beginning after the Employer executes this Adoption Agreement to restate the
Plan for the Tax Reform Act of 1986, if applicable.]

(b) Eligibility conditions. The eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
- -------------------.

(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after --------------------.

(e) Reallocation of Forfeitures. The reallocation of forfeitures under
Section 3.05 applies to Plan Years beginning after ------------------.

[Note: The date specified may not be earlier than December 31, 1985.]

(f) Accrual requirements.

The accrual requirements of Section 3.06 are effective for Plan Years
beginning after -----------------. [Note: If the effective date is later than
Plan Years beignning after December 31, 1989, the accrual requirements in the
Plan prior to its restatement may not be more restrictive for post- 1989 Plan
Years than the requirements permitted under Adoption Agreement Section 3.06.]

(g) Vesting schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after --------------------.

For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated povisions. A special Effective Date may not result in the delay
of a Plan provisionbeyond the permissible Effective Date under any applicable
law requirements.

Execution Page

<PAGE>

Name and EIN of Employer: ---------------------------------------

Signed: ---------------------------------------------------------

Name(s) of Trustee: ---------------------------------------------

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

Signed: ---------------------------------------------------------

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

Name of Custodian: ----------------------------------------------

Signed: ---------------------------------------------------------

[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]

Plan Number: The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------.

Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 E. Union Ave., Denver, Colorado
80201, (303) 779-0731.

<PAGE>

Reliance on Opinion Letter. If the Employer does not maintain (and has
never maintained) any other plan other than this Plan and a Paired Profit
Sharing Plan, it may rely on the Master Plan Sponsor's opinion letter covering
this Plan for purposes of plan qualification. For this purpose, the Employer has
not maintained another plan if this Plan, or the Paired Profit Sharing Plan,
amended and restated that prior plan and the prior plan was the same type of
plan as the restated plan. If the Employer maintains or has maintained another
plan other than a Paired Profit Sharing Plan, including a welfare benefit fund,
as defined in Code ss.419(e), which provides post-retirement medical benefits
for key employees (as defined in Code ss.419A(d)(3)), or an individual medical
account (as defined in Code ss.415(1)(2)), the Employer may not rely on this
Plan's qualified status unless it obtains a determination letter from the
applicable IRS Key District office.

PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)

The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, ----------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.

1. The Effective Date of the undersigned Employer's participation in the
designated Plan is ---------------------------.

2. The undersigned Employer's adoption of this Plan constitutes:

(a) The adoption of a new plan by the Participating Employer.

(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as ------------------------------------
and having an original effective date of --------------------------------------.

Dated this ----------------- day of --------------, 19----.

Name of Participating Employer: ------------------------------------

Signed: ------------------------------------------------------------

Participating Employer's EIN: --------------------------------------

Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.

Name of Signatory Employer: ----------------------------------------

<PAGE>

Accepted: -------------------------------------------------
[Date]

Signed: ---------------------------------------------------

Name(s) of Trustee: ---------------------------------------

Accepted: -------------------------------------------------
[Date]

Signed: ---------------------------------------------------

[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]

STD MP AA Instructions

Complete the first blank in the paragraph by writing in the business' name in
its entirety.

1.02 Trustee

1.03 Plan

Enter the plan name. Example: ABC Inc. Money Purchase Pension
Plan.

1.07 Employee

If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) or (c).

Leased Employees

You may not exclude leased employees from participation unless they are excluded
under options (b) or (c) of Section 1.07.

Related Employers

You may not exclude related employers from participating in the plan unless they
are excluded under options (b) or (c) of Section 1.07.

<PAGE>

1.12 Compensation

Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k) contributions to compensation for purposes of
allocating employer contributions, and forfeitures.

Modification to Compensation

Modifications to Compensation - You must choose option (c) or any combination of
(d) or (e). Any exclusion of compensation may result in unallowable
discrimination.

1.17 Plan Year

You must define the "plan year," usually it will follow the business tax year.

Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.

1.18 Effective Date

New Plan - Enter the first day of your plan year (usually January 1) and
the year.

Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.

1.27 Hours of Service

1.29 Service for Predecessor Employer

1.31 Leased Employees

<PAGE>

2.01 Eligibility

a. An employee must attain this age to become a participant (cannot exceed
age 21).

b. Pick how long (service) an employee must work to become a participant.

Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.

Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.

2.02 Years of Service

Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.

Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.

2.03 Break in Service

This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.

3.01 Employer Contributions and Forfeitures

Amount - The employer must select a definite contribution formula under a money
purchase pension plan. Option (a) is a nonintegrated formula, options (b) and
(c) are integrated formulas.

Option (a) allows the employer to choose a fixed amount for the contribution
regardless of compensation.

Options (b) and (c) are two approaches to allowing permitted disparity in the
contribution formula. Option (b) applies the first percentage to a participant's
total compensation.

<PAGE>

3.04 Contribution Allocation

Contribution will be allocated (split up to participants) in the manner elected
to computate the contribution selected under Section 3.01.

3.05 Forfeiture Allocation

Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as a reduction
in contributions. Option (b) allocates forfeitures as an additional employer
contribution.

3.06 Compensation Taken Into Account

If you wish to count a participant's full year's compensation (even if he or she
entered the plan during the year), for contributions choose option (a), if not,
choose option (b).

Requirement #1

If the Participant was employed on the last day of the plan year and worked for
at least one hour during the plan year, or

Requirement #2

If the Participant terminates employment during the plan year after working at
least 501 hours for the employer.

3.15 More Than One Plan

3.18 Defined Benefit Plan Limitation

5.01 Normal Retirement Age

Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).

<PAGE>

5.02 Vesting Death/Disability

You may choose to allow 100% vesting for participants that terminate from
service because of death, option (b) or disability, option (c).

5.03 Vesting Schedule

Choose what vesting schedule(s) you want to apply to employer contributions. If
you choose option (b), you must at a minimum complete the top-heavy vesting
schedule. Remember, if the eligibility requirements are more than one year,
option (a) must be chosen.

Complete the Modified Top Heavy Schedule based upon the following:

Nonforfeitable Percentage
Years of Service

1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)

5.04 Cash-Out Rule

If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.

5.06 Years of Service

Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose Option (a).

5.08 Prior Years of Service

By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.

Article 6

<PAGE>

provisions regarding optional forms of benefit, may not eliminate an
optional form of benefit with respect to the account balance accrued as of the
date the Employer executes the restated adoption agreement (or, if later, the
effective date of that restated adoption agreement). An option form of benefit
includes the form of payment (e.g., lump sum or installments), the timing of
payment (e.g., immediately after separation form service, following a break in
service, after attaining normal retirement age) and the medium of payment (e.g.
right to elect distribution in Employer securities, right to elect distribution
in the form of an annuity contract).

6.01 Distribution Date

A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
administratively reasonable period of time from the distribution date. Typical
distribution dates are annual dates such as March 1.

Nonforfeitable Accrued Benefit Not Exceeding $3,500

When a separated participant's vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.

Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).

<PAGE>

6.02 Method of Payment

Money purchase pension plans require payouts to be in the form of a
commercial annuity unless properly waived. The employer may in options (b) and
(c), (if this is a new plan), limit the alternative method of payment. Caution:
an employer cannot eliminate a prior method of payment by restating the plan
onto this document.

6.03 Participant Elections After Separation form Service

9.10 Value of Benefit

10.14 Valuation of Trust

You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.

