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401(k) Plan - NE Restaurant Co. Inc.

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                              FORM OF MERRILL LYNCH
                                  -------------
                                     SPECIAL
                                  -------------
                                PROTOTYPE DEFINED

                                CONTRIBUTION PLAN

                               ADOPTION AGREEMENT

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

                                   401(K) PLAN

                              EMPLOYEE THRIFT PLAN

                               PROFIT-SHARING PLAN

                         LETTER SERIAL NUMBER: D359287B
                      NATIONAL OFFICE LETTER DATE: 6/29/93

THIS PROTOTYPE PLAN AND ADOPTION AGREEMENT ARE IMPORTANT LEGAL INSTRUMENTS WITH
LEGAL AND TAX IMPLICATIONS FOR WHICH THE SPONSOR, MERRILL LYNCH, PIERCE, FENNER
& SMITH, INCORPORATED, DOES NOT ASSUME RESPONSIBILITY. THE EMPLOYER IS URGED TO
CONSULT WITH ITS OWN ATTORNEY WITH REGARD TO THE ADOPTION OF THIS PLAN AND ITS
SUITABILITY TO ITS CIRCUMSTANCES.

ADOPTION OF PLAN

The Employer named below hereby establishes or restates a profit-sharing plan
that includes a |X|401(k), |X|profit-sharing and/or |_| thrift plan feature (the
"Plan") by adopting the Merrill Lynch Special Prototype Defined Contribution
Plan and Trust as modified by the terms and provisions of this Adoption
Agreement.

EMPLOYER AND PLAN INFORMATION

Employer Name:*      N.E. RESTAURANT COMPANY, INC.

Business Address:    300 POND STREET

                     RANDOLPH, MASSACHUSETTS 02368

Telephone Number: (617) 986-4600

Employer Taxpayer ID Number:  06-1311266

Employer Taxable Year ends on:  DECEMBER 31ST

Plan Name:  N.E. RESTAURANT COMPANY, INC. 401(K) PROFIT SHARING PLAN

Plan Number:  001

                                                      Profit
                                         401(k)       Sharing          Thrift
<PAGE>
 
Effective Date of Adoption
                or Restatement:         01/01/96      01/01/96

Tax Reform Act of 1986
                Restatement Date:

Original Effective Date:                09/01/92      09/01/92

IF THIS PLAN IS A CONTINUATION OR AN AMENDMENT OF A PRIOR PLAN, ALL OPTIONAL
FORMS OF BENEFITS PROVIDED IN THE PRIOR PLAN MUST BE PROVIDED UNDER THIS PLAN TO
ANY PARTICIPANT WHO HAD AN ACCOUNT BALANCE, WHETHER OR NOT VESTED, IN THE PRIOR
PLAN.

----------------------
* If there are any Participating Affiliates in this Plan, list below the proper
name of each Participating Affiliate.

                             ARTICLE I. DEFINITIONS

A.  "COMPENSATION"

(1)  With respect to each Participant, except as provided below, Compensation
     shall mean the (select all those applicable for each column):

401(K) AND/            Profit
OR THRIFT              Sharing

|_|                    |_| (a) amount reported in the "Wages Tips and Other
                               Compensation" Box on Form W-2 for the applicable
                               period selected in Item 5 below.

|_|                    |_| (b) compensation for Code Section 415 safe-harbor
                               purposes (as defined in Section 3.9.1(H)(i) of
                               basic plan document #03) for the applicable
                               period selected in Item 5 below.

|X|                    |X| (c) amount reported pursuant to Code Section 3401(a)
                               for the applicable period selected in Item 5
                               below.

|_|                    |_| (d) all amounts received (under either option (a) or
                               (b) above) for personal services rendered to the
                                Employer but excluding (select one):

                                         |_| overtime |_| bonuses |_|
                                         commissions |_| amounts in
                                         excess of $ |_| other
                                         (specify) _____.

(2) Treatment of Elective Contributions (select one):

|X| (a) For purposes of contributions, Compensation shall include Elective
        Deferrals and amounts excludable from the gross income of the Employee
        under Code Section 125, Code Section 402(e)(3), Code Section 402(h) or
        Code Section 403(b) ("elective contributions").

|_| (b) For purposes of contributions, Compensation shall not include "elective
        contributions."

(3) CODA Compensation (select one):
<PAGE>
 
|X| (a) For purposes of the ADP and ACP Tests, Compensation shall include
        "elective contributions."

|X| (b) For purposes of the ADP and ACP Tests, Compensation shall not include
        "elective contributions."

(4) With respect to Contributions to an Employer Contributions Account,
    Compensation shall include all Compensation (select one):

|_| (a) during the Plan Year in which the Participant enters the Plan.

|X| (b) after the Participant's Entry Date.

(5) The applicable period for determining Compensation shall be (select one):

|X| (a) the Plan Year.

|_| (b) the Limitation Year.

|_| (c) the consecutive 12-month period ending on ___________.

