OREGON METALLURGICAL CORP, 10-K405, 1996-03-28

OREGON METALLURGICAL CORP
10-K405, 1996-03-28
ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________

FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ to _______________

COMMISSION FILE NUMBER 0-1339

OREGON METALLURGICAL CORPORATION
________________________________
(Exact name of registrant as specified in its charter)

Oregon 93-0448167
_______________________________ _____________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

530 34th Ave. S.W., Albany, OR 97321
_______________________________ ___________
(Address of principal executive offices) (Zip Code)

Registrant's Telephone number, including area code: (541) 967-9000
___________________

Securities registered pursuant to Section 12 (b) of the Act:

Name of each exchange
Title of each class which is registered

None None
___________________ _____________________

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1.00 Par Value
______________________________

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
_____ _____

Indicate by check mark if the disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

Based on the closing sales price of the Common Stock on March 21,
1996 as reported on the NASDAQ National Market System, the
aggregate market value of the voting stock held by nonaffiliates of
the registrant was $216,587,300.

The number of shares outstanding of the registrant's common stock,
$1.00 par value was 11,107,041 at March 21, 1996.

DOCUMENTS INCORPORATED BY REFERENCE
___________________________________

Oregon Metallurgical Corporation Annual Report to Shareholders for
1995 is incorporated by reference in Parts II and IV of Form 10-K
as stated herein.

The Oregon Metallurgical Corporation Proxy Statement for the Annual
Meeting of Shareholders to be held April 25, 1996, is incorporated
by reference in Part III of Form 10-K as stated herein.

<PAGE>
PART I

ITEM 1. BUSINESS

The following information contains forward-looking statements which
involve certain risks and uncertainties. Actual results and events
may differ significantly from those discussed in the forward-
looking statements.

THE COMPANY

Oregon Metallurgical Corporation ("OREMET" or the "COMPANY")
was incorporated in Oregon in 1955 and began operations in 1956.
OREMET is a major producer and distributor of titanium sponge,
ingot, mill products and castings for aerospace, industrial and
commercial applications.

The Company built its business in the 1950's and 1960's by
capitalizing on the demand for titanium from the United States Air
Force and other military programs and from the emerging commercial
aerospace industry. During this period, the Company funded its
growth internally and through investments by corporate partners.
In 1968, one partner, Armco Inc. ("Armco"), a major steel
manufacturer, made a substantial investment in the Company and by
the end of 1982 owned approximately 80% of the Company's common
stock. In 1985, Armco sold its interest in the Company to Owens-
Corning Fiberglas Corporation ("Owens-Corning"). In December 1987,
the Company repurchased its common stock from Owens-Corning and
immediately sold shares of its common stock to the newly created
Oregon Metallurgical Corporation Employee Stock Ownership Plan (the
"ESOP"). Initially, the ESOP owned approximately 67% of the
Company's outstanding common stock while at December 31, 1995, the
ESOP's ownership interest is approximately 35%.

On September 20, 1994, the Company completed the acquisition
of the net assets and subsidiaries of the Titanium Industries
Distribution Group from Kamyr, Inc. The acquired business is being
operated under the name of Titanium Industries, Inc. ("TI"), an 80%
owned subsidiary of OREMET. TI operates full-line titanium metal
service centers in the U.S., U.K., Germany and Canada and it
produces small diameter titanium bar, weld wire and fine wire. The
acquisition was accounted for as a purchase, with the results of TI
included in the Company's financial statements from the acquisition
date.

INDUSTRY OVERVIEW

Titanium was first commercially produced in the 1950's.
Titanium's superior strength-to-weight ratio, stability at high
temperatures and corrosion resistance made it well suited for the
aerospace and jet engine market. Historically, approximately 75-
80% of the U.S. titanium consumption has been for aerospace
applications both in the commercial and the military sectors.

<PAGE>
The aerospace industry has historically been characterized by
severe cyclicality, which has had a significant impact on the sales
and profitability of titanium producers, including OREMET. The
last peak in the titanium industry cycle occurred in the 1988-1990
period when domestic industry shipments exceeded 50 million pounds
in each year. In 1991, U.S. titanium industry shipments declined
by approximately 35% to 34 million pounds. This decline was
primarily due to lower demand resulting from a slump in the
commercial aerospace industry and the curtailment or cancellation
of military programs resulting from the end of the Cold War. Data
reported by the U.S. Bureau of Mines indicates that industry
shipments increased by approximately 1 million pounds per year in
1992 and 1993, while they dropped to approximately 35 million
pounds for 1994. While data for 1995 is not yet available, we
estimate that industry shipments were approximately 41 million
pounds. The improvement in industry shipments is the result of
increased demand from the commercial aerospace industry and from
the producers of golf clubs.

The aerospace industry is expected to continue to be the
primary source of demand for titanium products. However, many
opportunities exist in the non-aerospace markets where the
characteristics of titanium metal provide advantages over competing
materials, such as aluminum, nickel and stainless steels. Golf
club manufacturers are using titanium because of its strength and
low weight which enables production of clubs with larger heads.
Titanium's resistance to the effects of atmospheric conditions and
a variety of chemicals and acids make it an attractive metal for
marine and other industrial applications where corrosion is of
critical concern. As a result, titanium is used increasingly in
pollution control equipment, offshore oil installations, mining
operations and waste storage facilities. Its favorable strength-
to-weight ratio and bio-compatibility make it an increasingly
popular metal for biomedical products, such as medical implants,
and consumer products, such as eyeglass frames and bicycles.

PRODUCTS AND OPERATIONS

Titanium products is the Company's single business segment.
A full range of titanium products are produced for applications in
both the aerospace and non-aerospace markets. The principal
product forms are titanium sponge; titanium ingots; titanium mill
products; and castings.

Titanium sponge is the commercially pure, elemental form of
titanium metal. Titanium sponge is produced by OREMET at its
facility in Albany, Oregon by reducing titanium tetrachloride using
magnesium as the reduction agent. OREMET began producing titanium
sponge for internal use in 1970 and began selling it in 1987. The
Company sells sponge principally to the domestic non-integrated
titanium producers, who use the sponge to produce ingot and mill
products. During 1995, the sponge plant operated at approximately
75% of its practical annual capacity of 13.5 million pounds.

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Titanium ingots are cylinders with a weight of up to 20
thousand pounds and a diameter of up to 36 inches. Titanium ingots
are made by OREMET at its facility in Albany, Oregon by melting
sponge or titanium recycle, or a combination of the two, with
certain other elements to form titanium alloys. Ingot is converted
in a forge, either by OREMET or by its customers, into semi-
finished shapes and then into finished mill products. The Company
produces ingot in response to specific customer orders and in a
variety of sizes and grades to meet the customer's specifications.
During 1995, the ingot plant operated at approximately 70% of its
estimated annual capacity of 20 million pounds.

Titanium mill products result from the forging, rolling,
drawing and/or extruding of titanium ingots or slabs. OREMET
produces titanium billet, bar, rod, wire, plate and sheet. The
Company is dependent on the services of outside processors to
perform certain important processing functions. For some of its
products, OREMET is dependent on the services provided by Titanium
Hearth Technologies ("THT"), an outside processor which is 50%
owned by one of the Company's principal competitors. THT owns and
operates a cold hearth melting furnace which the Company utilizes
for melting titanium slab that is further processed into titanium
plate and sheet for non-aerospace applications. General Electric
Company, a major jet engine manufacturer, has specified that a
cold hearth melting furnace be used for melting several of the
products it purchases. Other than for those provided by THT, the
services performed by the outside processors are typically
available from multiple sources. Services are provided by THT in
accordance with a three-year agreement ending December 31, 1996
which agreement is renewed automatically for successive one-year
terms unless either party has given the other not less than six
months notice of its desire not to renew such term. OREMET has not
experienced any delays or other problems associated with the
competitor's 50% ownership of THT. Should the THT services
agreement not be renewed, OREMET would attempt to obtain these
services from another competitor which has a cold hearth melting
furnace, or, if financially justified, build a separate furnace for
OREMET's own use. OREMET believes that the loss of the services
provided by the existing outside processors would result in
production delays and have an adverse effect on operations.

OREMET sells its mill products to manufacturers of aircraft,
jet engines, vessels and piping for chemical plants, prosthetic and
orthopedic implants, golf clubs and other consumer goods. OREMET
produces mill products at its plant in Albany, Oregon and at a
plant in Frackville, Pennsylvania.

OREMET produces titanium and zirconium castings for customers
outside of the aerospace industry. Castings are made by melting
metal which is then poured under vacuum into graphite molds.
Castings generally weigh from 1 to 1 thousand pounds. OREMET's
castings are made at its Albany, Oregon plant to customer

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<PAGE>
specifications and are used in marine and other industrial
applications where corrosion is of critical concern.

RAW MATERIALS

The primary raw materials used by the Company are titanium
tetrachloride, magnesium, titanium recycle and certain combinations
of primary metals that form master alloys. Titanium tetrachloride
and magnesium are the principal materials used in the production of
titanium sponge. The principal materials used in the production of
titanium ingot are sponge, titanium recycle, other metallic
elements and master alloys.

OREMET purchases its titanium tetrachloride requirements from
SCM Chemicals Inc. ("SCM") under a long term contract that expires
in 2001. While the Company believes it could obtain commercial
quantities of sufficiently pure titanium tetrachloride from other
sources, any extended disruption in the supply from SCM would have
a material adverse effect on OREMET's ability to produce titanium
sponge. Magnesium is generally available from a number of
suppliers.

Titanium recycle is typically available from many sources.
The availability of attractively priced titanium recycle varies due
to the fluctuations in the size of the titanium market from year to
year and due to demands from other industries, such as steel, where
it is consumed in the process. Certain of the primary metal
compounds used to form master alloys are produced by a limited
number of suppliers. During December 1995, in response to rapidly
increasing recycle costs, the Company added surcharges to its
product prices to offset the higher costs it is experiencing.

When available at attractive prices, the Company has purchased
titanium sponge and recycle from the Former Soviet Union ("FSU").
Continued availability of these materials at attractive prices can
not be assured due to the uncertainties concerning the
manufacturing capabilities of the FSU titanium producers and the
potential for political and economic instability within the FSU.

MARKETING AND DISTRIBUTION

OREMET markets its products primarily to non-integrated
titanium producers and manufacturers of titanium metal end
products. The Company also sells its mill products to regional
value-added distributors who convert the mill products to smaller
lengths or sizes for resale to machine shops and other mill product
producers. The majority of sales are made through the Company's
internal sales organization. OREMET also uses independent sales
representatives for the sale of products outside of North America.

Shipments to customers may be made directly from one of the
Company's mills in Albany, Oregon or Frackville, Pennsylvania; from
an outside processor; or from one of the Company's service centers
in the U.S., Canada, the U.K., Germany, or France. The service

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centers maintain one of the world's largest inventories of titanium
mill products available for rapid delivery to points around the
globe. A complete line of first stage processing equipment is
available and outside machining can be arranged by the service
centers to meet the needs of their customers.

The Company estimates that its sales to the aerospace industry
totaled approximately 45%, 60% and 70% of its net sales in 1995,
1994 and 1993, respectively. OREMET believes that its sales to the
non-aerospace industry, as a percent of total sales, will continue
to increase in 1996. Industrial and commercial applications for
titanium are continuing to grow and the Company's presence in these
markets is further enhanced by the acquisition of TI in 1994. For
nearly 25 years, TI has been in the forefront of supplying and
developing titanium applications for industrial and commercial
customers.

The Company has a contract to supply titanium sponge and
certain other titanium products to RMI Titanium Company ("RMI")
through 2003. Sales to RMI accounted for approximately 5%, 13%
and 30% of OREMET's net sales in 1995, 1994 and 1993, respectively.
No other customer accounted for more than 10% of OREMET's net sales
in any of these three years.

EXPORTS

Export sales, primarily to Europe and Asia, totaled
approximately 20%, 14% and 13% of OREMET's net sales in 1995, 1994
and 1993, respectively. In May 1994, OREMET signed a three year
contract with, and in the second half of 1994 began supplying
product to, Aerospatiale Avions, France for engine pylons on Airbus
aircraft. To assist in the implementation of this contract and to
establish a basis for a sustained presence in Europe, the Company
formed a subsidiary, OREMET France S.a.r.l., during 1994 to operate
a service center in France. The acquisition of TI provided the
Company with a service center located in the U.K. with an
established operation. The Company intends to utilize these
facilities to meet its customers' needs in Europe.
BACKLOG

The Company's twelve month sales order backlog totaled
approximately $105 million at December 31, 1995 and $44 million at
December 31, 1994.

COMPETITION

Although OREMET's sales are predominately to the domestic
market, the titanium industry is competitive on a worldwide basis.
In each of the Company's major product lines, OREMET believes it
competes primarily on the basis of price, quality, delivery time

5
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and customer service. OREMET's principal competitors are other
integrated and non-integrated producers of titanium located
primarily in the U.S., Europe, Japan, China and the FSU.

The Company estimates that its share of U.S. sponge capacity
is approximately 30% and that its share of world capacity is about
5%. While approximately 15% of the world's sponge production
capacity is located within the U.S., approximately 60% is located
within the FSU. After the end of the Cold War, sponge produced in
the FSU became available and has been imported into the U.S. at low
prices in ever increasing quantities. Industry sources estimate
that approximately 11 million pounds of sponge were imported into
the U.S. from the FSU during 1995 and 1994. This is about 350%
higher than the amount imported during 1993 and it is about 40% of
the estimated 1995 production of the U.S. producers.

The titanium producers in the FSU are currently working with
several U.S. companies to have their "new production" sponge
qualified for use in critical aerospace applications. Currently,
FSU sponge is subject to import tariffs of 14% and dumping duties
of 85%. Requests for a review of the dumping duty by the U.S.
Department of Commerce are pending. An elimination or reduction of
the dumping duties on sponge from the FSU could result in
additional imports of their product which in turn could reduce the
demand for sponge produced by the Company.

While the FSU producers have not been significant participants
in the U.S. market for mill products, it is believed that they have
the largest titanium mill products production capacity in the
world. Imports of titanium ingot from the FSU totalled just under
2 million pounds during 1995. While this is an increase of almost
250% from the quantity imported from the FSU in 1994, it represents
less than 5% of the estimated 1995 production of the U.S.
producers. Continued expansion into the U.S. market by FSU
producers could materially affect the operations of the Company.

EMPLOYEE RELATIONS

As of December 31, 1995, the Company employed 580 employees,
of which 46 were employed outside of the U.S. All of the hourly
production and maintenance workers (approximately 342) at the
Albany, Oregon and Frackville, Pennsylvania manufacturing
facilities are represented by labor unions. In August 1994, the
Company and the union representing the Albany, Oregon employees
agreed upon a new labor contract which will continue through July
2000. This contract can be re-opened after three years to address
economic issues. The contract covering the Frackville,
Pennsylvania employees was negotiated in September 1994, and will
continue for three years. OREMET considers its relations with its
employees to be good.

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<PAGE>
RESEARCH, TECHNICAL AND PRODUCT DEVELOPMENT

The Company has a modest research and development staff which
maintains contact with university and government research
facilities and with major end-users of its products to assess new
applications for titanium and the need for new or alternative
alloys and titanium compositions. The Company develops titanium
alloy systems, processes and procedures for the manufacture of
experimental metal and new products. The Company also maintains a
staff of employees dedicated to process engineering. This process
engineering group continually evaluates and identifies potential
improvements in the manufacturing process. The amount of money
spent on research, technical and development activities totaled
approximately $1.6 million in 1995, $1.4 million in 1994 and $0.8
million in 1993.

OREMET's quality control group tests products for compliance
with customer specifications, including detailed metallurgical and
chemical analyses, sonic tests and mechanical capability and
property tests. The results of these tests are then certified for
conformance to specifications and then recorded for future
traceability.

PATENTS AND TRADEMARKS

The Company possesses a substantial body of trade secrets and
know-how. While no individual trade secret, patent or item of
know-how is thought to be material to the operations of the
Company, in total this body of knowledge is important to OREMET's
business.

ENVIRONMENTAL

The Company is subject to federal, state and local statutes
and regulations concerning environmental matters and land use.
Although the Company believes it is in material compliance with
these laws, they are frequently modified to be more restrictive and
it is impossible to predict accurately the future effect changes in
these laws may have on the Company.

Like all titanium producers, the Company generates certain
waste materials and emissions, including materials for which
disposal or emission requires compliance with environmental
protection laws. The Company conducts its operations at an
industrial site where hazardous materials have been managed for
many years in connection with its operations, including periods
before careful management of these materials was required or
generally believed to be necessary. Consequently, the Company is
subject to various environmental laws that impose compliance
obligations and can create liability for historical releases of
hazardous substances.

The Company has entered into a consent order with the Oregon
Department of Environmental Quality pursuant to which the Company
is conducting an investigation of hazardous substances in portions
of the soil and groundwater at its plant site (Albany, Oregon).
The Company anticipates that its investigation will result in a
determination that at least some remedial action is necessary. An
estimate of the cost cannot be made at this time. A neighboring
property owner also is investigating groundwater contamination at
their property that has migrated to Oremet's property and for which
Oremet may have legal claims to recover a portion of its
investigation costs.

In February 1995, the Oregon Department of Environmental
Quality modified Oremet's waste water discharge permit. The new
permit imposes more stringent discharge limits according to a
specified schedule. Oremet has identified several feasible
alternatives for meeting the new limits, the most expensive of
which would require capital expenditures of approximately $700.
Oremet is working with the Department to explore less expensive
alternatives.

In connection with the preparation of its application for a
new federal operating permit under Title V of the 1990 Clean Air
Act Amendment, the Company discovered that some of its air
emissions are greater than previously recognized. The Company has
voluntarily reported these facts to the Oregon Department of
Environmental Quality. To resolve these issues, the Company has
agreed to undertake an evaluation of its emissions that could
result in requirements to install additional pollution control
equipment. At this point, the Company is unable to determine
whether additional controls will be required, but the Company does
not believe the cost of such additional controls would have a
material effect on its capital expenditures, earnings or
competitive position.

In 1991 and in 1993, the Pennsylvania Department of
Environmental Regulation and the Environmental Protection Agency
(EPA) performed site inspections, including soil and water
sampling, at Titanium's site in Frackville, Pennsylvania, in
connection with a regional groundwater investigation of the
Frackville, Pennsylvania area. While the EPA's investigation is
ongoing, management has not been informed of any pending or
potentially required actions which may arise from this
investigation.

In conjunction with the sale of Titanium, Kamyr, Inc. (the
seller) has agreed to undertake specified clean-up activities. In
addition, Kamyr, Inc. has agreed to a substantial indemnification
of the Company in the event damages arise which result from
conditions which were not in compliance with environmental laws and
regulations as they existed at the time Oremet purchased Titanium.

Although no claims have been filed against the Company, it has
completed engineering studies with regards to the above-mentioned
items and less significant matters. As a result of these studies,
which are ongoing, the Company made provisions for environmental
expenses of $0, $240 and $970 in 1995, 1994 and 1993, respectively.
These amounts are in addition to recurring environmental costs
which are expensed as incurred and are included in cost of sales.
Management cannot reasonably predict when these environment issues
will be resolved at the present time.

ITEM 2. PROPERTIES

The Company's principal executive office is located in Albany,
Oregon. Manufacturing facilities in Albany, Oregon and Frackville,
Pennsylvania are owned and are described in the Products and
Operations portion of Item 1, Section I. The Company believes that
the plants are adequate and suitable for its operating needs.
Other than the facility in Birmingham, U.K., the service centers
and sales offices which the Company utilizes are leased.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company is involved in legal
proceedings which arise in the normal course of business. The
Company is not currently involved as a defendant in any pending
legal proceedings where the outcome would have a material adverse
effect on the business or results of operations of the Company.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER

No matters were submitted to a vote of the security holders
during the fourth quarter of 1995.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS

(a) MARKET INFORMATION: Registrant's common stock is traded
over the counter, and its NASDAQ symbol is OREM. Registrant's
stock commenced trading in the National Market System (NMS) on
March 5, 1985.

Information concerning the market price of Registrant's common
stock is incorporated by reference to the Quarterly Stock Data
Section on page 42 of the 1995 Annual Report to Shareholders.

(b) HOLDERS: At March 8, 1996, there were 2,342 holders of
Registrant's common stock based on the holders of record as
certified by the transfer agent. The Company believes that there
are an additional 4 to 5 thousand shareholders who maintain their
ownership in "street name".

(c) DIVIDENDS: There were no dividends declared in either
1995 or 1994. Under the terms of the Company's bank credit
facility, annual cash dividends are limited to the lesser of 50% of
net income, or $1.8 million per year.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is contained in the Five
Year Summary of Selected Financial Data Section on page 36 of the
1995 Annual Report to Shareholders and is incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The information required by this item is contained in the
Management's Discussion and Analysis Section on pages 37 through 41
of the 1995 Annual Report to Shareholders and is incorporated
herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is contained on pages 21
through 35 in the 1995 Annual Report to Shareholders and is
incorporated by reference herein as listed in Item 14 hereof.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is contained in the
Proxy Statement of Registrant for the Annual Shareholders Meeting
to be held April 25, 1996, in the sections titled "Election of
Directors", "Transactions With Management And Others", and
"Executive Officers". The Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days after the end of
the fiscal year covered by this Report, and the sections specified
in the preceding sentence are incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is contained in the
Proxy Statement of Registrant for the Annual Shareholders Meeting
to be held April 25, 1996, in the sections titled "Compensation
Policy," "Compensation Policies and Titanium Industries, Inc.,
Acquisition," and "Performance and Compensation." The Proxy
Statement will be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered
by this Report, and the section specified in the preceding sentence
is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this item is contained in the
Proxy Statement of Registrant for the Annual Shareholders Meeting
to be held April 25, 1996 in the section titled "Security Ownership
of Certain Beneficial Owners and Management." The Proxy Statement
will be filed with the Securities and Exchange Commission within
120 days after the end of the fiscal year covered by this Report,
and the sections specified in the preceding sentence are
incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is contained in the
Proxy Statement of Registrant for the Annual Shareholders Meeting
to be held April 25, 1996, in the section titled "Transactions with
Management and Others". The Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days after the end of
the fiscal year covered by this Report, and the section specified
in the preceding sentence is incorporated herein by reference.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON
FORM 8-K

(a) The following documents are filed as a part of this Report:

1. FINANCIAL STATEMENTS: The following Financial Statements
of Oregon Metallurgical Corporation and Report of
Independent Accountants are incorporated by reference
from pages 21 through 35 of the Registrant's 1995 Annual
Report to Shareholders:

Report of Independent Accountants.

Consolidated Statements of Operations - For The Years
Ended December 31, 1995, 1994 and 1993.

Consolidated Balance Sheets - December 31, 1995 and 1994.

Consolidated Statements of Shareholders' Equity - For The
Years Ended December 31, 1995, 1994 and 1993.

Consolidated Statements of Cash Flows - For The Years
Ended December 31, 1995, 1994 and 1993.

Notes to Consolidated Financial Statements,

2. FINANCIAL STATEMENT SCHEDULES: The following financial
statement schedule of Oregon Metallurgical Corporation
for the years ended December 31, 1995, 1994 and 1993 is
filed as part of this Report and should be read in
conjunction with the Consolidated Financial Statements of
Oregon Metallurgical Corporation:

Page

Report of Independent Accountants on
Financial Statement Schedules . . . . . . S-1
Schedule II : Valuation and Qualifying
Accounts. . . . . . . . . . . . . . . . . S-2

Schedules not listed above have been omitted because they
are not applicable or are not required or the information
required to be set forth therein is included in the
Consolidated Financial Statements or Notes thereto.

3. EXHIBITS

The Exhibit Index of this Annual Report on Form 10-K
lists the exhibits that are filed as part of this Report.

(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the
year ended December 31, 1995.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, this Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

OREGON METALLURGICAL CORPORATION

Date:March 22, 1996 /s/ Carlos E. Aguirre
______________ _____________________________________
Carlos E. Aguirre, President, Chief
Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ __________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:March 22, 1996 /s/ Carlos E. Aguirre
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive Officer and
Director

BOARD OF DIRECTORS

Date:
______________ ________________________
Howard T. Cusic, Chairman, Board of
Directors

Date:
______________ ____________________________________
Gilbert E. Bezar, Director

Date:
______________ ___________________________________
Robert P. Booth, Director

Date:
______________ ____________________________________
Roger V. Carter, Director

Date:
______________ ____________________________________
Nicholas P. Collins, Director

Date:
______________ _____________________________________
David H. Leonard, Director

Date:
______________ ____________________________________
James S. Paddock, Director

Date:
______________ ____________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ ___________________________________
Carlos E. Aguirre, President, Chief
Executive Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:March 22, 1996 /s/ Dennis P. Kelly
______________ _____________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ __________________________________
Carlos E. Aguirre, President, Chief
Executive Officer and Director

BOARD OF DIRECTORS

Date:
______________ __________________________________
Howard T. Cusic, Chairman, Board
of Directors

Date:
______________ _______________________________
Gilbert E. Bezar, Director

Date:
______________ ________________________________
Robert P. Booth, Director

Date:
______________ ________________________________
Roger V. Carter, Director

Date:
______________ ________________________________
Nicholas P. Collins, Director

Date:
______________ _________________________________
David H. Leonard, Director

Date:
______________ ________________________________
James S. Paddock, Director

Date:
______________ _________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ __________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ _________________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:March 22, 1996 /s/ Howard T. Cusic
______________ _________________________________
Howard T. Cusic, Chairman,
Board of Directors

Date:
______________ _______________________________
Gilbert E. Bezar, Director

Date:
______________ _________________________________
Robert P. Booth, Director

Date:
______________ _________________________________
Roger V. Carter, Director

Date:
______________ _________________________________
Nicholas P. Collins, Director

Date:
______________ ________________________________
David H. Leonard, Director

Date:
______________ ________________________________
James S. Paddock, Director

Date:
______________ _________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ ________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ _________________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ ________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:
______________ _________________________________
Howard T. Cusic, Chairman,
Board of Directors

Date:March 22, 1996 /s/ Gilbert E. Bezar
______________ _______________________________
Gilbert E. Bezar, Director

Date:
______________ _________________________________
Robert P. Booth, Director

Date:
______________ ________________________________
Roger V. Carter, Director

Date:
______________ _________________________________
Nicholas P. Collins, Director

Date:
______________ __________________________________
David H. Leonard, Director

Date:
______________ _________________________________
James S. Paddock, Director

Date:
______________ _________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ ________________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:
______________ _________________________________
Howard T. Cusic, Chairman,
Board of Directors

Date:
______________ _________________________________
Gilbert E. Bezar, Director

Date:March 21, 1996 /s/ Robert P. Booth
______________ ________________________________
Robert P. Booth, Director

Date:
______________ ________________________________
Roger V. Carter, Director

Date:
______________ _________________________________
Nicholas P. Collins, Director

Date:
______________ ________________________________
David H. Leonard, Director

Date:
______________ ________________________________
James S. Paddock, Director

Date:
______________ ________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ ______________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:
______________ _________________________________
Howard T. Cusic, Chairman,
Board of Directors

Date:
______________ ________________________________
Gilbert E. Bezar, Director

Date:
______________ ____________________________
Robert P. Booth, Director

Date:March 23, 1996 /s/ Roger V. Carter
______________ _________________________________
Roger V. Carter, Director

Date:
______________ __________________________________
Nicholas P. Collins, Director

Date:
______________ _________________________________
David H. Leonard, Director

Date:
______________ _________________________________
James S. Paddock, Director

Date:
______________ _________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ _________________________________
Dennis P. Kelly, Vice
President, Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ _________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:
______________ _________________________________
Howard T. Cusic, Chairman,
Board of Directors

Date:
______________ ______________________________
Gilbert E. Bezar, Director

Date:
______________ _____________________________
Robert P. Booth, Director

Date:
______________ ____________________________
Roger V. Carter, Director

Date:March 24, 1996 /s/ Nicholas P. Collins
______________ _______________________________
Nicholas P. Collins, Director

Date:
______________ ________________________________
David H. Leonard, Director

Date:
______________ ______________________________
James S. Paddock, Director

Date:
______________ _______________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ ________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ _____________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ ___________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:
______________ ____________________________
Howard T. Cusic, Chairman,
Board of Directors

Date:
______________ ___________________________
Gilbert E. Bezar, Director

Date:
______________ _____________________________
Robert P. Booth, Director

Date:
______________ ______________________________
Roger V. Carter, Director

Date:
______________ _____________________________
Nicholas P. Collins, Director

Date:March 21, 1996 /s/ David H. Leonard
______________ _________________________________
David H. Leonard, Director

Date:
______________ _________________________________
James S. Paddock, Director

Date:
______________ _________________________________
James R. Pate, Director

<PAGE>
SIGNATURES

OREGON METALLURGICAL CORPORATION

Date:
______________ ________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

PRINCIPAL FINANCIAL OFFICER,
AND PRINCIPAL ACCOUNTING OFFICER

Date:
______________ __________________________
Dennis P. Kelly, Vice President,
Finance

PRINCIPAL EXECUTIVE OFFICER

Date:
______________ ________________________________
Carlos E. Aguirre, President,
Chief Executive
Officer and Director

BOARD OF DIRECTORS

Date:
______________ ____________________________
Howard T. Cusic, Chairman, Board
of Directors

Date:
______________ _________________________________
Gilbert E. Bezar, Director

Date:
______________ _________________________________
Robert P. Booth, Director

Date:
______________ ________________________________
Roger V. Carter, Director

Date:
______________ ___________________________
Nicholas P. Collins, Director

Date:
______________ _____________________________
David H. Leonard, Director

Date:March 22, 1996 /s/ James S. Paddock
______________ ________________________________
James S. Paddock, Director

Date:
______________ __________________________________
James R. Pate, Director

<PAGE>
COOPERS COOPERS & LYBRAND L.L.P.
& LYBRAND a professional services firm

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

Our report on the consolidated financial statements of Oregon Metallurgical
Corporation is included in the 1995 Annual Report of Oregon Metallurgical
Corporation (which report and consolidated financial statements are incorporated
by reference in this Annual Report on Form 10-K). In connection with our audits
of such financial statements, we have also audidted the related financial
statements schedule listed in item 14(a) of this Form 10-K.

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

/s/ Coopers & Lybrand LLP

Eugene, Oregon
February 16, 1996, except for the second
paragraph of Note 8, as to which the date
is March 1, 1996

Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International,
a limited liability association incorporated in Switzerland.

S-1
<PAGE>
OREGON METALLURGICAL CORPORATION

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS YEAR
____________________________________________________________________________

<S> <C> <C> <C> <C>
ALLOWANCE FOR
DOUBTFUL ACCOUNTS:

Year ended
December 31, 1995 $1,024 $237 $ (4) (a) $1,257
______ ____ _____ ______

Year ended
December 31, 1994 $ 117 $962 $(55) (a) $1,024
______ ____ _____ ______

Year ended
December 31, 1993 $ 110 $ 39 $(32) (a) $ 117
______ ____ _____ ______

(a) Amounts written off, less recoveries.
</TABLE>

S-2
<PAGE>
EXHIBIT INDEX

EXHIBIT
NO. DESCRIPTION
_______ __________________

2.1 Stock and Asset Purchase Agreement between
Kamyr, Inc. and New TI, Inc. (Filed as
exhibit 2.1 to Form 8-K dated September 20,
1994)

3.1 Restated Articles of Incorporation. (Filed as
exhibit 3.1 to Form 10-K for the year ended
December 31, 1993)

3.2 Restated Bylaws. (Filed as exhibit 3.2 to
Form 10.K for the year ended December 31,
1994)

3.3 Amendment to Restated Articles of
Incorporation, Dated April 28, 1995. (Filed
as exhibit 3.1 to Form 10-Q for the quarter
ended June 30, 1995)

4.1 Specimen Common Stock Certificate.
(Previously filed)

4.2 Warrant Agreement (Nontransferable Warrant)
between James S. Paddock and the Company,
dated September 19, 1994. (Filed as exhibit
4.1 to Form 8-K/A-2 dated September 20, 1994)

10.1 Employee Stock Ownership Plan of the Company.
(Filed as exhibit 4.3 to Form S-8 Registration
Statement 33-18650) *

10.2 Trust Agreement under Oregon Metallurgical
Corporation Employee Stock Ownership Plan. *

10.3 Employment Agreement dated June 28, 1993
between the Company and Carlos Aguirre. (Filed
as exhibit 10.3 to Form 10-K for the year
ended December 31, 1994) *

10.4 Employment Agreement dated October 11, 1993
between the Company and Dennis P. Kelly.
(Filed as exhibit 10.4 to Form 10-K for the
year ended December 31, 1994) *

10.5 Employment Agreement dated October 8, 1993
between the Company and Steven H. Reichman.
(Filed as exhibit 10.5 to Form 10-K for the
year ended December 31, 1994) *

10.6 Employment Agreement dated February 20, 1995
between the Company and John P. Byrne. (Filed
as exhibit 10.6 to Form 10-K for the year
ended December 31, 1994) *

10.7 Loan and Security Agreement dated as of
September 19, 1994 among the Company, New TI,
Inc. and Bank of America Illinois. (Filed as
exhibit 10.7 to Form 10-K for the year ended
December 31, 1994)

10.8 Sales Agreement between RMI Titanium Company
and the Company. (Filed as exhibit 10 to Form
10-Q for the period ended September 30, 1994)

10.9 Corporate Organization and Shareholders
Agreement Among James S. Paddock, the Company
and New TI, Inc., dated September 19, 1994.
(Filed as exhibit 10.1 to the Form 8-K/A-2
dated September 20, 1994) *

10.10 OREMET Employment Agreement between James S.
Paddock and the Company, dated September 19,
1994. (Filed as exhibit 10.2 to the Form 8-
K/A-2 dated September 20, 1994) *

10.11 Employment Agreement between James S. Paddock
and New TI, Inc., dated September 19, 1994.
(Filed as exhibit 10.3 to the Form 8-K/A-2
dated September 20, 1994) *

10.12 Noncompetition and Confidentiality Agreement
between James S. Paddock and the Company,
dated September 19, 1994. (Filed as exhibit
10.4 to the Form 8-K/A-2 dated September 20,
1994) *

10.13 Noncompetition and Confidentiality Agreement
between James S. Paddock and New TI, Inc.,
dated September 19, 1994. (Filed as exhibit
10.5 to the Form 8-K/A-2 dated September 20,
1994) *

<PAGE>
10.14 Titanium Tetrachloride Agreement between SCM
Chemicals, Inc. and the Company, dated August
11, 1990. (Filed as exhibit 10.14 to Form 10-K
for the year ended December 31, 1994)

10.15 Subordinated promissory note between New TI,
Inc. and the former Titanium Industries, Inc.,
dated September 19, 1994. (Filed as exhibit
10.15 to Form 10-K for the year ended December
31, 1994)

10.16 Employment Agreement dated December 18, 1995
between the Company and David G. Floyd. *

10.17 Oregon Metallurgical Corporation Long Term
Incentive Compensation Stock Appreciation
Rights Plan. *

10.18 Oregon Metallurgical Corporation Savings Plan.
*

10.19 Trust Agreement Under Oregon Metallurgical
Corporation Savings Plan. *

10.20 Amendment No. 2 Dated as of June 30, 1995, to
Loan and Security Agreement with Oregon
Metallurgical Corporation and Titanium
Industries, Inc., Dated as of September 19,
1994. (Filed as exhibit 10.1 to the Form 10-Q
for the quarter ended June 30, 1995)

11.1 Statement re: Computation of Per Share
Earnings.

13.1 Portions of the 1995 Annual Report to
Shareholders which have been incorporated by
reference into this Annual Report on Form 10-
K. Except for such portions expressly
incorporated by reference, the 1995 Annual
Report to Shareholders is not deemed to be
filed as part of this Annual Report on Form
10-K.

21.1 Subsidiaries of the Company.

23.1 Consent of Independent Accountants.

27 Financial Data Schedule.

* Management contract or compensatory plan.

TRUST AGREEMENT UNDER OREGON METALLURGICAL CORPORATION
(OREMET) EMPLOYEE STOCK OWNERSHIP PLAN

THIS TRUST AGREEMENT (HEREINAFTER CALLED THE "TRUST") MADE AS
OF THE 1ST DAY OF JANUARY, 1995, BY AND BETWEEN OREGON
METALLURGICAL CORPORATION (HEREINAFTER CALLED THE "COMPANY") AND
KEY TRUST COMPANY OF THE NORTHWEST (HEREINAFTER CALLED THE
"TRUSTEE").

WITNESSETH:

WHEREAS, THE OREGON METALLURGICAL CORPORATION (OREMET)
EMPLOYEE STOCK OWNERSHIP PLAN (HEREINAFTER CALLED THE "PLAN") HAS
BEEN ESTABLISHED BY THE COMPANY; AND

WHEREAS, THE COMPANY DESIRES THE TRUSTEE TO ACT AS TRUSTEE
UNDER THIS TRUST AND THE TRUSTEE IS WILLING SO TO ACT IN ACCORDANCE
WITH THE TERMS OF THIS TRUST;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL COVENANTS HEREIN CONTAINED, THE COMPANY AND THE TRUSTEE DO
HEREBY COVENANT AND AGREE AS FOLLOWS:

1. TRUST FUND. THE TRUSTEE SHALL RECEIVE FROM THE COMPANY
CASH OR OTHER PROPERTY ACCEPTABLE TO THE TRUSTEE. ALL ASSETS SO
RECEIVED TOGETHER WITH THE INCOME THEREFROM AND ANY OTHER INCREMENT
THEREON (HEREINAFTER CALLED THE "TRUST FUND") SHALL BE HELD,
MANAGED AND

-1-
<PAGE>
ADMINISTERED BY THE TRUSTEE PURSUANT TO THE TERMS OF THIS TRUST
WITHOUT DISTINCTION BETWEEN PRINCIPAL AND INCOME. THE TRUSTEE
SHALL NOT BE RESPONSIBLE FOR THE COLLECTION OF ANY CONTRIBUTIONS TO
BE MADE UNDER THE PLAN AND THE TRUSTEE SHALL BE RESPONSIBLE ONLY
FOR MONEY OR OTHER PROPERTY RECEIVED BY IT PURSUANT TO THIS TRUST.
THE TRUSTEE SHALL BE UNDER NO DUTIES WHATSOEVER IN RESPECT OF THE
ADMINISTRATION OF THE PLAN. THE TRUSTEE SHALL HAVE ONLY THOSE
RESPONSIBILITIES SPECIFICALLY IMPOSED UPON IT BY THE PROVISIONS OF
THIS TRUST AND NEITHER THE PLAN NOR ANY OTHER INSTRUMENT TO WHICH
THE TRUSTEE IS NOT A PARTY, INCLUDING BUT NOT LIMITED TO ANY
AGREEMENT ENTERED INTO BETWEEN ANY ONE OR MORE OF THE ESOP
ADMINISTRATORS APPOINTED BY THE COMPANY TO ADMINISTER THE PLAN OR
TO DIRECT INVESTMENTS UNDER THIS TRUST, INCLUDING WITHOUT
LIMITATION, THE TWO PERSON COMMITTEE UNDER THE PLAN KNOWN AS THE
ESOP ADMINISTRATORS (HEREINAFTER REFERRED TO AS THE "ESOP
ADMINISTRATORS") AND AN INVESTMENT MANAGER APPOINTED PURSUANT TO
SUBPARAGRAPH B OF PARAGRAPH 4 BELOW, SHALL IMPOSE ANY DUTIES OR
OBLIGATIONS UPON THE TRUSTEE WITH RESPECT TO THE TRUST FUND.

2. DISTRIBUTIONS. SUBJECT TO THE PROVISIONS OF PARAGRAPHS 3
AND 4, THE TRUSTEE SHALL FROM TIME TO TIME ON THE DIRECTIONS OF THE
ESOP ADMINISTRATORS, EACH OF WHICH IS HEREBY DESIGNATED A "NAMED
FIDUCIARY" AS THAT TERM IS DEFINED IN THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974 (AS AMENDED, "ERISA"), MAKE
DISTRIBUTIONS OUT OF THE TRUST FUND TO SUCH PERSONS, WHETHER
NATURAL OR LEGAL, IN SUCH MANNER, IN SUCH AMOUNTS, AND FOR SUCH

-2-
<PAGE>
PURPOSES, INCLUDING THE PURCHASE OF LIFE INSURANCE AND/OR ANNUITY
CONTRACTS, AS MAY BE SPECIFIED IN THE DIRECTIONS OF THE ESOP
ADMINISTRATORS. THE TRUSTEE SHALL BE UNDER NO DUTY TO MAKE
INQUIRIES AS TO WHETHER ANY DISTRIBUTION DIRECTED BY THE ESOP
ADMINISTRATORS IS MADE PURSUANT TO THE PROVISIONS OF THE PLAN.

3. PROHIBITION AGAINST DIVERSION. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS TRUST, OR IN ANY AMENDMENT
THERETO, IT SHALL BE IMPOSSIBLE, AT ANY TIME PRIOR TO THE
SATISFACTION OF ALL LIABILITIES WITH RESPECT TO THE PARTICIPANTS
UNDER THE PLAN (THE "PARTICIPANTS") OR THEIR BENEFICIARIES, FOR ANY
PART OF THE TRUST FUND, OTHER THAN SUCH PART AS IS REQUIRED TO PAY
TAXES AND ADMINISTRATION FEES AND EXPENSES, TO BE USED FOR, OR
DIVERTED TO, PURPOSES OTHER THAN FOR THE EXCLUSIVE USE OF THE
PARTICIPANTS UNDER THE PLAN OR THEIR BENEFICIARIES. IN MAKING A
DISTRIBUTION UPON A DIRECTION AS AUTHORIZED IN PARAGRAPH 2, THE
TRUSTEE MAY ACCEPT SUCH DIRECTION AS A CERTIFICATION THAT SUCH
PAYMENT COMPLIES WITH THE PROVISIONS OF THIS PARAGRAPH 3 AND NEED
MAKE NO FURTHER INVESTIGATION.

4. POWERS, DUTIES AND IMMUNITIES OF THE TRUSTEE.

A. GENERAL. The Trustee shall administer the Trust Fund
as a nondiscretionary Trustee, and the Trustee shall not have any
discretion or authority with regard to the investment of the Trust
Fund and shall act solely as a directed Trustee of the Trust Fund.
Notwithstanding anything herein to the contrary, it is intended
that the Trust Fund be invested primarily in the

-3-

<PAGE>
common stock of the Company. The Trustee, as a nondiscretionary
Trustee, as may be directed by the ESOP ADMINISTRATORS (or the
Participants to the extent provided herein pursuant to the terms of
the Plan) is authorized and empowered, by way of limitation, with
the following powers, rights and duties, each of which the Trustee
shall exercise in a nondiscretionary manner as directed in
accordance with the direction of the ESOP ADMINISTRATORS or the
Participants (each as a Named Fiduciary), except to the extent that
Plan assets are subject to the control and management of a properly
appointed Investment Manager AS OTHERWISE PROVIDED IN THIS
PARAGRAPH 4:

(I) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY SELL, WRITE OPTIONS ON, LEASE FOR ANY TERM OR TERMS (WITH
OR WITHOUT OPTION TO PURCHASE), TRANSFER OR EXCHANGE ALL OR
ANY PART OF THE PROPERTY HELD BY IT IN THE TRUST FUND AND ALL
PROPERTY THAT MAY FROM TIME TO TIME BE SUBSTITUTED THEREFOR OR
ADDED THERETO, AT SUCH PRICES AND UPON SUCH TERMS AND
CONDITIONS AND IN SUCH MANNER AS IT SHALL DEEM ADVISABLE.

-4-
<PAGE>
LIMITED PARTNERSHIP INTERESTS, TRUST CERTIFICATES AND OTHER
SECURITIES OR OPTIONS THEREON, INCLUDING STOCKS AND OTHER
SECURITIES ISSUED BY THE COMPANY OR ANY SUBSIDIARY OR
AFFILIATE THEREOF (ALL OF WHICH ARE HEREIN CALLED
"SECURITIES"), LOANS, TIME AND SAVINGS DEPOSITS (INCLUDING
SAVINGS DEPOSITS AND CERTIFICATES OF DEPOSIT IN THE TRUSTEE OR
ANY AFFILIATE OF THE TRUSTEE IF SUCH DEPOSITS BEAR A
REASONABLE RATE OF INTEREST), COMMERCIAL PAPER (INCLUDING
PARTICIPATION IN POOLED COMMERCIAL PAPER ACCOUNTS), ANNUITY
AND INSURANCE CONTRACTS (INCLUDING, BUT NOT LIMITED TO,
RETIREMENT INCOME CONTRACTS OR CONTRACTS OF THE DEPOSIT
ADMINISTRATION TYPE OR FOR THE ACCUMULATION OF INTEREST), REAL
ESTATE, REAL ESTATE MORTGAGES AND OTHER KINDS OF PROPERTY OF
EVERY KIND AND DESCRIPTION, AS THE TRUSTEE MAY DEEM PROPER AND
SUITABLE. THE TRUSTEE MAY INVEST IN UNITS OF ANY ONE OR MORE
COLLECTIVE TRUST FUNDS, INCLUDING BUT NOT LIMITED TO THE KEY
TRUST MULTIPLE INVESTMENT TRUST FOR EMPLOYEE BENEFIT TRUSTS,
THE KEY TRUST EB MANAGED GUARANTEED INVESTMENT CONTRACT FUND,
OR IN UNITS OF ANY OTHER GROUP OR COLLECTIVE TRUST FUND
HERETOFORE OR HEREAFTER CREATED, WHICH SHALL HAVE BEEN
DETERMINED BY THE INTERNAL REVENUE SERVICE TO BE A "POOLED
FUND ARRANGEMENT" AS DESCRIBED IN REVENUE RULING 81-100, AND
WHICH SHALL BE ADMINISTERED BY THE TRUSTEE OR ANY OTHER
AFFILIATED BANK, TRUST COMPANY OR CORPORATION, OR ANY OF THEIR
SUCCESSORS OR ASSIGNS, OR ANY INVESTMENT MANAGER APPOINTED
HEREUNDER OR ANOTHER FIDUCIARY HEREUNDER; PROVIDED, HOWEVER,
SUCH INVESTMENT MANAGER OR OTHER FIDUCIARY QUALIFIES AS AN
INVESTMENT MANAGER UNDER SECTION 3(38) OF ERISA (HEREINAFTER
CALLED A "COLLECTIVE TRUST FUND"), IRRESPECTIVE OF THE
PROPORTION OF THE TRUST FUND REPRESENTED BY ANY SUCH
INVESTMENT OR ANY DELEGATION OF AUTHORITY RESULTING THEREFROM.
AS LONG AS THE TRUSTEE HOLDS ANY GROUP OR COLLECTIVE TRUST
FUND UNITS HEREUNDER, THE INSTRUMENTS ESTABLISHING AND/OR
AMENDING ANY SUCH COLLECTIVE TRUST FUND SHALL BE ADOPTED AND
MADE A PART OF THIS TRUST AS THOUGH FULLY SET FORTH HEREIN.
NOTWITHSTANDING THE FOREGOING, THE TRUSTEE SHALL BE UNDER NO
OBLIGATION TO INVEST IN ANY ASSET NOT REGULARLY OFFERED BY IT
AS AN INVESTMENT OPTION UNLESS IT AGREES TO DO SO IN WRITING.
TO THE EXTENT THAT THE TRUSTEE AGREES TO INVEST IN AND HOLD
ANY ASSET NOT REGULARLY OFFERED BY IT AS AN INVESTMENT OPTION,
THE TRUSTEE'S OBLIGATIONS WITH RESPECT TO THE ADMINISTRATION
OF THAT ASSET SHALL BE LIMITED TO THOSE OF A CUSTODIAN.

-5-
<PAGE>
ORGANIZATION, ANY OF THE SECURITIES OF WHICH MAY AT ANY TIME
BE HELD BY IT; (C) DEPOSIT ANY PROPERTY HELD HEREUNDER WITH
ANY PROTECTIVE, REORGANIZATION OR SIMILAR ESOP ADMINISTRATORS
AND DELEGATE DISCRETIONARY POWER THERETO; AND (D) DO ANY ACT
WITH REFERENCE TO THE MATTERS IN THIS PARAGRAPH, INCLUDING BUT
NOT LIMITED TO THE EXERCISE OF OPTIONS, MAKING OF AGREEMENTS
OR SUBSCRIPTIONS AND THE PAYMENT OF EXPENSES, ASSESSMENTS OR
SUBSCRIPTIONS, WHICH THE TRUSTEE MAY DEEM NECESSARY OR
ADVISABLE IN CONNECTION THEREWITH.

(IV) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY RETAIN FOR SUCH TIME AS IT MAY DEEM ADVISABLE ANY PROPERTY
ACQUIRED BY IT PURSUANT TO THE PRECEDING PARAGRAPH WHETHER OR
NOT SUCH PROPERTY WOULD NORMALLY BE PURCHASED AS AN INVESTMENT
HEREUNDER.

(V) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY VOTE ANY STOCK OR OTHER SECURITIES AND EXERCISE ANY RIGHT
APPURTENANT TO ANY STOCK, OTHER SECURITIES OR OTHER PROPERTY
HELD HEREUNDER, EITHER IN PERSON OR BY GENERAL OR LIMITED
PROXY, POWER OF ATTORNEY OR OTHER INSTRUMENT, EXCEPT AS THE
SAME IS MODIFIED BY SUBPARAGRAPH B OF THIS PARAGRAPH 4
RELATING TO COMPANY STOCK.

(VI) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY MANAGE, OPERATE, REPAIR AND IMPROVE ANY REAL OR PERSONAL
PROPERTY HELD BY IT IN THE TRUST FUND.

(VII) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY (A) RENEW OR EXTEND OR PARTICIPATE IN THE RENEWAL OR
EXTENSION OF ANY DEBT OWING TO THE TRUST FUND, UPON SUCH TERMS
AS IT MAY DEEM ADVISABLE, AND AGREE TO A REDUCTION IN THE RATE
OF INTEREST ON ANY SUCH DEBT OR TO ANY OTHER MODIFICATION OR
CHANGE IN THE TERMS OF ANY MORTGAGE OR OF ANY GUARANTEE
PERTAINING THERETO, IN SUCH MANNER AND TO SUCH EXTENT AS IT
MAY DEEM ADVISABLE FOR THE PROTECTION OF THE TRUST FUND OR THE
PRESERVATION OF THE VALUE OF THE INVESTMENT; (B) WAIVE ANY
DEFAULT WHETHER IN THE PERFORMANCE OF ANY COVENANT OR
CONDITION OF ANY EVIDENCE OF SUCH INDEBTEDNESS OR MORTGAGE OR
IN THE PERFORMANCE OF ANY GUARANTEE OR ENFORCE ANY RIGHTS
AVAILABLE TO THE TRUSTEE BY REASON OF ANY SUCH DEFAULT IN SUCH
MANNER AND TO SUCH EXTENT AS IT MAY DEEM ADVISABLE; (C)
EXERCISE AND ENFORCE ANY AND ALL RIGHTS OF FORECLOSURE, BID IN
PROPERTY AT FORECLOSURE, TAKE A DEED IN LIEU OF FORECLOSURE
WITH OR WITHOUT PAYING A CONSIDERATION THEREFOR AND IN
CONNECTION THEREWITH RELEASE THE OBLIGATION ON ANY NOTE OR
OTHER EVIDENCE OF INDEBTEDNESS SECURED BY SUCH MORTGAGE; AND
(D) EXERCISE AND ENFORCE IN ANY ACTION,

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<PAGE>
SUIT OR PROCEEDING AT LAW OR IN EQUITY ANY RIGHTS OR REMEDIES
IN RESPECT TO ANY SUCH DEBT, MORTGAGE OR GUARANTEE.

(VIII) AT THE DIRECTION OF A NAMED FIDUCIARY, THE
TRUSTEE MAY SETTLE, COMPROMISE OR SUBMIT TO ARBITRATION ANY
CLAIMS, DEBTS OR DAMAGES DUE TO OR OWING FROM THE TRUST FUND,
COMMENCE, AND DEFEND SUITS OR LEGAL PROCEEDINGS AND ACT, IN
ITS CAPACITY AS TRUSTEE, AS THE NAMED PARTY IN ALL SUITS OR
LEGAL PROCEEDINGS BROUGHT BY OR AGAINST THE TRUST FUND.

(IX) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY FORM OR JOIN WITH OTHERS IN THE FORMATION OF SUCH
CORPORATIONS AS SHALL BE DEEMED ADVISABLE IN CONNECTION WITH
THE ADMINISTRATION OR DISTRIBUTION OF THE TRUST FUND AND
TRANSFER TO ANY SUCH CORPORATION SUCH PROPERTY AS THE TRUSTEE
SHALL IN ITS DISCRETION DEEM ADVISABLE.

(X) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY BORROW FROM ANY LENDER (INCLUDING A PARTY IN INTEREST AS
DEFINED IN SECTION 3(14) OF ERISA) TO FINANCE THE ACQUISITION
OF SHARES OF COMMON STOCK OF THE COMPANY, GIVING ITS NOTE AS
TRUSTEE WITH SUCH REASONABLE INTEREST AND SECURITY FOR THE
LOAN AS MAY BE APPROPRIATE OR NECESSARY; PROVIDED, HOWEVER,
THAT ANY SUCH BORROWING SHALL COMPLY WITH THE PROVISIONS OF
SECTION 5 OF THE PLAN;

(XI) THE TRUSTEE MAY HOLD SECURITIES IN BEARER FORM AND
MAY REGISTER SECURITIES AND OTHER PROPERTY HELD IN THE TRUST
FUND IN ITS OWN NAME OR IN THE NAME OF A NOMINEE, COMBINE
CERTIFICATES REPRESENTING SECURITIES WITH CERTIFICATES OF THE
SAME ISSUE HELD BY THE TRUSTEE IN OTHER FIDUCIARY CAPACITIES,
AND DEPOSIT, OR ARRANGE FOR DEPOSIT OF PROPERTY WITH ANY
DEPOSITORY BUT THE BOOKS AND RECORDS OF THE TRUSTEE SHALL AT
ALL TIMES SHOW THAT ALL SUCH SECURITIES ARE PART OF THE TRUST
FUND.

(XII) THE TRUSTEE MAY HOLD IN ITS BANKING DEPARTMENT
UNINVESTED AND UNPRODUCTIVE OF INCOME, WITHOUT LIABILITY FOR
INTEREST THEREON, EXCEPT SUCH AS MAY BE ALLOWED IN ACCORDANCE
WITH ITS REGULATIONS, SUCH PART OF THE TRUST FUND AS IS
REASONABLE UNDER THE CIRCUMSTANCES.

(XIII) THE TRUSTEE MAY MAKE, EXECUTE AND DELIVER, AS
TRUSTEE, WITH OR WITHOUT A PROVISION FOR NO INDIVIDUAL
LIABILITY ON ITS PART, ANY AND ALL CONVEYANCES, NOTES,

-7-
<PAGE>
CONTRACTS, WAIVERS, RELEASES, LEASES, ASSIGNMENTS, MORTGAGES,
OPTIONS, POWERS OF ATTORNEY OR OTHER INSTRUMENTS IN WRITING
THAT THE TRUSTEE MAY DEEM NECESSARY OR ADVISABLE IN
ADMINISTERING THE TRUST FUND.

(XIV) THE TRUSTEE MAY EMPLOY, at the expense of the
Company or the Trust Fund, agents and delegate to them such
duties as the Trustee sees fit; the Trustee shall not be
responsible for any loss occasioned by any such agents
selected by it with reasonable care; the Trustee may consult
with legal counsel (who may be counsel for the Company)
concerning any questions which may arise with reference to its
power or duties under the Plan, and the written opinion of
such counsel shall be full and complete protection with
respect to any action taken or not taken by the Trustee in
good faith and in accordance with the written opinion of such
counsel.