Instructions for Effective Date Addendum

You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (g) have an effective date other than your
restated effective date in adoption agreement section 1.18. Some provisions in
the Tax Reform Act of 1986 were not effective until 1988 or 1989 the few
provisions (if any) that have later effective dates must specify when they are
effective.

a. Compensation definition may not be later than the first day of your 1991
plan year.

b. Eligibility conditions may not be later than the first day of your 1989
plan year.

c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.

d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.

e. Reallocation of Forfeitures may not be earlier than December 31, 1989.

f. Accrual requirements may not be earlier than the first day of your 1989
plan year.

<PAGE>

g. Vesting schedule may not be later than the first day of your 1989 plan
year.

Execution Page

Trustee

If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.

If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.

The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.

Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if you are unsure
what 3-digit plan number to use.

Instructions for the Participation Agreement

<PAGE>

participating Employer should execute a separate Participation Agreement.
See Section 1.30 of the Plan for the definition of related Employers.

Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one or two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.

legal\adop-agr\stdmpaa.004

Adoption Agreement #005
D346282a

Nonstandardized 401(k) Plan Adoption Agreement

Nonstandardized 401(k) Plan Considerations

For: Businesses that want the ability of employee pre-tax
contributions.

Compensation: The employer may exclude certain types of
compensation.

Eligibility for Contributions: May require employees to work up
to 1,000 hours and be employed on the last day.

Investment Direction: May allow the employee to direct where
funds are invested.

Eligibility: The employer may exclude certain classifications or
groups of employees.

Provided by:
The Financial Funds

Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC

<PAGE>

ADOPTION AGREEMENT #005
NONSTANDARDIZED CODE 401(k)
PROFIT SHARING PLAN

ARTICLE I
DEFINITIONS

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

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

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

1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.

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

(a) No exclusions.

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

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

(d) Commission Salesmen.

(e) Any Employee compensated on a salaried basis.

(f) Any Employee compensated on an hourly basis.

(g) (Specify) -------------------------------------------------
- -----------------------------------------------------------------

<PAGE>

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

(h) Not eligible to participate in the Plan.

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

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

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

1.12 COMPENSATION

Treatment of elective contributions. (Choose (a) or (b))

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

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

Modifications to Compensation definition. (Choose (c) or at least one of
(d) through (j))

(d) The Plan excludes Compensation in excess of $---------------.

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

(f) The Plan excludes bonuses.

(g) The Plan excludes overtime.

(h) The Plan excludes Commissions.

<PAGE>

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

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

Special definition for matching contributions. "Compensation" for purposes
of any matching contribution formula under Article III means: (Choose (k) or (l)
only if applicable)

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

(l) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------

Special definition for salary reduction contributions. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (m) or at least one of (n) or (o), if applicable)

(m) No exceptions.

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

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

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

(o) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

1.17 PLAN YEAR/LIMITATION YEAR.

Plan Year. Plan Year means: (Choose (a) or (b))

(a) The 12 consecutive month period ending every ---------------.

(b) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

Limitation Year. The Limitation Year is: (Choose (c) or (d))

(d) The 12 consecutive month period ending every ---------------.

1.18 EFFECTIVE DATE.

New Plan. The "Effective Date" of the Plan is -----------------.

Restated Plan. The restated Effective Date is -----------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ---------------------.
(Note: See the Effective Date Addendum.)

1.27 HOUR OF SERVICE. The crediting method for Hours of Service is: (Choose
(a) or (b))

(a) The actual method.

(b) The ---------------------------- equivalency method, except:

(1) No exceptions.

(2) The actual method applies for purposes of: (Choose at
least one)

(i) Participation under Article II.

(ii) Vesting under Article V.

(iii)Accrual of benefits under Section 3.06.

[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]

1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s):---------------------
- --------------------------------------------------------------------------------
Service with the designated predecessor employer(s) applies: (Choose at least
one of (a) or (b); (c) is available only in addition to (a) or (b))

(a) For purposes of participation under Article II.

(b) For purposes of vesting under Article V.

[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]

<PAGE>

1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the Plan
and also participates in a plan maintained by the leasing organization: (Choose
(a) or (b))

(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer nonelective contributions (other than designated qualified nonelective
contributions) under this Plan by the Leased Employee's allocation under the
leasing organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the Employer. The
leasing organizationn's plan:

(1) Must be a money purchase plan which would satisfy the definition under
Section 1.31 of a safe harbor plan, irrespective of whether the safe
harbor exception applies.

(2) Must satisfy the features and, if a defined benefit plan, the method
of reduction described in an addendum to this Adoption Agreement, numbered
1.31.

ARTICLE II
EMPLOYEE PARTICIPANTS

2.01 ELIGIBILITY.

Eligibility conditions. To become a Participant in the Plan, an Employee
must satisfy the following eligibility conditions: (Choose (a) or (b) or both;
(c) is optional as an additional election)

(a) Attainment of age ------------------ (specify age, not exceeding 21).

(b) Service requirement. (Choose one of (1) through (3))

(1) One Year of Service.

(2) ---------- months (not exceeding 12) following the Employee's
Employment Commencement Date.

(3) One Hour of Service.

<PAGE>

(1) The requirements of this Option (c) apply to
participation in: (Choose at least one of (i) through (iii))

(i) The allocation of Employer nonelective contributions and
Participant forfeitures.

(ii) The allocation of Employer matching contributions (including
forfeitures allocated as matching contributions).

(iii)The allocation of Employer qualified nonelective
contributions.

(2) For participation in the allocations described in (1),
the eligibility conditions are: (Choose at least one of (i)
through (iv))

(i) --------- (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section 2.03(A) of the
Plan) if the requirement is two Years of Service.

(ii) --------- months (not exceeding 24) following the Employee's
Employment Commencement Date.

(iii)One Hour of Service.

(iv) Attainment of age ----------------- (Specify age, not
exceeding 21).

Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(d), (e) or (f))

(d) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.

(e) The first day of the Plan Year.

(f) (Specify entry dates) ----------------------------/

Time of Participation. An Employee will become a Participant (and, if
applicable, will participate int he allocations described in Option (c)(1)),
unless excluded under Adoption Agreement Section 1.07, on the Plan Entry Date
(if employed on that date): (Choose (g), (h) or (I))

(g) immediately following

(h) immediately preceding

(i) nearest --------------------------------------------- the date the
Employer completes the eligibility conditions described in Options (a) and (b)
(or in Option (c)(2) if applicable) of this Adoption Agreement Section 2.01.

<PAGE>

[Note: The Employer must coordinate the selection of (g), (h) or (i) with
the "Plan Entry Date" selection in (d), (e) or (f). Unless otherwise excluded
under Section 1.07, the Employee must become a Participant by the earlier of:
(1) the first day of the Plan Year beginning after the date the Employee
completes the age and service requirements of Code ss.410(a); or (2) 6 months
after the date the Employee completes those requirements.]

Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (j) or (k))

(j) All Employees of the Employer, except: (Choose (1) or (2))

(1) No exceptions

(2) Employees who are Participants in the Plan as of the
Effective Date.

(k) Solely to an Employee employed by the Employer after ----------------.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))

(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age ----------------- (not to exceed 21).

(2) Under the eligibility conditions in effect under the Plan prior to the
restated Effective Date. If the restated Plan required more than one Year
of Service to participate, the eligibility conditions under this Option
(2) for participation in the Code 401(k) arrangement under this Plan is
one Year of Service for Plan Years beginning after December 31, 1988. [For
restated plans only]

(3) (Specify)
----------------------------------------------------------
----------------------------------------------------------/

2.02 YEAR OF SERVICE - PARTICIPATION.

Hours of Service. An Employee must complete: (Choose (a) or (b))

(a) 1,000 Hours of Service

(b) -------------- Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))

<PAGE>

(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.

