-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EmURshZiR0k29nTtHnMOTReaiNy6eZC+NEoTcR6Iz3wcccQVzX0rR78/jdFYSzsg D169dxoH4dkRReJvEjfYnA== 0000891020-96-001484.txt : 19961121 0000891020-96-001484.hdr.sgml : 19961121 ACCESSION NUMBER: 0000891020-96-001484 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19961119 EFFECTIVENESS DATE: 19961119 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOEING CO CENTRAL INDEX KEY: 0000012927 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT [3721] IRS NUMBER: 910425694 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-16363 FILM NUMBER: 96668992 BUSINESS ADDRESS: STREET 1: P O BOX 3707 MS 1F 31 CITY: SEATTLE STATE: WA ZIP: 98124 BUSINESS PHONE: 2066552121 MAIL ADDRESS: STREET 1: 7755 EAST MARGINAL WAY SOUTH CITY: SEATTLE STATE: WA ZIP: 98124-2207 FORMER COMPANY: FORMER CONFORMED NAME: BOEING AIRPLANE CO DATE OF NAME CHANGE: 19730725 S-8 1 BOEING FORM S-8 1 As filed with the Securities and Exchange Commission on Novemober 18, 1996. Registration No. 333-_________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 THE BOEING COMPANY (Exact name of registrant as specified in its charter) DELAWARE 91-0425694 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 7755 EAST MARGINAL WAY SOUTH SEATTLE, WASHINGTON 98108 (Address of principal executive offices, including zip code) BOEING NORTH AMERICAN SALARIED VOLUNTARY SAVINGS PLAN BOEING NORTH AMERICAN SAVINGS PLAN FOR CERTAIN EMPLOYEES BOEING NORTH AMERICAN VOLUNTARY SAVINGS PLAN FOR CERTAIN REPRESENTED HOURLY EMPLOYEES (Full title of the plans) HEATHER HOWARD CORPORATE SECRETARY AND CORPORATE COUNSEL THE BOEING COMPANY 7755 EAST MARGINAL WAY SOUTH SEATTLE, WASHINGTON 98108 (206) 655-7531 (Name, address and telephone number, including area code, of agent for service) COPY TO: J. SUE MORGAN PERKINS COIE 1201 THIRD AVENUE, 40TH FLOOR SEATTLE, WASHINGTON 98101-3099 CALCULATION OF REGISTRATION FEE
Proposed Maximum Title of Securities Number to Be Offering Price Per Proposed Maximum Amount of to Be Registered Registered(1) Share(2) Aggregate Offering Registration Price Fee - ----------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $5.00 per share - ----------------------------------------------------------------------------------------------------------------------------- Boeing North American Salaried Voluntary 932,495 $91.50 $85,323,293 $25,856 Savings Plan - ----------------------------------------------------------------------------------------------------------------------------- Boeing North American Savings Plan for 31,815 $91.50 $ 2,911,072 $ 882 Certain Employees - ----------------------------------------------------------------------------------------------------------------------------- Boeing North American Voluntary Savings Plan for Certain Represented Hourly Employees 65,810 $91.50 $ 6,021,615 $ 1,825 - ----------------------------------------------------------------------------------------------------------------------------- TOTAL 1,030,120 $91.50 $94,255,980 $28,563 - -----------------------------------------------------------------------------------------------------------------------------
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plans described herein. (1) Includes an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to such employee benefit plans as the result of any future stock split, stock dividend or similar adjustment of the registrant's outstanding Common Stock. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended. The price per share is estimated to be $91.50, based on the average of the high sales price ($92.00) and the low sales price ($91.00) for the registrant's Common Stock as reported on the New York Stock Exchange on November 13, 1996. 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents are hereby incorporated by reference in this registration statement: (a) The registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, filed with the Securities and Exchange Commission (the "Commission") on March 13, 1996, which contains audited consolidated financial statements for the most recent fiscal year for which such statements have been filed. (b) All other reports filed by the registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since the end of the fiscal year covered by the Annual Report on Form 10-K referred to in (a) above. (c) The description of the registrant's Common Stock contained in the registration statement on Form 10 (Registration No. 1-422), filed with the Commission on April 20, 1935, under Section 12(g) of the Exchange Act, including any amendments or reports filed for the purpose of updating such description. All documents filed by the registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the filing of a post-effective amendment which indicates that the securities offered hereby have been sold or which deregisters the securities covered hereby then remaining unsold shall also be deemed to be incorporated by reference into this registration statement and to be a part hereof commencing on the respective dates on which such documents are filed. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL The opinion of counsel as to the legality of the securities that may be issued under the registrant's Boeing North American Salaried Voluntary Savings Plan, Boeing North American Savings Plan for Certain Employees and Boeing North American Voluntary Savings Plan for Certain Represented Hourly Employees (the "Plans") is given by Heather Howard, Corporate Secretary and Corporate Counsel for the registrant. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation in a derivative action), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, by-laws, disinterested director vote, stockholder vote, agreement or otherwise. Article VII, Section 4 of the registrant's By-Laws provides for indemnification of the registrant's directors and officers to the full extent permitted under Delaware law. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for payments of unlawful dividends or II-1 3 unlawful stock repurchases or redemptions, or (iv) for any transaction from which the director derived an improper personal benefit. Article Twelfth of the registrant's Restated Certificate of Incorporation provides that, to the full extent that Delaware law permits the limitation or elimination of the liability of directors, a director of the registrant will not be liable to the registrant or its stockholders for monetary damages for breach of fiduciary duty as a director. Officers and directors of the registrant are covered by insurance that, with certain exceptions and within certain limitations, indemnifies them against losses and liabilities arising from any alleged "wrongful act," including any alleged error or misstatement, misleading statement, wrong act or omission, neglect or breach of duty. Article Sixth of the registrant's Restated Certificate of Incorporation provides that the personal liability of each director of the registrant to the registrant or to its stockholders for monetary damages for breach of fiduciary duty as a director is limited to the fullest extent permitted by the Delaware General Corporation Law. The registrant also maintains an insurance policy insuring its directors and officers against liability for certain acts or omissions while acting in their official capacities. Directors and officers of the registrant are covered by insurance that (with certain exceptions and within certain limitations) indemnifies them against losses and liabilities arising from any alleged "wrongful act," including any violation of statute, alleged error or misstatement or misleading statement, or wrongful act or omission or neglect or breach of duty. ITEM 8. EXHIBITS EXHIBIT NUMBER DESCRIPTION 5.1 Opinion of counsel regarding legality of the common stock being registered 15.1 Letter regarding unaudited interim financial information 23.1 Consent of Deloitte & Touche LLP (see page II-7) 23.2 Consent of counsel (included in Exhibit 5.1) 24.1 Power of Attorney (see signature page) 99.1 Boeing North American Salaried Voluntary Savings Plan 99.2 Boeing North American Savings Plan for Certain Employees 99.3 Boeing North American Voluntary Savings Plan for Certain Represented Hourly Employees II-2 4 ITEM 9. UNDERTAKINGS A. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to (a) include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (b) reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) that, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; and (c) include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. B. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefits plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. D. The undersigned registrant hereby undertakes that it will submit the Plans and any amendments thereto to the Internal Revenue Service (the "IRS") in a timely manner and will make all changes required by the IRS to qualify the Plans. II-3 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on November 15, 1996. THE BOEING COMPANY By /s/ Philip M. Condit ------------------------------------- Philip M. Condit President and Chief Executive Officer POWER OF ATTORNEY EACH PERSON WHOSE SIGNATURE APPEARS BELOW CONSTITUTES AND APPOINTS PHILIP M. CONDIT, THEODORE J. COLLINS AND B.E. GIVAN, OR ANY OF THEM, HIS OR HER ATTORNEYS-IN-FACT, WITH THE POWER OF SUBSTITUTION, FOR HIM OR HER IN ANY AND ALL CAPACITIES, TO SIGN ANY AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF. Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated on November 15, 1996. SIGNATURE TITLE President, Chief Executive Officer /s/ Philip M. Condit (Principal Executive Officer) and Director - --------------------------- Philip M. Condit Senior Vice President and Chief Financial Officer /s/ B.E. Givan (Principal Financial Officer) - --------------------------- B.E. Givan Vice President and Controller /s/ Gary W. Beil (Principal Accounting Officer) - --------------------------- Gary W. Beil /s/ Frank Shrontz Chairman of the Board - --------------------------- Frank Shrontz /s/ John E. Bryson Director - --------------------------- John E. Bryson II-4 6 /s/ John B. Fery Director - --------------------------- John B. Fery /s/ Paul E. Gray Director - --------------------------- Paul E. Gray /s/ Harold J. Haynes Director - --------------------------- Harold J. Haynes /s/ Stanley Hiller, Jr. Director - --------------------------- Stanley Hiller, Jr. /s/ Donald E. Petersen Director - --------------------------- Donald E. Petersen /s/ Charles M. Pigott Director - --------------------------- Charles M. Pigott /s/ Rozanne L. Ridgway Director - --------------------------- Rozanne L. Ridgway /s/ George H. Weyerhaeuser Director - --------------------------- George H. Weyerhaeuser II-5 7 THE PLANS Pursuant to the requirements of the Securities Act of 1933, as amended, the persons who administer the Boeing North American Salaried Voluntary Savings Plan, the Boeing North American Savings Plan for Certain Employees and the Boeing North American Voluntary Savings Plan for Certain Represented Hourly Employees have duly caused this registration statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on November 15, 1996. BOEING NORTH AMERICAN SALARIED VOLUNTARY SAVINGS PLAN By: THE BOEING COMPANY By /s/ Philip M. Condit -------------------------------------------- Philip M. Condit President and Chief Executive Officer BOEING NORTH AMERICAN SAVINGS PLAN FOR CERTAIN EMPLOYEES By: THE BOEING COMPANY By /s/ Philip M. Condit -------------------------------------------- Philip M. Condit President and Chief Executive Officer BOEING NORTH AMERICAN VOLUNTARY SAVINGS PLAN FOR CERTAIN REPRESENTED HOURLY EMPLOYEES By: THE BOEING COMPANY By /s/ Philip M. Condit -------------------------------------------- Philip M. Condit President and Chief Executive Officer II-6 8 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of The Boeing Company on Form S-8 of our reports dated January 25, 1996, appearing in and incorporated by reference in the Annual Report on Form 10-K of The Boeing Company and subsidiaries for the year ended December 31, 1995. /s/ Deloitte & Touche LLP - ------------------------- Deloitte & Touche LLP Seattle, Washington November 15, 1996 II-7 9 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION 5.1 Opinion of counsel regarding legality of the common stock being registered 15.1 Letter regarding unaudited interim financial information 23.1 Consent of Deloitte & Touche LLP (see page II-7) 23.2 Consent of counsel (included in Exhibit 5.1) 24.1 Power of Attorney (see signature page) 99.1 Boeing North American Salaried Voluntary Savings Plan 99.2 Boeing North American Savings Plan for Certain Employees 99.3 Boeing North American Voluntary Savings Plan for Certain Represented Hourly Employees EX-5.1 2 OPINION OF COUNSEL RE: LEGALITY OF COMMON STOCK 1 EXHIBIT 5.1 November 15, 1996 The Boeing Company 7755 East Marginal Way South Seattle, Washington 98108 Gentlemen and Ladies: As Corporate Counsel of The Boeing Company (the "Company"), I have acted as counsel in connection with the Registration Statement on Form S-8 which is being filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to 1,030,120 shares of common stock, $5.00 par value, of the Company (the "Shares"). The Shares may be issued pursuant to the Boeing North American Salaried Voluntary Savings Plan, the Boeing North American Savings Plan for Certain Employees, and the Boeing North American Voluntary Savings Plan for Certain Represented Hourly Employees (the "Plans"). I have examined the Registration Statement and a copy of the Restated Certificate of Incorporation of the Company and any amendments thereto to date, a copy of the By-Laws of the Company as amended to date, and such resolutions of the Board of Directors of the Company and other documentation as I have deemed necessary for the purpose of this opinion. Based upon and subject to the foregoing, I am of the opinion that the Shares that may be issued by the Company pursuant to the Plans, upon the due execution by the Company and registration by its registrar of the Shares and the issuance thereof by the Company in accordance with the terms of the Plans, and the receipt of consideration therefor in accordance with the terms of the Plans, will be validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the heading "Interests of Named Experts and Counsel" in the Registration Statement. Cordially, /s/ Heather Howard Heather Howard Corporate Secretary and Corporate Counsel EX-15.1 3 LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFO. 1 Exhibit 15.1 November 15, 1996 The Boeing Company Seattle, Washington We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of The Boeing Company and subsidiaries for the periods ended March 31, 1996 and 1995, June 30, 1996 and 1995 and September 30, 1996 and 1995, as indicated in our reports dated April 29, 1996, August 1, 1996 and November 5, 1996; respectively; because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, are being incorporated by reference in this Registration Statement. We are also aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Deloitte & Touche LLP - ------------------------- EX-99.1 4 NORTH AMERICAN SALARIED VOLUNTARY SAVINGS PLAN 1 Exhibit 99.1 BOEING NORTH AMERICAN SALARIED VOLUNTARY SAVINGS PLAN November 15, 1996 2 Table of Contents Page ---- Introduction............................................................. 1 Article 1 -- Definitions................................................. 2 1.1 Accounts...................................................... 2 1.2 Affiliate or Subsidiary....................................... 2 1.3 Authorized Period of Absence.................................. 2 1.4 Beneficiary................................................... 2 1.5 Boeing Company Stock Fund..................................... 3 1.6 Code.......................................................... 3 1.7 Common Stock.................................................. 3 1.8 Common Unit................................................... 3 1.9 Company....................................................... 3 1.10 Company Contributions Account................................ 3 1.11 Company Matching Contributions............................... 3 1.12 Compensation................................................. 3 1.13 Compensation Deduction Account............................... 4 1.14 Compensation Deduction Contributions......................... 4 1.15 Compensation Deferral Account................................ 4 1.16 Compensation Deferral Contributions.......................... 4 1.17 Controlled Group............................................. 4 1.18 Effective Date............................................... 4 1.19 Eligible Employee............................................ 4 1.20 Employee..................................................... 5 1.21 Employment Date.............................................. 5 1.22 ERISA........................................................ 5 1.23 Highly Compensated Eligible Employee......................... 5 1.24 Highly Compensated Employee.................................. 5 1.25 Hour of Service.............................................. 7 1.26 Investment Fund.............................................. 8 1.27 Investment Manager........................................... 8 1.28 Layoff....................................................... 8 1.29 Member....................................................... 8 1.30 Military Service............................................. 8 1.31 Parent....................................................... 8 1.32 Period of Service............................................ 8 1.33 Period of Severance.......................................... 9 1.34 Plan......................................................... 9 1.35 Plan Administrator........................................... 9 1.36 Plan Year.................................................... 9 1.37 Reemployment Date............................................ 10 -i- 3
1.38 Rollover Contribution................................................................................ 10 1.39 Severance from Service Date.......................................................................... 10 1.40 Stable Value Fund.................................................................................... 10 1.41 Supplemental Deduction Account....................................................................... 10 1.42 Supplemental Deduction Contributions................................................................. 10 1.43 Supplemental Deferral Account........................................................................ 11 1.44 Supplemental Deferral Contributions.................................................................. 11 1.45 Total Disability..................................................................................... 11 1.46 Total Earnings....................................................................................... 11 1.47 Trust Agreement...................................................................................... 11 1.48 Trust Fund........................................................................................... 11 1.49 Trustee.............................................................................................. 12 1.50 Unit................................................................................................. 12 1.51 Valuation Date....................................................................................... 12 Article 2 -- Membership.......................................................................................... 13 2.1 Entry Date............................................................................................ 13 2.2 Application for Membership............................................................................ 13 Article 3 --Contributions........................................................................................ 14 3.1 Compensation Deferral Contributions and Supplemental Deferral Contributions........................... 14 3.2 Compensation Deduction Contributions and Supplemental Deduction Contributions..................................................................................... 15 3.3 Deferral and Deduction Elections...................................................................... 15 3.4 Company Contributions................................................................................. 17 3.5 Return of Company Contributions....................................................................... 17 3.6 Contributions for Military Service.................................................................... 17 3.7 Testing Compensation and Supplemental Deferral Contributions for Discrimination.................................................................................... 18 3.8 Testing Compensation and Supplemental Deduction Contributions and Company Matching Contributions for Discrimination................................................. 20 3.9 Testing Aggregate Contributions for Discrimination.................................................... 23 3.10 Aggregation Rules for Discrimination Testing......................................................... 25 Article 4 -- Investment of Contributions......................................................................... 27 4.1 Investment Election................................................................................... 27 4.2 Changes in Investment Elections....................................................................... 27 4.3 Transfer of Investments............................................................................... 27 4.4 Independent Control................................................................................... 28 Article 5 -- Trust Agreement..................................................................................... 29 5.1 Establishment of Trust Fund........................................................................... 29 5.2 Investment Funds...................................................................................... 29 5.3 Voting Rights......................................................................................... 30 5.4 Tender Offer......................................................................................... 30 5.5 Trust Agreement....................................................................................... 31 5.6 Rights in the Trust Fund.............................................................................. 31
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Article 6 -- Maintenance of Members' Accounts.................................................................... 32 6.1 Accounts Maintained................................................................................... 32 6.2 Crediting Units to Accounts........................................................................... 32 6.3 Units Valuations...................................................................................... 32 6.4 Balance of Member's Accounts.......................................................................... 33 6.5 Member Account Statements............................................................................. 33 Article 7 -- Retirement.......................................................................................... 34 7.1 Eligibility........................................................................................... 34 7.2 Lump Sum Distribution................................................................................. 34 7.3 Installment Form of Payment........................................................................... 34 7.4 Limitations on Payment Date........................................................................... 35 7.5 Manner of Distribution................................................................................ 36 Article 8 -- Termination or Death................................................................................ 38 8.1 Vesting............................................................................................... 38 8.2 Distribution Upon Termination......................................................................... 38 8.3 Distribution Upon Death............................................................................... 39 8.4 Amount of Distribution................................................................................ 39 8.5 Forfeitures........................................................................................... 40 8.6 Repayment After Reemployment.......................................................................... 41 Article 9 -- Withdrawals and Loans............................................................................... 42 9.1 Withdrawals from Accounts by Members under Age 59 1/2................................................. 42 9.2 Withdrawal from Accounts by Members Over Age 59 1/2................................................... 43 9.3 Forfeitures and Limitation on Withdrawals............................................................. 43 9.4 Allocation of Withdrawals Among Investment Funds...................................................... 45 9.5 Hardship Withdrawals from Compensation and Supplemental Deferral Accounts.......................................................................................... 45 9.6 Loans................................................................................................. 47 Article 10 -- Termination of Plan................................................................................ 49 10.1 Termination of Plan.................................................................................. 49 10.2 Procedures Upon Termination of Plan.................................................................. 49 Article 11 -- Top Heavy Provisions............................................................................... 50 11.1 Top-Heavy Plan....................................................................................... 50 11.2 Definition of Terms.................................................................................. 50 11.3 Modification of Vesting Schedule..................................................................... 52 11.4 Minimum Contribution................................................................................. 53 11.5 Modification of Maximum Contribution................................................................. 53 11.6 Collective Bargaining Agreements..................................................................... 53 Article 12 -- Administration of Plan............................................................................. 54 12.1 Administration....................................................................................... 54 12.2 Records.............................................................................................. 55
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12.3 Payment of Expenses.................................................................................. 55 12.4 Delegation of Authority.............................................................................. 55 12.5 Information Available................................................................................ 55 12.6 Appeal Procedure..................................................................................... 55 12.7 Fiduciary Capacity................................................................................... 56 12.8 Committee Liability.................................................................................. 56 Article 13 -- General Provisions................................................................................. 57 13.1 Amendment of Plan.................................................................................... 57 13.2 Qualification........................................................................................ 57 13.3 Employment Status.................................................................................... 57 13.4 Mergers or Consolidations............................................................................ 57 13.5 Provision Against Anticipation....................................................................... 58 13.6 Facility of Payment.................................................................................. 58 13.7 Construction......................................................................................... 58 13.8 Legal Actions........................................................................................ 58 13.9 Limitations on Contributions......................................................................... 58 13.10 Qualified Domestic Relations Order.................................................................. 60 13.11 Pronouns............................................................................................ 60 13.12 Eligible Rollover Distribution...................................................................... 61 13.13 Rollover Contributions.............................................................................. 62 Appendix A -- Retirement Sub-Plans Crediting Service............................................................. 64 Appendix B -- Procedures, Terms, and Conditions of Loans......................................................... 65
-iv- 6 Introduction The Boeing North American Salaried Voluntary Savings Plan is effective on the closing date of the merger involving Rockwell International Corporation and Boeing NA, Inc. On this date, most Rockwell Aerospace and Defense business employees became employees of Boeing North American, Inc. Except as specifically provided in the Plan, the rights and benefits of any Member who terminates or retires prior to the effective date of any amendment to the Plan will be determined pursuant to the provisions of the Plan in effect on the earlier of his date of retirement or termination. The purpose of the Plan is to provide Eligible Employees with a means of making regular savings to provide additional security for their retirement. As an incentive, the Plan provides for Company matching contributions. It is intended that the Plan qualify as a profit sharing plan under the Internal Revenue Code of 1986 and comply with the Employee Retirement Income Security Act of 1974 and any amendments to said Code or Act. -1- 7 Article 1 Definitions 1.1 Accounts means the Company Contributions Account, Compensation Deferral Account, Compensation Deduction Account, Supplemental Deferral Account, and Supplemental Deduction Account maintained for each Member, as applicable. 1.2 Affiliate or Subsidiary means a member of a controlled group of corporations (as defined in Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C)), a group of trades or businesses (whether incorporated or not) which are under common control within the meaning of Code Section 414(c), or an affiliated service group (as defined in Code Sections 414(m) or 414(o)) of which The Boeing Company is a part. With respect to the Limitation on Contributions described in 13.9, in determining whether a corporation is a member of a controlled group of corporations the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in Code Section 1563(a)(1). 1.3 Authorized Period of Absence means an absence authorized by the Company for one or more of the following reasons: (a) Layoff not to exceed six years duration. (b) Approved leave of absence. (c) Jury duty. (d) Labor-management dispute. (e) Military Service as defined in section 1.30. (f) Illness or injury, including disability. Any discretion of the Company under the provisions of this definition will be exercised without discrimination and in accordance with definitely established rules uniformly applicable to Employees or Members whose approved periods of absence were occasioned by similar circumstances. 1.4 Beneficiary means the one or more persons or trusts designated by a Member to receive any benefit payable from the Plan upon the death of the Member. Each Member may designate a beneficiary; provided, however, if the Member has been married for a one year period and is survived by his spouse (or a former spouse to the extent provided under a qualified domestic relations order as described in Code Section 414(p)), he will be deemed to have designated such spouse as his Beneficiary unless he has designated a different Beneficiary in writing and his spouse has consented to this designation. The spouse's consent must be in writing, must acknowledge the effect of the designation, and must be witnessed by a Plan representative or a notary public. The requirement for -2- 8 spouse's consent will be waived if the Member establishes to the satisfaction of the Plan Administrator that such consent cannot be obtained because there is no spouse, the spouse cannot be located, or because of such other circumstances as the Secretary of the Treasury may by regulations prescribe. The spouse's consent (or waiver of consent where the spouse cannot be located) will be valid only with respect to that spouse. If no designation is filed with the Plan Administrator or if the designated Beneficiary does not survive the Member, the Member shall be deemed to have designated the following as Beneficiaries and contingent Beneficiaries with priority in the order named. (a) Surviving spouse, if none then to (b) Children in equal shares, if none then to (c) Any other relative of the Member designated by the Plan Administrator or to the Member's estate. 1.5 Boeing Company Stock Fund means the Investment Fund described in section 5.2(e). 1.6 Code means the Internal Revenue Code of 1986, as amended. 1.7 Common Stock means common stock of The Boeing Company 1.8 Common Unit means a Unit of the Boeing Company Stock Fund which is attributable to Common Stock. 1.9 Company means Boeing North American, Inc., a Delaware corporation, and any other entity to which the Board of Directors has extended this Plan. 1.10 Company Contributions Account means the Account, if any, maintained for each Member which is credited with the Member's share of Company Matching Contributions and investment earnings allocable to such Account. 1.11 Company Matching Contributions means the amount contributed to the Plan by the Company on behalf of the Member in accordance with section 3.4. 