B.  "DISABILITY"

(1) DEFINITION

    Disability shall mean a condition which results in the Participant's (select
    one):

|_| (a) inability to engage in any substantial gainful activity by reason
        of any medically determinable physical or mental impairment that can be
        expected to result in death or which has lasted or can be expected to
        last for a continuous period of not less than 12 months.

|X| (b) total and permanent inability to meet the requirements of the
        Participant's customary employment which can be expected to last for a
        continuous period of not less than 12 months.

|_| (c) qualification for Social Security disability benefits.

|_| (d) qualification for benefits under the Employer's long-term disability
        plan.

(2) CONTRIBUTIONS DUE TO DISABILITY (select one):

|X| (a) No contributions to an Employer Contributions Account will be made on
        behalf of a Participant due to his or her Disability.

|_| (b) Contributions to an Employer Contributions Account will be made on
        behalf of a Participant due to his or her Disability PROVIDED THAT: the
        Employer elected option (a) or (c) above as the definition of
        Disability, contributions are not made on behalf of a Highly
        Compensated Employee, the contribution is based on the Compensation
        each such Participant would have received for the Limitation Year if
        the Participant had been paid at the rate of Compensation paid
        immediately before his or her Disability, and contributions made on
        behalf of such Participant will be nonforfeitable when made.

C.  "EARLY RETIREMENT" is (select one):
<PAGE>
 
|X| (1) not permitted.

|_| (2) permitted if a Participant terminates Employment before Normal
        Retirement Age and has (select one):

        |_| (a) attained age ____.
        |_| (b) attained age ____ and completed _____ Years of Service.
        |_| (c) attained age ____ and completed _____ Years of Service as a
                Participant.

D.  "ELIGIBLE EMPLOYEES" (select one):

|_| (1) All Employees are eligible to participate in the Plan.

|X| (2) The following Employees are not eligible to participate in the
        Plan (select all those applicable):

    |X| (a) Employees included in a unit of Employees covered by a
            collective bargaining agreement between the Employer or a
            Participating Affiliate and the Employee representatives (not
            including any organization more than half of whose members are
            Employees who are owners, officers, or executives of the Employer or
            Participating Affiliate) in the negotiation of which retirement
            benefits were the subject of good faith bargaining, unless the
            bargaining agreement provides for participation in the Plan.

    |X| (b) non-resident aliens who received no earned income from the
            Employer or a Participating Affiliate which constitutes income from
            sources within the United States.

    |_| (c) Employees of an Affiliate.

    |X| (d) Employees employed in or by the following specified division, plant,
            location, job category or other identifiable individual or group of
            Employees: HOURLY PAID EMPLOYEES.

    If item (d) above is checked, certain employees who are not Eligible
    Employees shall become Participants under the following circumstances:
    If, in any calendar quarter, there is no day on which the percentage
    test described in Internal Revenue Code section 410(b) is met,
    additional Employees shall become Participants (or, if an Employee
    previously became a Participant, shall resume participation) as of the
    beginning of the Plan Year, or if later, the date such Employee would
    have become a Participant under Article I, Section E, below. Said Employees
    shall become Participants in order of decreasing length of service beginning
    with such Employees having the longest service as of the end of such
    calendar quarter, until the percentage test is met.

E.  "ENTRY DATE"

    Entry Date shall mean (select as applicable):

    401(K) AND/          Profit-
     OR THRIFT           Sharing

        |_|           |_| (1)  If the initial Plan Year is less than twelve
                               months, the __ day of ____________ and
                               thereafter:

        |_|           |_| (2)  the first day of the Plan Year following the date
<PAGE>
 
                               the Employee meets the eligibility requirements.
                               If the Employer elects this option (2)
                               establishing only one Entry Date, the eligibility
                               "age and service" requirements elected in Article
                               II must be no more than age 20-1/2 and 6 months
                               of service.

        |X|           |X| (3)  the first day of the month following the date the
                               Employee meets the eligibility requirements.

        |_|           |_| (4)  the first day of the Plan Year and the first day
                               of the seventh month of the Plan Year following
                               the date the Employee meets the eligibility
                               requirements.

        |_|           |_| (5)  the first day of the Plan Year, the first day of
                               the fourth month of the Plan Year, the first day
                               of the seventh month of the Plan Year, and the
                               first day of the tenth month of the Plan Year
                               following the date the Employee meets the
                               eligibility requirements.

        |_|           |_| (6)  other:  ________.
                               provided that the Entry Date or Dates selected
                               are no later than any of the options above.

F.  "HOURS OF SERVICE"

     Hours of Service for the purpose of determining a Participant's Period of
     Severance and Year of Service shall be determined on the basis of the
     method specified below:

     (1) ELIGIBILITY SERVICE: For purposes of determining whether a Participant
         has satisfied the eligibility requirements, the following method shall
         be used (select one):

401(K) AND/             Profit-
OR THRIFT               Sharing

   |X|                |X| (a)     elapsed time method
   |_|                |_| (b)     hourly records method


     (2)  VESTING SERVICE: A Participant's nonforfeitable interest shall be
          determined on the basis of the method specified below (select one):

          |_| (a) elapsed time method
          |X| (b) hourly records method
          |_| (c) If this item (c) is checked, the Plan only provides for
                  contributions that are always 100% vested and this item (2)
                  will not apply.