(XV) THE TRUSTEE MAY pay out of the Trust Fund any taxes
imposed or levied with respect to the Trust Fund and may
contest the validity or amount of any tax, assessment,
penalty, claim or demand respecting the Trust Fund; however,
unless the Trustee shall have first been indemnified to its
satisfaction, it shall not be required to contest the validity
of any tax, or to institute, maintain or defend against any
other action or proceeding either at law or in equity.

(XVI) THE TRUSTEE MAY make loans to Participants in
accordance with policies established by the Company or the
ESOP Administrators and in accordance with the terms of the
Plan and to segregate or otherwise identify property of the
Trust Fund as directed by the ESOP Administrators for such
purpose including providing collateral for loans made pursuant
to the Plan.

(XVII) WITHOUT LIMITATION OF THE FOREGOING, THE TRUSTEE
MAY DO ALL SUCH ACTS, EXECUTE ALL SUCH INSTRUMENTS, TAKE ALL
SUCH PROCEEDINGS AND EXERCISE ALL SUCH RIGHTS, POWERS AND
PRIVILEGES WITH RELATION TO ANY ASSETS CONSTITUTING A PART OF
THE TRUST FUND, AS IT MAY DEEM NECESSARY OR ADVISABLE TO CARRY
OUT THE PURPOSES OF THIS TRUST.

B. DIRECTED INVESTMENTS. THE COMPANY OR THE ESOP
Administrators SHALL HAVE THE FOLLOWING POWERS AND RESPONSIBILITIES
WITH RESPECT TO THE ASSETS HELD IN THE TRUST FUND:

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<PAGE>
(I) COMPANY OR ESOP Administrators Direction. The
assets of the Trust Fund shall be held in such number of
Investment Funds (the "Investment Funds") as the ESOP
Administrators and the Trustee may agree, plus a Company Stock
Fund if elected by the ESOP Administrators and permitted by
the terms of the Plan, as the ESOP Administrators shall
designate in writing on the Investment Fund Designation form
affixed hereto. Such Investment Funds shall be selected by
the ESOP Administrators subject to the Trustee's agreement to
administer such investments under this Agreement. The ESOP
Administrators hereby acknowledge that, available as In-
vestment Funds are interests in Proprietary Mutual Funds and
Collective Funds. The ESOP Administrators acknowledge that as
a Named Fiduciary, they have the sole responsibility for
selection of the Investment Funds offered under the Plan, and
have done so on the basis of the ESOP Administrators'
determination, after due inquiry, of the appropriateness of
the selected Investment Funds as vehicles for the investment
of Plan assets pursuant to the terms of the Plan, considering
all relevant facts and circumstances, including but not
limited to (a) the investment policy and philosophy of the
Company developed pursuant to ERISA <SUBSECTION> 402(b)(1); (b) the
Participants, including average level of investment experience
and sophistication; (c) the ability of Participants, using an
appropriate mix of Investment Funds, to diversify the
investment of Plan assets held for their benefit; (d) the
ability of Participants, utilizing an appropriate mix of
Investment Funds, to structure an investment portfolio within
their account in the Plan with risk and return characteristics
within the normal range of risk and return characteristics for
individuals with similar investment backgrounds, experience
and expectations. In making the selection of Investment
Funds, the ESOP Administrators represent that they did not
rely on any representations or recommendations from the
Trustee or any of its employees, except as may have been
provided through written materials, including marketing
materials provided by the various sponsors or distributors of
the Investment Funds, and that the Investment Fund selection
has not be influenced, approved, or encouraged through the
actions of the Trustee or its employees.

For purposes of the Plan, "Company Stock" shall mean common
stock listed on a recognized securities exchange issued by the
Company as employer of Employees covered by the Plan or by an
affiliate of such Company and which shall be a "qualifying
employer security" as defined in ERISA. The Company Stock
Fund shall be invested and reinvested in shares of Company
Stock, which stock shall be purchased by the Trustee to the
extent not contributed to the Plan by the Company, except for
amounts which may

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<PAGE>
reasonably be expected to be necessary to satisfy
distributions to be made in cash. Up to 100% of the assets of
the Trust Fund may be invested in Company Stock.

All contributions shall be allocated by the Trustee to the
Plan's Investment Funds specified by the ESOP Administrators.
Dividends, interest and other distributions shall be
reinvested in the same Investment Fund from which received.

Unless specifically agreed to between the Trustee and the
Company or the ESOP Administrators, the Trustee shall be under
no obligation to invest in any asset not regularly offered by
the Trustee for use as an Investment Fund. To the extent that
the Trustee agrees to hold an asset not regularly offered by
it as an Investment Fund, the Trustee's obligations with
respect to the administration of that asset shall be limited
to those of a custodian.

The Trustee shall not be liable but shall be fully protected
by reason of its taking or refraining from taking any action
at the direction of the Company or the ESOP Administrators,
nor shall the Trustee be liable but shall be fully protected
by reason of its refraining from taking any action because of
the failure of the Company, the ESOP Administrators, or any
Participant to give a direction or order. The Trustee shall
be under no duty to question or make inquiry as to any
direction, notification or order or failure to give a
direction, notification or order by the Company, the ESOP
Administrators or any Participant. The Trustee shall be under
no duty to make any review of investments directed by the
Company, the ESOP Administrators or any Participant acquired
for the Trust Fund and under no duty at any time to make any
recommendation with respect to disposing of or continuing to
retain any such investments. While the Company may direct the
Trustee with respect to Plan investments, unless specifically
authorized pursuant to ERISA under the plan, the Company may
not (a) borrow from the Fund or pledge any assets of the Fund
as security for a loan; (b) buy property or assets from or
sell property or assets to the Fund; (c) charge any fee for
services rendered to the Fund; or (d) receive any services
from the Fund on a preferential basis.

(II) INVESTMENT MANAGERS. FROM TIME TO TIME THE ESOP
ADMINISTRATORS MAY DESIGNATE AN INVESTMENT MANAGER, WHO SHALL
BE (A) EITHER REGISTERED AS AN INVESTMENT ADVISER UNDER THE
INVESTMENT ADVISERS ACT OF 1940, (B) A BANK, AS DEFINED IN
THAT ACT, OR (C) AN INSURANCE COMPANY QUALIFIED TO PERFORM
INVESTMENT SERVICES UNDER THE LAWS OF MORE THAN ONE STATE OF
THE UNITED STATES, AND WHO ACKNOWLEDGES IN WRITING TO THE

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<PAGE>
COMPANY AND THE TRUSTEE THAT IT IS A FIDUCIARY WITH RESPECT TO
THE ASSETS OF THE TRUST FUND UNDER SUCH INVESTMENT MANAGER'S
CONTROL WITH AUTHORITY TO DIRECT THE INVESTMENT AND
REINVESTMENT OF AN INVESTMENT FUND OR FUNDS SPECIFIED IN SUCH
NOTICE AND WITH SUCH ADDITIONAL AUTHORITY AS MAY BE SPECIFIED
THEREIN. THE INVESTMENT MANAGER SHALL NOT BE THE AGENT OF THE
TRUSTEE. THE ESOP Administrators MAY BY SIMILAR NOTICE MODIFY
OR TERMINATE SUCH DESIGNATION AND AUTHORITY FROM TIME TO TIME.
SO LONG AS, AND TO THE EXTENT THAT, ANY SUCH DESIGNATION IS IN
EFFECT, THE TRUSTEE (A) SHALL INVEST, REINVEST AND RETAIN THE
INVESTMENT FUND ASSIGNED TO AN INVESTMENT MANAGER IN
ACCORDANCE WITH THE INSTRUCTIONS RECEIVED FROM SUCH INVESTMENT
MANAGER, (B) WITH RESPECT TO ASSETS IN SUCH INVESTMENT FUND
SHALL FOLLOW ANY INSTRUCTIONS RECEIVED BY IT FROM SUCH
INVESTMENT MANAGER AS TO THE EXERCISE BY THE INVESTMENT
MANAGER OF THE POWERS UNDER SUBSECTIONS (I) THROUGH (IX) OF
SUBPARAGRAPH A OF THIS PARAGRAPH 4, WHICH POWERS SHALL BE
EXCLUSIVELY HELD BY THE INVESTMENT MANAGER, AND (C) AS TO
THOSE ASSETS IN THE INVESTMENT FUND, SHALL BE RELEASED AND
RELIEVED OF ALL DUTIES, RESPONSIBILITIES AND LIABILITIES
INCIDENT TO SUCH DESIGNATION, AND THEREAFTER ACT IN THE
CAPACITY OF CUSTODIAN OF SUCH ASSETS AND A NONDISCRETIONARY
TRUSTEE. THE TRUSTEE, IN ITS CAPACITY OF NONDISCRETIONARY
TRUSTEE AND CUSTODIAN, SHALL RETAIN ONLY THOSE POWERS AND
DUTIES SET FORTH IN SUBSECTIONS (XI) THROUGH (XVII) OF
SUBPARAGRAPH A OF THIS PARAGRAPH 4 AS ARE NECESSARY TO ITS
FUNCTIONS AS CUSTODIAN. THE OTHER POWERS SET FORTH IN SAID
SUBPARAGRAPH A SHALL ONLY BE EXCERCISED UPON THE WRITTEN
DIRECTIONS OF THE INVESTMENT MANAGER SO LONG AS, AND TO THE
EXTENT THAT, NO SUCH DESIGNATION IS IN EFFECT, THE TRUSTEE
SHALL INVEST, REINVEST AND RETAIN, IN ACCORDANCE WITH ITS OWN
DISCRETION, THAT PART OF THE TRUST FUND NOT ASSIGNED TO AN
INVESTMENT MANAGER.

(III) INSURANCE. THE TRUSTEE MAY TRANSFER SUCH PORTION
OF THE TRUST FUND AS THE ESOP Administrators SHALL DIRECT TO
ANY INSURANCE COMPANY FOR ONE OR MORE POLICIES, ANNUITY OR
OTHER CONTRACTS, WHETHER OR NOT THEY ARE GROUP CONTRACTS,
INCLUDING CONTRACTS WHICH PROVIDE FOR THE ALLOCATION OF
AMOUNTS THEREUNDER TO THE INSURANCE COMPANY'S GENERAL ACCOUNT
AND/OR TO ONE OR MORE OF ITS SEPARATE ACCOUNTS MAINTAINED FOR
THE COLLECTIVE INVESTMENT OF ASSETS OF QUALIFIED RETIREMENT
PLANS. THE INSURANCE COMPANY SHALL HAVE ALL THE SAME POWERS
WITH RESPECT TO THE ASSETS HELD UNDER A CONTRACT AS AN
INVESTMENT MANAGER HAS WITH RESPECT TO ASSETS OF THE TRUST
FUND PURSUANT TO SUBPARAGRAPH A OF THIS PARAGRAPH 4.

(IV) FOLLOWING DIRECTIONS OF THE COMPANY OR ESOP
Administrators. SO LONG AS, AND TO THE EXTENT THAT, THE
COMPANY OR ESOP Administrators SHALL EXERCISE THE POWER TO

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<PAGE>
MANAGE AS A NAMED FIDUCIARY ASSETS HELD AS PART OF AN
INVESTMENT FUND, THE TRUSTEE: (A) SHALL INVEST, REINVEST AND
RETAIN THE INVESTMENT FUND ASSIGNED TO THE COMPANY OR ESOP
Administrators IN ACCORDANCE WITH THE INSTRUCTIONS RECEIVED
FROM THE COMPANY OR ESOP Administrators; (B) WITH RESPECT TO
ASSETS IN SUCH INVESTMENT FUND SHALL FOLLOW ANY INSTRUCTIONS
RECEIVED BY IT FROM THE COMPANY OR ESOP Administrators AS TO
THE EXERCISE BY THE COMPANY OR ESOP Administrators OF THE
POWERS UNDER SUBSECTIONS (I) THROUGH (X) OF SUBPARAGRAPH A OF
THIS PARAGRAPH 4, WHICH POWERS SHALL BE EXCLUSIVELY HELD BY
THE COMPANY OR ESOP Administrators; AND (C) AS TO THOSE ASSETS
IN THE INVESTMENT FUND, SHALL BE RELEASED AND RELIEVED OF ALL
DUTIES, RESPONSIBILITIES AND LIABILITIES INCIDENT TO SUCH
POWER, AND THEREAFTER ACT IN THE CAPACITY OF CUSTODIAN OF SUCH
ASSETS AND A NONDISCRETIONARY TRUSTEE. THE TRUSTEE, IN ITS
CAPACITY OF NONDISCRETIONARY TRUSTEE AND CUSTODIAN, SHALL
RETAIN ONLY THOSE POWERS AND DUTIES SET FORTH IN SUBSECTIONS
(XI) THROUGH (XVII) OF SUBPARAGRAPH A OF THIS PARAGRAPH 4 AS
ARE NECESSARY TO ITS FUNCTIONS AS CUSTODIAN. THE OTHER POWERS
SET FORTH IN SAID SUBPARAGRAPH A SHALL ONLY BE EXCERCISED UPON
THE WRITTEN DIRECTIONS OF THE COMPANY OR ESOP Administrators.

(V) SPECIAL LIMITED PURPOSE FUNDS. THE COMPANY OR ESOP
ADMINISTRATORS MAY DESIGNATE AN INVESTMENT FUND AS A SPECIAL
PURPOSE OR LIMITED PURPOSE FUND THAT IS TO BE MANAGED (WHETHER
BY THE COMPANY, THE ESOP ADMINISTRATORS, THE TRUSTEE OR AN
INVESTMENT MANAGER) IN ACCORDANCE WITH SPECIAL OBJECTIVES OR
LIMITATIONS OR INVESTMENT PRACTICES (SUCH AS, BUT NOT LIMITED
TO, APPROXIMATING THE RESULTS OF A DESIGNATED MARKET INDEX).

C. PARTICIPANT DIRECTION. Each Participant shall by
such mechanism as may be agreed upon between the Trustee and the
ESOP Administrators, have the ability to direct that the
contributions made to his or her accounts for which the Participant
may direct investments, as selected by the ESOP Administrators in
the Plan, be invested in one or more of the Investment Funds,
including the Company Stock Fund, if applicable. At the time an
Employee becomes eligible for the Plan, he or she shall specify the
percentage of his or her accounts (expressed in percentage
increments as may be agreed to between the ESOP Administrators and
the Trustee) to

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<PAGE>
be invested prorata in each such Investment Fund. In the event a
Participant fails to direct investments of assets made to his or
her accounts, the Trustee shall invest such assets in such
investment fund or funds as the ESOP Administrators shall direct.
For purposes of the immediately preceding sentence, the ESOP
Administrators, as a Named Fiduciary, shall designate an investment
fund or funds as a default investment into which all assets of
Participants who fail to direct the investment of assets will be
invested.

(i) Upon prior written notice to the Trustee, or
other form of notice acceptable to the Trustee, a Participant
may change an investment direction with respect to future
contributions. Through acceptable notice to the Trustee and
pursuant to the terms of the Plan, the Participant may elect
to transfer all or a portion of such Participant's interest in
each Investment Fund (based on the value of such interest on
the "Valuation Date" immediately preceding such election), to
any other of the Investment Funds selected by the ESOP
Administrators so that the Participant's interest in the said
Investment Funds immediately after the transfer is allocated
in percentage increments as may be agreed to by the ESOP
Administrators and the Trustee. For purposes of this Trust
Agreement a "Valuation Date" is the date or dates on which the
Company and the Trustee mutually agree that the assets of the
Trust Fund will be valued.

(ii) Notwithstanding any Participant's election to
change Investment Funds, the Trustee may, in its discretion,
delay satisfaction of changes in Investment Funds pending
settlement of prior changes in Investment Funds and will
process such elections subject to any restrictions on
withdrawals and admissions in any Collective Trust Fund.

(iii) The Company will be responsible when
transmitting Company and Employee contributions to show the
dollar amount to be credited to each Investment Fund for each
Employee.

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<PAGE>
(iv) Except as otherwise provided in the Plan,
neither the Trustee, the Company, ESOP Administrators nor any
fiduciary of the Plan shall be liable to the Participant or
any of his or her beneficiaries for any loss resulting from
action taken at the direction of the Participant.

(V) NOTWITHSTANDING ANYTHING IN THE PLAN OR THIS
TRUST TO THE CONTRARY, WHEN INVESTMENT FUNDS ARE ESTABLISHED
OVER WHICH A PLAN PARTICIPANT OR BENEFICIARY OF A PLAN
PARTICIPANT IS PERMITTED TO EXERCISE CONTROL OVER INVESTMENT
OF THE PORTION OF THE TRUST FUND HELD FOR HIS BENEFIT (A
"PARTICIPANT DIRECTED INVESTMENT"), THE TRUSTEE, ESOP
ADMINISTRATORS, AND ALL OTHER FIDUCIARIES OF THE PLAN AND/OR
TRUST SHALL BE SUBJECT TO THE PROPER DIRECTIONS OF SUCH
PARTICIPANT. WHENEVER THE TRUSTEE, ESOP ADMINISTRATORS, OR
ANY OTHER FIDUCIARY OF THE PLAN AND/OR TRUST RECEIVES
DIRECTION FROM A PARTICIPANT REGARDING THE INVESTMENT OF
HER/HIS ACCOUNT (TO THE EXTENT AUTHORIZED IN THE PLAN OR THIS
TRUST), THE DIRECTION SHALL BE TREATED AS THE PROPER DIRECTION
OF A "NAMED FIDUCIARY" AND THE TRUSTEE, ESOP ADMINISTRATORS,
AND ALL OTHER FIDUCIARIES SHALL BE ENTITLED TO RELY ON SUCH
DIRECTION WITHOUT OBLIGATION OF INQUIRY AS TO THE
APPROPRIATENESS OF THE DIRECTION GIVEN BY SUCH PARTICIPANT.
NEITHER THE TRUSTEE, THE COMPANY NOR THE ESOP ADMINISTRATORS
SHALL HAVE ANY LIABILITY WHATSOEVER FOR ANY LOSSES WHICH MAY
RESULT FROM EITHER A PARTICIPANT'S DIRECTION OF ANY INVESTMENT
OR FOR ANY LOSS WHICH MAY RESULT BY FAILURE OF A PARTICIPANT
TO MAKE SUCH DIRECTION. NOR SHALL THE TRUSTEE, THE COMPANY OR
ESOP ADMINISTRATORS HAVE ANY LIABILITY OR RESPONSIBILITY
WHATSOEVER FOR ANY DISPARITY BETWEEN THE PERFORMANCE OR RATES
OF INVESTMENT RETURN OF ANY PARTICIPANT DIRECTED ACCOUNTS AND
THE TRUST FUND IN GENERAL.

D. INVESTMENT FUNDS GENERALLY. WHEN INVESTMENT FUNDS
HAVE BEEN ESTABLISHED PURSUANT TO SUBPARAGRAPH B OF THIS PARAGRAPH
4:

(I) THE ESOP ADMINISTRATORS SHALL REGULARLY NOTIFY EACH
DESIGNATED INVESTMENT MANAGER OF THE ANTICIPATED CASH
REQUIREMENTS FOR DISBURSEMENTS FROM THE INVESTMENT FUND OR
FUNDS UNDER HIS OR ITS DIRECTION, AND THE INVESTMENT MANAGER
SHALL DIRECT THE TRUSTEE TO HOLD CASH FUNDS UNINVESTED IN SUCH
AMOUNTS AND FOR SUCH PERIODS OF TIME AS MAY APPEAR TO BE
REASONABLY NECESSARY TO MEET SUCH CASH REQUIREMENTS. UPON THE
APPOINTMENT OF AN INVESTMENT MANAGER, THE TRUSTEE SHALL INVEST
AND REINVEST THE CASH FORMING A PART OF ANY INVESTMENT FUND,
WHICH IT HAS NOT BEEN DIRECTED TO HOLD UNINVESTED, IN SUCH
MONEY MARKET INSTRUMENTS, SUCH AS COMMERCIAL PAPER AND U.S.

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<PAGE>
TREASURY BILLS AND NOTES, REPURCHASE AGREEMENTS OR OTHER
EVIDENCES OF INDEBTEDNESS WHICH ARE PAYABLE ON DEMAND OR WHICH
GENERALLY HAVE A MATURITY DATE OF NOT MORE THAN FIFTEEN (15)
MONTHS FROM THE TIME OF ACQUISITION, AND INCLUDING SHARES OF
ANY MUTUAL FUND INCLUDING WITHOUT LIMITATION A PROPRIETARY
MUTUAL FUND DESCRIBED IN SUBSECTION (II) OF SUBPARAGRAPH 4A.

(II) THE INVESTMENT MANAGER SHALL PLACE THE BUY OR SELL
ORDERS WITH THE BROKERS, OR OTHER PERSONS THROUGH WHOM SUCH
TRANSACTIONS SHALL BE ACCOMPLISHED, PERTAINING TO THE
INVESTMENT FUND WHICH IS SUBJECT TO THE DIRECTION OF THE
INVESTMENT MANAGER. THE TRUSTEE'S SOLE DUTY AND OBLIGATION
RELATING TO THE INVESTMENT FUND WHICH IS SUBJECT TO THE
DIRECTION OF THE INVESTMENT MANAGER SHALL BE TO ACCEPT AND PAY
FOR ANY PROPERTY OF ANY NATURE WHATSOEVER THAT IT MAY BE
DIRECTED BY THE INVESTMENT MANAGER TO ACCEPT AND PAY FOR, AND
TO DELIVER AGAINST PAYMENT THEREFOR, ANY PROPERTY OF ANY
NATURE WHATSOEVER WHICH IT MAY BE DIRECTED BY SUCH INVESTMENT
MANAGER TO DELIVER AGAINST PAYMENT THEREFOR. THE TRUSTEE
SHALL USE ITS BEST EFFORTS TO CONSUMMATE ANY SUCH ACCEPTANCE
AND PAYMENT, OR DELIVERY AGAINST PAYMENT, AS IT MAY BE
DIRECTED SO TO DO, AND THIS SHALL CONSTITUTE THE TRUSTEE'S
SOLE DUTY WITH RESPECT TO SUCH TRADING.

(III) PAYMENT OF THE COSTS OF THE ACQUISITION, SALE OR
EXCHANGE OF ANY SECURITY OR OTHER PROPERTY FOR AN INVESTMENT
FUND SHALL BE CHARGED TO SUCH INVESTMENT FUND. IN THE ABSENCE
OF A DIRECTION FROM THE ESOP ADMINISTRATORS TO THE CONTRARY,
OTHER PAYMENTS AND DISBURSEMENTS FROM THE TRUST FUND SHALL BE
CHARGED TO SUCH PART OF THE TRUST FUND AS THE TRUSTEE DEEMS
ADVISABLE.

(IV) ALL INSTRUCTIONS FROM AN INVESTMENT MANAGER (OR
FROM PERSONS AUTHORIZED BY AN INVESTMENT MANAGER) TO THE
TRUSTEE SHALL BE IN WRITING AND SHALL BE COMPLETE IN ALL
REASONABLE AND NECESSARY DETAILS. THE TRUSTEE MAY, IN ITS
DISCRETION, ACCEPT DIRECTIONS BY TELEPHONE OR TELEGRAPH
CONFIRMED IN WRITING OR BY ANY OTHER MEANS OF COMMUNICATION
WHICH IT BELIEVES TO BE GENUINE (INCLUDING COMMUNICATIONS
RECEIVED THROUGH THE FACILITIES OF AN INSTITUTIONAL DELIVERY
SYSTEM OF A DEPOSITORY) PROVIDED THAT THE TRUSTEE SHALL NOT BE
LIABLE FOR EXECUTING OR FAILING TO EXECUTE ANY SUCH DIRECTIONS
OR FOR ANY MISTAKE IN THE EXECUTION OF ANY SUCH INSTRUCTION
EXCEPT FOR ITS WILLFUL DEFAULT OR GROSS NEGLIGENCE. THE
TRUSTEE SHALL HAVE NO DUTY TO QUESTION SUCH INSTRUCTIONS NOR
SHALL THE TRUSTEE INCUR ANY LIABILITY FOR FOLLOWING SUCH
INSTRUCTIONS.

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<PAGE>
(V) IN THE EVENT THAT AN INVESTMENT MANAGER APPOINTED
HEREUNDER IS AUTHORIZED AND EMPOWERED BY THE ESOP
ADMINISTRATORS TO INVEST AND REINVEST ALL OR ANY PART OF THE
TRUST FUND ALLOCATED TO ITS INVESTMENT FUND IN UNITS OF ANY
COMMON, COLLECTIVE OR COMMINGLED TRUST FUND MAINTAINED BY SAID
INVESTMENT MANAGER AS A QUALIFIED TRUST UNDER THE PROVISIONS
OF SECTION 401(A) AND EXEMPT UNDER THE PROVISIONS OF SECTION
501(A) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") THEN, NOTWITHSTANDING ANY PROVISION IN THIS TRUST
EXPRESSED OR IMPLIED TO THE CONTRARY, UPON DIRECTION OF AN
INVESTMENT MANAGER, THE TRUSTEE SHALL MAKE SUCH TRANSFERS TO
THE INVESTMENT MANAGER, AS THE TRUSTEE OF A COMMON, COLLECTIVE
OR COMMINGLED TRUST FUND DESCRIBED ABOVE, AS ARE NECESSARY TO
IMPLEMENT THE FOREGOING.

(VI) NOTWITHSTANDING THE PROVISIONS OF THIS TRUST WHICH
PLACE RESTRICTIONS UPON THE ACTIONS OF THE TRUSTEE, OR THE
INVESTMENT MANAGER, TO THE EXTENT MONIES OR OTHER ASSETS ARE
UTILIZED TO ACQUIRE UNITS OF ANY COMMON, COLLECTIVE OR GROUP
TRUST, THE TERMS OF THE COMMON, COLLECTIVE OR GROUP TRUST
INDENTURE SHALL SOLELY GOVERN THE INVESTMENT DUTIES,
RESPONSIBILITIES AND POWERS OF THE TRUSTEE OF SUCH COMMON,
COLLECTIVE OR GROUP TRUST, AND TO THE EXTENT REQUIRED BY LAW,
SUCH TERMS, RESPONSIBILITIES AND POWERS SHALL BE INCORPORATED
HEREIN BY REFERENCE AND SHALL BE PART OF THIS TRUST. THE
TRUSTEE SHALL HAVE NO DUTY OR RESPONSIBILITY AS TO THE
SAFEKEEPING OF SUCH ASSETS OR AS TO THE INVESTMENT AND
REINVESTMENT OF THE SAME, EXCEPT THAT THE TRUSTEE SHALL
REQUIRE SUCH STATEMENTS AND REPORTS FROM SUCH INVESTMENT
MANAGER AS MAY BE NECESSARY TO ENABLE THE TRUSTEE TO CARRY OUT
ITS RECORDKEEPING AND REPORTING DUTIES UNDER THIS TRUST. THE
TRUSTEE SHALL ENTER INTO AND EXECUTE SUCH AGREEMENTS, RECEIPTS
AND RELEASES AS SHALL BE REQUIRED TO CARRY OUT THE DIRECTIONS
OF THE ESOP ADMINISTRATORS WITH RESPECT TO THE TRANSFER OF ANY
ASSETS OF THE TRUST FUND TO OR FROM AN INVESTMENT MANAGER.

(VII) TO THE EXTENT THAT PROVISIONS OF SUBPARAGRAPHS B,
C AND D OF THIS PARAGRAPH 4 ARE INCONSISTENT WITH OTHER
PROVISIONS OF THIS PARAGRAPH 4, THE PROVISIONS OF SAID
SUBPARAGRAPHS B, C AND D SHALL BE CONTROLLING.

E. INCOME. INCOME RECEIVED BY THE TRUST FUND SHALL BE
ADDED PERIODICALLY TO THE PRINCIPAL OF THE TRUST FUND BY THE
TRUSTEE AND THE PROFITS AND LOSSES OF THE TRUST FUND SHALL BE
ALLOCATED TO THE PRINCIPAL OF THE TRUST FUND.

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<PAGE>
F. UNRELATED BUSINESS INCOME. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, THE TRUSTEE MAY ENTER INTO A TRANSACTION OR
RETAIN A TRUST INVESTMENT WHICH MAY, OR IN FACT DOES, GIVE RISE TO
UNRELATED BUSINESS TAXABLE INCOME EITHER THROUGH THE EXERCISE OF
THE TRUSTEE'S SOLE INVESTMENT AUTHORITY HEREUNDER OR PURSUANT TO
THE DIRECTIONS OF THE ESOP ADMINISTRATORS OR AN INVESTMENT MANAGER.

G. AUTHORITY OF TRUSTEE. NO PERSON DEALING WITH THE
TRUST FUND OR THE TRUSTEE SHALL BE REQUIRED TO INQUIRE AS TO THE
AUTHORITY OF THE TRUSTEE TO DO ANY ACT OR TO SEE TO THE APPLICATION
OF FUNDS OR OTHER PROPERTY PAID OR DELIVERED TO OR UPON THE ORDER
OF THE TRUSTEE, AND ANY ISSUING INSURANCE COMPANY MAY TREAT AS
BINDING AND CONCLUSIVE UPON IT ANY ACTION WHICH THE TRUSTEE MAY
TAKE WITH RESPECT TO ANY ANNUITY OR INSURANCE CONTRACT HELD BY THE
TRUSTEE.

H. INDEMNIFICATION. NEITHER THE TRUSTEE, THE COMPANY
NOR THE ESOP ADMINISTRATORS SHALL BE RESPONSIBLE FOR THE INVESTMENT
OF ANY PART OF THE TRUST FUND ALLOCATED TO AN INVESTMENT MANAGER.
THE TRUSTEE SHALL BE UNDER NO DUTY TO QUESTION OR MAKE INQUIRY AS
TO ANY DIRECTION, NOTIFICATION OR ORDER OR FAILURE TO GIVE A
DIRECTION, NOTIFICATION OR ORDER BY THE ESOP ADMINISTRATORS, THE
COMPANY OR AN INVESTMENT MANAGER. THE TRUSTEE SHALL BE UNDER NO
DUTY TO MAKE ANY REVIEW OF INVESTMENTS ACQUIRED FOR AN INVESTMENT
FUND MANAGED BY THE ESOP ADMINISTRATORS, THE COMPANY, OR AN
INVESTMENT MANAGER AND UNDER NO DUTY AT ANY

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TIME TO MAKE ANY RECOMMENDATION WITH RESPECT TO DISPOSING OF OR
CONTINUING TO RETAIN ANY SUCH INVESTMENTS.

THE COMPANY HEREBY INDEMNIFIES AND HOLDS THE TRUSTEE OR ITS
NOMINEE HARMLESS FROM ANY AND ALL ACTIONS, CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES OR REASONABLE EXPENSES OF WHATSOEVER
KIND AND NATURE IN CONNECTION WITH OR ARISING OUT OF (I) ANY ACTION
TAKEN OR OMITTED IN GOOD FAITH OR ANY INVESTMENT OR DISBURSEMENT OF
ANY PART OF THE TRUST FUND MADE BY THE TRUSTEE IN ACCORDANCE WITH
THE DIRECTIONS OF THE ESOP ADMINISTRATORS OR A PARTICIPANT PURSUANT
TO PARAGRAPH 4 OF SUBPARAGRAPH C HEREOF OR ANY INACTION WITH
RESPECT TO ANY INVESTMENT FUND MANAGED BY THE ESOP ADMINISTRATORS
OR ANY PARTICIPANT DIRECTED INVESTMENT OR WITH RESPECT TO ANY
INVESTMENT PREVIOUSLY MADE AT THE DIRECTION OF THE ESOP
ADMINISTRATORS OR ANY PARTICIPANT DIRECTED INVESTMENT IN THE
ABSENCE OF DIRECTIONS FROM THE ESOP ADMINISTRATORS OR THE
PARTICIPANT THEREFOR, OR (II) ANY ACTION TAKEN OR OMITTED IN GOOD
FAITH BY THE TRUSTEE WITH RESPECT TO AN INVESTMENT FUND MANAGED BY
AN INVESTMENT MANAGER IN ACCORDANCE WITH ANY DIRECTION OF THE
INVESTMENT MANAGER OR ANY INACTION WITH RESPECT TO ANY SUCH
INVESTMENT FUND IN THE ABSENCE OF DIRECTIONS FROM THE INVESTMENT
MANAGER, OR (III) ANY ACTION TAKEN IN GOOD FAITH BY THE TRUSTEE
PURSUANT TO A NOTIFICATION OF AN ORDER TO PURCHASE OR SELL
SECURITIES ISSUED BY AN INVESTMENT MANAGER OR THE ESOP
ADMINISTRATORS DIRECTLY TO A BROKER OR DEALER, OR (IV) ANY FAILURE
BY THE TRUSTEE TO PAY FOR ANY PROPERTY

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<PAGE>
PURCHASED BY AN INVESTMENT MANAGER OR THE ESOP ADMINISTRATORS FOR
THE TRUST FUND BY REASON OF THE INSUFFICIENCY OF FUNDS IN THE TRUST
FUND.

ANYTHING HEREINABOVE TO THE CONTRARY NOTWITHSTANDING, THE
COMPANY SHALL HAVE NO RESPONSIBILITY TO THE TRUSTEE UNDER THE
FOREGOING INDEMNIFICATION IF THE TRUSTEE KNOWINGLY PARTICIPATED IN
OR KNOWINGLY CONCEALED ANY ACT OR OMISSION OF THE ESOP
ADMINISTRATORS OR ANY INVESTMENT MANAGER KNOWING THAT SUCH ACT OR
OMISSION CONSTITUTED A BREACH OF FIDUCIARY RESPONSIBILITY, OR IF
THE TRUSTEE FAILS TO PERFORM ANY OF THE DUTIES UNDERTAKEN BY IT
UNDER THE PROVISIONS OF THIS TRUST, OF IF THE TRUSTEE FAILS TO ACT
IN CONFORMITY WITH THE DIRECTIONS OF AN AUTHORIZED REPRESENTATIVE
OF THE INVESTMENT MANAGER OR THE ESOP ADMINISTRATORS, WHICH ARE
CONSISTENT WITH THE REQUIREMENTS OF ERISA; PROVIDED, HOWEVER, THAT
IF THE TRUSTEE HAS KNOWLEDGE OF A BREACH COMMITTED BY AN INVESTMENT
MANAGER, THE SOLE RESPONSIBILITY OF THE TRUSTEE SHALL BE TO NOTIFY
THE COMPANY IN WRITING THEREOF, AND THE COMPANY SHALL THEREAFTER
ASSUME FULL RESPONSIBILITY TO ALL PERSONS INTERESTED IN THE TRUST
FUND TO REMEDY SAID BREACH.

I. DELEGATION OF AUTHORITY. NO ALLOCATION OR DELEGATION
BY THE COMPANY OR THE ESOP ADMINISTRATORS OF ANY OF THEIR
RESPECTIVE POWERS, AUTHORITIES, OR RESPONSIBILITIES UNDER THIS
TRUST TO THE TRUSTEE SHALL BECOME EFFECTIVE UNLESS SUCH ALLOCATION
OR DELEGATION IS SPECIFICALLY SET FORTH IN THIS TRUST OR SHALL
FIRST BE ACCEPTED BY THE TRUSTEE IN A WRITING SIGNED BY IT AND
DELIVERED TO THE COMPANY OR THE ESOP ADMINISTRATORS AS THE CASE MAY
BE.

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<PAGE>
J. COPIES OF DOCUMENTS. THE COMPANY SHALL PROVIDE THE
TRUSTEE WITH COPIES OF ALL DOCUMENTS CONSTITUTING THE PLAN AT THE
TIME THIS TRUST IS EXECUTED BY THE COMPANY AND ALL OTHER DOCUMENTS
AMENDING OR SUPPLEMENTING THE PLAN PROMPTLY UPON THEIR ADOPTION AND
THE ESOP ADMINISTRATORS SHALL PROVIDE THE TRUSTEE WITH COPIES OF
ALL AGREEMENTS WITH ALL INVESTMENT MANAGERS APPOINTED BY THE ESOP
ADMINISTRATORS AND ALL OTHER DOCUMENTS AMENDING OR SUPPLEMENTING
SUCH AGREEMENTS AND THE TRUSTEE SHALL BE ENTITLED TO RELY UPON THE
COMPANY'S AND THE ESOP ADMINISTRATOR'S ATTENTION TO THE AFORESAID
OBLIGATION AND SHALL BE UNDER NO DUTY TO INQUIRE OF THE COMPANY OR
THE ESOP ADMINISTRATORS OR ANY OTHER PERSON AS TO THE EXISTENCE OF
ANY SUCH DOCUMENTS NOT PROVIDED BY THE COMPANY OR THE ESOP
ADMINISTRATORS PURSUANT TO THE FOREGOING UNDERTAKING.

K. SECURITIES LENDING. THE ESOP ADMINISTRATORS MAY
APPOINT THE TRUSTEE OR ANY OF ITS AFFILIATES UNDER A SEPARATE
AGENCY AGREEMENT TO ACT AS AGENT FOR THE TRUST FUND FOR PURPOSES OF
LENDING ANY SECURITIES HELD IN THE TRUST FUND (INCLUDING ANY
INVESTMENT FUND CREATED PURSUANT TO SUBPARAGRAPH B OF THIS
PARAGRAPH 4 IF THE INVESTMENT MANAGER HAS CONSENTED) TO BROKER-
DEALER(S) OR BANK(S), AND IN CONNECTION THEREWITH AUTHORIZE THE
TRUSTEE OR ANY OF ITS AFFILIATES, AS AGENT, TO ENTER INTO
SECURITIES LOAN AGREEMENT(S), TO RECEIVE A REASONABLE FEE AS IT AND
THE ESOP ADMINISTRATORS MAY AGREE, TO DELIVER TO ANY SUCH BROKER-

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<PAGE>
DEALER(S), OR BANK(S), SUCH SECURITIES AND TO PERMIT THE LOANED
SECURITIES TO BE TRANSFERRED INTO THE NAME OF AND VOTED BY THE
BORROWER OR OTHERS.

L. VOTING OF COMPANY STOCK. All voting rights on shares
of Company Stock held in the Company Stock Fund shall be exercised
by the Trustee only as directed by the Participants acting in their
capacity as "Named Fiduciaries" (as defined in Section 402 of
ERISA) in accordance with the following provisions of this
Paragraph 4:

(i) As soon as practicable before each annual or
special shareholders' meeting of the Company, the Trustee
shall furnish to each Participant sufficient copies of the
proxy solicitation material sent generally to shareholders,
together with a form requesting confidential instructions on
how the shares of Company Stock allocated to such
Participant's account, and, separately, such shares of Company
Stock as may be unallocated ("Unallocated Shares") or
allocated to Participant accounts but for which the Trustee
does not receive timely voting instruction from the
Participant ("Non-Directed Shares"), (including fractional
shares to 1/1000th of a share) are to be voted. The direction
with respect to Non-Directed Shares and Unallocated Shares
shall apply to such number of votes equal to the total number
of votes attributable to Non-Directed Shares and Unallocated
Shares multiplied by a fraction, the numerator of which is the
number of shares of Company Stock credited to the
Participant's account and the denominator of which is the
total number of shares credited to the accounts of all such
Participants who have timely provided directions to the
Trustee with respect to Non-Directed Shares and Unallocated
Shares under this Paragraph 4. The Company and the ESOP
Administrators will cooperate with the Trustee to ensure that
Participants receive the requisite information in a timely
manner. The materials furnished to the Participants shall
include a notice from the Trustee that the Trustee will vote
any shares for which timely instructions are not received by
the Trustee as may be directed by those voting Participants,
acting in their capacity as Named Fiduciaries of the Plan as
provided above. Upon timely receipt of such instructions, the
Trustee shall vote the shares as instructed. The instructions
received by the Trustee from Participants or Beneficiaries
shall be held by the Trustee in strict confidence and shall
not be divulged or released to any person

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including directors, officers or employees of the Company, or
of any other company, except as otherwise required by law.

(ii) With respect to all corporate matters
submitted to shareholders, all shares of Company Stock shall
be voted only in accordance with the directions of such
Participants as Named Fiduciaries as given to the Trustee as
provided in Section 4(L)(i). With respect to shares of
Company Stock allocated to the account of a deceased
Participant, such Participant's Beneficiary, as Named
Fiduciary, shall be entitled to direct the voting of shares of
Company Sock as if such Beneficiary were the Participant.

M. TENDER OFFERS ON COMPANY STOCK. All tender or
exchange decisions with respect to Company Stock held in the
Company Stock Fund shall be made only by the Participants
acting in their capacity as Named Fiduciaries with respect to
the Company Stock allocated to their accounts in accordance
with the following provisions of this Paragraph:

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<PAGE>
Paragraph, the Trustee will not tender or exchange any shares
for which timely instructions are not received by the Trustee
and (ii) such related documents as are prepared by any person
and provided to the shareholders of the Company pursuant to
the Securities Exchange Act of 1934. The ESOP Administrators
and the Trustee may also provide Participants with such other
material concerning the tender or exchange offer as the
Trustee or the ESOP Administrators in their discretion
determine to be appropriate; provided, however, that prior to
any distribution of materials by the ESOP Administrators, the
Trustee shall be furnished with sufficient numbers of complete
copies of all such materials. The Company and the ESOP
Administrators will cooperate with the Trustee to ensure that
Participants receive the requisite information in a timely
manner.

(ii) The Trustee shall tender or not tender shares
or exchange shares of Company Stock (including fractional
shares to 1/1000th of a share) only as and to the extent
instructed by the Participants as Named Fiduciaries as
provided in Paragraph 4(M)(i). With respect to shares of
Company Stock allocated to the account of a deceased
Participant, such Participant's Beneficiary, as a Named
Fiduciary, shall be entitled to direct the Trustee whether or
not to tender or exchange such shares as if such Beneficiary
were the Participant. The instructions received by the
Trustee from Participants or Beneficiaries shall be held by
the Trustee in strict confidence and shall not be divulged or
released to any person, including directors, officers or
employees of the Company, or of any other company, except as
otherwise required by law.

(iii) In the event, under the terms of a tender
offer or otherwise, any shares of Company Stock tendered for
sale, exchange or transfer pursuant to such offer may be
withdrawn from such offer, the Trustee shall follow such
instructions respecting the withdrawal of such securities from
such offer in the same manner and the same proportion as shall
be timely received by the Trustee from the Participants, as
Named Fiduciaries, entitled under this Paragraph 4(M) to give
instructions as to the sale, exchange or transfer of
securities pursuant to such offer.

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<PAGE>
securities tendered for sale, exchange or transfer pursuant to the
first offer, whether to withdraw such tender, if possible, and, if
withdrawn, whether to tender any securities so withdrawn for sale,
exchange or transfer pursuant to the second offer and (ii) with
respect to securities not tendered for sale, exchange or transfer
pursuant to the first offer, whether to tender or not to tender
such securities for sale, exchange or transfer pursuant to the
second offer. The Trustee shall follow all such instructions
received in a timely manner from Participants in the same manner
and in the same proportion as provided in Paragraph 4(M)(i). With
respect to any further offer for any Company Stock received by the
Trustee and subject to any earlier offer (including successive
offers from one or more existing offerors), the Trustee shall act
in the same manner as described above.

(v) A Participant's instructions to the Trustee to
tender or exchange shares of Company Stock will not be deemed
a withdrawal or suspension from the Plan or a forfeiture of
any portion of the Participant's interest in the Plan. Funds
received in exchange for tendered shares will be credited to
the account of the Participant whose shares were tendered and
will be used by the Trustee to purchase Company Stock, as soon
as practicable. In the interim, the Trustee will invest such
funds in short-term investments permitted under the Plan, and
in the same manner in which forfeited amounts are invested.

(vi) In the event the Company initiates a tender or
exchange offer, the Trustee may, in its sole discretion, enter
into an agreement with the Company not to tender or exchange
any shares of Company Stock in such offer, in which event, the
foregoing provisions of this Paragraph shall have no effect
with respect to such offer and the Trustee shall not tender or
exchange any shares of Company Stock in such offer.

N. DESIGNATION OF AGENTS RE COMPANY STOCK FUND. The
Trustee acting with respect to the Company Stock Fund may, with the
consent of the ESOP Administrators, employ an agent selected by the
Trustee to solicit the instructions to vote or tender provided for
in subparagraphs L and M of this Paragraph 4, and shall be held
harmless in relying upon such agent's written advice as to how
shares are to be voted or tendered.

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<PAGE>
O. SECURITIES LAWS. The Company shall be responsible
for complying with applicable federal and state securities laws and
regulations.

P. VALUATIONS. As of each Valuation Date, the Trustee
shall determine the fair market value of each Investment Fund,
including the Company Stock Fund, if any, being administered by the
Trustee; PROVIDED, HOWEVER, THAT WITH RESPECT TO ANY ASSET ACQUIRED
BY THE COMPANY, THE ESOP ADMINISTRATORS OR AN INVESTMENT MANAGER,
THE TRUSTEE WILL ONLY BE RESPONSIBLE FOR VALUING SUCH ASSET IF THE
ASSET IS PUBLICLY TRADED OR REPORTED ON A PRICING SERVICE TO WHICH
THE TRUSTEE SUBSCRIBES. THE COMPANY OR, IF DESIGNATED BY THE
COMPANY, THE ESOP ADMINISTRATORS OR THE INVESTMENT MANAGER, WILL BE
RESPONSIBLE FOR VALUING ALL OTHER ASSETS ACQUIRED BY THE COMPANY,
THE ESOP ADMINISTRATORS OR AN INVESTMENT MANAGER FOR ALL PURPOSES
OF THE TRUST FUND. IF AN ASSET IS VALUED BY THE COMPANY, THE ESOP
ADMINISTRATORS OR AN INVESTMENT MANAGER, THE ESOP ADMINISTRATORS
WILL DIRECT THE TRUSTEE ON THE USE OF THE VALUE SO DEVELOPED AND
THE COMPANY AGREES TO INDEMNIFY AND HOLD THE TRUSTEE HARMLESS
AGAINST ANY AND ALL CLAIMS, ACTIONS, DEMANDS, LIABILITIES, LOSSES,
DAMAGES OR EXPENSES OF WHATSOEVER KIND AND NATURE, WHICH ARISE FROM
OR ARE RELATED TO ANY USE OF SUCH VALUE BY THE TRUSTEE IN THE
ADMINISTRATION OF THE TRUST FUND. With respect to each such
Investment Fund, the Trustee shall determine (1) the change in
value between the current Valuation Date and the then last
preceding Valuation Date, (2) the net gain or loss resulting from
expenses paid

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<PAGE>
(including fees and expenses, if any, which are to be charged to
such Fund) and (3) realized and unrealized gains and losses.

The transfer of funds to or from an Investment Fund
pursuant to this Paragraph 4 and payments, distributions and
withdrawals from an Investment Fund to provide benefits under the
Plan for Participants or Beneficiaries shall not be deemed to be
gains, expenses or losses of an Investment Fund.

After each Valuation Date, the Trustee shall allocate the
net gain or loss of each Investment Fund as of such Valuation Date
to the accounts of Participants participating in such Investment
Fund on such Valuation Date. Contributions, forfeitures and
rollovers received and credited to Participants' accounts as of
such Valuation Date, or as of any earlier date since the last
preceding Valuation Date shall not be considered in allocating
gains or losses allocated to Participants' accounts.

The reasonable and equitable decision of the Trustee as
to the value of each Investment Fund, including the Company Stock
Fund, if any, and of any account as of each Valuation Date shall be
conclusive and binding upon all persons having any interest, direct
or indirect, in the Investment Funds or in any account.

5. INVESTMENT IN MASTER TRUST. NOTWITHSTANDING ANYTHING
HEREIN CONTAINED TO THE CONTRARY, THE COMPANY MAY DIRECT THE
TRUSTEE AT ANY TIME OR FROM TIME TO TIME TO TRANSFER ALL

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<PAGE>
OR ANY PART OF THE TRUST FUND TO ANY TRUST WHICH HAS BEEN QUALIFIED
UNDER SECTION 401(A) AND IS EXEMPT UNDER SECTION 501(A) OF THE CODE
ESTABLISHED AS A MEDIUM FOR THE COLLECTIVE INVESTMENT OF FUNDS OF
PENSION, PROFIT SHARING OR OTHER EMPLOYEE BENEFIT TRUSTS
ESTABLISHED BY THE COMPANY, OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES AND TO WITHDRAW ANY PART OR ALL OF THE TRUST FUND SO
TRANSFERRED. ANY SUCH TRUST MAY PROVIDE, AMONG OTHER THINGS, FOR
THE SEPARATE INVESTMENT OF ANY PORTION THEREOF AND THE ALLOCATION
TO ANY SUCH SEPARATELY INVESTED PORTION OF ANY PART OF THE INTEREST
OF ANY EMPLOYEE BENEFIT TRUST INVESTED THEREUNDER AND FOR THE
DESIGNATION OF AN INVESTMENT MANAGER TO DIRECT THE TRUSTEE IN THE
EXERCISE OF THE POWER GRANTED TO IT WITH RESPECT TO SUCH SEPARATELY
INVESTED PORTION. THE PROVISIONS OF ANY SUCH TRUST SHALL BE DEEMED
TO HAVE BEEN ADOPTED AND MADE A PART OF THIS TRUST AND THE PLAN.

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AGAINST THE TRUST FUND; PROVIDED, HOWEVER, IN THE EVENT THAT THE
COMPANY SHALL NOTIFY THE TRUSTEE THAT, IN THE OPINION OF ITS
COUNSEL, ANY SUCH TAXES ARE UNLAWFULLY OR EXCESSIVELY ASSESSED, THE
TRUSTEE SHALL, AT THE EXPENSE OF THE COMPANY, JOIN WITH THE COMPANY
TO CONTEST THE VALIDITY OF SUCH ASSESSMENT IN ANY MANNER DEEMED
APPROPRIATE BY THE COMPANY OR ITS COUNSEL.

7. ACCOUNTING BY TRUSTEE. THE TRUSTEE SHALL MAINTAIN SUCH
ACCOUNTS AND RECORDS AS THE ESOP ADMINISTRATORS AND THE TRUSTEE
SHALL AGREE UPON. THE TRUSTEE SHALL RENDER FROM TIME TO TIME
ACCOUNTS OF ITS TRANSACTIONS TO THE ESOP ADMINISTRATORS, AND THE
ESOP ADMINISTRATORS MAY APPROVE SUCH ACCOUNTS BY AN INSTRUMENT IN
WRITING DELIVERED TO THE TRUSTEE. IN THE ABSENCE OF THE FILING IN
WRITING WITH THE TRUSTEE BY THE ESOP ADMINISTRATORS OF EXCEPTIONS
OR OBJECTIONS TO ANY SUCH ACCOUNT WITHIN SIXTY (60) DAYS, THE ESOP
ADMINISTRATORS SHALL BE DEEMED TO HAVE APPROVED SUCH ACCOUNT; AND
IN SUCH CASE, OR UPON THE WRITTEN APPROVAL BY THE ESOP
ADMINISTRATORS OF ANY SUCH ACCOUNT, THE TRUSTEE SHALL BE RELEASED,
RELIEVED AND DISCHARGED AS TO THE COMPANY WITH RESPECT TO ALL
MATTERS AND THINGS SET FORTH IN SUCH ACCOUNT AS THOUGH SUCH ACCOUNT
HAD BEEN SETTLED BY THE DECREE OF A COURT OF COMPETENT
JURISDICTION. NO PERSON OTHER THAN THE ESOP ADMINISTRATORS MAY
REQUIRE AN ACCOUNTING.

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<PAGE>
8. RELIANCE OF TRUSTEE ON ESOP ADMINISTRATORS. THE TRUSTEE
SHALL BE FULLY PROTECTED IN RELYING UPON A CERTIFICATION SIGNED BY
ONE OR MORE OF THE MEMBERS OF THE ESOP ADMINISTRATORS (AS SHALL BE
DESIGNATED IN A WRITTEN INSTRUMENT SIGNED BY ALL THE MEMBERS OF THE
ESOP ADMINISTRATORS AND FILED WITH THE TRUSTEE) WITH RESPECT TO ANY
INSTRUCTION, DIRECTION OR APPROVAL OF THE ESOP ADMINISTRATORS AND
IN CONTINUING TO RELY UPON SUCH CERTIFICATION AND/OR INSTRUMENT
UNTIL A SUBSEQUENT ONE IS FILED WITH THE TRUSTEE. THE TRUSTEE
SHALL BE FULLY PROTECTED BY THE COMPANY IN ACTING UPON ANY
INSTRUMENT, CERTIFICATE, OR PAPER BELIEVED BY IT TO BE GENUINE AND
TO BE SIGNED OR PRESENTED BY THE PROPER PERSON(S), AND THE TRUSTEE
SHALL BE UNDER NO DUTY TO MAKE ANY INVESTIGATION OR INQUIRY AS TO
ANY STATEMENT CONTAINED IN ANY SUCH WRITING BUT MAY ACCEPT THE SAME
AS CONCLUSIVE EVIDENCE OF THE TRUTH AND ACCURACY OF THE STATEMENTS
THEREIN CONTAINED. THE TRUSTEE SHALL HAVE NO DUTY TO SEE TO THE
PROPER APPLICATION OF ANY PART OF THE TRUST FUND IF DISTRIBUTIONS
ARE MADE IN ACCORDANCE WITH THE WRITTEN DIRECTIONS OF THE ESOP
ADMINISTRATORS AS HEREIN PROVIDED, NOR SHALL THE TRUSTEE BE
RESPONSIBLE FOR THE ADEQUACY OF THE TRUST FUND TO MEET AND
DISCHARGE ANY AND ALL DISTRIBUTIONS AND LIABILITIES UNDER THE PLAN.
ALL PERSONS DEALING WITH THE TRUSTEE ARE RELEASED FROM INQUIRY INTO
THE DECISIONS OR AUTHORITY OF THE TRUSTEE AND FROM SEEING TO THE
APPLICATION OF ANY MONEYS, SECURITIES, OR OTHER PROPERTY PAID OR
DELIVERED TO THE TRUSTEE.

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<PAGE>
9. RESIGNATION OR REMOVAL OF TRUSTEE. ANY TRUSTEE ACTING
HEREUNDER MAY RESIGN AT ANY TIME BY GIVING NOTICE IN WRITING TO THE
COMPANY AT LEAST SIXTY (60) DAYS BEFORE SUCH RESIGNATION IS TO
BECOME EFFECTIVE, UNLESS THE COMPANY SHALL ACCEPT AS ADEQUATE A
SHORTER NOTICE. THE COMPANY MAY, WITH OR WITHOUT CAUSE, REMOVE ANY
TRUSTEE ACTING HEREUNDER BY GIVING NOTICE IN WRITING TO SUCH
TRUSTEE AT LEAST SIXTY (60) DAYS BEFORE SUCH REMOVAL IS TO BECOME
EFFECTIVE, UNLESS THE TRUSTEE SHALL ACCEPT AS ADEQUATE A SHORTER
NOTICE. IF FOR ANY REASON A VACANCY SHOULD OCCUR IN THE
TRUSTEESHIP, A SUCCESSOR TRUSTEE SHALL FORTHWITH BE APPOINTED BY
THE COMPANY. ANY SUCCESSOR TRUSTEE APPOINTED HEREUNDER SHALL
EXECUTE, ACKNOWLEDGE, AND DELIVER TO THE COMPANY AND THE TRUSTEE AN
INSTRUMENT IN WRITING ACCEPTING SUCH APPOINTMENT HEREUNDER. SUCH
SUCCESSOR TRUSTEE THEREUPON SHALL BECOME VESTED WITH THE SAME TITLE
TO THE PROPERTY COMPRISING THE TRUST FUND, AND THE SAME POWERS,
DUTIES, AND IMMUNITIES WITH RESPECT THERETO, AS ARE HEREBY VESTED
IN THE ORIGINAL TRUSTEE. THE PREDECESSOR TRUSTEE SHALL EXECUTE ALL
SUCH INSTRUMENTS AND PERFORM ALL SUCH OTHER ACTS AS THE SUCCESSOR
TRUSTEE SHALL REASONABLY REQUEST TO EFFECTUATE THE PROVISIONS
HEREOF. THE SUCCESSOR TRUSTEE SHALL HAVE NO DUTY TO INQUIRE INTO
THE ADMINISTRATION OF THIS TRUST FOR ANY PERIOD PRIOR TO ITS
SUCCESSION.