2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))

(a) Does not apply to the Employer's Plan.

(b) Applies to the Employer's Plan.

2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))

(a) Does not permit an eligible Employee or a Participant to elect not to
participate.

(b) Does permit an eligible Employee or a Participant to elect not to
participate in accordance with Section 2.06 and with the following rules:
(Complete (1), (2), (3) and (4))

(1) An election is effective for Plan Year if filed no later than
---------------------.

(2) An election not to participate must be effective for at least
------------- Plan Year(s).

(3) Following a re-election to participate, the Employee or
Participant:

(i) May not again elect not to participate for any
subsequent Plan Year.

(ii) May again elect not to participate, but not earlier than the
--------------------- Plan Year following the Plan Year in which
the re-election first was effective.

(4) (Specify) --------------------------------------------------------
[Insert "N/A" if no other rules apply].

ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES

3.01 AMOUNT.

Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01.

<PAGE>

(Choose any combination of (a), (b), (c) and (d), or choose (e))

(a) Deferral contributions (Code 401(k) arrangement). (Choose
(1) or (2) or both)

(1) Salary reduction arrangement. The Employer must contribute the amount
by which the Participants have reduced their Compensation for the Plan
Year, pursuant to their salary reduction agreements on file with the
Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.

(2) Cash or deferred arrangement. The Employer will contribute on behalf
of each Participant the portion of the Participant's proportionate share
of the cash or deferred contribution which he has not elected to receive
in cash. See Section 14.02 of the Plan. The Employer's cash or deferred
contribution is the amount the Employer may from time to time deem
advisable which the Employer designates as a cash or deferred contribution
prior to making that contribution to the Trust.

(b) Matching contributions. The Employer will make matching contributions in
accordance with the formula(s) elected in Part II of this Adoption Agreement
Section 3.01.

(c) Designated qualified nonelective contributions. The Employer, in its sole
discretion, may contribute an amount which it designates as a qualified
nonelective contribution.

(d) Nonelective contributions. (Choose any combination of (1)
through (4))

(1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem advisable.

(2) The amount (or additional amount) the Employer may from
time to time deem advisable, separately determined for each
of the following classifications of Participants: (Choose
(i) of (ii))

(i) Nonhighly Compensated Employees and Highly
Compensated Employees.

(ii) (Specify classifications) ------------------------------------
------------------------------------------------------.

Under this Option (2), the Advisory Committee will allocate the
amount contributed for each Participant classification in accordance
with Part II of Adoption Agreement Section 3.04, as if the
Participants in that classification were the only Participants in
the Plan.

<PAGE>

(3) ----------------% of the Compensation of all Participants under
the Plan, determined for the Employer's taxable year for
which it makes the contribution. [Note: The percentage
selected may not exceed 15%.]

(4) -----------% of Net Profits but not more than $--------------.

(e) Frozen Plan. This Plan is a frozen Plan effective
- ----------------------. The Employer will not contribute to the Plan with
respect to any period following the stated date.

Net Profits. The Employer: (Choose (f) or (g))

(f) Need not have Net Profits to make its annual contribution under this Plan.

(g) Must have current or accumulated Net Profits exceeding $------------ to
make the following contributions: (Choose at least one)

(1) Cash or deferred contributions described in Option
(a)(2).

(2) Matching contributions described in Option (b), except:
-----------------------------------------------------------.

(3) Qualified nonelective contributions described in Option
(c).

(4) Nonelective contributions described in Option (d).

- ---------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]

<PAGE>

Agreement, each participating member will determine net Profits separately
but will not apply this reduction unless, after combining the separately
determined Net Profits, the aggregate Net Profits are insufficient to satisfy
the matching contribution liability. "Net Profits" includes both current and
accumulated Net Profits.

Part II. [Options (h) through (j)] Matching contribution formula. [Note: If
the Employer elected Option (b), complete Options (h), (i) and (j).]

(h) Amount of matching contributions. For each Plan Year, the Employer's
matching contribution is: (Choose any combination of (1), (2), (3), (4) and (5))

(1) An amount equal to -----------% of each Participant's eligible
contributions for the Plan Year.

(2) An amount equal to -----------% of each Participant's first tier of
eligible contributions for the Plan Year, plus the following matching
percentage(s) for the following subsequent tiers of eligible contributions
for the Plan Year: --------------------------------------.

(3) Discretionary formula.

(i) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of the
Participant's eligible contributions for the Plan Year.

(ii) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of each tier of
the Participant's eligible contributions for the Plan Year.

(4) An amount equal to the following percentage of each Participant's
eligible contributions for the Plan Year, based on the Participant's Years
of Service:

Number of Years of Service Matching Percentage

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

The Advisory Committee will apply this formula by determining
Years of Service as follows: -------------------------------------------------.

(5) A Participant's matching contribuitons may not: (Choose
(i) or (ii))

(i) Exceed -------------------------------------------.

(ii) Be less than -------------------------------------.

<PAGE>

Related Employers. If two or more related employers (as defined in Section
1.30) contribute to this Plan, the related employers may elect different
matching contribution formulas by attaching to the Adoption Agreement a
separately completd copy of this Part II. [Note: Separate matching contribution
formulas create separate current benefit structures that must satisfy the
minimum participation test of Code 401(a)(26).]

(i) Definition of eligible contributions. Subject to he requirements of
Option (j), the term "eligible contributions" means: (Choose any combination of
(1) through (3))

(1) Salary reduction contributions.

(2) Cash or deferred contributions (including any part of the
Participant's proportionate share of the cash or deferred contribution
which the Employer defers without the Participant's election).

(3) Participant mandatory contributions, as designated in Adoption
Agreement Section 4.01. See Section 14.04 of the Plan.

(j) Amount of eligible contributions taken into account. When determining a
Participant's eligible contributions taken into account under the matching
contributions formula(s), the following rules apply: (Choose any combination of
(1) through (4))

(1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.

(2) The Advisory Committee will disregard eligible contributions
exceeding

(3) The Advisory Committee will treat as the first tier of eligible
contributions, an amount not exceeding:
-----------------------------.

The subsequent tiers of eligible contributions are:
- ---------------------------.

(4) (Specify)------------------------------------.

Part III. [Options (k) and (l). Special rules for Code ss.401(k)
Arrangement. (Choose (k) or (l), or both, as applicable)

(k) Salary Reduction Agreements. The following rules and
restrictions apply to an Employee's salary reduction agreement:
(Make a selection under (1), (2), (3) and (4))

(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii or (iii))

<PAGE>

(i) No maximum limitation other than as provided in
the Plan.

(ii) May not exceed ------------% of Compensation for the Plan Year,
subject to the annual additions limitation described in Part 2 of
Article III and the 402(g) limitation described in Section 14.07 of
the Plan.

(iii)Based on percentages of Compensation must equal at
least --------------------.

(2) An Employee may revoke, on a prospective basis, a
salary reduction agreement: (Choose (i), (ii), (iii) or
(iv))

(i) Once during any Plan Year but not later than
--------------------- of the Plan Year.

(ii) As of any Plan Entry Date.

(iii)As of the first day of any month.

(iv) (Specify, but must be at least once per Plan Year
-------------------------.

(3) an Employee who revokes his salary reduction agreemetn
may file a new salary reduction agreemetn with an effective
date: (Choose (i), (ii), (iii) or (iv))

(i) No earlier than the first day of the next Plan
Year.

(ii) As of any subsequent Plan Entry Date.