     (3) HOURLY RECORDS: For the purpose of determining Hours of Service under
         the hourly record method (select one):

          |X| (a) only actual hours for which an Employee is paid or entitled
                  to payment shall be counted.

          |_| (b) an Employee shall be credited with 45 Hours of Service if
                  such Employee would be credited with at least 1 Hour of
<PAGE>
 
                  Service during the week.

G.  "INTEGRATION LEVEL"

    |X| (1) This Plan is not integrated with Social Security.

    |_|(2) This Plan is integrated with Social Security. The Integration
           Level shall be (select one):

           |_| (a) the Taxable Wage Base.
           |_| (b) $________ (a dollar amount less than the Taxable Wage Base).
           |_| (c) ______% of the Taxable Wage Base (not to exceed 100%).
           |_| (d) the greater of $10,000 or 20% of the Taxable Wage Base.

H.  "LIMITATION COMPENSATION"

For purposes of Code Section 415, Limitation Compensation shall be compensation
as determined for purposes of (select one):

    |_| (1) Code Section 415 Safe-Harbor as defined in Section 3.9.1(H)(i) of
            basic plan document #03.

    |_| (2) the "Wages, Tips and Other Compensation" Box on Form W-2.

    |X| (3) Code Section 3401(a) Federal Income Tax Withholding.

I.  "LIMITATION YEAR"

For purposes of Code Section 415, the Limitation Year shall be (select one):

    |X| (1) the Plan Year.

    |_| (2) the twelve consecutive month period ending on the _____ day of the
            month of -----.

J.  "NET PROFITS" are (select one):

     |X| (1) not necessary for any contribution.

     |_| (2) necessary for (select all those applicable):

             |_| (a) Profit-Sharing Contributions.
             |_| (b) Matching 401(k) Contributions.
             |_| (c) Matching Thrift Contributions.

K.  "NORMAL RETIREMENT AGE"

Normal Retirement Age shall be (select one):

|X| (1) attainment of age 65 (not more than 65) by the Participant.

|_| (2) attainment of age ____ (not more than 65) by the Participant or the
        _____ anniversary (not more than the 5th) of the first day of the Plan
        Year in which the Eligible Employee became a Participant, whichever is
        later.

|_| (3) attainment of age ____ (not more than 65) by the Participant or the
        _____ anniversary (not more than the 5th) of the first day on which the
        Eligible Employee performed an Hour of Service, whichever is later.
<PAGE>
 
L.  "PARTICIPANT DIRECTED ASSETS" ARE:

401(K) AND/                Profit-
OR THRIFT                  Sharing
|_|                        |_| (1) permitted.
|X|                        |X| (2) not permitted.

M.  "PLAN YEAR"

    The Plan Year shall end on the 31ST day of DECEMBER.

N.  "PREDECESSOR SERVICE"

    Predecessor service will be credited (select one):

    |X| (1) only as required by the Plan.

    |_| (2) to include, in addition to the Plan requirements and subject
            to the limitations set forth below, service with the following
            predecessor employer(s) determined as if such predecessors were
            the Employer: _______.

Service with such predecessor employer applies [select either or both (a) and/or
(b); (c) is only available in addition to (a) and/or (b)]:

|_| (a) for purposes of eligibility to participate;
|_| (b) for purposes of vesting;
|_| (c) except for the following service: ______.

O.  "VALUATION DATE"

Valuation Date shall mean (select one for each column, as applicable):


401(K) AND/    Profit-
OR THRIFT      Sharing
|_|            |_| (1) the last business day of each month.
|_|            |_| (2) the last business day of each quarter within the Plan
                       Year.
|X|            |X| (3) the last business day of each semi-annual period within
                       the Plan Year.
|_|            |_| (4) the last business day of the Plan Year
|_|            |_| (5) other: ______.


                            ARTICLE II. PARTICIPATION

PARTICIPATION REQUIREMENTS

An Eligible Employee must meet the following requirements to become a
Participant (select one or more for each column, as applicable):

401(K) AND/    Profit-
OR THRIFT      Sharing
|_|            |_| (1) Performance of one Hour of Service.
|X|            |X| (2) Attainment of age 21 (maximum 20 1/2) and completion of
                       1/2  (not more than 1/2) Years of Service.  If this item
                       is selected, no Hours of Service shall be counted.
|_|            |_| (3) Attainment of age 21 (maximum 21) and completion of 1
                       Year(s) of Service. If more than one Year of Service is
<PAGE>
 
                       selected, the immediate 100% vesting schedule must be
                       selected in Article VII of this Adoption Agreement.
|_|            |_| (4) Attainment of age ____(maximum 21) and completion of ___
                       Years of Service. If more than one Year of Service is
                       selected, the immediate 100% vesting schedule must be
                       selected in Article VII of this Adoption Agreement.
|X|            |X| (5) Each Employee who is an Eligible Employee on 09/01/92
                       will be deemed to have satisfied the participation
                       requirements on the effective date without regard to
                       such Eligible Employee's actual age and/or service.


            ARTICLE III. 401(K) CONTRIBUTIONS AND ACCOUNT ALLOCATION

A.  ELECTIVE DEFERRALS

If selected below, a Participant's Elective Deferrals will be (select all
applicable):

          |X|  (1)  a dollar amount or a percentage of Compensation, as
                    specified by the Participant on his or her 401(k) Election
                    form, which may not exceed 20% of his or her Compensation.

          |_|  (2)  with respect to bonuses, such dollar amount or percentage
                    as specified by the Participant on his or her 401(k)
                    Election form with respect to such bonus.