10. AMENDMENT. SUBJECT TO PARAGRAPH 3 ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT FROM TIME TO TIME TO AMEND THE
PROVISIONS OF THIS TRUST IN ANY MANNER; PROVIDED,

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HOWEVER, THAT ANY AMENDMENT THAT WOULD RESULT IN MAJOR SUBSTANTIVE
CHANGES TO THE TRUST MAY BE ADOPTED ONLY UPON THE APPROVAL OF TWO-
THIRDS OF THE VOTES CAST BY PARTICIPANTS, WITH EACH PARTICIPANT
ENTITLED TO CAST THE NUMBER OF VOTES EQUAL TO THE NUMBER OF HIS
YEARS OF SERVICE UNDER THE PLAN. ANY SUCH AMENDMENT SHALL BE BY
WRITTEN INSTRUMENT EXECUTED BY THE COMPANY AND THE TRUSTEE. ANY
SUCH AMENDMENT MAY BE MADE RETROACTIVELY IF SUCH AMENDMENT IS
NECESSARY TO ENABLE THE PLAN AND THIS TRUST TO MEET THE
REQUIREMENTS OF THE CODE (INCLUDING THE REGULATIONS AND RULINGS
ISSUED THEREUNDER) OR THE REQUIREMENTS OF ANY GOVERNMENTAL
AUTHORITY. NO AMENDMENT TO THIS TRUST AGREEMENT SHALL AFFECT THE
TRUSTEE'S RIGHTS, DUTIES OR RESPONSIBILITIES UNLESS THE TRUSTEE
CONSENTS THERETO IN WRITING.

11. PROHIBITION AGAINST ALIENATION. TO THE FULLEST EXTENT
PERMITTED BY LAW NO INTEREST OR EXPECTANCY OF ANY PARTICIPANT OR
BENEFICIARY TO ANY BENEFITS OR PAYMENTS UNDER THIS TRUST SHALL BE
TRANSFERABLE OR ASSIGNABLE OR SUBJECT TO VOLUNTARY OR INVOLUNTARY
ALIENATION, ENCUMBRANCE, GARNISHMENT, ATTACHMENT, ANTICIPATION,
EXECUTION OR LEVY OF ANY KIND. IN THE EVENT A PARTICIPANT OR
BENEFICIARY WHO IS RECEIVING OR IS ENTITLED TO RECEIVE BENEFITS
UNDER THIS TRUST ATTEMPTS TO ASSIGN, TRANSFER OR DISPOSE OF SUCH
RIGHT OR AN ATTEMPT IS MADE TO SUBJECT SUCH RIGHT TO SUCH PROCESS,
SUCH ASSIGNMENT, TRANSFER OR DISPOSITION SHALL BE NULL AND VOID.

12. TERMINATION OF TRUST. THIS TRUST MAY BE TERMINATED AT
ANY TIME BY THE COMPANY BY MAJORITY VOTE OF THE COMPANY'S BOARD OF
DIRECTORS WITH THE APPROVAL OF TWO-THIRDS OF THE

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VOTES CAST BY PARTICIPANTS, WITH EACH PARTICIPANT ENTITLED TO CAST
THE NUMBER OF VOTES EQUAL TO THE NUMBER OF HIS YEARS OF SERVICE
UNDER THE PLAN, AND UPON SUCH TERMINATION, THE TRUST FUND SHALL BE
PAID OUT BY THE TRUSTEE AS AND WHEN DIRECTED BY THE ESOP
ADMINISTRATORS IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 2.
UPON SUCH DISTRIBUTION IN ACCORDANCE WITH THE DIRECTION OF THE ESOP
ADMINISTRATORS THE TRUSTEE SHALL BE RELEASED AND DISCHARGED.

13. APPLICABLE LAW. THIS TRUST SHALL BE CONSTRUED,
REGULATED, AND ADMINISTERED UNDER THE LAWS OF THE
STATE/COMMONWEALTH IN WHICH THE PRINCIPAL OFFICE OF THE TRUSTEE IS
LOCATED, THE CODE AND ERISA. ALL CONTRIBUTIONS TO THE TRUSTEE
SHALL BE DEEMED TO TAKE PLACE IN THE STATE OF OREGON. THE TRUSTEE
MAY AT ANY TIME INITIATE AN ACTION OR PROCEEDINGS FOR THE
SETTLEMENT OF ITS ACCOUNTS OR FOR THE DETERMINATION OF ANY QUESTION
OF CONSTRUCTION WHICH MAY ARISE, OR FOR INSTRUCTIONS.

14. TITLES. TITLES OF PARAGRAPHS ARE PLACED HEREIN FOR
CONVENIENCE OF REFERENCE ONLY AND SHALL HAVE NO BEARING UPON THE
INTERPRETATION OF THIS TRUST.

15. ACTS BY COMPANY. ANY ACTS BY THE COMPANY AUTHORIZED
HEREUNDER SHALL BE EVIDENCED BY RESOLUTIONS OF ITS BOARD OF
DIRECTORS.

16. COUNTERPARTS. THIS TRUST MAY BE EXECUTED IN ANY NUMBER
OF COUNTERPARTS, EACH ONE OF WHICH SHALL BE DEEMED TO BE THE
ORIGINAL.

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17. FILINGS REQUIRED BY LAW. THE COMPANY AGREES THAT IT WILL
HAVE RESPONSIBILITY FOR THE PREPARATION AND DELIVERY TO PERSONS AND
GOVERNMENTAL AGENCIES OF ALL INFORMATION, DESCRIPTIONS, REPORTS AND
RETURNS REQUIRED BY LAW. THE TRUSTEE SHALL BE ENTITLED, AS IT MAY
DEEM APPROPRIATE FROM TIME TO TIME, TO REQUIRE OF THE COMPANY, THE
ESOP ADMINISTRATORS OR ANY OTHER PERSON INVOLVED IN THE
ADMINISTRATION OF THE PLAN OR THE INVESTMENT OF THE TRUST FUND, OR
HAVING ANY INTEREST UNDER THE PLAN OR IN, TO, OR UNDER THIS TRUST
OR TO THE TRUST FUND HELD HEREUNDER, SUCH CERTIFICATIONS AND PROOFS
OF FACTS AS SHALL PERMIT THE TRUSTEE TO PERFORM ITS DUTIES UNDER
APPLICABLE LAW AND REGULATIONS ADOPTED THEREUNDER AS MAY BE IN
EFFECT FROM TIME TO TIME, OR TO EXERCISE THE POWERS GRANTED THE
TRUSTEE UNDER THIS TRUST.

18. WITHHOLDING. THE TRUSTEE, IN ACCORDANCE WITH THE WRITTEN
INSTRUCTIONS OF THE COMPANY, SHALL WITHHOLD ANY TAX WHICH BY ANY
PRESENT OR FUTURE LAW IS REQUIRED TO BE WITHHELD FROM ANY PAYMENT
MADE HEREUNDER.

19. SUBSTITUTION OF TRUSTEE. ANY CORPORATION OR ASSOCIATION
INTO WHICH THE TRUSTEE MAY BE CONVERTED, MERGED OR WITH WHICH IT
MAY BE CONSOLIDATED, OR ANY CORPORATION OR ASSOCIATION RESULTING
FROM ANY CONVERSION, MERGER, REORGANIZATION OR CONSOLIDATION TO
WHICH THE TRUSTEE MAY BE A PARTY, SHALL BE THE SUCCESSOR OF THE
TRUSTEE HEREUNDER WITHOUT THE EXECUTION OR FILING OF ANY INSTRUMENT
OR THE PERFORMANCE OF ANY FURTHER ACT.

-33-
<PAGE>
20. REGULATION U COMPLIANCE. THE COMPANY REPRESENTS,
WARRANTS AND AGREES THAT IT SHALL NOT CAUSE AND WILL DIRECT EACH
INVESTMENT MANAGER NOT TO CAUSE THE TRUSTEE TO ENGAGE IN ANY
TRADING ACTIVITY THAT MAY CAUSE AN EXTENSION OF CREDIT IN VIOLATION
OF REGULATION U OF THE BOARD OF GOVERNOR'S OF THE FEDERAL RESERVE
OR REGULATION T OR X. THIS INCLUDES TRADING ON MARGINABLE STOCK OR
FAILURE TO HAVE CASH IN THE TRUST FUND ADEQUATE TO PAY FOR DELIVERY
OF ANY SECURITIES TRADED. IT IS MUTUALLY AGREED THAT SHOULD THE
TRUSTEE DETERMINE THAT A POTENTIAL REGULATION U VIOLATION, OR
OVERDRAFT CAN OCCUR, THE TRUSTEE SHALL TAKE APPROPRIATE MEASURES,
INCLUDING DISAFFIRMING OF THE TRADE AND THE LOSS SHALL BE ON THE
ACCOUNT OF THE COMPANY.

21. ESOP FEATURES. NOTWITHSTANDING ANYTHING HEREIN OR IN THE
PLAN TO THE CONTRARY, ALTHOUGH THE PLAN AND THIS TRUST AGREEMENT
CONTAIN PROVISIONS ALLOWING THE ESOP ADMINISTRATORS TO DIRECT THE
TRUSTEE TO BORROW MONEY AND TO USE SUCH BORROWED MONEY TO ACQUIRE
COMPANY STOCK, THE COMPANY AGREES THAT NEITHER IT NOR THE ESOP
ADMINISTRATORS WILL ISSUE ANY SUCH DIRECTION TO THE TRUSTEE UNLESS
THE COMPANY PROVIDES THE TRUSTEE WITH AT LEAST NINETY (90) DAYS
PRIOR WRITTEN NOTICE OF THE INTENTION TO ISSUE SUCH DIRECTION.

22. CONDITIONAL ADOPTION. THIS AGREEMENT SHALL BE
CONDITIONED ON THE APPROVAL BY PLAN PARTICIPANTS IN ACCORDANCE WITH
SECTION 21 OF THE PLAN, IF THIS AGREEMENT IS EXECUTED BEFORE SUCH
APPROVAL IS OBTAINED, AND THIS AGREEMENT SHALL BE EFFECTIVE AT SUCH
TIME AS THE PARTICIPANTS' APPROVAL IS OBTAINED.

-34-
<PAGE>
IN WITNESS WHEREOF, THE COMPANY AND THE TRUSTEE HAVE CAUSED
THIS TRUST TO BE EXECUTED THIS ________ DAY OF
________________________, 1995 ON THEIR BEHALF BY THEIR DULY
AUTHORIZED OFFICERS AS OF THE DATE FIRST ABOVE WRITTEN.

OREGON METALLURGICAL CORPORATION KEY TRUST COMPANY OF THE NORTHWEST,
TRUSTEE

BY: /s/ Dennis P. Kelly BY: /s/ Roger L. P. Greene
_______________________________ _____________________________

AND: /s/ Gary A. Weber AND: /s/ Arlene Fraser
______________________________ ____________________________

G:\WJN\GJE\PRISTST2.DOC

-35-

EMPLOYMENT AGREEMENT

DATE: December 18, 1995

PARTIES: Oregon Metallurgical Corporation, (the "Company")
an Oregon corporation
530 34th Avenue S.W.
P.O. Box 580
Albany, OR 97321

David G. Floyd ("Employee")
950 Kouns Drive N.W.
Albany, Oregon 97321

AGREEMENT:

The parties agree as follows:

SECTION 1. EMPLOYMENT

1.1 FIXED TERM. The Company agrees to employ Employee as
its Vice President - Commercial for a term commencing on December
18, 1995, and terminating on December 18, 1997, or until
termination in accordance with Section 5. If not terminated in
accordance with Section 5, upon expiration of the initial term of
this Agreement this Agreement shall automatically renew for
successive one (1) year terms thereafter.

1.2 DUTIES. Employee accepts employment with the Company on
the terms and conditions set forth in this Agreement, and agrees to
devote his full time and attention (reasonable periods of illness
excepted) to the performance of his duties under this Agreement.
In general, such duties shall consist of those duties generally
performed by the Vice President - Commercial of a corporation
engaged in the business of metals manufacturing which include, but
are not limited to, the managing, planning, organizing, controlling
and coordination of all Sales and Marketing activities of the
Company. Employee shall perform such specific duties and shall
exercise such specific authority as may be assigned to Employee
from time to time by the board of directors or the president of the
Company. In performing such duties, Employee shall comply with the
policies, standards, and regulations of the Company established
from time to time, and shall perform his duties faithfully,
intelligently, to the best of his ability, and in the best interest
of the Company. The devotion of reasonable periods of time by
Employee for personal purposes, outside business activities, or
charitable activities shall not be deemed a breach of this
Agreement, provided that such purposes or activities do

EMPLOYMENT AGREEMENT PAGE 1
<PAGE>
not materially interfere with the services required to be rendered
to or on behalf of the Company.

SECTION 2. COVENANT NOT TO COMPETE; CONFIDENTIALITY

2.1 NONCOMPETITION. During the term of this Agreement and
for a period of one (1) year after the termination of employment
with the Company for any reason, Employee shall not, within the
United States of America, Japan, United Kingdom, France, Germany,
C.I.S., China, Israel, Sweden or Italy, directly or indirectly, (1)
own (as a proprietor, partner, stockholder, or otherwise) an
interest in, or (2) participate (as an officer, director, or in any
other capacity) in the management, operation, or control of, or (3)
perform services as or act in the capacity of any employee,
independent contractor, consultant, or agent of any enterprise
engaged directly or indirectly, in the business of buying, selling,
producing, or processing titanium or titanium mill products or in
competition with any other business conducted by the Company in
which the employee was directly involved, except with the prior
written consent of the Company.

2.2 CONFIDENTIALITY. Employee agrees that contemporaneously
with the execution of this Agreement Employee shall execute
Company's standard form Confidentiality Agreement.

2.3 RETURN OF DOCUMENTS. Employee acknowledges and agrees
that all originals and copies of records, reports, documents,
lists, plans, drawings, memoranda, notes, and other documentation
related to the business of the Company or containing any
Confidential Information shall be the sole and exclusive property
of the Company, and shall be returned to the Company upon the
termination of employment with the Company or upon the written
request of the Company.

2.4 INJUNCTION. Employee agrees that it would be difficult
to measure damage to the Company from any breach by Employee os
Section 2.1, 2.2, or 2.3 and that monetary damages would be an
inadequate remedy for any such breach. Accordingly, Employee
agrees that if Employee shall breach or take steps preliminary to
breaching Section 2.1, 2.2 or 2.3, the Company shall be entitled,
in addition to all other remedies it may have at law or in equity,
to an injunction or other appropriate orders to restrain any such
breach, without showing or proving any actual damage sustained by
the Company.

2.5 NO RELEASE. Employee agrees that the termination of
employment with the Company or the expiration of the term of this
Agreement shall not release Employee from any obligations under
Section 2.1, 2.2, 2.3, or 2.4.

SECTION 3. COMPENSATION

EMPLOYMENT AGREEMENT PAGE 2
<PAGE>
3.1 BASE COMPENSATION. In consideration of all services to
be rendered by Employee to the Company, the Company shall pay to
Employee base compensation of One Hundred Thirty Thousand, Four
Hundred Thirty-Nine Dollars ($130,439.00) per year (equivalent to
$10,869.92 per month), through December 1997 with annual reviews,
payable in equal semi-monthly installments. In addition, the
Employee will receive one (1) share of OREMET stock per One Hundred
Dollars ($100.00) of W-2 earnings to be paid during the first
quarter of each calendar year.

Employee shall not be entitled to cost of living adjustments under
this Agreement.

3.2 ANNUAL BONUS. Employee will be a participant of the
Annual Bonus Program of the Company, on terms no less favorable
than those of other employees with similar responsibilities.

3.3 LONG TERM INCENTIVE PROGRAM. Company is in the process
of developing a competitive long-term incentive program and when
such program is placed in effect, Employee shall be a participant
therein.

3.4 OTHER BENEFITS. Base compensation and bonus compensation
paid to Employee shall be in addition to any contribution made by
the Company for the benefit of Employee to the 401(k) plan and any
qualified retirement plan maintained by the Company for the
exclusive benefit of its salaried employees. The Company shall
provide to Employee and Employee's family the same benefits that
the Company provides to other salaried employees and their
families, subject to Employee's satisfaction of the respective
eligibility conditions for such benefits.

Employee may select an American automobile, in keeping with
the Company's tradition, for lease by the Company for Employee's
use. Insurance, maintenance and operating costs of the automobile
will be paid for by the Company pursuant to current IRS
regulations.

Employee shall obtain an annual physical examination and
Company shall pay for said examination.

SECTION 4. EXPENSES

4.1 REIMBURSEMENT. Employee shall be entitled to
reimbursement from the Company for reasonable expenses necessarily
incurred by Employee in the performance of Employee's duties under
this Agreement, upon presentation of vouchers indicating in detail
the amount and business purpose of each such expense and upon
compliance with the Company's reimbursement policies established
from time to time.

SECTION 5. TERMINATION

EMPLOYMENT AGREEMENT PAGE 3
<PAGE>
5.1 TERMINATION BY PRIOR NOTICE. The employment of Employee
by the Company may be terminated by either the Company or Employee
upon the giving of Three Hundred Sixty-Five (365) days' prior
written notice to the other party during the initial term of this
Agreement. After the initial term of this Agreement and during any
subsequent renewal term this Agreement may be terminated at any
time upon the giving of six (6) months written notice by either
party. This Agreement may be terminated at any time upon the
mutual written agreement of the Company and Employee.

5.2 IMMEDIATE TERMINATION. Notwithstanding Employee's
entitlement to a notice of termination as provided elsewhere in
this Agreement, if Employee is terminated for any of the following
reasons, Employer may relieve employee of his duties immediately
without prior notice. In such event, Employee shall be entitled to
receive the benefits provided in paragraphs 5.3 and 5.4:

5.2.1 Employee willfully and continuously fails or refuses
to comply with the policies, standards, and regulations of the
Company established from time to time;

5.2.2 Employee engages in fraud, dishonesty, or any other
act of misconduct in the performance of Employee's duties on behalf
of the Company;

5.2.3 Employee fails to perform any provision of this
Agreement to be performed by Employee; or

5.2.4 Employee is deceased or suffers a permanent
disability. For purposes of this Agreement, "permanent disability"
shall be defined as Employee's inability, due to illness, accident,
or other cause, to perform the majority of Employee's usual duties
for a period of three (3) consecutive calendar months or for a
period of 120 days (whether or not consecutive) during any 365 day
period.

5.3 PRORATION OF BASE COMPENSATION. Upon the termination of
employment, the base compensation payable to Employee pursuant to
Section 3.1 shall be prorated to the date of such termination,
calculated on a calendar year basis.

5.4 INVOLUNTARY TERMINATION DURING FIRST 18 MONTHS. In the
event that Employee is involuntarily terminated by Company's
president or board of directors during the first eighteen (18)
months of this Agreement for reasons other than those specified in
Section 5.2 of this Agreement, then and in that event Employee will
receive severance pay equal to twelve (12) months' current base
salary.

SECTION 6. VACATION; ILLNESS

6.1 Vacation. Employee shall be subject to Company's
vacation policy for salaried employees with Employee being credited
for ten (10) years of service

EMPLOYMENT AGREEMENT PAGE 4
<PAGE>
prior to December 18, 1995, and future years employed will be added
to the ten (10) years for purposes of calculating service to
determine vacation.

6.2 ILLNESS. Subject to Section 5, Employee shall receive
full compensation for any period of illness or incapacity during
the term of this Agreement.

SECTION 7. MISCELLANEOUS PROVISIONS

7.1 BINDING EFFECT. This Agreement shall be binding on and
inure to the benefit of the parties and their heirs, personal
representatives, successors, and, to the extent permitted by
Section 7.2, assigns.

7.2 ASSIGNMENT. Except with the other party's prior written
consent, a party may not assign any rights under this Agreement.

7.3 AMENDMENTS. This Agreement may be amended only by an
instrument in writing executed by all the parties.

7.4 HEADINGS. The headings used in this Agreement are
solely for convenience of reference, are not part of this
Agreement, and are not to be considered in construing or
interpreting this Agreement.

7.5 ENTIRE AGREEMENT. This Agreement (including the
exhibits) sets forth the entire understanding of the parties with
respect to the subject matter of this Agreement and supersedes any
and all prior understandings and agreements, whether written or
oral, between the parties with respect to such subject matter.

7.6 COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when executed and
delivered shall be an original, but all of which together shall
constitute one and the same instrument.

7.7 SEVERABILITY. If any provision of this Agreement shall
be invalid or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in any other
respect and of the remaining provisions of this Agreement shall not
be in any way impaired.

7.8 WAIVER. A provision of this Agreement may be waived
only by a written instrument executed by the party waiving
compliance. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. Failure to
enforce any provision of this Agreement shall not operate as a
waiver of such provision or any other provision.

EMPLOYMENT AGREEMENT PAGE 5
<PAGE>
7.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Oregon.

7.10 VENUE. This Agreement has been made entirely within the
state of Oregon. This Agreement shall be governed by and construed
in accordance with the laws of the state of Oregon. If any suit or
action is filed by any party to enforce this Agreement or otherwise
with respect to the subject matter of this Agreement, venue shall
be in the federal or state courts in Linn County, Oregon.

7.11 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, including, without limitation, the
making, performance, or interpretation of this Agreement, shall be
settled by arbitration in Albany, Oregon, in accordance with ORS
36.300-36.365, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the
controversy.

THE COMPANY: OREGON METALLURGICAL
CORPORATION, an Oregon
corporation

By: /s/ Carlos E. Aguirre
_______________________
President and
Chief Executive
Officer

EMPLOYEE: /s/ David G. Floyd
__________________________
David G. Floyd

OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN

(Effective Date: December 14, 1995)

1. PURPOSE. The purposes of this Plan are to reward
performance, aid in retention of key strategic employees, provide
the Company with an additional element of competitive compensation,
align key strategic employee interests with those of the
shareholders and avoid dilution of existing shareholder ownership
interest. The Plan will enable the Company to attract and retain
the best available personnel for positions of substantial
responsibility which will promote the success of the business of
the Company and its Subsidiaries.

2. DEFINITIONS. As used herein, the following definitions
shall apply:

2.1 "BOARD" or "BOARD OF DIRECTORS" means the Board of
Directors of the Company.

2.2 "CAUSE" includes termination based on the commission
of any act or acts involving dishonesty, fraud, illegality or moral
turpitude.

2.3 "CODE" means the Internal Revenue Code of 1986, as
amended and regulations and rulings thereunder as amended from time
to time, and any successor thereto.

2.4 "COMMITTEE" means the committee of the Board
appointed pursuant to Section 4.

2.5 "COMMON STOCK" means the common stock of the
Company, $1.00 par value.

2.6 "COMPANY" means Oregon Metallurgical Corporation, an
Oregon corporation.

2.7 "DIRECTOR" means any person serving on the Board of
Directors of the Company.

2.8 "DISABILITY" means a mental or physical condition
which, in the opinion of the Committee, renders a Grantee unable or
incompetent to carry out the job responsibilities which such
Grantee held or the tasks to which such Grantee was assigned at the
time the disability was incurred, and which is expected to be
permanent or for an indefinite duration exceeding one year.

1 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
2.9 "EFFECTIVE DATE" means December 14, 1995.

2.10 "FAIR MARKET VALUE" of a Share means, as of any
applicable date the closing price of a Share of the Common Stock on
the National Association of Securities Dealers, Inc. Automated
Quotations System ("Nasdaq") National Market System or any national
securities exchange on which the Common Stock is traded (or if the
Common Stock is not then traded on the Nasdaq National Market
System or a national securities exchange, the representative
closing bid price of the Common Stock on the over-the-counter
market), as reported in The Wall Street Journal, or if no such
reported sale shall have occurred on such date, on the next
preceding date on which there was such a reported sale.

2.11 "GRANT DATE" means the date on which the award of
Units shall be duly granted, as determined in accordance with
Section 5.1.

2.12 "GRANTEE" means an individual who has been granted
Units under this Plan.

2.13 "1934 ACT" means the Securities Exchange Act of
1934, as amended. References to a particular section of, or rule
under, the 1934 Act shall include references to successor
provisions.

2.14 "PLAN" means this Oregon Metallurgical Corporation
Long Term Incentive Compensation Stock Appreciation Rights Plan.

2.15 "RETIREMENT" means termination of employment with
the Company and its Subsidiaries any time after attaining age 65
with at least 5 years of Company service.

2.16 "SECTION 16 GRANTEE" means a person subject to
potential liability under Section 16(b) of the 1934 Act with
respect to transactions involving equity securities of the Company.

2.17 "SHARE" means a share of Common Stock.

2.18 "SUBSIDIARY" means any entity in which the Company
directly or through intervening subsidiaries owns twenty-five
percent (25%) or more of the total combined voting power or value
of all classes of stock or, in the case of an unincorporated
entity, a twenty-five percent (25%) or more interest in the capital
and profits.

2.19 "UNIT" means an equal, undivided interest in the
future appreciation in the value of a Share.

2 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
3. ELIGIBILITY. Eligibility to participate in the Plan is
limited to officers and key senior managers of the Company or any
of its domestic Subsidiaries. In selecting the individuals to whom
Units may be granted as well as determining the number of Units,
and the other terms and conditions applicable to, each grant, the
Committee shall take into consideration such factors as it deems
relevant in promoting the purposes of this Plan.

4. ADMINISTRATION.

4.1 Subject to Section 4.2, the Plan shall be
administered by a committee ("Committee") of the Board of
Directors. The composition of the Committee shall be subject to
such limitations as the Board deems appropriate to permit
transactions pursuant to this Plan to be exempt or excluded from
Section 16 of the 1934 Act.

4.2 The Board may, in its discretion, reserve to itself
or delegate to another committee of the Board any or all of the
authority and responsibility of the Committee with respect to
awards who are not Section 16 Grantees at the time any such
delegated authority or responsibility is exercised. Such other
committee may consist of two or more directors who may, but need
not be, officers or employees of the Company or its Subsidiaries.
To the extent that the Board has reserved to itself or delegated to
such other committee the authority and responsibility of the
Committee, all references to the Committee in this Plan shall be to
the Board or such other committee.

4.3 The Committee shall have full and final authority,
in its discretion, subject to the express provisions of this Plan,
as follows:

4.3.1 to grant Units.

4.3.2 to determine (A) when Units will be
granted; or (B) which Grantees within the eligible group are to
receive Units and the number of Units each Grantee is to receive.

4.3.3 to determine the Fair Market Value on any
applicable valuation date.

4.3.4 to interpret this Plan and to make all
determinations necessary or advisable for the administration of
this Plan.

4.3.5 to prescribe, amend, and rescind rules and
regulations relating to this Plan, including rules with respect to
the exercisability and nonforfeitability of Units.

3 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
4.3.6 to determine the terms and provisions and
any restrictions or conditions, which need not be identical, of
grants under the Plan and with the consent of the Grantee, to
modify any such grant at any time.

4.3.7 to cancel, with the consent of the Grantee,
outstanding Units and to grant new Units in substitution therefor.

4.3.8 to delegate its duties and
responsibilities under this Plan, except its duties and
responsibilities with respect to Section 16 Grantees and (A) the
acts of such delegates shall be treated hereunder as acts of the
Committee and (B) such delegates shall report to the Committee
regarding the delegated duties and responsibilities.

4.3.9 to accelerate or waive any or all of the
restrictions and conditions applicable to, any award or any group
of awards for any reason.

4.3.10 subject to Section 7.2, to extend the time
during which any award or group of awards may be exercised.

4.3.11 to correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any grant
under the Plan in the manner and to the extent it may deem
expedient.

4.3.12 to make all other determinations necessary
and advisable with respect thereto.

The determination of the Committee on all matters
relating to this Plan shall be conclusive and final. No member of
the Committee shall be liable for any action or determination made
in good faith with respect to this Plan.

4.4 The Board of Directors may from time to time appoint
members of the Committee in substitution for and in addition to
members previously appointed and may fill vacancies, however
caused, in the Committee. The Committee may select one of its
members as its chairperson and shall hold its meetings at such
times and places as it shall deem advisable. A majority of the
members of the Committee shall constitute a quorum. All actions of
the Committee shall be taken by a majority of its members
constituting a quorum. Any action may be taken by a written
instrument signed by all Committee members, and all actions so
taken shall be fully as effective as if it has been taken by a vote
of a majority of the members at a meeting duly called and held.

4 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
4.5 For each Grantee receiving a grant, an account shall
be established in the Grantee's name. Each Grantee's account shall
designate the number of Units which have been granted to that
Grantee, the Grant Date on the Fair Market Value of a Share on the
Grant Date.

5. AWARD OF UNITS; VESTING.

5.1 The Grant Date of an award of Units shall be the
date on which the Committee grants the Units or such later date as
specified in advance by the Committee.

5.2 Subject to Sections 5.6 and 8, each Unit shall
entitle the Grantee, upon exercise, to receive from the Company in
exchange therefor an amount equal in value to the excess, if any,
of the Fair Market Value on the date of exercise of one Share of
Common Stock of the Company over its Fair Market Value on the Grant
Date, multiplied by the number of Units, or portion thereof, that
is surrendered.

5.3 The Units represent a hypothetical investment only
in the Company and do not constitute Shares. The Units represent,
upon vesting, the right to receive cash. This Plan shall not give
any Grantee a right to receive actual Shares of the Company and the
Company shall not be required to issue Shares to a Grantee as a
result of his or her participation in this Plan.

5.4 The maximum number of Units which the Committee may
award each calendar year under this Plan is 3.5% of the number of
issued and outstanding Shares of Common Stock on December 31 of the
calendar year preceding the current calendar year in which the
Committee is awarding Units. The Committee may not carryover Units
from a prior calendar year that were available and not awarded by
the Committee.

5.5 Subject to Sections 5.6 and 8, and unless otherwise
extended in the grant, the Units granted to each Grantee shall
become vested as follows: 50% of Units granted vest on the second
anniversary of the Grant Date; 75% of the Units granted vest on the
third anniversary of the Grant Date; and 100% of the Units granted
vest on the fourth anniversary of the Grant Date. A separate
vesting schedule shall be maintained for each grant of Units based
on the Grant Date of the Units. Unless the Committee conditions
the grant otherwise, such vesting shall occur only if the Grantee
is in the full time employ of the Company or its Subsidiaries on
each vesting date and has been continually employed (except for
such leaves of absence as have been approved by the Board of
Directors) for the period commencing as of the Grant Date of the
Units.

5.6 All rights to any Units payable under the terms of
this Plan shall be immediately forfeited if the Grantee engages in
any act which, in the opinion of the Committee, is inimical to the
best interests of the Company; including, but not limited to,
fraud, embezzlement, or disloyalty. The judgment of the Committee
shall be final as to the

5 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
determination of the nature of any acts performed by the Grantee
which are subject to this Section. The Committee, in its sole
discretion, may interpret and decide upon the nature of such acts.

6. STOCK ADJUSTMENTS. The Committee shall make equitable
adjustment of the number of Units and the Fair Market Value of
Shares to be used to determine the amount of the benefit payable
upon exercise of a Unit to reflect a stock dividend, stock split,
reverse stock split, share combination, recapitalization, merger,
consolidation, separation, spinoff, reorganization, stock rights
offering, or otherwise, of or by the Company.
7. EXERCISE; EXPIRATION OF UNITS.

7.1 At any time after a Grantee is vested in any Units
granted to Grantee under this Plan, the Grantee may exercise all or
a portion of his or her vested Units by delivery to the Company of
written notice of intent to exercise a specific number of Units.

7.2 Notwithstanding any other provision in this Plan,
all Units awarded to a Grantee shall expire ten years after the
Units are granted. All amounts payable with respect to such
expired Units shall be forfeited if not exercised pursuant this
Section prior to the expiration date.

8. EFFECT OF TERMINATION OF EMPLOYMENT, DEATH, DISABILITY,
RETIREMENT OR CHANGE IN CONTROL.

8.1 FOR CAUSE. If a Grantee has a termination of
employment for Cause, then, any unexercised Units shall thereupon
terminate.

8.2 ON ACCOUNT OF DEATH OR DISABILITY. If a Grantee has
a termination of employment on account of death or Disability,
then, any unexercised Units, whether or not exercisable on the date
of such termination of employment, will be deemed vested and
exercised.

8.3 ON ACCOUNT OF RETIREMENT. If a Grantee has a
termination of employment on account of Retirement, then, any
unexercised Units, whether or not exercisable on the date of such
termination of employment, will be deemed vested. Such Units may
be exercised in whole or in part by the Grantee no later than the
365th day following the Grantee's date of retirement.

8.4 ON ACCOUNT OF CHANGE IN CONTROL. In the event of a
"Change in Control," any unexercised Units, whether or not
exercisable on the date of such Change in Control, will be deemed
vested. Such Units may be exercised in whole or in part by the
Grantee no later than the 365th day following the Change in
Control. A "Change in

6 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
Control" means a change in control of a nature that would be
required to be reported in response to item 6(a) of Schedule 14A or
Regulation 14A promulgated under the 1934 Act as in effect on
November 15, 1988, provided that such a change in control shall be
deemed to have occurred at such time as (i) any "person" (as that
term is used in Section 13(d) and 14(d)(2) of the 1934 Act), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
1934 Act) directly or indirectly, of securities representing 20% or
more of the combined voting power for election of directors of the
then outstanding securities of the Company or any successor of the
Company; (ii) during any period of two (2) consecutive years or
less, individuals who at the beginning of such period constituted
the Board of Directors of the Company cease, for any reason, to
constitute at least a majority of the Board, unless the election or
nomination for election of each new director was approved by a vote
of at least two-thirds of the directors then still in office who
were directors at the beginning of the period; (iii) the
shareholders of the Company approve any merger or consolidation as
a result of which the shares shall be changed, converted or
exchanged (other than a merger with a wholly owned subsidiary of
the Company) or any liquidation of the Company or any sale or other
disposition of 50% or more of the assets or earning power of the
Company; or (iv) the shareholders of the Company approve any merger
or consolidation to which the Company is a party as a result of
which the persons who were shareholders of the Company immediately
prior to the effective date of the merger or consolidation shall
have beneficial ownership of less than 50% of the combined voting
power for election of directors of the surviving corporation
following the effective date of such merger or consolidation;
provided, however, that no Change in Control shall be deemed to
have occurred if, prior to such times as a Change in Control would
otherwise be deemed to have occurred, the Board of Directors
determines otherwise.

8.5 ANY OTHER REASON. If a Grantee has a termination of
employment for a reason other than for Cause, death of the Grantee,
the Grantee's Disability, Retirement, or a Change in Control, any
unexercised Units to the extent exercisable on the date of the
Grantee's termination of employment, may be exercised in whole or
in part by the Grantee, not later than the 365th day following the
Grantee's termination of employment; provided that if such 365th
day is not a business day, such Unit may be exercised not later
than the first business day following such 365th day. Any unvested
Units will be forfeited.

9. PAYMENT.

9.1 Within 30 days from the exercise date, the Company
shall pay to the Grantee the exercised Unit amount as defined in
Section 5.2. All amounts payable under this Section may be paid by
the Company in a single lump sum or in installment payments, as
elected by the Company. If installment payments are so elected,
payments may be made in no more than 12 equal quarterly
installments of principal and interest, commencing 30 days after
the exercise date. All deferred amounts shall bear interest at the
rate of 10% per annum from the exercise date until paid.

7 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
9.2 The Company shall have the right to withhold from
any payments under this Plan any taxes required by law to be
withheld with respect to such payments.

10. GRANTEE'S RESPONSIBILITIES. In consideration for the
benefits payable under the Plan, each Grantee shall agree that he
or she will devote his or her full time, skill, diligence and
attention to the Company's and its Subsidiaries' business and will
not actively engage, either directly or indirectly, in any business
or other activity which is or may be deemed to be in any way
competitive with or adverse to the best interests of the business
of the Company and its Subsidiaries.

11. RIGHTS AS A SHAREHOLDER. A Grantee shall have no rights
as a shareholder with respect to any Unit.

12. RESTRICTION ON TRANSFER. Each Unit granted under this
Plan shall not be assignable or transferable other than by will or
the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code unless the Board or
the Committee permit otherwise in writing. The rights of a Grantee
under the terms of this Plan are personal to the Grantee. The
rights of a Grantee or of any beneficiary are nontransferable and
are not subject to voluntary or involuntary alienation, assignment
or transfer by the Grantee or the beneficiary. Any attempt to
transfer (including transfer by a trustee or receiver in
bankruptcy) shall cause the Grantee or beneficiary to forfeit all
rights to any benefit under the terms of this Plan.

Each Unit granted to a Section 16 Grantee shall not be
assignable or transferable other then by will or the laws of
descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code unless the Board (or such
committee) has determined that such restrictions are not then
required for grants under this Plan to satisfy the requirements for
the exemption or exclusion provided by Section 16 of the 1934 Act
(in the form then applicable to the Company). Notwithstanding the
foregoing, a Section 16 Grantee may, in a manner specified by the
Committee and to the extent provided by this Plan, designate a
beneficiary.

13. RELATIONSHIP BETWEEN THE PARTIES.

13.1 Nothing contained in this Plan and no action taken
pursuant to the provisions of this Plan shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Grantee, his or her
beneficiaries or any other person. Any Company funds which may be
subject to the provisions of this Agreement shall continue for all
purposes to be the general funds of the Company. No person other
than the Company shall have any interest in such funds by virtue of
this Plan.

13.2 The rights of any Grantee to benefits under this
Plan shall be solely those of any unsecured creditor of the
Company. Any insurance policy or other assets

8 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
acquired or held by the Company in connection with the liabilities
assumed by it pursuant to this Plan shall not be deemed to be held
under any trust for the benefit of any Grantee, a beneficiary of
any Grantee, any Grantee's estate, or to be security for the
performance of the obligations of the Company but shall be a
general, unpledged and unrestricted asset of the Company.

13.3 Any amount payable under this Plan shall not be
deemed salary or other compensation of any Grantee for the purpose
of computing benefits to which he or she may be entitled under any
pension plan or other arrangement of the Company or its
Subsidiaries for the benefit of its Grantees.

13.4 The benefits payable under this Plan shall be
independent of, and in addition to, any other agreement relating to
any Grantee's employment that may exist from time to time between
the parties hereto, or any other compensation payable by the
Company to any Grantee, whether salary, bonus or otherwise.

13.5 This Plan shall not be deemed to constitute a
contract of employment between the Company and any Grantee, nor
shall any provision of this Plan be interpreted to restrict the
right of the Company to discharge any Grantee or restrict the right
of any Grantee to terminate his or her employment.

13.6 The Company in its discretion may apply for and
procure as owner and for its own benefit insurance on the life of
any Grantee who is a participant in the Plan in such amounts and in
such forms as the Company may choose. Such Grantee shall have no
interest whatsoever in any such policy or policies, but at the
request of the Company he or she shall submit to medical
examinations and supply such information and execute such documents
as may be required by the insurance company or companies to whom
the Company has applied for insurance.

13.7 Transfer of any Grantee from employment by the
Company to employment by a Subsidiaries or the transfer of any
Grantee from employment by a Subsidiaries to the Company shall not
be deemed a termination of employment.

13.8 Each Grantee shall execute a Grantee's statement
substantially in the same form as Exhibit A.

13.9 The amounts payable under the Plan shall not be
subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge. Any attempt to anticipate,
alienate, transfer, assign, pledge, encumber or charge the same
shall be void and shall terminate the Grantee's rights hereunder
whereupon the Company shall have no further liability to him or
her.

9 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
13.10 Each Grantee shall file with the Company a
written designation of one or more persons as beneficiary who shall
be entitled to receive the amount, if any, payable under the Plan
upon the death of the Grantee (substantially in the form of Exhibit
B). A Grantee may revoke or change his or her beneficiary
designation without the consent of a prior beneficiary by filing a
new designation with the Company. The last such designation
received by the Company shall be controlling; provided, however,
that no designations shall be effective unless received by the
Company prior to the Grantee's death and in no event shall it be
effective as of the date prior to such receipt. Beneficiary
designations of Grantees who are residents of community property
states must also be executed by the Grantee's spouse, if any.

13.11 If no such beneficiary designation is in effect
at the time of a Grantee's death, or if no designated beneficiary
survives the Grantee, or if such designation conflicts with law,
the Grantee's estate shall be deemed to have been designated his or
her beneficiary and shall receive the payment of the amount, if
any, payable under the Plan upon his or her death. If the Company
is in doubt as to the right of any person to receive such amount,
the Company may retain such amount, without incurring any liability
to such person, and without liability for any interest on such
amount, until the rights thereto are determined, or the Company may
pay such amount into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Plan
and the Company therefor.

13.12 For accounting purposes, any grants which are
forfeited under this Plan shall be treated as if they were returned
to the Company and other Grantees shall have no rights in or to the
forfeited amounts.

13.13 The Company shall annually give each Grantee
who has been granted Units a statement (substantially in the form
as Exhibit C) setting forth the number of Units granted, the Grant
Date, the Fair Market Value for each grant, and the Fair Market
Value for each grant as of the statement date.

14. CLAIMS PROCEDURE.

14.1 CLAIMS. If a Grantee is denied all or a portion of
an expected benefit under the terms of this Plan for any reason,
the Company shall notify the Claimant within 60 days of the
determination of the denial. The notice shall be in writing, sent
by mail to the Claimant's last known address and must contain the
following information:

14.1.1 The specific reasons for the denial;

14.1.2 Specific reference to pertinent
provisions of this Plan on which the denial is based; and

10 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
14.1.3 If applicable, a description of any
additional information or material necessary to perfect the claim,
an explanation of why such information or material is necessary and
an explanation of the claims review procedure.

14.2 REVIEW PROCEDURE. A Claimant is entitled to request
a review of any denial by the Company. The request for review must
be submitted in writing within 60 days of the Claimant's receipt of
the notice of the denial. Absent a request for review within the
60-day period, the claim will be deemed to be conclusively denied.
The Claimant or his or her representative shall be entitled to
review all pertinent documents, and to submit issues and comments
in writing.

14.3 FINAL DECISION. Within 60 days of receipt of the
Claimant's request for review, the Company shall allow or deny the
review. The decision shall be made in writing to the Claimant.
The decision shall recite the facts and reasons for its position,
with specific reference to the pertinent provisions of this Plan.

15. ACCOUNTING. All accounting issues arising due to the
existence of this Plan shall be determined in accordance with
generally accepted accounting principles.

16. AMENDMENT OR TERMINATION. This Plan shall terminate ten
years from the Effective Date of the Plan or such earlier time as
the Board may determine. The Board may from time to time in its
discretion amend or modify this Plan without the approval of the
shareholders of the Company, except as such approval as may be
required under the 1934 Act or the Code. Any amendment or
termination, whether in whole or in part, shall not affect a grant
then outstanding under this Plan.

17. NONUNIFORM DETERMINATIONS. Neither the Committee's or
the Board's determinations under this Plan need be uniform and may
be made by the Committee or the Board selectively among persons who
receive, or are eligible to receive, Units (whether or not such
persons are similarly situated).

18. CONTROLLING LAW. The Plan and all determinations made
and actions taken pursuant thereto shall be governed by the laws of
the State of Oregon and construed in accordance therewith.

19. SEVERABILITY. If all or any part of this Plan is
declared by any court, governmental authority or arbitrator to be
unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidity shall not serve to invalidate any portion of
this Plan not declared to be unlawful or invalid. Any Section or
part of a Section so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the
terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

11 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
20. ARBITRATION. Any claim or controversy arising under or
in connection with this Plan shall be settled exclusively by
binding arbitration in Albany, Oregon in accordance with the rules
of the American Arbitration Association and the laws of the State
of Oregon then in effect. The parties consent to the jurisdiction
of the Circuit Court of the State of Oregon, Linn County, and the
United States District Court for the District of Oregon, for all
purposes in connection with this Section. Judgment may be entered
on the arbitrator's award in any court having jurisdiction. Costs
of such arbitration shall be borne equally by the parties to the
arbitration. Arbitration shall be by a single arbitrator selected
by the parties or if the parties are unable to agree upon an
arbitrator, the Circuit Court of the State of Oregon, Linn County,
shall appoint an arbitrator. The parties agree that the arbitrator
shall have no jurisdiction to consider evidence with respect to or
render an award or judgment for punitive damages (or any other
amount awarded for the purpose of imposing a penalty). The parties
agree that all facts and other information relating to any
arbitration arising under this Agreement shall be kept confidential
to the fullest extent permitted by law.

OREGON METALLURGICAL CORPORATION
an Oregon corporation

By:______________________
Its:______________________

12 - OREGON METALLURGICAL CORPORATION
LONG TERM INCENTIVE COMPENSATION
STOCK APPRECIATION RIGHTS PLAN (SWW2/65385/103687/PST/626971.3)
<PAGE>
EXHIBIT A

PARTICIPANT'S STATEMENT

I have read the Oregon Metallurgical Corporation Long Term
Incentive Compensation Stock Appreciation Rights Plan ("Plan") and
understand that it sets forth my rights in the Plan and that I have
no other rights except as set forth therein. I understand this is
a discretionary, discriminatory Plan. I further understand that
under certain circumstances, all or a portion of the benefits
payable to me under the Plan may be forfeited.

DATED this ______ day of ___________________, 19___.

_________________________
Participant

1 - EXHIBIT A (SWW2/65385/103687/PST/626971.3)
<PAGE>
EXHIBIT B

BENEFICIARY DESIGNATION

Pursuant to the provisions of the Oregon Metallurgical
Corporation Long Term Incentive Compensation Stock Appreciation
Rights Plan, I designate the following as my beneficiary or
beneficiaries to whom any interest I may then have in the Plan
shall be paid in the event of my death (it being specifically
understood that I reserve such rights as may be available to me
under the Plan to change this beneficiary designation).

PRIMARY BENEFICIARY SECONDARY BENEFICIARY

______________________________ __________________________
Name Name

______________________________ __________________________
Address Address

______________________________ __________________________
Social Security No. Social Security No.

______________________________ __________________________
Relationship Relationship

NOTE: Give full name, address, Social Security number and
relationship of beneficiary or beneficiaries. Attach additional
designations, if necessary.

DATED this ______ day of _____________________, 19____.

__________________________
Participant

_________________________
Spouse (if applicable)

The forgoing form was received by Oregon Metallurgical
Corporation on the ______ day of ___________________, 19_____.

OREGON METALLURGICAL CORPORATION
an Oregon corporation

By:_______________________________

1 - EXHIBIT B (SWW2/65385/103687/PST/626971.3)
<PAGE>
EXHIBIT C

MODEL STATEMENT OF ACCOUNT

_________________________

_________________________
Name and Address of
Participant _________________________
Social Security Number

<TABLE>
<CAPTION>
================================================================================================================
A. B. C. D. E. F. G.
<S> <C> <C> <C> <C> <C> <C>
Grant Number of Fair Fair Market Value of a Total
Date Units Market Value of Share Unit as of Value of Percent
Granted Value of of Company December Units Vested
Share on Common 31, ______ (COLUMNS
Grant December 31, (COLUMNS BxE)
Date ____ D-C)
_______________________________________________________________________________________________________________

_______________________________________________________________________________________________________________

_______________________________________________________________________________________________________________
Totals
===================================================================================================================
</TABLE>

Fair Market Value of one Share of Common Stock of Oregon
Metallurgical Corporation as of December 31, __________ was
$________________.

YOUR INTEREST IS CONTINGENT ONLY AND
IS SUBJECT TO FORFEITURE. A COPY OF
THE PLAN CAN BE OBTAINED FROM THE
SECRETARY OF THE COMPANY.

1 - EXHIBIT C (SWW2/65385/103687/PST/626971.3)

OREGON METALLURGICAL CORPORATION
SAVINGS PLAN

Table of Contents

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. "Actual Contribution Percentage" . . . . . . . . . . . 1
1.2. "Actual Deferral Percentage" . . . . . . . . . . . . . 2
1.3. "Adjusted Balance" . . . . . . . . . . . . . . . . . . 2
1.4. "Annual Additions" . . . . . . . . . . . . . . . . . . 2
1.5. "Beneficiary". . . . . . . . . . . . . . . . . . . . . 2
1.6. "Board". . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. "Break in Service" . . . . . . . . . . . . . . . . . . 2
1.8. "Code" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9. "Committee". . . . . . . . . . . . . . . . . . . . . . 3
1.10. "Company" or "Oremet". . . . . . . . . . . . . . . . . 4
1.11. "Company Discretionary Contribution" . . . . . . . . . 4
1.12. "Company Discretionary Contribution Account" . . . . . 4
1.13. "Compensation" or "Earnings" . . . . . . . . . . . . . 4
1.14. "Early Retirement Date". . . . . . . . . . . . . . . . 5
1.15. "Employee" . . . . . . . . . . . . . . . . . . . . . . 5
1.16. "Employment Year". . . . . . . . . . . . . . . . . . . 5
1.17. "Equity Contributions" . . . . . . . . . . . . . . . . 6
1.18. "Equity Contribution Accounts" . . . . . . . . . . . . 6
1.19. "Entry Date" . . . . . . . . . . . . . . . . . . . . . 6
1.20. "ERISA". . . . . . . . . . . . . . . . . . . . . . . . 6
1.21. "Highly Compensated Participant" . . . . . . . . . . . 6
1.22. "Hour of Service". . . . . . . . . . . . . . . . . . . 6
1.23. "Investment Fund" or "Fund". . . . . . . . . . . . . . 7
1.24. "Limitation Year". . . . . . . . . . . . . . . . . . . 7
1.25. "Matching Contributions" . . . . . . . . . . . . . . . 7
1.26. "Matching Contribution Account". . . . . . . . . . . . 7
1.27. "Maximum Permissible Amount" . . . . . . . . . . . . . 8
1.28. "Net Profits". . . . . . . . . . . . . . . . . . . . . 8
1.29. "Normal Retirement Date" . . . . . . . . . . . . . . . 8
1.30. "Participant". . . . . . . . . . . . . . . . . . . . . 8
1.31. "Percentage Return on Equity" or "Return on Equity". . 8
1.32. "Plan" . . . . . . . . . . . . . . . . . . . . . . . . 8
1.33. "Plan Year". . . . . . . . . . . . . . . . . . . . . . 8
1.34. "Related Employer" . . . . . . . . . . . . . . . . . . 8
1.35. "Related Plan" . . . . . . . . . . . . . . . . . . . . 8
1.36. "Salary Reduction Agreement" . . . . . . . . . . . . . 8

i
<PAGE>
1.37. "Salary Reduction Contributions" . . . . . . . . . . . 8
1.38. "Salary Reduction Contribution Account". . . . . . . . 9
1.39. "Service". . . . . . . . . . . . . . . . . . . . . . . 9
1.40. "Supplemental Company Contribution". . . . . . . . . . 9
1.41. "Trust" or "Trust Fund". . . . . . . . . . . . . . . . 9
1.42. "Trust Agreement". . . . . . . . . . . . . . . . . . . 9
1.43. "Trustee". . . . . . . . . . . . . . . . . . . . . . . 9
1.44. "Valuation Date" or "Quarterly Valuation Date" . . . . 9
1.45. "Voluntary Contributions". . . . . . . . . . . . . . . 9
1.46. "Voluntary Contribution Account" . . . . . . . . . . . 9
1.47. "Year of Service". . . . . . . . . . . . . . . . . . . 9

PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1. Eligibility. . . . . . . . . . . . . . . . . . . . . . 10
2.2. Salary Reduction Contributions . . . . . . . . . . . . 10
2.3. Reemployment of a Participant. . . . . . . . . . . . . 10

SALARY REDUCTION CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 10
3.1. Salary Reductions. . . . . . . . . . . . . . . . . . . 10
3.2. Administrative Rules Governing Salary Reduction
Agreements . . . . . . . . . . . . . . . . . . . . . 12
3.3. Limitations on Salary Reduction Contributions. . . . . 12
3.4. Recharacterization and Return of Certain Salary
Reduction Contributions. . . . . . . . . . . . . . . 14
3.5. Treatment of Associated Matching Contribution. . . . . 14
3.6. Distributions From Salary Reduction Contribution
Accounts . . . . . . . . . . . . . . . . . . . . . . 15
3.7. Accounting . . . . . . . . . . . . . . . . . . . . . . 15
3.8. Supplemental Company Contributions . . . . . . . . . . 15

OTHER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1. Company Discretionary Contributions. . . . . . . . . . 16
4.2. Matching Contributions . . . . . . . . . . . . . . . . 16
4.3. Equity Contributions . . . . . . . . . . . . . . . . . 17
4.4 Voluntary Contributions. . . . . . . . . . . . . . . . 18
4.5. Limitations on Contributions . . . . . . . . . . . . . 18
4.6. Rules Governing Matching Contributions and Voluntary
Contributions. . . . . . . . . . . . . . . . . . . . 19
4.7. Exclusive Benefit of Employees . . . . . . . . . . . . 22
4.8. Transfers From Qualified Plans . . . . . . . . . . . . 23

ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . 25
5.1. Separate Accounts. . . . . . . . . . . . . . . . . . . 25
5.2. Allocations of Company Discretionary Contributions and
Forfeitures. . . . . . . . . . . . . . . . . . . . . 25
5.3. Allocation to Salary Reduction Contribution
Accounts . . . . . . . . . . . . . . . . . . . . . . 25
5.4. Allocation of Matching Contributions . . . . . . . . . 26
5.5. Allocation of Voluntary Contributions and
Forfeitures. . . . . . . . . . . . . . . . . . . . . 26

ii
<PAGE>
5.6. Maximum Allocation . . . . . . . . . . . . . . . . . . 27
5.7. Vesting. . . . . . . . . . . . . . . . . . . . . . . . 29
5.8. Allocations and Adjustments to Accounts. . . . . . . . 30
5.9. Installments . . . . . . . . . . . . . . . . . . . . . 31
5.10 Valuation of Oremet Stock. . . . . . . . . . . . . . . 31

PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1. Payments on Retirement . . . . . . . . . . . . . . . . 31
6.2 Payments on Death. . . . . . . . . . . . . . . . . . . 32
6.3. Payments on Disability . . . . . . . . . . . . . . . . 33
6.4. Payments on Termination for Other Reasons. . . . . . . 34
6.5. Pretermination Distributions . . . . . . . . . . . . . 35
6.6. Methods of Payment . . . . . . . . . . . . . . . . . . 37
6.7. Distribution of Unallocated Employee Contributions . . 40
6.8. Administrative Powers Relating to Payments . . . . . . 40
6.9. Withdrawals from Voluntary Contribution Account. . . . 41
6.10 Investment Pending Distribution. . . . . . . . . . . . 41

PLAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.1. Company Responsibility . . . . . . . . . . . . . . . . 41
7.2. Powers and Duties of Committee . . . . . . . . . . . . 41
7.3. Organization and Operation of Committee. . . . . . . . 42
7.4. Records and Reports of Committee . . . . . . . . . . . 42
7.5. Claims Procedure . . . . . . . . . . . . . . . . . . . 42
7.6. Compensation and Expenses of Committee . . . . . . . . 43
7.7. Indemnity of Committee Members . . . . . . . . . . . . 43
7.8 Voting Rights and Stock Dispositions . . . . . . . . . 43

LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . 45
8.1. Loans to Participants. . . . . . . . . . . . . . . . . 45
8.2. Maximum Loan Amount. . . . . . . . . . . . . . . . . . 46
8.3. Repayment of Loans . . . . . . . . . . . . . . . . . . 47
8.4. Terms. . . . . . . . . . . . . . . . . . . . . . . . . 47

INVESTMENT FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.1. Investment Funds . . . . . . . . . . . . . . . . . . . 50
9.2. Initial Investment . . . . . . . . . . . . . . . . . . 51
9.3. Selection of Investment Funds. . . . . . . . . . . . . 51

AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . 52
10.1. Amendment of Plan. . . . . . . . . . . . . . . . . . . 52
10.2. Voluntary Termination of or Permanent Discontinuance
of Contributions to the Plan . . . . . . . . . . . . 52

III
<PAGE>
10.3. Involuntary Termination of Plan. . . . . . . . . . . . 52
10.4. Payments on Termination of or Permanent
Discontinuance of Contributions to the Plan. . . . . 53

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.1. Duty To Furnish Information and Documents. . . . . . . 53
11.2. Committee's Annual Statements and Available
Information. . . . . . . . . . . . . . . . . . . . . 53
11.3. No Enlargement of Employment Rights. . . . . . . . . . 54
11.4. Applicable Law . . . . . . . . . . . . . . . . . . . . 54
11.5. No Guarantee . . . . . . . . . . . . . . . . . . . . . 54
11.6. Unclaimed Funds. . . . . . . . . . . . . . . . . . . . 54
11.7. Merger or Consolidation of Plan. . . . . . . . . . . . 55
11.8. Interest Nontransferable . . . . . . . . . . . . . . . 55
11.9. Prudent Man Rule . . . . . . . . . . . . . . . . . . . 55
11.10. Limitations on Liability . . . . . . . . . . . . . . . 56
11.11. Headings . . . . . . . . . . . . . . . . . . . . . . . 56
11.12. Gender and Number. . . . . . . . . . . . . . . . . . . 56
11.13. ERISA and Approval Under Internal Revenue Code . . . . 56
11.14. Extension of Plan to Related Employers . . . . . . . . 56

TOP-HEAVY PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 57
12.1. Top-Heavy Status . . . . . . . . . . . . . . . . . . . 57
12.2. Definitions. . . . . . . . . . . . . . . . . . . . . . 57
12.3. Determination of Top-Heavy Status. . . . . . . . . . . 58
12.4. Vesting. . . . . . . . . . . . . . . . . . . . . . . . 59
12.5. Minimum Contribution . . . . . . . . . . . . . . . . . 60
12.6. Compensation . . . . . . . . . . . . . . . . . . . . . 60
12.7. Collective Bargaining Agreements . . . . . . . . . . . 60

iv
<PAGE>
OREGON METALLURGICAL CORPORATION
SAVINGS PLAN

This AGREEMENT is made this 27th day of September, 1995, by
OREGON METALLURGICAL CORPORATION, a corporation (referred to as the
Company), effective January 1, 1995.