1.12 Compensation means a Member's base compensation from the Company and will include lump sum merit awards, any amount which would be paid to the Member absent an election under section 3.1(a) or (b) or an election to make elective employer contributions pursuant to a cafeteria plan meeting the requirement of Code Section 125. Compensation will not include overtime, extended workweek compensation, night work or other premium pay, bonuses, any form of extra, contingent, or supplementary compensation (including, but not limited to, lump sum payments for unused vacation) or compensation on the hourly payroll. Compensation is limited to amounts which would have been received by a Member in a Plan Year (but for a deferral election) or to amounts which are attributable to services performed by the Member in the Plan Year - 3 - 9 which would have been received within two and one-half months after the close of the Plan Year (but for a deferral election). Compensation shall not exceed $150,000 for 1994. On January 1 of each calendar year in which the Secretary of the Treasury prescribes a new dollar limit, this $150,000 limit will automatically be adjusted to that new limit. Compensation for the Plan Year commencing on the Effective Date and ending December 31, 1996 shall not exceed $12,500. For Plan Years beginning before January 1, 1997, this limit applies to the combined Compensation of a 5% owner (as defined in Code Section 416(i)(1)(A)(iii)) of the Company, or one of the 10 Highly Compensated Employees paid the greatest amount of Total Earnings during the year, and such individual's spouse and any lineal descendants who are not yet age 19 before the close of the Plan Year, to the extent required by Code Section 401(a)(17). If the limit applies to combined Total Earnings, the limit will be allocated to the affected individuals in proportion to each individual's Compensation determined prior to the application of the limit. 1.13 Compensation Deduction Account means the Account, if any, maintained for each Member which is credited with the Member's Compensation Deduction Contributions and investment earnings allocable to such Account. 1.14 Compensation Deduction Contributions means the amount contributed to the Plan by the Member through payroll deductions pursuant to section 3.2(a). 1.15 Compensation Deferral Account means the Account, if any, maintained for each Member which is credited with the Member's Compensation Deferral Contributions and investment earnings allocable to such Account. 1.16 Compensation Deferral Contributions means the amount contributed to the Plan by the Company on behalf of the Member in accordance with the Member's election pursuant to section 3.1(a). 1.17 Controlled Group means the Parent, the Company and any Affiliate or Subsidiary. All employees of the Controlled Group will be treated as employed by a single employer for purposes of applying the provisions of qualification of the Plan; of minimum participation standards of the Plan; of minimum vesting standards of the Plan; and of limitations on contributions under the Plan. 1.18 Effective Date means the closing date of the merger involving Rockwell International Corporation and Boeing NA, Inc. (_____________________________). 1.19 Eligible Employee means any Employee who is employed by the Company on a salaried payroll and paid directly through the Company's payroll department. Provided, however, that Eligible Employee shall not include any Employee who is employed at the Company's Guidance and Repair Center at Newark Air Force Base, Ohio. Eligible Employee shall not include any Employee represented by a collective bargaining agent - 4 - 10 unless the terms of the collective bargaining agreement covering such Employee specifically provide for coverage under the Plan. Eligible Employee also shall not include a leased employee as defined in Code Section 414(n). 1.20 Employee means any person employed by any member of the Controlled Group. Employee includes, to the extent permitted by Code Section 406, any United States citizen regularly employed by a foreign subsidiary or affiliate of the Company. The term Employee shall not include: (a) a person who serves the Company only as a Director and is not otherwise employed by the Company; (b) a person engaged only in an advisory or consulting capacity on a retained or fee basis; (c) any person compensated by special fees or pursuant to a special contract or arrangement or on a commission basis who is not otherwise employed by the Company; (d) a person engaged only in a capacity which, in the sole discretion of the Plan Administrator, is determined to be an independent contractor; (e) a person who is a leased employee (within the meaning of Code Section 414(n)) except that a leased employee will be treated as an employee of the Company to the extent required by law and any contributions or benefits provided by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer; or (f) any person whose services for the Company are not paid for through the Company's payroll department. 1.21 Employment Date means the date on which an Employee first performs an Hour of Service for any member of the Controlled Group. 1.22 ERISA means the Employee Retirement Income Security Act of 1974, as amended. 1.23 Highly Compensated Eligible Employee means an Eligible Employee who is a Highly Compensated Employee. 1.24 Highly Compensated Employee means: (a) For Plan Years beginning before January 1, 1997, any Employee who performs services for the Controlled Group during the determination year and who, during the look-back year: - 5 - 11 (1) received Total Earnings in excess of $75,000 (as adjusted by the Secretary of the Treasury for the relevant year), (2) received Total Earnings in excess of $50,000 (as adjusted by the Secretary of the Treasury for the relevant year) and was a member of the top-paid group for such year, or (3) was an officer (within the meaning of Code Section 416(i)) of the Controlled Group and received Total Earnings during such year that were greater than 50% of the dollar limitation in effect under Code Section 415(b)(1)(A). (b) For Plan Years beginning before January 1, 1997, any Employee who is both (i) described in (a) above if the term "determination year" is substituted for the term "look-back year" and (ii) is one of the 100 Employees who received the most Total Earnings from the Controlled Group during the determination year. (c) For Plan Years beginning after December 31, 1996, any Employee who performs services for the Controlled Group during the determination year and who, during the look-back year received Total Earnings in excess of $80,000 (as adjusted by the Secretary of the Treasury for the relevant year). (d) Any Employee who is a 5% owner (as defined in Code Section 416(i)(1)(A)(iii)) of the Company at any time during the look-back year or the determination year. (e) Any former Employee who was a Highly Compensated Employee for a separation year (as defined in Treasury Regulation section 1.414(q)-1T) or for any determination year ending on or after the Employee attains age 55, as provided by Code Section 414(q)(9), as in effect on December 31, 1996, and the regulations thereunder. (f) For Plan Years beginning before January 1, 1997, if no officer has satisfied the compensation requirement in (a)(3) above during either a determination year or look-back year, the highest paid officer for such determination year shall be treated as a Highly Compensated Eligible Employee if such officer is an Eligible Employee. No more than 50 Employees (or if less, the greater of three Employees or 10% of the Employees) shall be treated as officers. (g) For purposes of this section the following definitions apply. The determination year is the Plan Year. The look-back year is the 12-month period immediately preceding the determination year; provided, however, for the Plan Year commencing on the Effective Date and ending December 31, 1996, the look-back year is the 1996 calendar year. The top-paid group is the top 20% of Employees ranked on the basis of compensation received during the year and shall be - 6 - 12 determined in accordance with Code Section 414(q)(8), as in effect on December 31, 1996, and the regulations thereunder. (h) For Plan Years beginning before January 1, 1997, any Employee who is a 5% owner or one of the 10 highly compensated employees in the Controlled Group paid the greatest amount of Total Earnings during the Plan Year and such Employee's spouse, lineal ascendants or descendants and the spouses of such lineal ascendants or descendants shall be treated as a single Employee for purposes of this section. 1.25 Hour of Service means: (a) each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Company; (b) each hour for which an Employee is paid, or entitled to payment, by the Company on account of a period of time during which no duties are performed (whether or not the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence; provided, however, that an Employee shall not be credited with more than 501 Hours of Service under this sentence for any continuous period during which he performs no duties for the Company. Notwithstanding the preceding provisions of this subsection, no credit will be given: (1) for an Hour of Service for which the individual is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed if such payment is made or due under a plan maintained solely for the purpose of complying with applicable workers' compensation, unemployment compensation or disability insurance laws; or (2) for an Hour of Service for which a payment is made which solely reimburses the individual for medical or medically related expenses incurred; (c) each hour not otherwise credited under the Plan for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Company. (d) Hours of Service will be credited for employment with other members of an affiliated service group, a controlled group of corporations, or a group of trades or businesses under common control of which the Company is a member. (e) Hours of Service will also be credited for any individual considered an employee under Code Section 414(n). - 7 - 13 (f) The crediting of Hours of Service under this Plan will be applied under the rules of paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2 which, by this reference, is specifically incorporated in full within this Plan. 1.26 Investment Fund has the meaning specified in section 5.2. 1.27 Investment Manager means any fiduciary (other than a Trustee, The Boeing Company or the Plan Administrator): (a) which has the power to manage, acquire, or dispose of any assets of the Plan; and (b) which (1) is registered as an investment adviser under the Investment Advisers Act of 1940, or (2) is a bank, as defined in that Act, or (3) is an insurance company qualified to perform services described in item (a) above under the laws of more than one state; and (c) which has acknowledged in writing that it is a fiduciary with respect to the Plan. 1.28 Layoff means an involuntary severance of employment, other than a discharge for cause. 1.29 Member means any Eligible Employee who has become a Member in the Plan as provided in Article 2. 1.30 Military Service means the period of time during which a person is absent from active work for the Company or any member of the Controlled Group serving as a member of the Armed Forces of the United States in time of war or other emergency or under the laws of conscription in time of peace. Military Service includes time when such person has a right to reemployment at his former position or a substantially similar position upon his separation from such Military Service, and such period of time, not exceeding ninety days, immediately following such Military Service as such person remains absent from active work for the Company or any member of the Controlled Group. 1.31 Parent means The Boeing Company and any successor by change of name, merger, purchase of stock or purchase of assets. 1.32 Period of Service means: (a) a period beginning on the Employee's Employment Date or Reemployment Date, whichever is applicable, and ending on his Severance from Service Date. (b) If an Employee has a Severance from Service Date due to either: (1) a quit, discharge or retirement which is not covered under (2) below, and then performs an Hour of Service for the Company or any member of the Controlled Group within 12 months of his Severance from Service Date, or - 8 - 14 (2) a quit, discharge or retirement which occurs during an absence from service (which is not due to a quit, discharge, retirement or death) and performs an Hour of Service for the Company or any member of the Controlled Group within 12 months of the date on which he was first absent from service, then the Period of Severance shall be counted in determining his Period of Service. (c) If a Member has a Period of Severance before he has a vested interest in the Plan, his Period of Service will exclude all of the following: (1) service prior to a one-year Period of Severance which is not followed by a one-year Period of Service, (2) service prior to a five-year Period of Severance when the Period of Severance equals or exceeds the Member's Period of Service prior to such Period of Severance. (d) A Member's Period of Service shall not be less than his vesting service under any of the sub-plans of the Boeing North American, Inc. Retirement Plan listed in Appendix A in which he participates at the time his Period of Service for purposes of this Plan is determined (if at the time of such determination the Member does not participate in any of the sub-plans listed in Appendix A, his vesting service for purposes of this subsection will be determined as if he participated in the sub-plan Rockwell International Corporation Retirement Income Plan for Certain Salaried Employees). (e) For any person who is an Eligible Employee on the Effective Date (including an active employee, an employee on layoff status, or an employee on leave of absence) service with Rockwell International Corporation and related employers that is recognized as vesting service under the Rockwell International Corporation Savings Plan shall be deemed to be service as an Employee hereunder in determining the Member's Period of Service. 1.33 Period of Severance means the period of time commencing on an Employee's Severance from Service Date and ending on the date on which the Employee again performs an Hour of Service for the Company or an Affiliate or Subsidiary. 1.34 Plan means the Boeing North American Salaried Voluntary Savings Plan. 1.35 Plan Administrator means the Voluntary Investment Plan Committee established by The Boeing Company Board of Directors. 1.36 Plan Year means the period commencing on the Effective Date and concluding on the December 31 next following the effective date, and each calendar year thereafter. - 9 - 15 1.37 Reemployment Date means the first day following a Period of Severance on which an Employee performs an Hour of Service for the Company or an Affiliate or Subsidiary. 1.38 Rollover Contribution means the amount transferred to this Plan pursuant to section 13.13. 1.39 Severance from Service Date means the earlier of: (a) the date on which an Employee quits, retires, is discharged or dies, and (b) either (1) or (2) below, whichever is applicable: (1) the first anniversary of the first day of a period in which an Employee remains absent from service (with or without pay) with the Company or an Affiliate or Subsidiary for any reason other than quit, retirement, discharge or death; (2) the second anniversary of the first day of a period in which an Employee remains absent from service (with or without pay) with the Company or an Affiliate or Subsidiary because of pregnancy, the birth of the Employee's child, the placement of a child with the Employee in connection with the adoption of such child by the Employee, or the need to care for the Employee's child during the period immediately following the child's birth or placement. Any such absence shall not be taken into account unless the Employee furnishes the Plan Administrator such timely information as the Plan Administrator may require to establish that the absence from employment is for such reason. The period of absence between the first and second anniversaries of the first day of absence shall not be included as a Period of Service nor as a Period of Severance. (c) An Employee who is on leave of absence for uniformed service as defined in the Uniformed Services Employment and Reemployment Rights Act shall not be deemed to have a Severance from Service unless he fails to return to work during the time he has reemployment rights under the law. If such employee fails to return to work within such time, his Severance from Service Date will be the first anniversary of the first day of the period of his absence from employment. 1.40 Stable Value Fund means the Investment Fund described in section 5.2(c). 1.41 Supplemental Deduction Account means the Account, if any, maintained for each Member which is credited with the Member's Supplemental Deduction Contributions and investment earnings allocable to such Account. 1.42 Supplemental Deduction Contributions means the amount contributed to the Plan by the Member through payroll deductions pursuant to section 3.2(b). - 10 - 16 1.43 Supplemental Deferral Account means the Account, if any, maintained for each Member which is credited with the Member's Supplemental Deferral Contributions, Rollover Contributions, and investment earnings allocable to such Account. 1.44 Supplemental Deferral Contributions means the amount contributed to the Plan by the Company on behalf of the Member in accordance with the Member's election pursuant to section 3.1(b). 1.45 Total Disability means a physical or mental disability lasting at least six months, which wholly prevents the Member from performing the duties of his occupation or other appropriate work made available to him by the Company. The condition of Total Disability will be determined by the Plan Administrator through the application of procedures which are uniformly applied and which do not discriminate in favor of any class or classes of individuals. 1.46 Total Earnings means compensation used in determining the actual deferral percentage and the actual contribution percentage. Total Earnings is equal to compensation received by the Employee from the Company, other than compensation in the form of qualified or previously qualified deferred compensation, that is currently includible in gross income for income tax purposes. Total Earnings also includes all elective contributions made by the Company on behalf of the Employee that are not includible in gross income of the Employee under Code Sections 125 or 402(e)(3). Total Earnings shall not exceed $150,000 for 1994. On January 1 of each calendar year in which the Secretary of the Treasury prescribes a new dollar limit, this $150,000 limit will automatically be adjusted to that new limit. Compensation for the Plan Year commencing on the Effective Date and ending December 31, 1996 shall not exceed $12,500. For Plan Years beginning before January 1, 1997, this limit applies to the combined Total Earnings of a 5% owner (as defined in Code Section 416(i)(1)(A)(iii)) of the Company, or one of the 10 Highly Compensated Employees paid the greatest amount of Total Earnings during the Plan Year, and such individual's spouse and any lineal descendants who are not yet age 19 before the close of the Plan Year, to the extent required by Code Section 401(a)(17). If the limit applies to combined Total Earnings, the limit will be allocated to the affected individuals in proportion to each individual's Total Earnings determined prior to the application of the limit. 1.47 Trust Agreement means the instrument or instruments executed between the Company and the Trustee named in it, which provides for the receiving, holding, investing, and disposing of the Trust Fund. 1.48 Trust Fund means the fund established by the Trust Agreement, including the earnings thereon, held by the Trustee for all contributions made by Members and the Company pursuant to the Plan. - 11 - 17 1.49 Trustee means the trustee or trustees designated in the Trust Agreement, and any successor Trustee. 1.50 Unit means the applicable participation unit under the Trust Fund used to measure the Member's proportionate interest in the Trust Fund as provided in Article 6. 1.51 Valuation Date means the last business day of each month or such other business day as the Plan Administrator may determine. - 12 - 18 Article 2 Membership 2.1 Entry Date (a) Each Eligible Employee on the Effective Date who was eligible to participate in the Rockwell International Corporation Savings Plan immediately prior to the Effective Date may elect to become a Member of the Plan on the Effective Date or the first day of any month thereafter. (b) An Eligible Employee who is not described in (a) may elect to become a Member on his Employment Date or the first day of any month thereafter. 2.2 Application for Membership An election to participate shall be made in the manner prescribed by the Plan Administrator, including completion of such form(s) as the Plan Administrator may prescribe. The election to participate shall be effective as soon as practicable, but in no event later than the first payroll payment date that is at least 30 days after the date the election is made. By making an election to participate, an Eligible Employee shall agree to the terms and conditions of this Plan. - 13 - 19 Article 3 Contributions 3.1 Compensation Deferral Contributions and Supplemental Deferral Contributions (a) A Member may elect to defer receipt of a portion of his Compensation and have the Company contribute such deferral to the Plan on his behalf as a Compensation Deferral Contribution. The amount of this deferral must be between one and eight percent (in whole percentage increments) of the Member's Compensation. (b) A Member who has elected to defer receipt of eight percent of his Compensation pursuant to subsection (a) may elect to defer receipt of an additional portion of his Compensation and have the Company contribute such deferral to the Plan on his behalf as a Supplemental Deferral Contribution. The amount of this deferral must be between one and three percent (in whole percentage increments) of the Member's Compensation; provided, however, that if the Member is a Highly Compensated Eligible Employee, the amount of this deferral may not exceed two percent of the Member's Compensation. (c) The total of a Member's Compensation Deferral Contributions and Supplemental Deferral Contributions in one calendar year, when added to the Member's other Elective Deferrals for such year, may not exceed $7,000 (adjusted for cost of living changes under Code Section 402(g)). For purposes of this section, "Elective Deferrals" means the sum of all elective contributions made pursuant to a Member's deferral election under another plan or arrangement described in Code Sections 401(k), 408(k) or 403(b). Compensation Deferral Contributions and Supplemental Deferral Contributions in excess of this limit and investment earnings on such contributions (including gains and losses) shall be returned to the Member in accordance with the provisions of Code Section 402(g), the regulations thereunder, and other applicable rules and regulations. A Member's Compensation Deferral Contributions and Supplemental Deferral Contributions in excess of this limit for a calendar year and investment earnings (including gains and losses) thereon may be distributed to the Member during the same calendar year if (1) the Member and the Plan Administrator designate the distribution as an excess Elective Deferral and (2) the distribution is made after the date the Plan received the excess contribution. If a Member notifies the Plan Administrator in writing no later than March 1 (or April 15 if the Plan Administrator waives the deadline) following a calendar year that the Member's Compensation Deferral Contributions and Supplemental Deferral Contributions exceeded the limit under Code Section 402(g) (as adjusted) for such year, the Plan Administrator may, in its discretion, distribute the amount specified by the Member and investment earnings on such amount (including gains and losses) no later than April 15 following such year. - 14 - 20 3.2 Compensation Deduction Contributions and Supplemental Deduction Contributions (a) A Member who has not elected to defer receipt of a portion of his Compensation pursuant to section 3.1 may authorize to be deducted from his Compensation, as paid, an amount which shall be contributed to the Plan as a Compensation Deduction Contribution. The amount of this deduction must be between one and eight percent (in whole percentage increments) of the Member's Compensation. (b) A Member who has authorized deduction of eight percent of his Compensation pursuant to paragraph (a) may authorize deduction of an additional one to three percent (in whole percentage increments) of his Compensation which shall be contributed to the Plan as a Supplemental Deduction Contribution; provided, however, that if the Member is a Highly Compensated Eligible Employee, the amount of this deduction may not exceed two percent of the Member's Compensation. 3.3 Deferral and Deduction Elections (a) The Plan Administrator shall prescribe procedures for an Eligible Employee to apply for membership and to elect to have Compensation or Supplemental Deferral Contributions made on his behalf pursuant to section 3.1 or to authorize Compensation or Supplemental Deduction Contributions pursuant to section 3.2. Such an election shall first apply to Compensation received on the first payroll payment date coincident with or immediately following the effective date of the election to participate described in section 2.2. (b) A Member may from time to time change the rate of his Compensation Deferral Contributions, Supplemental Deferral Contributions, Compensation Deduction Contributions, or Supplemental Deduction Contributions by making a new election in the manner prescribed by the Plan Administrator. Such change shall be effective as soon as is reasonably possible after his election, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to his election. (c) A Member who has an authorization in effect to make Compensation or Supplemental Deduction Contributions may revoke such authorization and at the same time elect to commence Compensation or Supplemental Deferral Contributions. Such revocation and election shall be effective as soon as reasonably possible after his election, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to his election. (d) A Member who has made an election to have Compensation or Supplemental Deferral Contributions made on his behalf may revoke such election and at the same time authorize Compensation or Supplemental Deduction Contributions to - 15 - 21 commence effective with the first payroll payment date in April or October by giving the Plan Administrator prior notice thereof. (e) A Member may, at any time, revoke his election to have Compensation or Supplemental Deferral Contributions made on his behalf or his authorization to make Compensation or Supplemental Deduction Contributions. Such revocation will be effective as soon as reasonably possible, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to his revocation. (f) A Member who has voluntarily suspended contributions under section 3.3(e) may elect to have contributions resumed, effective as soon as reasonably possible after his election, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to such election. (g) A Member's election to have Compensation or Supplemental Deferral Contributions made on his behalf or his authorization to make Compensation or Supplemental Deduction Contributions shall remain in effect until a new election or authorization is made, except as provided in (1) and (2) below. (1) No contributions (including Company Matching Contributions) shall be made by, or on behalf of, any Member after any of the following events, until the Member again makes an election that is effective under section 2.2 and section 3.3(a): (A) the Member ceases to be an Eligible Employee; (B) the Member receives a distribution under section 7.2, 7.3, or 8.2; or (C) the Member voluntarily elects to have contributions suspended under section 3.3(e). (2) No contributions (including Company Matching Contributions) shall be made by, or on behalf of, any Member when: (A) no payment of Compensation is made by the Company to the Member or, in the case of Compensation or Supplemental Deduction Contributions, the amount payable after all applicable withholdings and deductions required by law or the Company is less than the applicable contributions; (B) payroll deduction for Compensation or Supplemental Deduction Contributions under the Plan would be contrary to law; (C) the Member receives a distribution from his Company Contributions Account pursuant to section 9.1(a)(3); provided, however, that contributions shall automatically resume following the completion of - 16 - 22 the twenty-six (26) week period beginning on the date of the distribution. 3.4 Company Contributions (a) Each month the Company shall contribute to the Plan on behalf of each Member who has completed a one-year Period of Service with an Affiliate or Subsidiary an amount equal to 75% of the Member's Compensation Deferral Contributions and Compensation Deduction Contributions. No Company Matching Contributions shall be made on behalf of a Member who has not yet completed a one-year Period of Service with an Affiliate or Subsidiary, and no Company Matching Contributions shall be made with respect to Supplemental Deferral Contributions, Supplemental Deduction Contributions, or Rollover Contributions. (b) Amounts which have been forfeited in accordance with section 3.7(d), 3.8(d), 3.9(d), 8.5, or 9.3(a) shall be applied to reduce subsequent Company Matching Contributions required hereunder. If the Plan should be terminated, any amount not previously so applied shall be credited ratably to the Accounts of all Members in proportion to the amounts of Company Matching Contributions credited to their respective Accounts during the most recent Plan Year. 3.5 Return of Company Contributions (a) Except as provided below, the assets of the Plan will never inure to the benefit of the Company and will be held for the exclusive purpose of providing benefits to Members of the Plan and their Beneficiaries and defraying reasonable expenses of administering the Plan. (b) If a contribution is made by the Company by a mistake of fact, such contribution will be returned to the Company provided this is done within one year after the payment of such contribution. (c) Contributions are conditioned upon their deductibility under Code Section 404. If a contribution deduction is disallowed, to the extent the deduction is disallowed, such contribution shall be returned to the Company within one year after the disallowance. (d) Contributions are conditioned upon the initial qualification of the Plan under Code Section 401(a). If the Plan does not initially qualify, such contributions will be returned to the Company within one year of such denial. 3.6 Contributions for Military Service Notwithstanding any provision of this plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). - 17 - 23 3.7 Testing Compensation and Supplemental Deferral Contributions for Discrimination (a) The actual deferral percentage for Highly Compensated Eligible Employees for any Plan Year may not exceed the greater of: (1) One and one-quarter times the actual deferral percentage for all other Eligible Employees for the Plan Year, or (2) The lesser of (A) two percentage points plus the actual deferral percentage for all other Eligible Employees for the Plan Year, or (B) two times such percentage for all other Eligible Employees for the Plan Year. (b) The "actual deferral percentage" for each group of Eligible Employees is the average of the deferral percentages for each Eligible Employee in such group. The deferral percentage is equal to the sum of the Employee's Compensation Deferral Contributions plus Supplemental Deferral Contributions for the Plan Year, divided by his Total Earnings for the Plan Year. Eligible Employees who are not making Compensation Deferral Contributions or Supplemental Deferral Contributions will be included at zero percent in determining the actual deferral percentage. (c) Prior to the beginning of each Plan Year and periodically during the year, the Plan Administrator shall test deferral elections under section 3.1 to determine whether or not the limits under this section will be exceeded for the Plan Year. In performing this test, the Plan Administrator will assume that deferrals for current Eligible Employees will continue for the remainder of the Plan Year at the rate currently elected by the Eligible Employee. If elections made by Highly Compensated Eligible Employees would (if not reduced) cause the actual deferral percentage for such Employees to exceed the limitation in this section, the Plan Administrator shall first reduce any Supplemental Deferral Contribution and then Compensation Deferral Contributions elected by the Highly Compensated Eligible Employees to comply with the maximum permissible deferral percentage for the Plan Year. Such reduction shall be effective as of the first payroll payment date in the month following such determination and shall be made as set forth below: (1) First, Highly Compensated Eligible Employees electing Supplemental Deferral Contributions in an amount equal to 3% of Compensation shall have their elections reduced to 2% of Compensation. If, following this reduction, the maximum permissible deferral percentage is still exceeded, Highly Compensated Eligible Employees electing Supplemental Deferral Contributions in an amount equal to 2% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 1% of Compensation. If, following this reduction, the maximum permissible deferral percentage is still exceeded, Highly Compensated Eligible - 18 - 24 Employees electing Supplemental Deferral Contributions in an amount equal to 1% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 0% of Compensation. (2) Second, if, following the reductions described in paragraph (1), the maximum permissible deferral percentage is still exceeded, Highly Compensated Eligible Employees electing Compensation Deferral Contributions in an amount equal to 8% of Compensation shall have their elections reduced to 7% of Compensation. If, following this reduction, the maximum permissible deferral percentage is still exceeded, Highly Compensated Eligible Employees electing Compensation Deferral Contributions in an amount equal to 7% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 6% of Compensation. The process set forth in this paragraph (2) shall continue until the average deferral percentage for the Highly Compensated Eligible Employees does not exceed the maximum permissible deferral percentage. (3) Subject to section 3.8, the amount that would have been contributed as Supplemental Deferral Contributions or Compensation Deferral Contributions on behalf of the Member except for the reductions prescribed in paragraphs (1) and (2) above, shall be contributed by the Member to the Plan as Supplemental Deduction Contributions or Compensation Deduction Contributions, as appropriate. In addition, to the extent permitted by regulation, the Plan Administrator may during or following a Plan Year cause Supplemental Deferral Contributions and Compensation Deferral Contributions made on behalf of Highly Compensated Eligible Employees to be recharacterized (on a uniform and non-discriminatory basis) as Supplemental Deduction Contributions and Compensation Deduction Contributions to the extent necessary to prevent the average deferral percentage for said Members for any Plan Year from exceeding the maximum permissible deferral percentage. (d) At the end of the Plan Year, if Compensation and Supplemental Deferral Contributions for Highly Compensated Eligible Employees exceed the limitation described in this section, the Plan Administrator shall determine the excess Compensation and Supplemental Deferral Contributions of each Highly Compensated Eligible Employee in accordance with the following leveling method. The deferral percentage of the Highly Compensated Eligible Employee with the highest deferral percentage will be reduced to the extent required to (i) enable the Plan to comply with this section, or (ii) cause such Employee's deferral percentage to equal the deferral percentage of the Highly Compensated Eligible Employee with the next highest deferral percentage. This procedure will be --19- 25 repeated until the Plan satisfies the limitation in this section. Subject to section 3.8, excess Compensation and Supplemental Deferral Contributions and investment earnings (including gains and losses) minus any Compensation and Supplemental Deferral Contributions previously distributed for the Plan Year under section 3.1(c) will be recharacterized as Compensation and Supplemental Deduction Contributions. Such excess Compensation and Supplemental Deferral Contributions and investment earning (including gains and losses) that are not recharacterized will be refunded to the Member in cash before the end of the next Plan Year. If Compensation Deferral Contributions are refunded, Company Matching Contributions attributable to such Compensation Deferral Contributions and investment earnings on such Company Matching Contributions (including gains and losses) will be forfeited and used to reduce subsequent Company Matching Contributions otherwise payable pursuant to section 3.4. Investment earnings allocable to excess Compensation and Supplemental Deferral Contributions for a Plan Year and for the period between the end of such Plan Year and the date of the refund shall be determined in accordance with proposed Treasury Regulation section 1.401(k)-1(f)(4)(ii), as it may be revised from time to time by the Secretary of the Treasury. For Plan Years beginning before January 1, 1997, in the case of a Highly Compensated Eligible Employee whose deferral percentage is determined under the family aggregation rules of Code Section 414(q)(6) as in effect on December 31, 1996, the deferral percentage shall be reduced in accordance with the leveling method described above and the excess Compensation and Supplemental Deferral Contributions will be allocated among the family members in proportion to the Compensation and Supplemental Deferral Contributions of each family member that has been combined. 