B.  MATCHING 401(K) CONTRIBUTIONS

If selected below, the Employer may make Matching 401(k) Contributions for each
Plan Year (select one):

|X| (1) Discretionary Formula:

     Discretionary Matching 401(k) Contribution equal to such a dollar amount
     or percentage of Elective Deferrals, as determined by the Employer, which
     shall be allocated (select one):

     |_|  (a) based on the ratio of each Participant's Elective Deferral
              for the Plan Year to the total Elective Deferrals of all
              Participants for the Plan Year. If inserted, Matching 401(k)
              Contributions shall be subject to a maximum amount of $____ for
              each Participant or ____% of each Participant's Compensation.

     |X| (b)  in an amount not to exceed 50% of each Participant's
              first 20% of Compensation contributed as Elective Deferrals for
              the Plan Year. If any Matching 401(k) Contribution remains, it
              is allocated to each such Participant in an amount not to exceed
              _____% of the next ____% of each Participant's Compensation
              contributed as Elective Deferrals for the Plan Year.

Any remaining Matching 401(k) Contribution shall be allocated to each such
Participant in the ratio that such Participant's Elective Deferral for the Plan
Year bears to the total Elective Deferrals of all such Participants for the Plan
Year. If inserted, Matching 401(k) Contributions shall be subject to a maximum
amount of $_____ for each Participant or ______% of each Participant's
Compensation.

|_| (2) Nondiscretionary Formula:
<PAGE>
 
A nondiscretionary Matching 401(k) Contribution for each Plan Year equal to
(select one):

    |_|  (a) ____% of each Participant's Compensation contributed as
             Elective Deferrals. If inserted, Matching 401(k) Contributions
             shall be subject to a maximum amount of $______ for each
             Participant or ____% of each Participant's Compensation.

    |_|  (b) ____% of the first ____% of the Participant's Compensation
             contributed as Elective Deferrals and ___% of the next ______%
             of the Participant's Compensation contributed as Elective
             Deferrals. If inserted, Matching 401(k) Contributions shall be
             subject to a maximum amount of $_______ for each Participant or
             ___% of each Participant's Compensation.

C.  PARTICIPANTS ELIGIBLE FOR MATCHING 401(K) CONTRIBUTION ALLOCATION

             The following Participants shall be eligible for an allocation to
             their Matching 401(k) Contributions Account (select all those
             applicable):

              |_| (1) Any Participant who makes Elective Deferrals.

              |X| (2) Any Participant who satisfies those requirements elected
                      by the Employer for an allocation to his or her Employer
                      Contributions Account as provided in Article IV Section C.

              |_| (3) Solely with respect to a Plan in which Matching 401(k)
                      Contributions are made quarterly (or on any other regular
                      interval that is more frequent than annually) any
                      Participant whose 401(k) Election is in effect throughout
                      such entire quarter (or other interval).

D.  QUALIFIED MATCHING CONTRIBUTIONS

    If selected below, the Employer may make Qualified Matching Contributions
    for each Plan Year (select all those applicable):

    (1) In its discretion, the Employer may make Qualified Matching
        Contributions on behalf of (select one):

        |X| (a) all Participants who make Elective Deferrals in that Plan Year.

        |_| (b) only those Participants who are Nonhighly Compensated
                Employees and who make Elective Deferrals for that Plan Year.

    (2) Qualified Matching Contributions will be contributed and allocated to
        each Participant in an amount equal to:

        |_| (a) ______% of the Participant's Compensation contributed as
                Elective Deferrals. If inserted, Qualified Matching
                Contributions shall not exceed ____% of the Participant's
                Compensation.

        |X| (b) Such an amount, determined by the Employer, which is needed to
                meet the ACP Test.

    (3) In its discretion, the Employer may elect to designate all or any part
        of Matching 401(k) Contributions as Qualified Matching Contributions
        that are taken into account as Elective Deferrals -- included in the ADP
<PAGE>
 
        Test and excluded from the ACP Test -- on behalf of (select one):

        |X| (a) all Participants who make Elective Deferrals for that Plan Year.

        |_| (b) Only Participants who are Nonhighly Compensated Employees who
                make Elective Deferrals for that Plan Year.

E.  QUALIFIED NONELECTIVE CONTRIBUTIONS

    If selected below, the Employer may make Qualified Nonelective
    Contributions for each Plan Year (select all those applicable):

    (1) In its discretion, the Employer may make Qualified Nonelective
        Contributions on behalf of (select one):

        |_| (a) all Eligible Participants.

        |X| (b) only Eligible Participants who are Nonhighly Compensated
                Employees.

    (2) Qualified Nonelective Contributions will be contributed and allocated
        to each Eligible Participant in an amount equal to (select one):

        |_| (a) ____% (no more than 15%) of the Compensation of each Eligible
                Participant eligible to share in the allocation.

        |X| (b) Such an amount determined by the Employer, which is needed
                to meet either the ADP Test or ACP Test.