(iii)As of the first day of any month subsequent to the
month in which he revoked an Agreement.

(iv) (Specify, but must be at least once per Plan Year following the
Plan Year of revocation) ----------------------.

(4) A Participant may increase or may decrease, on a
prospective basis, his salary reduction percentage or dollar
amount: (Choose (i), (ii), (iii) or (iv))

(i) As of the beginning of each payroll period.

(ii) As of the first day of each month.

(iii)As of any Plan Entry Date.

(iv) (Specify, but must permit an increase or a
decrease at least once per Plan Year
-----------------------------------.

<PAGE>

(l) Cash or deferred contributions. For each Plan Year for which the Employer
makes a designated cash or deferred contribution, a Participant may elect to
receive directly in cash not more than the following portion (or, if less, the
402(g) limitation described in Section 14.07 of the Plan) of his proportionate
share of that cash or deferred contribution: (Choose (1) or (2))

(1) All or any portion.

(2) ----------------%.

3.04 CONTRIBUTION ALLOCATION. the Advisory Committee will allocate deferral
contributions, matching contributions, qualified nonelective contributions and
nonelective contributions in accordance with Section 14.06 and the elections
under this Adoption Agreement Section 3.04.

Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)

(a) Matching Contribuitons Account. The Advisory Committee will allocate
matching contributions to a Participant's: (Choose (1) or (20; (3) is available
only in addition to (1))

(1) Regular Matching Contribution Account.

(2) Qualified Matching Contributions Account.

(3) Except, matching contributions under Option(s) ---------------------
of Adoption Agreement Section 3.01 are allocable to the Qualified Matching
Contributions Account.

(b) Special Allocation Dates for Salary Reduction Contributions. The
advisory Committee will allocate salary reduction contributions as of the
Accounting Date and as of the following additional allocation dates:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(c) Special Allocation Dates for Matching Contributions. The Advisory
Committee will allocate matching contributions as of the Accounting Date and as
of the following additional allocation dates:
- ----------------------------------------------------------.

(d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified nonelective
contribution, "Participant" means: (Choose (1), (2) or (3))

(1) All Participants.

(2) Participants who are Nonhighly Compensated Employees
for the Plan Year.

<PAGE>

(3) (Specify) ----------------------------------------------------------
--------------------------------------------------------------------------

Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Section 3.04. If the
Employer elects Option (e)(2), Optoin (g)(2) or Option (h), for the first 3% of
Compensation allocated to all Participants, "Compensation" does not include an
exclusions elected under Adoptoin Agreement Section 1.12 (other than the
exclusion of elective contributions), and the Advisory Committee must take into
account the Participant's Compensation for the entire Plan Year. (Choose an
allocation method under (e), (f), (g) or (h); (I) is mandatory if the Employer
elects (f), (g) or (h); (j) is optional in addition to any other election.)

(e) Nonintegrated Allocation Formula. (Choose (1) or (2))

(1) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.

(2) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. For purposes of this Option (2), "Participant" means, in
addition to a Participant who satisfies the requirements of Section 3.06
for the Plan Year, any other Participant entitled to a top heavy minimum
allocation under Section 3.04(b), but such Participant's allocation will
not exceed 3% of his Compensation for the Plan Year.

(f) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual Employer nonelective contributions
in the same ratio that each Participant's Compensation plus Excess Compensation
of all Participants for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (i).

The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.

<PAGE>

(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation may not exceed the
applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum Disparity
Table following Option (I). Solely for purposes of the allocation in this first
paragraph, "Participant" means, in addition to a Participant who satisfies the
requirements of Section 3.06 for the Plan Year: (Choose (1) or (2))

(1) No other Participant.

(2) any other Participant entitled to a top heavy minimum allocation under
Section 3.04(B), but such Participant's allocation under this Option (g) will
not exceed 3% of his Compensation for the Plan Year.

As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Excess Compensation, may not exceed the
allocation percentage in the first paragraph.

Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.

(h) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Compensation. Solely for purposes of this first tier allocation, a
"Participant" means, in addition to any Participant who satisfies the
requirements of Section 3.06 for the Plan Year, any other Participant entitled
to a top heavy minimum allocation under Sectoin 3.04(B) of the Plan.

As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year, but not exceeding 3% of each Participant's
Excess Compensation.

As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus

<PAGE>

Excess Compensation of all Participants for the Plan year. The allocation
under this paragraph, as a percentage of each Participant's Compensation plus
Excess Compensation, must not exceed the applicable percentage (2.7%, 2.4% or
1.3%) listed under the Maximum Disparity Table following Option (i).

(i) Excess Compensation. For purposes of Option (f), (g) or (h), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))

(1) --------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))

(i) Rounded to ----------------------- (but not exceeding
the taxable wage base).

(ii) But not greater than $--------------------.

(iii)Without any further adjustment or limitation.

(2) $------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]

Maximum Disparity Table. For purposes of Options (f), (g) and
(h), the applicable percentage is:

Integration Level Applicable Percentages Applicable
(as percentage of for Option (f) or Percentages
taxable wage base) Option (g) For Option (h)
- --------------------------------------------------------------------------------
100% 5.7% 2.7%

More than 80% but
less than 100% 5.4% 2.4%

More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%

20% (or $10,000, if
greater) or less 5.7% 2.7%

<PAGE>

(j) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under Part II of this Section 3.04 by the
Participant's allocation under the following qualified plan(s) maintained by the
Employer: ----------------. The Advisory Committee will determine this
allocation reduction:
(Choose (1) or (2))

(1) By treating the term "nonelective contribution" as including all
amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (j). If a Participant under
this Plan also participates in that other plan, the Advisory Committee
will treat the amount the Employer contributes for or during a Plan Year
on behalf of a particular Participant under such other plan as an amount
allocated under this Plan to that Participant's Account for that Plan
Year. The Advisory Committee will make the computation of allocation
required under the immediately preceding sentence before making any
allocation of nonelecive contributions under this Section 3.04.

(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(j).

(k) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.

(l) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ---------------------. However, the Employer
will make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (l). See Section 3.04(B)(7)(b) of the Plan.

Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
nonelective contributions (and forfeitures treated as nonelective contributions)
to each Participant in the Plan, in accordance with the elections in this
Adoption Agreement Section 3.04: (Choose (m) or (n))

<PAGE>

(m) Without regard to which contributing related group member employes the
Participant.

(n) Only to the Participants directly employed by the contributing Employer. If
a Participant receives Compensation from more than one contributing Employer,
the Advisory Committee will determine the allocations under this Adoption
Agreement Section 3.04 by prorating among the participating Employers the
Participant's Compensation and, if applicable, the Participant's Integration
Level under Option (i).

3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))

(a) As an Employer nonelective contribution for the Plan Year in which the
forfeiture occurs, as if the Participant forfeiture were an additional
nonelective contribution for that Plan Year.

(b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (Choose (1) or (2))

(1) in which the forfeiture occurs.

(2) immediately following the Plan Year in which the
forfeiture occurs.

(1) In the manner elected under Options (a) or (b).

(2) First to reduce Employer matching contributions for the
Plan Year: (Choose (i) or (ii))

(i) in which the forfeiture occurs,

(ii) immediately following the Plan Year in which the forfeiture
occurs, then as elected in Options (a) or (b).

(3) As a discretionary matching contribution for the Plan Year in which
the forfeiture occurs, in lieu of the manner elected under Options (a) or
(b).

(d) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a), (b) or (c), whichever applies. If the Employer elects
Option (c), the forfeitures used to reduce Plan expenses: (Choose (1) or (2))

(1) relate proportionately to forfeitures described in
Option (c) and to forfeitures described in Options (a) or (b).