WITNESSETH:

WHEREAS, the Company desires to increase certain of its
Employees' interest in the Company by providing a medium through
which they may share in the profitable operations of the Company;
and

WHEREAS, the Company wishes both to reward certain of its
Employees for past service and to furnish additional security to
certain of its Employees who become permanently disabled;

NOW, THEREFORE, the Company hereby adopts the OREGON
METALLURGICAL CORPORATION SAVINGS PLAN, effective as of January 1,
1995, as set forth below:

ARTICLE I

DEFINITIONS

Whenever used herein the following words and phrases shall
have the meanings stated below unless a different meaning is
plainly required by the context:

1.1. "Actual Contribution Percentage" (if applicable for any
year in which Voluntary Contributions are permitted) for a
specified group of Participants for a given Plan Year means the
average of the ratios, calculated separately for each Participant
in such group, of: (a) the sum of the Voluntary Contributions, if
any, contributed by the Participant to the Plan for such Plan Year
and the Matching Contributions, if any, contributed by the Company
on behalf of such Participant to the Plan for such Plan Year, to
(b) the Participant's Compensation for the period of time during
such Plan Year in which he was a participant.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 1
<PAGE>
1.2. "Actual Deferral Percentage" for a specified group of
Participants for a given Plan Year means the average of the ratios,
calculated separately for each Participant in such group, of: (a)
the Salary Reduction Contributions, if any, and Supplemental
Company Contributions, if any, contributed by the Company on behalf
of each such Participant for such Plan Year to (b) the
Participant's Compensation for the period of time during such Plan
Year in which he was a Participant.

1.3. "Adjusted Balance" means the balance in a Participant's
account or accounts, as adjusted in accordance with Sections 5.2,
5.3, 5.4, 5.5, 5.6 and 5.8 of the Plan as of the applicable
Valuation Date.

1.4. "Annual Additions" means the total of: (a) Company
contributions allocated to a Participant's accounts under this Plan
and any Related Plan during any Limitation Year; (b) the amount of
Employee contributions made by the Participant under this Plan and
any Related Plan; and (c) forfeitures allocated to a Participant's
accounts under this Plan and any Related Plan. Clauses (a) and (b)
above include excess contributions under Sections 3.4 and 4.6.

1.5. "Beneficiary" means the person, persons, or entity
designated or determined pursuant to the provisions of Section
6.2(b) of the Plan.

1.6. "Board" means the Board of Directors of the Company.

1.7. "Break in Service" means the termination of employment of
an Employee followed by the expiration of an Employment Year in
which the Employee accumulates fewer than 501 Hours of Service.
For purposes of this Section:

(a) A Break in Service shall not be deemed to have
occurred if (i) the employment of a terminated Employee is
resumed prior to the expiration of an Employment Year in which
he accumulates fewer than 501 Hours of Service; (ii) the
Employee is absent with the prior consent of the Company for
a period not exceeding 12 months (which consent shall be
granted under uniform rules applied to all Employees on a
nondiscriminatory basis) and he returns to active employment
with the Company upon the expiration of the period of
authorized absence; or (iii) he leaves the Company to serve in
the armed forces of the United States for a period during
which his reemployment rights are guaranteed by law and he
returns or offers to return to work for the Company prior to
the expiration of his reemployment rights.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 2
<PAGE>
(b) An Employee who is absent from work with the Company
because of (i) the Employee's pregnancy, (ii) the birth of the
Employee's child, (iii) the placement of a child with the
Employee in connection with the Employee's adoption of the
child, or (iv) caring for such child immediately following
such birth or placement shall receive credit, solely for
purposes of determining whether a Break in Service has
occurred under this Section, for the Hours of Service
described in subsection (c) of this Section; provided that the
total number of hours credited as Hours of Service under this
subsection shall not exceed 501 Hours of Service.

(c) In the event of an Employee's absence from work for
any of the reasons set forth in subsection (b) of this
Section, the Hours of Service that the Employee will be
credited with under subsection (b) are (i) the Hours of
Service that otherwise would normally have been credited to
the Employee but for such absence, or (ii) eight Hours of
Service per day of such absence if the Committee is unable to
determine the Hours of Service described in clause (i).

(d) An Employee who is absent from work for any of the
reasons set forth in subsection (b) of this Section shall be
credited with Hours of Service under subsection (b), (i) only
in the Employment Year in which the absence begins, if the
Employee would be prevented from incurring a Break in Service
in that Year solely because the period of absence is treated
as credited Hours of Service, as provided in subsections (b)
and (c), or (ii) in any other case, in the immediately
following Employment Year.

(e) No credit for Hours of Service will be given
pursuant to subsections (b), (c) and (d) of this Section
unless the Employee furnishes to the Committee such timely
information that the Committee may reasonably require to
establish (i) that the absence from work is for one of the
reasons specified in subsection (b) and (ii) the number of
days for which there was such an absence. No credit for Hours
of Service will be given pursuant to subsections (b), (c), and
(d) for any purpose of the Plan other than the determination
of whether an Employee has incurred a Break in Service
pursuant to this Section.

1.8. "Code" means the Internal Revenue Code of 1986, as
amended from time to time. Reference to a Section of the Code shall
include that Section and any comparable Section or Sections of any
future legislation that amends, supplements or supersedes said
Section.

1.9. "Committee" means the Plan Administrative Committee
described in Section 7.1 of the Plan.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 3
<PAGE>
1.10. "Company" or "Oremet" means OREGON METALLURGICAL
CORPORATION, an Oregon corporation, or any successor corporation
resulting from a merger or consolidation with the Company or
transfer of substantially all of the assets of the Company, if such
successor or transferee shall adopt and continue the Plan by
appropriate corporate action, pursuant to Section 11.3 of the Plan.

1.11. "Company Discretionary Contribution" means a
contribution made by the Company pursuant to the provisions of
Section 4.1 of the Plan.

1.12. "Company Discretionary Contribution Account" means
the record of money and assets held by the Trustee for an
individual Participant or Beneficiary pursuant to the provisions of
the Plan, derived from Company Discretionary Contributions to the
Trust.

1.13. "Compensation" or "Earnings" means a Participant's
total remuneration from the Company paid during a Plan Year for
services rendered, as reflected in Box 10 (or similar item
subsequently redesignated) of the participant's IRS Form W-2 for
the calendar year corresponding to the Plan Year, and excludes the
taxable portion of moving expense, and compensation which is not
currently includible in the Participant's gross income by reason of
the application of Code Section 125, 402 (e)(3), 402 (h)(1)(B), or
403 (b), and includes amounts subject to the Salary Reduction
Agreement under this Plan.

(a) In addition to other applicable limitations set
forth in the Plan and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on or after
January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA
'93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number
of months in the determination period, and the denominator of
which is 12.

(b) For Plan Years beginning on or after January 1,
1994, any reference in this Plan to the limitation under
Section 401(a)(17) of the Code shall mean the OBRA '93 annual
compensation limit set forth in this provision.

(c) If Compensation for any prior determination period
is taken into account in determining an Employee's benefits
accruing in the current Plan Year, the Compensation for that
prior determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination
period. For this purpose, for

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 4
<PAGE>
determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.

(d) Compensation shall exclude (a)(1) contributions made
by the Employer to a qualified or non-qualified plan of
deferred compensation to the extent that the contributions are
not includable in the gross income of the Participant for the
taxable year in which contributed, (2) any distributions from
a qualified or non-qualified plan of deferred compensation;
(b) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by
an Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture; (c) amounts
realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and (d) other amounts
which receive special tax benefits.

1.14. "Early Retirement Date" means (a) the date a
Participant attains age 55 and has completed five (5) years of
service, or (b) the date that any combination of the total of a
Participant's Years of Service and age add up to 75.

1.15. "Employee" means an individual employed by the Company
that has completed IRS Form W-4, provided, however, that "Employee"
does not include any individual who is a non-resident alien and who
receives no earned income from the Company which constitutes income
from sources within the United States. Employees of a Related
Employer shall be excluded from this Plan unless the Plan is
adopted by the Related Employer. Notwithstanding anything to the
contrary contained in this Section 1.15, no provision of this
Section 1.15 shall be construed or interpreted to require the
Company to make a Company contribution under the Plan for any
individual who is not an Employee. A person who performs service
for the Company as an independent contractor is not an Employee for
purposes of this Plan.

A person who is not employed by the Company but who
performs services for the Company pursuant to an agreement between
the Company and a leasing organization shall be considered a
"leased Employee" after such person performs such services on a
substantially full-time basis for at least 12 months and the
services are of a type historically performed by Employees in the
business field of the Company. A person who is considered a leased
Employee of the Company shall not be considered an Employee for
purposes of the Plan. If a leased Employee subsequently becomes an
Employee, and thereafter participates in the Plan, he shall be
given credit for Hours of Service and Service for his period of
employment as a leased Employee, except to the extent that the
requirements of Section 414(n)(5) of the Code were satisfied with
respect to such Employee while he was a leased Employee.

1.16. "Employment Year", if applicable, means a
12-consecutive-month period commencing with an Employee's initial
date of hire (or last date of rehire if he has incurred a Break

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 5
<PAGE>
in Service) or with any anniversary thereof. An Employee's date of
hire shall be the first day on which he completes an Hour of
Service and his date of rehire shall be the first day on which he
completes an Hour of Service following a Break in Service.

1.17. "Equity Contributions" means amounts contributed by the
Company pursuant to Section 4.3 of the Plan.

1.18. "Equity Contribution Accounts" means the record of
Oremet common stock held by the Trustee for an Individual
Participant or Beneficiary pursuant to the provisions of the Plan
derived from Equity Contributions.

1.19. "Entry Date" means the Employee's date of hire, and for
Employees employed on the Effective Date, the Entry Date is the
Effective Date.

1.20. "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended from time to
time.

1.21. "Highly Compensated Participant" means a Participant
who, during the current Plan Year or the preceding Plan Year, (a)
was at any time a five-percent owner of the Company, (b) received
Compensation from the Company in excess of $75,000 (or such greater
amount provided by the Secretary of the Treasury pursuant to
Section 414(q) of the Code), (c) received Compensation from the
Company in excess of $50,000 (or such greater amount provided by
the Secretary of the Treasury pursuant to Section 414(q) of the
Code) and was in the top paid group of Employees for such Plan
Year, or (d) was at any time an officer of the Company and received
Compensation from the Company greater than 50% of the amount in
effect under Section 415(b)(1)(A) of the Code for such Plan Year.
The provisions of Section 414(q) of the Code shall apply in
determining whether a Participant is a Highly Compensated
Participant. The Company for any Plan Year may elect to identify
Highly Compensated Participants based upon only the current Plan
Year to the extent permitted by Section 414(q) of the Code and
Regulations issued thereunder.

1.22. "Hour of Service" means (i) each hour for which an
Employee is paid or entitled to payment for the performance of
duties for the Company; and (ii) each hour for which an Employee is
directly or indirectly paid by the Company or is entitled to
payment from the Company during which no duties are performed by
reason of vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence
(but not in excess of 501 hours in any continuous period during
which no duties are performed). Each Hour of Service for which
back pay, irrespective of mitigation of damages, is either awarded
or agreed to by the Company shall be included under either (i) or
(ii) as may be appropriate. Hours of Service shall be credited:

(a) in the case of hours referred to in clause (i) of
the first sentence of this Section, for the computation period
in which the duties are performed;

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 6
<PAGE>
(b) in the case of hours referred to in clause (ii) of
the first sentence of this Section, for the computation period
or periods in which the period during which no duties are
performed occurs; and

(c) in the case of hours for which back pay is awarded
or agreed to by the Company, for the computation period or
periods to which the award or agreement pertains, rather than
to the computation period in which the award, agreement or
payment is made.

In determining Hours of Service, an Employee who is employed
by the Company on other than an hourly rated basis shall be
credited with 10 Hours of Service per day for each day the Employee
would, if hourly rated, be credited with service pursuant to clause
(i) of the first sentence of this Section 1.22. If an Employee is
paid for reasons other than the performance of duties pursuant to
clause (ii) of the first sentence of this Section 1.22: (i) in the
case of a payment made or due which is calculated on the basis of
units of time, an Employee shall be credited with the number of
regularly scheduled working hours included in the units of time on
the basis of which the payment is calculated; and (ii) an Employee
without a regular work schedule shall be credited with 8 Hours of
Service per day (to a maximum of 40 Hours of Service per week) for
each day that the Employee is so paid. Hours of Service shall be
calculated in accordance with Department of Labor Regulations
<SUBSECTION> 2530.200b-2 or any future legislation or regulation
that amends, supplements or supersedes said section. Solely for
purposes of determining an Employee's (i) eligibility to
participate in the Plan under Section 2.1, and (ii) vesting under
Section 5.7, Hours of Service shall include hours during an
approved leave of absence granted by an employer to an Employee on
or after August 5, 1993 pursuant to the Family and Medical Leave
Act, if the Employee returns to work for an employer at the end of
such leave of absence.

Such Hours of Service shall be calculated pursuant to the
second sentence of this paragraph.

1.23. "Investment Fund" or "Fund" means any Fund as described
on the schedule attached hereto.

1.24. "Limitation Year" means the 12-consecutive-month period
to be used in determining the Plan's compliance with Code Section
415 and the regulations thereunder. The Company shall take all
actions necessary to ensure that the Limitation Year is the same
12-month period as the Plan Year.

1.25. "Matching Contributions" means amounts contributed by
the Company pursuant to Section 4.2 of the Plan.

1.26. "Matching Contribution Account" means the record of
money and assets held by the Trustee for an individual Participant
or Beneficiary pursuant to the provisions of the Plan derived from
Matching Contributions.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 7
<PAGE>
1.27. "Maximum Permissible Amount" means the lesser of: (a)
$30,000 (or, if greater, one-quarter of the dollar limitation in
effect pursuant to Section 415(b)(1)(A) of the Code); or (b) 25% of
a Participant's Compensation.

1.28. "Net Profits" means the net income or profits of the
Company for a given fiscal year determined by the Company upon the
basis of its books of account maintained in accordance with
generally accepted accounting practices, consistently applied
without any deduction for: (i) federal, state or local taxes based
upon income; (ii) contributions made by the Company in accordance
with the terms of this Plan; or (iii) contributions made by the
Company to any other plan which is qualified under the provisions
of Section 401 of the Code.

1.29. "Normal Retirement Date" means the date a Participant
attains age 65.

1.30. "Participant" means an Employee who becomes a
Participant under the provisions of Section 2.1 of the Plan.

1.31. "Percentage Return on Equity" or "Return on Equity"
means profit (net income after tax) divided by average equity (the
sum of the equity as of the end of the previous fiscal year and the
end of each fiscal quarter divided by five).

1.32. "Plan" means the OREGON METALLURGICAL CORPORATION
SAVINGS PLAN. For purposes of Section 401(a)(27)(B) of the Code,
the Plan shall constitute a profit sharing plan.

1.33. "Plan Year" means the fiscal year of the Company, which
is currently designated as the 12-month period from January 1
through December 31 of each year. Any other 12-consecutive- month
period that may hereafter be designated as the fiscal year of the
Company shall be the Plan Year.

1.34. "Related Employer" means (i) any corporation that is a
member of a controlled group of corporations (as defined in Section
414(b) of the Code) that includes the Company; (ii) any trade or
business (whether incorporated or unincorporated) that is under
common control (as defined in Section 414(c) of the Code) with the
Company; and (iii) any member of an affiliated service group (as
defined in Section 414(m) of the Code) that includes the Company.

1.35. "Related Plan" means any other defined contribution
plan (as defined in Section 415 of the Code) maintained by the
Company or by any Related Employer.

1.36. "Salary Reduction Agreement" means a written agreement,
entered into by a Participant, pursuant to the provisions of
Sections 3.1 and 3.2 of the Plan.

1.37. "Salary Reduction Contributions" means amounts
contributed by the Company on behalf of Participants pursuant to
the provisions of Section 3.1 of the Plan.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 8
<PAGE>
1.38. "Salary Reduction Contribution Account" means the
record of money and assets held by the Trustee for an individual
Participant or Beneficiary pursuant to the provisions of the
Plan, derived from Salary Reduction Contributions and
Supplemental Company Contributions.

1.39. "Service" shall have the meaning set forth in "Year of
Service", below.

1.40. "Supplemental Company Contribution" means a
contribution made by the Company pursuant to the provisions of
Section 3.8 of the Plan.

1.41. "Trust" or "Trust Fund" means all money, securities and
other property held under the Trust Agreement for the purposes of
the Plan.

1.42. "Trust Agreement" means the agreement between the
Company and the Trustee governing the administration of the Trust,
as it may be amended from time to time.

1.43. "Trustee" means the corporation or individuals
appointed by the Board of Directors of the Company to administer
the Trust.

1.44. "Valuation Date" or "Quarterly Valuation Date"means the
last day of each calendar quarter and such other date, if any, as
shall be selected by the Company, except that Company Discretionary
Contributions shall have a Valuation Date that is the last day of
the Plan Year (the "Annual Valuation Date") or such other date, if
any, as shall be selected by the Company. "Valuation Period" means
the time between consecutive Valuation Dates.

1.45. "Voluntary Contributions" means Participant after-tax
contributions if specifically authorized by the Board and made
pursuant to the provisions of Section 4.4.

1.46. "Voluntary Contribution Account" means the record of
money and assets held by the Trustee for an individual Participant
or Beneficiary pursuant to the provisions of the Plan, derived from
Voluntary Contributions.

1.47. "Year of Service" means the computation period of
twelve (12) consecutive months, herein set forth, during which an
Employee has at least 1,000 Hours of Service. For vesting
purposes, the computation period shall be the Plan Year, including
periods prior to the Effective Date of the Plan.

Service shall include an approved leave of absence
granted to an Employee on or after August 5, 1993 pursuant to the
Family and Medical Leave Act, if the Employee returns to work for
an employer at the end of such leave of absence. Without regard to
the preceding provisions of this Section 1.47, a Participant's
years of Service after a period of five consecutive one-year Breaks
in Service shall be disregarded for purposes of determining his
nonforfeitable interest in his Company Discretionary Contribution
Account as of the Valuation Date coincident with or next preceding
the date he incurs such five consecutive one-year Breaks in
Service. For any short Plan Year, the

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 9
<PAGE>
determination of whether an Employee has completed a Year of
Service shall be made in accordance with Department of Labor
Regulation 2530.203-2(c).

ARTICLE II

PARTICIPATION

2.1. ELIGIBILITY. Each Employee employed on the Effective
Date (January 1, 1995) shall become a Participant in this Plan on
the Effective Date. Employees hired after the Effective Date shall
become eligible to participate upon completion of a period of
employment of 120 calendar days with the Company. After satisfying
the eligibility requirements, an employee shall become a
Participant as of the employee's date of hire.

2.2. SALARY REDUCTION CONTRIBUTIONS. Each Participant shall
be entitled to authorize Salary Reduction Contributions to be made
by the Company on his behalf effective as of the first full payroll
period following satisfaction of the eligibility requirements of
Section 2.1 after the date he becomes a Participant. Each such
Participant shall authorize such Salary Reduction Contributions by
executing and filing with the Committee a Salary Reduction
Agreement and such other forms as may be required by the Committee,
which the Committee will provide as soon as practicable after the
Employee satisfies the eligibility requirements of Section 2.1.

2.3. REEMPLOYMENT OF A PARTICIPANT. If an Employee who has
satisfied the eligibility requirements of Section 2.1 shall incur
a Break in Service and shall thereafter be reemployed by the
Company, he shall again become eligible to participate under the
Plan on the date of his resumption of employment. Upon such
reemployment by the Company, all Years of Service before such Break
shall be taken into account for purposes of vesting under Section
5.7 if any part of the Participant's benefit derived from Company
contributions was nonforfeitable. If no part of the Participant's
benefit derived from Company contributions was nonforfeitable when
he incurred such Break, years of Service with the Company completed
prior to such Break shall not be required to be taken into account
in any event if the number of consecutive one-year Breaks in
Service equals or exceeds the greater of (A) five or (B) the
aggregate number of years of Service completed prior to such Break.

ARTICLE III

SALARY REDUCTION CONTRIBUTIONS

3.1. SALARY REDUCTIONS.

(a) (i) Each Participant may elect, by entering
into a Salary Reduction Agreement with the Company,
to reduce his Earnings from the Company by any
integral percentage, as elected by the

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 10
<PAGE>
Participant, but not to exceed a maximum of 15% of
a Participant's Earnings. Reductions to a
Participant's Earnings pursuant to his Salary
Reduction Agreement shall be effected through
payroll deductions. Salary Reduction Agreements
shall be subject to the special rules set forth in
this Article III.

(ii) If specifically authorized by the Board,
and effective when specified by the Committee, for
the duration of the Collective Bargaining Agreement
entered into in 1994 between the Company and the
United Steelworkers of America, Local 7150, each
Participant may elect as part of the Salary
Reduction Agreement to defer receipt of all (or any
portion) of the Participant's Equity Bonus
Compensation. "Equity Bonus Compensation" means
the bonus compensation of one (1) share of common
stock of the Company awarded for each $100 of
Earnings of the Participant as described in the
Stock Compensation Plan -- Salaried Employees and
the Stock Compensation Plan -- Union Employees.
Deferred Equity Bonus Compensation shall be
regarded as salary reduction for a Participant and
held in the Participant's Equity Bonus Compensation
Account.

(b) Notwithstanding any provision of the Plan to the
contrary, the elective deferrals (as defined in Section
402(g)(3) of the Code, including Salary Reduction
Contributions) of any Participant for any taxable year of the
Participant shall not exceed the amount set forth in Section
402(g) of the Code, as adjusted by the Secretary of the
Treasury pursuant to Sections 402(g)(5) and 415(d) of the
Code. Notwithstanding paragraph (a), fractional reductions
shall be permitted where necessary to comply with the limit
imposed by Section 402(g)(3) of the Code. Any amount
contributed to the Plan by the Company on behalf of a
Participant during any Plan Year, pursuant to the
Participant's Salary Reduction Agreement, in excess of the
limitations set forth in this subsection, adjusted for
earnings, gains, and losses allocable thereto, shall be paid
directly to the Participant within the time period set forth
in Section 402(g)(2) of the Code.

(c) The Company shall contribute to the Trust a Salary
Reduction Contribution in an amount equal to the total amount
subject to Salary Reduction Agreements and deducted from
payroll during the period from the last preceding Valuation
Date and not reduced pursuant to Sections 3.3 and 3.4. The
Company shall pay to the Trustee its Salary Reduction
Contribution as of the earliest date on which such
Contributions can reasonably be segregated from the Company's
general assets, not to exceed 90 days from the date on which
such amounts would otherwise have been payable to the
Participants in cash.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 11
<PAGE>
3.2. Administrative Rules Governing Salary Reduction
Agreements.

(a) The Committee will set rules on the time periods
within which a Salary Reduction Agreement can be entered,
amended, or revoked.

(b) The Committee, at its election, may amend, suspend
or revoke a Salary Reduction Agreement with a Participant at
any time if the Committee determines that such amendment,
suspension or revocation is necessary to ensure that the
Annual Additions to the accounts of a Participant for any Plan
Year do not exceed the Maximum Permissible Amount for such
Participant for that Plan Year or to ensure that the
requirements of Section 3.3 are met for such Plan Year.

3.3. LIMITATIONS ON SALARY REDUCTION CONTRIBUTIONS.

(a) Notwithstanding anything to the contrary contained
elsewhere in the Plan or contained in any Salary Reduction
Agreement, all Salary Reduction Agreements entered into with
respect to any Plan Year shall be valid only if one of the
tests set forth in subsection (b) of this Section is satisfied
for such Plan Year. In determining whether such tests are
satisfied, all Salary Reduction Contributions, Supplemental
Company Contributions, if any, and excess Salary Reduction
Contributions under Section 3.1(b) of Highly Compensated
Participants, if any, made with respect to such Plan Year
shall be considered.

(b) For each Plan Year the Actual Deferral Percentage
for Highly Compensated Participants shall bear to the Actual
Deferral Percentage for all other Participants a relationship
that satisfies either of the following tests:

(i) The Actual Deferral Percentage for Highly
Compensated Participants is not more than the Actual
Deferral Percentage of all other Participants multiplied
by 1.25; or

(ii) The Actual Deferral Percentage for Highly
Compensated Participants is not more than the Actual
Deferral Percentage for all other Participants multiplied
by two and the excess of the Actual Deferral Percentage
for the group of Highly Compensated Participants over
that of all other Participants is not more than two
percentage points.

That portion of the Plan that benefits hourly employees
subject to the Collective Bargaining Agreement with the United
Steelworkers of America will be tested separately from that
portion of the Plan benefiting salaried employees not subject
to such Collective Bargaining Agreement.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 12
<PAGE>
(c) If at the end of any Plan Year neither of the tests
set forth in subsection (b) of this Section is satisfied for
such Year, then:

(i) Salary Reduction Agreements entered into for
such Year by Highly Compensated Participants shall be
valid only to the extent permitted by one of the tests
set forth in subsection (b) of this Section, and Salary
Reduction Contributions made by the Company for such Year
for Highly Compensated Participants shall be reduced in
the manner set forth in subsection (c)(ii) to the extent
necessary to comply with one of the tests set forth in
subsection (b) of this Section. All Salary Reduction
Contributions so reduced, adjusted for earnings, gains
and losses allocable thereto, shall be allocated and
distributed in the manner provided in Section 3.4.

(ii) Reductions pursuant to subsection (i) next
above shall be effected with respect to Highly
Compensated Participants pursuant to the following
procedure: The Actual Deferral Percentage of the Highly
Compensated Participant with the highest Actual Deferral
Percentage shall be reduced to the extent necessary to
cause such Highly Compensated Participant's Actual
Deferral Percentage to equal the Actual Deferral
Percentage of the Highly Compensated Participant with the
next highest Actual Deferral Percentage. This process
shall be repeated until the Plan satisfies one of the
tests set forth in subsection (b) of this Section for
such Plan Year.

(iii) Salary Reduction Agreements entered into
by all Participants who are not Highly Compensated
Participants shall be valid and Salary Deferral
Contributions made by the Company for such Participants
shall not be changed.

The calculations, reductions and allocations required by this
Section 3.3 and Section 3.4 shall be made by the Company with
respect to a Plan Year at any time prior to the close of the
following Plan Year.

(d) If at any time during a Plan Year the Company, in
its sole discretion, determines that neither of the tests set
forth in subsection (b) of this Section 3.3 may be met for
such Plan Year, then:

(i) The Committee shall have the unilateral right
during the Plan Year to require the prospective
reduction, for the balance of such Year or any part
thereof, of the percentage of the Earnings of Highly
Compensated Participants that may be subject to Salary
Reduction Agreements. Such reductions shall be made to
the extent necessary, in the discretion of the Committee,
to assure that one of the tests set forth in subsection
(b) of this

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 13
<PAGE>
Section 3.3 shall be met for the Plan Year and shall be
based upon estimates made from data available to the
Committee at any time during the Plan Year.

(ii) Reductions pursuant to subsection (i) next
above shall be effected with respect to Highly
Compensated Participants pursuant to the following
procedure: The Actual Deferral Percentage of the Highly
Compensated Participant with the highest Actual Deferral
Percentage shall be reduced to the extent necessary to
cause such Highly Compensated Participant's Actual
Deferral Percentage to equal the Actual Deferral
Percentage of the Highly Compensated Participant with the
next highest Actual Deferral Percentage. This process
shall be repeated to the extent necessary to assure that
one of the tests set forth in subsection (b) shall not be
exceeded for such plan year.

3.4. RECHARACTERIZATION AND RETURN OF CERTAIN SALARY REDUCTION
CONTRIBUTIONS. If a Salary Reduction Contribution made by the
Company for a Highly Compensated Participant is reduced for a Plan
Year pursuant to Section 3.3(c), the amount so reduced shall be
allocated and distributed, at any time prior to the close of the
following Plan Year, as follows:

(a) To the extent permitted by regulations issued by the
Secretary of the Treasury and as elected by the Highly
Compensated Participant, if the Participant has not made
Voluntary Contributions equal to the maximum amount permitted
under the Plan, the amount reduced pursuant to Section 3.3(c),
adjusted for earnings, gains and losses allocable thereto for
the Plan Year, shall be deemed to be Voluntary Contributions
made by the Participant and shall (within the limits contained
in the Plan) be allocated to the Participant's Voluntary
Contribution Account; or

(b) To the extent that the procedure set forth in
subsection (a) of this Section is not elected by the Highly
Compensated Participant, or if the Highly Compensated
Participant makes or is deemed to have made Voluntary
Contributions equal to the maximum amount permitted by the
Plan (through contributions made pursuant to Article IV of the
Plan, pursuant to the operation of subsection (a), or both),
any portion of the amount so reduced pursuant to Section
3.3(c) that is not allocated to the Participant's Voluntary
Contribution Account pursuant to subsection (a) of this
Section 3.4, adjusted for earnings, gains and losses allocable
thereto for the Plan Year, pursuant to Section 401(k)(8) of
the Code, shall be paid directly to the applicable Highly
Compensated Participant.

3.5. TREATMENT OF ASSOCIATED MATCHING CONTRIBUTION. Any
Matching Contribution that is associated with a Salary Reduction
Contribution made by the Company for a Highly Compensated
Participant that is reduced for a Plan Year pursuant to Section
3.3(c), shall continue to be treated as a Matching Contribution,
subject to Section 4.6.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 14
<PAGE>
3.6. DISTRIBUTIONS FROM SALARY REDUCTION CONTRIBUTION
ACCOUNTS. Notwithstanding anything to the contrary contained
elsewhere in the Plan, a Participant's Salary Reduction
Contribution Account shall not be distributable other than upon:

(a) The Participant's separation from service, death, or
disability;

(b) Termination of the Plan without establishment or
maintenance of another defined contribution plan (other than
an employee stock ownership plan as defined in Section
4975(e)(7) of the Code);

(c) The date of the sale or other disposition by the
Company to an unrelated entity of substantially all of the
assets (within the meaning of Section 409(d)(2) of the Code)
used by the Company in a trade or business of the Company,
where (i) the Participant is employed by such trade or
business and continues employment with the entity acquiring
such assets, and (ii) the Company continues to maintain the
Plan after the sale or other disposition. The sale of 85% of
the assets used in the trade or business shall be deemed a
sale of "substantially all" of the assets used in such trade
or business;

(d) The date of the sale or other disposition by the
Company of the Company's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) to an unrelated
entity, where (i) the Participant is employed by such
subsidiary and continues employment with such subsidiary
following such sale or other disposition, and (ii) the Company
continues to maintain the Plan after the sale or other
disposition;

(e) The Participant's attainment of age 59 1/2; or

(f) The Participant's hardship (as defined in Section
6.5(a)).

Notwithstanding anything to the contrary contained herein, an
event shall not be treated as described in clause (b), (c) or
(d) above with respect to any Participant unless the
Participant receives a lump sum distribution (as defined in
Section 401(k)(10)(B)(ii) of the Code) by reason of the event.

3.7. ACCOUNTING. Each Participant's Salary Reduction
Contribution Account shall be accounted for separately from the
Participant's other accounts under the Plan.

3.8. SUPPLEMENTAL COMPANY CONTRIBUTIONS. The Company may
contribute to the Trust with respect to any Plan Year a
Supplemental Company Contribution in such amount as the Board, in
its discretion, may determine by resolution adopted within 90 days
after the end of such Year. Supplemental Company Contributions may
be made to the Salary Reduction Contribution Accounts of the
lowest-paid Participants only if, and to the extent that, such
Contributions are necessary to

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 15
<PAGE>
satisfy one of the tests contained in Section 3.3(b) of the Plan.
Supplemental Contributions shall only be made to that portion of
the Plan that has failed the ratio tests set forth in Section 3.3
(b), that is, the portion benefiting hourly employees subject to
the Collective Bargaining Agreement, or that portion benefiting
salaried employees not subject to the Collective Bargaining
Agreement. The Supplemental Company Contribution for any Plan Year
shall be allocated to such Participants' Salary Reduction
Contribution Accounts pursuant to the provisions of Section 5.3 of
the Plan. Upon allocation to the Salary Reduction Contribution
Accounts of such Participants, the Supplemental Company
Contribution shall be considered as Salary Reduction Contributions
for all purposes of the Plan other than for purposes of Section 6.5
of the Plan and for purposes of determining the amount of Matching
Contributions made on such Participant's behalf pursuant to Section
4.2, and shall be subject to all of the provisions of the Plan
regarding Salary Reduction Contributions. The Company shall pay to
the Trustee its Supplemental Company Contribution with respect to
a particular Plan Year within 90 days after the end of such Plan
Year.

ARTICLE IV

OTHER CONTRIBUTIONS

4.1. COMPANY DISCRETIONARY CONTRIBUTIONS. The Company may
contribute to the Trust for each Plan Year such amount, if any, as
the Board may determine by resolution adopted prior to the date of
filing of the Company's federal income tax return for such Year
including extensions thereof duly granted. Such amount shall be
referred to as the "Company Discretionary Contribution" for such
Year. The Company shall pay to the Trustee its Company
Discretionary Contribution with respect to a particular Plan Year
within the period of time prescribed by law for the filing of the
Company's federal income tax return for such Year, including
extensions thereof duly granted.

4.2. MATCHING CONTRIBUTIONS.

(a) For the duration of the Collective Bargaining
Agreement entered into in 1994, the Company shall contribute
to the Trust for each Participant a Matching Contribution in
an amount equal to a certain percent, as established by the
Board, of the amount designated by such Participant pursuant
to a Salary Reduction Agreement and deducted from his Earnings
through payroll deductions during such Plan Year.
The following schedule shall govern Matching
Contributions:

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 16
<PAGE>
Match (To a Maximum 100% of 3% of
Percent Return on Equity in Prior Year Participant's Compensation)

Less than 3% 25%
3-6% 50%
6-10% 75%
Greater than 10% 100%

Matching Contributions shall be held in trust
uninvested by the Company and shall not accrue Earnings until
remitted to the Trustee, which shall be during or as soon as
practicable following the Valuation Date.

Matching Contributions shall only be made to
Participants employed by the Company as of the last day of
the Plan Year.

In no event will such Matching Contribution exceed
(a) Three percent (3%) of a Participant's Compensation or (b)
the Participant's Salary Reduction. For years when the
Company's Return on Equity is zero or negative, the Company,
in the discretion of the Board, may suspend such Matching
Contribution, or continue them at a level set by the Board.
Matching Contributions shall be subject to the special rules
set forth in Section 4.6 below.

The Company may establish additional levels of
Matching Contributions in its discretion.

(b) Matching Contributions made with respect to a Plan
Year or any part thereof pursuant to this Section 4.2 shall in
no event be made later than the time prescribed by law for
filing the income tax return of the Company for the fiscal
year of the Company (including extensions thereto) which
corresponds to such Plan Year. However, the Company may elect
to make such contributions on a quarterly basis, although it
shall not be required to do so.

(c) Matching Contributions to the Trust under the Plan
shall be made in cash or other property as the Company, in its
discretion, shall determine, although it is expected that all
such contributions will be made in equity stock of the
Company, and for all purposes of the Plan "Equity Matching
Contributions" shall mean "Matching Contributions".

4.3. EQUITY CONTRIBUTIONS.

(a) For the duration of the Collective Bargaining
Agreement entered into in 1994, the Company shall contribute
to the Trust .125 shares of Oremet common

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 17
<PAGE>
stock for each hour worked by an hourly employee subject to
the Collective Bargaining Agreement with the United
Steelworkers of America, Local 7150, and one (1) share of
Oremet common stock for each day worked by a salaried employee
not subject to such Collective Bargaining Agreement.

Equity contributions shall be held in trust
uninvested by the Company and shall not accrue earnings until
remitted to the Trustee, which shall be during or as soon as
practicable following the Valuation Date.

(b) Equity contributions made with respect to a Plan
Year or any part thereof pursuant to this Section 4.3 shall in
no event be made later than the time prescribed by law for
filing the income tax return of the Company for the fiscal
year of the Company (including extensions thereto) which
correspond to such Plan Year. However, the Company may elect
to make such contributions on a quarterly basis, although it
shall not be required to do so.

(c) Equity contributions to the trust under the Plan
shall be made in cash or other property as the Company, in its
discretion, shall determine, although it is expected that all
such contributions will be made in equity stock of the
Company.

(d) Equity contributions shall be regarded as qualified
Non-Elective Contributions under the Code.

4.4 VOLUNTARY CONTRIBUTIONS. Each Participant may elect, by
executing a form provided by the Committee, to contribute to the
Trust Fund an amount which does not exceed fifteen percent (15%),
of his Compensation. The Committee shall establish the time of
admission and periods within which election forms must be received.
A Participant who has elected to make Voluntary Contributions may
suspend his contributions at any time, by giving advance written
notice to the Committee on a form provided by the Committee.
Following a suspension of contributions, the Participant may not
resume making contributions until the next admission period. All
voluntary Contributions shall be credited with the earnings and
losses of the Trust Fund in the manner and at the times set forth
in Section 5.8 of the Plan.

The Committee shall establish such rules and procedures
for the acceptance of, manner of accounting for, distribution of
Voluntary Contributions, and earnings thereon, as it shall deem
advisable.

4.5. LIMITATIONS ON Contributions. Notwithstanding anything
to the contrary in Sections 3.1, 3.8, 4.1 or 4.2 in no event shall:
(i) the aggregate amount of such Contributions contributed by the
Company pursuant to this Plan exceed the maximum deduction
allowable by Section 404(a)(3)(A) of the Code; or (ii) the Company
contribute an amount for any Limitation Year which would cause:
(a) the Annual Additions to the accounts of any Participant to
exceed the Maximum Permissible Amount for such Participant for that
Year (except as provided in Section 5.6(b); or (b)

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 18
<PAGE>
the sum of the defined benefit plan fraction and the defined
contribution plan fraction (as such terms are defined in Section
5.6) to exceed one for any Participant for that Year. All
contributions made by the Company under the Plan are conditioned
upon the qualification of the Plan under Section 401 of the Code
and deductibility of the contribution under Section 404 of the
Code.

4.6. RULES GOVERNING MATCHING CONTRIBUTIONS AND VOLUNTARY
CONTRIBUTIONS.

(a) Notwithstanding any provisions of the Plan to the
contrary, the Actual Contribution Percentage of Highly
Compensated Participants shall bear to the Actual Contribution
Percentage for all other Participants a relationship that
satisfies either of the following tests:

(i) The Actual Contribution Percentage for Highly
Compensated Participants is not more than the Actual
Contribution Percentage for all other Participants
multiplied by 1.25; or

(ii) The Actual Contribution Percentage for Highly
Compensated Participants is not more than the Actual
Contribution Percentage for all other Participants
multiplied by two and the excess of the Actual
Contribution Percentage for the group of Highly
Compensated Participants over that of all other
Participants is not more than two percentage points.

(b) If, at the end of any Plan Year, neither of the
tests set forth in subsection (a) is satisfied for such Year,
then the Matching Contributions made for such Year on behalf
of Highly Compensated Participants and the Voluntary
Contribution made for such year by Highly Compensated
Participants shall be reduced in the manner set forth in this
subsection (b) to the extent necessary to comply with one of
the tests set forth in subsection (a). Reductions pursuant to
the preceding sentence shall be effected with respect to
Highly Compensated Participants pursuant to the following
procedure: The Actual Contribution Percentage of the Highly
Compensated Participant with the highest Actual Contribution
Percentage shall be reduced to the extent necessary to cause
such Highly Compensated Participant's Actual Contribution
Percentage to equal the Actual Contribution Percentage of the
Highly Compensated Participant with the next highest Actual
Contribution Percentage. This process shall be repeated until
the Plan satisfies one of the tests set forth in subsection
(a) for such Plan Year.

(c) Voluntary Contributions made by Participants who are
not Highly Compensated Participants and Matching Contributions
made on account of Participants who are not Highly Compensated
Participants shall be valid and shall not be affected by this
Section. The unvested portion of Matching Contributions that
is reduced pursuant to the preceding provisions of this
Section for the Plan Year, adjusted for earnings, gains and
losses allocable thereto pursuant to Section 401(m)

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 19
<PAGE>
of the Code for such Plan Year, shall be returned to the
Company and the reduced Voluntary Contributions and the vested
portion of such reduced Matching Contributions, adjusted for
earnings, gains and losses allocable thereto shall be paid
directly to the applicable Participant. Voluntary
Contributions shall be reduced first, and to the extent
necessary, Vested Matching Contributions shall be reduced
thereafter. If the vested portion of the Matching
Contributions Account of the Participant is not sufficient to
satisfy the necessary reduction, the nonvested portion of such
Matching Contributions Account shall be forfeited pursuant
Section 6.4 to the extent necessary to satisfy such reduction.
The calculations, reductions, allocations and payments
required by this Section shall be made by the Committee with
respect to a Plan Year at any time prior to the close of the
following Plan Year.

(d) If at any time during the Plan Year the Committee,
it its sole discretion, determines that neither of the tests
set forth in subsection (a) of this Section 4.6 may be met for
such Plan Year, then:

(i) The Committee shall have the unilateral right
during the Plan Year to require the prospective
reduction, for the balance of the Year, or any part
thereof, of the percentage of Earnings of Highly
Compensated Participants that may be contributed as
Voluntary Contributions. Such reductions shall be made to
the extent necessary, in the discretion of the Committee,
to assure that one of the tests set forth in subsection
(a) of this Section 4.6 shall be met for the Plan Year
and shall be based upon estimates made from data
available to the Committee at any time during the Plan
Year.

(ii) Reductions pursuant to (i) above shall be
effected with respect to Highly Compensated Participants
pursuant to the following procedure: The Actual
Contribution Percentage of the Highly-Compensated
Participant with the highest Actual Contribution
Percentage shall be reduced to the extent necessary to
cause such Highly Compensated Participant's Actual
Contribution Percentage to equal the Actual Contribution
Percentage of the Highly Compensated Participant with the
next highest Actual Contribution Percentage. This process
shall be repeated to the extent necessary to assure that
one of the tests set forth in subsection (a) shall not be
exceeded for such Plan Year.

(e) If a "Multiple Use of the Alternative Limitation"
occurs in a Plan Year, then, notwithstanding any other
provision of Section 3.3 or of this Section 4.6, the test in
paragraph (a)(ii) of this Section shall not be used to satisfy
the requirements of this Section for Voluntary Contributions
and Matching Contributions

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 20
<PAGE>
in the same Plan Year that the test contained in Section
3.3(b)(ii) is used to satisfy the requirements of Section 3.3
with respect to Salary Reduction Contributions. If the
preceding sentence shall be applicable for a Plan Year, then
the Committee shall determine whether to use the test in
paragraph (a)(ii) of this Section to satisfy the requirements
of this Section 4.6, or to use the test in paragraph (b)(ii)
of Section 3.3 to satisfy the requirements of Section 3.3, for
such Plan Year.

A Multiple Use of the Alternative Limitation shall
occur in any Plan Year if all of the following conditions are
satisfied in the Plan Year.

(1) At least one Highly Compensated Participant is
eligible to authorize Salary Reduction Contributions to be
made on his behalf; and to make Voluntary Contributions or
have Matching Contributions allocated to his Matching
Contributions Account, pursuant to the Plan during such Plan
Year.

(2) The sum of the Actual Deferral Percentage of the
entire group of Highly Compensated Participants and of the
Actual Contribution Percentage of the entire group of Highly
Compensated Participants for such Plan Year exceeds the
greater of A and B below:

A. The sum of:

(i) 125% of the greater of (I) the Actual Deferral
Percentage of the group of Participants for such Plan
Year who are not Highly Compensated Participants, or (II)
the Actual Contribution Percentage of the group of
Participants who are not Highly Compensated Participants
for such Plan Year, and

(ii) Two plus the lesser of (I) or (II) above. In no
event, however, shall this amount exceed 200% of the
lesser of (I) or (II) above;

B. The sum of:

(i) 125% of the lesser of (I) the Actual Deferral
Percentage of the group of Participants who are not
Highly Compensated Participants for such Plan Year, or
(II) the Actual Contribution Percentage of the group of
Participants who are not Highly Compensated Participants
for such Plan Year, and

(ii) Two plus the greater of (I) or (II) above. In
no event, however, shall this amount exceed 200% of the
greater of (I) or (II) above.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 21
<PAGE>
(3) The Actual Deferral Percentage of the entire group
of Highly Compensated Participants exceeds the amount
described in Section 3.3(b)(i); and

(4) The Actual Contribution Percentage of the entire
group of Highly Compensated Participants exceeds the amount
described in Section 4.6(a)(i).

4.7. EXCLUSIVE BENEFIT OF EMPLOYEES. All contributions made
pursuant to the Plan shall be held by the Trustee in accordance
with the terms of the Trust Agreement for the exclusive benefit of
those Employees who are Participants under the Plan, including
former Employees and their Beneficiaries, and shall be applied to
provide benefits under the Plan and to pay expenses of
administration of the Plan and the Trust, to the extent that such
expenses are not otherwise paid. At no time prior to the
satisfaction of all liabilities with respect to such Employees and
their Beneficiaries shall any part of the Trust Fund (other than
such part as may be required to pay administration expenses and
taxes), be used for, or diverted to, purposes other than for the
exclusive benefit of such Employees and their Beneficiaries.
However, without regard to the provisions of this Section 4.7.

(a) If a contribution under the Plan is conditioned on
initial qualification of the Plan under Section 401(a) of the
Code, and the Plan receives an adverse determination with
respect to its initial qualification, the Trustee shall, upon
written request of the Company, return to the Company the
amount of such contribution (increased by earnings
attributable thereto and reduced by losses attributable
thereto) within one calendar year after the date that
qualification of the Plan is denied, provided that the
application for the determination is made by the time
prescribed by law for filing the Company's return for the
taxable year in which the Plan is adopted, or such later date
as the Secretary of the Treasury may prescribe;

(b) If a contribution is conditioned upon the
deductibility of the contribution under Section 404 of the
Code, then, to the extent the deduction is disallowed, the
Trustee shall upon written request of the Company return the
contribution (to the extent disallowed) to the Company within
one year after the day the deduction is disallowed;

(c) If a contribution or any portion thereof is made by
the Company by a mistake of fact, the Trustee shall, upon
written request of the Company, return the contribution or
such portion to the Company within one year after the date of
payment to the Trustee; and

(d) Earnings attributable to amounts to be returned to
the Company pursuant to subsection (b) or (c) above shall not
be returned, and losses attributable to amounts to be returned
pursuant to subsection (b) or (c) shall reduce the amount to
be so returned.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 22
<PAGE>
4.8. TRANSFERS FROM QUALIFIED PLANS.

(a) With the consent of the Administrator, amounts may
be transferred from other qualified plans by Participants,
provided that the trust from which such funds are transferred
permits the transfer to be made and the transfer will not
jeopardize the tax exempt status of the Plan or trust, or
create adverse tax consequences for the Employer. Transfers
of Oremet Common Stock from the Oremet Employee Stock
Ownership Plan ("ESOP") shall not be permitted; however, cash
transfers from the ESOP shall be permitted if allowed under
terms of the ESOP. The amounts transferred shall be set up in
a separate account herein referred to as a "Participant's
Rollover Account". Such account shall be fully vested at all
times and shall not be subject to Forfeiture for any reason.

(b) Amounts in a Participant's Rollover Account shall be
held by the Trustee pursuant to the provisions of this Plan
and may not be withdrawn by, or distributed to the
Participant, in whole or in part, except as provided in
paragraphs (c) and (d) of this Section.

(c) Except as permitted by Regulations (including
Regulation 1.411(d)-4), amounts attributable to elective
contributions (as defined in Regulation 1.401(k)-1(g)(3),
including amounts treated as elective contributions, which are
transferred from another qualified plan in a plan-to-plan
transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d).

(d) (i) At Normal Retirement Date, or such other
date when the Participant or his Beneficiary shall
be entitled to receive benefits, the fair market
value of the Participant's Rollover Account shall
be used to provide additional benefits to the
Participant or his Beneficiary. Any distributions
of amounts held in a Participant's Rollover Account
shall be made in a manner which is consistent with
and satisfies the provisions of this Plan,
including, but not limited to, all notice and
consent requirements of Code Sections 417 and
411(a)(11) and the Regulations thereunder.
Furthermore, such amounts shall be considered as
part of a Participant's benefit in determining
whether an involuntary cash-out of benefits without
Participant consent may be made.

(ii) Amounts transferred from the Oremet ESOP
shall be held in Participant's ESOP Rollover
Account and shall be distributed as provided in
Section 6.5(c).

(e) The Administrator may direct that Employee transfers
made after a Valuation Date be segregated into a separate
account for each Participant in a

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 23
<PAGE>
federally insured savings account, certificate of deposit in
a bank or savings and loan association, money market
certificate, or other short-term debt security acceptable to
the Trustee until such time as the allocations pursuant to
this Plan have been made, at which time they may remain
segregated or be invested as part of the general Trust Fund,
to be determined by the Administrator.

(f) All amounts allocated to a Participant's ESOP
Account may be treated as a directed investment account, but
only to the extent such rollover does not involve common stock
of the Company.

(g) For purposes of this Section, the term "qualified
plan" shall mean any tax qualified plan under Code Section
401(a). The term "amounts transferred from other qualified
plans" shall mean: (i) amounts transferred to this Plan
directly from another qualified plan; (ii) distributions from
another qualified plan which are eligible rollover
distributions and which are either transferred by the Employee
to this Plan within sixty (60) days following his receipt
thereof or are transferred pursuant to a direct rollover;
(iii) amounts transferred to this Plan from a conduit
individual retirement account provided that the conduit
individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by
another qualified plan as a lump-sum distribution (B) were
eligible for tax-free rollover to a qualified plan and (C)
were deposited in such conduit individual retirement account
within sixty (60) days of receipt thereof and other than
earnings on said assets; and (iv) amounts distributed to the
Employee from a conduit individual retirement account meeting
the requirements of clause (iii) above, and transferred by the
Employee to this Plan within sixty (60) days of his receipt
thereof from such conduit individual retirement account.

(h) Prior to accepting any transfers to which this
Section applies, the Administrator may require the Employee to
establish that the amounts to be transferred to this Plan meet
the requirements of this Section and may also require the
Employee to provide an opinion of counsel satisfactory to the
Employer that the amounts to be transferred meet the
requirements of this Section.

(i) This Plan shall not accept any direct or indirect
transfers from a defined benefit plan, money purchase plan
(including a target benefit plan), stock bonus or profit
sharing plan which would otherwise have provided for a life
annuity form of payment to the Participant.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 24
<PAGE>
(j) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan (or
a transaction having the effect of such a transfer) shall only
be permitted if it will not result in the elimination or
reduction of any "Section 411(d)(6) protected benefit" as
described therein.

ARTICLE V

ALLOCATIONS TO PARTICIPANTS' ACCOUNTS

5.1. SEPARATE ACCOUNTS. The Committee shall create and
maintain such separate accounts for each Participant as shall be
needed or convenient, including, initially, a Company Discretionary
Contribution Account, a Salary Reduction Contribution Account, an
Equity Contribution Account, an Equity Bonus Contribution Account
(if applicable), an ESOP (or other) Rollover Account and a Matching
Contribution Account. The Committee shall also create and maintain
a Suspense Account in the event that such an account is required
pursuant to Section 5.6. Such accounts are primarily for
accounting purposes and do not require a segregation of the Trust
Fund. The Company may delegate the responsibility for the
maintenance of the accounts to the Trustee or to the Committee.
Notwithstanding any provisions of this Article, in no event shall
an allocation be made to any account of any Participant, for any
Limitation Year that would cause: (a) Annual Additions to the
accounts of such Participant to exceed the Maximum Permissible
Amount for that Year (except as permitted in Section 5.6(b)); or
(b) the sum of the defined benefit Plan fraction (as defined in
Section 5.6) and the defined contribution Plan fraction (as defined
in Section 5.6) to exceed one for such Participant for that Year.

5.2. ALLOCATIONS OF COMPANY DISCRETIONARY CONTRIBUTIONS AND
FORFEITURES. The Company Discretionary Contributions for each Plan
Year shall be allocated as of the last day of such Plan Year (even
though receipt of the Company Discretionary Contributions by the
Trustee may take place after the close of such Year) among the
Company Discretionary Contribution Accounts of each Participant
who, during the course of such Plan Year: (i) completed at least
1,000 Hours of Service and was employed by the Company on the last
day of such Plan Year; (ii) retired on or after his Normal
Retirement Date; (iii) died; or (iv) became disabled as defined in
Section 6.3. Such allocation shall be in the ratio that such
Participant's Compensation (as defined in Section 1.13 of the Plan)
during the Plan Year bears to the total Compensation during such
Plan Year of all Participants entitled to share in such
contributions.