    (3) At the discretion of the Employer, as needed and taken into account as
        Elective Deferrals included in the ADP Test on behalf of (select one):

        |_| (a) all Eligible Participants.

        |X| (b) only those Eligible Participants who are Nonhighly Compensated
                Employees.

F. ELECTIVE DEFERRALS USED IN ACP TEST (select one):

|X| (1) At the discretion of the Employer, Elective Deferrals may
        be used to satisfy the ACP Test.

|_| (2) Elective Deferrals may not be used to satisfy the ACP Test.

G.  MAKING AND MODIFYING A 401(K) ELECTION

    An Eligible Employee shall be entitled to increase, decrease or resume his
    or her Elective Deferral percentage with the following frequency during the
    Plan Year (select one):

    |_| (1) annually.
    |_| (2) semi-annually.
    |X| (3) quarterly.
    |_| (4)monthly.
    |_| (5) other (specify): ______.

Any such increase, decrease or resumption shall be effective as of the first
payroll period coincident with or next following the first day of each period
set forth above. A Participant may completely discontinue making Elective
Deferrals at any time effective for the payroll period after written notice is
<PAGE>
 
provided to the Administrator.

         ARTICLE IV. PROFIT-SHARING CONTRIBUTIONS AND ACCOUNT ALLOCATION

A.   PROFIT-SHARING CONTRIBUTIONS

     If selected below, the following contributions for each Plan Year will be
     made:

     Contributions to Employer Contributions Accounts (select one):

     |X| (a) Such an amount, if any, as determined by the Employer.

     |_| (b) _____% of each Participant's Compensation.

B.   ALLOCATION OF CONTRIBUTIONS TO EMPLOYER CONTRIBUTIONS ACCOUNTS (select
     one):

     |X| (1) Non-Integrated Allocation

             The Employer Contributions Account of each Participant eligible to
             share in the allocation for a Plan Year shall be credited with a
             portion of the contribution, plus any forfeitures if forfeitures
             are reallocated to Participants, equal to the ratio that the
             Participant's Compensation for the Plan Year bears to the
             Compensation for that Plan Year of all Participants entitled to
             share in the contribution.

     |_| (2) Integrated Allocation

             Contributions to Employer Contributions Accounts with respect to a
             Plan Year, plus any forfeitures if forfeitures are reallocated to
             Participants, shall be allocated to the Employer Contributions
             Account of each eligible Participant as follows:

             (a) First, in the ratio that each such eligible Participant's
                 Compensation for the Plan Year bears to the Compensation for
                 that Plan Year of all eligible Participants but not in excess
                 of 3% of each Participant's Compensation.

             (b) Second, any remaining contributions and forfeitures will be
                 allocated in the ratio that each eligible Participant's
                 Compensation for the Plan Year in excess of the Integration
                 Level bears to all such Participants' excess Compensation for
                 the Plan Year but not in excess of 3%.

             (c) Third, any remaining contributions and forfeitures will be
                 allocated in the ratio that the sum of each Participant's
                 Compensation and Compensation in excess of the Integration
                 Level bears to the sum of all Participants' Compensation and
                 Compensation in excess of the Integration Level, but not in
                 excess of the Maximum Profit-Sharing Disparity Rate (defined
                 below).

             (d) Fourth, any remaining contributions or forfeitures will be
                 allocated in the ratio that each Participant's Compensation for
                 that year bears to all Participants' Compensation for that
                 year.

             The Maximum Profit-Sharing Disparity Rate is equal to the lesser
<PAGE>
 
             of:

             (a) 2.7% or

             (b) The applicable percentage determined in accordance with the
                 following table:

IF THE INTEGRATION LEVEL IS
(AS A % OF THE TAXABLE WAGE BASE
("TWB")).                                        THE APPLICABLE PERCENTAGE IS:

20% (or $10,000 if greater) or less of the TWB                2.7%

More than 20% (but not less than $10,001 but
not more than 80% of the TWB                                  1.3%

More than 80% but not less than 100% of the
TWB                                                           2.4%

100% of the TWB                                               2.7%

C.   PARTICIPANTS ELIGIBLE FOR EMPLOYER CONTRIBUTION ALLOCATION

     The following Participants shall be eligible for an allocation to their
     Employer Contributions Account (select all those applicable):

     |_| (1) Any Participant who was employed during the Plan Year.

     |_| (2) In the case of a Plan using the hourly record method for
             determining Vesting Service, any Participant who was credited with
             a Year of Service during the Plan Year.

     |_| (3) Any Participant who was employed on the last day of the Plan Year.

     |_| (4) Any Participant who was on a leave of absence on the last day of
             the Plan Year.

     |_| (5) Any Participant who during the Plan Year died or became Disabled
             while an Employee or terminated employment after attaining Normal
             Retirement Age.

     |_| (6) Any Participant who was credited with at least 501 Hours of Service
             whether or not employed on the last day of the Plan Year.

     |_| (7) Any Participant who was credited with at least 1,000 Hours of
             Service and was employed on the last day of the Plan Year.