3.8 Testing Compensation and Supplemental Deduction Contributions and Company Matching Contributions for Discrimination (a) The actual contribution percentage for Highly Compensated Eligible Employees for any Plan Year may not exceed the greater of: (1) One and one-quarter times the actual contribution percentage for all other Eligible Employees for the Plan Year, or (2) The lesser of (A) two percentage points plus the actual contribution percentage for all other Eligible Employees for the Plan Year, or (B) two times such percentage for all other Eligible Employees for the Plan Year. (b) The "actual contribution percentage" for each group of Eligible Employees is the average of the contribution percentages for each Eligible Employee in such group. The contribution percentage is equal to sum of the Employee's Compensation - 20 - 26 Deduction Contributions plus his Supplemental Deduction Contributions plus his Company Matching Contributions, divided by his Total Earnings for the Plan Year. Eligible Employees for whom there are no Compensation Deduction Contributions, Supplemental Deduction Contributions, or Company Matching Contributions will be included at zero percent in determining the actual contribution percentage. (c) Prior to the beginning of each Plan Year and periodically during the year, the Plan Administrator shall test deferral elections under section 3.1 and deduction authorizations under section 3.2 to determine whether or not the limits under this section will be exceeded for the Plan Year. In performing this test, the Plan Administrator will assume that deferrals and deductions for current Eligible Employees will continue for the remainder of the Plan Year at the rate currently elected by the Eligible Employee. If elections made by Highly Compensated Eligible Employees would (if not reduced) cause the actual contribution percentage for such Employees to exceed the limitation in this section, the Plan Administrator shall first reduce any Supplemental Deduction Contributions and then the Compensation Deduction Contributions elected by the Highly Compensated Eligible Employees to comply with the maximum permissible contribution percentage for the Plan Year. Such reduction shall be effective as of the first payroll payment date in the month following such determination and shall be made as set forth below: (1) First, Highly Compensated Eligible Employees electing Supplemental Deduction Contributions in an amount equal to 3% of Compensation shall have their elections reduced to 2% of Compensation. If, following this reduction, the maximum permissible contribution percentage is still exceeded, Highly Compensated Eligible Employees electing Supplemental Deduction Contributions in an amount equal to 2% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 1% of Compensation. If, following this reduction, the maximum permissible contribution percentage is still exceeded, Highly Compensated Eligible Employees electing Supplemental Deduction Contributions in an amount equal to 1% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 0% of Compensation. (2) Second, if, following the reductions described in paragraph (1), the maximum permissible contribution percentage is still exceeded, Highly Compensated Eligible Employees electing Compensation Deduction Contributions in an amount equal to 8% of Compensation shall have their elections reduced to 7% of Compensation. If, following this reduction, the - 21 - 27 maximum permissible contribution percentage is still exceeded, Highly Compensated Eligible Employees electing Compensation Deduction Contributions in an amount equal to 7% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 6% of Compensation. The process set forth in this paragraph (2) shall continue until the average contribution percentage for the Highly Compensated Eligible Employees does not exceed the maximum permissible deferral percentage. (d) At the end of the Plan Year, if Compensation and Supplemental Deduction Contributions and Company Matching Contributions for Highly Compensated Eligible Employees exceed the limitation described in this section, the Plan Administrator shall determine the excess Compensation and Supplemental Deduction Contributions and Company Matching Contributions of each Highly Compensated Eligible Employee in accordance with the following leveling method. The contribution percentage of the Highly Compensated Eligible Employee with the highest contribution percentage will be reduced to the extent required to (i) enable the Plan to comply with this section, or (ii) cause such Employee's contribution percentage to equal the contribution percentage of the Highly Compensated Eligible Employee with the next highest contribution percentage. This procedure will be repeated until the Plan satisfies the limitation in this section. Excess Compensation and Supplemental Deduction Contributions and investment earnings (including gains and losses) will be refunded to the Member in cash before the end of the next Plan Year. In accordance with Treasury Regulations Section 1.401(m)-1(e)(2)(ii), the amount of excess Compensation and Supplemental Deduction Contributions and Company Matching Contributions shall be determined only after first determining the excess Compensation and Supplemental Deferral Contributions, if any, that are treated as Compensation and Supplemental Deduction Contributions due to recharacterization pursuant to section 3.6. If Compensation Deduction Contributions are refunded to the Member, any Company Matching Contributions attributable to such Compensation Deduction Contributions and investment earnings (including gains and losses) shall be forfeited and used to reduce Company Matching Contributions otherwise payable pursuant to 3.4. Investment earnings allocable to excess Compensation and Supplemental Deduction Contributions and Company Matching Contributions for a Plan Year and for the period between the end of such Plan Year and the date of the refund shall be determined in accordance with proposed Treasury Regulation section 1.401(m)-1(e)(3)(ii), as it may be revised from time to time by the Secretary of the Treasury. - 22 - 28 For Plan Years beginning before January 1, 1997, in the case of a Highly Compensated Eligible Employee whose contribution percentage is determined under the family aggregation rules of Code Section 414(q)(6) as in effect on December 31, 1996, the contribution percentage shall be reduced in accordance with the leveling method described above and the excess Compensation and Supplemental Deduction Contributions and Company Matching Contributions will be allocated among the family members in proportion to the contributions of each family member that have been combined. 3.9 Testing Aggregate Contributions for Discrimination (a) The sum of the actual deferral percentage and the actual contribution percentage for Highly Compensated Eligible Employees for each Plan Year may not exceed the greater of (1) or (2) below: (1) The sum of (A) and (B) below: (A) one and one-quarter times the greater of (i) the actual deferral percentage for all other Eligible Employees for the Plan Year, or (ii) the actual contribution percentage for all other Eligible Employees for the Plan Year, plus (B) the lesser of (i) or (ii) below: (i) Two percentage points plus the lesser of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (ii) Two times the lesser of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (2) The sum of (A) and (B) below: (A) one and one-quarter times the lesser of (i) the actual deferral percentage for all other Eligible Employees for the Plan Year, or (ii) the actual contribution percentage for all other Eligible Employees for the Plan Year, plus (B) the lesser of (i) or (ii) below: (i) Two percentage points plus the greater of 1) the actual deferral percentage for all other Eligible Employees for the - 23 - 29 Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (ii) Two times the greater of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (b) Prior to the beginning of each Plan Year and periodically during the year, the Plan Administrator shall test deferral elections under section 3.1 and deduction authorizations under section 3.2 to determine whether or not the limits under this section will be exceeded for the Plan Year. If elections made by Highly Compensated Eligible Employees would (if not reduced) cause the sum of the actual deferral percentage and the actual contribution percentage for such Employees to exceed the limitation in this section, the Plan Administrator shall reduce the deduction percentages elected by the Highly Compensated Eligible Employees to comply with the limitations of this section. This reduction will be accomplished by determining the maximum possible upper limit on Compensation and Supplemental Deduction Contributions (as a percentage of Compensation) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. If the limitation described in this section is still exceeded after reducing the upper limit on Compensation and Supplemental Deduction Contributions for Highly Compensated Eligible Employees to zero, the Plan Administrator shall also reduce Compensation and Supplemental Deferral Contributions elected by Highly Compensated Eligible Employees. This reduction will be accomplished by determining the maximum possible upper limit on Compensation and Supplemental Deferral Contributions (as a percentage of Compensation) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. (c) At the end of the Plan Year, if the sum of the actual deferral percentage and the actual contribution percentage for Highly Compensated Eligible Employees exceeds the limitations described in this section after the corrective distributions or forfeitures are made under sections 3.7(d) and 3.8(d) the Plan Administrator shall determine the maximum possible upper limit on Compensation and Supplemental Deduction Contributions (as a percentage of Total Earnings) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. Compensation and Supplemental Deduction Contributions in excess of this limit and investment earnings on such contributions (including gains and losses) will be refunded to the Member in cash. If the limitation in this section is still exceeded after refunding all Compensation and Supplemental Deduction Contributions for Highly Compensated Eligible Employees, the Plan Administrator shall determine the maximum possible upper limit - 24 - 30 on Compensation and Supplemental Deferral Contributions (as a percentage of Compensation) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. Compensation and Supplemental Deferral Contributions in excess of this limit and investment earnings on such contributions (including gains and losses) will be refunded to the Member in cash. (d) If Compensation Deduction Contributions or Compensation Deferral Contributions are refunded to the Member, any Company Matching Contributions attributable to such refunded contributions and investment earnings on such Company Matching Contributions will be forfeited and used to reduce Company Matching Contributions otherwise payable pursuant to 3.4. 3.10 Aggregation Rules for Discrimination Testing (a) If this Plan is combined with one or more plans maintained by the Company or an Affiliate or Subsidiary of the Company for purposes of Code Section 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)), then this Plan and such other plans will be considered a single plan for purposes of the discrimination testing described in this article. (b) If a Highly Compensated Eligible Employee is eligible to have Compensation or Supplemental Deferral Contributions, Compensation or Supplemental Deduction Contributions, or Company Matching Contributions allocated to his account under two or more plans described in Code Section 401(k) which are maintained by the Company or an Affiliate or Subsidiary of the Company, the average deferral percentage and average contribution percentage for such Highly Compensated Eligible Employee shall be determined as if all such contributions were made under a single plan. (c) For Plan Years beginning before January 1, 1997, for purposes of determining the actual deferral percentage and the actual contribution percentage of a Highly Compensated Eligible Employee who is (1) a five-percent owner or (2) one of the ten Employees paid the greatest Total Earnings for the Plan Year, the Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, Company Matching Contributions and Total Earnings of such Employee shall include the Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, Company Matching Contributions and Total Earnings of such Employee's spouse, lineal ascendants or descendants, and the spouses of such lineal ascendants or descendants except as otherwise provided under Treasury regulations. Such family members shall be disregarded in determining the actual deferral percentage and the actual contribution percentage for Eligible Employees who are not Highly Compensated Eligible Employees. In applying the maximum dollar limitation on Total Earnings described in 1.46, such limitation will be - 25 - 31 applied to the combined Total Earnings of the Highly Compensated Eligible Employees described in this section, the spouse of such Employee, and any lineal descendants of the Employee who have not attained age 19 before the end of the Plan Year. - 26 - 32 Article 4 Investment of Contributions 4.1 Investment Election At the time of enrollment in the Plan, the Member shall elect to have his future Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, Company Matching Contributions, and Rollover Contributions invested in one or more of the Investment Funds listed in section 5.2. (Prior to enrollment as a Member, an Eligible Employee may make such an election with respect to Rollover Contributions.) The election shall specify the percentage, if any, of such contributions to be allocated to each of the Investment Funds. Members may allocate their contributions among the Investment Funds in 5% increments, with the total of the elected percentage increments equaling 100%; provided, however, the maximum percentage of such contributions that may be invested in the Boeing Company Stock Fund is 50%. 4.2 Changes in Investment Elections A Member may change an election made pursuant to section 4.1 regarding his future Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, Company Matching Contributions, and Rollover Contributions once each calendar quarter. Such change shall be effective as of the last business day of the month in which the change of election is made. 4.3 Transfer of Investments A Member may elect once in each calendar quarter to change the investment of his Accounts; provided, however, amounts may not be transferred into or out of the Stable Value Fund before April 1, 1997. The election shall specify the percentage, if any, of the total dollar balance of the Member's Accounts, determined pursuant to section 6.4, to be allocated to each of the Investment Funds. Members may allocate their balances among the Investment Funds in 5% increments, with the total of the elected percentage increments equaling 100%; provided, however, the maximum percentage of such contributions that may be invested in the Boeing Company Stock Fund is 50%. The transfers described in this section shall be effected on the first day of the calendar month immediately succeeding the month in which the Member elected to make the transfer. All elections under this section shall be irrevocable and shall not affect the Member's right to exercise any other election provided by the Plan. Upon making an election to transfer investments under this section, the Member shall also either confirm or change his election under section 4.1 or 4.2 with respect to future Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, and Company Matching Contributions. - 27 - 33 4.4 Independent Control An election or change of election made pursuant to this section shall be within the independent control of the Member. Neither the Trustee, the Parent, nor the Company shall be liable for any loss which may result from the exercise of such control by the Member. If, at any time, no election under this section is in effect for any portion of a Member's Accounts or contributions, such portion shall be invested in the manner determined by the Plan Administrator on a uniform and nondiscriminatory basis with respect to all Members. An election or change of election deemed to have been made under this section shall not be counted for purposes of the provisions of those sections which impose restrictions on the frequency of changes. - 28 - 34 Article 5 Trust Agreement 5.1 Establishment of Trust Fund The property resulting from contributions made on behalf of all Members, including contributions made by the Company, shall be held in a Trust Fund by a Trustee or Trustees selected by the Plan Administrator pursuant to a Trust Agreement entered into between such Trustee and the Plan Administrator. References in the Plan to Trustee shall be deemed to be applicable with equal force to co-Trustees or successor Trustees who may be so designated. 5.2 Investment Funds The Trust Agreement will provide that at the direction of the Plan Administrator, the Trustee shall establish investment funds, each with investment objectives determined by the Plan Administrator. The Plan Administrator shall provide information to Members regarding the Investment Funds available under the Plan, including a description of the investment objectives and types of investments of each such fund. As of the Effective Date, the following Investment Funds shall be established: (a) S&P 500 Index Fund. The assets of this fund are invested in the same stocks and in substantially the same percentages as the Standard and Poor's (S&P) 500 Index. (b) Short-Term Income Fund. The assets of this fund are invested in a variety of investment-grade instruments with maturities generally between 1 and 365 days with an average maturity between 30 and 60 days. These instruments may include: United States government and agency obligations, bank obligations, short-term corporate debt instruments, repurchase agreements, unsecured loan participations, and registered investment companies which invest in such instruments. (c) Stable Value Fund. The assets of this fund are invested in investment contracts with one or more insurance companies which guarantee the principal and interest thereon for a specified period of time. (d) Intermediate-Term Bond Fund. The assets of this fund are invested in debt obligations issued by the United States government and its agencies and instrumentalities. The maximum maturity of any issue in the fund is five years. (e) Boeing Company Stock Fund. The assets of this fund are invested in cash and Common Stock of The Boeing Company. - 29 - 35 5.3 Voting Rights Each Member who has Common Stock of The Boeing Company held in the Boeing Company Stock Fund allocated to his Accounts shall be entitled to instruct the Trustee regarding the voting of the number of such shares allocated to the Accounts (determined by the proportionate share of the Member's investment in the Fund) at all stockholders' meetings of the Company, determined as of the record date for such stockholders' meetings. The Company will send, or cause to be sent, to each Member who has Common Stock of the Company allocated to the Member's Accounts a voting instruction form and the same proxy solicitation material as is sent to stockholders generally. 5.4 Tender Offer Not withstanding any other provisions of the Plan to the contrary: (a) If any person shall make a tender offer (as defined in subsection (c) below) to acquire (by purchase or exchange) Common Stock of the Company, including shares of such Common Stock that are held in the Company Stock Fund, the Trustee and the Company shall act as follows: (1) The Company shall ensure that the materials made available to shareholders generally in connection with the tender offer are provided to each Member who has shares of Common Stock of the Company held in the Company Stock Fund allocated to his Member's Accounts, and the response of the Trustee as to whether to accept or reject the tender offer with respect to the full and fractional shares of such Common Stock that are so allocated shall be made in accordance with the instructions of the Member given to the Trustee on forms provided for that purpose. (2) If the Trustee fails to receive clear and timely instructions from a Member in a case where instructions have been sought by the Trustee as provided in paragraph (1), the Trustee shall have no discretion in such matter and shall reject the tender offer with respect to the affected full and fractional shares of Common Stock of the Company that are allocated to the Accounts of such Members. (b) With respect to full and fractional shares of Common Stock of the Company that have been acquired by the Plan and are not yet allocated (including any such Common Stock held in a suspense account because it cannot be allocated currently due to the Code Section 415 limits), the Trustee shall have no discretion in such matter and shall reject the tender offer with respect to such Common Stock. - 30 - 36 (c) If any tender offer is accepted (in whole or in part) pursuant to subsection (a), the Trustee shall have the power to transfer Common Stock of the Company in order to effect such acceptance. (d) For purposes of this section, "tender offer" shall mean any offer to acquire Common Stock of the Company which is subject to either section 13(e) or 14(d) of the Securities Exchange Act of 1934 and which under applicable rules and regulations is required to be the subject of a filing with the Securities and Exchange Commission on either Schedule 13E-4 or Schedule 14D-9. (e) The foregoing notwithstanding, nothing herein shall serve to modify the related rules of the Trust Agreement or to expand the duties of the Trustee unless and until the Trustee gives its consent in the manner provided in the Trust Agreement. 5.5 Trust Agreement The Plan Administrator has entered into a Trust Agreement with the Trustee of the Trust Fund under which the Trustee will hold, invest and distribute the assets of the Trust Fund as required by the Trust Agreement. The Plan Administrator may remove the Trustee at any time upon reasonable notice. The Trust Agreement shall provide that upon the removal or resignation of the Trustee the assets shall be transferred to another Trustee to be designated by the Plan Administrator under the terms of the Trust Agreement satisfying the conditions herein set forth. 5.6 Rights in the Trust Fund No part of the Trust Fund shall be used for, or diverted to, purposes other than the exclusive benefit of Members and their beneficiaries under the Plan. No person shall have any interest in or right to any part of the Trust Fund except as and to the extent expressly provided in the Plan. - 31 - 37 Article 6 Maintenance of Members' Accounts 6.1 Accounts Maintained The Plan Administrator shall establish and maintain for each Member a Compensation Deduction Account, Compensation Deferral Account, Supplemental Deduction Account, Supplemental Deferral Account, and a Company Contributions Account under each Investment Fund to represent all amounts (if any), adjusted for gains or losses thereon, which have been contributed by or on behalf of the Member as Compensation Deduction Contributions, Compensation Deferral Contributions, Supplemental Deduction Contributions, Supplemental Deferral Contributions or Rollover Contributions, and Company Matching Contributions. Such separate Accounts shall contain sufficient information to permit, with respect to the Boeing Company Stock Fund, a determination of the number of Common Units in such Member's Accounts, and with respect to the Company Contributions Account, a determination of the portion which is attributable to Compensation Deduction Contributions and the portion which is attributable to Compensation Deferral Contributions. 6.2 Crediting Units to Accounts (a) The interest of each Member in the Investment Funds shall be represented by Units allocated to his Accounts. The value of each Unit shall be $1.00 for the contributions deposited on behalf of each Member prior to the first Valuation Date following the effective date of the particular Fund. (b) Each contribution on behalf of a Member to, or payment made to a Member from, an Investment Fund shall result in a credit or charge to the Account representing his interest in such Fund under his Company Contributions Account, Compensation Deferral Account, Supplemental Deferral Account, Compensation Deduction Account, or Supplemental Deduction Account, as applicable, and shall be equal to the number of Units contributed or paid, as the case may be. (c) Dividends on Common Stock held in the Boeing Company Stock Fund shall result in an appropriate increase in the Unit values of said Fund. 6.3 Units Valuations Except as otherwise provided in section 6.2, as of each Valuation Date, an amount equal to the fair market value of all property in the Investment Funds (other than dividends received which are attributable to whole shares of Common Stock which were or are to be transferred to Members subsequent to the record date for such dividend) or under a contract, in the case of the Stable Value Fund, shall be determined by the Trustee in such manner and on such basis as it shall deem appropriate. Such amount shall be divided by the total number of Units credited to all the Members in the Fund or under the contract - 32 - 38 concerned on the particular Valuation Date, thereby establishing a new Unit value. With respect to each Investment Fund, each contribution or other payment thereto or payment therefrom after such Valuation Date and prior to or on the next Valuation Date shall be converted to Units (in the case of the Boeing Company Stock Fund to Common Units to the extent appropriate) by dividing such new Unit value into the amount of such contribution or payment, and the individual Account of each affected Member representing his interest in the Investment Fund under his Company Contributions Account, Compensation Deferral Account, Supplemental Deferral Account, Compensation Deduction Account, and Supplemental Deduction Account, as applicable, shall be credited or charged, as the case may be, with the portion of the number of Units so attributable to such Member. The value of each contract under the Stable Value Fund shall be equal to the principal amount held in such fund plus accrued interest. 6.4 Balance of Member's Accounts As of any specified date, the dollar balance of the Accounts of each Member representing the interest of each Member in each Investment Fund under his Company Contributions Account, Compensation Deferral Account, Supplemental Deferral Account, Compensation Deduction Account, and Supplemental Deduction Account, as applicable, shall be determined by multiplying the number of Units in his current balance by the Unit value as of the last preceding Valuation Date in accordance with the foregoing and adding to the resulting dollar balance the amount of contributions made with respect to such Account since the last valuation date for which Units have not yet been credited. Only those contributions actually received by the Trustee will be considered in making valuations and determining Account balances. 6.5 Member Account Statements After the end of each calendar year or more frequently as the Plan Administrator shall determine, the Plan Administrator shall forward by mail to each Member a statement, in such form as the Plan Administrator shall determine, setting forth pertinent information relative to the Member's Accounts. Such statement shall, for all purposes, be deemed to have been accepted as correct unless the Plan Administrator is notified to the contrary by mail within 60 days of the mailing thereof to the Member. - 33 - 39 Article 7 Retirement 7.1 Eligibility This article will apply to any Member who terminates employment on or after his 65th birthday or who retires before his 65th birthday pursuant to a retirement plan sponsored by the Company or an Affiliate or Subsidiary. 7.2 Lump Sum Distribution (a) If the balance in the Member's Accounts is $3,500 or less, such amount will be paid to the Member in a lump sum as soon as practicable after his Severance from Service Date in the manner described in section 7.5. (b) If the balance in the Member's Accounts exceeds $3,500, the Member may elect (1) to receive such amount in a lump sum as soon as practicable after his Severance from Service Date in the manner described in section 7.5 or (2) to defer any distribution from his Accounts. If the Member elects to defer distribution, his Accounts will be retained in the Plan and maintained and valued in accordance with Article 6. The amount of such deferred distribution(s) will be based on the value of the Member's Accounts determined as of the Valuation Date preceding the deferred distribution date. If the vested balance in the Member's Accounts at the time of a distribution exceeds $3,500, then the vested balance at any subsequent time shall be deemed to exceed $3,500. (c) A Member who has deferred receiving his distribution may elect to receive the balance in his Accounts in a lump sum payable as soon as practicable after the request for such distribution is received by the Plan Administrator in the manner described in section 7.5. Such request shall be in the manner prescribed by the Plan Administrator for this purpose. 7.3 Installment Form of Payment (a) If the balance in the Member's Accounts exceeds $3,500, the Member may elect to have his benefit paid in annual installments over 10 or fewer years; provided, however, that the Member may not elect installments to be paid over a period which exceeds the life expectancy of the Member or the combined life expectancies of the Member and his Beneficiary determined as of the date payments are to commence. The amount of such installments will be the value of the Member's Accounts as of the Valuation Date immediately preceding the installment payment, divided by the number of installment payments remaining at the time of the payment. The initial installment payment will be made as soon as practicable after the effective date of the Member's election. Subsequent installment payments during the elected installment payment period will be made - 34 - 40 as of the annual anniversary date of the initial installment payment. If the vested balance in the Member's Accounts at the time of a distribution exceeds $3,500, then the vested balance at any subsequent time shall be deemed to exceed $3,500. (b) A Member who is still an Employee on the required beginning date described in section 7.4(b) and is, therefore, required to commence distribution, shall receive his distribution in annual installments over the period of the Member's life expectancy (pursuant to Code Section 401(a)(9)). Upon the Member's subsequent Termination of Employment, the Member shall be entitled to elect either a lump sum distribution as provided in section 7.2(b) or installment payments as provided in section 7.3(a) with respect to his remaining Account balance at that time. (c) Subsection (a) notwithstanding, if a Member who is no longer an Employee has elected to defer receiving his distribution pursuant to section 7.2(b) and the Plan Administrator has not received an election concerning the form of distribution by the end of the calendar year in which the Member attains age 70 1/2, the distribution shall be made in the form of a lump sum distribution payable no later than the required beginning date described in section 7.4(b). (d) If a Member who had previously elected and commenced receipt of installment payments pursuant to subsection (a) returns to employment with the Company or an Affiliate or Subsidiary (other than as a member of the Company's flexible work force), such installment payments shall be suspended until the Member's subsequent retirement, at which time he shall be permitted again to make the election described in this section. (e) A Member who had previously elected and commenced receipt of installment payments pursuant to subsection (a) shall be permitted to revoke such election at a later date and accelerate receipt of the distribution by electing distribution of the remaining Account balances in a lump sum payment. 