<PAGE>

(2) relate first to forfeitures described in Option
--------------.

Allocation of forfeited excess aggregate contributions. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))

(e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))

(1) in which the forfeiture occurs.

(2) immediately following the Plan Year in which the
forfeiture occurs.

(f) As Employer discretionary matching contributions for the Plan Year in which
forfeited, except the Advisory Committee will not allocate these forfeitures to
the Highly Compensated Employees who incurred the forfeitures.

(g) In accordance with Options (a) through (d), whichever applies, except the
Advisory Committee will not allocate these forfeitures under Option (a) or under
Option (c)(3) to the Highly Compensated Emplyees who incurred the forfeitures.

3.06 ACCRUAL OF BENEFIT.

Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any cash or deferred contribution, designated qualified nonelective contribution
or nonelective contribution by taking into account: (Choose (a) or (b))

(a) The Employee's Compensation for the entire Plan Year.

(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan.

Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of cash or deferred
contributions, matching contributions, designated qualified nonelective
contributions, nonelective contributions and Participant forfeitures, if any,
for the Plan Year, a Participant must satisfy the conditions described in the
folloiwng elections: (Choose (c) or at least one of (d) through (f))

(c) Safe harbor rule. If the Participant is employed by the Employer on the
last day of the Plan Year, the Participant must complete at least one Hour of
Service for that Plan Year. If the Participant is not employed by the Employer
on the last day of the Plan Year, the Participant must complete at least 501
Hours of Service during the Plan Year.

<PAGE>

(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service during the Plan Year: (Choose at least one of
(1) through (5))

(1) 1,000 Hours of Service.

(2) (Specify, but the number of Hours of Service may not
exceed 1,000) --------------------------------------------.

(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of:
(Choose (i), (ii) or (iii))

(i) Death.

(ii) Disability.

(iii)Attainment of Normal Retirement Age in the current Plan Year or
in a prior Plan Year.

(4) ------------ Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan Year, subjet to
any election in Option (3).

(5) No Hour of Service requirement for an allocation of the
following contributions: -------------------------------------------------
--------------------------------------------------------------------------

(e) Employment conditions. The Participant must be employed by the Employer on
the last day of the Plan Year, irrespective of whether he satisfies any Hours of
Service condition under Option (d), with the following exceptions: (Choose (1)
or at least one of (2) through (5))

(1) No exceptions.

(2) Termination of employment because of death.

(3) Termination of employment because of disability.

(4) Termination of employment following attainment of
Normal Retirement Age.

(5) No employment conditions for the following
contributions: ---------------------------------.

(f) (Specify other conditions, if applicable): -------------------------------
- --------------------------------------------------------------------------------

Suspension of Accrual Requirements. The suspension of accrual requirements
of Section 3.06(E) of the Plan: (g), (h) or (I))

<PAGE>

(g) Applies to the Employer's Plan.

(h) Does not apply to the Employer's Plan.

(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).

Special accrual requirements for matching contributions. If the Plan allocates
matching contributions on two or more allocation dates for a Plan Year, the
Advisory Committee, unless otherwise specified in Option (1), will apply any
Hours of Service condition by dividing the required Hours of Service on a
prorata basis to the allocation periods included in that Plan Year. Furthermore,
a Participant who satisfies the conditions described in this Adoption Agreement
Section 3.06 will receive an allocation of matching contributions (and
forfeitures treated as matching contributions) only if the Participant satisfies
the following additional condition(s): (Choose (j) or at least one of (k) or
(l))

(j) No additional conditions.

(k) The Participant is not a Highly Compensated Employee for the Plan Year.
This Option (k) applies to: (Choose (1) or (2))

(1) All matching contributions.

(2) Matching contributions described in Option(s) --------- of Adoption
Agreement Section 3.01.

(l) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.

3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (Choose (a), (b) or
(c))

(a) The product of:

(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times

(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).

(b) The total Excess Amount.

<PAGE>

3.18 DEFINED BENEFIT PLAN LIMITATION.

Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))

(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.

(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))

(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.

(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.

[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]

(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting ---------% (not less than 4%) for "3%", except: (Choose (i or (ii))

(i No exceptions.

(ii) Plan Years in which the top heavy ratio exceeds 90%.

(e) For Non-Key Employees also participating in the defined benefit plan,
the top heavy minimum is: (Choose (1) or (2))

(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))

(i) No exceptions.

(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.

<PAGE>

(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code ss.416 for these Non-Key
Employees.]

Actuarial Assumptions for Top Heavy Calculation. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accured benefits under a defined benefit plan:-------------
- -------------------------------------------------------------------------------.

ARTICLE IV
PARTICIPANT CONTRIBUTIONS

4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or (b);
(c) is available only with (b))

(a) Does not permit Participant nondeductible contributions.

(b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.

(c) The following portion of the Participant's nondeductible contributions
for the Plan Year are mandatory contributions under Option (i)(3) of Adoption
Agreement Section 3.01: (Choose (1) or (2))

(1) The amount which is not less than: -------------------.

(2) The amount which is not greater than: ----------------.

Allocation dates: The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates:
(Choose (d) or (e))

(d) No other allocation dates.

(e) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.

As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (e), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.

<PAGE>

4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION.

Subject to the restrictions of Article VI, the following distribution options
apply to a Participant's Mandatory Contributions Account, if any, prior to his
Separation from Service: (Choose (a) or at least one of (b) through (d))

(a) No distribution optoins prior to Separation from Service.

(b) The same distribution options applicable to the Deferral Contributions
Account prior to the Participant's Separation from Service, as elected in
Adoption Agreement Section 6.03.

(c) Until he retires, the Participant has a continuing election
to receive all or any portion of his Mandatory Contributions
Account if: (Choose (1) or at least one of (2) through (4))

(1) No conditions.

(2) The mandatory contributions have accumulated for at least
--------------- Plan Years since the Plan Year for which contributed.

(3) The Participant suspends making nondeductible
contributions for a period of months.

(4) (Specify)-----------------------------------------------------------
-------------------------------------------------------------------------.

(d) (Specify) ----------------------------------------------------------------
-------------------------------------------------------------------------.

ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING

5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is: (Choose
(a) or (b))

(a) ----------------------- [State age, but may not exceed age
65].

(b) The later of the date the Participant attains --------- years of age or the
- --------- anniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]

5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section
5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))

(a) Does not apply.

<PAGE>

(b) Applies to death.

5.03 VESTING SCHEDULE.

Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account/Mandatory Contributions
Account. A Participant has a 100% Nonforfeitable interest at all times in his
Deferral Contributions account, his Qualified Matching Contributions Account,
his Qualified Nonelective Contributions Account and in his Mandatory
Contributions Account.

Regular Matching Contributions Account/Employer contributions Account. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only as additional options)

(a) Immediate vesting. 100% Nonforfeitable at all times. [Note: The
Employer must election Option (a) if the eligibility conditions under Adoption
Agreement Section 2.01(c) require 2 year of service or more than 12 months of
employment.]

(b) Graduated Vesting Schedules.

Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)

Years of Nonforfeitable Years of Nonforfeitable
Service Percengage Service Percentage
- --------------------------------------------------------------------------------

Less than 1 ----- Less than 1 -----
1 ----- 1 -----
2 ----- 2 -----
3 ----- 3 -----
4 ----- 4 -----
5 ----- 5 -----
6 or more 100% 6 -----
7 or more -----

(c) Special vesting election for Regular Matching Contributions Account. In
lieu of the election under Options (a) or (b), the Employer elects the following
vesting schedule for a Participant's Regular Matching Contributions Account:
(Choose (1) or (2))

(1) 100% Nonforfeitable at all times.