                         ARTICLE V. THRIFT CONTRIBUTIONS

                         THIS ARTICLE IS NOT APPLICABLE

A.  EMPLOYEE THRIFT CONTRIBUTIONS

    If selected below, Employee Thrift Contributions, which are required for
    Matching Thrift Contributions, may be made by a Participant in an amount
    equal to (select one):

    |_| (1) A dollar amount or a percentage of the Participant's Compensation
            which may not be less than ___% nor may not exceed _____% of his or
            her Compensation.
<PAGE>
 
    |_| (2) An amount not less than ___% of and not more than ___% of each
            Participant's Compensation.

B.  MAKING AND MODIFYING AN EMPLOYEE THRIFT CONTRIBUTION ELECTION

    A Participant shall be entitled to increase, decrease or resume his or her
    Employee Thrift Contribution percentage with the following frequency during
    the Plan Year (select one):

    |_| (1) annually
    |_| (2) semi-annually
    |_| (3) quarterly
    |_| (4) monthly
    |_| (5) other (specify): ______.

    Any such increase, decrease or resumption shall be effective as of the
    first payroll period coincident with or next following the first day of
    each period set forth above. A Participant may completely discontinue
    making Employee Thrift Contributions at any time effective for the payroll
    period after written notice is provided to the Administrator.

C.  THRIFT MATCHING CONTRIBUTIONS

    If selected below, the Employer will make Matching Thrift Contributions for
    each Plan Year (select one):

    |_| (1) Discretionary Formula:

         A discretionary Matching Thrift Contribution equal to such a dollar
         amount or percentage as determined by the Employer, which shall be
         allocated (select one):

         |_| (a) based on the ratio of each Participant's Employee Thrift
                 Contribution for the Plan Year to the total Employee
                 Thrift Contributions of all Participants for the Plan Year. If
                 inserted, Matching Thrift Contributions shall be subject to a
                 maximum amount of $______ for each Participant or _____% of
                 each Participant's Compensation.

         |_| (b) in an amount not to exceed ______% of each Participant's
                 first ___% of Compensation contributed as Employee Thrift
                 Contributions for the Plan Year. If any Matching Thrift
                 Contribution remains, it is allocated to each such Participant
                 in an amount not to exceed ___% of the next ___% of each
                 Participant's Compensation contributed as Employee Thrift
                 Contributions for the Plan Year.

     Any remaining Matching Thrift Contribution shall be allocated to each such
     Participant in the ratio that such Participant's Employee Thrift
     Contributions for the Plan Year bears to the total Employee Thrift
     Contributions of all such Participants for the Plan Year. If inserted,
     Matching Thrift Contributions shall be subject to a maximum amount of $___
     for each Participant or __% of each Participant's Compensation.

     |_| (2) Nondiscretionary Formula:

         A nondiscretionary Matching Thrift Contribution for each Plan Year
         equal to (select one):
<PAGE>
 
         |_| (a) ___% of each Participant's Compensation contributed as
                 Employee Thrift Contributions. If inserted, Matching Thrift
                 Contributions shall be subject to a maximum amount of $___ for
                 each Participant or ___% of each Participant's Compensation.

         |_| (b) ___% of the first ___% of the Participant's Compensation
                contributed as Employee Thrift Contributions and ___% of the
                next ___% of the Participant's Compensation contributed as
                Employee Thrift Contributions. If inserted, Matching Thrift
                Contributions shall be subject to a maximum amount of $___ for
                each Participant or ___% of each Participant's Compensation.

D.  QUALIFIED MATCHING CONTRIBUTIONS

     If selected below, the Employer may make Qualified Matching Contributions
     for each Plan Year (select all those applicable):

     (1) In its discretion, the Employer may make Qualified Matching
         Contributions on behalf of (select one):

         |_| (a) all Participants who make Employee Thrift Contributions.

         |_|  (b) only those Participants who are Nonhighly Compensated
                  Employees and who make Employee Thrift Contributions.

     (2) Qualified Matching Contributions will be contributed and allocated to
         each Participant in an amount equal to:

         |_| (a) ___% of the Participant's Employee Thrift Contributions.
                 If inserted, Qualified Matching Contributions shall not exceed
                 _______% of the Participant's Compensation.

         |_| (b) such an amount, determined by the Employer, which is
                 needed to meet the ACP Test.

                      ARTICLE VI. PARTICIPANT CONTRIBUTIONS

PARTICIPANT VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS

Participant Voluntary Nondeductible Contributions are (select one):

     |_| (a) permitted.
     |X| (b) not permitted.

                              ARTICLE VII. VESTING

A.  EMPLOYER CONTRIBUTION ACCOUNTS

(1)  A Participant shall have a vested percentage in his or her
     Profit-Sharing Contributions, Matching 401(k) Contributions and/or
     Matching Thrift Contributions, if applicable, in accordance with the
     following schedule (Select one):

MATCHING
401(K)
AND/OR
MATCHING
THRIFT                  PROFIT-SHARING
CONTRIBUTIONS           CONTRIBUTIONS
<PAGE>
 
   |_|                     |_|            (a) 100% vesting immediately upon
                                              participation.
   |_|                     |_|            (b) 100% after ___ (not more than 5)
                                              years of Vesting Service.
   |X|                     |X|            (c) Graded vesting schedule:
   20%                     20%                after 1 year of Vesting Service;
   --                      --
   40%                     40%                after 2 years of Vesting Service;
   --                      --
   100%                   100%                (not less than 20%) after 3 years
                                              of Vesting Service;
   ---                    ---
    %                      %                  (not less than 40%) after 4 years
                                              of Vesting Service;
   --
    %                      %                  (not less than 60%) after 5 years
                                              of Vesting Service;
   --
    %                      %                  (not less than 80%) after 6 years
                                              of Vesting Service;
   --

               100% after 7 years of Vesting Service.