5.3. ALLOCATION TO SALARY REDUCTION CONTRIBUTION ACCOUNTS.

(a) Salary Reduction Contributions made on behalf of a
Participant for a Plan Year shall be allocated to his Salary
Reduction Contribution Account as of the last day of such
Valuation Date (even though receipt of the Salary Reduction
Contribution by the Trustee may take place after the close of
such Valuation Date). The amount of the allocation to a
Participant's Salary Reduction Contribution

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 25
<PAGE>
Account shall be equal to (i) the amount by which the
Participant's Earnings from the Company were reduced during
the Valuation Period pursuant to such Participant's Salary
Reduction Agreement in effect for such Period, reduced by (ii)
any applicable amounts pursuant to the provisions of Sections
3.1(b) and 3.3(c).

(b) In the event that the Company elects to make a
Supplemental Company Contribution with respect to any Plan
Year, such Contribution shall be allocated to the Salary
Reduction Contribution Accounts of certain Participants who
are not Highly Compensated and who are eligible to share in
the Company Discretionary Contribution pursuant to Section 5.2
of the Plan, starting with the lowest paid 5% of such
Participants and continuing with the remaining such
Participants in groups of 5% in the inverse order of their
Compensation until the Supplemental Company Contribution has
been entirely allocated. Supplemental Company Contributions
made for a Plan Year shall be allocated to Participants'
Salary Reduction Contribution Accounts as of the last day of
such Year (even though receipt of the Supplemental Company
Contribution by the Trustee may take place after the close of
such Year).

5.4. ALLOCATION OF MATCHING CONTRIBUTIONS. Matching
Contributions made on behalf of a Participant for a Valuation
Period pursuant to Section 4.2 and not reduced pursuant to Section
4.6, shall be allocated to his Matching Contributions Account as of
the last day of the Valuation Date (even though receipt of the
Matching Contributions by the Trustee may take place after the
close of such Valuation Period). An allocation pursuant to this
Section shall be made only to the Matching Contributions Account of
a Participant whose Earnings were reduced through payroll
deductions pursuant to a Salary Reduction Agreement during the
applicable Plan Year.

5.5. ALLOCATION OF VOLUNTARY CONTRIBUTIONS AND FORFEITURES.

(a) Voluntary Contributions made by a Participant, and
not reduced pursuant to Section 4.6, shall be allocated to his
Voluntary Contribution Account as of the Valuation Date
coinciding with or immediately following receipt of such
Contributions by the Trustee.

(b) As of each Annual Valuation Date, any amounts which
become forfeitures since the last Valuation Date shall be made
available to reinstate the previously forfeited account
balances of former Participants, if any. The remaining
forfeitures, if any, shall be used to reduce the discretionary
contribution or the matching contribution of the Company for
the Plan Year in which such forfeitures occur and based on
whether such forfeitures derive from the Discretionary
Contribution Accounts or the Matching Contribution Accounts,
respectively.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 26
<PAGE>
5.6. MAXIMUM ALLOCATION.

(a) Except as provided in paragraph (b) of this Section,
the allocations to the accounts of any Participant in any
Limitation Year shall be limited so that the Participant's
Annual Additions for such Year do not exceed the Maximum
Permissible Amount.

(b) If the foregoing limitation on allocations would be
exceeded in any Limitation Year for any Participant as a
result of (i) the allocation of forfeitures, (ii) reasonable
error in estimating a Participant's Compensation, (iii)
reasonable error in determining the amount of elective
deferrals (within the meaning of Section 402(g)(3) of the
Code) that may be made with respect to a Participant, or (iv)
under such other limited facts and circumstances that the
Commissioner of Internal Revenue, pursuant to Code Regulations
<SUBSECTION> 1.415-6(b)(6), finds justify the availability of this
Section 5.6, the Voluntary Contributions and Salary Reduction
Contributions made by or with respect to such Participant
shall be distributed to him to the extent that any such
distribution would reduce the amount in excess of the limits
of this Section 5.6 and any amount in excess of the limits of
this Section 5.6 remaining after such distribution shall be
placed, unallocated to any Participant, in a Suspense Account.
If a Suspense Account is in existence at any time during a
particular Limitation Year, other than the Limitation Year
described in the preceding sentence, all amounts in the
Suspense Account must be allocated to Participants' accounts
(subject to the limits of this Section 5.6) before any
contributions which would constitute Annual Additions may be
made to the Plan for that Limitation Year. The excess amount
allocated pursuant to this Section 5.6(b) shall be used to
reduce Company Discretionary Contributions and Matching
Contributions for the next Limitation Year (and succeeding
Limitation Years, as necessary) for that Participant. However,
if that Participant is not covered by the Plan as of the end
of the applicable Limitation Year, then the excess amounts
must be held unallocated in the Suspense Account for the
Limitation Year and allocated and reallocated in the next
Limitation Year to all of the remaining Participants in the
Plan. The Suspense Account will not share in the valuation of
Participants' accounts and the allocation of earnings set
forth in Section 5.8 of the Plan, and the change in fair
market value and allocation of earnings attributable to the
Suspense Account shall be allocated to the remaining accounts
hereunder as set forth in Section 5.8.

(c) Any reduction in the contributions and allocations
under this Plan made with respect to a Participant's accounts
required pursuant to this Section 5.6 and Section 415 of the
Code shall be effected, to the minimum extent necessary, in
the following manner: (i) first, Voluntary Contributions made
by such Participant, adjusted for earnings, gains and losses
allocated thereto, shall be reduced (ii) next, the Salary
Reduction Contributions that would have been made by the
Company for the applicable Limitation Year with respect to the
Participant, adjusted for earnings,

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 27
<PAGE>
gain and losses allocable thereto shall be reduced; (iii)
next, Company Discretionary Contributions that would have been
made by the Company for the applicable Limitation Year with
respect to such Participant shall be reduced; and (iv)
finally, the Matching Contributions that would have been made
by the Company for the applicable Limitation Year with respect
to such Participant shall be reduced. The amount of any
reductions in Voluntary Contributions and Salary Reduction
Contributions pursuant to clauses (i) and (ii), adjusted for
earnings, gains and losses allocable to Voluntary
Contributions and Salary Reduction Contributions, shall be
paid by the Trustee directly to the affected Participant
pursuant to subsection (b) of this Section, and any reductions
in Company Discretionary Contributions and Matching
Contributions, pursuant to clauses (iii) and (iv), adjusted
for gains, earnings, and losses allocable thereto, shall be
treated pursuant to subsection (b) of this Section.

(d) Upon termination of the Plan, any amounts in a
Suspense Account at the time of such termination shall revert
to the Company.

(e) In the event that any Participant under this Plan is
also a Participant in a defined benefit Plan (as defined in
Section 415(k) of the Code) maintained by the Company, the sum
of the defined benefit Plan fraction and the defined
contribution Plan fraction (as such terms are defined in
Section 415(e) of the Code) for any Limitation Year with
respect to such Participant shall not exceed one. If that sum
exceeds one, then no reduction in contributions or allocations
to obtain compliance with Section 415(e) of the Code shall
occur under this Plan until the Participant's benefits under
such defined benefit Plan have been reduced pursuant to the
terms thereof. Any reduction under this Plan shall be made
only to the extent necessary so that the sum of such fractions
shall equal one. For purposes of this Section 5.6, a Plan is
deemed to be maintained by the Company if the Plan is
maintained by any Related Employer.

(f) If a Participant is entitled to receive an
allocation under this Plan and any Related Plan and, in the
absence of the limitations contained in this Section 5.6, the
Company would contribute or allocate to the accounts of that
Participant an amount for a Limitation Year that would cause
the Annual Additions to the accounts of the Participant to
exceed the Maximum Permissible Amount for such Year, then the
contributions and allocations made with respect to the
Participant under this Plan shall not be reduced until the
contributions or allocations under the Related Plan have been
reduced to the extent necessary so that the allocation of such
Annual Additions does not exceed the Maximum Permissible
Amount.

(g) The provisions of this Section shall be interpreted
by the Committee, in the administration of the Plan, to reduce
contributions and allocations (as required by this Section)
only to the minimum extent necessary to reflect the
requirements of

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 28
<PAGE>
Section 415 of the Code, as amended and in force from time to
time, and Regulations promulgated pursuant to that Section,
which are incorporated by reference herein.

5.7. VESTING.

(a) Each Participant shall have a vested interest in the
Adjusted Balance of his Company Discretionary Contribution
Account and Matching Contributions Account in accordance with
the following formula:

<TABLE>
<CAPTION>
Vested Forfeitable
Years of Service Percentage Percentage
________________ __________ ___________

<S> <C> <C>
Less Than One Year 0% 100%
One Year 20% 80%
Two Years 40% 60%
Three Years 60% 40%
Four Years 80% 20%
Five or More Years 100% 0%

</TABLE>

(b) On reaching Normal Retirement Date or Early
Retirement Date, a Participant shall be 100% vested in the
Adjusted Balance of the Participant's Company Discretionary
Contribution Account and Matching Contribution Account.

(c) In the event a Participant dies or becomes disabled
within the meaning of Section 6.2 or 6.3 while an Employee, he
shall be 100% vested in the Adjusted Balance of his Company
Discretionary Contribution Account and Matching Contributions
Account as of the date of his death or disability.

(d) In the event the Plan is terminated, or upon the
complete discontinuance of Company contributions to the Plan,
each Participant shall become 100% vested in the Adjusted
Balance of his Company Discretionary Contribution Account and
Matching Contributions Account, provided that the forfeitable
percentage of the unpaid balances of such accounts of a
Participant whose employment has terminated and who has
incurred a one-year Break in Service on the date of such Plan
termination or discontinuance shall be forfeited on the
effective date of such termination on discontinuance of
contributions and shall not be vested.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 29
<PAGE>
(e) Each Participant shall at all times be fully vested
in the Adjusted Balances of his Salary Reduction Contribution
Account, Rollover Accounts, Equity Bonus Compensation Account
(if applicable), and Equity Contribution Account.

5.8. ALLOCATIONS AND ADJUSTMENTS TO ACCOUNTS. As of each
valuation Date, and subject to Section 8.4(e), the Trustee shall
determine, on an accrual basis of accounting, the Adjusted Balance
of the account of each Participant in the following manner:

(a) As soon as feasible after each Valuation Date, the
Trustee shall determine the earnings and the amount of any
realized or unrealized appreciation or depreciation in the
fair market value of each of the Investment Funds, determined
as of the Valuation Date or the next previous business day if
the Valuation Date falls on a Saturday, Sunday, or holiday. In
determining such value, the Trustee shall use such generally
accepted methods and bases as the Trustee, in its discretion,
shall deem advisable. The judgment of the Committee as to the
fair market value of any asset shall be presumptively
conclusive and binding on all persons.

(b) The earnings on contributions made or deemed made
pursuant to Sections 3.1, 4.1, 4.2, 4.3 and 4.4 that have been
initially invested in short-term investment obligations
selected by the Trustee from time to time pending allocation
to one or more of the Investment Funds shall be allocated to
a Participant's applicable account in the same proportion as
such contributions shall be determined by multiplying the
total amount of such earnings by a fraction, the numerator of
which is the amount of such contributions allocated to a
Participant's account for the period ending on the applicable
Valuation Date and the denominator of which is the total
amount of such contributions allocated to all participants'
accounts for that period.

(c) The earnings and market appreciation or depreciation
of each Investment Fund for a period ending on a Valuation
Date (including earnings and appreciation or depreciation
attributable to the investment of any Suspense Account in such
Investment Fund) shall be allocated to each applicable account
(excluding any Suspense Account) that is invested in such
Investment Fund on the current Valuation Date by multiplying
the earnings and market appreciation or depreciation of such
Fund by a fraction, the numerator of which is the Adjusted
Balance of such account invested in the applicable Fund as of
the prior Valuation Date and the denominator of which is the
total of the Adjusted Balances of all such accounts (excluding
any Suspense Account) invested in such Fund as of the prior
Valuation Date. Each such account (excluding any Suspense
Account) shall be adjusted by adding thereto or subtracting
therefrom its share of the earnings and market appreciation or
depreciation of each Investment Fund as determined by the
preceding sentence.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 30
<PAGE>
(d) Each account shall then be further adjusted by
adding to it the amount of contributions allocable thereto,
for each Participant's account pursuant to Sections 5.2, 5.3,
5.4 and 5.5 for the Plan Year ending on that Valuation Date.

(e) Following the above adjustments to each account
there shall be deducted from each account the distributions
and withdrawals made therefrom since the prior Valuation Date.

5.9. INSTALLMENTS. Whenever an account balance is
distributable in installments, if applicable, the undistributed
balance of such account shall participate in the valuation provided
in Section 5.8 until fully distributed. In lieu of such
participation, however, upon the written request of the former
Participant or Beneficiary entitled to receive such installments,
received by the Committee prior to the payment of the first
installment, the Adjusted Balance of his accounts shall be
deposited in the name of the Trustee in a savings account or
certificate of deposit in a national or state bank, or in a federal
savings and loan association and shall earn and be credited with
such earnings (at not less than the current rate of earnings paid
thereon by the depository). Any amounts deposited pursuant to this
Section 5.9 and any earnings thereon shall be disregarded in
computing the fair market value of Trust assets to be allocated
under Section 5.8 of the Plan and the Earnings shall be payable to
such former Participant or Beneficiary with payment of the
aforementioned installments. Any expenses incurred by the Trustee
and the Committee as the result of any deposit made pursuant to
this Section shall be payable from the accounts of the former
Participant or Beneficiary for whom such deposit was made.

5.10 VALUATION OF OREMET STOCK. The value of Oremet stock for
contribution or allocation purposes shall be its closing value on
the day transfer instructions are issued to the transfer agent of
the Company with regard to such contribution.

ARTICLE VI

PAYMENT OF BENEFITS

6.1. PAYMENTS ON RETIREMENT. A Participant who attains his
Normal Retirement Date and continues to be an Employee shall
continue to share in the allocation of Company Discretionary
Contributions, Supplemental Company Contributions, Salary Reduction
Contributions, Equity Contributions, Equity Bonus Compensation
Contributions, and Matching Contributions, and may elect or
continue to make Voluntary Contributions and may elect or continue
to enter into Salary reduction Agreements. Upon the retirement of
a Participant at or after his Normal Retirement Date, the Committee
shall notify the Trustee in writing of the Participant's retirement
and shall direct the Trustee to make payment of the Adjusted
Balance of the Participant's accounts as of the Valuation Date
coinciding with or immediately preceding the date distribution is
made to the Participant in a method provided in the Plan.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 31
<PAGE>
6.2 PAYMENTS ON DEATH.

(a) Upon the death of a Participant, the Committee shall
promptly notify the Trustee in writing of the Participant's
death and the name of his Beneficiary and shall direct the
Trustee to make payment of the Adjusted Balance (reduced by
any security interest held by the Plan by reason of a loan
outstanding to the Participant) as of the date of his death
pursuant to Article VIII of the Participant's accounts as of
the Valuation Date coinciding with or immediately preceding
the date distribution is made to his Beneficiary, in a method
provided in the Plan.

(b) Each unmarried Participant or each married
Participant whose surviving spouse has consented to an
alternate Beneficiary designation or alternate method of
payment as provided in subsection (c), shall have the right to
designate, by giving a written designation to the Committee,
(i) a person or persons or entity as Beneficiary to receive
the death benefit provided under this Section 6.2 and (ii) the
method of payment of such death benefit to his Beneficiary
pursuant to Section 6.6. Successive designations may be made,
and the last designation received by the Committee prior to
the death of the Participant shall be effective and shall
revoke all prior designations. If a designated Beneficiary
shall die before the Participant, the Beneficiary's interest
shall terminate, and, unless otherwise provided in the
Participant's designation if the designation included more
than one Beneficiary, such interest shall be paid in equal
shares to those Beneficiaries, if any, who survive the
Participant. A Participant to whom this subsection applies
shall have the right to designate different Beneficiaries to
receive the Adjusted Balance in his various accounts under the
Plan and shall have the right to revoke the designation of any
Beneficiary without the consent of the Beneficiary.

(c) The Beneficiary of each married Participant shall be
the surviving spouse of the Participant and the death benefits
of any Participant who is married at the date of his death
shall be paid in full to his surviving spouse in a single lump
sum. Notwithstanding the preceding sentence, the death
benefits provided pursuant to subsection (a) shall be
distributed to any other Beneficiary designated by a married
Participant as provided in subsection (b) of this Section and
pursuant to the method, if any, designated by the Participant
as provided in subsection (b), if the Participant's surviving
spouse consented to such designation by the Participant, prior
to the date of the Participant's death, in writing. Such
consent must acknowledge the effect of the election and the
identity of any nonsurviving spouse Beneficiary, including any
class of Beneficiaries or contingent Beneficiaries, and must
be witnessed by a representative of the Plan or a notary
public. The consent of the Participant's surviving spouse
shall not be required if the Participant establishes to the
satisfaction of the Committee that consent may not be obtained
because there is no surviving spouse or the surviving spouse
cannot be located, or because of such other circumstances as
the Secretary of the Treasury may prescribe by regulations.
The

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 32
<PAGE>
Participant may not subsequently change the method of
distribution elected by the Participant or the designation of
his Beneficiary unless his surviving spouse consents to the
new election or designation in accordance with the
requirements set forth in the preceding sentence, or unless
the surviving spouse's consent permits the Participant to
change the election of method of payment or the designation of
his Beneficiary without the spouse's further consent. A
spouse's consent shall be irrevocable. Any consent by a
surviving spouse, or establishment that the consent of the
surviving spouse may not be obtained, shall be effective only
with respect to that surviving spouse.

(d) If a Participant fails to designate a Beneficiary,
if such designation is for any reason illegal or ineffective,
or if no Beneficiary survives the Participant, his death
benefits otherwise payable pursuant to subsection (b) or (c)
shall be paid:

(i) to his surviving spouse;

(ii) if there is no surviving spouse, to his
descendants (including legally adopted children or their
descendants) per stirpes;

(iii) if there is neither a surviving spouse nor
surviving descendants, to the duly appointed and
qualified executor or other personal representative of
the Participant to be distributed in accordance with the
Participant's will or applicable intestacy law; or

(iv) if no such representative is duly
appointed and qualified within six months after the date
of death of such deceased Participant, then to such
persons as, at the date of his death, would be entitled
to share in the distribution of such deceased
Participant's personal estate under the provisions of the
applicable statute then in force governing the descent of
intestate property, in the proportions specified in such
statute.

(e) The Committee may determine the identity of the
distributees of any death benefit payable under the Plan and
in so doing may act and rely upon any information it may deem
reliable upon reasonable inquiry, and upon any affidavit,
certificate, or other paper believed by it to be genuine, and
upon any evidence believed by it sufficient.

(f) A Participant's surviving spouse, for purposes of
the Plan, is the person who is legally married to the
Participant immediately prior to the death of the Participant.

6.3. PAYMENTS ON DISABILITY. Upon the termination of a
Participant's employment with the Company by reason of a
disability, the Committee shall notify the Trustee in writing of
said

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 33
<PAGE>
disability termination, and shall direct the Trustee to make
payment of the Adjusted Balance of the Participant's accounts as of
the Valuation Date coinciding with or immediately preceding the
date a distribution is made to the Participant, in a method
provided in the Plan. For purposes of this Section "disability"
means a physical or mental condition which is expected to render
the Participant permanently unable to perform any duties for the
Company. The determination of the existence of such disability
shall be made by the Committee and shall be final and binding upon
the Participant and all other parties. The Committee may require
the submission of such medical evidence as it may deem necessary in
order to arrive at its determination. The Committee's
determination of the existence of a disability will be made with
reference to the nature of the injury without regard to the period
the Participant is absent from work.

6.4. PAYMENTS ON TERMINATION FOR OTHER REASONS. Upon the
termination of a Participant's employment with the Company for any
reason other than retirement on or after his Normal Retirement
Date, death, or permanent disability, the Committee shall notify
the Trustee in writing of the termination and shall direct the
Trustee to make payment of the Adjusted Balance of his Salary
Reduction Contribution Account, if any, and the vested portion of
the Adjusted Balance of his Company Discretionary Contribution
Account and Matching Contributions Account, if any, as of the
Valuation Date coinciding with or immediately preceding the date
distribution is made to the Participant, in a method provided in
the Plan. The vested portion of a Participant's Company
Discretionary Contribution Account and Matching Contributions
Account shall be determined in accordance with Section 5.7. The
nonvested portion, if any, of the Adjusted Balance of his Company
Discretionary Contribution Account and Matching Contributions
Account shall be retained in his Company Discretionary Contribution
Account and Matching Contributions Account, respectively, until a
period has elapsed sufficient to determine whether he will be
reemployed or will incur five consecutive one-year Breaks in
Service. If he is reemployed before he incurs five consecutive
one-year Breaks in Service, his Company Discretionary Contribution
Account and Matching Contributions Account will continue to vest;
if he incurs five consecutive one-year Breaks in Service, the
amount in such accounts shall be deemed a forfeiture and shall
reduce the Company Discretionary Contribution and the Matching
Contributions, whichever applies, as of the last day of the Plan
Year in which he incurs the last of such five consecutive one-year
Breaks in Service. If a Participant who is rehired before he
incurs five consecutive one-year Breaks in Service again incurs a
termination of employment under circumstances in which he is not
fully vested in his Company Discretionary Contribution Account and
Matching Contributions Account, the portion of his Company
Discretionary Contribution Account and Matching Contributions
Account distributable on the date of his later termination of
employment shall be calculated as follows:

(i) the amount distributed to the Participant from
his Company Discretionary Contribution Account and
Matching Contributions Account upon his earlier
termination of employment shall be added to the Adjusted
Balance of his Company Discretionary Contribution Account
and Matching Contributions Account;

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 34
<PAGE>
(ii) the amount determined under paragraph (i) shall
be multiplied by the vested percentage as of the date of
his later termination of employment determined under
Section 5.7; and

(iii) the amount distributed to the Participant upon
his earlier termination of employment shall be deducted from
the product calculated under paragraph (ii) to determine the
amount distributable upon his later termination of employment.

6.5. PRETERMINATION DISTRIBUTIONS.

(a) The Committee may, upon the request of a Participant
at any time prior to his termination of employment, direct the
Trustee to make a lump sum distribution to the Participant
from the portion of his Salary Reduction Contribution Account
that is not being used as security for a loan under Section
8.4, determined as of the Valuation Date coinciding with or
immediately preceding the date a request is made hereunder,
for the purposes set forth below, subject to the following
rules:

(i) Each request for a distribution must be made by
written application to the Committee supported by such
evidence as the Committee may require;

(ii) In no event shall the amount distributed to a
Participant in accordance with this Section 6.5 exceed
100% of his Salary Reduction Contribution Account, not
including any earnings thereon credited after December
31, 1988;

(iii) Each distribution made pursuant to this
Section 6.5 shall be on account of a hardship suffered by
the Participant. For purposes of this Section 6.5, a
hardship shall be limited to:

(1) Medical expenses described in Code
Section 213(d) previously incurred by the
Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Code
Section 152); or necessary for any of these persons
to obtain medical care described in Code Section
213(d);

(2) Purchase (excluding mortgage payments) of
a principal residence for the Participant;

(3) Payment of tuition and related
educational fees for the next twelve months of
post- secondary education for the Participant, his
spouse, children or dependent;

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 35
<PAGE>
(4) The need to prevent eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence; and

(5) Funeral expenses of a family member of
the Participant;

(iv) The amount distributed shall not be in excess
of the immediate and heavy financial need of the
Participant which need shall be deemed to include any
amounts reasonably anticipated by the Participant to be
necessary to pay federal, state or local income taxes and
penalties incurred as a result of the distribution;

(v) The Participant shall first obtain all
distributions, other than hardship distributions, and all
nontaxable loans currently available under the Plan and
all other plans maintained by the Company;

(vi) The Participant's elective contributions and
employee contributions (as defined in Regulations
<SUBSECTION> 1.401(k)) shall be suspended under the Plan
and all other deferred compensation plans maintained by
the Company for 12 months after his receipt of the
hardship distribution (except for mandatory employee
contributions to a defined benefit plan);

(vii) The Participant may not make elective
contributions (as defined in Regulations <SUBSECTION>
1.401(k)) under the Plan or any other Plan maintained by
the Company for the Participant's taxable year
immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount
of such Participant's elective contributions for the
taxable year of the hardship distribution;

(viii) The amount distributed to a Participant in
accordance with this Section 6.5 shall not exceed (A) the
Adjusted Balance of a Participant's Salary Reduction
Contribution Account as of December 31, 1988, plus (B)
Salary Reduction Contributions allocated to such Salary
Reduction Contribution Account after December 31, 1988;
and

(ix) If a Participant's termination of employment
occurs after a request is approved in accordance with
this Section 6.5 but prior to distribution of the full
amount approved, the approval of his request shall be
automatically void and the benefits which he or his
Beneficiary are entitled to receive under the Plan shall
be distributed in accordance with the preceding
provisions of this Article.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 36
<PAGE>
(b) A Participant who has attained the age of 59 1/2 may
elect, by written instrument given to the Committee, to the
extent such account is not being used as security for a loan
as determined under Section 8.4 to withdraw from his Salary
Reduction Contribution Account an amount not in excess of the
Adjusted Balance thereof, determined as of the Valuation Date
coinciding with or next succeeding the date the written
instrument is delivered to the Committee. No withdrawal made
under this paragraph (b) shall be for an amount which is less
than the lesser of: (i) $200, or (ii) the Adjusted Balance in
the Participant's Salary Reduction Contribution Account.

(c) A Participant may elect by written instrument given
to the Committee to withdraw from his ESOP Rollover Account an
amount not in excess of the adjusted balance thereof,
determined as of the Valuation Date coinciding with or next
succeeding the date the written instrument is delivered to the
Committee, and to the extent such account is not being used as
security for a loan determined under Section 8.4. No
withdrawal under this paragraph (c) shall be for an amount
which is less than the lesser of: (i) $200 or (ii) the
adjusted balance in the Participant's ESOP Rollover Account.

(d) A request for a distribution pursuant to this
Section 6.5 shall be approved or denied by written instrument
given by the Committee to the Participant within 60 days after
the date the written request is given to the Committee by the
Participant. In the event that such request is approved, the
distribution shall be made within 30 days after notice of
approval is given by the Committee to the Participant.

6.6. METHODS OF PAYMENT.

(a) Whenever the Committee shall direct the Trustee to
make payment to a Participant or his Beneficiary upon
termination of the Participant's employment (whether by reason
of retirement, death, disability, or for other reasons), the
Committee shall direct the Trustee to pay the Adjusted Balance
of his Salary Reduction Contribution Account, Voluntary
Contributions Account, ESOP (or other) Rollover Account,
Equity Contributions Account, and Equity Bonus Compensation
Account (if applicable), and the vested portion of the
Adjusted Balance of his Company Discretionary Contribution
Account and Matching Contributions Account, to or for the
benefit of the Participant or his Beneficiary, in cash or
wholly or partly in kind, in the following way in a lump sum,
provided that distributions in kind shall be valued at the
fair market value of the assets distributed on the date of
such distribution.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 37
<PAGE>
(b) In the case of a Participant whose employment has
terminated for any reason payment shall be made or commence as
soon as administratively feasible after the end of the first
calendar quarter following the quarter in which the
Participant terminates. Notwithstanding the preceding
sentence, if the Participant's account balances at the time
for any distribution exceed $3,500, then neither such
distribution nor any subsequent distribution shall be made to
the Participant at any time before his 65th birthday without
his written consent.

(c) Notwithstanding anything to the contrary contained
elsewhere in the Plan a Participant's benefits under the Plan
will be distributed to him not later than the Required
Distribution Date (as defined in subsection (e)). If the
Participant dies before distribution has occurred,
distribution will be made no later than five years after the
Participant's death, unless the beneficiary is the
Participant's spouse.

(d) If the Beneficiary is the surviving spouse of the
Participant, the distribution shall not be earlier than the
date on which the Participant would have attained age 70 1/2, and
if the surviving spouse dies before the distributions to that
spouse begin, then this subsection (d) shall be applied as if
the surviving spouse were the Participant.

(e) For purposes of this Section, the Required
Distribution Date means April 1 of the calendar year in which
the Participant attains age 70 1/2, provided however that in the
case of a Participant who attained age 70 1/2 during calendar
year 1988 or 1989, the Required Distribution Date means April
1, 1990, and further provided that, if the Participant
attained age 70 1/2 prior to January 1, 1988, distribution shall
commence on the April 1 following the later of the calendar
year in which he: (A) attained age 70 1/2, or (B) terminated
service with the Company and all Related Employers, unless he
was a five-percent owner (as defined in Section 416 of the
Code) of the Company with respect to the Plan Year ending in
the calendar year in which he attained age 70 1/2, in which case
clause (B) shall not apply.

(f) No Participant shall receive a distribution under
circumstances that would impose an additional tax on such
distribution pursuant to Section 72(t) of the Code unless and
until that individual is notified in writing by the Committee
of the tax and the individual, by writing delivered to the
Committee, acknowledges receipt of the notification and
requests the distribution.

(g) This subsection 6.6(g) applies to distributions made
on or after January 1, 1993. Notwithstanding any provision of
the Plan to the contrary that would otherwise limit a
Distributee's election under this subsection, a Distributee
may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 38
<PAGE>
(i) Definitions.

(A) "Eligible Rollover Distribution"
is any distribution of all or any portion of the
balance to the credit of the Distributee,
except that an Eligible Rollover Distribution
does not include: Any distribution that is one
of a series of substantially equal periodic
payments (not less frequently than annually)
made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life
expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for
a specified period of ten years or more; any
distribution to the extent such distribution
is required under Section 401(a)(9) of the
Code; and the portion of any distribution that
is not includable in gross income (determined
without regard to the exclusion for net
unrealized appreciation with respect to
employer securities).

(B) "Eligible Retirement Plan is an
individual retirement account described in
Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b)
of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code,
that accepts the Distributee's eligible
rollover distribution. However, in the case
of an Eligible Rollover Distribution to the
Surviving Spouse, an Eligible Retirement Plan
is an individual retirement account or
individual retirement annuity.

(C) "Distributee" includes an Employee
or former Employee. In addition, the
Employee's or former Employee's Surviving
Spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate
payee under a qualified domestic relations
order, as defined in Section 414(p) of the
Code, are Distributees with regard to the
interest of the spouse or former spouse.

(D) "Direct Rollover" is a payment by
the Plan to the Eligible Retirement Plan
specified by the Distributee.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 39
<PAGE>
(ii) If a distribution is one to which Sections
401(a)(11) and 417 of the Code do not apply, such
distribution may commence less than 30 days after
the notice required under Regulation 1.411(a)-11(c)
is given, provided that:

(A) The Committee clearly informs the
Participant that the Participant has a right to a
period of at least 30 days after receiving the
notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a
particular distribution option); and

(B) The Participant, after receiving the
notice, affirmatively elects a distribution.

6.7. DISTRIBUTION OF UNALLOCATED EMPLOYEE CONTRIBUTIONS.

(a) If on the date of termination of a Participant's
employment, the Company shall be holding Voluntary
Contributions made by the Participant, but not yet allocated
to his Voluntary Contribution Account, the Committee shall
direct the Company to pay such amounts either directly to the
Participant (or his Beneficiary, as the case may be) or to the
Trustee, to be distributed by the Trustee in accordance with
the method of distribution determined under Section 6.6.

(b) If on the date of termination of a Participant's
employment, a Participant's Earnings have been reduced by any
amount pursuant to a Salary Reduction Agreement, and such
amount has not yet been allocated to his Salary Reduction
Contribution Account, the Committee shall direct the Company
to pay such amounts to the Trustee to be credited to the
Participant's Salary Reduction Contribution Account, to be
distributed by the Trustee in accordance with the method of
distribution determined under Section 6.6.

6.8. ADMINISTRATIVE POWERS RELATING TO PAYMENTS. If a
Participant or Beneficiary is under a legal disability or, by
reason of illness or mental or physical disability, is in the
opinion of the Committee unable properly to attend to his personal
financial matters, the Trustee may make such payments in such of
the following ways as the Committee shall direct:

(i) directly to such Participant or Beneficiary;

(ii) to the legal representative of such Participant
or Beneficiary; or

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 40
<PAGE>
(iii) to some relative by blood or marriage, or
friend, for the benefit of such Participant or
Beneficiary.

Any payment made pursuant to this Section shall be in complete
discharge of the obligation therefor under the Plan.

6.9. WITHDRAWALS FROM VOLUNTARY CONTRIBUTION ACCOUNT. A
Participant may withdraw from his Voluntary Contribution Account an
amount not in excess of the Adjusted Balance thereof, determined as
of the Valuation Date coinciding with or immediately succeeding the
date a request is being made hereunder, that is not being used as
security for a loan under Section 8.4. No withdrawal made under
this Section 6.9 shall be for an amount which is less than the
lesser of: (i) $200, or (ii) the Adjusted Balance in the
Participant's Voluntary Contribution Account.

6.10 INVESTMENT PENDING DISTRIBUTION. The Committee, in its
discretion, may direct the Trustee to invest the Accounts of a
terminated Participant in a money-market or similar type of
investment.

ARTICLE VII

PLAN ADMINISTRATION

7.1. COMPANY RESPONSIBILITY. The Company shall be responsible
for and shall control and manage the operation and administration
of the Plan. It shall be the "Plan Administrator" and "Named
Fiduciary" for purposes of ERISA and shall be subject to service of
process on behalf of the Plan. The Board may, in its discretion,
appoint a Committee of one or more persons, to be known as the
"Plan Administrative Committee" to act as the agent of the Company
in performing these duties. In the event that the Board chooses
not to appoint such a Committee, all references in the Plan to the
"Committee" (except for such references in this Section 7.1) shall
mean the Board. The members of the Committee shall serve at the
pleasure of the Board; they may be officers, directors, or
Employees of the Company or any other individuals. Any member may
resign by delivering his written resignation to the Board and to
the Committee. Vacancies in the Committee arising by resignation,
death, removal or otherwise, shall be filed by the Board. The
Company shall advise the Trustee in writing of the names of the
members of the Committee and of changes in membership from time to
time.

7.2. POWERS AND DUTIES OF COMMITTEE. The Committee shall
administer the Plan in accordance with its terms and shall have all
powers necessary to carry out the provisions of the Plan. The
Committee shall direct the Trustee concerning all payments which
shall be made out of the Trust pursuant to the Plan. The Committee
shall interpret the Plan and shall determine all questions arising
in the administration, interpretation, and application of the Plan,
including but not limited to, questions of eligibility and the
status and rights of Participants, Beneficiaries and other persons.
Any such determination by the Committee shall presumptively be
conclusive and binding on all

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 41
<PAGE>
persons. The regularly kept records of the Company shall be
conclusive and binding upon all persons with respect to an
Employee's Hours of Service, date and length of employment, time
and amount of Compensation and the manner of payment thereof, type
and length of any absence from work and all other matters contained
therein relating to Employees. All rules and determinations of the
Committee shall be uniformly and consistently applied to all
persons in similar circumstances.

7.3. ORGANIZATION AND OPERATION OF COMMITTEE.

(a) The Committee shall act by majority vote of its
members at the time in office, and such action may be taken
either by a vote at a meeting or in writing without a meeting.
The signatures of a majority of the members will be sufficient
to authorize Committee action. A Committee member shall not
participate in discussions of or vote upon matters pertaining
to his own participation in the Plan.

(b) The Committee may authorize any of its members or
any other person to execute any document or documents on
behalf of the Committee, in which event the Committee shall
notify the Trustee in writing of such action and the name or
names of such member or person. The Trustee thereafter shall
accept and rely upon any document executed by such members or
persons as representing action by the Committee, until the
Committee shall file with the Trustee a written revocation of
such designation.

(c) The Committee may adopt such bylaws and regulations
as it deems desirable for the conduct of its affairs and with
the consent of the President or Vice President, Finance of the
Company, may appoint such accountants, counsel, specialists,
and other persons as it deems necessary or desirable in
connection with the administration of this Plan. The
Committee shall be entitled to rely conclusively upon, and
shall be fully protected in any action taken by it in good
faith in relying upon, any opinions or reports which shall be
furnished to it by any such accountant, counsel, specialist or
other person.

7.4. RECORDS AND REPORTS OF COMMITTEE. The Committee shall
keep a record of all its proceedings and acts and shall keep all
such books of account, records, and other data as may be necessary
for proper administration of the Plan. The Committee shall notify
the Trustee and the Company of any action taken by the Committee
and, when required, shall notify any other interested person or
persons.

7.5. CLAIMS PROCEDURE. Claims for benefits under the Plan
shall be made in writing to the Committee. In the event a claim
for benefits is wholly or partially denied by the Committee, the
Committee shall, within a reasonable period of time, but not later
than 90 days after receipt of the claim, notify the claimant in
writing of the denial of the claim. If the claimant shall not be
notified in writing of the denial of the claim within 90 days after
it is received by the Committee, the claim shall be deemed denied.
A notice of denial shall be written in a manner calculated to be
understood

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 42
<PAGE>
by the claimant, and shall contain (i) the specific reason or
reasons for denial of the claim, (ii) a specific reference to the
pertinent Plan provisions upon which the denial is based, (iii) a
description of any additional material or information necessary for
the claimant to perfect the claim, together with an explanation of
why such material or information is necessary, and (iv) an
explanation of the Plan's review procedure. Within 60 days of the
receipt by the claimant of the written notice of denial of the
claim, or within 60 days after the claim is deemed denied as set
forth above, if applicable, the claimant may file a written request
with the Committee that it conduct a full and fair review of the
denial of the claimant's claim for benefits, including the
conducting of a hearing, if deemed necessary by the Committee. In
connection with the claimant's appeal of the denial of his benefit,
the claimant may review pertinent documents and may submit issues
and comments in writing. The Committee shall render a decision on
the claim appeal promptly, but not later than 60 days after the
receipt of the claimant's request for review, unless special
circumstances (such as the need to hold a hearing, if necessary),
require an extension of time for processing, in which case the
60-day period may be extended to 120 days. The Committee shall
notify the claimant in writing of any such extension. The decision
upon review shall (i) include specific reasons for the decision,
(ii) be written in a manner calculated to be understood by the
claimant and (iii) contain specific references to the pertinent
Plan provisions upon which the decision is based.

7.6. COMPENSATION AND EXPENSES OF COMMITTEE. The members of
the Committee shall serve without Compensation for services as
such, but all proper expenses incurred by the Committee incident to
the functioning of the Plan shall be paid by the Company, provided,
however, that reasonable Compensation or expenses of administering
the Plan shall be borne by, and paid out of the Plan assets, except
to the extent the Board elects to have such expenses paid directly
by the Company.

7.7. INDEMNITY OF COMMITTEE MEMBERS. The Company shall
indemnify and defend each member of the Committee and each of its
other Employees against any and all claims, loss, damages, expenses
(including reasonable attorney fees), and liability arising in
connection with the administration of the Plan, except when the
same is judicially determined to be due to the gross negligence or
willful misconduct of such member or other Employee.

7.8 VOTING RIGHTS AND STOCK DISPOSITIONS.

(a) Governing Provisions. The voting, tendering, sale
or other disposition of Oremet Stock held in the Trust (except
in connection with a distribution) shall be governed by this
Section 7.8.

(b) Participant Directions.

(i) Each Participant or Beneficiary shall have the
right, with respect to Oremet Stock allocated to any of
his Accounts, and, separately, shares allocated to
accounts for which the Trustee has not received timely
voting instructions and, if applicable, unallocated

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 43
<PAGE>
shares, ("Non-Directed Shares"), to direct the Trustee as
to the manner in which (x) to vote such Oremet Stock in
any matter put to a shareholder vote; and (y) to respond
to a tender or exchange offer or any other offer to
dispose of stock held in the Trust. As to Non-Directed
Shares, the Trustee shall vote, tender, exchange, sell or
dispose of the Oremet Stock based on the following
formula: Total number of Non-Directed Shares multiplied
by a fraction, the numerator of which is the number of
Shares credited to the voting Participant's Account and
the denominator of which is the total number of Shares
credited to the Accounts of all Participants who have
provided timely directions to the Trustee.

(ii) With respect to shares of Company Stock
allocated to the account of a deceased Participant such
Participant's Beneficiary, as Named Fiduciary, shall be
entitled to direct the voting of shares of Company Stock
as if such Beneficiary were the Participant.

(iii) In the event a tender offer shall be
received by the Trustee and instructions shall be
solicited from Participants pursuant to this Section 7.8
(b) regarding such offer, and prior to termination of
such offer, another offer is received by the Trustee for
the securities subject to the first offer, the Trustee
shall use its best efforts under the circumstances to
solicit instructions from the Participants to the Trustee
(x) with respect to securities tendered for sale,
exchange or transfer pursuant to the first offer, whether
to withdraw such tender, if possible, and, if withdrawn,
whether to tender any securities so withdrawn for sale,
exchange or transfer pursuant to the second offer and (y)
with respect to securities not tendered for sale,
exchange or transfer pursuant to the first offer, whether
to tender or not to tender such securities for sale,
exchange or transfer pursuant to the second offer. The
Trustee shall follow all such instructions received in a
timely manner from Participants in the same manner and in
the same proportion as provided in Section 7.8 (b) (i).
With respect to any further offer for any Company Stock
received by the Trustee and subject to any earlier offer
(including successive offers from one or more existing
offerors), the Trustee shall act in the same manner as
described above.

(iv) A participant's instructions to the Trustee to
tender or exchange shares of Company Stock will not be
deemed a withdrawal or suspension from the Plan or a
forfeiture of any portion of the Participant's interest
in the Plan. Funds received in exchange for tendered
shares will be credited to the account of the Participant

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 44
<PAGE>
whose shares were tendered and will be used by the
Trustee to purchase Company Stock, as soon as
practicable. In the interim, the Trustee will invest
such funds in short-term investments permitted under the
Plan, and in the same manner in which forfeited amounts
are invested.

(v) In the event the Company initiates a tender or
exchange offer, the Trustee may, in its sole discretion,
enter into an agreement with the Company not to tender or
exchange any shares of Company Stock in such offer, in
which event the foregoing provisions of this Section 7.8
shall have no effect with respect to such offer, and the
Trustee shall not tender or exchange any shares of
Company Stock in such offer.

(c) INFORMATION. On any matter in which a Participant
(or Beneficiary) is entitled to direct the Trustee under this
Section 7.8, the Trustee shall solicit such directions by
distributing to each Participant and Beneficiary to whose
Account Oremet Stock has been allocated, such information as
shall be distributed to shareholders of Oremet generally in
connection with a shareholder vote, tender, exchange or other
offer, together with any additional information the Trustee
deems appropriate in order for each Participant (or
Beneficiary) to give proper directions to the Trustee. The
directions received from any Participant (or Beneficiary)
shall be held in confidence by the Trustee, and shall not be
individually divulged or released to any person, including
officers or employees of Oremet or the Union. Any costs
incurred in connection with obtaining directions shall be
treated as expenses of the Plan for the purposes of Section
7.8.

ARTICLE VIII

LOANS TO PARTICIPANTS

8.1. LOANS TO PARTICIPANTS.

(a) The Committee shall direct the Trustee to make
a loan or loans to active Participants and, to the extent not
inconsistent with Section 401 (a) of the Code, to former
Participants who are Parties in Interest (as defined in <SUBSECTION>
3(14) of ERISA) and who retain account balances in the Plan
following termination of employment ("Former Participants"),
applied for pursuant to the terms of this Article. Such loans
shall be in amounts that do not in the aggregate exceed the
amount set forth in Section 8.2. Loans shall be made on the
written application of the Participant to the Committee and on
such terms and conditions as are set forth in this Section and
Sections 8.2 and 8.3. In making such loans the Committee
shall pursue uniform

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 45
<PAGE>
policies and shall not discriminate in favor of or against any
Participant or group of Participants.

(b) Loans shall be made only from the Participant's
Salary Reduction Contribution Account, Voluntary Contribution
Account and ESOP (or other) Rollover Account, and the
Participant shall specify in his loan application the
Investment Funds in which such accounts are invested, from
which any loan shall be paid and the allocation of the loan
proceeds among such Investment Funds; provided that such
allocation shall be in increments of one percent. Each such
loan shall be made in accordance with the specification of the
borrowing Participant or former Participant except that, if
any Investment Fund imposes any restriction or penalty on a
distribution as a loan, the loan shall be paid from the
Investment Funds in such manner as will comply with the
restriction and avoid the penalty.

(c) The Committee may impose such additional
uniform and nondiscriminatory requirements upon Participants
and Former Participants applying for loans as the Committee
may determine.

8.2. MAXIMUM LOAN AMOUNT.

(a) In no event shall any loan made pursuant to this
Article to any Participant or Former Participant be in an
amount that shall cause the outstanding aggregate balance of
all loans made to such Participant or Former Participant under
this Plan and all other qualified employer plans (as defined
in Section 72(p)(4) of the Code without regard to subparagraph
(2)(D) thereof) maintained by the Company or any Related
Employer to exceed the lesser of:

(i) $50,000, reduced by the excess (if any) of:

(A) the highest outstanding balance of loans
from the Plan and such other qualified plans to the
Participant during the one-year period ending on
the day before the date such loan is made, over

(B) the outstanding balance of loans from the
Plan and such other qualified plans to the
Participant on the date on which such loan is made,
or

(ii) 50% of the vested portion of the Adjusted
Balance of such Participant's or former Participant's
Salary Reduction Contribution Account, Company
Discretionary Contribution Account, Matching Contribution
Account, and Equity Contribution Account.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 46
<PAGE>
Notwithstanding the preceding provisions of this
Subsection (a), in no event shall any loan exceed 100% of
a Participant's Salary Reduction Contribution Account,
Voluntary Contribution Account and ESOP (or other)
Rollover Account.

(b) For purposes of this Article, the balances of a
borrowing Participant's or Former Participant's accounts shall
be determined as of the Valuation Date for which a valuation
of his accounts is most recently available on the date on
which the proceeds of a loan made under this Article are
disbursed to the borrowing Participant.

8.3. REPAYMENT OF LOANS. All loans made under this Article
shall mature and be payable in full within five years alter the
date such loan is made, except that a loan to a Participant used to
acquire any dwelling unit that within a reasonable time alter the
loan is made is to be used (determined at the time the loan is
made) as the principal residence of the Participant shall mature
and be payable in full within ten years after the date such loan is
made.

8.4. TERMS.

(a) Loans to Participants shall be made according to the
following terms:

(i) The minimum security for such loans shall be:

(A) 50% of the vested portion of the
Adjusted Balance of the Salary Reduction
Contribution Account, Voluntary Contribution
Account, Company Discretionary Contribution
Account, Matching Contributions Account,
Equity Bonus Compensation Account (if
applicable), and Equity Contribution Account
of the borrowing Participant, plus (B) in the
discretion of the Committee, a security
interest in such other property, determined by
the Committee, that would be required in the
case of an otherwise identical transaction in
a normal commercial setting between unrelated
parties on arm's-length terms;

(ii) Interest shall be determined by the Committee
at the time the loan is made and shall be charged at a
rate that is commensurate with the interest rate charged
by persons in the business of lending money for loans
that would be made under similar circumstances in the
local geographical area;

(iii) Payments of principal and interest by an
active Participant shall be made through payroll
deductions, which deductions shall be

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 47
<PAGE>
irrevocably authorized by the borrowing Participant in
writing on a form supplied by the Committee or Trustee at
the time the loan is made to him, and such payroll
deductions shall be sufficient to amortize the principal
and interest payable pursuant to the loan during the term
thereof on a substantially level basis in equal quarterly
(or more frequent) installments. Payments of principal
and interest by a Former Participant shall be made by
personal check in equal quarterly (or more frequent)
installments. All payments of principal and interest
shall be allocated to the accounts of the Participant or
Former Participant to whom the loan was made;

(iv) The borrowing Participant or Former Participant
shall have the right to prepay all or any portion of the
interest and principal of such loan without penalty;

(v) The loans shall be evidenced by such forms of
obligations, and shall be made upon such additional terms
as to default, prepayment, security and otherwise as the
Committee shall determine;

(vi) The Committee may charge a borrowing
Participant or Former Participant such reasonable
administrative fees with respect to each loan as the
Committee shall, in its discretion, decide; and

(vii) If the borrowing Participant or Former
Participant is married at the time for disbursement of
the loan proceeds, disbursement may not be made unless
such Participant's or Former Participant's spouse
consents in writing to the loan and the terms thereof
pursuant to procedures established by the Committee.

(b) The entire unpaid balance of any loan made under
this Article and all interest due thereon, including all
arrearages thereon, shall, at the option of the Committee,
immediately become due and payable without further notice or
demand, if, with respect to the borrowing Participant or
Former Participant, any of the following events of default occurs:

(i) any payments of principal or accrued interest
on the loan remain due and unpaid for a period of ten
days after the same becomes due and payable under the
terms of the loan;

(ii) a proceeding in bankruptcy, receivership, or
insolvency is commenced by or against the borrowing
Participant or Former Participant;

(iii) an active Participant's employment with
the Company terminates and he does not become a Former
Participant;

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 48
<PAGE>
(iv) the borrowing Participant becomes a Former
Participant and thereafter receives a final distribution
of the Adjusted Balance of his accounts;

(v) the borrowing Participant or Former Participant
attempts to make an assignment, for the benefit of
creditors, of any security for the loan; or

(vi) the borrowing Participant or Former
Participant marries or remarries and his new spouse does
not consent in writing to the loan and the terms thereof
pursuant to procedures established by the Committee
within 30 days after marrying the Participant.

Any payments of principal or interest on the loan not paid
when due shall bear interest thereafter, to the extent permitted by
law, at the rate specified by the terms of the loan. The payment
and acceptance of any sum or sums at any time on account of the
loan after an event of default, or any failure to act or enforce
the rights granted hereunder upon an event of default, shall not be
a waiver of the right of acceleration set forth in this paragraph.

(c) If an event of default and an acceleration of
the unpaid balance of the loan and interest due thereon shall
occur, the Committee shall have the right to direct the
Trustee to pursue any remedies available to a creditor at law
or under the terms of the loan, including the right to execute
on the security for the loan. Notwithstanding the preceding
sentence, in no event shall either the Trustee or the
Committee reduce the amount in the Participant's Salary
Reduction Contribution Account at any time prior to the first
to occur of the termination of the Participant's employment
with the Company or the Participant's attainment of age 59 1/2.

(d) If (i) an event of default (specified in Section
8.4(b)) occurs; and (ii) an event occurs pursuant to which the
Participant or Former Participant, his estate or his
Beneficiaries will receive a distribution from the Salary
Reduction Contribution Account, Discretionary Contribution
Account, Matching Contributions Account, or Equity
Contribution Account of such Participant or Former Participant
under the provisions of the Plan, then such Participant or
Former Participant, if living, shall pay to the Trustee an
amount equal to the portion of the loan or loans then
outstanding, including all accrued interest thereon in
accordance with Section 8.4(b), and such Participant or Former
Participant shall thereafter receive the full amount of the
distribution under the provisions of the Plan to which he is
otherwise entitled. If such Participant or Former Participant
is not then living, or if such Participant or Former
Participant does not make full payment of the portion of the
loan or loans then outstanding within 15 days after the date
of the event of default, then the unpaid balance of the loan
or loans will be deemed to be distributed to the

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 49
<PAGE>
borrowing Participant, to the extent such a distribution would
be allowed under the terms of the Plan, on the last date by
which full payment should have been made. The amount of the
deemed distribution will be deducted from the borrowing
Participant's applicable Accounts and paid to the Trustee as
payment on the loan or loans. No subsequent distribution
shall be made to a Participant, or Former Participant, or his
estate or his spouse or his Beneficiaries from his Salary
Reduction Contribution Account, Discretionary Contribution
Account, Matching Contributions Account, or Equity
Contribution Account in an amount greater than the excess of
the portion of his Salary Reduction Contribution Account,
Discretionary Contribution Account, Matching Contributions
Account, or Equity Contribution Account otherwise
distributable over the aggregate of the deemed distribution.

(e) All loans made pursuant to this Article shall
be funded from the borrowing Participant's or Former
Participant's Salary Reduction Contribution Account, Voluntary
Contribution Account and ESOP (or other) Rollover Account. As
set forth in Section 8.1(b), the Salary Reduction Contribution
Account of a Participant or a Former Participant shall, to the
extent used to fund such loan, not participate in the
allocation of Earnings and losses pursuant to Section 5.8.
All interest paid by a Participant or a Former Participant
with respect to a loan shall be credited to the borrowing
Participant's or Former Participant's Salary Reduction
Contribution Account, Voluntary Contribution Account and ESOP
(or other) Rollover Account and shall not be allocated
pursuant to Section 5.8 as Earnings of the Investment Funds.
All payments of principal and interest made by a Participant
or Former Participant with respect to a loan shall be
allocated to one or more of the Investment Funds based upon
the form relating to the selection of Investment Funds that is
in effect, at the time such payment is received by the
Trustee, with respect to the Participant's Salary Reduction
Contributions, Voluntary Contribution Account and ESOP (or
other) Rollover Account. If such a form is not in effect at
the time such payment is received, the payments shall be
allocated based upon the last such form that was in effect for
such Participant or Former Participant.

ARTICLE IX

INVESTMENT FUNDS

9.1. INVESTMENT FUNDS. The Adjusted Balance of each
Participant's Salary Reduction Contribution Account, Voluntary
Contribution Account and ESOP (or other) Rollover Account will be
invested in the various Investment Funds.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 50
<PAGE>
9.2. INITIAL INVESTMENT. All Salary Reduction Contributions,
Voluntary Contributions and ESOP (or other) Rollovers received by
the Trustee will be initially invested in such short-term
investment obligations as selected by the Trustee as directed by
the Committee from time to time pending investment pursuant to
Section 9.3. These deposits and Earnings will be allocated between
the Investment Funds as of the Valuation Date next following
receipt by the Trustee of such deposits and Earnings in accordance
with Participants' selection of Investment Funds pursuant to
Section 9.3.

9.3. SELECTION OF INVESTMENT FUNDS.

(a) Each Participant shall have the right to file a form
with the Committee directing that his Salary Reduction
Contributions, Voluntary Contributions and ESOP (or other)
Rollovers be invested, in specified multiples as determined by
the Committee, in any one of the Investment Funds. In default
of any Participant's direction, such contributions will be
invested in each, or any one, of the Investment Funds
described in the schedule attached hereto until a form
designating a different Investment Fund is submitted to the
Committee and forwarded to the Trustee.

(b) Each Participant shall have the right to file a
written form with the Committee modifying the direction made
in subsection (a) with respect to subsequent Salary Reduction
Contributions, Voluntary Contribution Account and ESOP (or
other) Rollover Account under the Plan.

(c) Each Participant shall have the right to file a
written form with the Committee directing that the portion of
his Salary Reduction Contribution Account, Voluntary
Contribution Account and ESOP (or other) Rollover Account held
in any one Investment Fund be transferred, in whole or in
part, to any other Investment Fund. This direction shall be
made by designating the percentage of the Adjusted Balance of
such accounts that is to be divided among the various
applicable Funds in multiples as determined by the Committee.

(d) Any written form submitted pursuant to subsections
(a), (b) or (c) shall be filed with the Committee, pursuant to
rules it establishes, within a time period to be established
by the Committee. The initial allocation to an Investment
Fund pursuant to subsection (a) or subsection (b) or a
reallocation among Investment Funds pursuant to subsection (c)
shall be made as of the effective date of the form submitted
pursuant to this subsection (d) or as soon as reasonably
possible after such date.