7.4 Limitations on Payment Date (a) Payment will begin not later than the 60th day after the end of the Plan Year in which: (1) the Member's 65th birthday occurs, or (2) the Member's Severance from Service Date occurs, whichever is later. However, payment under this subsection will not begin until the Member has filed a claim for such payment in the manner prescribed by the Plan Administrator for that purpose. - 35 - 41 (b) The required beginning date described in this subsection (b) will apply regardless of any election made by the Member. (1) Benefit payments for a Member who attained age 70 1/2 before January 1, 1996, will begin January 1, 1997, whether or not such Member's employment has terminated. (2) Benefit payments for a Member who attained age 70 1/2 in 1996, will begin not later than April 1, 1997, whether or not such Member's employment has terminated. (3) Benefit payments for a Member who is not a 5% owner who attains age 70 1/2 after December 31, 1996 will begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the Member attains age 70 1/2, or (B) the calendar year in which the Member retires. (4) Benefit payments for a Member who is a 5% owner will begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the Member attained age 70 1/2, or (B) the earlier of (iii) the calendar year within which ends the Plan Year in which the Member becomes a 5% owner, or (iv) the calendar year in which the Member retires. (5) A Member is treated as a 5% owner for purposes of this subsection (b), if such Member is a 5% owner as defined in Code Section 416(i) at any time during the Plan Year ending within the calendar year in which such owner attains age 66 1/2 or any subsequent Plan Year. Once a Member is described in this paragraph, distributions will continue to such Member even if such Member ceases to own more than 5% of the Company in a subsequent year. (6) If a Member receives payments under this subsection (b), such payments will be determined as if the Member's retirement date were the date by which benefit payments must be made under this subsection (b). If the Member continues to have contributions made to his Accounts after this date, the additional benefit for each Plan Year will be paid in a lump sum after the following January 1. 7.5 Manner of Distribution A Member's distribution(s) shall be made as follows: (a) With respect to Investment Funds other than the Boeing Company Stock Fund, the Member entitled to a lump sum distribution pursuant to section 7.2 shall receive the full dollar balance of his Accounts in such Funds. A Member electing - 36 - 42 installment payments pursuant to section 7.3 shall receive the full dollar balance divided by the remaining number of installment payments. Such balance shall be determined in the manner provided in section 6.4, by reference to the value of Units in such Member's Accounts on the Valuation Date coinciding with or immediately preceding the date of the distribution. (b) With respect to the Boeing Company Stock Fund, the full dollar balance (for a Member electing installment payments pursuant to section 7.3, the full dollar balance divided by the remaining number of installment payments) in the Member's Accounts in the fund as of the Valuation Date coinciding with or immediately preceding the date of the distribution (determined in the manner provided in section 6.4, separately by reference to the Common Units in the Account on such Valuation Date and the respective Unit values on such Valuation Date) shall be applied to Common Stock to the extent attributable to Common Units. The Member shall receive shares of Common Stock equal to the maximum number of whole shares of Common Stock which could be purchased at the closing price of Common Stock on the New York Stock Exchange-- Composite Transactions listing on such Valuation Date (or, in the event such Valuation Date falls on a date on which there are no trades of such stock reflected on such listing, the last trading day preceding such Valuation Date) with the portion of such dollar balance attributable to Common Units in the Account. The Member shall be paid in cash the amount of such dollar balance remaining after reduction by the value of the whole shares previously described, based upon such closing price. In addition, the Member shall be paid in cash the amount of any cash dividends received since such Valuation Date attributable to the number of whole shares of Common Stock distributed to him and the dollar value of any contributions to the Company Stock Fund in respect of such Member between such Valuation Date and the Severance from Service Date. - 37 - 43 Article 8 Termination or Death 8.1 Vesting (a) A Member will always have a 100% vested interest in his Compensation Deduction Account, Compensation Deferral Account, Supplemental Deduction Account, and Supplemental Deferral Account. (b) A Member who has completed a five-year Period of Service will have a 100% vested interest in his Company Contributions Account. (c) No Units in a Member's Company Contributions Account shall vest subsequent to the Member's termination of employment, except as provided in section 8.6. (d) Regardless of the number of years in his Period of Service, a Member will have a 100% vested interest in his Company Contributions Account upon the occurrence of any of the following events: (1) 65th birthday, (2) retirement before his 65th birthday pursuant to a retirement plan sponsored by the Company or an Affiliate or Subsidiary, (3) termination of employment to enter into the Armed Forces of the United States, except temporary service of 90 days or less, or to accept employment with the Government of the United States, (4) determination of Total Disability, (5) termination of employment because of inability to meet Company medical standards, (6) Layoff, or (7) death. 8.2 Distribution Upon Termination (a) This section will apply to any Member whose Severance from Service Date occurs before he has satisfied the eligibility conditions for retirement as described in section 7.1. (b) Subject to the provisions of subsection (c), the Member shall receive as a lump sum all amounts described in section 8.4 as soon as practicable after his Severance - 38 - 44 from Service Date, but not later than 60 days after the end of the Plan Year in which his Severance from Service Date occurred. (c) If the vested balance in the Member's Accounts exceeds $3,500, no distribution of benefits under the Plan shall be made unless the Plan Administrator has first obtained the Member's written consent thereto. In the event such written consent is not obtained, the vested portion of the Member's Accounts will be retained by the Plan and will be maintained and valued in accordance with Article 6. Distribution of the Member's Accounts pursuant to this section shall be made following the date on which the Plan Administrator obtains the Member's written consent to the distribution or, if earlier, the required beginning date described in section 7.4. The amount of distribution will be determined as provided in section 8.4, except that the balance of the Member's Accounts will be determined by reference to the Unit Values on the Valuation Date coincident with or immediately preceding the date of distribution. If the Member is reemployed as an Employee prior to the date on which the Plan Administrator receives his written consent to the distribution, the Member shall not have any further right to receive a distribution of benefits as a result of his prior termination of employment. Under no circumstances shall a Member have any right to withdraw a portion of the balance of his Accounts under Article 9 prior to the deferred distribution date. If the vested balance in the Member's Accounts at the time of a distribution exceeds $3,500, then the vested balance at any subsequent time shall be deemed to exceed $3,500. 8.3 Distribution Upon Death (a) If a Member dies before payment of benefits begins, his Beneficiary(ies) shall receive all amounts described in section 8.4 as soon as practicable after the Member's death, but not later than 60 days after the end of the Plan Year in which the Member's death occurred. (b) If a Member dies after installment payments have commenced pursuant to section 7.3, payments will continue to the Beneficiary under the form of payment in effect at the time of the Member's death. 8.4 Amount of Distribution The amounts which a Member or Beneficiary will receive under section 8.2 or 8.3 shall be as follows: (a) With respect to Investment Funds other than the Boeing Company Stock Fund, the Member shall receive the vested dollar balance of his Accounts in such Funds. Such balance shall be determined in the manner provided in section 6.4, by reference to the value of Units in such Member's Accounts on the Valuation Date coinciding with or immediately preceding his Severance from Service Date or, in - 39 - 45 the case of death or Total Disability, the date all documentation necessary to effect the distribution is received by the Plan Administrator. (b) With respect to the Boeing Company Stock Fund, the vested dollar balance in the Member's Accounts in the fund as of the Valuation Date coinciding with or immediately preceding his Severance from Service Date or, in the case of death or Total Disability, the date all documentation necessary to effect the distribution is received by the Plan Administrator (determined in the manner provided in section 6.4, separately by reference to the Common Units in the Account on such Valuation Date and the respective Unit values on such Valuation Date) shall be applied to Common Stock to the extent attributable to Common Units. The Member shall receive shares of Common Stock equal to the maximum number of whole shares of Common Stock which could be purchased at the closing price of Common Stock on the New York Stock Exchange--Composite Transactions listing on such Valuation Date (or, in the event such Valuation Date falls on a date on which there are no trades of such stock reflected on such listing, the last trading day preceding such Valuation Date) with the portion of such vested dollar balance attributable to Common Units in the Account. The Member shall be paid in cash the vested dollar amount remaining in his Accounts invested in the Boeing Company Stock Fund after reduction of each such Account by the value of the whole shares previously described, based upon such closing price. In addition, the Member shall be paid in cash the amount of any cash dividends received since such Valuation Date attributable to the number of whole shares of Common Stock distributed to him and the dollar value of any contributions to the Company Stock Fund in respect of such Member between such Valuation Date and his Severance from Service Date. 8.5 Forfeitures (a) If a Member terminates employment and receives the vested portion of his Accounts, the nonvested portion of the Company Contributions Account, if any, will be forfeited at the time such distribution is made. Such forfeiture will be applied as soon as practicable to reduce Company Matching Contributions otherwise payable under 3.4. (b) If a Member who has not completed a five-year Period of Service becomes eligible to receive a distribution under section 8.2(c) but fails to provide written consent to such distribution, the nonvested portions of the Member's Company Contributions Account shall be forfeited at the conclusion of the five-year Period of Severance following his Severance from Service Date, unless the Member shall be reemployed as an Employee prior to the conclusion of said five-year period. Such forfeiture will be applied as soon as practicable to reduce Company Matching Contributions otherwise payable under 3.4. - 40 - 46 8.6 Repayment After Reemployment If a Member who has forfeited a nonvested balance is reemployed as an Employee, the previously forfeited nonvested portion of his Company Contributions Account will be restored to the dollar amount on the date the Member received a distribution under this article if the Member makes a cash repayment to the Plan of the amounts which were distributed from his Compensation Deduction and Compensation Deferral Accounts on or before the earlier of: (a) the fifth anniversary of his Reemployment Date or (b) the completion of a five-year Period of Severance. The Company Contributions Account balance will be restored by an additional Company contribution. The amount of the Member's repayment (which shall not reflect interest) will be credited to the Member's Compensation Deduction Account. The repayment and the restored Company Contributions Account will be allocated to the Investment Funds in the same proportion as the Member's current Compensation Deduction or Deferral Contributions. The nonvested portion of the member's Company Contributions Account restored pursuant to this section shall vest as provided in section 8.1. - 41 - 47 Article 9 Withdrawals and Loans 9.1 Withdrawals from Accounts by Members under Age 59 1/2 (a) Subject to sections 9.4 and 9.5, a Member who has not yet attained age 59 1/2 may elect while still employed to withdraw certain amounts from his Accounts. As soon as practicable after the Plan Administrator's receipt of such an election, there shall be paid or transferred to such Member cash and, if applicable, shares of Common Stock from his Accounts in the following order: (1) first, from his Supplemental Deduction Account; (2) second, from his Compensation Deduction Account; (3) third, from that portion (if vested) of his Company Contributions Account, which is attributable to Compensation Deduction Contributions; (4) fourth, from his Supplemental Deferral Account; and (5) fifth, from his Compensation Deferral Account. (b) If a Member receives a withdrawal pursuant to section 9.1(a)(2), the nonvested portion of his Company Contributions Account associated with the amounts withdrawn shall be forfeited as provided in section 9.3 and the withdrawal limitations of section 9.3 shall apply. If a Member receives a withdrawal pursuant to section 9.1(a)(3), his Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, and Company Matching Contributions shall be suspended for a period of 26 weeks. (c) A Member shall be permitted to withdraw from his Supplemental and Compensation Deferral Accounts, as described in section 9.1(a)(4) and (5), only upon providing adequate evidence of a hardship, as provided in section 9.5, and such a hardship withdrawal shall be governed by the provisions of that section. (d) The portion of the Member's Company Contributions Account which is attributable to Compensation Deferral Contributions shall not be available for withdrawal prior to the Member's attainment of age 59 1/2. (e) In determining withdrawal amounts, the value of available Units in the Member's Accounts shall be determined as of the Valuation Date coinciding with or immediately preceding the date of the election. - 42 - 48 9.2 Withdrawal from Accounts by Members Over Age 59 1/2 (a) A Member who has attained age 59 1/2 while still employed by the Company may elect to withdraw any or all vested amounts from his Accounts. A Member making such an election shall receive the amount of cash or, if applicable, stock to be withdrawn from his Accounts in the following order: (1) first, from his Supplemental Deduction Account; (2) second, from his Compensation Deduction Account; (3) third, from his Supplemental Deferral Account; (4) fourth, from his Compensation Deferral Account; (5) fifth, from that portion (if vested) of his Company Contributions Account, which is attributable to Compensation Deduction Contributions; and (6) sixth, from that portion (if vested) of his Company Contributions Account, which is attributable to Compensation Deferral Contributions. (b) If a Member receives a withdrawal pursuant to section 9.2(a)(2), the nonvested portion of his Company Contributions Account associated with the amounts withdrawn shall be forfeited as provided in section 9.3, but the withdrawal limitations of section 9.3(d) shall not apply and his Compensation and Supplemental Deferral Contributions, Compensation and Supplemental Deduction Contributions, and Company Matching Contributions shall not be suspended. (c) In determining the distribution amounts, the value of available Units in the Member's Accounts shall be determined as of the Valuation Date coinciding with or immediately preceding the date of the election. 9.3 Forfeitures and Limitation on Withdrawals (a) When applicable, any nonvested portion of a Member's Company Contributions Account associated with a withdrawal from his Compensation Deduction Account shall be forfeited at the time of such withdrawal. (1) The forfeitable Units, if any, of a Member's Company Contributions Account which are attributable to Compensation Deduction Contributions shall be determined by multiplying the dollar balance of the Member's Company Contributions Account which is attributable to Compensation Deduction Contributions by a fraction, the numerator of which is equal to the dollar value of the Compensation Deduction Contributions which were withdrawn by the Member and the denominator of which is the total dollar value of the Member's Compensation Deduction Account (both such dollar - 43 - 49 values to be determined as of the last Valuation Date preceding the date of withdrawal). (2) An Employee who has suffered a forfeiture described in this subsection (a) may elect to restore his interest in the Plan by making a cash repayment to the Plan in the amount and in the manner described in subsections (b) and (c). (b) In order to restore a forfeiture described in subsection (a), a repayment of the amount withdrawn by the Employee from his Compensation Deduction Account must be made within 60 months after such withdrawal. For purposes of this subsection (b), the amount distributed to an Employee means the sum of the cash distributed to such Employee plus the dollar value of the Common Stock distributed to such Employee, determined at the closing price for Common Stock as reflected on the New York Stock Exchange--Composite Transactions listing on the Valuation Date applicable to the distribution or withdrawal (or if such Valuation Date falls on a date on which, for any reason, there are no trades of such stock reflected on such listing, the last trading day preceding such Valuation Date). Such amount shall not be increased to reflect interest. (c) As soon as practicable after an Employee makes a repayment described in subsection (b), there shall be credited to the Employee's Company Contributions Account the dollar amount of any amounts forfeited as a result of the withdrawals. The amount repaid under this subsection (c) shall be credited to the Employee's Compensation Deduction Account or, if applicable, his Compensation Deferral Account and shall be allocated to the Investment Funds in the same proportion as the Member's current Compensation Deduction Contributions or Compensation Deferral Contributions. The previously forfeited amount which is credited under this subsection shall subsequently vest as provided in section 8.1. (d) Withdrawals shall be in a minimum amount of $100. A Member who has not yet attained age 59 1/2 may not make a request for a partial withdrawal within 26 weeks of any prior request for a partial withdrawal; provided, however, that this limitation upon the ability of such Member to make a partial withdrawal (including hardship withdrawals pursuant to the provisions of section 9.5) within 26 weeks of any prior request for a partial withdrawal shall be waived by the Plan Administrator for the six-month period immediately following any due declaration by the President of the United States under applicable federal law that a particular occurrence or situation constitutes a national disaster condition, if such partial withdrawal is requested for a reason associated with financial need of the Member resulting from the effects of the said condition. - 44 - 50 9.4 Allocation of Withdrawals Among Investment Funds (a) Withdrawals pursuant to sections 9.1 and 9.2 shall be taken from the Member's Accounts in the Investment Funds in a pro rata fashion, based upon the relative size of such Accounts. (b) Notwithstanding the above subsection (a), a Member may elect to have any such withdrawal taken: (1) first from the Member's Accounts in the Boeing Company Stock Fund, with any additional withdrawal amount to be taken on a pro rata basis from the Member's Accounts in the remaining Investment Funds other than the Boeing Company Stock Fund; or. (2) first on a pro rata basis from the Member's Accounts in Investment Funds other than the Boeing Company Stock Fund, with any additional withdrawal amount to then be taken from the Member's Accounts in the Boeing Company Stock Fund. 9.5 Hardship Withdrawals from Compensation and Supplemental Deferral Accounts Subject to any restrictions the Plan Administrator may establish pursuant to section 9.6: (a) A Member who has not attained age 59 1/2 may request approval of the Company to withdraw some or all of the Units of his Compensation Deferral Account and his Supplemental Deferral Account, if the Member demonstrates that the withdrawal is required as a result of a hardship and for payment of any federal, state or local income taxes and penalties reasonably anticipated to result from such withdrawal. (1) For the purposes of this subsection (a) the term "hardship" shall mean an immediate and heavy financial need of the Member for which the amount required is not reasonably available to the Member from other sources and which arises for one of the following reasons: (A) the purchase (excluding mortgage payments) or construction of a principal residence for the Member, or to prevent eviction from, or foreclosure on the mortgage on, the Member's principal residence; (B) the incurring of obligations for: (i) tuition, related educational fees and room and board expenses for post-secondary education for the Member, his spouse or one or more of his children or other dependents (as defined in section 152 of the Code) to be incurred during the 12-month - 45 - 51 period immediately following the date of his request for distribution; or (ii) expenses not covered by insurance which either have been previously incurred by the Member for, or are necessary in order for the Member to obtain, medical care (as described in section 213(d) of the Code) for himself, his spouse or one or more of his dependents (as defined in section 152 of the Code); (C) any other reason permitted under section 401(k)(2)(B)(i)(IV) of the Code and approved by the Plan Administrator. (2) Any determination of the existence of hardship, the reasonable availability to the Member of funds from other sources and the amount to be withdrawn on account of such hardship shall be made by the Plan Administrator on the basis of all relevant facts and circumstances and in accordance with the foregoing rules, as applied in a uniform and nondiscriminatory manner. In making such determination, the Plan Administrator may, if it is reasonable to do so in the light of all relevant and known facts and circumstances, rely on the Member's representation that the hardship cannot be relieved: (A) through reimbursement or compensation by insurance or otherwise; (B) by reasonable liquidation of the Member's assets, to the extent that such liquidation would not itself cause an immediate and heavy financial need; (C) by suspension of Compensation Deferral or Compensation Deduction Contributions; or (D) by other distributions (other than hardship distributions) or loans (which meet the requirements of section 72(p) of the Code) from the Plan and any other plan maintained by an Affiliate or Subsidiary or by any former employer or by borrowing from commercial sources at reasonable commercial rates. (b) Withdrawals pursuant to subsection (a) shall not result in the forfeiture of a Member's interest in his Company Contributions Account. (c) Withdrawals pursuant to subsection (a) shall be taken from the Member's Accounts in the Investment Funds in a pro rata fashion, based upon the relative size of such Accounts. - 46 - 52 (d) Notwithstanding the above subsection (c), a Member may elect to have any such withdrawal taken: (1) first from the Member's Accounts in the Boeing Company Stock Fund, with any additional withdrawal amount to be taken on a pro rata basis from the Member's Accounts in the remaining Investment Funds other than the Boeing Company Stock Fund; or (2) first on a pro rata basis from the Member's Accounts in Investment Funds other than the Boeing Company Stock Fund, with any additional withdrawal amount to then be taken from the Member's Accounts in the Boeing Company Stock Fund. (e) Withdrawals (including those from the Boeing Company Stock Fund) shall be in cash and for a minimum amount of $100. A Member may not make a request for partial withdrawal within 26 weeks of any prior request for partial withdrawal; provided, however, that this limitation upon the ability of a Member to make a partial withdrawal (including hardship withdrawals pursuant to the provisions of subsection (a) of this Section) within 26 weeks of any prior request for a partial withdrawal shall be waived by the Plan Administrator for the six-month period immediately following any due declaration by the President of the United States under applicable federal law that a particular occurrence or situation constitutes a national disaster condition, if such partial withdrawal is requested for a reason associated with financial need of the Member resulting from the effects of such condition. 9.6 Loans The Plan Administrator shall establish, and may from time to time modify, procedures pursuant to which any Member or other "party in interest" (as defined in ERISA section 3(14)) may apply for and receive a loan from the Plan; provided, however, no loans shall be made pursuant to this section before July 1, 1997. The amount of the loan may not exceed the least of (a), (b), (c), or (d): (a) the aggregate of the balances in the borrower's Compensation Deferral, Supplemental Deferral, Compensation Deduction and Supplemental Deduction Accounts; (b) an amount which, when combined with all outstanding loans to the borrower from all other plans of all Affiliate or Subsidiary, equals $50,000, reduced by the excess, if any, of (1) the highest outstanding and unpaid balances of all prior loans to the borrower from the Plan and such other plans during the 12-month period immediately preceding the date on which such loan is made, over - 47 - 53 (2) the outstanding balance of any loan to the borrower from the Plan or such other plans on the date on which the loan is made; (c) one-half of the aggregate of the fully vested and nonforfeitable interests in the balances of the borrower's Accounts; or (d) such amount, not exceeding the amounts described in (a) through (c) above, as the Plan Administrator shall determine. In addition to the above limitation, no such Member or other party in interest shall be permitted to have more than a single loan outstanding at any one time from this Plan and all other plans sponsored by Affiliate or Subsidiary. All such loans shall be made available to all eligible Members and other parties in interest on a reasonably equivalent and non-discriminatory basis and shall be governed by the provisions of Appendix B, as such Appendix is from time to time constituted, pursuant to determination of the Plan Administrator. - 48 - 54 Article 10 Termination of Plan 10.1 Termination of Plan The Company expects to continue the Plan indefinitely but reserves the right to terminate the Plan in whole or in part upon giving prior written notice to the Trustee and the Plan Administrator. 10.2 Procedures Upon Termination of Plan Upon a complete or partial termination of the Plan or upon a complete discontinuance of contributions to the Plan, the interests of the Members in their Company Contributions Accounts (or, in the case of a partial termination, the interests of those Members for whom the Plan has terminated), shall be fully vested. Upon such termination, the Plan Administrator shall perform a valuation of the Plan assets. Upon completion of such valuation, the full balances in the Accounts of Members (or, in the case of a partial termination, the Members for whom the Plan has terminated), shall be distributed to them. - 49 - 55 Article 11 Top Heavy Provisions 11.1 Top-Heavy Plan Notwithstanding any other provision of this Plan to the contrary, this article will apply if the Plan is a Top-Heavy Plan. The Plan will be a Top-Heavy Plan if, as of the Determination Date, the cumulative account balances of Key Employees exceeds 60% of the cumulative account balances under the Plan of all Employees and Key Employees (but excluding the account balances of former Key Employees and individuals who have not performed any services for the Company at any time during the five year period ending on the Determination Date). This percentage will be computed in accordance with Code Section 416(g). In determining whether this Plan is a Top-Heavy Plan, all employers that are aggregated under Code Sections 414(b), (c) and (m) shall be treated as a single employer. In addition, all plans that are part of the Aggregation Group shall be treated as a single plan. In determining present values, mortality shall be based on the 1971 Group Annuity Mortality Table and the interest rate utilized shall be five percent. 11.2 Definition of Terms For purposes of this article only, the following terms shall have the following meanings: (a) "Aggregation Group" means the Required Aggregation Group or, at the election of the Company, the Permissive Aggregation Group. (b) "Compensation" for purposes of this article and 13.9 only means a Member's wages, salaries, fees for professional service and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company to the extent that the amounts are includible in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements, and expense allowances). Compensation will not include the following: (1) Company contributions to a plan of deferred compensation which are not included in the Employee's gross income for the taxable year in which contributed (before the application of the Code Section 415 limitation to that plan) or Company contributions to a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensation; - 50 - 56 (2) amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (3) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (4) other amounts which receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includible in the Employee's gross income). Compensation shall not exceed $150,000 for 1994. On January 1 of each calendar year in which the Secretary of the Treasury prescribes a new dollar limit, this $150,000 limit will automatically be adjusted to that new limit. (c) "Determination Date" means the last day of the preceding Plan Year. This date will also be the valuation date for determining present values. For the first Plan Year, the Determination Date will be the last day of that Plan Year. (d) "Key Employee" means an Employee, a former Employee, or the Beneficiary of a former Employee who, in the Plan Year containing the Determination Date, or any of the four preceding Plan Years, is: (1) An officer of the Company having an annual compensation from the Company greater than 50 percent of the amount in effect under Code Section 415(b)(1)(A) for the calendar year in which any such Plan Year ends. Not more than fifty Employees (or, if fewer, the greater of three Employees or ten percent of the Employees not excluded under Code Section 414(q)(8), as in effect on December 31, 1996), including those Employees included under paragraphs (2), (3) and (4) below, shall be considered as officers for purposes of this paragraph. (2) One of the ten Employees having an annual Compensation from the Company greater than the amount in effect under Code Section 415(c)(1)(A) for the calendar year in which any such Plan Year ends and owning (or considered as owning within the meaning of Code Section 318) both more than a one-half percent interest and the largest interests in the Company. (3) A five-percent owner of the Company. (4) A one-percent owner of the Company having an annual Compensation from the Company of more than $150,000 for a Plan Year. (5) For purposes of this subsection (d), Compensation shall include amounts contributed by the Company pursuant to a salary reduction agreement - 51 - 57 which are excludable from gross income under Code Sections 125, 402(e)(3), 402(h) or 403(b). Whether an Employee is a five-percent owner or a one-percent owner shall be determined in accordance with Code Section 416(i). (e) "Non-key Employee" means an Employee (and any Beneficiary of an Employee) who is not a Key Employee. (f) "Permissive Aggregation Group" means the Required Aggregation Group of plans plus any other plan or plans of the Company which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code Sections 401(a)(4) and 410. (g) "Required Aggregation Group" means: (1) Each stock bonus, pension, or profit sharing plan of the Company in which a Key Employee participates in the Plan Year containing the Determination Date or any of the four preceding Plan Years which is intended to qualify under Code Section 401(a); and (2) Each other such stock bonus, pension or profit sharing plan of an employer which enables any plan in which a Key Employee participates to meet the requirements of Code Section 401(a)(4) or 410. (h) "Top-Heavy Group" means the Aggregation Group if the sum of (1) and (2) below exceeds sixty percent of a similar sum determined for all Employees (excluding former Key Employees and individuals who have not performed any services for the Company at any time during the five year period ending on the Determination Date): (1) The present value of the cumulative accrued benefit for Key Employees under all defined benefit plans included in such group. (2) The aggregate of the accounts of Key Employees under all defined contribution plans included in such group. In a Top-Heavy Group, all plans in the Required Aggregation Group are Top-Heavy regardless of whether or not the individual plans are Top-Heavy. 11.3 Modification of Vesting Schedule If the Plan is Top-Heavy in a Plan Year, a Participant who is credited with an Hour of Service in such Plan Year shall have his vested interest determined in accordance with the following schedule if it produces a higher vesting interest than the schedule in section 8.1. - 52 - 58
Period of Service Vested Interest ----------------- --------------- Less than 3 years 0% 3 or more years 100%