(2) In accordance with the vesting schedule described in
the addendum to this Adoption Agreement, numbered 5.03(c).
[Note: If the Employer elects this Option (c)(2), the
addendum must designate the applicable vesting schedule(s)
using the same format as used in Option (b).]

<PAGE>

[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.411(a)(2). Also see Section 7.05 of the Plan.]

(d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (Choose (1) or (2))

(1) Only in a Plan Year for which the Plan is top heavy.

(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]

Minimum Vesting. (Choose (e) or (f))

(e) The Plan does not apply a minimum vesting rule.

(f) A Participant's Nonforfeitable Accrued Benefit will never be less than the
lesser of $--------------- or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c) would
result in a smaller Nonforfeitable Accrued Benefit.

Life Insurance Investments. The Participant's Accrued Benefit attributable
to insurance contracts purchased on his behalf under Article XI is: (Choose (g)
or (h))

(g) Subject to the vesting election under Options (a), (b), or
(c).

(h) 100% Nonforfeitable at all times, irrespective of the vesting election
under Options (b) or (c)(2).

5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))

(a) Does not apply.

(b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a Deferral
Contributions Account.

5.06 YEAR OF SERVICE - VESTING.

Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))

<PAGE>

(a) Plan Years.

Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))

(d) ------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]

5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b)
through (e))

(a) None other than as specified in Section 5.08(a) of the Plan.

(b) Any Year of Service before the Participant attained the age of
- ------------------. [Note: The age selected may not exceed age 18.]

(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.

ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS

<PAGE>

Plan. Furthermore, if the elections liberalize the optional forms of
benefit under the Plan, the more liberal options apply on the later of the
adoption date or the Effective Date of this Adoption Agreement.

6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.

Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d)or (e))

(a) ----------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.

(b) ------------------------ following the Participant's Separation from
Service.

(c) --------------------------------- of the Plan Year after the
Participant incurs ---------------------- Break(s) in Service (as defined in
Article V).

(d) -------------- following the Participant's attainment of Normal Retirement
Age, but not earlier than --------------- days following his Separation from
Service.

(e) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.

Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.

Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (f), (g) or (h))

(e) -------------------- after the Participant terminates employment because of
disability.

(f) The same as if the Participant had terminated employment without
disability.

(h) (Specify)----------------------------------------------------------------
- -------------------------------------------------------------------------------.

Hardship. (Choose (i) or (j))

<PAGE>

(i) The Plan does not permit a hardship distribution to a Participant who
has separated from Service.

(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
(Choose (1), (2) or (3))

(1) Section 6.01(A)(4) of the Plan.

(2) Section 14.11 of the Plan.

(3) The addendum to this Adoption Agreement, numbered
Section 6.01.

Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))

(k) Treats the default as a distributable event. the Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit. To the extent the loan is
attributable to the Participant's Deferral Contributions Account, Qualified
Matching Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued Benefit
unless the participant has separated from Service or unless the Participant has
attained age 59 1/2.

(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.

(m) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.

6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose (a) or
at least one of (b), (c), (d) and (e))

(a) No modifications.

(b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available: -------------------------------------------------
- -------------------------------------------------------------------------------.

<PAGE>

(1) Is not available under the Plan.

(2) May not exceed the lesser of ------------- years of the maximum
period permitted under Section 6.02.

(3) (Specify) ---------------------------------------------------------
-------------------------------------------------------------------------.

(d) The Plan permits the following annuity options: -------------------------
- ----------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(d).]

6.03 BENEFIT PAYMENT ELECTIONS.

(a) As of any distribution date, but not earlier than ---------of the ---------
Plan Year beginning after the Participant's Separation from Service.

(b) As of the following date(s): (Choose at least one of Options (1)
through (6))

(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.

(2) Any distribution date following his Separation from
Service.

(3) Any distribution date in the --------------- Plan Year(s) beginning
after his Separation from Service.

(4) Any distribution date in the Plan Year after the Participant incurs
------------ Break(s) in Service (as defined in Article V).

(5) Any distribution date following attainment of age ---------- and
completion of at least -------- Years of Service (as defined in Article
V).

(6) (Specify) ----------------------------------------------------------
-------------------------------------------------------------------------.

(c) (Specify) ----------------------------------------------------------------
-------------------------------------------------------------------------.

<PAGE>

The distribution events described in the election(s) made under Options (a), (b)
or (c) apply equally to all Accounts maintained for the Participant unless
otherwise specified in Option (c).

Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (d) or at least one of (e)
through (h))

(d) No distribution options prior to Separation from Service.

(e) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable interest
in these Accounts after he attains: (Choose (1) or (2))

(1) Normal Retirement Age.

(2) ----------- years of age and is at least -----------%
vested in these Accounts. [Note: If the percentage is less
than 100%, see the special vesting formula in Section 5.03.]

(f) After a Participant has participated in the Plan for a period of not
less than ---------- years and he is 100% vested in these Accounts, until he
retires, the Participant has a continuing election to receive all or any portion
of his Accounts. [Note: The number in the blank space may not be less than 5.]

(g) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
Choose (1), () or (3); (4) is available only as an additional option)

(1) Under Section 6.01(A)(4) of the Plan.

(2) Under Section 14.11 of the Plan.

(3) Provided in the addendum to this Adoption Agreement,
numbered Setion 6.03.

(4) In no event may a Participant receive a hardship
distribution before he is at least ---------% vested in
these Accounts. [Note: If the percentage in the blank is
less than 100%, see the special vesting formula in Section
5.03.]

(h) (Specify) ---------------------------------------------------------------
- -------------------------------------------------------------------------------.
[Note: The Employer may use an addendum, numbered 6.03, to provide
additional language authorized by Options (b)(6), (g)(3) or (h) of this Adoption
Agreement Section 6.03.]

<PAGE>

Participant Elections Prior to Separation from Service - Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service: (Choose (i) or at least one of (j)
through (l))

(i) No distribution options prior to Separation from Service.

(j) Until he retires, the Participant has a continuing election to receive all
or any portion of these Accounts after he attains:
(Choose (1) or (2))

(1) The later of Normal Retirement Age or age 59 1/2.

(2) Age --------------------- (at least 59 1/2).

(k) Hardship. A participant, prior to his separation from service, may elect a
hardship distribution from his Deferral Contributions Account in accordance with
the hardship distribution policy under Section 14.11 of the Plan.

(l) (Specify) ---------------------------------------------------.
[Note: Option (m) may not permit in service distributions prior to age 59
1/2, (other than hardship) and may not modify the hardship policy described in
Section 14.11.]

Sale of trade of business/subsidiary. If the employer sells substantially all of
the assets (within the meaning of Code 409(d)(2) used in a trade or business or
sells a subsidiary (within the meaning of Code 409(d)(3)), a Participant who
continues employment with he acquiring corporation is eligible for distribution
from his Deferral Contributions Account, Qualified Matching Contributions
Account and Qualified Nonelective Contributions Account: (Choose (m) or (n))

(m) Only as described in this Adoption Agreement Section 6.03 for distributions
prior to Separation from Service.

(n) As if he has a Separation from Service. After March 31, 1988, a distribution
authorized solely by reason of this Option (n) must constitute a lump sum
distribution, determined in a manner consistent with Code (k)(10) and the
applicable Treasury regulations.

6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))

<PAGE>

(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).

(b) Apply to all Participants.

ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS

9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than
a distribution from a segregated Account and other than a corrective
distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b) (c))

(a) ---------------% per annum. [Note: The percentage may equal 0%.]

(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.

(c) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.

9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss:
(complete only those items, if any, which are applicable to the Employer's Plan)

(a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3), (4) or (5))

(1) Apply Section 9.11 without modification.

(2) Use the segregated account approach described in
Section 14.12.

(3) Use the weighted average method described in Section 14.12, based on a
-------------------------- weighting period.

(4) Treat as part of the relevant Account at the beginning
of the valuation period -----% of the salary reduction
contributions: (Choose (i) or (ii))

(i) made during that valuation period.

(ii) made by the following specified time: ----------
----------------------------------------------------.

(5) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(a).

<PAGE>

(b) For matching contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))

(1) Apply Section 9.11 without modification.

(2) Use the weighted average method described in Section 14.12, based on a
-------------------- weighting period.

(3) Treat as part of the relevant Account at the beginning of the
valuation period ---------% of the Matching contributions allocated during
the valuation period.

(4) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(b).

(1) Apply Section 9.11 without modification.

(2) Use the segregated account approach described in
Section 14.12.

(3) Use the weighted average method described in Section 14.12, based on a
-------------------- weighting period.

(4) Treat as part of the relevant Account at the beginning
of the valuation period -------------% of the Participant
nondeductible contributions: (Choose (i) or (ii))

(i) made during that valuation period.

(ii) made by the following specified time: ---------------.

(5) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(c).

ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES

10.03 INVESTMENT POWERS. Pursuant to Section 10.03(F) of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))

(a) May not exceed 10% of Plan assets.

(b) May not exceed --------------% of Plan assets.
[Note: The percentage may not exceed 100%.]

10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a) or
(b))

<PAGE>

(a) No other mandatory valuation dates.

(b) (Specify) --------------------------------------------------------------
- -------------------------------------------------------------------------------.

EFFECTIVE DATE ADDENDUM
(Restated Plans Only)

(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -----------. [Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption Agreement to
restate the Plan for the Tax Reform Act of 1986, if applicable.]

(b) Eligibility conditions. the eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
- -----------------.

(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after ------------------.

(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ----------------.

(f) Employment condition. The employment condition of Section 3.06 is
effective for Plan Years beginning after --------------.

(g) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ------------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]

(h) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ----------------------.

(i) Allocation of Earnings. The special allocation provisions elected under
Adoption Agreement Section 9.11 are effective for Plan Years beginning after
- -------------------------------.

<PAGE>

(j) (Specify)-----------------------------------------------------------------
- -------------------------------------------------------------------------------.

Execution Page

Name and EIN of Employer: --------------------------------------------

Signed: --------------------------------------------------------------

Name(s) of Trustee: --------------------------------------------------

Signed: -------------------------------------------------------------

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

Name of Custodian: ---------------------------------------------------

Signed: --------------------------------------------------------------

[Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]

Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------------------------------.

<PAGE>

Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan Sponsor
at the following address and telephone number: INVESCO Trust Company, 7800 E.
Union Ave., Suite 900, Denver, Colorado (303) 779-0731.

Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covreing this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.

PARTICIPATION AGREEMENT

For Participation by Related Group Members (Plan Section 1.30)

The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, -----------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.

1. The Effective Date of the undersigned Employer's
participation in the designated Plan is ------------------------------.

2. The undersigned Employer's adoption of this Plan
constitutes:

(a) The adoption of a new plan by the Participating Employer.

(b) The adoption of an amendment and restatement of a plan currently maintained
by the Employer, identified as ------------------------------------ and having
an original effective date of --------------------------------------.

Dated this -------------- day of ---------------------, 19-----.

Name of Participating Employer: -------------------------------------

Signed: -------------------------------------------------------------

Participating Employer's EIN: ---------------------------------------

<PAGE>

Acceptance by the Signatory Employer to the Execution Page of the
Adoption Agreement and by the Trustee.

Name of Signatory Employer: -------------------------------------

Accepted: -------------------------------------------------------
[Date]

Signed: ---------------------------------------------------------

Name(s) of Trustee: ---------------------------------------------

Accepted: -------------------------------------------------------
[Date]

Signed: ---------------------------------------------------------

[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]

STN PSP AA Instructions

Complete the first blank in the paragraph by writing in the business' name in
its entirety.

1.02 Trustee

Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 26 for further explaination of Non-discretionary
Trustee.

1.03 Plan

Enter the plan name. Example: ABC Inc. Employees 401(k) Plan.

1.07 Employee

If you want the plan to cover all employees, select option (a). If you want to
exclude from the plan any group(s) of employees, select any combination of (b)
through (g). When a retirement plan excludes employees in options (d) through
(g) from participation, the plan is subjet to a minimum coverage test to
maintain its "tax qualified" status. Your accounting firm should be notified to
perform the test annually.

Leased Employers

You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 401(b) and 401(a)(26),
consult your legal or financial counsel.

<PAGE>

Related Employers

1.12 Compensation

Modifications to Compensation

Modifications to Compensation - You must choose option (c) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination, your accountant may want to test for any discriminatory effect
of excluding any type of compensation.

1.17 Plan Year

You must define the "plan year," usually it will follow the business tax year.

Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.

1.18 Effective Date

New Plan - Enter the first day of your plan year (usually January
1) and the year.

Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.

1.27 Hours of Service

1.29 Service for Predecessor Employer

<PAGE>

Under this option, you may elect to count service for a predecessor
employer when you are not maintaining the plan of the predecessor employer.
(Used primarily in the event of a merger or acquisition.)

1.31 Leased Employees

2.01 Eligibility

a. An employee must attain this age to become a participant (cannot exceed
age 21).

b. Pick how long (service) an employee must work to become a participant.

c. You may choose to have more restrictive eligibility requirements apply to the
employer contributions under the plan. Choose the employer contribution affected
and the conditions which apply to those contributions. Choosing separate
eligibility conditions may cause your plan to be discriminatory, consult your
counsel.

Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (d), semi-annual entry dates, is chosen.

Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (g) is chosen.

2.02 Years of Service

Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.

Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.

2.03 Break in Service

This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option

<PAGE>

(a) is chosen for administrative convenience.

2.06

3.01 Contributions allowed

Section 3.01 of this Adoption Agreement consists of three parts. Part I defines
the types of contributions you authorize under the plan. Part II explains the
matching contribution formula, if any. Part III allows you to put limits on the
employee 401(k) contributions. You must complete Part I, but only complete Parts
II and III, if necessary.

Option (a) permits the election of either a salary reduction arrangement (Option
(a)(1), or a cash or deferred arrangement Option (a)(2). The Employer also may
elect both arrangements.

Option (b) authorizes matching contributions. If the Employer elects Option (b),
it must complete Part II to establish the matching contribution formula.

Option (c) authorizes the Employer to make qualified nonelective contributions
(QNCs"). The Employer will designate to the Trustee the amount of its
contributions consisting of QNCs.

The amount of QNCs is solely within the Employer's discretion. Any contribution
designated as QNCs is includible in the ADP test (see Section 14.08 of the Plan)
or in the ACP test (see Section 14.09 of the Plan). The advisory committee may
divide the QNCs between these two tests in any fashion it deems appropriate, but
may not use the same contributions in both tests. As a general rule, the
Employer will make a level of QNCs necessary to satisfy the applicable tests,
unless the Employer wishes to have excess contributions or excess aggregate
contributions distributed to the appropriate highly compensated employees, in
accordance with Sections 14.08 and 14.09.