(e) The Committee will maintain individual accounts
representing the interests of Participants in the several
Investment Funds. Each Investment Fund may be invested as a
single fund, however, without segregation of Fund assets to
the accounts of Participants.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 51
<PAGE>
(f) All contributions in-kind of shares of Company Stock
made as Company Discretionary Contributions, Equity Matching
Contributions, Equity Bonus Compensation (if applicable), and
Equity Contributions or with respect to any other accounts
hereafter created, shall be held in the general trust fund by
the Trustee under provisions of the Trust Agreement and shall
not be subject to individual Participant investment direction
unless authorized by the Company.

ARTICLE X

AMENDMENT AND TERMINATION

10.1. AMENDMENT OF PLAN. The Company shall have the right
to amend the Plan at any time and from time to time by resolution
of its Board of Directors, and all Employees and persons claiming
any interest hereunder shall be bound thereby; provided, however,
that no amendment shall have the effect of: (i) directly or
indirectly divesting the interest of any Participant in any amount
that he would have received had he terminated his employment with
the Company immediately prior to the effective date of such
amendment, or the interest of any Beneficiary as such interest
existed immediately prior to the effective date of such amendment,
(ii) directly or indirectly affecting the vesting schedule set
forth in Section 5.7 used to determine the vested interest of a
Participant on the effective date of the amendment unless the
conditions of <SUBSECTION> 203(c) of ERISA are satisfied; (iii) vesting in
the Company any right, title or interest in or to any Plan assets;
(iv) causing or effecting discrimination in favor of officers,
shareholders, or highly compensated Employees; or (v) causing any
part of the Plan assets to be used for any purpose other than for
the exclusive benefit of the Participants and their Beneficiaries.

10.2. VOLUNTARY TERMINATION OF OR PERMANENT DISCONTINUANCE
OF CONTRIBUTIONS TO THE PLAN. The Company expects the Plan to be
permanent, but since future conditions affecting the Company cannot
be anticipated, the Company shall have the right to terminate the
Plan in whole or in part, or to permanently discontinue
contributions to the Plan, at any time by resolution of its Board
and by giving written notice of such termination or permanent
discontinuance to the Trustee. Such resolution shall specify the
effective date of termination or permanent discontinuance, which
shall not be earlier than the first day of the Plan Year which
includes the date of the resolution.

10.3. INVOLUNTARY TERMINATION OF PLAN. The Plan shall
automatically terminate if the Company is legally adjudicated a
bankrupt, makes a general assignment for the benefit of creditors,
or is dissolved. In the event of the merger or consolidation of
the Company with or into any other corporation, or in the event
substantially all of the assets of the Company shall be transferred
to another corporation, the successor corporation resulting from
the consolidation or merger, or transfer of such assets, as the
case may be, shall have the right to adopt and continue the Plan
and succeed to the position of the Company hereunder. If, however,
the Plan is not so adopted within 90 days after the effective date
of such consolidation, merger or sale, the Plan shall automatically
be deemed terminated as of the effective date of such transaction.
Nothing in this Plan shall prevent the

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 52
<PAGE>
dissolution, liquidation, consolidation or merger of the Company,
or the sale or transfer of all or substantially all of its assets.

10.4. PAYMENTS ON TERMINATION OF OR PERMANENT
DISCONTINUANCE OF CONTRIBUTIONS TO THE PLAN. If the Plan is
terminated as herein provided, or if it should be partially
terminated, or upon the complete discontinuance of Company
contributions to the Plan, the following procedure shall be
followed, except that, in the event of a partial termination, it
shall be followed only in cases of those Participants and
Beneficiaries directly affected:

(i) The Committee may continue to administer the
Plan, but if it fails to do so, its records, books of
account and other necessary data shall be turned over to
the Trustee and the Trustee shall act on its own motion
as hereinafter provided.

(ii) Notwithstanding any other provisions of the
Plan, all interests of Participants shall become fully
vested and nonforfeitable.

(iii) The value of the Trust and the shares of
all Participants and Beneficiaries shall be determined as
of the date of termination or discontinuance.

(iv) Distribution to Participants and
Beneficiaries shall be made at such time after
termination of or discontinuance of contributions to the
Plan as shall be determined by the Committee (or the
Trustee if no Committee is then acting) not later than
the time specified in Section 6.6.

ARTICLE XI

MISCELLANEOUS

11.1. DUTY TO FURNISH INFORMATION AND DOCUMENTS.
Participants and their Beneficiaries must furnish to the Committee
and the Trustee such evidence, data or information as the Committee
considers necessary or desirable for the purpose of administering
the Plan, and the provisions of the Plan for each person are upon
the condition that he will furnish promptly full, true, and
complete evidence, data, and information requested by the
Committee. All parties to, or claiming any interest under, the
Plan hereby agree to perform any and all acts, and to execute any
and all documents and papers, necessary or desirable for carrying
out the Plan and the Trust.

11.2. COMMITTEE'S ANNUAL STATEMENTS AND AVAILABLE
INFORMATION. The Committee shall advise Employees of the
eligibility requirements and benefits under the Plan. As soon as
practicable after making the annual valuations and allocations
provided for in the Plan, and at such other times as the Committee
may determine, the Committee shall provide each Participant, and
each former

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 53
<PAGE>
Participant and Beneficiary with respect to whom an account is
maintained, with a statement reflecting the current status of his
Accounts, including the Adjusted Balance thereof. No Participant,
except a member of the Committee, shall have the right to inspect
the records reflecting the account of any other Participant. The
Committee shall make available for inspection at reasonable times
by Participants and Beneficiaries copies of the Plan, any
amendments thereto, the Plan summary, and all reports of Plan
operations required by law.

11.3. NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Nothing
contained in the Plan shall be construed as a contract of
employment between the Company and any person, nor shall the Plan
be deemed to give any person the right to be retained in the employ
of the Company or limit the right of the Company to employ or
discharge any person with or without cause, or to discipline any
Employee.

11.4. APPLICABLE LAW. All questions pertaining to the
validity, construction and administration of the Plan shall be
determined in conformity with the laws of Oregon to the extent that
such laws are not preempted by ERISA and valid Regulations
published thereunder.

11.5. NO GUARANTEE. Neither the Trustee, the Committee,
nor the Company in any way guarantees the Trust Fund from loss or
depreciation or the payment of any benefits that may be or become
due to any person from the Trust Fund. No Participant or other
person shall have any recourse against the Trustee, the Company or
the Committee if the Trust Fund is insufficient to provide Plan
benefits in full. Nothing herein contained shall be deemed to give
any Participant, former Participant, or Beneficiary an interest in
any specific part of the Trust Fund or any other interest except
the right to receive benefits out of the Trust Fund in accordance
with the provisions of the Plan.

11.6. UNCLAIMED FUNDS. Each Participant shall keep the
Committee informed of his current address and the current address
of his Beneficiary or Beneficiaries. None of the Company, the
Committee and the Trustee shall be obligated to search for the
whereabouts of any person. If the location of a Participant is not
made known to the Committee within three years after the date on
which distribution of the Participant's accounts may first be made,
distribution may be made as though the Participant had died at the
end of the three-year period. If, within one additional year after
such three-year period has elapsed, or, within three years after
the actual death of a Participant, the Committee is unable to
locate any individual who would receive a distribution under the
Plan upon the death of the Participant pursuant to Section 6.2 of
the Plan, the Adjusted Balance in the Participant's accounts shall
be deemed a forfeiture and shall be used to reduce Company
Discretionary Contributions and Matching Contributions to the Plan
for the Plan Year next following the year in which the forfeiture
occurs; provided, however, that in the event that the Participant
or a Beneficiary makes a claim for any amount that has been
forfeited, the benefits which have been forfeited shall be
reinstated.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 54
<PAGE>
11.7. MERGER OR CONSOLIDATION OF PLAN. Any merger or
consolidation of the Plan with another plan, or transfer of Plan
assets or liabilities to any other plan, shall be effected in
accordance with such Regulations, if any, as may be issued pursuant
to <SUBSECTION> 208 of ERISA, in such a manner that each Participant in the
Plan would receive, if the merged, consolidated or transferee Plan
were terminated immediately following such event, a benefit that is
equal to or greater than the benefit he would have been entitled to
receive if the Plan had terminated immediately before such event.

11.8. INTEREST NONTRANSFERABLE. Except as provided in
Article VIII and in this Section, no interest of any person or
entity in, or right to receive distributions from, the Trust Fund
shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance
of any kind; nor may such interest or right to receive
distributions be taken, either voluntarily or involuntarily, for
the satisfaction of the debts of, or other obligations or claims
against, such person or entity, including claims in bankruptcy
proceedings. The account of any Participant, however, shall be
subject to and payable in accordance with the applicable
requirements of any qualified domestic relations order, as that
term is defined in Section 414(p) of the Code, and the Committee
shall direct the Trustee to provide for payment from a
Participant's account in accordance with such order and with the
provisions of Section 414(p) of the Code and any Regulations
promulgated thereunder. A payment from a Participant's account may
be made to an alternate payee (as defined in Section 414(p)(8) of
the Code) prior to the date the Participant reaches his earliest
retirement age (as defined in Section 414(p)(4)(B) of the Code) if
such payments are made pursuant to the terms of a qualified
domestic relations order. All such payments pursuant to a
qualified domestic relations order shall be subject to reasonable
rules and regulations promulgated by the Committee respecting the
time of payment pursuant to such order and the valuation of the
Participant's account or accounts from which payment is made;
provided that all such payments are made in accordance with such
order and Section 414(p). The balance of an account that is
subject to any qualified domestic relations order shall be reduced
by the amount of any payment made pursuant to such order.

Notwithstanding the preceding paragraph, if any
Participant borrows money pursuant to Article VIII, the Trustee and
the Committee shall have all rights to collect upon such
indebtedness as are granted pursuant to Article VIII and any
agreements or documents executed in connection with such loan.

11.9. PRUDENT MAN RULE. Notwithstanding any other
provision of this Plan, the Trustee, the Committee and the Company
shall exercise their powers and discharge their duties under this
Plan Agreement for the exclusive purpose of providing benefits to
Employees and their Beneficiaries, and shall act with the care,
skill, prudence and diligence under the circumstances that a
prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims. Subject to the terms of the
preceding sentence, the Trustee shall diversify investments of the
Trust Fund so as to minimize the risk of large losses, unless under
the circumstances it is clearly prudent not to do so.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 55
<PAGE>
11.10. LIMITATIONS ON LIABILITY. Notwithstanding any of
the preceding provisions of the Plan, none of the Trustee, the
Company, the Committee and each individual acting as an Employee or
agent of any of them shall be liable to any Participant, former
Participant or Beneficiary for any claim, loss, liability or
expense incurred in connection with the Plan, except when the same
shall have been judicially determined to be due to the gross
negligence or willful misconduct of such person. The Company shall
indemnify and hold harmless each individual acting as an Employee
or agent of the Company (including Committee members) from any and
all claims, liabilities, costs and expense (including attorney
fees) arising out of any actual or alleged act or failure to act
with respect to the administration of the Plan, except that no
indemnification or defense shall be provided to any person with
respect to conduct which has been judicially determined, or agreed
by the parties, to have constituted bad faith or willful misconduct
on the part of such person, or to have resulted in his receipt of
personal profit or advantage to which he is not entitled.

11.11. HEADINGS. The headings in this Plan are inserted
for convenience of reference only and are not to be considered in
construction of the provisions hereof.

11.12. GENDER AND NUMBER. Except when otherwise required
by the context, any masculine terminology in this document shall
include the feminine, and any singular terminology shall include
the plural.

11.13. ERISA AND APPROVAL UNDER INTERNAL REVENUE CODE.
This Plan is intended to qualify as a plan meeting the requirements
of Sections 401 and 501(a) of the Code, as now in effect or
hereafter amended, so that the income of the Trust Fund may be
exempt from taxation under Section 501(a) of the Code,
contributions of the Company under the Plan may be deductible for
federal income tax purposes under Section 404 of the Code and
amounts subject to Salary Reduction Agreements are not treated as
distributed to Participants for federal income tax purposes under
Section 402(e)(3) of the Code. Any modification or amendment of
the Plan and/or Trust Agreement may be made retroactively, as
necessary or appropriate, to establish and maintain such
qualification and to meet any requirement of the Code or ERISA.

11.14. EXTENSION OF PLAN TO RELATED EMPLOYERS.

(a) With the approval of the Company, any Related
Employer may adopt the Plan and qualify its Employees to
become Participants thereunder by taking proper corporate
action to adopt the Plan and making such contributions to the
Trust Fund as the Board of Directors of the Related Employer
may require.

(b) The Plan will terminate with respect to any Related
Employer that has adopted the Plan pursuant to this Section if
the Related Employer ceases to be a Related Employer, revokes
its adoption of the Plan by appropriate corporate action,
permanently discontinues its contributions for its Employees,
is judicially declared bankrupt, makes a general assignment
for the benefit of creditors or is dissolved. If the Plan is
terminated or contributions are discontinued with respect to
any Related

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 56
<PAGE>
Employer, the provisions of Section 10.4 shall apply to the
interest in the Plan of the Employees of such Related
Employer, and their Beneficiaries.

(c) The terms "Company" and "Employee" in the Plan shall
include any Related Employer that has adopted the Plan
pursuant to this Section 11.14 and such Related Employer's
Employees; provided, however, that the term "Company" shall
not include any such Related Employer where used in Articles
VI or VII of the Plan. The Company shall act as the agent for
each Related Employer that adopts the Plan for all purposes of
administration thereof.

ARTICLE XII

TOP-HEAVY PROVISIONS

12.1. TOP-HEAVY STATUS. Except as provided in Sections
12.4(b) and (c), the provisions of this Article shall not apply to
the Plan with respect to any Plan Year for which the Plan is not
Top-Heavy. If the Plan is or becomes Top-Heavy in any Plan Year,
the provisions of this Article XII will supersede any conflicting
provisions elsewhere in the Plan.

12.2. DEFINITIONS. For purposes of this Article XII, the
following words and phrases shall have the meanings stated below
unless a different meaning is required by the context:

(a) "Determination Date" means, with respect to any Plan
Year: (i) the last day of the preceding Plan Year, or (ii) in
the case of the first Plan Year of the Plan, the last day of
such Plan Year.

(b) "Key Employee" means an Employee meeting the
definition of "key employee" contained in Section 416(i)(1) of
the Code and the Regulations interpreting that Section. For
purposes of determining whether an Employee is a Key Employee,
the definition of Compensation set forth in Section 12.6 shall
apply.

(d) "Valuation Date" means with respect to a particular
Determination Date, the most recent annual Plan Year Valuation
Date (as defined in Section 1.44) occurring within a 12-month
period ending on the applicable Determination Date.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 57
<PAGE>
12.3. DETERMINATION OF TOP-HEAVY STATUS.

(a) The Plan will be "Top-Heavy" with respect to any
Plan Year if, as of the Determination Date applicable to such
Year, the ratio of the Adjusted Balances in the accounts of
Key Employees (determined as of the Valuation Date applicable
to such Determination Date) to the Adjusted Balances in the
accounts of all Employees (determined as of such Valuation
Date) exceeds 60%. For purposes of computing such ratio, and
for all other purposes of applying and interpreting this
paragraph (a): (i) the amount of the accounts of any Employee
shall be increased by the aggregate distributions made with
respect to such Employee under the Plan during the five-year
period ending on any Determination Date; (ii) benefits
provided under all Plans which are aggregated pursuant to (b)
of this Section must be considered; and (iii) the provisions
of Section 416 of the Code and all Regulations interpreting
that Section shall be applied. If any Employee has not
performed services for the Company or any Related Employer at
any time during the five-year period ending on any
Determination Date, the balances of the accounts of such
Employee shall not be taken into consideration for purposes of
determining whether the Plan is Top-Heavy with respect to the
Plan Year to which such Determination Date applies.

(b) For purposes of determining whether the Plan is
Top-Heavy, all qualified retirement Plans maintained by the
Company and each Related Employer shall be aggregated to the
extent that such aggregation is required under the applicable
provisions of Section 416 of the Code and the Regulations
interpreting that Section. All other qualified retirement
Plans maintained by the Company and each Related Employer
shall be aggregated only to the extent permitted by Section
416 of the Code and such Regulations and elected by the
Company.

(c) For purposes of determining whether the Plan is
Top-Heavy, the Adjusted Balance of a Participant's accounts
shall not include (i) the amount of a rollover contribution
(or similar transfer) and Earnings thereon attributable to a
rollover contribution (or similar transfer) accepted after
December 31, 1983, initiated by the Participant and derived
from a Plan not maintained by the Company or any Related
Employer, or (ii) a distribution made with respect to an
Employee which is a tax-free rollover contribution (or similar
transfer) that is either not initiated by the Employee or that
is made to a Plan maintained by the Company or any Related
Employer.

(d) Solely for purposes of determining whether the Plan
is Top-Heavy, the accrued benefit of any Non-Key Employee
shall be determined (i) under the method, if any, that
uniformly applies for accrual purposes under all plans of the
Company or any Related Employer, or (ii) if there is no such
method, as if such

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 58
<PAGE>
benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional accrual rule of Section
411(b)(1)(C) of the Code.

12.4. VESTING.

(a) If the Plan becomes Top-Heavy, the vested interest
of a Participant in the portion of his Company Discretionary
Contribution Account and Matching Contributions Account
referred to in paragraph (b) below shall be determined in
accordance with the following formula:

<TABLE>
<CAPTION>
Vested Forfeitable
Years of Service Percentage Percentage
________________ __________ ___________
<S> <C> <C>

Less than One Year 0% 100%
One Year 20% 80%
Two Years 40% 60%
Three Years 60% 40%
Four Years 80% 20%
Five or More Years 100% 0%

</TABLE>

For purposes of the above schedule, years of Service shall
include all years of Service required to be counted under
Section 411(a) of the Code, disregarding all years of Service
permitted to be disregarded under Section 411(a)(4) of the
Code.

(b) The vesting schedule set forth in paragraph (a)
shall apply to all amounts allocated to a Participant's
Company Discretionary Contribution Account and Matching
Contributions Account while the Plan is Top-Heavy and during
the period of time before the Plan becomes Top- Heavy. This
vesting schedule shall not apply to the Company Discretionary
Contribution Account and Matching Contributions Account of any
Employee who does not have an Hour of Service after the Plan
becomes Top-Heavy.

(c) If the Plan becomes Top-Heavy and subsequently
ceases to be Top-Heavy, the vesting schedule set forth in
subsection (a) shall automatically cease to apply, and the
vesting schedule set forth in Section 5.7 shall automatically
apply, with respect to all amounts allocated to a
Participant's Company Discretionary Contribution Account and
Matching Contributions Account for all Plan Years after

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 59
<PAGE>
the Plan Year with respect to which the Plan was last Top
Heavy. For purposes of this subsection (c), this change in
vesting schedules shall only be valid to the extent that the
conditions of Section 10.1 of the Plan and Section 411(a)(10)
of the Code are satisfied.

12.5. MINIMUM CONTRIBUTION. For each Plan Year that the
Plan is Top-Heavy, the Company will contribute and allocate to the
Company Discretionary Contribution Account, Salary Reduction
Contribution Account and Matching Contributions Account of each
Participant who is a Non-Key Employee and is employed by the
Company on the last day of such Plan Year an amount consisting of
contributions and forfeitures equal to the lesser of (i) three
percent of such Employee's Compensation (as defined in Section
12.6) for such Plan Year and (ii) the largest percentage of Company
Discretionary Contributions, Salary Reduction Contributions,
Supplemental Company Contributions, matching Contributions and
forfeitures, as a percentage of the Key Employee's Compensation (as
defined in Section 12.6), allocated to the Company Discretionary
Contribution Account, Salary Reduction Contribution Account and
Matching Contributions Account of any Key Employee for such Plan
Year. The minimum contribution allocable pursuant to this Section
12.5 will be determined without regard to any contributions by the
Company for any Employee under the Federal Social Security Act. A
Non-Key Employee will not be excluded from an allocation pursuant
to this Section merely because his compensation is less than a
stated amount. A Non-Key Employee who has become a Participant but
who fails to complete at least 1,000 Hours of Service in a Plan
Year in which the Plan is Top-Heavy shall not be excluded from an
allocation pursuant to this Section. A Non-Key Employee who is a
Participant in the Plan and who declined to elect to have Salary
Reduction Contributions made to his account for the Plan Year shall
receive an allocation for that Plan Year pursuant to this Section.
Notwithstanding anything to the contrary contained herein, in no
event shall the Compensation of a Participant taken into account
under the Plan for purposes of this Section 12.5 for any Plan Year
commencing on and after January 1, 1989, and prior to January 1,
1994, exceed $200,000, or such greater amount provided pursuant to
Section 401(a)(17) of the Code. The Compensation of a Participant
taken into account for purposes of this Section 12.5 for Plan Years
commencing on and after January 1, 1994, shall be limited in
accordance with the provisions of subsections 1.13(a) through (c)
of the Plan.

12.6. COMPENSATION. For any Plan Year in which the Plan
is Top-Heavy, annual compensation for purposes of this Article XII
shall have the meaning set forth in Section 414(q)(7) of the Code.

12.7. COLLECTIVE BARGAINING AGREEMENTS. The requirements
of Sections 12.4 and 12.5 shall not apply with respect to any
Employee included in a unit of Employees covered by a collective
bargaining agreement between Employee representatives and the
Company or a Related Employer if retirement benefits were the
subject of good faith bargaining between such Employee
representatives and the Company or Related Employer.

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 60
<PAGE>

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 61
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed in its name by its duly authorized officers and its
corporate seal to be hereunto affixed, and the Trustee to evidence
his acceptance, has hereunto set his hand, all on the day and year
first above written. This Plan may be executed in separate
counter-parts by the Company and Trustee, each of which, together
shall constitute an original Plan.

OREGON METALLURGICAL CORPORATION,
an Oregon corporation

By /s/ Dennis P. Kelly
____________________________________
Dennis P. Kelly, Vice President,
Finance

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 62
<PAGE>
[bjm:A:\OM-SAV.PLN:3/26/96]

OREGON METALLURGICAL CORPORATION SAVINGS PLAN PAGE 63

TRUST AGREEMENT UNDER OREGON METALLURGICAL CORPORATION
______________________________________________________
SAVINGS PLAN
____________

WITNESSETH:

WHEREAS, THE OREGON METALLURGICAL CORPORATION SAVINGS PLAN
(HEREINAFTER CALLED THE "PLAN") HAS BEEN ESTABLISHED BY THE
COMPANY; AND

WHEREAS, THE COMPANY DESIRES THE TRUSTEE TO ACT AS TRUSTEE
UNDER THIS TRUST AND THE TRUSTEE IS WILLING SO TO ACT IN ACCORDANCE
WITH THE TERMS OF THIS TRUST;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL COVENANTS HEREIN CONTAINED, THE COMPANY AND THE TRUSTEE DO
HEREBY COVENANT AND AGREE AS FOLLOWS:

1. TRUST FUND. THE TRUSTEE SHALL RECEIVE FROM THE COMPANY
CASH OR OTHER PROPERTY ACCEPTABLE TO THE TRUSTEE. ALL ASSETS SO
RECEIVED TOGETHER WITH THE INCOME THEREFROM AND ANY

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<PAGE>
OTHER INCREMENT THEREON (HEREINAFTER CALLED THE "TRUST FUND") SHALL
BE HELD, MANAGED AND ADMINISTERED BY THE TRUSTEE PURSUANT TO THE
TERMS OF THIS TRUST WITHOUT DISTINCTION BETWEEN PRINCIPAL AND
INCOME. THE TRUSTEE SHALL NOT BE RESPONSIBLE FOR THE COLLECTION OF
ANY CONTRIBUTIONS TO BE MADE UNDER THE PLAN AND THE TRUSTEE SHALL
BE RESPONSIBLE ONLY FOR MONEY OR OTHER PROPERTY RECEIVED BY IT
PURSUANT TO THIS TRUST. THE TRUSTEE SHALL BE UNDER NO DUTIES
WHATSOEVER IN RESPECT OF THE ADMINISTRATION OF THE PLAN. THE
TRUSTEE SHALL HAVE ONLY THOSE RESPONSIBILITIES SPECIFICALLY IMPOSED
UPON IT BY THE PROVISIONS OF THIS TRUST AND NEITHER THE PLAN NOR
ANY OTHER INSTRUMENT TO WHICH THE TRUSTEE IS NOT A PARTY, INCLUDING
BUT NOT LIMITED TO ANY AGREEMENT ENTERED INTO BETWEEN ANY ONE OR
MORE OF THE COMMITTEES APPOINTED BY THE COMPANY TO ADMINISTER THE
PLAN OR TO DIRECT INVESTMENTS UNDER THIS TRUST (HEREINAFTER
REFERRED TO COLLECTIVELY (IF MORE THAN ONE) OR INDIVIDUALLY AS THE
"COMMITTEE") AND AN INVESTMENT MANAGER APPOINTED PURSUANT TO
SUBPARAGRAPH B OF PARAGRAPH 4 BELOW, SHALL IMPOSE ANY DUTIES OR
OBLIGATIONS UPON THE TRUSTEE WITH RESPECT TO THE TRUST FUND.

2. DISTRIBUTIONS. SUBJECT TO THE PROVISIONS OF PARAGRAPHS 3
AND 4, THE TRUSTEE SHALL FROM TIME TO TIME ON THE DIRECTIONS OF THE
COMMITTEE, WHICH IS HEREBY DESIGNATED A "NAMED FIDUCIARY" AS THAT
TERM IS DEFINED IN THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974 (AS AMENDED, "ERISA"), MAKE DISTRIBUTIONS OUT OF THE TRUST
FUND TO SUCH PERSONS, WHETHER NATURAL OR LEGAL, IN SUCH MANNER, IN
SUCH AMOUNTS, AND FOR SUCH PURPOSES, INCLUDING THE

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<PAGE>
PURCHASE OF LIFE INSURANCE AND/OR ANNUITY CONTRACTS, AS MAY BE
SPECIFIED IN THE DIRECTIONS OF THE COMMITTEE. THE TRUSTEE SHALL BE
UNDER NO DUTY TO MAKE INQUIRIES AS TO WHETHER ANY DISTRIBUTION
DIRECTED BY THE COMMITTEE IS MADE PURSUANT TO THE PROVISIONS OF THE
PLAN.

4. POWERS, DUTIES AND IMMUNITIES OF THE TRUSTEE.

A. GENERAL. The Trustee shall administer the Trust Fund
as a nondiscretionary Trustee, and the Trustee shall not have any
discretion or authority with regard to the investment of the Trust
Fund and shall act solely as a directed Trustee of the Trust Fund.
The Trustee, as a nondiscretionary Trustee, as may be directed by
the Committee (or the Participants to the extent provided herein
pursuant to the terms of the Plan) is authorized and empowered, by
way of

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<PAGE>
limitation, with the following powers, rights and duties, each of
which the Trustee shall exercise in a nondiscretionary manner as
directed in accordance with the direction of the Committee or the
Participants (each as a Named Fiduciary), except to the extent that
Plan assets are subject to the control and management of a properly
appointed Investment Manager AS OTHERWISE PROVIDED IN THIS
PARAGRAPH 4:

(II) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
SHALL INVEST AND REINVEST ALL OR SUCH PART OF THE TRUST FUND
AS IT SHALL DEEM ADVISABLE IN SUCH NOTES, DEBENTURES, BONDS,
STOCKS, MUTUAL FUNDS (INCLUDING WITHOUT LIMITATION MUTUAL
FUNDS TO WHICH THE TRUSTEE OR ANY AFFILIATE MAY SERVE AS
INVESTMENT ADVISOR, UNDERWRITER, MANAGER, ADMINISTRATOR,
DISTRIBUTOR, CUSTODIAN, TRANSFER AGENT OR IN ANY OTHER
CAPACITY, FOR WHICH THE TRUSTEE OR ANY SUCH AFFILIATE MAY
RECEIVE A FEE FROM SUCH FUND OR COMPANY (HEREINAFTER CALLED
"PROPRIETARY MUTUAL FUNDS"); PROVIDED, HOWEVER, THAT IF THE
TRUSTEE PURCHASES AS AN INVESTMENT UNITS IN A PROPRIETARY
MUTUAL FUND FOR WHICH IT (OR ANY AFFILIATE) SERVES IN ONE OR
MORE OF THE FOREGOING CAPACITIES AND FOR WHICH IT (OR ANY
AFFILIATE) RECEIVES A FUND-LEVEL FEE, THE TRUSTEE SHALL NOTIFY
THE Committee, OR ANOTHER INDEPENDENT FIDUCIARY, IN WRITING,
OF ITS INTENTION TO MAKE SUCH INVESTMENTS AND SHALL OBTAIN THE
WRITTEN CONSENT OF THE Committee, AND/OR SUCH OTHER FIDUCIARY
AS MAY BE REQUIRED UNDER ERISA, TO THE FEE ARRANGEMENT),
LIMITED PARTNERSHIP INTERESTS, TRUST CERTIFICATES AND OTHER
SECURITIES OR OPTIONS THEREON, INCLUDING STOCKS AND OTHER
SECURITIES ISSUED BY THE COMPANY OR ANY SUBSIDIARY OR
AFFILIATE THEREOF (ALL OF WHICH ARE HEREIN CALLED
"SECURITIES"), LOANS, TIME AND SAVINGS DEPOSITS (INCLUDING
SAVINGS DEPOSITS AND CERTIFICATES OF DEPOSIT IN THE TRUSTEE OR
ANY AFFILIATE OF THE TRUSTEE IF SUCH DEPOSITS BEAR A
REASONABLE RATE OF INTEREST), COMMERCIAL PAPER (INCLUDING
PARTICIPATION IN POOLED COMMERCIAL PAPER ACCOUNTS), ANNUITY
AND INSURANCE CONTRACTS (INCLUDING, BUT NOT

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<PAGE>
LIMITED TO, RETIREMENT INCOME CONTRACTS OR CONTRACTS OF THE
DEPOSIT ADMINISTRATION TYPE OR FOR THE ACCUMULATION OF
INTEREST), REAL ESTATE, REAL ESTATE MORTGAGES AND OTHER KINDS
OF PROPERTY OF EVERY KIND AND DESCRIPTION, AS THE TRUSTEE MAY
DEEM PROPER AND SUITABLE. THE TRUSTEE MAY INVEST IN UNITS OF
ANY ONE OR MORE COLLECTIVE TRUST FUNDS, INCLUDING BUT NOT
LIMITED TO THE KEY TRUST MULTIPLE INVESTMENT TRUST FOR
EMPLOYEE BENEFIT TRUSTS, THE KEY TRUST EB MANAGED GUARANTEED
INVESTMENT CONTRACT FUND, OR IN UNITS OF ANY OTHER GROUP OR
COLLECTIVE TRUST FUND HERETOFORE OR HEREAFTER CREATED, WHICH
SHALL HAVE BEEN DETERMINED BY THE INTERNAL REVENUE SERVICE TO
BE A "POOLED FUND ARRANGEMENT" AS DESCRIBED IN REVENUE RULING
81-100, AND WHICH SHALL BE ADMINISTERED BY THE TRUSTEE OR ANY
OTHER AFFILIATED BANK, TRUST COMPANY OR CORPORATION, OR ANY OF
THEIR SUCCESSORS OR ASSIGNS, OR ANY INVESTMENT MANAGER
APPOINTED HEREUNDER OR ANOTHER FIDUCIARY HEREUNDER; PROVIDED,
HOWEVER, SUCH INVESTMENT MANAGER OR OTHER FIDUCIARY QUALIFIES
AS AN INVESTMENT MANAGER UNDER SECTION 3(38) OF ERISA
(HEREINAFTER CALLED A "COLLECTIVE TRUST FUND"), IRRESPECTIVE
OF THE PROPORTION OF THE TRUST FUND REPRESENTED BY ANY SUCH
INVESTMENT OR ANY DELEGATION OF AUTHORITY RESULTING THEREFROM.
AS LONG AS THE TRUSTEE HOLDS ANY GROUP OR COLLECTIVE TRUST
FUND UNITS HEREUNDER, THE INSTRUMENTS ESTABLISHING AND/OR
AMENDING ANY SUCH COLLECTIVE TRUST FUND SHALL BE ADOPTED AND
MADE A PART OF THIS TRUST AS THOUGH FULLY SET FORTH HEREIN.
NOTWITHSTANDING THE FOREGOING, THE TRUSTEE SHALL BE UNDER NO
OBLIGATION TO INVEST IN ANY ASSET NOT REGULARLY OFFERED BY IT
AS AN INVESTMENT OPTION UNLESS IT AGREES TO DO SO IN WRITING.
TO THE EXTENT THAT THE TRUSTEE AGREES TO INVEST IN AND HOLD
ANY ASSET NOT REGULARLY OFFERED BY IT AS AN INVESTMENT OPTION,
THE TRUSTEE'S OBLIGATIONS WITH RESPECT TO THE ADMINISTRATION
OF THAT ASSET SHALL BE LIMITED TO THOSE OF A CUSTODIAN.

(III) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY (A) EXERCISE ANY EXCHANGE PRIVILEGES, CONVERSION
PRIVILEGES AND/OR SUBSCRIPTION RIGHTS AVAILABLE IN CONNECTION
WITH ANY PROPERTY AT ANY TIME HELD BY IT; (B) CONSENT TO, OR
DISSENT FROM, THE REORGANIZATION, CONSOLIDATION, MERGER OR
READJUSTMENT OF THE FINANCES OF, OR THE SALE, MORTGAGE, PLEDGE
OR LEASE OF THE PROPERTY OF, ANY CORPORATION, COMPANY OR
ORGANIZATION, ANY OF THE SECURITIES OF WHICH MAY AT ANY TIME
BE HELD BY IT; (C) DEPOSIT ANY PROPERTY HELD HEREUNDER WITH
ANY PROTECTIVE, REORGANIZATION OR SIMILAR COMMITTEE AND
DELEGATE DISCRETIONARY POWER THERETO; AND (D) DO ANY ACT WITH
REFERENCE TO THE MATTERS IN THIS PARAGRAPH, INCLUDING BUT NOT
LIMITED TO THE EXERCISE OF OPTIONS, MAKING OF AGREEMENTS OR
SUBSCRIPTIONS AND THE PAYMENT OF EXPENSES, ASSESSMENTS OR
SUBSCRIPTIONS, WHICH THE TRUSTEE MAY DEEM NECESSARY OR
ADVISABLE IN CONNECTION THEREWITH.

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<PAGE>
(IV) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY RETAIN FOR SUCH TIME AS IT MAY DEEM ADVISABLE ANY PROPERTY
ACQUIRED BY IT PURSUANT TO THE PRECEDING PARAGRAPH WHETHER OR
NOT SUCH PROPERTY WOULD NORMALLY BE PURCHASED AS AN INVESTMENT
HEREUNDER.

(VI) AT THE DIRECTION OF A NAMED FIDUCIARY, THE TRUSTEE
MAY MANAGE, OPERATE, REPAIR AND IMPROVE ANY REAL OR PERSONAL
PROPERTY HELD BY IT IN THE TRUST FUND.

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<PAGE>
CAPACITY AS TRUSTEE, AS THE NAMED PARTY IN ALL SUITS OR LEGAL
PROCEEDINGS BROUGHT BY OR AGAINST THE TRUST FUND.

(X) THE TRUSTEE MAY HOLD SECURITIES IN BEARER FORM AND
MAY REGISTER SECURITIES AND OTHER PROPERTY HELD IN THE TRUST
FUND IN ITS OWN NAME OR IN THE NAME OF A NOMINEE, COMBINE
CERTIFICATES REPRESENTING SECURITIES WITH CERTIFICATES OF THE
SAME ISSUE HELD BY THE TRUSTEE IN OTHER FIDUCIARY CAPACITIES,
AND DEPOSIT, OR ARRANGE FOR DEPOSIT OF PROPERTY WITH ANY
DEPOSITORY BUT THE BOOKS AND RECORDS OF THE TRUSTEE SHALL AT
ALL TIMES SHOW THAT ALL SUCH SECURITIES ARE PART OF THE TRUST
FUND.

(XI) THE TRUSTEE MAY HOLD IN ITS BANKING DEPARTMENT
UNINVESTED AND UNPRODUCTIVE OF INCOME, WITHOUT LIABILITY FOR
INTEREST THEREON, EXCEPT SUCH AS MAY BE ALLOWED IN ACCORDANCE
WITH ITS REGULATIONS, SUCH PART OF THE TRUST FUND AS IS
REASONABLE UNDER THE CIRCUMSTANCES.

(XII) THE TRUSTEE MAY MAKE, EXECUTE AND DELIVER, AS
TRUSTEE, WITH OR WITHOUT A PROVISION FOR NO INDIVIDUAL
LIABILITY ON ITS PART, ANY AND ALL CONVEYANCES, NOTES,
CONTRACTS, WAIVERS, RELEASES, LEASES, ASSIGNMENTS, MORTGAGES,
OPTIONS, POWERS OF ATTORNEY OR OTHER INSTRUMENTS IN WRITING
THAT THE TRUSTEE MAY DEEM NECESSARY OR ADVISABLE IN
ADMINISTERING THE TRUST FUND.

(XIII) THE TRUSTEE MAY EMPLOY, at the expense of
the Company or the Trust Fund, agents and delegate to them
such duties as the Trustee sees fit; the Trustee shall not be
responsible for any loss occasioned by any such agents
selected by it with reasonable care; the Trustee may consult
with legal counsel (who may be counsel for the Company)
concerning any questions which may arise with reference to its
power or duties under the Plan, and the written opinion of
such counsel shall be full and complete protection with
respect to any action taken or not taken by the Trustee in
good faith and in accordance with the written opinion of such
counsel.

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<PAGE>
(XIV) THE TRUSTEE MAY pay out of the Trust Fund any
taxes imposed or levied with respect to the Trust Fund and may
contest the validity or amount of any tax, assessment,
penalty, claim or demand respecting the Trust Fund; however,
unless the Trustee shall have first been indemnified to its
satisfaction, it shall not be required to contest the validity
of any tax, or to institute, maintain or defend against any
other action or proceeding either at law or in equity.

(XV) THE TRUSTEE MAY make loans to Participants in
accordance with policies established by the Company or the
Committee and in accordance with the terms of the Plan and to
segregate or otherwise identify property of the Trust Fund as
directed by the Committee for such purpose including providing
collateral for loans made pursuant to the Plan.

(XVI) WITHOUT LIMITATION OF THE FOREGOING, THE TRUSTEE
MAY DO ALL SUCH ACTS, EXECUTE ALL SUCH INSTRUMENTS, TAKE ALL
SUCH PROCEEDINGS AND EXERCISE ALL SUCH RIGHTS, POWERS AND
PRIVILEGES WITH RELATION TO ANY ASSETS CONSTITUTING A PART OF
THE TRUST FUND, AS IT MAY DEEM NECESSARY OR ADVISABLE TO CARRY
OUT THE PURPOSES OF THIS TRUST.

B. DIRECTED INVESTMENTS. THE COMPANY OR THE COMMITTEE
SHALL HAVE THE FOLLOWING POWERS AND RESPONSIBILITIES WITH RESPECT
TO THE ASSETS HELD IN THE TRUST FUND:

(I) COMPANY OR COMMITTEE DIRECTION. The assets of the
Trust Fund shall be held in such number of Investment Funds
(the "Investment Funds") as the Committee and the Trustee may
agree, plus a Company Stock Fund if elected by the Committee,
as the Committee shall designate in writing on the Investment
Fund Designation form affixed hereto. Such Investment Funds
shall be selected by the Committee subject to the Trustee's
agreement to administer such investments under this Agreement.
The Committee hereby acknowledges that, available as In-
vestment Funds are interests in Proprietary Mutual Funds and
Collective Funds. The Committee acknowledges that it, as a
Named Fiduciary, has the sole responsibility for selection of
the Investment Funds offered under the Plan, and it has done
so on the basis of the Committee's determination, after due
inquiry, of the appropriateness of the selected Investment
Funds as vehicles for the investment of Plan assets pursuant
to the terms of the Plan, considering all relevant facts and
circumstances, including but not limited to (a) the investment
policy and philosophy of the Company developed pursuant to
ERISA <SUBSECTION> 402(b)(1); (b) the

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<PAGE>
Participants, including average level of investment experience
and sophistication; (c) the ability of Participants, using an
appropriate mix of Investment Funds, to diversify the
investment of Plan assets held for their benefit; (d) the
ability of Participants, utilizing an appropriate mix of
Investment Funds, to structure an investment portfolio within
their account in the Plan with risk and return characteristics
within the normal range of risk and return characteristics for
individuals with similar investment backgrounds, experience
and expectations. In making the selection of Investment
Funds, the Committee represents that it did not rely on any
representations or recommendations from the Trustee or any of
its employees, except as may have been provided through
written materials, including marketing materials provided by
the various sponsors or distributors of the Investment Funds,
and that the Investment Fund selection has not be influenced,
approved, or encouraged through the actions of the Trustee or
its employees.

All contributions shall be allocated by the Trustee to the
Plan's Investment Funds specified by the Committee.
Dividends, interest and other distributions shall be
reinvested in the same Investment Fund from which received.

If the Company sponsors a 401(k) or profit sharing plan it, or
the Committee, may elect to determine the Investment Funds,
including a Company Stock Fund, if applicable, into which
Matching Contributions and/or Company Contributions will be
invested and/or into and out of which Participants may not
direct contributions. By making these designations, the
Company, or the Committee, shall be deemed to have advised the
Trustee in writing regarding the retention of investment
powers.

Notwithstanding the foregoing provisions of this Paragraph 4,
the Trustee may, in its discretion, accept certain investments
which have been, and are, held as part of the Trust Fund prior
to the date the Company adopted this Plan. Such investments
shall be

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<PAGE>
considered investments directed by the Company or the
Committee, if one is acting. The Trustee shall hold,
administer and dispose of such investments in accordance with
directions to the Trustee contained in a written notice from
the Company or Committee. Any such notice shall advise the
Trustee regarding the retention of investment powers by the
Company or the Committee and shall be of a continuing nature
or otherwise, and may be revoked in writing by the Company or
Committee. In addition, unless specifically agreed to between
the Trustee and the Company or the Committee, the Trustee
shall be under no obligation to invest in any asset not
regularly offered by the Trustee for use as an Investment
Fund. To the extent that the Trustee agrees to hold an asset
not regularly offered by it as an Investment Fund, the
Trustee's obligations with respect to the administration of
that asset shall be limited to those of a custodian.

The Trustee shall not be liable but shall be fully protected
by reason of its taking or refraining from taking any action
at the direction of the Company or the Committee, nor shall
the Trustee be liable but shall be fully protected by reason
of its refraining from taking any action because of the
failure of the Company, the Committee, or any Participant to
give a direction or order. The Trustee shall be under no duty
to question or make inquiry as to any direction, notification
or order or failure to give a direction, notification or order
by the Company, the Committee or any Participant. The Trustee
shall be under no duty to make any review of investments
directed by the Company, the Committee or any Participant
acquired for the Trust Fund and under no duty at any time to
make any recommendation with respect to disposing of or
continuing to retain any such investments. While the Company
may direct the Trustee with respect to Plan investments,
unless specifically authorized pursuant to ERISA, the Company
may not (a) borrow from the Fund or pledge any assets of the
Fund as security for a loan; (b) buy property or assets from
or sell property or assets to the Fund; (c) charge any fee for
services rendered to the Fund; or (d) receive any services
from the Fund on a preferential basis.

(II) INVESTMENT MANAGERS. FROM TIME TO TIME THE
COMMITTEE MAY DESIGNATE AN INVESTMENT MANAGER, WHO SHALL BE
(A) EITHER REGISTERED AS AN INVESTMENT ADVISER UNDER THE
INVESTMENT ADVISERS ACT OF 1940, (B) A BANK, AS DEFINED IN
THAT ACT, OR (C) AN INSURANCE COMPANY QUALIFIED TO PERFORM
INVESTMENT SERVICES UNDER THE LAWS OF MORE THAN ONE STATE OF
THE UNITED STATES, AND WHO ACKNOWLEDGES IN WRITING TO THE
COMPANY AND THE TRUSTEE THAT IT IS A FIDUCIARY WITH RESPECT TO
THE ASSETS OF THE TRUST FUND UNDER SUCH INVESTMENT MANAGER'S
CONTROL WITH AUTHORITY TO DIRECT THE INVESTMENT AND

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<PAGE>
REINVESTMENT OF AN INVESTMENT FUND OR FUNDS SPECIFIED IN SUCH
NOTICE AND WITH SUCH ADDITIONAL AUTHORITY AS MAY BE SPECIFIED
THEREIN. THE INVESTMENT MANAGER SHALL NOT BE THE AGENT OF THE
TRUSTEE. THE COMMITTEE MAY BY SIMILAR NOTICE MODIFY OR
TERMINATE SUCH DESIGNATION AND AUTHORITY FROM TIME TO TIME.
SO LONG AS, AND TO THE EXTENT THAT, ANY SUCH DESIGNATION IS IN
EFFECT, THE TRUSTEE (A) SHALL INVEST, REINVEST AND RETAIN THE
INVESTMENT FUND ASSIGNED TO AN INVESTMENT MANAGER IN
ACCORDANCE WITH THE INSTRUCTIONS RECEIVED FROM SUCH INVESTMENT
MANAGER, (B) WITH RESPECT TO ASSETS IN SUCH INVESTMENT FUND
SHALL FOLLOW ANY INSTRUCTIONS RECEIVED BY IT FROM SUCH
INVESTMENT MANAGER AS TO THE EXERCISE BY THE INVESTMENT
MANAGER OF THE POWERS UNDER SUBSECTIONS (I) THROUGH (IX) OF
SUBPARAGRAPH A OF THIS PARAGRAPH 4, WHICH POWERS SHALL BE
EXCLUSIVELY HELD BY THE INVESTMENT MANAGER, AND (C) AS TO
THOSE ASSETS IN THE INVESTMENT FUND, SHALL BE RELEASED AND
RELIEVED OF ALL DUTIES, RESPONSIBILITIES AND LIABILITIES
INCIDENT TO SUCH DESIGNATION, AND THEREAFTER ACT IN THE
CAPACITY OF CUSTODIAN OF SUCH ASSETS AND A NONDISCRETIONARY
TRUSTEE. THE TRUSTEE, IN ITS CAPACITY OF NONDISCRETIONARY
TRUSTEE AND CUSTODIAN, SHALL RETAIN ONLY THOSE POWERS AND
DUTIES SET FORTH IN SUBSECTIONS (X) THROUGH (XVI) OF
SUBPARAGRAPH A OF THIS PARAGRAPH 4 AS ARE NECESSARY TO ITS
FUNCTIONS AS CUSTODIAN. THE OTHER POWERS SET FORTH IN SAID
SUBPARAGRAPH A SHALL ONLY BE EXCERCISED UPON THE WRITTEN
DIRECTIONS OF THE INVESTMENT MANAGER SO LONG AS, AND TO THE
EXTENT THAT, NO SUCH DESIGNATION IS IN EFFECT, THE TRUSTEE
SHALL INVEST, REINVEST AND RETAIN, IN ACCORDANCE WITH ITS OWN
DISCRETION, THAT PART OF THE TRUST FUND NOT ASSIGNED TO AN
INVESTMENT MANAGER.

(III) INSURANCE. THE TRUSTEE MAY TRANSFER SUCH PORTION
OF THE TRUST FUND AS THE COMMITTEE SHALL DIRECT TO ANY
INSURANCE COMPANY FOR ONE OR MORE POLICIES, ANNUITY OR OTHER
CONTRACTS, WHETHER OR NOT THEY ARE GROUP CONTRACTS, INCLUDING
CONTRACTS WHICH PROVIDE FOR THE ALLOCATION OF AMOUNTS
THEREUNDER TO THE INSURANCE COMPANY'S GENERAL ACCOUNT AND/OR
TO ONE OR MORE OF ITS SEPARATE ACCOUNTS MAINTAINED FOR THE
COLLECTIVE INVESTMENT OF ASSETS OF QUALIFIED RETIREMENT PLANS.
THE INSURANCE COMPANY SHALL HAVE ALL THE SAME POWERS WITH
RESPECT TO THE ASSETS HELD UNDER A CONTRACT AS AN INVESTMENT
MANAGER HAS WITH RESPECT TO ASSETS OF THE TRUST FUND PURSUANT
TO SUBPARAGRAPH A OF THIS PARAGRAPH 4.

(IV) FOLLOWING DIRECTIONS OF THE COMPANY OR COMMITTEE.
SO LONG AS, AND TO THE EXTENT THAT, THE COMPANY OR COMMITTEE
SHALL EXERCISE THE POWER TO MANAGE AS A NAMED FIDUCIARY ASSETS
HELD AS PART OF AN INVESTMENT FUND, THE TRUSTEE: (A) SHALL
INVEST, REINVEST AND RETAIN THE INVESTMENT FUND ASSIGNED TO
THE COMPANY OR COMMITTEE IN

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<PAGE>
ACCORDANCE WITH THE INSTRUCTIONS RECEIVED FROM THE COMPANY OR
COMMITTEE; (B) WITH RESPECT TO ASSETS IN SUCH INVESTMENT FUND
SHALL FOLLOW ANY INSTRUCTIONS RECEIVED BY IT FROM THE COMPANY
OR COMMITTEE AS TO THE EXERCISE BY THE COMPANY OR COMMITTEE OF
THE POWERS UNDER SUBSECTIONS (I) THROUGH (IX) OF SUBPARAGRAPH
A OF THIS PARAGRAPH 4, WHICH POWERS SHALL BE EXCLUSIVELY HELD
BY THE COMPANY OR COMMITTEE; AND (C) AS TO THOSE ASSETS IN THE
INVESTMENT FUND, SHALL BE RELEASED AND RELIEVED OF ALL DUTIES,
RESPONSIBILITIES AND LIABILITIES INCIDENT TO SUCH POWER, AND
THEREAFTER ACT IN THE CAPACITY OF CUSTODIAN OF SUCH ASSETS AND
A NONDISCRETIONARY TRUSTEE. THE TRUSTEE, IN ITS CAPACITY OF
NONDISCRETIONARY TRUSTEE AND CUSTODIAN, SHALL RETAIN ONLY
THOSE POWERS AND DUTIES SET FORTH IN SUBSECTIONS (X) THROUGH
(XVI) OF SUBPARAGRAPH A OF THIS PARAGRAPH 4 AS ARE NECESSARY
TO ITS FUNCTIONS AS CUSTODIAN. THE OTHER POWERS SET FORTH IN
SAID SUBPARAGRAPH A SHALL ONLY BE EXCERCISED UPON THE WRITTEN
DIRECTIONS OF THE COMPANY OR COMMITTEE.

(V) SPECIAL LIMITED PURPOSE FUNDS. THE COMPANY OR
COMMITTEE MAY DESIGNATE AN INVESTMENT FUND AS A SPECIAL
PURPOSE OR LIMITED PURPOSE FUND THAT IS TO BE MANAGED (WHETHER
BY THE COMPANY, THE COMMITTEE, THE TRUSTEE OR AN INVESTMENT
MANAGER) IN ACCORDANCE WITH SPECIAL OBJECTIVES OR LIMITATIONS
OR INVESTMENT PRACTICES (SUCH AS, BUT NOT LIMITED TO,
APPROXIMATING THE RESULTS OF A DESIGNATED MARKET INDEX).

C. PARTICIPANT DIRECTION. Each Participant shall by
such mechanism as may be agreed upon between the Trustee and The
Commitee, have the ability to direct that the contributions made to
his or her accounts for which the Participant may direct
investments, as selected by the the Commitee, be invested in one or
more of the Investment Funds, including the Company Stock Fund, if
applicable. At the time an Employee becomes eligible for the Plan,
he or she shall specify the percentage of his or her accounts
(expressed in percentage increments as may be agreed to between the
The Commitee and the Trustee) to be invested prorata in each such
Investment Fund. In the event a Participant fails to direct
investments of assets made to his or her accounts, the Trustee
shall invest such assets in such investment fund or funds as the

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<PAGE>
Committee shall direct. For purposes of the immediately preceding
sentence, the Committee, as a Named Fiduciary, shall designate an
investment fund or funds as a default investment into which all
assets of Participants who fail to direct the investment of assets
will be invested.

(i) Upon prior written notice to the Trustee, or
other form of notice acceptable to the Trustee, a Participant
may change an investment direction with respect to future
contributions. Through acceptable notice to the Trustee and
pursuant to the terms of the Plan, the Participant may elect
to transfer all or a portion of such Participant's interest in
each Investment Fund (based on the value of such interest on
the Valuation Date immediately preceding such election), to
any other of the Investment Funds selected by the Committee so
that the Participant's interest in the said Investment Funds
immediately after the transfer is allocated in percentage
increments as may be agreed to by the Committee and the
Trustee. For purposes of this Trust Agreement a "Valuation
Date" is the date or dates on which the Company and the
Trustee mutually agree that the assets of the Trust Fund will
be valued.

(iii) The Company will be responsible when
transmitting Company and Employee contributions to show the
dollar amount to be credited to each Investment Fund for each
Employee.

(iv) Except as otherwise provided in the Plan,
neither the Trustee, the Company, the Committee, nor any
fiduciary of the Plan shall be liable to the Participant or
any of his or her beneficiaries for any loss resulting from
action taken at the direction of the Participant.

(V) NOTWITHSTANDING ANYTHING IN THE PLAN OR THIS
TRUST TO THE CONTRARY, WHEN INVESTMENT FUNDS ARE ESTABLISHED
OVER WHICH A PLAN PARTICIPANT OR BENEFICIARY

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<PAGE>
OF A PLAN PARTICIPANT IS PERMITTED TO EXERCISE CONTROL OVER
INVESTMENT OF THE PORTION OF THE TRUST FUND HELD FOR HIS
BENEFIT (A "PARTICIPANT DIRECTED INVESTMENT"), THE TRUSTEE,
COMMITTEE, AND ALL OTHER FIDUCIARIES OF THE PLAN AND/OR TRUST
SHALL BE SUBJECT TO THE PROPER DIRECTIONS OF SUCH PARTICIPANT.
WHENEVER THE TRUSTEE, COMMITTEE, OR ANY OTHER FIDUCIARY OF THE
PLAN AND/OR TRUST RECEIVES DIRECTION FROM A PARTICIPANT
REGARDING THE INVESTMENT OF HER/HIS ACCOUNT (TO THE EXTENT
AUTHORIZED IN THE PLAN OR THIS TRUST), THE DIRECTION SHALL BE
TREATED AS THE PROPER DIRECTION OF A "NAMED FIDUCIARY" AND THE
TRUSTEE, COMMITTEE, AND ALL OTHER FIDUCIARIES SHALL BE
ENTITLED TO RELY ON SUCH DIRECTION WITHOUT OBLIGATION OF
INQUIRY AS TO THE APPROPRIATENESS OF THE DIRECTION GIVEN BY
SUCH PARTICIPANT. NEITHER THE TRUSTEE, THE COMPANY NOR THE
COMMITTEE SHALL HAVE ANY LIABILITY WHATSOEVER FOR ANY LOSSES
WHICH MAY RESULT FROM EITHER A PARTICIPANT'S DIRECTION OF ANY
INVESTMENT OR FOR ANY LOSS WHICH MAY RESULT BY FAILURE OF A
PARTICIPANT TO MAKE SUCH DIRECTION. NOR SHALL THE TRUSTEE,
THE COMPANY OR COMMITTEE HAVE ANY LIABILITY OR RESPONSIBILITY
WHATSOEVER FOR ANY DISPARITY BETWEEN THE PERFORMANCE OR RATES
OF INVESTMENT RETURN OF ANY PARTICIPANT DIRECTED ACCOUNTS AND
THE TRUST FUND IN GENERAL.