(2) Top Heavy Plan

MATCHING
401(K)
AND/OR
MATCHING
THRIFT                  PROFIT-SHARING
CONTRIBUTIONS           CONTRIBUTIONS


Vesting Schedule (Select one):

    |_|                   |_|       (a) 100% vesting immediately upon
                                        participation.
    |_|                   |_|       (b) 100% after - (not more than 3) years of
                                        Vesting Service.
    |X|                   |X|       (c) Graded vesting schedule:
    20%                   20%           after 1 year of Vesting Service;
    --                    --
    40%                   40%           (not less than 20%) after 2 years of
                                        Vesting Service;
    --                    --
    100%                 100%           (not less than 40%) after 3 years of
                                        Vesting Service;
    ---                  --- 
      %                    %            (not less than 60%) after 4 years of
                                        Vesting Service;
     --
      %                    %            (not less than 80%) after 5 years of
                                        Vesting Service;
     --

              100% after 6 years of Vesting Service.

Top Heavy Ratio:
<PAGE>
 

     (a)  If the adopting Employer maintains or has ever maintained a qualified
          defined benefit plan, for purposes of establishing present value to
          compute the top-heavy ratio, any benefit shall be discounted only for
          mortality and interest based on the following:

                          Interest Rate: 5%
                          Mortality Table: GAM

     (b)  For purposes of computing the top-heavy ratio, the valuation date
          shall be the last business day of each Plan Year.


B.  ALLOCATION OF FORFEITURES

         Forfeitures shall be (select one from each applicable column):

MATCHING 401(K)
AND/OR MATCHING                 PROFIT-SHARING
THRIFT CONTRIBUTIONS            CONTRIBUTIONS

    |X|                         |X|    (1) used to reduce Employer contributions
                                           for succeeding Plan Year.
    |_|                         |_|    (2) allocated in the succeeding Plan Year
                                           in the ratio which the Compensation
                                           of each Participant for the Plan Year
                                           bears to the total Compensation of
                                           all Participants entitled to share
                                           in the Contributions. If the Plan is
                                           integrated with Social Security,
                                           forfeitures shall be allocated in
                                           accordance with the formula elected
                                           by the Employer.

C.  VESTING SERVICE

       For purposes of determining Years of Service for Vesting Service [select
       (1) or (2) and/or (3)]:

       |X| (1) All Years of Service shall be included.

       |_| (2) Years of Service before the Participant attained age 18 shall be
               excluded.

       |_| (3) Service with the Employer prior to the effective date of the Plan
               shall be excluded.


                ARTICLE VIII. DEFERRAL OF BENEFIT DISTRIBUTIONS,
                        IN-SERVICE WITHDRAWALS AND LOANS

A.  DEFERRAL OF BENEFIT DISTRIBUTIONS

401(k) and/                PROFIT-
OR THRIFT                  SHARING
    |_|                    |_|    If this item is checked, a Participant's
                                  vested benefit in his or her Employer
                                  Accounts shall be payable as soon as
                                  practicable after the earlier of: (1) the
                                  date the Participant terminates Employment
                                  due to Disability or (2) the end of the Plan
<PAGE>
 
                                  Year in which a terminated Participant
                                  attains Early Retirement Age, if applicable,
                                  or Normal Retirement Age.

B.  IN-SERVICE DISTRIBUTIONS

|X| (1) In-service distributions may be made from any of the Participant's
        vested Accounts, at any time upon or after the occurrence of the
        following events (select all applicable):

        |X| (a) a Participant's attainment of age 59-1/2.
        |X| (b) due to hardships as defined in Section 5.9 of the Plan.

|_| (2) In-service distributions are not permitted.

C.  LOANS ARE:

401(k) and/          Profit
OR THRIFT           SHARING

|X|               |X|      (1)  permitted.
|_|               |_|      (2)  not permitted.


                             ARTICLE IX. GROUP TRUST

|_|  If this item is checked, the Employer elects to establish a Group Trust
     consisting of such Plan assets as shall from time to time be transferred to
     the Trustee pursuant to Article X of the Plan. The Trust Fund shall be a
     Group Trust consisting of assets of this Plan plus assets of the following
     plans of the Employer or of an Affiliate: ____________.


                            ARTICLE X. MISCELLANEOUS

A.   IDENTIFICATION OF SPONSOR

     The address and telephone number of the Sponsor's authorized representative
     is 800 Scudders Mill Road, Plainsboro, New Jersey 08536; (609) 282-2272.
     This authorized representative can answer inquiries regarding the adoption
     of the Plan, the intended meaning of any Plan provisions, and the effect of
     the opinion letter.