Option (d) authorizes the Employer to make nonelective contributions in the same
manner it would under a regular profit sharing plan. The choices under Option
(d) are the same as the contribution formula options under the profit sharing
adoption agreements.

Part II Matching Contribution Formula

If the Employer elects Option (b), it must complete Part II, making a selection
under each option provided under Part II.

<PAGE>

The Plan permits matching contributions for salary reduction contributions,
cash or deferred contributions or participant mandatory contributions.
Therefore, the formulas offered under Option (h) refer to "eligible
contributions." The Employer will define eligible contributions under Options
(i) and (j).

Option (h) provides the formulas for determining the matching contribution. The
primary purpose of Option (h) is to establish the level of the matching
contribution (a fixed percentage or discretionary with the Employer) and to
permit the Employer to define a maximum or a minimum matching contribution. The
formula alone will not be sufficient to determine the Employer's actual matching
contribution on a participant's behalf. The characterization of eligible
contributions under Option (i) and any limitations on the amount of eligible
contributions taken into account, as provided under Option (j), are necessary
factors in computing the Employer's matching contribution.

Option (i) designates the character of the matching contributions. If the
Employer elects (i)(3), it also must elect Adoption Agreement Section 4.01(c).
If eligible contribuitons include salary reduction contributions or cash or
deferred contributions, the matching contribution formulas will not apply to
amounts characterized as excess deferrals under Section 14.07 of the Plan.

Option (j) establishes any limitations on the amount of eligible contributions
taken into account under Option (h).

Part III Salary Reduction Agreements

Under Option (k), the Employer must make selections from (1), 92), (3) and (4).
Under (1), Option (ii) prescribes a maximum deferral percentage, Option (iii)
prescribes a minimum deferral percentage and Option (i) prescribes no special
maximum limitation. The Employer may select both Options (ii) and (iii), or both
Options (i) and (iii), but Options (i) and (ii) are mutually exclusive. The
Employer may wish to consider a maximum percentage deferral under Option (ii) to
minimize the potential for Code 415 violations.

Under paragraphs (2) and (3), the Employer elects which restrictions apply to
the participant's right to revoke his/her salary reduction agreement. Under
paragraph (4), the Employer elects which restrictions apply to the participant's
right to increase or decrease his/her salary reduction percentage. The Employer
should consider the effect its elections have on plan administration.

3.04 Contribution Allocation

Part I - Matching Contributions. Select which account you want the matching
contributions to be allocated to. The Regular Matching Account is subject to a
vesting schedule. The Qualified Matching Account is always 100% vested and
contributions may be used to satisfy the deferral non-discrimination test.

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Qualified Non-elective Contributions. Choose which participants would
receive an extra contribution to help satisfy the non-discrimination test for
deferrals (QNEC). For administrative convenience opton (2) is chosen.

Part II - Method of Allocation. Choose the option for allocating the
discretionary employer contribution between all plan participants. You have
choices of non-integrated (pro-rata) or one of four integrated formulas.

Allocation formula. The primary allocation formulas are in Options (e), (f), (g)
and (h). Option (e) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (f), (g) and (h) are
alternatives for integrated plans. Usually option (e)(2) is chosen for non-
integrated plans.

The two-tiered formula under Option (f) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4% or 4.3%) described in the second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.

Under the three-tiered formula under Option (g), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.

The four-tiered allocation under Option (h) is a hybrid of Options (g) and (f).
The sole purpose of Option (h) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (g). The fourth tier is a prorata allocation
based on total compensation.

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3.05 Forfeiture Allocation

Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Options (c) and (d) allow you to allocate separately forfeitures
from matching contributions. Select from options (e), (f) and (g) to determine
how to allocate forfeitures from high paid employee's matching account when the
matching non-discrimination test is not satisfied.

3.06 Compensation Taken Into Account

If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).

Suspension of Accrual Requirements - This section allows you to suspend some or
all of the accrual requirements found in Section 3.06(E) of the plan for
participants to receive allocations. This would apply in plan years when a plan
may not satisfy coverage and participation requirements. For administrative
convenience choose option (g).

3.15 More Than One Plan

3.18 Defined Benefit Limitation

Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit plan under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.

4.01 Participant Nondeductible Contributions

This section allows participants to contribute after-tax employee contributions.
These contributions are subject to a special nondiscrimination test. By checking
option (a) these contributions are not allowed.

4.05 Withdrawal Restriction

This section only applies if you checked option (c) of section

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4.01. It states whether or not there are restrictions on participants receiving
their after-tax contributions prior to separation from service.

5.01 Normal Retirement Age

Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).

5.02 Vesting Death/Disability

You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).

5.03 Vesting Schedule

Complete the Top Heavy Schedule based upon the following:

Years of Service

1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)

Optional: Complete the Non Top Heavy Schedule based upon the
following:

Years of Service

1
2
3 (not less than 20%)
4 (not less than 40%
5 (not less than 60%)
6 (not less than 80%)
7 (not less than 100%)

5.04 Cash-Out Rule

If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.

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5.06 Years of Service

Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).

5.08 Prior Years of Service

By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.

Article 6

The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Optional Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An optional form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g. right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).

6.01 Distribution Date

A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k)plans are semi-annual dates or quarterly dates.

Nonforfeitable Accrued Benefit Not Exceeding $3,500

When a separated participants vested balance does not exceed $3,500, the
plan allows the employer to separately establish the timing of these
distributions, separate from the distribution dates. When you complete this
section, you need to balance two concerns: 1) will the timing of the
distribution cause the participant to consider it a "severance benefit" and
therefore encourage separation from service, and 2) the administrative concerns
of carrying a non-active account in the plan.

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Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h).

6.02 Method of Payment

You may choose the standard forms of payment if this is a brand new plan and not
a restatment. Elect any one or combineation of options (b) through (e). If no
modifications are necessary, elect option (a).

6.03 Participant Elections After Separation from Service

Participant Elections Prior to Separation from Service - Employer
Contributions

The following distribution elections apply to all participant's matching and
employer discretionary accounts regardless of vested account balances, prior to
employment separation. If you prefer not to allow any distribution options from
these accounts prior to separation, select option (d).

Participant Elections Prior Separation from Service

Deferrals, QMAC's and QNEC's - The following distribution elections apply to all
participant's deferral, qualified matching, and qualified non-elective
contributions accounts, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to employment
separation, select option (I).

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6.04 Annuity Distributions

9.10 Value of Benefit

9.11 Allocation of Net Income/Loss

The following elections will state how current year contributions will share, if
at all, in net income, gains or losses of the trust. You must election option
(a) if your plan allows employee deferrals, option (b) if your plan includes a
matching contribution, or option (c) if the plan allows employee after tax
contributions. Only make the elections applicable to your plan.

Option (1) would not include contributions made since the last valuation date in
any earnings or loss calculation. The other choices are based upon a segregated
account approach or a weighted average approach, both are described in section
14.12 of the plan.

Usually option (3) daily weighting is chosen if INVESCO is your recordkeeper,
for 9.11(a)(b) and (c).

10.03 Investment Powers

Complete this section if you (the employer) wish to allow the plan to invest in
qualifying employer securities, you should consult your legal counsel. The term
"qualifying employer securities: has a specific meaning under ERISA and may not
include all securities.

10.14 Valuation of Trust

You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally Option (a) is chosen.

Instructions for Effective Date Addendum

You must complete the effective date addendum only if the effective dates
of any of the listed items (a) through (j) have an effective date other than
your restated effective date in adoption agreement Section 1.18. Some some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989.
The few provisions (if any) that have later effective dates must specify when
they are effective.