A Participant's vested interest shall not be less than that determined as of the last day of the last Plan Year in which the Plan was a Top-Heavy Plan. If the Plan ceases to be Top-Heavy, each Participant with a Period of Service of three or more years (determined as of the first day of the Plan Year in which the Plan ceases to be Top-Heavy) shall continue to have his vested interest determined in accordance with this section. 11.4 Minimum Contribution If the Plan is a Top-Heavy Plan in a Plan Year, a Member, other than a Key Employee, who is employed in such Plan Year or who is on an authorized period of absence shall be credited with a Company contribution as of the last day of such Plan Year not less than 3% of compensation or, if less, the largest percentage contribution made or required to be made for any Key Employee. Amounts contributed as a result of a salary reduction agreement shall be included in determining the largest percentage contribution made or required to be made for Key Employees. The minimum contribution under this section shall not apply to an Employee during any year in which he is entitled to a minimum benefit under a Top-Heavy defined benefit pension plan maintained by the Company. 11.5 Modification of Maximum Contribution If the Plan is a Top-Heavy Plan in a Plan Year, 13.9(e) shall be amended for such Plan Year by substitution of "1.0" for "1.25" where such factor appears in Code Section 415(e). 11.6 Collective Bargaining Agreements The provisions shall not apply to any Employee who is included in a group of Employees covered by a collective bargaining agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, including the Company, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and such employer or employers. - 53 - 59 Article 12 Administration of Plan 12.1 Administration (a) The Plan Administrator will serve as the named fiduciary pursuant to ERISA. The Plan Administrator will have complete control of the administration of the Plan, subject to the provisions hereof, with all powers necessary to enable it to carry out its duties properly in that respect. Not in limitation, but in amplification of the foregoing, it will have the power to interpret the Plan and to determine all questions that may arise hereunder, including all questions relating to the eligibility of Employees to participate in the Plan and the amount of benefit to which any Member or Beneficiary may become entitled. Its decisions upon all matters within the scope of its authority will be final. (b) The Plan Administrator will establish rules and procedures to be followed by Members and Beneficiaries in filing applications for benefits, in furnishing and verifying proofs necessary to determine age or marital status, and in any other matters required to administer the Plan. (c) The Plan Administrator will receive all applications for benefits and will determine all facts necessary to establish the right of the applicant to benefits under the provisions of the Plan and the amount thereof. (d) The Plan Administrator shall maintain accounts showing the fiscal transactions of the Plan, and shall keep data required for the valuation of the assets and liabilities of the Plan. The Plan Administrator shall also prepare an annual report showing in reasonable detail the assets and liabilities of the Plan and giving a brief account of the operation of the Plan for each year. The Plan Administrator shall make the annual report available to each Member as required by law. (e) The Plan Administrator may appoint such accountants, counsel, consultants, actuaries and other persons the Plan Administrator deems necessary or desirable in connection with the administration of the Plan. (f) The Plan Administrator will have the power to appoint or remove any Investment Manager or Managers and to manage (including the power to acquire and dispose of) any assets of the Plan. (g) The Plan Administrator will have the power to appoint or remove the Trustee. (h) The Plan Administrator will be entitled to rely upon all tables, valuations, certificates and reports furnished by the accountant, consultant or actuary appointed by the Plan Administrator and upon all opinions given by any counsel selected or approved by it. - 54 - 60 12.2 Records All acts and determinations of the Plan Administrator and the Company regarding this Plan will be duly recorded and all such records, together with such other documents as may be necessary for the administration of the Plan, will be preserved in the custody of the Plan Administrator. 12.3 Payment of Expenses Necessary and proper expenses of administration of the Plan shall be paid from assets of the Trust Fund except for those expenses the Company is required by law to pay or chooses to pay. Brokerage and other fees incurred in the purchase or sale of securities will be charged to the Investment Fund in which the transaction occurred. Fees charged by the Trustee for supervision and administration of Plan assets will be charged to the Investment Fund to which such fees are properly allocable. Any expense charged by an insurance company under the provision of an investment contract will be charged to the Investment Fund which holds such contract. 12.4 Delegation of Authority The administrative duties and responsibilities set forth in 12.1 may be delegated by the Plan Administrator in whatever manner and extent it chooses to such person or persons as it selects. It will notify the Company and the Trustee of the authority conferred upon such person or persons. 12.5 Information Available Any Member of the Plan or any Beneficiary receiving benefits under the Plan may examine copies of the Plan description, latest annual report, any bargaining agreement, the Plan, the Trust Agreement or any other instrument under which the Plan was established or is operated. The Plan Administrator will maintain all of these items in its office, or in such other place or places as it may designate from time to time for examination during reasonable business hours. Upon the written request of a Member or Beneficiary receiving benefits under the Plan, the Plan Administrator will furnish a copy of any item listed in this section. The Plan Administrator may make a reasonable charge to the requesting person for the copy furnished. 12.6 Appeal Procedure The Plan Administrator shall adopt procedures for the presentation of claims for benefits and for the review of the denial of such claims by the Plan Administrator. Detailed information regarding such procedures may be obtained by writing to the Plan Administrator, The Boeing Company, M.S. 11-59, P.O. Box 3707, Seattle, Washington 98124. The decision of the Plan Administrator upon such review shall be final, subject to appeal rights provided by law. - 55 - 61 12.7 Fiduciary Capacity Any person may serve in more than one fiduciary capacity with respect to this Plan. 12.8 Committee Liability The members of the Voluntary Investment Plan Committee shall use ordinary care and diligence in the performance of their duties, but no member will be personally liable by virtue of any contract, agreement, or other instrument made or executed as a member of the Committee, nor for any mistake of judgment made by him or by any other member, nor for any loss unless resulting from willful misconduct or failure to exercise good faith. No member of the Committee will be liable for the neglect, omission, or wrongdoing of any other member or of the agents or counsel of the Committee. The Company shall indemnify each member of the Committee against, and hold him harmless from any and all expenses and liabilities arising out of any act or omission to act as a member of the Committee, except such liabilities and expenses as are due to willful misconduct or failure to exercise good faith. - 56 - 62 Article 13 General Provisions 13.1 Amendment of Plan (a) The Company may amend the Plan at any time. Such amendments may include any remedial retroactive changes to comply with the requirements of any law or regulation issued by any governmental agency to which the Company is subject. The Company may delegate to the Voluntary Investment Plan Committee, or to any member thereof, its authority to amend the Plan. No amendment will diminish or adversely affect any accrued interest or benefit of Members or their Beneficiaries, except as may be required to comply with the requirements of any law or regulation issued by any governmental agency to which the Company is subject. (b) If any amendment to the Plan changes the vesting schedule, each Member who is an Employee and has completed a three-year Period of Service may elect to remain under the vesting schedule of the Plan prior to such amendment. If the Member does not make the election within a reasonable time (as may be determined pursuant to governmental regulations from time to time), he will be subject to the vesting schedule under the Plan as amended. In no event will the vesting percentage attained by a Member be reduced below the percentage attained prior to such amendment. (c) If any amendment to the Plan eliminates an optional form of payment, a Member may continue to elect such form of payment with respect to any Account balance earned prior to the effective date of such amendment. 13.2 Qualification Each contribution of the Company to the Trust Fund is conditioned upon the initial qualification of the Plan under Code Section 401. If the deduction of any such contribution is disallowed, it shall be returned to the Company (to the extent disallowed), within one year after the date of such disallowance. 13.3 Employment Status Nothing contained in the Plan will be deemed to give any Employee the right to be retained in the employ of the Company or to interfere with the rights of the Company to discharge any Employee at any time. 13.4 Mergers or Consolidations If this Plan merges or consolidates with, or transfers its assets or liabilities to any other qualified plan of deferred compensation, no Member will, as a result of such merger, consolidation or transfer, be entitled to a benefit on the day following such event which - 57 - 63 is less than the benefit to which he is entitled on the day preceding such event. For purposes of this section, the benefit to which a Member is entitled shall be calculated based upon the assumption that a Plan termination and distribution of assets occurred on the day as of which the Member's entitlement is being determined. 13.5 Provision Against Anticipation No benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge or other legal process, and any attempt to do so shall be void. The preceding sentence will not apply to a qualified domestic relations order pursuant to Code Section 414(p). 13.6 Facility of Payment If any Member or Beneficiary is physically or mentally incapable of giving a valid receipt for any payment due him and no legal representative has been appointed for him, the Plan Administrator may direct the Trustee to make such payment to any person or institution maintaining such Member or Beneficiary and the release of such person or institution will be a valid and complete discharge for such payment. Any final payment or distribution of any Member, to the legal representative of the Member or to any Beneficiaries of such Member in accordance with the provisions herein will be in full satisfaction of all claims against the Plan, the Plan Administrator, the Trustee, the Company and the Parent arising under or by virtue of the Plan. 13.7 Construction The validity of the Plan or any of its provisions will be determined under and will be construed according to federal law and, to the extent permissible, according to the laws of the state of Washington. If any provision of the Plan is held illegal or invalid for any reason, such determination will not affect the remaining provisions of the Plan and the Plan will be construed and enforced as if said illegal or invalid provision had never been included. 13.8 Legal Actions The Plan Administrator will be the necessary party to any action or proceeding involving the assets held with respect to the Plan or the administration thereof. No Employee, Member, former Member or their Beneficiaries, or any other person having or claiming to have an interest in the Plan will be entitled to any notice or process. Any final judgment that may be entered in any such action or proceeding will be binding and conclusive on all persons having or claiming to have any interest in the Plan. 13.9 Limitations on Contributions (a) For purposes of this section only, the following definitions shall apply: - 58 - 64 (1) "Additions" means the sum of (A) Company Matching Contributions, (B) Elective Contributions, (C) forfeitures, if any, allocated to the Member's Accounts, (D) amounts allocated after March 31, 1984, to an individual medical account (defined in Code Section 415(l)(2)) which is part of a pension or annuity plan maintained by the Company (provided that the 25% limitation in 13.9(b) shall not apply), and (E) amounts allocated after December 31, 1985, to the separate account of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit fund (as defined in Code Section 419(e)) maintained by the Company. (2) "Compensation" has the meaning defined in 11.2(b). (3) "Limitation Year" means a Plan Year. (b) The total Additions made to the Accounts of a Member for any Plan Year shall not exceed the lesser of 25% of the Member's Compensation or the greater of $30,000 or one-quarter of the dollar limitation in effect under Code Section 415(b)(1)(A) as adjusted for cost of living increases by the Secretary of the Treasury. (c) If Additions exceed the limitation for any Plan Year as a result of the allocation of forfeitures, a reasonable error in estimating a Member's annual compensation, or under such facts and circumstances as the Commissioner may allow, such excess Additions will be applied in accordance with subdivisions (ii) and (iv) of Treasury Regulation section 1.415-6(b)(6). (d) All defined contribution plans of the Company, terminated or not, will be considered as one plan for purposes of the limitations specified under this section, and all entities of a controlled group of entities will be considered as one employer. (e) In any case in which a person is a Member of both a defined benefit plan and a defined contribution plan maintained by the Company or any Affiliate or Subsidiary of the Company, then the provisions of Code Section 415(e) shall apply. If for any Plan Year, the limits described in Code Section 415(e) are exceeded, the projected annual retirement income benefit under the defined benefit plan shall be limited, to the extent necessary, to reduce the defined benefit plan fraction (as defined in Code Section 415(e)(2)) so that the sum of the defined contribution plan fraction (as defined in Code Section 415(e)(3)) and the defined benefit plan fraction does not exceed 1.0. Notwithstanding the foregoing, if the defined benefit plan of the Company or Affiliate or Subsidiary specifically provides that the defined benefit plan fraction is not reduced, the Member's Additions will be adjusted as described 13.9(c) to the extent necessary, to reduce the defined contribution plan fraction so that the sum of the defined contribution plan fraction and the defined benefit plan fraction does not exceed 1.0. - 59 - 65 13.10 Qualified Domestic Relations Order (a) The Plan Administrator shall promptly notify a Member and any other alternate payee of the receipt of a domestic relations order and of the Plan's procedure for determining whether the order qualifies as a Qualified Domestic Relations Order as defined in Code Section 414(p)(1)(A). Within a reasonable period of time after the receipt of such order, the Plan Administrator shall determine whether such order qualifies as a Qualified Domestic Relations Order and shall notify the Member and each alternate payee of such determination. (b) During any period in which the issue of qualification of a domestic relations order is being determined, the Plan Administrator shall segregate in a separate account in the Plan the amounts, if any, which would have been payable to the alternate payee during such period if the order had been determined to be a Qualified Domestic Relations Order. If the domestic relations order is determined to be qualified, the Plan Administrator shall pay the balance of such account to the person or persons entitled thereto. If within eighteen months it is determined that the domestic relations order is not qualified, or if the issue is not resolved, then, as of the Valuation Date next following the close of such period, the balance in the segregated account shall either be credited to the account of the Member, or, if the Member has terminated employment, distributed to the Member, or, in the event of the Member's death, to his Beneficiary. Any subsequent determination that the domestic relations order is a Qualified Domestic Relations Order shall apply prospectively only. (c) If a domestic relations order is determined to be qualified, then the Plan Administrator shall make distribution to the alternate payee as required by that Qualified Domestic Relations Order. No payment shall be made under this section which is in excess of the balance of a Member's Accounts as determined pursuant to the provisions of the Plan. (d) In the event that the Plan Administrator shall determine that a distribution or a withdrawal of a Member's Account pursuant to Article 7, Article 8, Article 9, or Article 10 has been delayed as a result of a pending or threatened domestic relations order, the Valuation Date immediately preceding the date on which such withdrawal or distribution is approved by the Plan Administrator pursuant to such order shall be substituted for the Valuation Date which would otherwise be applicable to such distribution or withdrawal. 13.11 Pronouns Masculine pronouns as used in this Plan will include both masculine and feminine gender unless the context indicates otherwise. - 60 - 66 13.12 Eligible Rollover Distribution (a) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, 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. Prior to effecting such transfer, the Plan Administrator shall required evidence reasonably satisfactory to him that the entity to which such transfer is to be made is, in fact, and eligible retirement plan and such plan may receive the distribution in the forms required under Article 7, Article 8, or Article 9, as applicable. (b) Definitions. (1) Eligible rollover distribution: An 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 Code Section 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (2) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts the distributee's eligible rollover distribution in the forms required under Article 7, Article 8, or Article 9, as applicable. 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. (3) Distributee: A 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 Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. - 61 - 67 (4) Direct rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. 13.13 Rollover Contributions With the consent of the Plan Administrator and without regard to any limitations on contributions set forth in 3.1 and Article 13, the Plan may receive from an Eligible Employee, in cash, a rollover contribution if: (a) The amounts transferred to the Plan originated under a retirement plan sponsored by another employer and the following conditions are satisfied: (1) The Eligible Employee was a participant under another plan that was qualified under Code Section 401(a) or an annuity plan qualified under Code Section 403(a); (2) In the case of a plan qualified under Code Section 401(a), the trust under such other plan is exempt from tax under Code Section 501(a); (3) Such Eligible Employee receives a distribution from such other plan which qualifies as an eligible rollover distribution, as described in Code Section 402(c)(1); (4) The Eligible Employee furnishes evidence satisfactory to the Plan Administrator that such contribution meets conditions (1), (2), and (3) above; and (5) The rollover contribution is made no later than the 60th day after receipt of the distribution; or (b) The amounts transferred to the Plan are from a conduit individual retirement account, provided that the following conditions are satisfied: (1) Such account has no assets other than assets that were previously distributed to the Eligible Employee by another qualified plan and contains no amount attributable to contributions made by the Eligible Employee; (2) Such amounts met the applicable requirements of Code Section 408(d)(3) for rollover treatment or transfer to the conduit individual retirement account; and (3) Such amounts are transferred by the Eligible Employee to the Plan within 60 days following his receipt of such amount from the conduit individual retirement account. - 62 - 68 Rollover contributions shall be held in the Supplemental Deferral Account established and maintained under the Plan for the benefit of the Eligible Employee who transferred such contributions. An Eligible Employee who has made a rollover contribution shall at all times have a 100% nonforfeitable right to the value of the assets held in his Supplemental Deferral Account. Amounts allocated to the Supplemental Deferral Account shall be held in trust and invested in accordance with the terms and conditions provided in Article 4. No Company Matching Contribution shall be made under 3.4 with respect to such rollover. Distributions of amounts allocated to a Supplemental Deferral Account shall be payable on retirement as a benefit under Article 7, on termination or death as a benefit under Article 8, or upon withdrawal under Article 9. All other provisions of the Plan shall be applicable to the amount so transferred, regardless of whether or not the Eligible Employee becomes a Member under 2.1. If an Eligible Employee makes a rollover contribution to the Plan under this 13.13, such Eligible Employee nevertheless shall not become a Member under the Plan and shall not participate in the allocation of Company Matching Contributions under 13.13 until such Eligible Employee has satisfied the requirements for membership set forth in Article 2. - 63 - 69 Appendix A Retirement Sub-Plans Crediting Service 1. Rockwell International Corporation Retirement Income Plan for Certain Salaried Employees. 2. Rockwell International Corporation Retirement Income Plan For Salaried Employees in Certain Units of the General Industries Operations. 3. Rockwell International Corporation Retirement Income Plan for Certain Salaried Employees of the General Industries Operations. 4. Rockwell International Corporation Salaried Employees' Retirement Plan - Electronics Operations. 5. Rockwell International Corporation Retirement Plan for Eligible Employees on the Salary and Weekly Payrolls of Electronics Operations, North American Aircraft Operations and North American Space Operations. 6. Maine Electronics Inc. Salary Payroll Retirement Plan. 7. Rockwell Telecommunications, Inc. (formerly Wescom) Retirement Plan for Exempt Salaried Employees. 8. Retirement Plan for Hourly-Rated Employees of the Sulphur Springs, Texas Plant. 9. Asheville Employees Retirement Savings Plan, Truck Axle Division. - 64 - 70 Appendix B Procedures, Terms, and Conditions of Loans ELIGIBILITY FOR LOANS. The individuals eligible to obtain loans from the Plan ("Borrowers") are limited to: (1) Employees, and (2) non-Employees who are "parties in interest" (as defined in section 3(14) of ERISA) who have Plan Account balances. An Employee who wishes to obtain a loan must be employed on an active payroll of the Company or an Affiliate or Subsidiary at the time of the loan application. A party in interest who is not an Employee will be eligible to obtain a loan only if an agreement can be provided by the party's current employer to deduct and remit the required loan repayments to the Plan. LIMITATION ON NUMBER AND MINIMUM AMOUNT OF LOANS. Only one loan to a Borrower is permitted to be outstanding from all Company sponsored savings plans at any one time. Any Borrower who has an outstanding loan from the Plan will be required to repay that loan in full before applying for another loan. Each loan which is approved must be for a minimum of $1,000. MAXIMUM AMOUNT OF LOAN. The amount which a Borrower will be permitted to borrow from the Plan is based on the aggregate value of the Borrower's Accounts, determined in accordance with section 6.4 of the Plan, and may not exceed the least of the amounts described in subsections (a), (b) and (c) of section 9.6 of the Plan. The maximum amount of any loan will be further limited to ensure that, after applying the appropriate interest rate and taking into account all applicable deductions, the resulting periodic repayments will not exceed the Borrower's net earnings. The deductions referred to in the preceding sentence include statutory withholdings, deductions for employee benefits and all pre-tax contributions to the Plan, but exclude credit union, savings bond, charitable contribution and other similar deductions. LOAN APPLICATIONS. Loan applications by prospective Borrowers will be made via telephone to the Plan Administrator or such third party administrator as may be designated by the Plan Administrator (either of whom is hereafter referred to as the "Loan Administrator"). The Loan Administrator will then review the telephonic application and determine eligibility for the loan. If the loan is approved, the Loan Administrator will prepare and forward to the Borrower a letter notifying the Borrower of the approval, together with a Truth in Lending Statement and a check for the loan amount, all in the form approved by the Plan Administrator. The Borrower's endorsement of the loan check will be considered to be the Borrower's agreement to the terms of the loan. Failure by the Borrower to endorse the check within 30 days after the date of the check will be deemed to be a withdrawal by the Borrower of the loan application. - 65 - 71 SOURCE OF LOAN FUNDS. Each loan will be funded by withdrawing the required amounts from the Plan Account(s) of the Borrower in the following order: First -- from the Borrower's Supplemental Deferral Account; Second -- from the Borrower's Compensation Deferral Account; Third -- from the Borrower's Supplemental Deduction Account; and Fourth -- from the Borrower's Compensation Deduction Account. Subject to the provisions of the following paragraph, the loan amount will be funded by the Borrower's Investment Funds in the applicable Accounts, in a pro rata fashion, based upon the relative size of the balance of each such Fund in the Accounts. Alternatively, a Borrower may elect to have the loan funded first from the Borrower's interest in Stock Fund B, with any additional funding to be on a pro rata basis from the remaining Investment Funds. Any pro rata loan funding from the Borrower's interest in the Guaranteed Return Fund will be taken in reverse sequence by accessing the Fund's contracts on a last-in first-out basis. To the extent a loan is made against the Borrower's Stock Fund B Account, the Borrower will receive cash in lieu of shares of Common Stock. The Trustee will not be permitted to sell shares of Common Stock in order to provide the cash with which to finance loan applications. If, at any time, the Trustee does not have sufficient cash on hand to finance all outstanding loan applications, processing of each application for which sufficient cash is not available will be deferred until sufficient cash becomes available to process such loans on a first-come, first-serve basis. DETERMINATION OF LOAN INTEREST RATE. The interest rate to be charged for loans will be 1% over the prime rate, which is defined for this Appendix as the base rate on corporate loans posted by at least 75% of the largest 30 U.S. banks, as such rate is identified in the edition of The Wall Street Journal published on the last business day of the month prior to the approval of a loan. TERM OF LOANS. Loans will be permitted for terms of 12, 24, 36, 48 or 60 months for loans other than those for the purpose of purchasing a primary residence, which will be permitted for a term of 120 months. REPAYMENTS. Loan repayments by Employees will be deducted from the Employee's pay check each pay period. If a pay check is insufficient to cover the full amount of the loan repayment, no deduction will be made, and the repayment will be deducted from the Employee's next pay check. Loan repayment schedules for Borrowers who are not Employees will be developed on an individual basis, but will parallel as closely as possible the loan repayment schedules for Employees. - 66 - 72 PREPAYMENTS. The full unpaid balance of a loan may be prepaid at any time by a Borrower. Partial prepayments in excess of scheduled payroll deductions will not be accepted. No prepayments will be accepted within 12 months after the date of the loan, unless the Borrower is an Employee and terminates employment within such 12 month period. MISSED PAYMENTS. If any payment is not made, interest will continue to accrue on such missed payment and subsequent payments will be applied first to accrued and unpaid interest on the missed payment and then to principal. A notice will be mailed to the last known address of the Borrower stating that if three consecutive months of payments are missed, the loan will be considered to be in default. TERMINATION OF EMPLOYMENT. If a Borrower who is an Employee terminates employment or is on an unpaid leave of absence, or if a Borrower who is not an Employee is no longer able to repay a loan through payroll deductions, the Borrower may continue to make loan repayments by personal check. Such repayments to the Plan will be made through the Loan Administrator at an address to be provided to the Borrower by the Loan Administrator. DEFAULT. A loan will be considered to be in default after three consecutive months of payments have been missed during the term of the loan or when a Borrower revokes a payroll deduction authorization. In the event of such a default, a distribution of the loan amount, including both unpaid principal and accrued but unpaid interest, will be deemed to have occurred (as described in section 1.401(k)-1(d)(6)(ii) of the Treasury Regulations) and an information return reflecting the tax consequences, if any, to the Borrower will be issued. Upon the occurrence of an event permitting actual distribution of the Borrower's Account pursuant to the provisions of Code Section 401(k) (whether distribution of the Borrower's entire Plan Account will actually be made or will be deferred pursuant to applicable provisions of the Plan), the unpaid balance of a defaulted loan will be charged off against the Borrower's Account. If no distribution event has occurred, which would otherwise permit payment to the Borrower under Code Section 401(k), the unpaid balance of the loan will be retained in the Account until such time as payment would be permitted under that Code Section, at which time the unpaid balance of the loan, including any accrued and unpaid interest, will be charged off against the Borrower's Account. - 67 - EX-99.2 5 NORTH AMERICAN SAVINGS PLAN FOR CERTAIN EMPLOYEES 1 Exhibit 99.2 BOEING NORTH AMERICAN SAVINGS PLAN FOR CERTAIN EMPLOYEES November 15, 1996 051_BOEA0A_96.doc 2 Table of Contents
Page ---- Introduction 1 Article 1 -- Definitions..........................................................................................2 1.1 Accounts...............................................................................................2 1.2 Affiliate or Subsidiary................................................................................2 1.3 Authorized Period of Absence...........................................................................2 1.4 Beneficiary............................................................................................2 1.5 Boeing Company Stock Fund..............................................................................3 1.6 Code...................................................................................................3 1.7 Common Stock...........................................................................................3 1.8 Common Unit............................................................................................3 1.9 Company................................................................................................3 1.10 Company Contributions Account.........................................................................3 1.11 Company Matching Contributions........................................................................3 1.12 Compensation..........................................................................................3 1.13 Compensation Deduction Account........................................................................4 1.14 Compensation Deduction Contributions..................................................................4 1.15 Compensation Deferral Account.........................................................................4 1.16 Compensation Deferral Contributions...................................................................4 1.17 Controlled Group......................................................................................4 1.18 Effective Date........................................................................................4 1.19 Eligible Employee.....................................................................................4 1.20 Employee..............................................................................................5 1.21 ERISA.................................................................................................5 1.22 Highly Compensated Eligible Employee..................................................................5 1.23 Highly Compensated Employee...........................................................................5 1.24 Hour of Service.......................................................................................7 1.25 Investment Fund.......................................................................................9 1.26 Investment Manager....................................................................................9 1.27 Layoff................................................................................................9 1.28 Member................................................................................................9 1.29 Military Service......................................................................................9 1.30 Newark Member.........................................................................................9 1.31 One-Year Break in Service.............................................................................9 1.32 Parent................................................................................................9 1.33 Plan..................................................................................................9 1.34 Plan Administrator...................................................................................10 1.35 Plan Year............................................................................................10 1.36 Reemployment Date....................................................................................10 1.37 Stable Value Fund....................................................................................10