     The Sponsor will inform the adopting Employer of any amendments made to the
     Plan or the discontinuance or abandonment of the Plan.

B.   PLAN REGISTRATION

     1.  INITIAL REGISTRATION

          This Plan must be registered with the Sponsor, Merrill Lynch, Pierce,
          Fenner & Smith Incorporated, in order to be considered a Prototype
          Plan by the Sponsor. Registration is required so that the Sponsor is
          able to provide the Administrator with documents, forms and
          announcements relating to the administration of the Plan and with Plan
          amendments and other documents, all of which relate to administering
          the Plan in accordance with applicable law and maintaining compliance
          of the Plan with the law.

          The Employer must complete and sign the Adoption Agreement. Upon
<PAGE>
 
          receipt of the Adoption Agreement, the Plan will be registered as a
          Prototype Plan of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
          The Adoption Agreement will be countersigned by an authorized
          representative and a copy of the countersigned Adoption Agreement will
          be returned to the Employer.

     2.  REGISTRATION RENEWAL

          Annual registration renewal is required in order for the Employer to
          continue to receive any and all necessary updating documents. There is
          an annual registration renewal fee in the amount set forth with the
          initial registration material. The adopting Employer authorizes
          Merrill Lynch, Pierce, Fenner & Smith Incorporated, to debit the
          account established for the Plan for payment of agreed upon annual
          fee; provided, however, if the assets of an account are invested
          solely in Participant-Directed Assets, a notice for this annual fee
          will be sent to the Employer annually. The Sponsor reserves the right
          to change this fee from time to time and will provide written notice
          in advance of any change.

C.  PROTOTYPE REPLACEMENT PLAN

     This Adoption Agreement is a replacement prototype plan for the (1) Merrill
     Lynch Special Prototype Defined Contribution Plan and Trust - 401(k) Plan
     #03-004 and (2) Merrill Lynch Asset Management, Inc., Special Prototype
     Defined Contribution Plan and Trust - 401(k) Plan Adoption Agreement
     #03-004.

D.  RELIANCE

     The adopting Employer may not rely on the opinion letter issued by the
     National Office of the Internal Revenue Service as evidence that this Plan
     is qualified under Code Section 401. In order to obtain reliance, the
     Employer must apply to the appropriate Key District Director of the
     Internal Revenue Service for a determination letter with respect to the
     Plan.

                              EMPLOYER'S SIGNATURE




                           Name of Employer:___________________________



                           By:      _____________________________________
                                    Authorized Signature

                                    -------------------------------------
                                    Print Name

                                    -------------------------------------
                                    Title



Dated: ________________, 19__
<PAGE>
 
TO BE COMPLETED BY MERRILL LYNCH:

SPONSOR ACCEPTANCE:

Subject to the terms and conditions of the Prototype Plan and this Adoption
Agreement, this Adoption Agreement is accepted by Merrill Lynch, Pierce, Fenner
& Smith Incorporated as the Prototype Sponsor.

Authorized Signature:  _________________________________________________


TRUSTEE(S) SIGNATURE


This Trustee Acceptance is to be completed only if the Employer appoints one or
more Trustees and does not appoint a Merrill Lynch Trust Company as Trustee.

The undersigned hereby accept all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.

                                   AS TRUSTEE:



__________________________              ___________________________________
        (Signature)                            (print or type name)



__________________________              ___________________________________
        (Signature)                            (print or type name)


__________________________              ___________________________________
        (Signature)                            (print or type name)



__________________________              ___________________________________
        (Signature)                            (print or type name)



Dated:____________, 19__


                                                       27

                  THE MERRILL LYNCH TRUST COMPANIES AS TRUSTEE


This Trustee Acceptance and designation of Investment Committee are to be
completed only when a Merrill Lynch Trust Company is appointed as Trustee.
<PAGE>
 
TO BE COMPLETED BY THE EMPLOYER:

                           DESIGNATION OF INVESTMENT COMMITTEE


The Investment Committee for the Plan is (print or type names):

Name:_____________________________________

Name:_____________________________________

Name:_____________________________________

Name:_____________________________________


TO BE COMPLETED BY MERRILL LYNCH TRUST COMPANY:


                             ACCEPTANCE BY TRUSTEE:


The undersigned hereby accept all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.



SEAL                       MERRILL LYNCH TRUST COMPANY [________________]


                                   By:______________________________________


DATED:__________, 19__


            THE MERRILL LYNCH TRUST COMPANIES AS ONE OF THE TRUSTEES

This Trustee Acceptance is to be completed only if, in addition to a Merrill
Lynch Trust Companies as Trustee, the Employer appoints an additional Trustee of
a second trust fund.

The undersigned hereby accept all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.



                                                     AS TRUSTEE


________________________________          ________________________________
         (Signature)                            (print or type name)

DATED: ________________, 19_____
<PAGE>
 
SEAL              MERRIL LYNCH TRUST COMPANY [__________________________]

                  _______________________________________________________


DATED: ________________, 19_____



DESIGNATION OF INVESTMENT COMMITTEE

         The Investment Committee for the Plan is (print or type name):


______________________________________________________________________________


______________________________________________________________________________



______________________________________________________________________________



______________________________________________________________________________