D. INVESTMENT FUNDS GENERALLY. WHEN INVESTMENT FUNDS
HAVE BEEN ESTABLISHED PURSUANT TO SUBPARAGRAPH B OF THIS PARAGRAPH
4:

(I) THE COMMITTEE SHALL REGULARLY NOTIFY EACH DESIGNATED
INVESTMENT MANAGER OF THE ANTICIPATED CASH REQUIREMENTS FOR
DISBURSEMENTS FROM THE INVESTMENT FUND OR FUNDS UNDER HIS OR
ITS DIRECTION, AND THE INVESTMENT MANAGER SHALL DIRECT THE
TRUSTEE TO HOLD CASH FUNDS UNINVESTED IN SUCH AMOUNTS AND FOR
SUCH PERIODS OF TIME AS MAY APPEAR TO BE REASONABLY NECESSARY
TO MEET SUCH CASH REQUIREMENTS. UPON THE APPOINTMENT OF AN
INVESTMENT MANAGER, THE TRUSTEE SHALL INVEST AND REINVEST THE
CASH FORMING A PART OF ANY INVESTMENT FUND, WHICH IT HAS NOT
BEEN DIRECTED TO HOLD UNINVESTED, IN SUCH MONEY MARKET
INSTRUMENTS, SUCH AS COMMERCIAL PAPER AND U.S. TREASURY BILLS
AND NOTES, REPURCHASE AGREEMENTS OR OTHER EVIDENCES OF
INDEBTEDNESS WHICH ARE PAYABLE ON DEMAND OR WHICH GENERALLY
HAVE A MATURITY DATE OF NOT MORE THAN FIFTEEN (15) MONTHS FROM
THE TIME OF ACQUISITION, AND INCLUDING SHARES OF ANY MUTUAL
FUND INCLUDING WITHOUT LIMITATION A PROPRIETARY MUTUAL FUND
DESCRIBED IN SUBSECTION (II) OF SUBPARAGRAPH 4A.

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<PAGE>
(II) THE INVESTMENT MANAGER SHALL PLACE THE BUY OR SELL
ORDERS WITH THE BROKERS, OR OTHER PERSONS THROUGH WHOM SUCH
TRANSACTIONS SHALL BE ACCOMPLISHED, PERTAINING TO THE
INVESTMENT FUND WHICH IS SUBJECT TO THE DIRECTION OF THE
INVESTMENT MANAGER. THE TRUSTEE'S SOLE DUTY AND OBLIGATION
RELATING TO THE INVESTMENT FUND WHICH IS SUBJECT TO THE
DIRECTION OF THE INVESTMENT MANAGER SHALL BE TO ACCEPT AND PAY
FOR ANY PROPERTY OF ANY NATURE WHATSOEVER THAT IT MAY BE
DIRECTED BY THE INVESTMENT MANAGER TO ACCEPT AND PAY FOR, AND
TO DELIVER AGAINST PAYMENT THEREFOR, ANY PROPERTY OF ANY
NATURE WHATSOEVER WHICH IT MAY BE DIRECTED BY SUCH INVESTMENT
MANAGER TO DELIVER AGAINST PAYMENT THEREFOR. THE TRUSTEE
SHALL USE ITS BEST EFFORTS TO CONSUMMATE ANY SUCH ACCEPTANCE
AND PAYMENT, OR DELIVERY AGAINST PAYMENT, AS IT MAY BE
DIRECTED SO TO DO, AND THIS SHALL CONSTITUTE THE TRUSTEE'S
SOLE DUTY WITH RESPECT TO SUCH TRADING.

(III) PAYMENT OF THE COSTS OF THE ACQUISITION, SALE OR
EXCHANGE OF ANY SECURITY OR OTHER PROPERTY FOR AN INVESTMENT
FUND SHALL BE CHARGED TO SUCH INVESTMENT FUND. IN THE ABSENCE
OF A DIRECTION FROM THE COMMITTEE TO THE CONTRARY, OTHER
PAYMENTS AND DISBURSEMENTS FROM THE TRUST FUND SHALL BE
CHARGED TO SUCH PART OF THE TRUST FUND AS THE TRUSTEE DEEMS
ADVISABLE.

(V) IN THE EVENT THAT AN INVESTMENT MANAGER APPOINTED
HEREUNDER IS AUTHORIZED AND EMPOWERED BY THE COMMITTEE TO
INVEST AND REINVEST ALL OR ANY PART OF THE TRUST FUND
ALLOCATED TO ITS INVESTMENT FUND IN UNITS OF ANY COMMON,
COLLECTIVE OR COMMINGLED TRUST FUND MAINTAINED BY SAID
INVESTMENT MANAGER AS A QUALIFIED TRUST UNDER THE PROVISIONS
OF SECTION 401(A) AND EXEMPT UNDER THE PROVISIONS OF SECTION
501(A) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") THEN, NOTWITHSTANDING ANY PROVISION IN THIS TRUST
EXPRESSED OR IMPLIED TO THE CONTRARY, UPON

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<PAGE>
DIRECTION OF AN INVESTMENT MANAGER, THE TRUSTEE SHALL MAKE
SUCH TRANSFERS TO THE INVESTMENT MANAGER, AS THE TRUSTEE OF A
COMMON, COLLECTIVE OR COMMINGLED TRUST FUND DESCRIBED ABOVE,
AS ARE NECESSARY TO IMPLEMENT THE FOREGOING.

(VI) NOTWITHSTANDING THE PROVISIONS OF THIS TRUST WHICH
PLACE RESTRICTIONS UPON THE ACTIONS OF THE TRUSTEE, OR THE
INVESTMENT MANAGER, TO THE EXTENT MONIES OR OTHER ASSETS ARE
UTILIZED TO ACQUIRE UNITS OF ANY COMMON, COLLECTIVE OR GROUP
TRUST, THE TERMS OF THE COMMON, COLLECTIVE OR GROUP TRUST
INDENTURE SHALL SOLELY GOVERN THE INVESTMENT DUTIES,
RESPONSIBILITIES AND POWERS OF THE TRUSTEE OF SUCH COMMON,
COLLECTIVE OR GROUP TRUST, AND TO THE EXTENT REQUIRED BY LAW,
SUCH TERMS, RESPONSIBILITIES AND POWERS SHALL BE INCORPORATED
HEREIN BY REFERENCE AND SHALL BE PART OF THIS TRUST. THE
TRUSTEE SHALL HAVE NO DUTY OR RESPONSIBILITY AS TO THE
SAFEKEEPING OF SUCH ASSETS OR AS TO THE INVESTMENT AND
REINVESTMENT OF THE SAME, EXCEPT THAT THE TRUSTEE SHALL
REQUIRE SUCH STATEMENTS AND REPORTS FROM SUCH INVESTMENT
MANAGER AS MAY BE NECESSARY TO ENABLE THE TRUSTEE TO CARRY OUT
ITS RECORDKEEPING AND REPORTING DUTIES UNDER THIS TRUST. THE
TRUSTEE SHALL ENTER INTO AND EXECUTE SUCH AGREEMENTS, RECEIPTS
AND RELEASES AS SHALL BE REQUIRED TO CARRY OUT THE DIRECTIONS
OF THE COMMITTEE WITH RESPECT TO THE TRANSFER OF ANY ASSETS OF
THE TRUST FUND TO OR FROM AN INVESTMENT MANAGER.

F. UNRELATED BUSINESS INCOME. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, THE TRUSTEE MAY ENTER INTO A TRANSACTION OR
RETAIN A TRUST INVESTMENT WHICH MAY, OR IN FACT DOES, GIVE RISE TO
UNRELATED BUSINESS TAXABLE INCOME EITHER THROUGH THE EXERCISE OF
THE

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<PAGE>
TRUSTEE'S SOLE INVESTMENT AUTHORITY HEREUNDER OR PURSUANT TO THE
DIRECTIONS OF THE COMMITTEE OR AN INVESTMENT MANAGER.

H. INDEMNIFICATION. NEITHER THE TRUSTEE, THE COMPANY
NOR THE COMMITTEE SHALL BE RESPONSIBLE FOR THE INVESTMENT OF ANY
PART OF THE TRUST FUND ALLOCATED TO AN INVESTMENT MANAGER. THE
TRUSTEE SHALL BE UNDER NO DUTY TO QUESTION OR MAKE INQUIRY AS TO
ANY DIRECTION, NOTIFICATION OR ORDER OR FAILURE TO GIVE A
DIRECTION, NOTIFICATION OR ORDER BY THE COMMITTEE, THE COMPANY OR
AN INVESTMENT MANAGER. THE TRUSTEE SHALL BE UNDER NO DUTY TO MAKE
ANY REVIEW OF INVESTMENTS ACQUIRED FOR AN INVESTMENT FUND MANAGED
BY THE COMMITTEE, THE COMPANY, OR AN INVESTMENT MANAGER AND UNDER
NO DUTY AT ANY TIME TO MAKE ANY RECOMMENDATION WITH RESPECT TO
DISPOSING OF OR CONTINUING TO RETAIN ANY SUCH INVESTMENTS.

THE COMPANY HEREBY INDEMNIFIES AND HOLDS THE TRUSTEE OR ITS
NOMINEE HARMLESS FROM ANY AND ALL ACTIONS, CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES OR REASONABLE EXPENSES OF

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<PAGE>
WHATSOEVER KIND AND NATURE IN CONNECTION WITH OR ARISING OUT OF (I)
ANY ACTION TAKEN OR OMITTED IN GOOD FAITH OR ANY INVESTMENT OR
DISBURSEMENT OF ANY PART OF THE TRUST FUND MADE BY THE TRUSTEE IN
ACCORDANCE WITH THE DIRECTIONS OF THE COMMITTEE OR A PARTICIPANT
PURSUANT TO PARAGRAPH 4 OF SUBPARAGRAPH C HEREOF OR ANY INACTION
WITH RESPECT TO ANY COMMITTEE MANAGED INVESTMENT FUND OR ANY
PARTICIPANT DIRECTED INVESTMENT OR WITH RESPECT TO ANY INVESTMENT
PREVIOUSLY MADE AT THE DIRECTION OF THE COMMITTEE OR ANY
PARTICIPANT DIRECTED INVESTMENT IN THE ABSENCE OF DIRECTIONS FROM
THE COMMITTEE OR THE PARTICIPANT THEREFOR, OR (II) ANY ACTION TAKEN
OR OMITTED IN GOOD FAITH BY THE TRUSTEE WITH RESPECT TO AN
INVESTMENT FUND MANAGED BY AN INVESTMENT MANAGER IN ACCORDANCE WITH
ANY DIRECTION OF THE INVESTMENT MANAGER OR ANY INACTION WITH
RESPECT TO ANY SUCH INVESTMENT FUND IN THE ABSENCE OF DIRECTIONS
FROM THE INVESTMENT MANAGER, OR (III) ANY ACTION TAKEN IN GOOD
FAITH BY THE TRUSTEE PURSUANT TO A NOTIFICATION OF AN ORDER TO
PURCHASE OR SELL SECURITIES ISSUED BY AN INVESTMENT MANAGER OR THE
COMMITTEE DIRECTLY TO A BROKER OR DEALER, OR (IV) ANY FAILURE BY
THE TRUSTEE TO PAY FOR ANY PROPERTY PURCHASED BY AN INVESTMENT
MANAGER OR THE COMMITTEE FOR THE TRUST FUND BY REASON OF THE
INSUFFICIENCY OF FUNDS IN THE TRUST FUND.

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<PAGE>
INVESTMENT MANAGER KNOWING THAT SUCH ACT OR OMISSION CONSTITUTED A
BREACH OF FIDUCIARY RESPONSIBILITY, OR IF THE TRUSTEE FAILS TO
PERFORM ANY OF THE DUTIES UNDERTAKEN BY IT UNDER THE PROVISIONS OF
THIS TRUST, OF IF THE TRUSTEE FAILS TO ACT IN CONFORMITY WITH THE
DIRECTIONS OF AN AUTHORIZED REPRESENTATIVE OF THE INVESTMENT
MANAGER OR THE COMMITTEE, WHICH ARE CONSISTENT WITH THE
REQUIREMENTS OF ERISA; PROVIDED, HOWEVER, THAT IF THE TRUSTEE HAS
KNOWLEDGE OF A BREACH COMMITTED BY AN INVESTMENT MANAGER, THE SOLE
RESPONSIBILITY OF THE TRUSTEE SHALL BE TO NOTIFY THE COMPANY IN
WRITING THEREOF, AND THE COMPANY SHALL THEREAFTER ASSUME FULL
RESPONSIBILITY TO ALL PERSONS INTERESTED IN THE TRUST FUND TO
REMEDY SAID BREACH.

I. DELEGATION OF AUTHORITY. NO ALLOCATION OR DELEGATION
BY THE COMPANY OR THE COMMITTEE OF ANY OF THEIR RESPECTIVE POWERS,
AUTHORITIES, OR RESPONSIBILITIES UNDER THIS TRUST TO THE TRUSTEE
SHALL BECOME EFFECTIVE UNLESS SUCH ALLOCATION OR DELEGATION IS
SPECIFICALLY SET FORTH IN THIS TRUST OR SHALL FIRST BE ACCEPTED BY
THE TRUSTEE IN A WRITING SIGNED BY IT AND DELIVERED TO THE COMPANY
OR THE COMMITTEE AS THE CASE MAY BE.

J. COPIES OF DOCUMENTS. THE COMPANY SHALL PROVIDE THE
TRUSTEE WITH COPIES OF ALL DOCUMENTS CONSTITUTING THE PLAN AT THE
TIME THIS TRUST IS EXECUTED BY THE COMPANY AND ALL OTHER DOCUMENTS
AMENDING OR SUPPLEMENTING THE PLAN PROMPTLY UPON THEIR ADOPTION AND
THE COMMITTEE SHALL PROVIDE THE TRUSTEE WITH COPIES OF ALL
AGREEMENTS WITH ALL INVESTMENT MANAGERS APPOINTED BY THE COMMITTEE
AND ALL OTHER DOCUMENTS AMENDING OR SUPPLEMENTING

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<PAGE>
SUCH AGREEMENTS AND THE TRUSTEE SHALL BE ENTITLED TO RELY UPON THE
COMPANY'S AND THE COMMITTEE'S ATTENTION TO THE AFORESAID OBLIGATION
AND SHALL BE UNDER NO DUTY TO INQUIRE OF THE COMPANY OR THE
COMMITTEE OR ANY OTHER PERSON AS TO THE EXISTENCE OF ANY SUCH
DOCUMENTS NOT PROVIDED BY THE COMPANY OR THE COMMITTEE PURSUANT TO
THE FOREGOING UNDERTAKING.

K. SECURITIES LENDING. THE COMMITTEE MAY APPOINT THE
TRUSTEE OR ANY OF ITS AFFILIATES UNDER A SEPARATE AGENCY AGREEMENT
TO ACT AS AGENT FOR THE TRUST FUND FOR PURPOSES OF LENDING ANY
SECURITIES HELD IN THE TRUST FUND (INCLUDING ANY INVESTMENT FUND
CREATED PURSUANT TO SUBPARAGRAPH B OF THIS PARAGRAPH 4 IF THE
INVESTMENT MANAGER HAS CONSENTED) TO BROKER-DEALER(S) OR BANK(S),
AND IN CONNECTION THEREWITH AUTHORIZE THE TRUSTEE OR ANY OF ITS
AFFILIATES, AS AGENT, TO ENTER INTO SECURITIES LOAN AGREEMENT(S),
TO RECEIVE A REASONABLE FEE AS IT AND THE COMMITTEE MAY AGREE, TO
DELIVER TO ANY SUCH BROKER-DEALER(S), OR BANK(S), SUCH SECURITIES
AND TO PERMIT THE LOANED SECURITIES TO BE TRANSFERRED INTO THE NAME
OF AND VOTED BY THE BORROWER OR OTHERS.

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<PAGE>
(i) As soon as practicable before each annual or
special shareholders' meeting of the Company, the Trustee
shall furnish to each Participant sufficient copies of the
proxy solicitation material sent generally to shareholders,
together with a form requesting confidential instructions on
how the shares of Company Stock allocated to such
Participant's account, and, separately, such shares of Company
Stock as may be unallocated ("Unallocated Shares") or
allocated to Participant accounts but for which the Trustee
does not receive timely voting instruction from the
Participant ("Non-Directed Shares"), (including fractional
shares to 1/1000th of a share) are to be voted. The direction
with respect to Non-Directed Shares and Unallocated Shares
shall apply to such number of votes equal to the total number
of votes attributable to Non-Directed Shares and Unallocated
Shares multiplied by a fraction, the numerator of which is the
number of shares of Company Stock credited to the
Participant's account and the denominator of which is the
total number of shares credited to the accounts of all such
Participants who have timely provided directions to the
Trustee with respect to Non-Directed Shares and Unallocated
Shares under this Paragraph 4. The Company and the Committee
will cooperate with the Trustee to ensure that Participants
receive the requisite information in a timely manner. The
materials furnished to the Participants shall include a notice
from the Trustee that the Trustee will vote any shares for
which timely instructions are not received by the Trustee as
may be directed by those voting Participants, acting in their
capacity as Named Fiduciaries of the Plan as provided above.
Upon timely receipt of such instructions, the Trustee shall
vote the shares as instructed. The instructions received by
the Trustee from Participants or Beneficiaries shall be held
by the Trustee in strict confidence and shall not be divulged
or released to any person including directors, officers or
employees of the Company, or of any other company, except as
otherwise required by law.

M. TENDER OFFERS ON COMPANY STOCK. All tender or
exchange decisions with respect to Company Stock held in the
Company Stock Fund shall be made only by the

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<PAGE>
Participants acting in their capacity as Named Fiduciaries with
respect to the Company Stock allocated to their accounts in
accordance with the following provisions of this Paragraph:

(i) In the event an offer shall be received by the
Trustee (including a tender offer for shares of Company Stock
subject to Section 14(d)(1) of the Securities Exchange Act of
1934 or subject to Rule 13e-4 promulgated under that Act, as
those provisions may from time to time be amended) to purchase
or exchange any shares of Company Stock held by the Trust, the
Trustee will advise each Participant who has shares of Company
Stock credited to such Participant's account in writing of the
terms of the offer as soon as practicable after its
commencement and will furnish each Participant with a form by
which he may instruct the Trustee confidentially whether or
not to tender or exchange shares allocated to such
Participant's account, and, separately, Unallocated Shares and
Non-Directed Shares (including fractional shares to 1/1000th
of a share). The directions with respect to Non-Directed
Shares and Unallocated Shares shall apply to such number of
Non-Directed Shares and Unallocated Shares equal to the total
number of Non-Directed Shares and Unallocated Shares
multiplied by a fraction, the numerator of which is the number
of shares of Company Stock credited to the Participant's
account and the denominator of which is the total number of
shares credited to the accounts of all such Participants who
have timely provided directions to the Trustee with respect to
Non-Directed Shares and Unallocated Shares under this
Paragraph. The materials furnished to the Participants shall
include (i) a notice from the Trustee that, except as provided
in this Paragraph, the Trustee will not tender or exchange any
shares for which timely instructions are not received by the
Trustee and (ii) such related documents as are prepared by any
person and provided to the shareholders of the Company
pursuant to the Securities Exchange Act of 1934. The
Committee and the Trustee may also provide Participants with
such other material concerning the tender or exchange offer as
the Trustee or the Committee in its discretion determines to
be appropriate; provided, however, that prior to any
distribution of materials by the Committee, the Trustee shall
be furnished with sufficient numbers of complete copies of all
such materials. The Company and the Committee will cooperate
with the Trustee to ensure that Participants receive the
requisite information in a timely manner.

(ii) The Trustee shall tender or not tender shares
or exchange shares of Company Stock (including fractional
shares to 1/1000th of a share) only as and to the

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<PAGE>
extent instructed by the Participants as Named Fiduciaries as
provided in Paragraph 4(M)(i). With respect to shares of
Company Stock allocated to the account of a deceased
Participant, such Participant's Beneficiary, as a Named
Fiduciary, shall be entitled to direct the Trustee whether or
not to tender or exchange such shares as if such Beneficiary
were the Participant. The instructions received by the
Trustee from Participants or Beneficiaries shall be held by
the Trustee in strict confidence and shall not be divulged or
released to any person, including directors, officers or
employees of the Company, or of any other company, except as
otherwise required by law.

(iv) In the event an offer shall be received by the
Trustee and instructions shall be solicited from Participants
pursuant to this Paragraph 4(M) regarding such offer, and
prior to termination of such offer, another offer is received
by the Trustee for the securities subject to the first offer,
the Trustee shall use its best efforts under the circumstances
to solicit instructions from the Participants to the Trustee
(i) with respect to securities tendered for sale, exchange or
transfer pursuant to the first offer, whether to withdraw such
tender, if possible, and, if withdrawn, whether to tender any
securities so withdrawn for sale, exchange or transfer
pursuant to the second offer and (ii) with respect to
securities not tendered for sale, exchange or transfer
pursuant to the first offer, whether to tender or not to
tender such securities for sale, exchange or transfer pursuant
to the second offer. The Trustee shall follow all such
instructions received in a timely manner from Participants in
the same manner and in the same proportion as provided in
Paragraph 4(M)(i). With respect to any further offer for any
Company Stock received by the Trustee and subject to any
earlier offer (including successive offers from one or more
existing offerors), the Trustee shall act in the same manner
as described above.

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<PAGE>
exchange for tendered shares will be credited to the account
of the Participant whose shares were tendered and will be used
by the Trustee to purchase Company Stock, as soon as
practicable. In the interim, the Trustee will invest such
funds in short-term investments permitted under the Plan, and
in the same manner in which forfeited amounts are invested.

N. DESIGNATION OF AGENTS RE COMPANY STOCK FUND. The
Trustee acting with respect to the Company Stock Fund may, with the
consent of the Committee, employ an agent selected by the Trustee
to solicit the instructions to vote or tender provided for in
subparagraphs L and M of this Paragraph 4, and shall be held
harmless in relying upon such agent's written advice as to how
shares are to be voted or tendered.

O. SECURITIES LAWS. The Company shall be responsible
for complying with applicable federal and state securities laws and
regulations.

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<PAGE>
INVESTMENT MANAGER, WILL BE RESPONSIBLE FOR VALUING ALL OTHER
ASSETS ACQUIRED BY THE COMPANY, THE COMMITTEE OR AN INVESTMENT
MANAGER FOR ALL PURPOSES OF THE TRUST FUND. IF AN ASSET IS VALUED
BY THE COMPANY, THE COMMITTEE OR AN INVESTMENT MANAGER, THE
COMMITTEE WILL DIRECT THE TRUSTEE ON THE USE OF THE VALUE SO
DEVELOPED AND THE COMPANY AGREES TO INDEMNIFY AND HOLD THE TRUSTEE
HARMLESS AGAINST ANY AND ALL CLAIMS, ACTIONS, DEMANDS, LIABILITIES,
LOSSES, DAMAGES OR EXPENSES OF WHATSOEVER KIND AND NATURE, WHICH
ARISE FROM OR ARE RELATED TO ANY USE OF SUCH VALUE BY THE TRUSTEEE
IN THE ADMINISTRATION OF THE TRUST FUND. With respect to each such
Investment Fund, the Trustee shall determine (1) the change in
value between the current Valuation Date and the then last
preceding Valuation Date, (2) the net gain or loss resulting from
expenses paid (including fees and expenses, if any, which are to be
charged to such Fund) and (3) realized and unrealized gains and
losses.

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<PAGE>
credited to Participants' accounts as of such Valuation Date, or as
of any earlier date since the last preceding Valuation Date shall
not be considered in allocating gains or losses allocated to
Participants' accounts.

5. INVESTMENT IN MASTER TRUST. NOTWITHSTANDING ANYTHING
HEREIN CONTAINED TO THE CONTRARY, THE COMPANY MAY DIRECT THE
TRUSTEE AT ANY TIME OR FROM TIME TO TIME TO TRANSFER ALL OR ANY
PART OF THE TRUST FUND TO ANY TRUST WHICH HAS BEEN QUALIFIED UNDER
SECTION 401(A) AND IS EXEMPT UNDER SECTION 501(A) OF THE CODE
ESTABLISHED AS A MEDIUM FOR THE COLLECTIVE INVESTMENT OF FUNDS OF
PENSION, PROFIT SHARING OR OTHER EMPLOYEE BENEFIT TRUSTS
ESTABLISHED BY THE COMPANY, OR ANY OF ITS SUBSIDIARIES OR
AFFILIATES AND TO WITHDRAW ANY PART OR ALL OF THE TRUST FUND SO
TRANSFERRED. ANY SUCH TRUST MAY PROVIDE, AMONG OTHER THINGS, FOR
THE SEPARATE INVESTMENT OF ANY PORTION THEREOF AND THE ALLOCATION
TO ANY SUCH SEPARATELY INVESTED PORTION OF ANY PART OF THE INTEREST
OF ANY EMPLOYEE BENEFIT TRUST INVESTED THEREUNDER AND FOR THE
DESIGNATION OF AN INVESTMENT MANAGER TO DIRECT THE TRUSTEE IN THE
EXERCISE OF THE POWER

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<PAGE>
GRANTED TO IT WITH RESPECT TO SUCH SEPARATELY INVESTED PORTION.
THE PROVISIONS OF ANY SUCH TRUST SHALL BE DEEMED TO HAVE BEEN
ADOPTED AND MADE A PART OF THIS TRUST AND THE PLAN.

6. COMPENSATION AND EXPENSES OF THE TRUSTEE. THE TRUSTEE
SHALL BE ENTITLED TO RECEIVE REASONABLE FEES FOR ITS SERVICES
HEREUNDER IN ACCORDANCE WITH ITS SCHEDULE OF FEES THEN IN EFFECT
AND SHALL BE ENTITLED TO RECEIVE REIMBURSEMENT FOR ALL REASONABLE
EXPENSES INCURRED BY IT IN THE ADMINISTRATION OF THIS TRUST.
UNLESS PAID DIRECTLY BY THE COMPANY, ANY PROPER CHARGES AND
DISBURSEMENTS INCURRED BY THE TRUSTEE IN THE PERFORMANCE OF ITS
DUTIES HEREUNDER, INCLUDING FEES FOR LEGAL SERVICES RENDERED TO THE
TRUSTEE WHETHER DURING OR AFTER THE TIME IT IS ACTING HEREUNDER,
SHALL BE PAID FROM THE TRUST FUND. ALL TAXES OF ANY AND ALL KINDS
WHATSOEVER THAT MAY BE LEVIED OR ASSESSED UNDER EXISTING OR FUTURE
LAWS UPON OR IN RESPECT OF THE TRUST FUND OR THE INCOME THEREOF
SHALL BE A CHARGE AGAINST THE TRUST FUND; PROVIDED, HOWEVER, IN THE
EVENT THAT THE COMPANY SHALL NOTIFY THE TRUSTEE THAT, IN THE
OPINION OF ITS COUNSEL, ANY SUCH TAXES ARE UNLAWFULLY OR
EXCESSIVELY ASSESSED, THE TRUSTEE SHALL, AT THE EXPENSE OF THE
COMPANY, JOIN WITH THE COMPANY TO CONTEST THE VALIDITY OF SUCH
ASSESSMENT IN ANY MANNER DEEMED APPROPRIATE BY THE COMPANY OR ITS
COUNSEL.

7. ACCOUNTING BY TRUSTEE. THE TRUSTEE SHALL MAINTAIN SUCH
ACCOUNTS AND RECORDS AS THE COMMITTEE AND THE TRUSTEE SHALL AGREE
UPON. THE TRUSTEE SHALL RENDER FROM TIME TO TIME ACCOUNTS OF ITS
TRANSACTIONS TO THE COMMITTEE, AND THE COMMITTEE MAY APPROVE SUCH
ACCOUNTS

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<PAGE>
BY AN INSTRUMENT IN WRITING DELIVERED TO THE TRUSTEE. IN THE
ABSENCE OF THE FILING IN WRITING WITH THE TRUSTEE BY THE COMMITTEE
OF EXCEPTIONS OR OBJECTIONS TO ANY SUCH ACCOUNT WITHIN SIXTY (60)
DAYS, THE COMMITTEE SHALL BE DEEMED TO HAVE APPROVED SUCH ACCOUNT;
AND IN SUCH CASE, OR UPON THE WRITTEN APPROVAL BY THE COMMITTEE OF
ANY SUCH ACCOUNT, THE TRUSTEE SHALL BE RELEASED, RELIEVED AND
DISCHARGED AS TO THE COMPANY WITH RESPECT TO ALL MATTERS AND THINGS
SET FORTH IN SUCH ACCOUNT AS THOUGH SUCH ACCOUNT HAD BEEN SETTLED
BY THE DECREE OF A COURT OF COMPETENT JURISDICTION. NO PERSON
OTHER THAN THE COMMITTEE MAY REQUIRE AN ACCOUNTING.

8. RELIANCE OF TRUSTEE ON COMMITTEE. THE TRUSTEE SHALL BE
FULLY PROTECTED IN RELYING UPON A CERTIFICATION SIGNED BY ONE OR
MORE OF THE MEMBERS OF THE COMMITTEE (AS SHALL BE DESIGNATED IN A
WRITTEN INSTRUMENT SIGNED BY ALL THE MEMBERS OF THE COMMITTEE AND
FILED WITH THE TRUSTEE) WITH RESPECT TO ANY INSTRUCTION, DIRECTION
OR APPROVAL OF THE COMMITTEE AND IN CONTINUING TO RELY UPON SUCH
CERTIFICATION AND/OR INSTRUMENT UNTIL A SUBSEQUENT ONE IS FILED
WITH THE TRUSTEE. THE TRUSTEE SHALL BE FULLY PROTECTED BY THE
COMPANY IN ACTING UPON ANY INSTRUMENT, CERTIFICATE, OR PAPER
BELIEVED BY IT TO BE GENUINE AND TO BE SIGNED OR PRESENTED BY THE
PROPER PERSON(S), AND THE TRUSTEE SHALL BE UNDER NO DUTY TO MAKE
ANY INVESTIGATION OR INQUIRY AS TO ANY STATEMENT CONTAINED IN ANY
SUCH WRITING BUT MAY ACCEPT THE SAME AS CONCLUSIVE EVIDENCE OF THE
TRUTH AND ACCURACY OF THE STATEMENTS THEREIN CONTAINED. THE
TRUSTEE SHALL HAVE NO DUTY TO SEE TO THE PROPER APPLICATION OF ANY
PART OF THE TRUST FUND IF

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<PAGE>
DISTRIBUTIONS ARE MADE IN ACCORDANCE WITH THE WRITTEN DIRECTIONS OF
THE COMMITTEE AS HEREIN PROVIDED, NOR SHALL THE TRUSTEE BE
RESPONSIBLE FOR THE ADEQUACY OF THE TRUST FUND TO MEET AND
DISCHARGE ANY AND ALL DISTRIBUTIONS AND LIABILITIES UNDER THE PLAN.
ALL PERSONS DEALING WITH THE TRUSTEE ARE RELEASED FROM INQUIRY INTO
THE DECISIONS OR AUTHORITY OF THE TRUSTEE AND FROM SEEING TO THE
APPLICATION OF ANY MONEYS, SECURITIES, OR OTHER PROPERTY PAID OR
DELIVERED TO THE TRUSTEE.

9. RESIGNATION OR REMOVAL OF TRUSTEE. ANY TRUSTEE ACTING
HEREUNDER MAY RESIGN AT ANY TIME BY GIVING NOTICE IN WRITING TO THE
COMPANY AT LEAST SIXTY (60) DAYS BEFORE SUCH RESIGNATION IS TO
BECOME EFFECTIVE, UNLESS THE COMPANY SHALL ACCEPT AS ADEQUATE A
SHORTER NOTICE. THE COMPANY MAY, WITH OR WITHOUT CAUSE, REMOVE ANY
TRUSTEE ACTING HEREUNDER BY GIVING NOTICE IN WRITING TO SUCH
TRUSTEE AT LEAST SIXTY (60) DAYS BEFORE SUCH REMOVAL IS TO BECOME
EFFECTIVE, UNLESS THE TRUSTEE SHALL ACCEPT AS ADEQUATE A SHORTER
NOTICE. IF FOR ANY REASON A VACANCY SHOULD OCCUR IN THE
TRUSTEESHIP, A SUCCESSOR TRUSTEE SHALL FORTHWITH BE APPOINTED BY
THE COMPANY. ANY SUCCESSOR TRUSTEE APPOINTED HEREUNDER SHALL
EXECUTE, ACKNOWLEDGE, AND DELIVER TO THE COMPANY AND THE TRUSTEE AN
INSTRUMENT IN WRITING ACCEPTING SUCH APPOINTMENT HEREUNDER. SUCH
SUCCESSOR TRUSTEE THEREUPON SHALL BECOME VESTED WITH THE SAME TITLE
TO THE PROPERTY COMPRISING THE TRUST FUND, AND THE SAME POWERS,
DUTIES, AND IMMUNITIES WITH RESPECT THERETO, AS ARE HEREBY VESTED
IN THE ORIGINAL TRUSTEE. THE PREDECESSOR

-29-
<PAGE>
TRUSTEE SHALL EXECUTE ALL SUCH INSTRUMENTS AND PERFORM ALL SUCH
OTHER ACTS AS THE SUCCESSOR TRUSTEE SHALL REASONABLY REQUEST TO
EFFECTUATE THE PROVISIONS HEREOF. THE SUCCESSOR TRUSTEE SHALL HAVE
NO DUTY TO INQUIRE INTO THE ADMINISTRATION OF THIS TRUST FOR ANY
PERIOD PRIOR TO ITS SUCCESSION.

10. AMENDMENT. SUBJECT TO PARAGRAPH 3 ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT FROM TIME TO TIME TO AMEND THE
PROVISIONS OF THIS TRUST IN ANY MANNER. ANY SUCH AMENDMENT SHALL
BE BY WRITTEN INSTRUMENT EXECUTED BY THE COMPANY AND THE TRUSTEE.
ANY SUCH AMENDMENT MAY BE MADE RETROACTIVELY IF SUCH AMENDMENT IS
NECESSARY TO ENABLE THE PLAN AND THIS TRUST TO MEET THE
REQUIREMENTS OF THE CODE (INCLUDING THE REGULATIONS AND RULINGS
ISSUED THEREUNDER) OR THE REQUIREMENTS OF ANY GOVERNMENTAL
AUTHORITY. NO AMENDMENT TO THIS TRUST AGREEMENT SHALL AFFECT THE
TRUSTEE'S RIGHTS, DUTIES OR RESPONSIBILITIES UNLESS THE TRUSTEE
CONSENTS THERETO IN WRITING.

-30-
<PAGE>
TRUST ATTEMPTS TO ASSIGN, TRANSFER OR DISPOSE OF SUCH RIGHT OR AN
ATTEMPT IS MADE TO SUBJECT SUCH RIGHT TO SUCH PROCESS, SUCH
ASSIGNMENT, TRANSFER OR DISPOSITION SHALL BE NULL AND VOID.

12. TERMINATION OF TRUST. THIS TRUST MAY BE TERMINATED AT
ANY TIME BY THE COMPANY, AND UPON SUCH TERMINATION, THE TRUST FUND
SHALL BE PAID OUT BY THE TRUSTEE AS AND WHEN DIRECTED BY THE
COMMITTEE IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 2. UPON
SUCH DISTRIBUTION IN ACCORDANCE WITH THE DIRECTION OF THE COMMITTEE
THE TRUSTEE SHALL BE RELEASED AND DISCHARGED.

14. TITLES. TITLES OF PARAGRAPHS ARE PLACED HEREIN FOR
CONVENIENCE OF REFERENCE ONLY AND SHALL HAVE NO BEARING UPON THE
INTERPRETATION OF THIS TRUST.

15. ACTS BY COMPANY. ANY ACTS BY THE COMPANY AUTHORIZED
HEREUNDER SHALL BE EVIDENCED BY RESOLUTIONS OF ITS BOARD OF
DIRECTORS.

-31-
<PAGE>
16. COUNTERPARTS. THIS TRUST MAY BE EXECUTED IN ANY NUMBER
OF COUNTERPARTS, EACH ONE OF WHICH SHALL BE DEEMED TO BE THE
ORIGINAL. FOR PURPOSES OF THIS AGREEMENT AND ANY AMENDMENTS
HERETO, FACSIMILE SIGNATURES SHALL BE TREATED AS ORIGINALS.

17. FILINGS REQUIRED BY LAW. THE COMPANY AGREES THAT IT WILL
HAVE RESPONSIBILITY FOR THE PREPARATION AND DELIVERY TO PERSONS AND
GOVERNMENTAL AGENCIES OF ALL INFORMATION, DESCRIPTIONS, REPORTS AND
RETURNS REQUIRED BY LAW. THE TRUSTEE SHALL BE ENTITLED, AS IT MAY
DEEM APPROPRIATE FROM TIME TO TIME, TO REQUIRE OF THE COMPANY, THE
COMMITTEE OR ANY OTHER PERSON INVOLVED IN THE ADMINISTRATION OF THE
PLAN OR THE INVESTMENT OF THE TRUST FUND, OR HAVING ANY INTEREST
UNDER THE PLAN OR IN, TO, OR UNDER THIS TRUST OR TO THE TRUST FUND
HELD HEREUNDER, SUCH CERTIFICATIONS AND PROOFS OF FACTS AS SHALL
PERMIT THE TRUSTEE TO PERFORM ITS DUTIES UNDER APPLICABLE LAW AND
REGULATIONS ADOPTED THEREUNDER AS MAY BE IN EFFECT FROM TIME TO
TIME, OR TO EXERCISE THE POWERS GRANTED THE TRUSTEE UNDER THIS
TRUST.

-32-
<PAGE>
THE TRUSTEE MAY BE A PARTY, SHALL BE THE SUCCESSOR OF THE TRUSTEE
HEREUNDER WITHOUT THE EXECUTION OR FILING OF ANY INSTRUMENT OR THE
PERFORMANCE OF ANY FURTHER ACT.

20. REGULATION U COMPLIANCE. THE COMPANY REPRESENTS,
WARRANTS AND AGREES THAT IT SHALL NOT CAUSE AND WILL DIRECT EACH
INVESTMENT MANAGER NOT TO CAUSE THE TRUSTEE TO ENGAGE IN ANY
TRADING ACTIVITY THAT MAY CAUSE AN EXTENSION OF CREDIT IN VIOLATION
OF REGULATION U OF THE BOARD OF GOVERNOR'S OF THE FEDERAL RESERVE
OR REGULATION T OR X. THIS INCLUDES TRADING ON MARGINABLE STOCK OR
FAILURE TO HAVE CASH IN THE TRUST FUND ADEQUATE TO PAY FOR DELIVERY
OF ANY SECURITIES TRADED. IT IS MUTUALLY AGREED THAT SHOULD THE
TRUSTEE DETERMINE THAT A POTENTIAL REGULATION U VIOLATION, OR
OVERDRAFT CAN OCCUR, THE TRUSTEE SHALL TAKE APPROPRIATE MEASURES,
INCLUDING DISAFFIRMING OF THE TRADE AND THE LOSS SHALL BE ON THE
ACCOUNT OF THE COMPANY.

IN WITNESS WHEREOF, THE COMPANY AND THE TRUSTEE HAVE CAUSED
THIS TRUST TO BE EXECUTED THIS 10TH DAY OF OCTOBER, 1995 ON THEIR
BEHALF BY THEIR DULY AUTHORIZED OFFICERS AS OF THE DATE FIRST ABOVE
WRITTEN.

OREGON METALLURGICAL CORPORATION KEY TRUST COMPANY OF THE NORTHWEST,
TRUSTEE

BY: /s/ Dennis P. Kelly BY: /s/ Roger L. P. Greene
_______________________________ ______________________________

-33-
<PAGE>
AND: /s/ Gary A. Weber AND: /s/ Arlene Fraser
______________________________ _____________________________

g:\wjn\gje\oregon2.doc

-34-

OREGON METALLURGICAL CORPORATION

EXHIBIT 11.1

Earnings per share computation

<TABLE>
<CAPTION>
Three Years Ended
December 31, 1995
(in thousands except per share data)

1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Net Income (loss) $ (2,415) $ (2,023) $ (4,098)
======== ======== ========

Weighted average shares outstanding 10,921 10,997 10,839

Weighted average share equivalents
assumed issued from Excess Benefit
Plan 121 --- ---

Weighted average shares equivalents
assumed issued from exercise of warrants 59 4 ---

Weighted average share equivalents
assumed issued as part of Employee
Compensation policy 118 --- ---
________ ________ ________

Weighted average share and share
equivalents outstanding 11,219 11,001 10,839
======== ======== ========
Net income (loss) per share $ (0.22) $ (0.18) $ (0.38)
======== ======== ========
<PAGE>
Earnings per share computed on both the primary and fully diluted
bases are the same.

t:\wpwin60\95annual\exhibit.111
</TABLE>

QUARTERLY STOCK DATA

MARKET FOR COMMON STOCK

<TABLE>
<CAPTION>
HIGH LOW
____ ___

<S> <C> <C>
For the Year Ended December 31, 1995
First Quarter $ 8.25 $ 6.00
Second Quarter 9.63 6.563
Third Quarter 13.50 9.375
Fourth Quarter 12.50 9.125

For the Year Ended December 31, 1994
First Quarter $ 6.75 $ 6.00
Second Quarter 6.37 4.37
Third Quarter 6.25 5.25
Fourth Quarter 8.37 5.62
</TABLE>

FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
____________________________________________

(In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,

1995 1994 1993 1992 1991
____ ____ ____ ____ ____

<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:

Net Sales ......................................... $ 146,853 $ 71,166 $ 55,351 $ 56,785 $ 54,241
Cost of sales ..................................... 131,002 64,527 52,636 57,352 57,432
Gross profit (loss) ............................... 15,851 6,639 2,715 (567) (3,191)
Restructuring and environmental charges ........... --- 240 2,997 200 ---
Net (loss) ........................................ (2,415) (2,025) (4,098) 2) (4,122) 3) (4,685)
Net cash provided by (used in)
operating activities ............................ (10,969) (4,459) 841 7,454 961
Earnings (loss) per share ......................... (0.22) (0.18) (0.38) 2) (0.38) 3) (0.44)
Weighted average number of shares and share
equivalents outstanding ......................... 11,219 11,001 10,839 10,754 10,603

FINANCIAL POSITION:

Cash, cash equivalents and short-term
investments ..................................... 572 1,636 7,718 8,977 3,560
Working capital ................................... 63,769 49,082 1) 36,467 37,296 39,291
Current ratio ..................................... 2.95 3.1 1) 4.5 5.7 6.1
Net property, plant and equipment ................. 35,138 37,520 36,204 39,811 39,069
Total assets ...................................... 133,077 111,972 1) 83,326 85,701 86,520
Long-term debt, including current portion ......... 27,362 17,177 4,750 8,100 8,250
Shareholders' equity .............................. 65,887 67,282 67,065 68,402 68,436
Shareholders' equity per share .................... 5.98 6.18 6.16 6.32 6.42
Cash dividend per share ........................... --- --- --- --- .31

SUPPLEMENTARY DATA:

Net income (loss) as a percent of net sale ........ (1.6)% (2.8)% (7.4)% (7.3)% 3) (8.6)%
Number of employees ............................... 580 482 310 359 354
Number of shareholders ............................ 2,397 2,484 2,630 2,869 2,812
<FN>
<F1> The increase in working capital and total assets and the
decrease in the current ratio, as these items compare to prior
years, is primarily the result of the Company's acquisition of
Titanium Industries, Inc. on September 20, 1994.

<F2> The net loss includes a provision for restructuring of $1,409
net of tax benefit, or $0.13 per share and a provision for
estimated environmental expenses of $674 net of tax benefit, or
$0.06 per share. (See notes 11 and 14 to the Consolidated
Financial Statements)

<F3> The net loss excludes the cumulative effect of changes in
accounting principles for income taxes and post retirement benefits
other than pensions.
</FN>
</TABLE>

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

OVERVIEW

MARKET FOR TITANIUM PRODUCTS:
The Company, and other major U.S. titanium producers, reported
losses in 1995, which continued a trend which began in 1991. This
period represents one of the longest and most severe downturns
which the industry has seen. The years 1991 through 1994 were
characterized by declining military aerospace markets, weak
commercial aerospace markets and declining prices.

While still reporting losses for the year, the titanium industry
rebounded significantly in 1995. The industry benefited from both
a recovery in the commercial aerospace sector and continued growth
in the industrial sector. The recreation market (primarily golf
club stock) displayed strong demand. In response to the increase
in the demand for titanium products, production levels increased
at a rapid pace, straining capacity and extending mill delivery
dates.

The Company believes that the market for golf club stock has grown
to be the second largest consumer of titanium, after the commercial
aerospace market. Additionally, the developing market for titanium
armor (ballistic protection material) appears to be a significant
new application for the titanium industry.

The Company's twelve-month sales order backlog (sales backlog) was
$105 million at December 31, 1995, an increase of 139% over the
December 31, 1994 sales backlog of $44 million. The sales backlog
reflects recent customer order placement but may not be an accurate
indicator of annual or quarterly sales volume.

1995 - IN SUMMARY:
The Company reported profits during the fourth quarter of 1994 and
the first two quarters of 1995. However, during the last two
quarters of 1995 and for the year, the Company incurred losses.
Strong increases in demand resulted in shortages in raw material
supply and escalating costs. The Company's rapid increase in
production levels coupled with a larger and more complex mix of
products, resulted in production inefficiencies, and higher
conversion costs. These factors combined to depress margins on
most of the Company's sales. The Company's fixed price long-term
sales agreements were severely impacted, requiring the Company to
record a charge to income during the fourth quarter to reflect
anticipated losses on future shipments under its long-term sales
agreements.

<PAGE>
The Company's 1995 Consolidated Financial Statements reflect the
activities of Titanium Industries, Inc. (TI) for the entire year.
TI was acquired by the Company in September 1994. TI operates
titanium sales and service centers in North America and Western
Europe. TI sells its product primarily into the industrial markets
and to a lesser extent the commercial aerospace market. TI enjoyed
the benefits of strong markets and stable margins in 1995.

With the acquisition of TI and the emergence of the recreation and
armor markets, the Company has reduced its level of dependence on
the aerospace industry. Aerospace related sales represented
approximately 45% of net sales in 1995, compared with 60% and 85%
of net sales in 1994 and 1993, respectively. Access to a variety
of markets has been a long-term goal of the Company's due to the
traditionally cyclical nature of the aerospace industry.

RESULTS OF OPERATION

1995 COMPARED TO 1994

NET SALES:
Net sales increased 106% to $146.8 million in 1995, compared to
$71.2 million in 1994. 1995 represents the first complete year in
which Titanium Industries, Inc. (TI) results are consolidated with
the Company. TI was acquired by the Company in September 1994. On
a pro forma basis, as if TI had been included in results for all of
1994, the sales increase in 1995 would have been 53% as compared to
the actual 1995 increase of 106%. The increase in sales was
primarily driven by increased demand and pricing for both the
Company's manufactured and service center products.

TITANIUM SPONGE:
During 1995, the Company's integrated sponge facility operated at
near capacity, primarily supplying the Company's internal demand
for titanium sponge and sales to RMI Titanium Company (RMI) under
our long-term titanium sponge supply agreement. Sales of titanium
sponge and sponge conversion services decreased 15% for 1995
compared to 1994. Sponge shipments decreased 22% and average
sponge price per pound increased 9%. The increase in the average
price per pound of 9% is attributable to sales of our high purity
sponge which the Company started commercially producing during 1995
in limited quantities. Sales of titanium sponge have decreased due
to greater internal consumption by the Company. The Company
projects that for 1996 it will continue to operate its sponge
facility at near capacity rates with substantially all production
being needed for internal consumption or for supply to RMI. The
Company anticipates it will supplement its sponge production in
1996 with purchases from other producers.

<PAGE>
INGOT:
Sales of ingot increased 44% in 1995 compared to 1994. Ingot
shipments increased 24% and the average ingot price per pound
increased 16% from 1994. The company began operating its melt
facilities at near capacity during the second-half of 1995. The
Company produces ingot for both internal use in its mill products
division and for sales to outside customers.

MILL PRODUCTS:
The OREMET Titanium Division (primary production facilities located
in Albany, Oregon) of the Company directly produces or contracts
for outside production a variety of mill products, including:
billet, bar, plate, sheet and engineered parts. OREMET Titanium
Division mill products sales increased 126% for 1995 compared to
1994. Shipments of mill products increased 110% and the average
price per pound increased 8%. During 1995, Mill Products
experienced increased sales across all product lines. Sales of
titanium billet destined to be made into golf club heads had a
favorable effect on 1995 mill product sales.

The Company's service centers market a wide variety of mill
products including engineered parts, manufactured by various
producers. During 1995, both shipments and pricing for service
center products increased.

CASTINGS:
Sales of castings increased 11% in 1995 compared to 1994. During
the fourth quarter of 1995, a significant competitor of the Company
discontinued their casting operations which has had a positive
effect on casting orders and sales. The Company expects to expand
its casting production facilities during 1996.

COST OF SALES:
Cost of sales for 1995 increased $66.5 million or 103%, to $131.0
million, compared to $64.5 million in 1994. TI's cost of sales
were included for a full year in 1995, compared to approximately
three months in 1994. The primary reasons for the increase in cost
of sales were increased shipments coupled with rising raw material
costs. The markets served by the Company's service centers, which
were entered by the Company with the acquisition of TI, displayed
strong growth and steady gross profits during 1995.

The Company has traditionally entered into long-term agreements
("LTA(s)") with certain customers, primarily in the aerospace
industry. The LTAs, which typically cover a two or three-year
period, obligate the Company to sell product at a fixed price for
the duration of the agreement. In 1995, rapidly increasing costs
of raw materials and processing had a detrimental impact on the
profitability of the Company's LTAs. Many LTAs were negatively
affected and the Company expects to incur a loss on certain LTA's
over the remaining term of the agreements. Therefore, the Company
recorded a provision for losses on LTAs of $4.4 million at December
31, 1995 to cover future estimated losses. The provision for
losses on LTA's was charged to cost of sales. The Company's most
significant unfavorable LTA expires during the third quarter of
1997. In response to the changing market conditions, the Company
has negotiated more favorable terms on many of its LTA's and has
instituted raw material

<PAGE>
surcharges. The future profitability of the Company's fixed price
LTAs is subject to change based upon the Company's costs of
production.

RESEARCH, TECHNICAL AND PRODUCT DEVELOPMENT EXPENSES:
Research, technical and product development expenses (RT&D)
increased $0.2 million or 16% in 1995, to $1.6 million compared to
$1.4 million in 1994. RT&D salaries and related costs have
increased in 1995 compared to 1994, reflecting an increase in
technical personnel to support the Company's long-term commitments
for research, development of new products and improvements in
operating processes.

SELLING GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses (SG&A) increased $7.0
million or 93% in 1995 to $14.5 million from $ 7.5 million in 1994.
The inclusion of TI for a full year in the Company's 1995 results
is the primary reason for the increase in the Company's SG&A. In
response to an increased activity level, all departments included
in the SG&A category added personnel during 1995.

INTEREST INCOME:
The Company did not have any interest income during 1995 compared
to $0.4 million in 1994. The Company expects that interest income
for 1996 and the foreseeable future should be negligible.

INTEREST EXPENSE:
Interest expense increased $1.5 million or 247% to $2.1 million in
1995 compared to $0.6 million in 1994. The increase in interest
expense in 1995 compared to 1994 is the direct result of the
purchase of TI in September of 1994 and increased borrowings
required to support the Company's increased operating levels.

MINORITY INTERESTS:
The amounts reported as minority interests eliminate the minority
shareholder's 20% interest in the net income of TI from the
Company's Consolidated Statements of Operations.

INCOME TAX BENEFIT:
The Company's 1995 effective tax benefit rate on the net loss
before income tax benefit and minority interests is 18%. The
Company's income tax rate varies from the normally expected
statutory rate due to differences between book and tax income for
which recognition of a deferred tax asset is not currently
considered appropriate. See note 7 to the Consolidated Financial
Statements. During 1995, the Company concluded an IRS examination
of its 1989 through 1993 Federal income tax filings. The
examination did not give rise to any material adjustments.

NET LOSS:
The Company reported a net loss of $2.4 million, or $0.22 per
share, for 1995 compared to a net loss of $2.0 million, or $0.18
per share, for 1994.

<PAGE>
1994 COMPARED TO 1993

NET SALES:
Net sales increased 29% to $71.1 million in 1994, compared to $55.4
million in 1993. The Company's 1994 net sales include $11.5
million of sales attributable to Titanium Industries, Inc.

Net sales of ingot, mill products and castings increased 29% in
1994 compared to 1993. The expansion in sales across the Company's
primary product lines reflects a strengthening general economy.
The increase in revenue for these products is primarily the result
of increased shipments, average prices have remained stable between
the two periods.

Sales of titanium sponge and sponge conversion services decreased
36% in 1994. The decrease in sales and conversion of titanium
sponge are a direct result of competition from lower priced
titanium sponge available principally from the Former Soviet Union
(FSU).

COST OF SALES:
Cost of sales as a percentage of net sales decreased in 1994 to 91%
from 95% for 1993. The change is primarily due to the increase in
volume. As a result, gross profit increased $3.9 million to $6.6
million for 1994 from $2.7 million for 1993.

RESTRUCTURING COSTS:
During 1993, the Company recorded a non-recurring provision for
restructuring costs of $2.0 million. No additional restructuring
charges were incurred during 1994 (For further information, see
Note 14 to the Consolidated Financial Statements).

PROVISION FOR ESTIMATED ENVIRONMENTAL MATTERS:
In 1994, the Company recorded a provision for estimated
environmental matters of $0.2 million, compared to $1.0 million in
1993, a decrease of $0.8 million or 80%. (For further information
see Note 11 to the Consolidated Financial Statements.)

RESEARCH, TECHNICAL AND PRODUCT DEVELOPMENT EXPENSES:
Research, technical and product development expenses (RT&D)
increased 78% in 1994 to $1.4 million from $0.8 million in 1993.
The Company has significantly increased its emphasis on new product
development and technical support. This strategic commitment began
in November 1993, with the appointment of Steven H. Reichman to
the newly created position of Vice-President-Technology and
Corporate Development. Also in 1994, the Company successfully
completed its search for two newly defined positions, both of which
have been filled by experienced metallurgists.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses (SG&A) increased 47%
in 1994 to $7.5 million from $5.1 million in 1993. The addition of
Titanium Industries, Inc. represents 69% of the increase in SG&A.
The balance of the increase in SG&A arises from management's
decision to increase its allowance for uncollectible accounts
receivable

<PAGE>
and reflects the Company's increased commitment to the expansion of
its marketing efforts.

INTEREST INCOME:
Interest income decreased to $0.4 million in 1994 compared to $0.8
million in 1993 due to the liquidation of the Company's portfolio
of short-term investments and a smaller outstanding balance on the
note receivable from the OREMET ESOP. The Company expects that
interest income for 1995 and the foreseeable future should be
negligible.

INTEREST EXPENSE:
Interest expense increased to $0.6 million in 1994 compared to $0.5
million in 1993, primarily as a result of the debt incurred by the
Company in the purchase of Titanium Industries, Inc. Additionally,
the Company increased borrowings during the fourth quarter of 1994
to finance an increase in operating levels.