- i - 3 1.38 Shreveport Member....................................................................................10 1.39 Termination of Employment............................................................................10 1.40 Total Disability.....................................................................................10 1.41 Total Earnings.......................................................................................10 1.42 Trust Agreement......................................................................................11 1.43 Trust Fund...........................................................................................11 1.44 Trustee..............................................................................................11 1.45 Unit.................................................................................................11 1.46 Valuation Date.......................................................................................11 1.47 Vesting Service......................................................................................11 Article 2 -- Membership..........................................................................................13 2.1 Entry Date............................................................................................13 2.2 Application for Membership............................................................................13 Article 3 --Contributions........................................................................................14 3.1 Compensation Deferral Contributions...................................................................14 3.2 Compensation Deduction Contributions..................................................................14 3.3 Deferral and Deduction Elections......................................................................15 3.4 Company Contributions.................................................................................17 3.5 Return of Company Contributions.......................................................................17 3.6 Contributions for Military Service....................................................................17 3.7 Testing Compensation Deferral Contributions for Discrimination........................................17 3.8 Testing Compensation Deduction Contributions and Company Matching Contributions for Discrimination....20 3.9 Testing Aggregate Contributions for Discrimination....................................................21 3.10 Aggregation Rules for Discrimination Testing.........................................................23 Article 4 -- Investment of Contributions.........................................................................25 4.1 Investment Election...................................................................................25 4.2 Changes in Investment Elections.......................................................................25 4.3 Transfer of Investments...............................................................................25 4.4 Independent Control...................................................................................27 Article 5 -- Trust Agreement.....................................................................................28 5.1 Establishment of Trust Fund...........................................................................28 5.2 Investment Funds......................................................................................28 5.3 Voting Rights.........................................................................................29 5.4 Tender Offer.........................................................................................29 5.5 Trust Agreement.......................................................................................30 5.6 Rights in the Trust Fund..............................................................................30 Article 6 -- Maintenance of Members' Accounts....................................................................31 6.1 Accounts Maintained...................................................................................31 6.2 Crediting Units to Accounts...........................................................................31
- ii - 4 6.3 Units Valuations......................................................................................31 6.4 Balance of Member's Accounts..........................................................................32 6.5 Member Account Statements.............................................................................32 Article 7 -- Retirement..........................................................................................33 7.1 Eligibility...........................................................................................33 7.2 Lump Sum Distribution.................................................................................33 7.3 Installment Form of Payment...........................................................................33 7.4 Limitations on Payment Date...........................................................................34 7.5 Manner of Distribution................................................................................35 Article 8 -- Termination or Death................................................................................37 8.1 Vesting...............................................................................................37 8.2 Distribution Upon Termination.........................................................................37 8.3 Distribution Upon Death...............................................................................38 8.4 Amount of Distribution................................................................................38 8.5 Employees of Divested Components......................................................................39 8.6 Forfeitures...........................................................................................40 8.7 Repayment After Reemployment..........................................................................40 Article 9 -- Withdrawals and Loans...............................................................................41 9.1 Withdrawals from Accounts by Members under Age 59 1/2.................................................41 9.2 Withdrawal from Accounts by Members Over Age 59 1/2...................................................41 9.3 Forfeitures and Limitation on Withdrawals.............................................................42 9.4 Allocation of Withdrawals Among Investment Funds......................................................43 9.5 Hardship Withdrawals from Compensation Deferral Accounts..............................................44 9.6 Loans.................................................................................................46 Article 10 -- Termination of Plan................................................................................47 10.1 Termination of Plan..................................................................................47 10.2 Procedures Upon Termination of Plan..................................................................47 Article 11 -- Top Heavy Provisions...............................................................................48 11.1 Top-Heavy Plan.......................................................................................48 11.2 Definition of Terms..................................................................................48 11.3 Modification of Vesting Schedule.....................................................................50 11.4 Minimum Contribution.................................................................................51 11.5 Modification of Maximum Contribution.................................................................51 11.6 Collective Bargaining Agreements.....................................................................51 Article 12 -- Administration of Plan.............................................................................52 12.1 Administration.......................................................................................52 12.2 Records..............................................................................................53 12.3 Payment of Expenses..................................................................................53 12.4 Delegation of Authority..............................................................................53
- iii - 5 12.5 Information Available................................................................................53 12.6 Appeal Procedure.....................................................................................53 12.7 Fiduciary Capacity...................................................................................54 12.8 Committee Liability..................................................................................54 Article 13 -- General Provisions.................................................................................55 13.1 Amendment of Plan....................................................................................55 13.2 Qualification........................................................................................55 13.3 Employment Status....................................................................................55 13.4 Mergers or Consolidations............................................................................55 13.5 Provision Against Anticipation.......................................................................56 13.6 Facility of Payment..................................................................................56 13.7 Construction.........................................................................................56 13.8 Legal Actions........................................................................................56 13.9 Limitations on Contributions.........................................................................56 13.10 Qualified Domestic Relations Order..................................................................58 13.11 Pronouns............................................................................................58 13.12 Eligible Rollover Distribution......................................................................59 Appendix A -- Procedures, Terms, and Conditions of Loans.........................................................61
- iv - 6 Introduction The Boeing North American Savings Plan for Certain Employees is effective on the closing date of the merger involving Rockwell International Corporation and Boeing NA, Inc. On this date, most Rockwell Aerospace and Defense business employees became employees of Boeing North American, Inc. Except as specifically provided in the Plan, the rights and benefits of any Member who terminates or retires prior to the effective date of any amendment to the Plan will be determined pursuant to the provisions of the Plan in effect on the earlier of his date of retirement or termination. The purpose of the Plan is to provide Eligible Employees with a means of making regular savings to provide additional security for their retirement. As an incentive, the Plan provides for Company matching contributions. It is intended that the Plan qualify as a profit sharing plan under the Internal Revenue Code of 1986 and comply with the Employee Retirement Income Security Act of 1974 and any amendments to said Code or Act. - 1 - 7 Article 1 Definitions 1.1 Accounts means the Company Contributions Account, Compensation Deferral Account, and Compensation Deduction Account maintained for each Member, as applicable. 1.2 Affiliate or Subsidiary means a member of a controlled group of corporations (as defined in Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C)), a group of trades or businesses (whether incorporated or not) which are under common control within the meaning of Code Section 414(c), or an affiliated service group (as defined in Code Sections 414(m) or 414(o)) of which The Boeing Company is a part. With respect to the Limitation on Contributions described in 13.9, in determining whether a corporation is a member of a controlled group of corporations the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in Code Section 1563(a)(1). 1.3 Authorized Period of Absence means an absence authorized by the Company for one or more of the following reasons: (a) Layoff not to exceed six years duration. (b) Approved leave of absence. (c) Jury duty. (d) Labor-management dispute. (e) Military Service as defined in section 1.29. (f) Illness or injury, including disability. Any discretion of the Company under the provisions of this definition will be exercised without discrimination and in accordance with definitely established rules uniformly applicable to Employees or Members whose approved periods of absence were occasioned by similar circumstances. 1.4 Beneficiary means the one or more persons or trusts designated by a Member to receive any benefit payable from the Plan upon the death of the Member. Each Member may designate a beneficiary; provided, however, if the Member has been married for a one year period and is survived by his spouse (or a former spouse to the extent provided under a qualified domestic relations order as described in Code Section 414(p)), he will be deemed to have designated such spouse as his Beneficiary unless he has designated a different Beneficiary in writing and his spouse has consented to this designation. The spouse's consent must be in writing, must acknowledge the effect of the designation, and must be witnessed by a Plan representative or a notary public. The requirement for spouse's consent will be waived if the Member establishes to the satisfaction of the Plan - 2 - 8 Administrator that such consent cannot be obtained because there is no spouse, the spouse cannot be located, or because of such other circumstances as the Secretary of the Treasury may by regulations prescribe. The spouse's consent (or waiver of consent where the spouse cannot be located) will be valid only with respect to that spouse. If no designation is filed with the Plan Administrator or if the designated Beneficiary does not survive the Member, the Member shall be deemed to have designated the following as Beneficiaries and contingent Beneficiaries with priority in the order named. (a) Surviving spouse, if none then to (b) Children in equal shares, if none then to (c) Any other relative of the Member designated by the Plan Administrator or to the Member's estate. 1.5 Boeing Company Stock Fund means the Investment Fund described in section 5.2(e). 1.6 Code means the Internal Revenue Code of 1986, as amended. 1.7 Common Stock means common stock of The Boeing Company 1.8 Common Unit means a Unit of the Boeing Company Stock Fund which is attributable to Common Stock. 1.9 Company means Boeing North American, Inc., a Delaware corporation, and any other entity to which the Board of Directors has extended this Plan. 1.10 Company Contributions Account means the Account maintained for each Shreveport Member which is credited with the Member's share of Company Matching Contributions and investment earnings allocable to such Account. 1.11 Company Matching Contributions means the amount contributed to the Plan by the Company on behalf of the Member in accordance with section 3.4. 1.12 Compensation means a Member's base compensation from the Company including regular, straight-time base pay, gainsharing payments, any annual lump sum payments which have been negotiated with a collective bargaining unit, lump sum payments for unused vacation and any amount which would have been paid to the Member absent an election under section 3.1(a) or (b) or an election to make elective employer contributions pursuant to a cafeteria plan meeting the requirements of Code Section 125. Compensation will not include overtime, extended workweek compensation, night work or other premium pay, bonuses, any form of extra, contingent, or supplementary compensation or, in the case of Shreveport Members, compensation on the salaried payroll. Compensation is limited to amounts which would have been received by a Member in a Plan Year (but for a deferral election) or to amounts which are attributable - 3 - 9 to services performed by the Member in the Plan Year which would have been received within two and one-half months after the close of the Plan Year (but for a deferral election). Compensation shall not exceed $150,000 for 1994. On January 1 of each calendar year in which the Secretary of the Treasury prescribes a new dollar limit, this $150,000 limit will automatically be adjusted to that new limit. Compensation for the Plan Year commencing on the Effective Date and ending December 31, 1996 shall not exceed $12,500. For Plan Years beginning before January 1, 1997, this limit applies to the combined Compensation of a 5% owner (as defined in Code Section 416(i)(1)(A)(iii)) of the Company, or one of the 10 Highly Compensated Employees paid the greatest amount of Total Earnings during the year, and such individual's spouse and any lineal descendants who are not yet age 19 before the close of the Plan Year, to the extent required by Code Section 401(a)(17). If the limit applies to combined Total Earnings, the limit will be allocated to the affected individuals in proportion to each individual's Compensation determined prior to the application of the limit. 1.13 Compensation Deduction Account means the Account, if any, maintained for each Member which is credited with the Member's Compensation Deduction Contributions and investment earnings allocable to such Account. 1.14 Compensation Deduction Contributions means the amount contributed to the Plan by the Member through payroll deductions pursuant to section 3.2. 1.15 Compensation Deferral Account means the Account, if any, maintained for each Member which is credited with the Member's Compensation Deferral Contributions and investment earnings allocable to such Account. 1.16 Compensation Deferral Contributions means the amount contributed to the Plan by the Company on behalf of the Member in accordance with the Member's election pursuant to section 3.1. 1.17 Controlled Group means the Parent, the Company and any Affiliate or Subsidiary. All employees of the Controlled Group will be treated as employed by a single employer for purposes of applying the provisions of qualification of the Plan; of minimum participation standards of the Plan; of minimum vesting standards of the Plan; and of limitations on contributions under the Plan. 1.18 Effective Date means the closing date of the merger involving Rockwell International Corporation and Boeing NA, Inc. (_____________________________). 1.19 Eligible Employee means any Employee who is: (a) employed at the Company's Guidance and Repair Center at Newark Air Force Base, Ohio; or - 4 - 10 (b) employed at Shreveport, Louisiana, as an hourly paid employee. 1.20 Employee means any person employed by any member of the Controlled Group. Employee includes, to the extent permitted by Code Section 406, any United States citizen regularly employed by a foreign subsidiary or affiliate of the Company. The term Employee shall not include: (a) a person who serves the Company only as a Director and is not otherwise employed by the Company; (b) a person engaged only in an advisory or consulting capacity on a retained or fee basis; (c) any person compensated by special fees or pursuant to a special contract or arrangement or on a commission basis who is not otherwise employed by the Company; (d) a person engaged only in a capacity which, in the sole discretion of the Plan Administrator, is determined to be an independent contractor; (e) a person who is a leased employee (within the meaning of Code Section 414(n)) except that a leased employee will be treated as an employee of the Company to the extent required by law and any contributions or benefits provided by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer; or (f) any person whose services for the Company are not paid for through the Company's payroll department. 1.21 ERISA means the Employee Retirement Income Security Act of 1974, as amended. 1.22 Highly Compensated Eligible Employee means an Eligible Employee who is a Highly Compensated Employee. 1.23 Highly Compensated Employee means: (a) For Plan Years beginning before January 1, 1997, any Employee who performs services for the Controlled Group during the determination year and who, during the look-back year: (1) received Total Earnings in excess of $75,000 (as adjusted by the Secretary of the Treasury for the relevant year), (2) received Total Earnings in excess of $50,000 (as adjusted by the Secretary of the Treasury for the relevant year) and was a member of the top-paid group for such year, or - 5 - 11 (3) was an officer (within the meaning of Code Section 416(i)) of the Controlled Group and received Total Earnings during such year that were greater than 50% of the dollar limitation in effect under Code Section 415(b)(1)(A). (b) For Plan Years beginning before January 1, 1997, any Employee who is both (i) described in (a) above if the term "determination year" is substituted for the term "look-back year" and (ii) is one of the 100 Employees who received the most Total Earnings from the Controlled Group during the determination year. (c) For Plan Years beginning after December 31, 1996, any Employee who performs services for the Controlled Group during the determination year and who, during the look-back year received Total Earnings in excess of $80,000 (as adjusted by the Secretary of the Treasury for the relevant year). (d) Any Employee who is a 5% owner (as defined in Code Section 416(i)(1)(A)(iii)) of the Company at any time during the look-back year or the determination year. (e) Any former Employee who was a Highly Compensated Employee for a separation year (as defined in Treasury Regulation section 1.414(q)-1T) or for any determination year ending on or after the Employee attains age 55, as provided by Code Section 414(q)(9), as in effect on December 31, 1996, and the regulations thereunder. (f) For Plan Years beginning before January 1, 1997, if no officer has satisfied the compensation requirement in (a)(3) above during either a determination year or look-back year, the highest paid officer for such determination year shall be treated as a Highly Compensated Eligible Employee if such officer is an Eligible Employee. No more than 50 Employees (or if less, the greater of three Employees or 10% of the Employees) shall be treated as officers. (g) For purposes of this section the following definitions apply. The determination year is the Plan Year. The look-back year is the 12-month period immediately preceding the determination year; provided, however, for the Plan Year commencing on the Effective Date and ending December 31, 1996, the look-back year is the 1996 calendar year. The top-paid group is the top 20% of Employees ranked on the basis of compensation received during the year and shall be determined in accordance with Code Section 414(q)(8), as in effect on December 31, 1996, and the regulations thereunder. (h) For Plan Years beginning before January 1, 1997, any Employee who is a 5% owner or one of the 10 highly compensated employees in the Controlled Group paid the greatest amount of Total Earnings during the Plan Year and such Employee's spouse, lineal ascendants or descendants and the spouses of such - 6 - 12 lineal ascendants or descendants shall be treated as a single Employee for purposes of this section. 1.24 Hour of Service means: (a) each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Company (hours worked at a premium rate shall be credited as straight-time hours). (b) each hour credited in accordance with subsection (i) for any of the following absences, provided that at the time of commencement of the absence, the Member is an Eligible Employee: (1) absence from work, up to a maximum of two years, because of injury or illness sustained in the course of employment with the Company and with respect to which the Member receives workmen's compensation benefits and during which he would normally have been scheduled to work for the Company as an Eligible Employee; (2) absence from work pursuant to an authorized sick leave; (3) absence from work for paid vacation or paid holiday(s) not worked; (4) absence from work for a period during which the Member is serving as a juror (5) absence from work for a period for which the Member is on an authroized leave of absence for union business; (6) absence from work for a period during which the Member is required by the Armed Forces of the United States for military training or emergency duty; (7) absence from work for a paid funeral or bereavement leave; (8) absence from work for a period during which the Member is on authorized personal leave; (9) absence from work for a period during which the Member is on layoff status; and (10) absence from work for a period during which the Member is on an authorized educational leave. (c) each hour for which an Employee is paid his regular hourly rate by the Company for a period of absence that is not described in subsection (b); provided, however, - 7 - 13 that an Employee shall not be credited with more than 501 Hours of Service under this sentence for any continuous period during which he performs no duties for the Company. (d) each hour not otherwise credited under the Plan for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Company. (e) each hour credited for absence from work by an Eligible Employee who may be elected or appointed to governmental office requiring him to be absent from duty with the Company; provided, however, that a written opinion of counsel is obtained in advance that granting such credit in a specific circumstance, and its acceptance by the Member, does not violate any federal, state, or local law. (f) Hours of Service will be credited for employment with other members of an affiliated service group, a controlled group of corporations, or a group of trades or businesses under common control of which the Company is a member. (g) Hours of Service will also be credited for any individual considered an employee under Code Section 414(n). (h) Solely for purposes of determining whether a One-Year Break in Service has occurred, an Employee who is absent from work shall receive credit for up to 501 Hours of Service which would have been credited to the Employee but for such absence if the absence is (1) because of the Employee's pregnancy, (2) because of the birth of the Employee's child, (3) because of the placement of a child with the Employee in connection with the adoption of such child by such Employee, (4) for purposes of caring for such child for a period beginning immediately following such birth or placement, or (5) because of leave required by the Family Medical Leave Act. Where such hours cannot be determined, eight Hours of Service per day of such absence shall be used. The Hours of Service credited under (1), (2), (3), or (4) of this subsection will be credited in the computation period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period. In all other cases, Hours of Service credited under (1), (2), (3), or (4) of this subsection will be credited in the following computation period. (i) For purposes of determining the number of Hours of Service to which an Eligible Employee may be entitled pursuant to subsection (b) with respect to any period of absence for which he is not paid his regular hourly rate of compensation by the Company, the Eligible Employee shall receive 174 Hours of Service for each full month of such absence, prorated on a daily basis at the rate of eight Hours of Service per day, not to exceed 40 Hours of Service per week; and with respect to any period of absence for which the Eligible Employee is paid his regular hourly rate of compensation by the Company, Hours of Service shall be determined by dividing the payments received by or due to the Eligible Employee for such period by his regular hourly rate of compensation. For purposes other than - 8 - 14 subsection (b), the crediting of Hours of Service under this Plan will be applied under the rules of paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2 which, by this reference, is specifically incorporated in full within this Plan. 1.25 Investment Fund has the meaning specified in section 5.2. 1.26 Investment Manager means any fiduciary (other than a Trustee, The Boeing Company or the Plan Administrator): (a) which has the power to manage, acquire, or dispose of any assets of the Plan; and (b) which (1) is registered as an investment adviser under the Investment Advisers Act of 1940, or (2) is a bank, as defined in that Act, or (3) is an insurance company qualified to perform services described in item (a) above under the laws of more than one state; and (c) which has acknowledged in writing that it is a fiduciary with respect to the Plan. 1.27 Layoff means an involuntary severance of employment, other than a discharge for cause. 1.28 Member means any Eligible Employee who has become a Member in the Plan as provided in Article 2. 1.29 Military Service means the period of time during which a person is absent from active work for the Company or any member of the Controlled Group serving as a member of the Armed Forces of the United States in time of war or other emergency or under the laws of conscription in time of peace. Military Service includes time when such person has a right to reemployment at his former position or a substantially similar position upon his separation from such Military Service, and such period of time, not exceeding ninety days, immediately following such Military Service as such person remains absent from active work for the Company or any member of the Controlled Group. 1.30 Newark Member means an Eligible Employee employed at the Company's Guidance and Repair Center at Newark Air Force Base, Ohio, who has become a Member in the Plan pursuant to Article 2. 1.31 One-Year Break in Service means a calendar year during which the Member fails to complete more than 500 Hours of Service. 1.32 Parent means The Boeing Company and any successor by change of name, merger, purchase of stock or purchase of assets. 1.33 Plan means the Boeing North American Savings Plan for Certain Employees. - 9 - 15 1.34 Plan Administrator means the Voluntary Investment Plan Committee established by The Boeing Company Board of Directors. 1.35 Plan Year means the period commencing on the Effective Date and concluding on the December 31 next following the effective date, and each calendar year thereafter. 1.36 Reemployment Date means the first day following a Period of Severance on which an Employee performs an Hour of Service for the Company or an Affiliate or Subsidiary. 1.37 Stable Value Fund means the Investment Fund described in section 5.2(c). 1.38 Shreveport Member means an Eligible Employee who is employed at Shreveport, Louisiana, as an hourly paid employee and who has become a Member in the Plan pursuant to Article 2. 1.39 Termination of Employment means cessation of employment with the Company or any member of the Controlled Group due to: (a) the date on which an Employee quits, retires, is discharged or dies, and (b) failure to return to work upon the expiration of any Authorized Period Of Absence from the Company or any member of the Controlled Group, in which event cessation of active work will be deemed to have occurred at the time such Authorized Period of Absence expired. (c) An Employee who is on leave of absence for uniformed service as defined in the Uniformed Services Employment and Reemployment Rights Act shall not be deemed to have a Termination of Employment unless he fails to return to work during the time he has reemployment rights under the law. If such employee fails to return to work within such time, his Termination of Employment will be the first anniversary of the first day of the period of his absence from employment. 1.40 Total Disability means a physical or mental disability lasting at least six months, which wholly prevents the Member from performing the duties of his occupation or other appropriate work made available to him by the Company. The condition of Total Disability will be determined by the Plan Administrator through the application of procedures which are uniformly applied and which do not discriminate in favor of any class or classes of individuals. 1.41 Total Earnings means compensation used in determining the actual deferral percentage and the actual contribution percentage. Total Earnings is equal to compensation received by the Employee from the Company, other than compensation in the form of qualified or previously qualified deferred compensation, that is currently includible in gross income for income tax purposes. Total Earnings also includes all elective contributions made by the Company on behalf of the Employee that are not includible in gross income of the Employee under Code Sections 125 or 402(e)(3). - 10 - 16 Total Earnings shall not exceed $150,000 for 1994. On January 1 of each calendar year in which the Secretary of the Treasury prescribes a new dollar limit, this $150,000 limit will automatically be adjusted to that new limit. Compensation for the Plan Year commencing on the Effective Date and ending December 31, 1996 shall not exceed $12,500. For Plan Years beginning before January 1, 1997, this limit applies to the combined Total Earnings of a 5% owner (as defined in Code Section 416(i)(1)(A)(iii)) of the Company, or one of the 10 Highly Compensated Employees paid the greatest amount of Total Earnings during the Plan Year, and such individual's spouse and any lineal descendants who are not yet age 19 before the close of the Plan Year, to the extent required by Code Section 401(a)(17). If the limit applies to combined Total Earnings, the limit will be allocated to the affected individuals in proportion to each individual's Total Earnings determined prior to the application of the limit. 1.42 Trust Agreement means the instrument or instruments executed between the Company and the Trustee named in it, which provides for the receiving, holding, investing, and disposing of the Trust Fund. 1.43 Trust Fund means the fund established by the Trust Agreement, including the earnings thereon, held by the Trustee for all contributions made by Members and the Company pursuant to the Plan. 1.44 Trustee means the trustee or trustees designated in the Trust Agreement, and any successor Trustee. 1.45 Unit means the applicable participation unit under the Trust Fund used to measure the Member's proportionate interest in the Trust Fund as provided in Article 6. 1.46 Valuation Date means the last business day of each month or such other business day as the Plan Administrator may determine. 1.47 Vesting Service shall be determined as follows: (a) For each calendar year in which an Employee completes 1,000 Hours of Service, he shall be credited with one year of Vesting Service. (b) For each calendar year in which an Employee completes less than 1000 Hours of Service but more than 500 Hours of Service he shall accrue 1/12th of a Year of Vesting Service for each 80 of such Hours of Service, computed to the nearest 1/12th. (c) For each calendar year in which an Employee completes 500 or fewer Hours of Service no Vesting Service shall be credited. (d) Subject to the provisions of subsection (e) below, all calendar years in which the Employee has accrued a whole or fractional year of Vesting Service, whether or not continuous, shall be counted in computing Vesting Service. - 11 - 17 (e) If an Employee who has not completed five years of Vesting Service incurs a One-Year Break in Service, Vesting Service will not include: (1) service prior to a One-Year Break in Service that is not followed by a calendar year in which the Employee accrued a full or fractional year of Vesting Service (2) service prior to five or more consecutive One Year Breaks in Service. (f) For any person who is an Eligible Employee on the Effective Date (including an active employee, an employee on layoff status, or an employee on leave of absence) service with Rockwell International Corporation and related employers that is recognized as vesting service under the Rockwell Retirement Savings Plan for Certain Employees shall be deemed to be Vesting Service for purposes of this Plan. - 12 - 18 Article 2 Membership 2.1 Entry Date (a) Each Eligible Employee on the Effective Date who was eligible to participate in the Rockwell Retirement Savings Plan for Certain Employees immediately prior to the Effective Date may elect to become a Member of the Plan on the Effective Date or at any time thereafter. (b) An Eligible Employee who is not described in (a) may elect to become a Member at any time after he has completed 52 weeks of employment with the Company or an Affiliate or Subsidiary. 2.2 Application for Membership An election to participate shall be made in the manner prescribed by the Plan Administrator, including completion of such form(s) as the Plan Administrator may prescribe. The election to participate shall be effective as soon as practicable, but in no event later than the first payroll payment date that is at least 15 days after the date the election is made. By making an election to participate, an Eligible Employee shall agree to the terms and conditions of this Plan. - 13 - 19 Article 3 Contributions 3.1 Compensation Deferral Contributions (a) A Newark Member may elect to defer receipt of a portion of his Compensation and have the Company contribute such deferral to the Plan on his behalf as a Compensation Deferral Contribution. The amount of this deferral must be between one and 11 percent (in whole percentage increments) of the Member's Compensation. (b) A Shreveport Member may elect to defer receipt of a portion of his Compensation and have the Company contribute such deferral to the Plan on his behalf as a Compensation Deferral Contribution. The amount of this deferral must be between one and ten percent (in whole percentage increments) of the Member's Compensation. (c) A Member's Compensation Deferral Contributions in one calendar year, when added to the Member's other Elective Deferrals for such year, may not exceed $7,000 (adjusted for cost of living changes under Code Section 402(g)). For purposes of this section, "Elective Deferrals" means the sum of all elective contributions made pursuant to a Member's deferral election under another plan or arrangement described in Code Sections 401(k), 408(k) or 403(b). Compensation Deferral Contributions in excess of this limit and investment earnings on such contributions (including gains and losses) shall be returned to the Member in accordance with the provisions of Code Section 402(g), the regulations thereunder, and other applicable rules and regulations. A Member's Compensation Deferral Contributions in excess of this limit for a calendar year and investment earnings (including gains and losses) thereon may be distributed to the Member during the same calendar year if (1) the Member and the Plan Administrator designate the distribution as an excess Elective Deferral and (2) the distribution is made after the date the Plan received the excess contribution. If a Member notifies the Plan Administrator in writing no later than March 1 (or April 15 if the Plan Administrator waives the deadline) following a calendar year that the Member's Compensation Deferral Contributions exceeded the limit under Code Section 402(g) (as adjusted) for such year, the Plan Administrator may, in its discretion, distribute the amount specified by the Member and investment earnings on such amount (including gains and losses) no later than April 15 following such year. 3.2 Compensation Deduction Contributions (a) A Newark Member who has not elected to defer receipt of a portion of his Compensation pursuant to section 3.1(a) may authorize to be deducted from his - 14 - 20 Compensation, as paid, an amount which shall be contributed to the Plan as a Compensation Deduction Contribution. The amount of this deduction must be between one and 11 percent (in whole percentage increments) of the Member's Compensation; provided. (b) A Shreveport Member who has not elected to defer receipt of a portion of his Compensation pursuant to section 3.1(b) may authorize to be deducted from his Compensation, as paid, an amount which shall be contributed to the Plan as a Compensation Deduction Contribution. The amount of this deduction must be between one and ten percent (in whole percentage increments) of the Member's Compensation; provided. 3.3 Deferral and Deduction Elections (a) The Plan Administrator shall prescribe procedures for an Eligible Employee to apply for membership and to elect to have Compensation Deferral Contributions made on his behalf pursuant to section 3.13.1 or to authorize Compensation Deduction Contributions pursuant to section 3.2. Such an election shall first apply to Compensation received on the first payroll payment date that is at least 15 days after the date the election is made. (b) A Member may from time to time change the rate of his Compensation Deferral Contributions or Compensation Deduction Contributions by making a new election in the manner prescribed by the Plan Administrator. Such change shall be effective as soon as is reasonably possible after his election, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to his election. (c) A Member who has an authorization in effect to make Compensation Deduction Contributions may revoke such authorization and at the same time elect to commence Compensation Deferral Contributions. Such revocation and election shall be effective as soon as reasonably possible after his election, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to his election. (d) A Member who has made an election to have Compensation Deferral Contributions made on his behalf may revoke such election and at the same time authorize Compensation Deduction Contributions to commence effective with the first payroll payment date in April or October by giving the Plan Administrator prior notice thereof. (e) A Member may, at any time, revoke his election to have Compensation Deferral Contributions made on his behalf or his authorization to make Compensation Deduction Contributions. Such revocation will be effective as soon as reasonably - 15 - 21 possible, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to his revocation. (f) A Member who has voluntarily suspended contributions under section 3.3(e) may elect to have contributions resumed, effective as soon as reasonably possible after his election, but, in general, no later than the first payroll payment date that is at least 15 days subsequent to such election. (g) A Member's election to have Compensation Deferral Contributions made on his behalf or his authorization to make Compensation Deduction Contributions shall remain in effect until a new election or authorization is made, except as provided in (1) and (2) below. (1) No contributions (including Company Matching Contributions) shall be made by, or on behalf of, any Member after any of the following events, until the Member again makes an election that is effective under section 2.2 and section 3.3(a): (A) the Member ceases to be an Eligible Employee; (B) the Member receives a distribution under section 7.2, 7.3, or 8.2; or (C) the Member voluntarily elects to have contributions suspended under section 3.3(e). (2) No contributions (including Company Matching Contributions) shall be made by, or on behalf of, any Member when: (A) no payment of Compensation is made by the Company to the Member or, in the case of Compensation Deduction Contributions, the amount payable after all applicable withholdings and deductions required by law or the Company is less than the applicable contributions; (B) payroll deduction for Compensation Deduction Contributions under the Plan would be contrary to law; (C) the Member receives a distribution from his Company Contributions Account pursuant to section 9.1(a)(2); provided, however, that contributions shall automatically resume following the completion of the twenty-six (26) week period beginning on the date of the distribution. - 16 - 22 3.4 Company Contributions (a) The Company shall contribute to the Plan on behalf of each Shreveport Member an amount equal to 100% of the Member's Compensation Deferral Contributions and Compensation Deduction Contributions; provided, however, that the Company Contributions made pursuant to this section for a Plan Year shall not exceed $250 or 1% of the Member's Compensation, whichever amount is less. (b) Amounts which have been forfeited in accordance with section 3.7(d), 3.8(d), 3.9(d), 8.6, or 9.3(a) shall be applied to reduce subsequent Company Matching Contributions required hereunder. If the Plan should be terminated, any amount not previously so applied shall be credited ratably to the Accounts of all Members in proportion to the amounts of Company Matching Contributions credited to their respective Accounts during the most recent Plan Year. 3.5 Return of Company Contributions (a) Except as provided below, the assets of the Plan will never inure to the benefit of the Company and will be held for the exclusive purpose of providing benefits to Members of the Plan and their Beneficiaries and defraying reasonable expenses of administering the Plan. (b) If a contribution is made by the Company by a mistake of fact, such contribution will be returned to the Company provided this is done within one year after the payment of such contribution. (c) Contributions are conditioned upon their deductibility under Code Section 404. If a contribution deduction is disallowed, to the extent the deduction is disallowed, such contribution shall be returned to the Company within one year after the disallowance. (d) Contributions are conditioned upon the initial qualification of the Plan under Code Section 401(a). If the Plan does not initially qualify, such contributions will be returned to the Company within one year of such denial. 3.6 Contributions for Military Service Notwithstanding any provision of this plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). 3.7 Testing Compensation Deferral Contributions for Discrimination (a) The actual deferral percentage for Highly Compensated Eligible Employees for any Plan Year may not exceed the greater of: - 17 - 23 (1) One and one-quarter times the actual deferral percentage for all other Eligible Employees for the Plan Year, or (2) The lesser of (A) two percentage points plus the actual deferral percentage for all other Eligible Employees for the Plan Year, or (B) two times such percentage for all other Eligible Employees for the Plan Year. (b) The "actual deferral percentage" for each group of Eligible Employees is the average of the deferral percentages for each Eligible Employee in such group. The deferral percentage is equal to the Employee's Compensation Deferral Contributions for the Plan Year, divided by his Total Earnings for the Plan Year. Eligible Employees who are not making Compensation Deferral Contributions will be included at zero percent in determining the actual deferral percentage. (c) Prior to the beginning of each Plan Year and periodically during the year, the Plan Administrator shall test deferral elections under section 3.13.1 to determine whether or not the limits under this section will be exceeded for the Plan Year. In performing this test, the Plan Administrator will assume that deferrals for current Eligible Employees will continue for the remainder of the Plan Year at the rate currently elected by the Eligible Employee. If elections made by Highly Compensated Eligible Employees would (if not reduced) cause the actual deferral percentage for such Employees to exceed the limitation in this section, the Plan Administrator shall reduce Compensation Deferral Contributions elected by Highly Compensated Eligible Employees to comply with the maximum permissible deferral percentage for the Plan Year. Such reduction shall be effective as of the first payroll payment date in the month following such determination and shall be made as set forth below: (1) First, Highly Compensated Eligible Employees electing Compensation Deferral Contributions in an amount equal to 11% of Compensation shall have their elections reduced to 10% of Compensation. If, following this reduction, the maximum permissible deferral percentage is still exceeded, Highly Compensated Eligible Employees electing Compensation Deferral Contributions in an amount equal to 10% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 9% of Compensation. The process set forth in this paragraph (2) shall continue until the average deferral percentage for the Highly Compensated Eligible Employees does not exceed the maximum permissible deferral percentage. (2) Subject to section 3.8, the amount that would have been contributed as Compensation Deferral Contributions on behalf of the Member except for the reductions prescribed in paragraph (1) above, shall be contributed by the Member to the Plan as Compensation Deduction Contributions. In addition, to the extent permitted by regulation, the Plan Administrator may - 16 - 24 during or following a Plan Year cause Compensation Deferral Contributions made on behalf of Highly Compensated Eligible Employees to be recharacterized (on a uniform and non-discriminatory basis) as Compensation Deduction Contributions to the extent necessary to prevent the average deferral percentage for said Members for any Plan Year from exceeding the maximum permissible deferral percentage. (d) At the end of the Plan Year, if Compensation Deferral Contributions for Highly Compensated Eligible Employees exceed the limitation described in this section, the Plan Administrator shall determine the excess Compensation Deferral Contributions of each Highly Compensated Eligible Employee in accordance with the following leveling method. The deferral percentage of the Highly Compensated Eligible Employee with the highest deferral percentage will be reduced to the extent required to (i) enable the Plan to comply with this section, or (ii) cause such Employee's deferral percentage to equal the deferral percentage of the Highly Compensated Eligible Employee with the next highest deferral percentage. This procedure will be repeated until the Plan satisfies the limitation in this section. Subject to section 3.8, excess Compensation Deferral Contributions and investment earnings (including gains and losses) minus any Compensation Deferral Contributions previously distributed for the Plan Year under section 3.13.1(c) will be recharacterized as Compensation Deduction Contributions. Such excess Compensation Deferral Contributions and investment earning (including gains and losses) that are not recharacterized will be refunded to the Member in cash before the end of the next Plan Year. If Compensation Deferral Contributions are refunded, Company Matching Contributions attributable to such Compensation Deferral Contributions and investment earnings on such Company Matching Contributions (including gains and losses) will be forfeited and used to reduce subsequent Company Matching Contributions otherwise payable pursuant to section 3.4. Investment earnings allocable to excess Compensation Deferral Contributions for a Plan Year and for the period between the end of such Plan Year and the date of the refund shall be determined in accordance with proposed Treasury Regulation section 1.401(k)-1(f)(4)(ii), as it may be revised from time to time by the Secretary of the Treasury. For Plan Years beginning before January 1, 1997, in the case of a Highly Compensated Eligible Employee whose deferral percentage is determined under the family aggregation rules of Code Section 414(q)(6) as in effect on December 31, 1996, the deferral percentage shall be reduced in accordance with the leveling method described above and the excess Compensation Deferral Contributions will be allocated among the family members in proportion to the Compensation Deferral Contributions of each family member that has been combined. - 19 - 25 3.8 Testing Compensation Deduction Contributions and Company Matching Contributions for Discrimination (a) The actual contribution percentage for Highly Compensated Eligible Employees for any Plan Year may not exceed the greater of: (1) One and one-quarter times the actual contribution percentage for all other Eligible Employees for the Plan Year, or (2) The lesser of (A) two percentage points plus the actual contribution percentage for all other Eligible Employees for the Plan Year, or (B) two times such percentage for all other Eligible Employees for the Plan Year. (b) The "actual contribution percentage" for each group of Eligible Employees is the average of the contribution percentages for each Eligible Employee in such group. The contribution percentage is equal to sum of the Employee's Compensation Deduction Contributions plus his Company Matching Contributions, divided by his Total Earnings for the Plan Year. Eligible Employees for whom there are no Compensation Deduction Contributions or Company Matching Contributions will be included at zero percent in determining the actual contribution percentage. (c) Prior to the beginning of each Plan Year and periodically during the year, the Plan Administrator shall test deferral elections under section 3.13.1 and deduction authorizations under section 3.2 to determine whether or not the limits under this section will be exceeded for the Plan Year. In performing this test, the Plan Administrator will assume that deferrals and deductions for current Eligible Employees will continue for the remainder of the Plan Year at the rate currently elected by the Eligible Employee. If elections made by Highly Compensated Eligible Employees would (if not reduced) cause the actual contribution percentage for such Employees to exceed the limitation in this section, the Plan Administrator shall reduce the Compensation Deduction Contributions elected by Highly Compensated Eligible Employees to comply with the maximum permissible contribution percentage for the Plan Year. Such reduction shall be effective as of the first payroll payment date in the month following such determination and shall be made as set forth below: (1) Highly Compensated Eligible Employees electing Compensation Deduction Contributions in an amount equal to 11% of Compensation shall have their elections reduced to 10% of Compensation. If, following this reduction, the maximum permissible contribution percentage is still exceeded, Highly Compensated Eligible Employees electing Compensation Deduction Contributions in an amount equal to 10% of Compensation (including any Highly Compensated Eligible Employees whose elections were reduced under the preceding sentence) shall have their elections reduced to 9% of Compensation. - 20 - 26 (2) The process set forth in paragraph (2) shall continue until the average contribution percentage for the Highly Compensated Eligible Employees does not exceed the maximum permissible deferral percentage. (d) At the end of the Plan Year, if Compensation Deduction Contributions and Company Matching Contributions for Highly Compensated Eligible Employees exceed the limitation described in this section, the Plan Administrator shall determine the excess Compensation Deduction Contributions and Company Matching Contributions of each Highly Compensated Eligible Employee in accordance with the following leveling method. The contribution percentage of the Highly Compensated Eligible Employee with the highest contribution percentage will be reduced to the extent required to (i) enable the Plan to comply with this section, or (ii) cause such Employee's contribution percentage to equal the contribution percentage of the Highly Compensated Eligible Employee with the next highest contribution percentage. This procedure will be repeated until the Plan satisfies the limitation in this section. Excess Compensation Deduction Contributions and investment earnings (including gains and losses) will be refunded to the Member in cash before the end of the next Plan Year. In accordance with Treasury Regulations Section 1.401(m)-1(e)(2)(ii), the amount of excess Compensation Deduction Contributions and Company Matching Contributions shall be determined only after first determining the excess Compensation Deferral Contributions, if any, that are treated as Compensation Deduction Contributions due to recharacterization pursuant to section 3.7. If Compensation Deduction Contributions are refunded to the Member, any Company Matching Contributions attributable to such Compensation Deduction Contributions and investment earnings (including gains and losses) shall be forfeited and used to reduce Company Matching Contributions otherwise payable pursuant to 3.4. Investment earnings allocable to excess Compensation Deduction Contributions and Company Matching Contributions for a Plan Year and for the period between the end of such Plan Year and the date of the refund shall be determined in accordance with proposed Treasury Regulation section 1.401(m)-1(e)(3)(ii), as it may be revised from time to time by the Secretary of the Treasury. For Plan Years beginning before January 1, 1997, in the case of a Highly Compensated Eligible Employee whose contribution percentage is determined under the family aggregation rules of Code Section 414(q)(6) as in effect on December 31, 1996, the contribution percentage shall be reduced in accordance with the leveling method described above and the excess Compensation Deduction Contributions and Company Matching Contributions will be allocated among the family members in proportion to the contributions of each family member that have been combined. 3.9 Testing Aggregate Contributions for Discrimination - 21 - 27 (a) The sum of the actual deferral percentage and the actual contribution percentage for Highly Compensated Eligible Employees for each Plan Year may not exceed the greater of (1) or (2) below: (1) The sum of (A) and (B) below: (A) one and one-quarter times the greater of (i) the actual deferral percentage for all other Eligible Employees for the Plan Year, or (ii) the actual contribution percentage for all other Eligible Employees for the Plan Year, plus (B) the lesser of (i) or (ii) below: (i) Two percentage points plus the lesser of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (ii) Two times the lesser of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (2) The sum of (A) and (B) below: (A) one and one-quarter times the lesser of (i) the actual deferral percentage for all other Eligible Employees for the Plan Year, or (ii) the actual contribution percentage for all other Eligible Employees for the Plan Year, plus (B) the lesser of (i) or (ii) below: (i) Two percentage points plus the greater of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (ii) Two times the greater of 1) the actual deferral percentage for all other Eligible Employees for the Plan Year or 2) the actual contribution percentage for all other Eligible Employees for the Plan Year. (b) Prior to the beginning of each Plan Year and periodically during the year, the Plan Administrator shall test deferral elections under section 3.13.1 and deduction authorizations under section 3.2 to determine whether or not the limits under this section will be exceeded for the Plan Year. If elections made by Highly - 22 - 28 Compensated Eligible Employees would (if not reduced) cause the sum of the actual deferral percentage and the actual contribution percentage for such Employees to exceed the limitation in this section, the Plan Administrator shall reduce the deduction percentages elected by the Highly Compensated Eligible Employees to comply with the limitations of this section. This reduction will be accomplished by determining the maximum possible upper limit on Compensation Deduction Contributions (as a percentage of Compensation) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. If the limitation described in this section is still exceeded after reducing the upper limit on Compensation Deduction Contributions for Highly Compensated Eligible Employees to zero, the Plan Administrator shall also reduce Compensation Deferral Contributions elected by Highly Compensated Eligible Employees. This reduction will be accomplished by determining the maximum possible upper limit on Compensation Deferral Contributions (as a percentage of Compensation) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. (c) At the end of the Plan Year, if the sum of the actual deferral percentage and the actual contribution percentage for Highly Compensated Eligible Employees exceeds the limitations described in this section after the corrective distributions or forfeitures are made under sections 3.7(d) and 3.8(d) the Plan Administrator shall determine the maximum possible upper limit on Compensation Deduction Contributions (as a percentage of Total Earnings) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. Compensation Deduction Contributions in excess of this limit and investment earnings on such contributions (including gains and losses) will be refunded to the Member in cash. If the limitation in this section is still exceeded after refunding all Compensation Deduction Contributions for Highly Compensated Eligible Employees, the Plan Administrator shall determine the maximum possible upper limit on Compensation Deferral Contributions (as a percentage of Compensation) which, when imposed as a limitation on the Highly Compensated Eligible Employees, will cause the Plan to comply with this section. Compensation Deferral Contributions in excess of this limit and investment earnings on such contributions (including gains and losses) will be refunded to the Member in cash. (d) If Compensation Deduction Contributions or Compensation Deferral Contributions are refunded to the Member, any Company Matching Contributions attributable to such refunded contributions and investment earnings on such Company Matching Contributions will be forfeited and used to reduce Company Matching Contributions otherwise payable pursuant to 3.4. 3.10 Aggregation Rules for Discrimination Testing - 23 - 29 (a) If this Plan is combined with one or more plans maintained by the Company or an Affiliate or Subsidiary of the Company for purposes of Code Section 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)), then this Plan and such other plans will be considered a single plan for purposes of the discrimination testing described in this article. (b) If a Highly Compensated Eligible Employee is eligible to have Compensation Deferral Contributions, Compensation Deduction Contributions, or Company Matching Contributions allocated to his account under two or more plans described in Code Section 401(k) which are maintained by the Company or an Affiliate or Subsidiary of the Company, the average deferral percentage and average contribution percentage for such Highly Compensated Eligible Employee shall be determined as if all such contributions were made under a single plan. (c) For Plan Years beginning before January 1, 1997, for purposes of determining the actual deferral percentage and the actual contribution percentage of a Highly Compensated Eligible Employee who is (1) a five-percent owner or (2) one of the ten Employees paid the greatest Total Earnings for the Plan Year, the Compensation Deferral Contributions, Compensation Deduction Contributions, Company Matching Contributions and Total Earnings of such Employee shall include the Compensation Deferral Contributions, Compensation Deduction Contributions, Company Matching Contributions and Total Earnings of such Employee's spouse, lineal ascendants or descendants, and the spouses of such lineal ascendants or descendants except as otherwise provided under Treasury regulations. Such family members shall be disregarded in determining the actual deferral percentage and the actual contribution percentage for Eligible Employees who are not Highly Compensated Eligible Employees. In applying the maximum dollar limitation on Total Earnings described in 1.41, such limitation will be applied to the combined Total Earnings of the Highly Compensated Eligible Employees described in this section, the spouse of such Employee, and any lineal descendants of the Employee who have not attained age 19 before the end of the Plan Year. - 24 - 30 Article 4 Investment of Contributions 4.1 Investment Election At the time of enrollment in the Plan, the Member shall elect to have his future Compensation Deferral Contributions and Compensation Deduction Contributions invested in one or more of the Investment Funds listed in section 5.2. The election shall specify the percentage, if any, of such contributions to be allocated to each of the Investment Funds. Members may allocate their contributions among the Investment Funds in 5% increments, with the total of the elected percentage increments equaling 100%. All Company Matching Contributions shall be invested in the Boeing Company Stock Fund. 4.2 Changes in Investment Elections A Member may change an election made pursuant to section 4.1 regarding his future Compensation Deferral Contributions and Compensation Deduction Contributions once each calendar quarter. Such change shall be effective as of the last business day of the month in which the change of election is made. 4.3 Transfer of Investments (a) A Member may elect once in each calendar quarter to change the investment of his Accounts; provided, however, amounts may not be transferred into or out of the Stable Value Fund before April 1, 1997, and amounts may not be transferred out of the Boeing Company Stock Fund except as provided in subsection (b) below. The election shall specify the percentage, if any, of the total dollar balance of the Member's Accounts in the Investment Funds (other than the Boeing Company Stock Fund and, for transfers before April 1, 1997, the Stable Value Fund), determined pursuant to section 6.4, to be allocated to each of the Investment Funds. Members may allocate their balances among the Investment Funds in 5% increments, with the total of the elected percentage increments equaling 100%. The transfers described in this section shall be effected on the first day of the calendar month immediately succeeding the month in which the Member elected to make the transfer. (b) In addition to the elections available under subsection (a), the following elections shall be available to eligible Members: (1) A Member who has not attained age 55 may elect once in each calendar year, by giving the Plan Administrator notice of such election, to have 10% of the total value of all Units (or 100% of such total value, if $25.00 or less) in the Boeing Company Stock Fund, which are attributable to the Member's Compensation Deferral or Deduction Contributions, transferred, - 25 - 31 in increments of 5%, into any one or more of the Investment Funds; provided, however, amounts may not be transferred into the Stable Value Fund before April 1, 1997. (2) A Member who has attained age 55, but not age 65, may elect once in each calendar year, by giving the Plan Administrator notice of such election, to have 50% of the total value of all Units (or 100% of such total value, if $25.00 or less) in the Boeing Company Stock Fund, which are attributable to the Member's Compensation Deferral and Deduction Contributions, transferred, in increments of 5%, into any one or more of the Investment Funds; provided, however, amounts may not be transferred into the Stable Value Fund before April 1, 1997. A Member may not make an election under this paragraph during the same calendar year in which an election has been made under paragraph (1). (3) A Member who is still an Employee and has attained age 65 or a who has elected deferred distribution pursuant to section 7.2(b) may elect once each calendar quarter to have the total value or a portion (in 5% increments) of the total value of all Units in the Boeing Company Stock Fund, transferred, in 5% increments, into any one or more of the Investment Funds; provided, however, amounts may not be transferred into the Stable Value Fund before April 1, 1997. If, as a result of an election made pursuant to this paragraph, 100% of the Member's interest in the Boeing Company Stock Fund has been transferred to other Investment Funds, all subsequent Company Matching Contributions, if any, made to the Member's Company Contributions Account after the effective date of said election shall be made in cash and shall be invested in the same manner as the Member's Compensation Deferral and Deduction Contributions. If less than 100% of the Member's interest in the Boeing Company Stock Fund has been so transferred, Company Matching Contributions shall continue to be invested in the Boeing Company Stock Fund. (4) The effective date of an election under this subsection shall be, and the value of all Units elected to be converted hereunder shall be determined as of, the first Valuation Date following the date on which such election is received by the Plan Administrator. Such conversion shall be effected by the conversion of such Units into cash and the transfer of such cash to the designated Investment Fund(s). Such transfer shall be effected by the Trustee on or before the Valuation Date in the second month succeeding the month in which the election was received. (c) All elections under this section shall be irrevocable and shall not affect the Member's right to exercise any other election provided by the Plan. - - 26 - 32 (d) Upon making an election to transfer investments under this section, the Member shall also either confirm or change his election under section 4.1 or 4.2 with respect to future Compensation Deferral Contributions, Compensation Deduction Contributions, and Company Matching Contributions. 