MINORITY INTERESTS:
The amounts reported as minority interests removes the minority
shareholder's 20% interest in the net income of TI from the
Company's Consolidated Statements of Operations.

INCOME TAX BENEFIT:
The Company reported an income tax benefit of $0.7 million
(effective tax rate of 26%) for 1994, compared to a tax benefit of
$1.8 million, or an effective tax rate of 30% for 1993. ( See Note
7 to the Consolidated Financial Statements for an analysis of the
Company's effective tax rate.)

NET LOSS:
The Company reported a net loss of $2.0 million ($0.18 per share)
for 1994 compared to a net loss of $4.1 million ($0.38 per share)
for 1993.

1993 COMPARED TO 1992

NET SALES:
Net sales decreased 2.5% to $55.4 million in 1993, compared to
$56.8 in 1992. Decreased sales of ingot, castings, titanium sponge
and conversion services were only partially offset by increased
sales of mill products. Favorable mix shifts and small price
changes in sponge, ingots, castings and mill products offset an
approximate 5% decline in shipments. Reductions in toll melting,
conversion and other services accounted for the majority of the
$1.4 million decrease in sales. These net decreases were primarily
due to a continuing weak demand for titanium metal and shrinkage of
the military and commercial aerospace markets. Imports from the
FSU have intensified the downward pressure on pricing.

<PAGE>
COST OF SALES:
Cost of sales as a percentage of net sales improved in 1993 to 95%
from 101% in 1992, due primarily to increased sales of higher
value-added mill products and increased prices as previously noted.
Cost of sales decreased 8.2% in 1993 to $52.6 million from $57.4 in
1992 primarily as a result of the decrease in shipments and the
reduced levels of toll melting, conversion and other services. As
a result, gross profit improved to $2.7 million in 1993 from a loss
of $0.6 million in 1992.

RESTRUCTURING COST:
In 1993, the Company recorded a provision for restructuring costs
of $2.0 million, which included non-recurring costs for severance
pay and benefits of $1.0 million and a write-down of construction
in progress of $1.0 million related to the curtailed expansion of
the titanium sponge reduction and magnesium recovery plants. This
downsizing and restructuring was done to reduce fixed costs to a
level which was more supportable by the then current level of
business and to recognize that at that level and with the
availability of low priced sponge from the FSU, the expansion was
no longer needed. (See note 14 to the Consolidated Financial
Statements.)

PROVISION FOR ESTIMATED ENVIRONMENTAL MATTERS:
The Company recorded a provision for estimated environmental
expenses of $1.0 million in 1993 compared to $0.2 million in 1992.
For further information see Note 11 to the Consolidated Financial
Statements.

SELLING, GENERAL AND ADMINISTRATIVE, AND RESEARCH TECHNICAL AND
PRODUCT DEVELOPMENT EXPENSES:
Selling, general and administrative expense and research, technical
and product development expense increased 14% in 1993 to $5.9
million from $5.2 million in 1992 and increased as a percentage of
net sales to 10.7% from 9.1%. This increase is primarily due to
employment related expenses associated with the transition to the
new management team, increased administrative supply expenses as
well as increased legal and professional expenses.

INTEREST EXPENSE:
Interest expense decreased to $0.5 million in 1993 compared to $0.7
million in the previous year due primarily to a reduction in the
bank term loans.

INCOME TAX BENEFIT:
The loss before income taxes increased slightly to $5.9 million in
1993 compared to $5.8 million in the prior year. The income tax
benefits of $1.8 million in 1993 and $1.7 million in the prior year
are recorded at a rate different than the statutory rate primarily
as a result of recording a state tax valuation allowance in
compliance with SFAS No. 109 "Accounting For Income Taxes", and in
1993 recording an alternative minimum tax limitation.

<PAGE>
NET LOSS:
The Company reported a net loss of $4.1 Million, or $0.38 per share
for 1993, compared to a net loss of $4.2 Million or 0.39 per share,
for 1992.

NON-U.S. OPERATIONS AND MONETARY ASSETS

FOREIGN SUBSIDIARIES:
The Company has the following foreign subsidiaries:

- - Titanium International Limited (TIL), a sales and service center
located in the United Kingdom, and Titanium International GmbH, a
sales and service center located in Germany. Both service centers
are wholly-owned subsidiaries of TI, an 80% owned subsidiary of the
Company. As of December 31, 1995, TIL had $9.4 million in total
assets and approximately 30 employees. Titanium International GmbH
began operations in early 1996 with three employees.

- - Oremet France, S.a.r.l., is a wholly owned service center located
outside of Paris, France. Oremet France was in a start-up phase
during 1994, and became operational in January 1995. Oremet France
operates from a leased warehouse, has total assets as of December
31, 1995 of $0.9 million, and has six employees.

Approximately 11% of the Company's 1995 net sales were derived from
its European service centers.

Changes in the value of non-U.S. currencies relative to the U.S.
dollar cause fluctuations in U.S. dollar financial position and
operating results. The impact of currency fluctuations on the
Company was not significant in 1995.

FORWARD FOREIGN EXCHANGE CONTRACTS:
See notes 1 and 15 to the Company's 1995 Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW:
Net cash used in operating activities totaled $11.0 million in 1995
compared to $4.5 million for 1994. Working capital increases
required to support the sharp increase in operating levels are
responsible for the most significant portion of the cash used by
the Company's operating activities in 1995. The increase in the
amount of cash flow used in operating activities is a trend which
began in the second quarter of 1994. The timing of this trend is
consistent with the Company's experience of increasing sales, sales
order backlog and production.

During 1995, the Company incurred $2.7 million in expenses relating
to its Stock Compensation Plans and Savings Plan. The Company has,
or will satisfy liabilities arising under these plans by issuing
shares of the Company's common stock. ( See note 10 to the
Consolidated Financial Statements for further discussion regarding
the Company's Stock Compensation and Defined Contribution Plans.)

<PAGE>
During the fourth quarter of 1995, the Company incurred a non-cash
charge to earnings of $4.4 million to establish an allowance for
anticipated future losses on fixed price long-term sales
agreements. (See note 6 to the Company's Consolidated Financial
Statements.)

Net cash used in investing activities totaled $2.2 million in 1995
compared to $2.7 million in 1994. The Company had additions to
property, plant and equipment in 1995 of $1.9.

Net cash provided by financing activities totaled $12.1 million in
1995, compared to $8.8 million in 1994. For 1995, $11.3 million
was provided from net proceeds on the Company's revolving credit
agreements and book overdraft, and $1.0 million from proceeds from
a capital lease obligation.

REVIEW OF SIGNIFICANT WORKING CAPITAL ACCOUNTS:
Inventories increased $17.0 million, or 35%, to $66.0 million at
December 31, 1995, compared to $49.0 million at December 31, 1994.
In addition to an increase in finished goods inventory of $3.5
million, increases in raw materials and work-in-process have been
made in support of higher production levels. In response to a
growing sales backlog, the Company is continuing to raise its
production levels. The Company is also experiencing higher raw
material and conversion costs, which have increased the cost of the
Company's inventory.

Accounts receivable increased $5.5 million, or 27%, to $25.9
million at December 31, 1995, compared to $20.4 million as of
December 31, 1994. The increase in accounts receivable is
consistent with the Company's increase in sales volume.

The Company had a book overdraft on December 31, 1995 of $2.0
million. The book overdraft represents Company checks which have
been disbursed and are in transit as of the end of the year. When
the checks clear the Company's bank, they are funded by draws on
the Company's revolving credit agreement to the extent they are not
funded by deposits.

Accounts payable at December 31, 1995 of $17.0 million is
comparable to the December 31, 1994 balance of $16.9 million. The
minimal change in the accounts payable balance between 1995 and
1994 reflects the Company's use of other financing facilities,
primarily its credit agreements, to fund the substantial increases
in accounts receivable and inventory.

Accrued payroll and employee benefits increased $3.7 million or
126% to $6.7 million at December 31, 1995, compared to $2.9 million
as of December 31, 1994. Amounts payable in shares of the
Company's common stock pursuant to its Stock Compensation and
Retirement Savings Plans account for $1.8 million of the increase.
The balance of the increase of $1.9 million relates to increased
levels of activity in 1995.

<PAGE>
CREDIT AGREEMENTS:
The Company may borrow up to $25 million under the terms of a
revolving credit agreement with BankAmerica Business Credit, Inc.
(BABC). The credit agreement expires in September 1997. The
balance outstanding under the credit agreement as of December 31,
1995 is $21.2 million. The Company anticipates that the credit
facility with BABC will expand to $35 million in 1996 in
anticipation of increased financing requirements necessary to
support higher operating levels.

As of December 31, 1995, the Company was not in compliance with
certain of its financial covenants contained in its BABC credit
agreement. The Company obtained a written waiver from BABC on
these matters. The Company believes that in the future, it will
meet the covenants contained in its credit agreement with BABC.
The Company has classified the outstanding balance on the credit
agreement as a long-term liability on the Company's Consolidated
Balance Sheets.

The Company has an additional short-term credit facility with
Midland Bank plc, in the United Kingdom. This credit agreement
provides for a credit facility of approximately $2.3 million. The
credit agreement is subject to renewal on December 31, 1996. The
balance outstanding under the credit agreement as of December 31,
1995 is $0.5 million. (See note 8 to the Company's Consolidated
Financial Statements for further information regarding the
Company's credit agreements and other long-term debt.)

CAPITAL EXPENDITURES:
The Company has no material open commitments which obligate it to
make future capital expenditures. The Company's 1996 capital plan
anticipates that capital expenditures may approximate $7.5 million.
Capital expenditures required to maintain compliance with
applicable environmental regulations are included in the Company's
capital plan to the extent that they can presently be determined.
The Company's capital expenditures will be funded by a combination
of internally generated cash and external financing.

The Company's recent capital expenditure history is as follows
(dollars in millions):

<TABLE>
<CAPTION>
Year Ended December 31
______________________

Budgeted Actual
________ __________________
1996 1995 1994 1993
____ ____ ____ ____
<S> <C> <C> <C> <C>
Additions to property, plant and equipment $7.5 $1.9 $1.9 $1.2
</TABLE>

The 1996 capital expenditures budget includes amounts to rebuild
and modernize existing equipment and to increase prodution
capacity. The Company's revolving credit facility with BABC
provides that capital expenditures may not exceed $4.5 million for
any fiscal year. A change in the covenant to reflect the higher
budgeted capital spending amount is currently being discussed with
BABC.

<PAGE>
INCOME TAXES:

For financial and income tax reporting purposes the Company
incurred net losses for 1991 through 1994. The Company is unable
to carryback any further losses for federal or state tax refunds.
In 1995, the Company reported a loss for financial reporting
purposes, but expects to report taxable income for both federal and
state income tax reporting purposes. The Company anticipates that
it will be able to utilize federal and state net operating loss
carryforwards, limiting the amount of taxes actually payable to the
taxing jurisdictions where it is subject to the largest taxes. The
Company does pay minimal franchise and income taxes in various
states. For 1995, the operations of TIL, located in the U.K.,
have resulted in the Company's most significant tax obligations.

The Company has both federal and state net operating loss
carryforwards which will provide it with some relief should its
operations return to profitability within the carryforward periods.
( See note 7 to the Consolidated Financial Statements for a further
discussion regarding the Company's income taxes.)

ADEQUACY OF LIQUIDITY AND CAPITAL RESOURCES:
The Company's access to borrowing facilities, internally generated
cash and to capital markets are expected to be sufficient to
provide the resources necessary to support increased operating
needs and to finance its continued growth, capital expenditures and
repayment of long-term debt obligations.

ENVIRONMENTAL MATTERS

(See note 11 to the Company's Consolidated Financial Statements.)

GAW/dkt
February 23, 1996
t:winwp60\95annual\mda95.wpd

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF OREGON METALLURGICAL
CORPORATION AND SUBSIDIARIES:

We have audited the accompanying consolidated balance sheets of
Oregon Metallurgical Corporation and subsidiaries as of December
31, 1995 and 1994, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

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

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

/s/ COOPERS & LYBRAND L.L.P.

Eugene, Oregon
February 16, 1996, except for the second
paragraph of Note 8, as to which the date
is March 1, 1996

MANAGEMENT'S STATEMENT ON FINANCIAL REPORTING

The management of Oregon Metallurgical Corporation is responsible
for the preparation as well as the integrity of the consolidated
financial statements and related data contained in this Annual
Report. The consolidated financial statements have been prepared
in accordance with generally accepted accounting principles and
necessarily include amounts which represent the best estimates and
judgments of management with appropriate consideration to
materiality.

The Company maintains internal accounting policies, procedures, and
controls designed to provide reasonable assurance at reasonable
cost that assets are safeguarded and that transactions are properly
recorded and executed in accordance with management's
authorization. Management believes the Company's accounting
controls provide reasonable assurance that errors or irregularities
which may occur are detected within a timely period by employees in
the normal course of performing their assigned functions. Our
independent accountants, whose report on their examination of the
financial statements appears above, also review our systems of
internal accounting control in accordance with generally accepted
auditing standards for the purpose of expressing their opinion on
the consolidated financial statements.

The Board of Directors pursues its oversight role for these
consolidated financial statements through its Audit Committee,
which is comprised exclusively of outside directors. The Audit
Committee meets with management and the independent accountants.
The independent accountants have access to the Audit Committee and,
without management present, have the opportunity to discuss the
quality of financial reporting.

/s/ Carlos Aguirre
Carlos E. Aguirre
President and Chief Executive Officer

/s/ Dennis P. Kelly
Dennis P. Kelly
Vice President - Finance
Treasurer and Chief Financial Officer
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)
for the years ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION>
1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Net sales $146,853 $ 71,166 $ 55,351
Cost of sales, including provision for future losses on
long-term agreements of $4,417 in 1995 (Note 6) 131,002 64,527 52,636
________ ________ ________

Gross profit 15,851 6,639 2,715

Research, technical and product development expenses 1,595 1,376 773
Selling, general and administrative expenses 14,512 7,517 5,124
Provision for estimated environmental matters - 240 970
Restructuring cost - - 2,027
________ ________ ________
Loss from operations (256) (2,494) (6,179)

Interest income - 391 816
Interest expense (2,104) (606) (532)
Minority interests (480) (29) -
________ ________ ________
Loss before income tax benefit (2,840) (2,738) (5,895)

Income tax benefit 425 715 1,797
________ ________ ________
Net loss $ (2,415) $ (2,023) $ (4,098)
======== ======== ========

Net loss per share $ (0.22) $ (0.18) $ (0.38)
======= ======== ========
Weighted average shares and share equivalents
outstanding 11,219 11,001 10,839
======= ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)
December 31, 1995 and 1994

<TABLE>
<CAPTION>
1995 1994
____ ____

<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents $ 572 $ 1,636
Accounts receivable, less allowance for doubtful accounts
of $1,257 and $858 25,894 20,444
Inventories 66,010 49,023
Income taxes receivable 321
Prepayments 689 1,031
Deferred tax assets 3,242 517
________ ________
Total current assets 96,407 72,972

Property, plant and equipment, net 35,138 37,520
Other assets, net 1,532 1,480
________ ________
$133,077 $111,972
======== ========

LIABILITIES

Current liabilities:
Current portion of long-term debt $ 616 $ 13
Book overdraft 2,014 -
Accounts payable 16,973 16,860
Accrued payroll and employee benefits 6,659 2,944
Provision for losses on long-term agreements 2,781 -
Other accrued expenses 3,595 4,073
________ ________
Total current liabilities 32,638 23,890

Long-term debt, less current portion 26,746 17,164
Deferred tax liabilities 3,149 1,098
Deferred compensation payable 678 881
Accrued postretirement benefit 1,563 1,457
Provision for losses on long-term agreements, less
current portion 1,636 -
Minority interest 780 200
________ ________
Total liabilities 67,190 44,690
________ ________

Commitments and contingencies (Note 11)

SHAREHOLDERS' EQUITY

Common stock, $1.00 par value; shares authorized, 25,000;
shares issued, 1995 - 11,018; 1994 - 10,893 11,018 10,893
Additional paid-in capital 38,340 37,445
Retained earnings 16,545 18,960
Cumulative foreign currency translation adjustment (16) (16)
________ ________
65,887 67,282
________ ________
$133,077 $111,972
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)
for the years ended December 31, 1993, 1994 and 1995

<TABLE>
<CAPTION>
Foreign
Additional Currency Note
Common Stock Paid-in Retained Translation Receivable
_________________
Shares Amount Capital Earnings Adjustment ESOP Total
______ ______ __________ ________ ___________ __________ _____

<S> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1992 10,827 $ 10,827 $ 37,149 $ 25,081 - $ (4,655) $ 68,402
Repayment of loan by ESOP - - - - - 2,429 2,429
Issuance of common stock
in payment of:
Employee benefits 8 8 59 - - - 67
Restructuring cost 53 53 212 - - - 265
Net loss 0 0 0 (4,098) - - (4,098)
______ ________ ________ ________ ________ ________ ________
Balances, December 31, 1993 10,888 10,888 37,420 20,983 - (2,226) 67,065
Repayment of loan by ESOP - - - - - 2,226 2,226
Issuance of common stock
in payment of employee benefits 5 5 25 - - - 30
Cumulative currency
translation adjustment - - - - $ (16) - (16)
Net loss - - - (2,023) - - (2,023)
______ ________ ________ ________ ________ ________ ________

Balances, December 31, 1994 10,893 10,893 37,445 18,960 (16) - 67,282
______ ________ ________ ________ ________ ________ ________
Issuance of common stock
in payment of employee benefits 125 125 895 - - - 1,020

Net loss - - - (2,415) - - (2,415)

______ _______ ________ ________ ________ ________ ________

Balances, December 31, 1995 11,018 $ 11,018 $ 38,340 $ 16,545 $ (16) $ - $ 65,887
====== ======== ======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
for the years ended December 31, 1995, 1994 and 1993

<TABLE>
<CAPTION> 1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (2,415) $ (2,023) $ (4,098)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 4,632 4,014 3,937
Loss on disposition of assets - - 1,000
Deferred income tax benefit (674) (1,434) (403)
Employee benefits paid or payable in common stock 2,666 125 -
Provision for losses on long-term agreements 4,417 - -
Minority interests' share of income 480 29 -
Changes in current assets and liabilities, net of effects
from acquisition of a business:
Accounts receivable (5,450) (4,158) (3,141)
Inventories (16,987) (12,209) (930)
Other current assets 663 1,107 1,174
Accounts payable 113 7,198 1,161
Accrued payroll and employee benefits 2,153 1,577 211
Other accrued expenses (478) 920 1,204
Other (89) 395 726
________ ________ ________
Net cash provided by (used in) operating activities (10,969) (4,459) 841
________ ________ ________

Cash flows from investing activities:
Acquisition of a business, net of cash acquired - (8,223) -
Additions to property, plant and equipment (1,914) (1,929) (1,244)
Short-term investments - purchased - (1,228) (15,651)
Short-term investments - redeemed - 8,811 14,856
Other (334) (111) 65
________ ________ ________
Net cash used in investing activities (2,248) (2,680) (1,974)
________ ________ ________
Cash flows from financing activities:
Proceeds from revolving credit agreement 107,049 40,361 -
Payments on revolving credit agreement (97,800) (27,865) -
Capitalized loan fees and acquisition costs (54) (1,260) -
Proceeds from long-term debt 990 - -
Payments of long-term debt (54) (4,754) (3,350)
Book overdraft 2,014 - -
Proceeds from note receivable - ESOP - 2,226 2,429
Other - 46 -
________ ________ ________
Net cash provided by (used in) financing activities 12,145 8,754 (921)
________ ________ ________
Effect of exchange rates on cash and cash equivalents 8 (16) -
________ ________ ________
Net increase (decrease) in cash and cash equivalents (1,064) 1,599 (2,054)
Cash and cash equivalents, beginning of year 1,636 37 2,091
________ ________ ________

Cash and cash equivalents, end of year $ 572 $ 1,636 $ 37
======== ======== ========

</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF OPERATION - Oregon Metallurgical Corporation (Oremet) and
Subsidiaries (the "Company") is a major producer and distributor of
titanium sponge, ingot, mill products and castings, primarily for
North American and western European aerospace, industrial and
commercial customers. As of December 31, 1995, the Company is 35%
owned by the Oregon Metallurgical Corporation Employee Stock
Ownership Plan (the "ESOP").

In September 1994, the Company completed the acquisition of the net
operating assets and subsidiaries of Titanium Industries
Distribution Group from Kamyr, Inc. The acquisition cost of
approximately $13,502 was funded by $5,000 in cash, $4,002 of bank
financing and $4,500 of seller financing. The acquired business is
being operated under the name of Titanium Industries, Inc.
(Titanium), an eighty percent (80%) owned subsidiary of Oremet.
The acquisition was accounted for as a purchase, with the results
of Titanium included in the Company's financial statements from the
acquisition date.

BASIS OF CONSOLIDATION - The consolidated financial statements
include the accounts of Oremet, Titanium and another wholly-owned
subsidiary. All material intercompany accounts and transactions
are eliminated in consolidation. Operations of purchased
businesses are included in the consolidated financial statements
from the date of acquisition.

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

CASH AND CASH EQUIVALENTS - The Company classifies all cash on
deposit with banks and all highly liquid debt investments purchased
with a maturity of 90 days or less as cash and cash equivalents.
The carrying amounts approximate fair value because of the short
maturity of these instruments.

CONCENTRATIONS OF CREDIT RISK - Financial instruments that
potentially subject the Company to concentrations of credit risk
consist principally of cash and cash equivalents and trade
receivables. The Company places its cash and cash equivalents with
high-credit-quality financial institutions and limits the amount of
credit exposure at any one financial institution. At times,
temporary cash investments may be in excess of the Federal Deposit
Insurance Corporation insurance limit. Management believes that
risk of loss on the Company's trade receivables is significantly
reduced by ongoing credit evaluations of customers' financial
condition. Generally, the Company does not require collateral.

INVENTORIES - Inventories are carried at the lower of cost or
market. Cost is determined using the weighted average cost method.
Inventory costs generally include material, labor cost and
manufacturing overhead.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are
recorded at historical cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets
for financial reporting purposes and accelerated methods are used
for income tax reporting purposes. The cost and accumulated
depreciation applicable to assets retired are removed from the
accounts and the gain or loss on disposition is recognized in the
statement of operations. The Company capitalizes interest costs as
part of the cost of constructing major facilities and equipment.
No interest costs were capitalized in 1995, 1994 or 1993.

EXCESS OF COST OVER NET ASSETS ACQUIRED - Excess cost over net
assets acquired of $857 is included in other assets. The excess
relates to the acquisition of Titanium and is being amortized on a
straight-line basis over 15 years. Accumulated amortization was
$70 and $13 in 1995 and 1994, respectively.

INCOME TAXES - The Company uses the liability method to record
deferred tax assets and liabilities that are based on the
difference between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes. These
temporary differences result from the use of different accounting
methods for financial statement and tax reporting purposes.

FORWARD FOREIGN EXCHANGE CONTRACTS - The Company may enter into
forward foreign exchange contracts as a hedge against currency
fluctuations relating to net foreign transactions and commitments
denominated in foreign currencies. Gains and losses on forward
contracts are deferred and offset against foreign exchange gains or
losses on the underlying hedged items.

FOREIGN CURRENCY TRANSLATION - The Company's foreign subsidiaries'
accounts are measured using local currency as the functional
currency. Assets and liabilities are translated at the exchange
rate in effect at year end. Revenues and expenses are translated
at the average rate of exchange prevailing during the year.
Translation adjustments arising from differences in exchange rates
from period to period are included in the cumulative adjustment
account in shareholders' equity, net of related deferred income
taxes.

EARNINGS PER SHARE - Earnings (loss) per share are based on the
weighted average number of shares of common stock and common stock
equivalents outstanding during each year presented. Common stock
equivalents consist of warrants and amounts due to be settled in
shares pursuant to Oremet's excess benefit, stock compensation and
defined contribution plans. Common stock equivalents are computed
using the treasury stock method.

REVENUE RECOGNITION - Revenues from the sale of commercial products
are recognized upon passage of title to the customer, which in most
cases coincides with shipment. Revenues from long-term, fixed
price agreements are recognized as the work is performed and
shipped. Losses estimated to be sustained upon completion of
agreements are charged to income in the period such estimates are
determined.

ACCOUNTING STANDARDS PRONOUNCEMENTS - For the year ended December
31, 1995, the Company has adopted Statement of Financial Accounting
Standards Board No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS No. 121). The Standard requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity
be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount on an asset may not
be recoverable. The adoption of SFAS No. 121 had no effect on the
Company's financial position or results of operations.

RECLASSIFICATIONS - Certain amounts in the 1994 and 1993 financial
statements have been reclassified to conform with the current
year's presentation. The reclassifications do not affect
previously reported net loss.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

2. ADDITIONAL CASH FLOWS STATEMENT INFORMATION:

The Company's noncash investing and financing activities and cash payments for
interest and income taxes for years ended December 31 are as follows:

<TABLE>
<CAPTION>
1995 1994 1993
____ ____ ____
<S> <C> <C> <C>
Cash paid (received) during the year for:
Interest, net of amounts capitalized $ 2,253 $ 614 $ 523
Income taxes (refunds, net of payments) 9 (1,327) (2,817)
Noncash investing activities:
Acquisition of business, net of cash acquired:
Working capital, other than cash $ - $ (9,630) $ -
Property, plant and equipment - (3,278) -
Long-term debt assumed - 185 -
Note payable issued to seller - 4,500 -
________ ________ ________
$ - $ (8,223) $ -
======== ======== ========
</TABLE>

3. INVENTORIES:

<TABLE>
<CAPTION>
Inventories at December 31 consist of:
1995 1994
____ ____

<S> <C> <C>
Finished goods $ 18,141 $ 14,656
Work-in-progress 19,837 15,288
Raw materials 28,032 19,079
________ ________
Total $ 66,010 $ 49,023
======== ========
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
<CAPTION>
Property, plant and equipment at December 31 consist of:

1995 1994
____ ----

<S> <C> <C>
Land $ 1,189 $ 1,189
Buildings and improvements 11,455 11,087
Machinery and equipment 42,248 39,940
Integrated sponge facility 45,641 45,309
Construction in progress 846 1,976
-------- --------
101,379 99,501
Less accumulated depreciation 66,241 61,981
-------- --------
$ 35,138 $ 37,520
======== ========
</TABLE>

Included in machinery and equipment at December 31, 1995 are leased
capital assets of $969, net of accumulated amortization of $21.

5. OTHER ACCRUED EXPENSES:
<TABLE>
<CAPTION>
Other accrued expenses at December 31 consist of:
1995 1994
____ ----

<S> <C> <C>
Accrual for estimated environmental matters $ 909 $ 1,150
Sales returns and allowances 607 1,050
Income taxes payable 478 755
Other 1,601 1,118
________ ________
$ 3,595 $ 4,073
======== ========
</TABLE>

6. PROVISION FOR LOSSES ON LONG-TERM AGREEMENTS:

The Company has historically entered into long-term agreements
("LTAs") with certain customers, primarily in the aerospace
industry. The LTAs, which typically cover a two or three-year
period, obligate the Company to sell product at a fixed price for
that duration. As a result of current projected costs of raw
materials and processing being higher than those anticipated when
the LTAs were executed, the Company recorded during 1995 a
provision for losses on long-term agreements of $5,717 of which
$4,417 remains outstanding at December 31, 1995. This provision
represents management's current estimate of the amount by which the
future costs of products supplied under these LTAs will exceed the
revenues generated. This provision includes expected unfavorable
yield losses and processing costs together with substantial
increases in anticipated raw material costs.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

7. INCOME TAXES:
<TABLE>
<CAPTION>
The income tax benefit consists of the following:
1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Current provision (benefit):
Federal $ (372) $ 422 $ (1,583)
State 155 80 18
Foreign 466 - -
Deferred provision (credit) (674) (1,217) (232)
________ _________ ________
Total benefit $ (425) $ (715) $ (1,797)
======== ========= ========
</TABLE>

<TABLE>
<CAPTION>
The difference between the Company's income tax benefit and federal tax at statutory rates is as follows:

1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Federal benefit at statutory rates $ (966) $ (931) $ (2,004)
State tax benefit (193) (179) (389)
Valuation allowance 1,138 216 597
Alternative minimum tax limitation 21 - 212
Adjustment of prior-year tax accrual (264) - -
Other (161) 179 (213)
======== ======== ========
________ ________ ________
Total $ (425) $ (715) $ (1,797)
======== ======== ========
======== ========
</TABLE>
At December 31, 1995, the Company has net operating loss
carryforwards for state income tax purposes of $2,300, $6,900,
$8,600 and $12,200 from 1994, 1993, 1992 and 1991 operations,
respectively. The Company has net operating loss carryforwards for
federal income tax purposes of $2,800 from 1994 and $800 from 1993.
If unused, the loss carryforwards expire fifteen (15) years after
the year in which they arose.

<TABLE>
<CAPTION>
The components of the deferred taxes are as follows:
1995 1994
____ ____
<S> <C> <C>
Assets:
Tax loss and credit carryforwards $ 4,089 $ 3,881
Pension, retirement and other employment
related items 1,715 1,722
Allowance for doubtful accounts 455 346
Safe harbor lease 215 296
Environmental accrual 350 467
Capitalized inventory costs 281 619
Provision for losses on long-term agreements 1,627 -
Other 871 345
Less valuation allowance (2,948) (1,810)
________ ________

6,655 5,866
Liabilities:
Accumulated depreciation and amortization 6,562 6,421
Other - 26
________ ________
6,562 6,447
________ ________
Net deferred tax asset (liability) $ 93 $ (581)
======== ========
Balance sheet classification:
Current assets $ 3,242 $ 517
Long-term liability (3,149) (1,098)
________ ________
Net deferred tax asset (liability) $ 93 $ (581)
======== ========
</TABLE>
The Company has recorded a valuation allowance with respect to the
future tax benefits reflected in deferred income taxes as a result
of the uncertainty of their future realization. Realization is
dependent on generating sufficient taxable income prior to
expiration of loss carryforwards and the reversal of certain
temporary differences. The amount of the deferred tax assets
considered realizable, however, could be increased in the near term
if estimates of future taxable income during the carryforward
period are increased.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

8. LONG-TERM DEBT:
<TABLE>
<CAPTION>
Long-term debt as of December 31 is as follows:

1995 1994
____ ____

<S> <C> <C>
U.S. revolving credit agreement $ 21,228 $ 12,496
U.K. based credit facility 517 -
Subordinated loan with Kamyr, Inc. 4,500 4,500
Obligations under capital leases and other 1,117 181
________ ________
27,362 17,177
Less current maturities 616 13
________ ________
$ 26,746 $ 17,164
======== ========
</TABLE>
U.S. REVOLVING CREDIT AGREEMENT - The Company may borrow up to
$25,000 under the terms of a revolving credit agreement with a U.S.
bank at an interest rate of prime (8.5% at December 31, 1995) plus
1.5%, or LIBOR (6.43% at December 31, 1995) plus 2.5%. The Company
has exercised the LIBOR option. Borrowings under the agreement are
collateralized by accounts receivable, inventories and other
intangible assets, including the Company's stock in Titanium. The
Company must pay a nonuse fee of .5% annually on the unused portion
of the commitment. The credit agreement matures in September 1997
and can be renewed for one-year periods with the consent of both
parties. The credit agreement contains restrictive covenants with
regard to various financial ratios and imposes limitations on
capital expenditures and dividends. Annual cash dividends are
limited to the lesser of fifty percent (50%) of net income or $1.8
million.

As of December 31, 1995, the Company was not in compliance with
covenants principally relating to interest coverage and minimum net
worth requirements. On March 1, 1996, the Company obtained a
written waiver from the lender on these matters. The Company
believes that it will be in compliance with its financial covenants
in the future.

U.K. BASED CREDIT FACILITY - On January 19, 1996, Titanium
International, Ltd. ("T.I.L."), a wholly-owned subsidiary of
Titanium, amended its credit facility with Midland Bank plc. The
facility provides for a credit facility of approximately $2,300, a
foreign exchange facility for $900 and other guarantees of
approximately $450. Aggregate borrowings which include Parent
loans cannot exceed shareholders' equity less intangible assets.
The credit facility is collateralized by the assets of T.I.L. only.
Interest is to be charged at the rate of 1.5% over Midland Bank's
base rate on amounts borrowed up to $1,500 and 2% over Midland
Bank's base rate on amounts borrowed in excess of $1,500. The
credit facility has financial covenants pertaining to net worth and
prepayment of loan to Parent. The Bank has the option of
terminating the availability of credit at its discretion and the
facility is subject to review on December 31, 1996.

SUBORDINATE LOAN WITH KAMYR, INC. - On September 19, 1994, as part
of the Company's acquisition of Titanium Industries, Inc.
(Titanium), Titanium entered into a subordinated debt agreement
with the seller, Kamyr, Inc., for $4,500, interest at 8%, payable
quarterly. The initial principal payment of $300 is due March
1997, with additional quarterly installments of $350 through March
2000. The subordinated debt agreement includes covenants relative
to shareholders' equity, the maximum amount of senior debt,
relative financial ratios and restrictions on dividends, new
borrowings and guarantees and liens. The loan is collateralized by
a second lien on the accounts receivable, inventories, and general
intangibles of Titanium.

OTHER NOTES PAYABLE - Other notes payable principally consist of
capital lease obligations (see Note 11) and are payable in monthly
installments of $15, including interest. A balloon payment of $264
is due in July 2002. The loans bear interest at rates between 6.9%
and 8.5%. The loans are collateralized by certain machinery and
equipment.

Aggregate contractual maturities of long-term debt approximate the
following at December 31, 1995:

1996 $ 616
1997 22,683
1998 1,512
1999 1,518
2000 491
Thereafter 542
________
$ 27,362
========

9. STOCK PURCHASE WARRANTS:

Warrants to purchase 200 thousand shares of the Company's common
stock are outstanding. The warrants are exercisable at $6.375 per
share, and expire in September 2004. The warrants were issued in
connection with the Company's acquisition of Titanium. The warrant
holder is the president of Titanium, who is also an officer and
director of the Company.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

10. EMPLOYEE BENEFIT PLANS:
PENSION PLANS - Oremet's hourly employees are covered by a union
pension plan. Pension expense is based on a fixed rate per hour
established under a negotiated union contract.

Oremet maintains a defined benefit pension plan covering its
salaried employees who have completed at least one year of service
and have reached age 21. The benefits under this plan are based on
years of service and an employee's final average earnings. The
plan's assets consist of interest-bearing obligations and equities.
Pension costs for Oremet's hourly and salaried plans were $1,581 in
1995, $1,287 in 1994 and $1,274 in 1993. The following table sets
forth the amounts recognized in the Company's financial statements
for the salaried plan's pension expense and the salaried plan's
funded status at December 31:

<TABLE>
<CAPTION>
1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Pension costs for the year:
Service cost $ 474 $ 522 $ 565
Interest cost 981 859 779
Actual return on plan asset (2,252) (250) (717)
Net amortization of deferral 1,571 (397) 119
________ ________ ________
Net pension cost $ 774 $ 734 $ 746
======== ======== ========

Plan assets at fair value $ 12,246 $ 9,863 $ 10,122
________ ________ ________
Projected benefits based on employment service
to date and present pay levels:
Vested 10,036 7,976 9,542
Nonvested 528 300 335
________ ________ ________
Accumulated benefit obligation 10,564 8,276 9,877
Additional amounts related to projected
compensation increases 4,443 2,500 2,224
________ ________ ________
Projected benefit obligation 15,007 10,776 12,101
________ ________ ________
Plan assets less projected benefit obligation (2,761) (913) (1,979)

Unrecognized net obligation 237 276 315
Unrecognized prior service cost 255 182 205
Unrecognized net loss 1,874 76 1,614
________ ________ ________
Prepaid pension cost (pension liability) $ (395) $ (379) $ 155
======== ======== ========

</TABLE>

Assumptions utilized to measure net pension cost and the projected benefit
obligations are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Weighted average discount rate 7.25% 8.50% 6.75%
Rate of compensation increase 4.50 4.50 4.50
Long-term rate of return on plan assets 8.00 8.00 8.00
</TABLE>

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

10. EMPLOYEE BENEFIT PLANS, continued
Primarily, as a result of the change in the weighted average
discount rate to 7.25% in 1995 from 8.50% in 1994, the Projected
Benefit Obligation (PBO) as of December 31, 1995 increased $4,231
to $15,007, compared to the 1994 PBO of $10,826. Similarly, the
decrease in the weighted average discount rate increased the
unrecognized net loss by $1,798 to $1,874, compared to the December
31, 1994 unrecognized net loss of $76. The increase in the
unrecognized net loss was partially offset by the returns on plan
assets which were more than the assumed 8.0%.

The decrease in the December 31, 1994 PBO and unrecognized net loss
compared to 1993 was the result of the increase in the weighted
average discount rate to 8.5% in 1994 from 6.75% in 1993.

During 1993, the Company restructured its workforce, resulting in
the termination of a significant number of employees. The
termination resulted in a partial curtailment of the salaried
pension plan and increased the restructuring cost by $151.

POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS - The Company
accrues the cost of postretirement benefits other than pensions
during the period of employment of the salaried employees. The
following table sets forth the plan's status, reconciled with the
amount shown in the Company's balance sheets, as of December 31:

<TABLE>
<CAPTION>
1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 611 $ 638 $ 701
Fully eligible plan participants 121 140 90
Other active plan participants 1,190 770 949
________ ________ ________
1,922 1,548 1,740
Less unrecognized loss 359 91 404
________ ________ ________
Accrued postretirement benefit liability $ 1,563 $ 1,457 $ 1,336
======== ======== ========

</TABLE>

The components of net periodic postretirement benefit costs are as follows:
<TABLE>
<CAPTION>

1995 1994 1993
____ ____ ____

<S> <C> <C> <C>
Service cost, benefits attributed to employee
service during the year $ 89 $ 96 $ 97
Interest cost on accumulated postretirement
benefit obligation 119 118 123
Net amortization and deferral - 15 15
________ ________ ________
Net periodic postretirement benefit cost $ 208 $ 229 $ 235
======== ======== ========
</TABLE>
For measurement purposes, a 9% annual increase in the per capita
cost of postretirement medical benefits was assumed for 1995; the
rate is assumed to decrease gradually to 6% for 2001 and remain at
that level thereafter. The health care cost trend rate assumption
has a significant affect on the amounts reported. To illustrate,
increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1995 by $250,
and the aggregate of the service and interest cost components of
net periodic postretirement cost for the year then ended by $36.

The discount rate used in determining the accumulated
postretirement benefit obligation was 7.25%, 8.5% and 7.0% for
1995, 1994 and 1993, respectively. The unrecognized loss was
$359 at December 31, 1995, compared to $91 at December 31, 1994,
an increase of $268. The increase in the unrecognized loss was
substantially attributable to the decrease in the discount rate.

During 1993, the Company restructured its workforce, resulting in
the termination of a significant number of employees. The
terminations resulted in a partial curtailment of the
postretirement benefit plan and decreased the unrecognized loss
component of the postretirement benefit liability by $210.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

10. EMPLOYEE BENEFIT PLANS, Continued:
DEFINED CONTRIBUTION PLANS - Oremet sponsors a domestic 401(k)
retirement savings plan for the benefit of both its union and
salaried employees. Under the provisions of the plan, Oremet will
contribute one share of stock for each day worked, or approximately
260 shares a year for a full-time employee. Oremet will also
contribute a matching contribution based on the profitability of
the Company. The matching contribution is limited to 3% of the
participant's compensation. Oremet's costs under the plan totaled
$1,041 in 1995. No shares of the Company's common stock were
issued under the plan in 1995. As of December 31, 1995,
approximately 110 thousand shares are issuable pursuant to the
Oremet savings plan.

Titanium sponsors a domestic 401(k) retirement savings plan. Under
the provisions of the plan, participants may contribute a
percentage of their compensation not to exceed 12%. Titanium
matches the participants' contributions up to 3%. Participants are
fully vested with regard to Titanium's contributions and earnings
thereon after one (1) year of service. Titanium's contributions to
the plan were approximately $64 in 1995 and $21 in 1994.

Titanium International, LTD. (T.I.L.) sponsors a defined
contribution pension plan for all employees over the age of 25 with
one (1) year of service. Under the plan, participants may
contribute between 17.5% to 40% of base pay depending upon their
age. Participants are fully vested and T.I.L. matches between 2%
and 14% of the employee's base pay, depending upon employee age and
as long as the employee's contributions are at least 2%. T.I.L.'s
contributions for 1995 and 1994 were approximately $51 and $19, respectively.

THE ESOP - In 1987, the Company established The Oregon
Metallurgical Corporation Employee Stock Ownership Plan (ESOP), an
employee stock ownership plan covering substantially all employees
of Oremet. The ESOP borrowed $17 million from the Company to
purchase approximately 6.3 million shares of Oremet common stock.
The loan obligation of the ESOP is considered unearned employee
benefit expense and, as such, is recorded as a reduction of
shareholders' equity. Both the loan obligation and the unearned
benefit expense have been reduced by loan repayments made by the
ESOP. In December 1994, the note receivable from the ESOP was
fully repaid. As of December 31, 1995, the ESOP owned
approximately 3.9 million shares or 35% of the outstanding common
stock of the Company. All of the Company's common stock held in
the ESOP has been allocated to Oremet employees. The Company made
no contribution to the ESOP in 1995. The ESOP contribution expense
totaled $2,382 and $2,755 in 1994 and 1993, respectively.

EXCESS BENEFIT PLAN (EBP) - Oremet maintains an unfunded EBP for
participants whose allocations of common stock of the Company to
the ESOP are reduced as a result of limitations imposed under
federal income tax law. A portion of a participant's excess
benefit shares is distributable after two years, but a participant
may defer distributions. Distributions are required upon request
following a participant's termination of employment. Oremet has
the option to distribute shares in lieu of cash, but not in excess
of 1% of the outstanding shares of common stock of the Company as
of the prior year end. The cash value of dividends that would have
been paid to the participant had the participant's allocation of
shares to the ESOP not been reduced will be paid to the participant
in conjunction with the payment of dividends on the Company's
common stock. The liability under this plan is recorded as
deferred compensation payable in the accompanying balance sheets.
The Company made no contributions to the EBP in 1995. EBP costs
were $332 and $259 in 1994 and 1993, respectively. As of December
31, 1995, the Company had recorded a liability to the EBP for 115
thousand shares of stock.

STOCK COMPENSATION PLANS - Beginning in 1995, Oremet implemented
stock compensation plans for the benefit of both its union and
salaried employees. The employee earns one share of the Company's
common stock for every one hundred dollars earned in salaries and
wages. Stock Compensation Plan costs were $1,750 in 1995. During
1995, approximately 107 thousand shares were issued, and as of
December 31, 1995 another 62 thousand are issuable under the union
and salaried stock compensation plans.

STOCK APPRECIATION RIGHTS (SARs) - In December of 1995, the Company
established an incentive SARs plan. At the discretion of the Board
of Directors, SARs may be granted to officers and other key
employees. Upon exercise of a SAR, the holder is entitled to
receive cash equal to the amount by which the market value of the
Company's common stock on the exercise date exceeds the market
value of the stock on the date of grant. The SARs become fully
exercisable over a four-year vesting period measured from the date
of grant; no SARs are vested as of December 31, 1995. The Board of
Directors granted 166.5 thousand SARs, with a market value of
$10.25 per share, on December 14, 1995. The SARs plan will expire
in 2001 unless extended by the Board of Directors.

11. COMMITMENTS AND CONTINGENCIES:
OPERATING LEASES - Minimum annual rental commitments at December
31, 1995, under noncancelable capital leases and operating leases,
principally for railroad tank cars, sales and service center
facilities, and various pieces of equipment, are payable as
follows:

<TABLE>
<CAPTION>
Capital Operating
Leases Leases
_______ _________

<S> <C> <C>
1996 $ 148 $ 802
1997 148 617
1998 148 403
1999 148 368
2000 148 235
Thereafter 499 203
________ ________
Total minimum lease payments 1,239 $ 2,628
========
Less amounts representing interest 289
________
Present value of net minimum
payments 950
________
Current portion 85
Long-term capitalized lease
obligations
(included in long-term debt) $ 865
========
</TABLE>

Total rental costs were $951, $533 and $421 in 1995, 1994 and 1993,
respectively.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

11. COMMITMENTS AND CONTINGENCIES, continued
OTHER - Oremet has agreed to acquire the remaining 20% interest in
Titanium in annual increments of at least 15% of the remaining
interest no earlier than 1999 and no later than 2004.

ENVIRONMENTAL MATTERS - The Company is subject to federal, state
and local statutes and regulations concerning environmental matters
and land use. Although the Company believes it is in material
compliance with these laws, they are frequently modified to be more
restrictive and it is impossible to predict accurately the future
effect changes in these laws may have on the Company.

Like all titanium producers, the Company generates certain waste
materials and emissions, including materials for which disposal or
emission requires compliance with environmental protection laws.
The Company conducts its operations at an industrial site where
hazardous materials have been managed for many years in connection
with its operations, including periods before careful management of
these materials was required or generally believed to be necessary.
Consequently, the Company is subject to various environmental laws
that impose compliance obligations and can create liability for
historical releases of hazardous substances.

In February 1995, the Oregon Department of Environmental Quality
modified Oremet's waste water discharge permit. The new permit
imposes more stringent discharge limits according to a specified
schedule. Oremet has identified several feasible alternatives for
meeting the new limits, the most expensive of which would require
capital expenditures of approximately $700. Oremet is working
with the Department to explore less expensive alternatives.

In connection with the preparation of its application for a new
federal operating permit under Title V of the 1990 Clean Air Act
Amendment, the Company discovered that some of its air emissions
are greater than previously recognized. The Company has
voluntarily reported these facts to the Oregon Department of
Environmental Quality. To resolve these issues, the Company has
agreed to undertake an evaluation of its emissions that could
result in requirements to install additional pollution control
equipment. At this point, the Company is unable to determine
whether additional controls will be required, but the Company does
not believe the cost of such additional controls would have a
material effect on its capital expenditures, earnings or
competitive position.

In 1991 and in 1993, the Pennsylvania Department of Environmental
Regulation and the Environmental Protection Agency (EPA) performed
site inspections, including soil and water sampling, at Titanium's
site in Frackville, Pennsylvania, in connection with a regional
groundwater investigation of the Frackville, Pennsylvania area.
While the EPA's investigation is ongoing, management has not been
informed of any pending or potentially required actions which may
arise from this investigation.

In conjunction with the sale of Titanium, Kamyr, Inc. (the seller)
has agreed to undertake specified clean-up activities. In
addition, Kamyr, Inc. has agreed to a substantial indemnification
of the Company in the event damages arise which result from
conditions which were not in compliance with environmental laws and
regulations as they existed at the time Oremet purchased Titanium.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

12. MAJOR CUSTOMERS AND BUSINESS SEGMENTS:
The Company has a contract to supply titanium sponge and certain
other titanium products through 2003 to RMI Titanium Company (RMI).
Sales to RMI, as a percentage of net sales, were 5% for 1995, 13%
for 1994 and 30% for 1993.

The Company's operations are conducted primarily in one business
segment, the production and marketing of titanium metal and related
products. For years ended December 31, 1995, 1994 and 1993, export
sales approximated $30,000, $10,000 and $7,000, respectively,
principally to customers in western Europe and Japan.

Export sales include the sales of Titanium International, Ltd., a
wholly-owned subsidiary of Titanium, located in the United Kingdom.

13. MAJOR SUPPLIERS/SIGNIFICANT OPERATING RISKS:
DEPENDENCE ON SUPPLIER - The Company currently purchases all of its
titanium tetrachloride (TICL4) under a long-term supply contract
from a single domestic supplier. TICL4 is the primary ingredient
in the manufacture of titanium sponge. Although there are a
limited number of TICL4 producers, management believes that other
suppliers could provide similar material on comparable terms.
However, a sudden loss of TICL4 supply could have a near-term
adverse impact on the Company's business, financial condition and
results of operations.

FLUCTUATIONS IN TITANIUM SCRAP AND SPONGE PRICES - The Company is
a major recycler of titanium scrap. Where possible, the Company
utilizes titanium scrap as a cost effective alternative to titanium
sponge; both materials are used as primary ingredients in the
manufacture of ingot. Much of the titanium scrap which is
purchased by the Company originates from within the Former Soviet
Union (FSU). Additionally, the Company purchases low priced
titanium sponge, also produced in the FSU. Management believes
that there are other sources which can provide these materials.
Historically, the Company has sought to recover increases in
titanium scrap and sponge prices through price increases of its
products. There can be no assurance that titanium scrap and sponge
prices will not increase or that the Company will be successful in
implementing related price increases on its products. Any
increases in titanium scrap and sponge prices which are not offset
by increases in the Company's sales prices could have a material
adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE ON ESSENTIAL MACHINERY AND EQUIPMENT - The Company's
manufacturing processes are dependent on the reliable operation of
its machinery and equipment. The adverse consequences of an
unexpected breakdown of certain pieces of the Company's machinery
and equipment could be reasonably mitigated by the use of outside
converters. However, the Company has certain critical pieces of
machinery and equipment which may require significant lead times to
complete necessary repairs and the functions which are performed
may not be easily replaced by an outside converter. Such an event
could have a material adverse impact on the Company's business,
financial condition and results of operations.

14. RESTRUCTURING COST:
In 1993, the Company recorded a provision for restructuring of
$2,027 which includes nonrecurring costs of severance pay and
benefits of $1,027, incurred and substantially all paid in the
third and fourth quarters of 1993, and a write-down, in the fourth
quarter of 1993, of construction in progress of $1,000 related to
a curtailed expansion of the Titanium Sponge Reduction Plant and
the related Magnesium Recovery Facility. The downsizing and
restructuring were done to reduce fixed costs and to write-off the
nonrecoverable portion of funds spent to increase sponge production
capacity. Due to the reduced demand for sponge and the
availability of low priced sponge from the Former Soviet Union, the
expansion was no longer needed.

15. FINANCIAL INSTRUMENTS:
FOREIGN CURRENCY CONTRACTS - The Company enters into forward
foreign exchange contracts to hedge foreign currency transactions
on a continuing basis for periods consistent with its committed
exposures. The Company does not enter into foreign currency
contracts for trading or speculative purposes. This hedging
minimizes the impact of foreign exchange rate movements on the
Company's operating results. The Company's foreign exchange
contracts do not subject the Company's results of operations to
risk due to exchange rate movements because gains and losses on
these contracts generally offset losses and gains on the assets and
liabilities being hedged.

At December 31, 1995 and 1994, the Company had notional principal
amounts of approximately $490 and $1,813, respectively, in
contracts to buy U.S. dollars within the future, with maturities of
less than six months. Net foreign currency transaction gains
occurring for 1995 and 1994 were approximately $121 and $48,
respectively, which have been included in cost of goods sold.

OTHER FINANCIAL INSTRUMENTS - At December 31, 1995 and 1994, the
carrying value of financial instruments classified as current
assets or liabilities approximated their fair values, based on the
short-term maturities of these instruments. Fair value is
determined based on future cash flows, discounted at market
interest rates, and other appropriate valuation methodologies. At
December 31, 1995 and 1994, the fair value of long-term debt with
fixed interest terms approximated carrying value. Both periods
include long-term borrowing with variable interest terms, for which
the carrying value approximated market. The fair value of debt is
determined by obtaining quotes from financial institutions.

Exposure to market risk on foreign currency contracts results from
fluctuations in currency rates during the periods the contracts are
outstanding. The counterparties to foreign currency exchange
contracts are major financial institutions. Credit loss from
counterparty nonperformance is not anticipated.

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

(in thousands)

16. QUARTERLY INFORMATION (Unaudited)
The following table sets forth unaudited selected quarterly
financial data for the years ended December 31, 1995 and 1994.
Although the Company's business is not seasonal, growth rates of
sales have varied from quarter to quarter as a result of the
purchase of Titanium Industries, Inc. in September of 1994, the
timing of new product introductions and short-term industry, and
general U.S. and international economic conditions (in thousands,
except per share amounts).

<TABLE>
<CAPTION>
Net
Income
(Loss)
Gross Net Per
Profit Income Share
Sales (Loss) (Loss) (3)
_____ ______ ______ ______

<S> <C> <C> <C> <C>
1995 Quarter:
1st $ 30,838 $ 5,332 $ 535 $ 0.05
2nd (1) 35,125 5,291 453 0.04
3rd 41,236 4,090 (439) (0.04)
4th (1)(2) 39,654 1,138 (2,964) (0.26)
________ ________ ________
$146,853 $ 15,851 $ (2,415) $(0.22)

1994 Quarter:
1st $ 13,294 $ 89 $ (1,085) $(0.10)
2nd 14,503 660 (601) (0.06)
3rd 16,980 1,697 (400) (0.03)
4th 26,389 4,193 63 0.01
________ ________ ________ ______
$ 71,166 $ 6,639 $ (2,023) $(0.18)

<FN>
<F1> During the second quarter of 1995, the Company reported a
pre-tax charge to income of $1,300 to reflect the impact of
projected conversion costs on long-term agreements which were
in excess of selling price. During the fourth quarter of
1995, the Company reported a pre-tax charge to income of
$4,417 to reflect the impact of increased raw material costs
on long-term agreements.

<F2> The Company concluded the first nine months of 1995 with an
effective tax provision rate of 37.9% on income before income
taxes and minority interest of $1,434. For the fourth quarter
of 1995, the Company's effective tax benefit rate was 25.5% on
a net loss before income taxes and minority interest of
$3,794. The Company's 1995 effective tax benefit rate was
18.0%. The above change in the Company's effective tax rate
reflects the establishment of a valuation allowance on a
substantial portion of the deferred tax assets which were
generated by the Company's loss incurred during the fourth
quarter of 1995.

<F3> Earnings per share are computed independently for each of the
quarters presented. The sum of the quarterly earnings per
share in 1995 do not equal the total computed for the year due
to stock issued under employee benefit plans (see Note 10).

</FN>
</TABLE>

OREGON METALLURGICAL CORPORATION
EXHIBIT 21.1

Subsidiaries of
Oregon Metallurgical Corporation:
_________________________________

State or Country
Name of Subsidiary in Which Organized
__________________ ________________

OREMET France S.a.r.l. (1)(3) France

Titanium Industries, Inc. *(1)(3) Oregon

Titanium Wire Corporation ** (2)(4) Pennsylvania

Titanium International Limited ** (2)(3) United Kingdom

Titanium International GmbH** (3)(5) Germany

* Titanium Industries, Inc. is a majority-owned (80%) subsidiary
of Oregon Metallurgical Corporation.

** The companies are wholly-owned subsidiaries of Titanium
Industries, Inc.

(1) Created 1994

(2) Acquired 1994

(3) Operates titanium Service Centers

(4) Manufactures titanium rod and wire

(5) Began operation in February 1996

COOPERS COOPERS & LYBRAND L.L.P.
& LYBRAND a professional services firm

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration
Statements of Oregon Metallurgical Corporation on Form S-8 (File
Nos. 33-18650, 33-63449 and 333-00167) of our reports dated
February 16, 1996, except for the second paragraph of Note 8, as to
which the date is March 1, 1996, on our audits of the consolidated
financial statements and financial statement schedule of Oregon
Metallurgical Corporation as of December 31, 1995 and 1994, and for
the years ended December 31, 1995, 1994, and 1993, which reports
are included in this Annual Report on Form 10-K.

/s/ Coopers & Lybrand LLP

Eugene, Oregon
March 25, 1996

Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand
International, a limited liability association incorporated in
Switzerland.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.

<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
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0
0
<COMMON> 11,018
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<INCOME-PRETAX> (2,840)
<INCOME-TAX> (425)
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