4.4 Independent Control An election or change of election made pursuant to this section shall be within the independent control of the Member. Neither the Trustee, the Parent, nor the Company shall be liable for any loss which may result from the exercise of such control by the Member. If, at any time, no election under this section is in effect for any portion of a Member's Accounts or contributions, such portion shall be invested in the manner determined by the Plan Administrator on a uniform and nondiscriminatory basis with respect to all Members. An election or change of election deemed to have been made under this section shall not be counted for purposes of the provisions of those sections which impose restrictions on the frequency of changes. - 27 - 33 Article 5 Trust Agreement 5.1 Establishment of Trust Fund The property resulting from contributions made on behalf of all Members, including contributions made by the Company, shall be held in a Trust Fund by a Trustee or Trustees selected by the Plan Administrator pursuant to a Trust Agreement entered into between such Trustee and the Plan Administrator. References in the Plan to Trustee shall be deemed to be applicable with equal force to co-Trustees or successor Trustees who may be so designated. 5.2 Investment Funds The Trust Agreement will provide that at the direction of the Plan Administrator, the Trustee shall establish investment funds, each with investment objectives determined by the Plan Administrator. The Plan Administrator shall provide information to Members regarding the Investment Funds available under the Plan, including a description of the investment objectives and types of investments of each such fund. As of the Effective Date, the following Investment Funds shall be established: (a) S&P 500 Index Fund. The assets of this fund are invested in the same stocks and in substantially the same percentages as the Standard and Poor's (S&P) 500 Index. (b) Short-Term Income Fund. The assets of this fund are invested in a variety of investment-grade instruments with maturities generally between 1 and 365 days with an average maturity between 30 and 60 days. These instruments may include: United States government and agency obligations, bank obligations, short-term corporate debt instruments, repurchase agreements, unsecured loan participations, and registered investment companies which invest in such instruments. (c) Stable Value Fund. The assets of this fund are invested in investment contracts with one or more insurance companies which guarantee the principal and interest thereon for a specified period of time. (d) Intermediate-Term Bond Fund. The assets of this fund are invested in debt obligations issued by the United States government and its agencies and instrumentalities. The maximum maturity of any issue in the fund is five years. (e) Boeing Company Stock Fund. The assets of this fund are invested in cash and Common Stock of The Boeing Company. - 28 - 34 5.3 Voting Rights Each Member who has Common Stock of The Boeing Company held in the Boeing Company Stock Fund allocated to his Accounts shall be entitled to instruct the Trustee regarding the voting of the number of such shares allocated to the Accounts (determined by the proportionate share of the Member's investment in the Fund) at all stockholders' meetings of the Company, determined as of the record date for such stockholders' meetings. The Company will send, or cause to be sent, to each Member who has Common Stock of the Company allocated to the Member's Accounts a voting instruction form and the same proxy solicitation material as is sent to stockholders generally. 5.4 Tender Offer Not withstanding any other provisions of the Plan to the contrary: (a) If any person shall make a tender offer (as defined in subsection (c) below) to acquire (by purchase or exchange) Common Stock of the Company, including shares of such Common Stock that are held in the Company Stock Fund, the Trustee and the Company shall act as follows: (1) The Company shall ensure that the materials made available to shareholders generally in connection with the tender offer are provided to each Member who has shares of Common Stock of the Company held in the Company Stock Fund allocated to his Member's Accounts, and the response of the Trustee as to whether to accept or reject the tender offer with respect to the full and fractional shares of such Common Stock that are so allocated shall be made in accordance with the instructions of the Member given to the Trustee on forms provided for that purpose. (2) If the Trustee fails to receive clear and timely instructions from a Member in a case where instructions have been sought by the Trustee as provided in paragraph (1), the Trustee shall have no discretion in such matter and shall reject the tender offer with respect to the affected full and fractional shares of Common Stock of the Company that are allocated to the Accounts of such Members. (b) With respect to full and fractional shares of Common Stock of the Company that have been acquired by the Plan and are not yet allocated (including any such Common Stock held in a suspense account because it cannot be allocated currently due to the Code Section 415 limits), the Trustee shall have no discretion in such matter and shall reject the tender offer with respect to such Common Stock. - 29 - 35 (c) If any tender offer is accepted (in whole or in part) pursuant to subsection (a), the Trustee shall have the power to transfer Common Stock of the Company in order to effect such acceptance. (d) For purposes of this section, "tender offer" shall mean any offer to acquire Common Stock of the Company which is subject to either section 13(e) or 14(d) of the Securities Exchange Act of 1934 and which under applicable rules and regulations is required to be the subject of a filing with the Securities and Exchange Commission on either Schedule 13E-4 or Schedule 14D-9. (e) The foregoing notwithstanding, nothing herein shall serve to modify the related rules of the Trust Agreement or to expand the duties of the Trustee unless and until the Trustee gives its consent in the manner provided in the Trust Agreement. 5.5 Trust Agreement The Plan Administrator has entered into a Trust Agreement with the Trustee of the Trust Fund under which the Trustee will hold, invest and distribute the assets of the Trust Fund as required by the Trust Agreement. The Plan Administrator may remove the Trustee at any time upon reasonable notice. The Trust Agreement shall provide that upon the removal or resignation of the Trustee the assets shall be transferred to another Trustee to be designated by the Plan Administrator under the terms of the Trust Agreement satisfying the conditions herein set forth. 5.6 Rights in the Trust Fund No part of the Trust Fund shall be used for, or diverted to, purposes other than the exclusive benefit of Members and their beneficiaries under the Plan. No person shall have any interest in or right to any part of the Trust Fund except as and to the extent expressly provided in the Plan. - 30 - 36 Article 6 Maintenance of Members' Accounts 6.1 Accounts Maintained The Plan Administrator shall establish and maintain for each Member a Compensation Deduction Account, a Compensation Deferral Account, and a Company Contributions Account under each Investment Fund to represent all amounts (if any), adjusted for gains or losses thereon, which have been contributed by or on behalf of the Member as Compensation Deduction Contributions, Compensation Deferral Contributions, and Company Matching Contributions. Such separate Accounts shall contain sufficient information to permit, with respect to the Boeing Company Stock Fund, a determination of the number of Common Units in such Member's Accounts, and with respect to the Company Contributions Account, a determination of the portion which is attributable to Compensation Deduction Contributions and the portion which is attributable to Compensation Deferral Contributions. 6.2 Crediting Units to Accounts (a) The interest of each Member in the Investment Funds shall be represented by Units allocated to his Accounts. The value of each Unit shall be $1.00 for the contributions deposited on behalf of each Member prior to the first Valuation Date following the effective date of the particular Fund. (b) Each contribution on behalf of a Member to, or payment made to a Member from, an Investment Fund shall result in a credit or charge to the Account representing his interest in such Fund under his Company Contributions Account, Compensation Deferral Account, or Compensation Deduction Account, as applicable, and shall be equal to the number of Units contributed or paid, as the case may be. (c) Dividends on Common Stock held in the Boeing Company Stock Fund shall result in an appropriate increase in the Unit values of said Fund. 6.3 Units Valuations Except as otherwise provided in section 6.2, as of each Valuation Date, an amount equal to the fair market value of all property in the Investment Funds (other than dividends received which are attributable to whole shares of Common Stock which were or are to be transferred to Members subsequent to the record date for such dividend) or under a contract, in the case of the Stable Value Fund, shall be determined by the Trustee in such manner and on such basis as it shall deem appropriate. Such amount shall be divided by the total number of Units credited to all the Members in the Fund or under the contract concerned on the particular Valuation Date, thereby establishing a new Unit value. With respect to each Investment Fund, each contribution or other payment thereto or payment - 31 - 37 therefrom after such Valuation Date and prior to or on the next Valuation Date shall be converted to Units (in the case of the Boeing Company Stock Fund to Common Units to the extent appropriate) by dividing such new Unit value into the amount of such contribution or payment, and the individual Account of each affected Member representing his interest in the Investment Fund under his Company Contributions Account, Compensation Deferral Account, and Compensation Deduction Account, as applicable, shall be credited or charged, as the case may be, with the portion of the number of Units so attributable to such Member. The value of each contract under the Stable Value Fund shall be equal to the principal amount held in such fund plus accrued interest. 6.4 Balance of Member's Accounts As of any specified date, the dollar balance of the Accounts of each Member representing the interest of each Member in each Investment Fund under his Company Contributions Account, Compensation Deferral Account, and Compensation Deduction Account, as applicable, shall be determined by multiplying the number of Units in his current balance by the Unit value as of the last preceding Valuation Date in accordance with the foregoing and adding to the resulting dollar balance the amount of contributions made with respect to such Account since the last valuation date for which Units have not yet been credited. Only those contributions actually received by the Trustee will be considered in making valuations and determining Account balances. 6.5 Member Account Statements After the end of each calendar year or more frequently as the Plan Administrator shall determine, the Plan Administrator shall forward by mail to each Member a statement, in such form as the Plan Administrator shall determine, setting forth pertinent information relative to the Member's Accounts. Such statement shall, for all purposes, be deemed to have been accepted as correct unless the Plan Administrator is notified to the contrary by mail within 60 days of the mailing thereof to the Member. - 32 - 38 Article 7 Retirement 7.1 Eligibility This article will apply to any Member who terminates employment on or after his 65th birthday or who retires before his 65th birthday pursuant to a retirement plan sponsored by the Company or an Affiliate or Subsidiary. 7.2 Lump Sum Distribution (a) If the balance in the Member's Accounts is $3,500 or less, such amount will be paid to the Member in a lump sum as soon as practicable after his Termination of Employment in the manner described in section 7.5. (b) If the balance in the Member's Accounts exceeds $3,500, the Member may elect (1) to receive such amount in a lump sum as soon as practicable after his Termination of Employment in the manner described in section 7.5 or (2) to defer any distribution from his Accounts. If the Member elects to defer distribution, his Accounts will be retained in the Plan and maintained and valued in accordance with Article 6. The amount of such deferred distribution(s) will be based on the value of the Member's Accounts determined as of the Valuation Date preceding the deferred distribution date. If the vested balance in the Member's Accounts at the time of a distribution exceeds $3,500, then the vested balance at any subsequent time shall be deemed to exceed $3,500. (c) A Member who has deferred receiving his distribution may elect to receive the balance in his Accounts in a lump sum payable as soon as practicable after the request for such distribution is received by the Plan Administrator in the manner described in section 7.5. Such request shall be in the manner prescribed by the Plan Administrator for this purpose. 7.3 Installment Form of Payment (a) If the balance in the Member's Accounts exceeds $3,500, the Member may elect to have his benefit paid in annual installments over 10 or fewer years; provided, however, that the Member may not elect installments to be paid over a period which exceeds the life expectancy of the Member or the combined life expectancies of the Member and his Beneficiary determined as of the date payments are to commence. The amount of such installments will be the value of the Member's Accounts as of the Valuation Date immediately preceding the installment payment, divided by the number of installment payments remaining at the time of the payment. The initial installment payment will be made as soon as practicable after the effective date of the Member's election. Subsequent installment payments during the elected installment payment period will be made - 33 - 39 as of the annual anniversary date of the initial installment payment. If the vested balance in the Member's Accounts at the time of a distribution exceeds $3,500, then the vested balance at any subsequent time shall be deemed to exceed $3,500. (b) A Member who is still an Employee on the required beginning date described in section 7.4(b) and is, therefore, required to commence distribution, shall receive his distribution in annual installments over the period of the Member's life expectancy (pursuant to Code Section 401(a)(9)). Upon the Member's subsequent Termination of Employment, the Member shall be entitled to elect either a lump sum distribution as provided in section 7.2(b) or installment payments as provided in section 7.3(a) with respect to his remaining Account balance at that time. (c) Subsection (a) notwithstanding, if a Member who is no longer an Employee has elected to defer receiving his distribution pursuant to section 7.2(b) and the Plan Administrator has not received an election concerning the form of distribution by the end of the calendar year in which the Member attains age 70 1/2, the distribution shall be made in the form of a lump sum distribution payable no later than the required beginning date described in section 7.4(b). (d) If a Member who had previously elected and commenced receipt of installment payments pursuant to subsection (a) returns to employment with the Company or an Affiliate or Subsidiary (other than as a member of the Company's flexible work force), such installment payments shall be suspended until the Member's subsequent retirement, at which time he shall be permitted again to make the election described in this section. (e) A Member who had previously elected and commenced receipt of installment payments pursuant to subsection (a) shall be permitted to revoke such election at a later date and accelerate receipt of the distribution by electing distribution of the remaining Account balances in a lump sum payment. 7.4 Limitations on Payment Date (a) Payment will begin not later than the 60th day after the end of the Plan Year in which: (1) the Member's 65th birthday occurs, or (2) the Member's Termination of Employment occurs, whichever is later. However, payment under this subsection will not begin until the Member has filed a claim for such payment in the manner prescribed by the Plan Administrator for that purpose. - 34 - 40 (b) The required beginning date described in this subsection (b) will apply regardless of any election made by the Member. (1) Benefit payments for a Member who attained age 70 1/2 before January 1, 1996, will begin January 1, 1997, whether or not such Member's employment has terminated. (2) Benefit payments for a Member who attained age 70 1/2 in 1996, will begin not later than April 1, 1997, whether or not such Member's employment has terminated. (3) Benefit payments for a Member who is not a 5% owner who attains age 70 1/2 after December 31, 1996 will begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the Member attains age 70 1/2, or (B) the calendar year in which the Member retires. (4) Benefit payments for a Member who is a 5% owner will begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the Member attained age 70 1/2, or (B) the earlier of (iii) the calendar year within which ends the Plan Year in which the Member becomes a 5% owner, or (iv) the calendar year in which the Member retires. (5) A Member is treated as a 5% owner for purposes of this subsection (b), if such Member is a 5% owner as defined in Code Section 416(i) at any time during the Plan Year ending within the calendar year in which such owner attains age 66 1/2 or any subsequent Plan Year. Once a Member is described in this paragraph, distributions will continue to such Member even if such Member ceases to own more than 5% of the Company in a subsequent year. (6) If a Member receives payments under this subsection (b), such payments will be determined as if the Member's retirement date were the date by which benefit payments must be made under this subsection (b). If the Member continues to have contributions made to his Accounts after this date, the additional benefit for each Plan Year will be paid in a lump sum after the following January 1. 7.5 Manner of Distribution A Member's distribution(s) shall be made as follows: (a) With respect to Investment Funds other than the Boeing Company Stock Fund, the Member entitled to a lump sum distribution pursuant to section 7.2 shall receive the full dollar balance of his Accounts in such Funds. A Member electing - 35 - 41 installment payments pursuant to section 7.3 shall receive the full dollar balance divided by the remaining number of installment payments. Such balance shall be determined in the manner provided in section 6.4, by reference to the value of Units in such Member's Accounts on the Valuation Date coinciding with or immediately preceding the date of the distribution. (b) With respect to the Boeing Company Stock Fund, the full dollar balance (for a Member electing installment payments pursuant to section 7.3, the full dollar balance divided by the remaining number of installment payments) in the Member's Accounts in the fund as of the Valuation Date coinciding with or immediately preceding the date of the distribution (determined in the manner provided in section 6.4, separately by reference to the Common Units in the Account on such Valuation Date and the respective Unit values on such Valuation Date) shall be applied to Common Stock to the extent attributable to Common Units. The Member shall receive shares of Common Stock equal to the maximum number of whole shares of Common Stock which could be purchased at the closing price of Common Stock on the New York Stock Exchange-- Composite Transactions listing on such Valuation Date (or, in the event such Valuation Date falls on a date on which there are no trades of such stock reflected on such listing, the last trading day preceding such Valuation Date) with the portion of such dollar balance attributable to Common Units in the Account. The Member shall be paid in cash the amount of such dollar balance remaining after reduction by the value of the whole shares previously described, based upon such closing price. In addition, the Member shall be paid in cash the amount of any cash dividends received since such Valuation Date attributable to the number of whole shares of Common Stock distributed to him and the dollar value of any contributions to the Company Stock Fund in respect of such Member between such Valuation Date and the Termination of Employment. - 36 - 42 Article 8 Termination or Death 8.1 Vesting (a) A Member will always have a 100% vested interest in his Compensation Deduction Account and Compensation Deferral Account. (b) A Member who has completed at least five years of Vesting Service will have a 100% vested interest in his Company Contributions Account. (c) No Units in a Member's Company Contributions Account shall vest subsequent to the Member's termination of employment, except as provided in section 8.7. (d) Regardless of his years of Vesting Service, a Member will have a 100% vested interest in his Company Contributions Account upon the occurrence of any of the following events: (1) 65th birthday, (2) retirement before his 65th birthday pursuant to a retirement plan sponsored by the Company or an Affiliate or Subsidiary, (3) termination of employment to enter into the Armed Forces of the United States, except temporary service of 90 days or less, or to accept employment with the Government of the United States, (4) determination of Total Disability, (5) termination of employment because of inability to meet Company medical standards, (6) Layoff, or (7) death. 8.2 Distribution Upon Termination (a) This section will apply to any Member whose Termination of Employment occurs before he has satisfied the eligibility conditions for retirement as described in section 7.1 and who is not an Employee of a divested component covered by section 8.5. (b) Subject to the provisions of subsection (c), the Member shall receive as a lump sum all amounts described in section 8.4 as soon as practicable after his - 37 - 43 Termination of Employment, but not later than 60 days after the end of the Plan Year in which his Termination of Employment occurred. (c) If the vested balance in the Member's Accounts exceeds $3,500, no distribution of benefits under the Plan shall be made unless the Plan Administrator has first obtained the Member's written consent thereto. In the event such written consent is not obtained, the vested portion of the Member's Accounts will be retained by the Plan and will be maintained and valued in accordance with Article 6. Distribution of the Member's Accounts pursuant to this section shall be made following the date on which the Plan Administrator obtains the Member's written consent to the distribution or, if earlier, the required beginning date described in section 7.4. The amount of distribution will be determined as provided in section 8.4, except that the balance of the Member's Accounts will be determined by reference to the Unit Values on the Valuation Date coincident with or immediately preceding the date of distribution. If the Member is reemployed as an Employee prior to the date on which the Plan Administrator receives his written consent to the distribution, the Member shall not have any further right to receive a distribution of benefits as a result of his prior termination of employment. Under no circumstances shall a Member have any right to withdraw a portion of the balance of his Accounts under Article 9 prior to the deferred distribution date. If the vested balance in the Member's Accounts at the time of a distribution exceeds $3,500, then the vested balance at any subsequent time shall be deemed to exceed $3,500. 8.3 Distribution Upon Death (a) If a Member dies before payment of benefits begins, his Beneficiary(ies) shall receive all amounts described in section 8.4 as soon as practicable after the Member's death, but not later than 60 days after the end of the Plan Year in which the Member's death occurred. (b) If a Member dies after installment payments have commenced pursuant to section 7.3, payments will continue to the Beneficiary under the form of payment in effect at the time of the Member's death. 8.4 Amount of Distribution The amounts which a Member or Beneficiary will receive under section 8.2 or 8.3 shall be as follows: (a) With respect to Investment Funds other than the Boeing Company Stock Fund, the Member shall receive the vested dollar balance of his Accounts in such Funds. Such balance shall be determined in the manner provided in section 6.4, by reference to the value of Units in such Member's Accounts on the Valuation Date coinciding with or immediately preceding his Termination of Employment or, in - 38 - 44 the case of death or Total Disability, the date all documentation necessary to effect the distribution is received by the Plan Administrator. (b) With respect to the Boeing Company Stock Fund, the vested dollar balance in the Member's Accounts in the fund as of the Valuation Date coinciding with or immediately preceding his Termination of Employment or, in the case of death or Total Disability, the date all documentation necessary to effect the distribution is received by the Plan Administrator (determined in the manner provided in section 6.4, separately by reference to the Common Units in the Account on such Valuation Date and the respective Unit values on such Valuation Date) shall be applied to Common Stock to the extent attributable to Common Units. The Member shall receive shares of Common Stock equal to the maximum number of whole shares of Common Stock which could be purchased at the closing price of Common Stock on the New York Stock Exchange--Composite Transactions listing on such Valuation Date (or, in the event such Valuation Date falls on a date on which there are no trades of such stock reflected on such listing, the last trading day preceding such Valuation Date) with the portion of such vested dollar balance attributable to Common Units in the Account. The Member shall be paid in cash the vested dollar amount remaining in his Accounts invested in the Boeing Company Stock Fund after reduction of each such Account by the value of the whole shares previously described, based upon such closing price. In addition, the Member shall be paid in cash the amount of any cash dividends received since such Valuation Date attributable to the number of whole shares of Common Stock distributed to him and the dollar value of any contributions to the Company Stock Fund in respect of such Member between such Valuation Date and his Termination of Employment. 8.5 Employees of Divested Components (a) This section shall apply to any Member who is employed by a Divested Component immediately prior to its divestiture. For purposes of this section, "Divested Component" means a component of the Company or of an Affiliate or Subsidiary which ceases to be a component of the Company or of an Affiliate or Subsidiary, by reason of its divestiture or any action incident thereto. (b) The Member shall be fully vested in his Company Contributions Account, regardless of his years of Vesting Service. (c) If the Member does not continue employment with the Divested Component, his Accounts shall be distributed to him as provided in Article 7 or section 8.2, whichever is applicable. (d) If the Member continues employment with the Divested Component, his Account shall be distributable as provided in Article 7 or section 8.2, whichever is applicable, or shall be transferred by the Trustee to the trustee of the other funding - 39 - 45 agent of any appropriate plan established or otherwise maintained by the acquiror of the Divested Component in such a manner as to ensure that no portion of the Member's Accounts shall be subject to forfeiture. 8.6 Forfeitures (a) If a Member terminates employment and receives a distribution of the vested portion of his Accounts pursuant to section 8.2, the nonvested portion of his Company Contributions Account, if any, will be forfeited at the time such distribution is made. Such forfeiture will be applied as soon as practicable to reduce Company Matching Contributions otherwise payable under 3.4. (b) If a Member who has not completed five years of Vesting Service becomes eligible to receive a distribution under section 8.2(c) but fails to provide written consent to such distribution, the nonvested portion of the Member's Company Contributions Account shall be forfeited when the Member incurs five consecutive One-Year Breaks in Service, unless the Member is reemployed as an Employee prior to incurring five consecutive One-Year Breaks in Service. . Such forfeiture will be applied as soon as practicable to reduce Company Matching Contributions otherwise payable under 3.4. 8.7 Repayment After Reemployment If a Member who has forfeited a nonvested balance is reemployed as an Employee, the previously forfeited nonvested portion of his Company Contributions Account will be restored to the dollar amount on the date the Member received a distribution under this article if the Member makes a cash repayment to the Plan of the amounts which were distributed from his Compensation Deduction and Compensation Deferral Accounts on or before the earlier of: (a) the last day of the month containing the fifth anniversary of his Reemployment Date or (b) the date the Member incurs five consecutive One-Year Breaks in Service. The Company Contributions Account balance will be restored by an additional Company contribution. The amount of the Member's repayment (which shall not reflect interest) will be credited to the Member's Compensation Deduction Account. The repayment and the restored Company Contributions Account will be allocated to the Investment Funds in the same proportion as the Member's current Compensation Deduction or Deferral Contributions. The nonvested portion of the member's Company Contributions Account restored pursuant to this section shall vest as provided in section 8.1. - 40 - 46 Article 9 Withdrawals and Loans 9.1 Withdrawals from Accounts by Members under Age 59 1/2 (a) Subject to sections 9.4 and 9.5, a Member who has not yet attained age 59 1/2 may elect while still employed to withdraw certain amounts from his Accounts. As soon as practicable after the Plan Administrator's receipt of such an election, there shall be paid or transferred to such Member cash and, if applicable, shares of Common Stock from his Accounts in the following order: (1) first, from his Compensation Deduction Account; (2) second, from that portion (if vested) of his Company Contributions Account, which is attributable to Compensation Deduction Contributions; (3) third, from his Compensation Deferral Account. (b) If a Member receives a withdrawal pursuant to section 9.1(a)(1), the nonvested portion of his Company Contributions Account associated with the amounts withdrawn shall be forfeited as provided in section 9.3; and the withdrawal limitations of section 9.3 shall apply. If a Member receives a withdrawal pursuant to section 9.1(a)(2), his Compensation Deferral Contributions, Compensation Deduction Contributions, and Company Matching Contributions shall be suspended for a period of 26 weeks. (c) A Member shall be permitted to withdraw from his Compensation Deferral Account, as described in section 9.1(a)(3), only upon providing adequate evidence of a hardship, as provided in section 9.5, and such a hardship withdrawal shall be governed by the provisions of that section. (d) The portion of the Member's Company Contributions Account which is attributable to Compensation Deferral Contributions shall not be available for withdrawal prior to the Member's attainment of age 59 1/2. (e) In determining withdrawal amounts, the value of available Units in the Member's Accounts shall be determined as of the Valuation Date coinciding with or immediately preceding the date of the election. 9.2 Withdrawal from Accounts by Members Over Age 59 1/2 (a) A Member who has attained age 59 1/2 while still employed by the Company may elect to withdraw any or all vested amounts from his Accounts. A Member making such an election shall receive the amount of cash or, if applicable, stock to be withdrawn from his Accounts in the following order: - 41 - 47 (1) first, from his Compensation Deduction Account; (2) second, from his Compensation Deferral Account; (3) third, from that portion (if vested) of his Company Contributions Account, which is attributable to Compensation Deduction Contributions; and (4) fourth, from that portion (if vested) of his Company Contributions Account, which is attributable to Compensation Deferral Contributions. (b) If a Member receives a withdrawal pursuant to section 9.2(a)(1), the nonvested portion of his Company Contributions Account associated with the amounts withdrawn shall be forfeited as provided in section 9.3, but the withdrawal limitations of section 9.3(d) shall not apply and his Compensation Deferral Contributions, Compensation Deduction Contributions, and Company Matching Contributions shall not be suspended. (c) In determining the distribution amounts, the value of available Units in the Member's Accounts shall be determined as of the Valuation Date coinciding with or immediately preceding the date of the election. 9.3 Forfeitures and Limitation on Withdrawals (a) When applicable, any nonvested portion of a Member's Company Contributions Account associated with a withdrawal from his Compensation Deduction Account shall be forfeited at the time of such withdrawal. (1) The forfeitable Units, if any, of a Member's Company Contributions Account which are attributable to Compensation Deduction Contributions shall be determined by multiplying the dollar balance of the Member's Company Contributions Account which is attributable to Compensation Deduction Contributions by a fraction, the numerator of which is equal to the dollar value of the Compensation Deduction Contributions which were withdrawn by the Member and the denominator of which is the total dollar value of the Member's Compensation Deduction Account (both such dollar values to be determined as of the last Valuation Date preceding the date of withdrawal). (2) An Employee who has suffered a forfeiture described in this subsection (a) may elect to restore his interest in the Plan by making a cash repayment to the Plan in the amount and in the manner described in subsections (b) and (c). (b) In order to restore a forfeiture described in subsection (a), a repayment of the amount withdrawn by the Employee from his Compensation Deduction Account must be made within 60 months after such withdrawal. For purposes of - 42 - 48 this subsection (b), the amount distributed to an Employee means the sum of the cash distributed to such Employee plus the dollar value of the Common Stock distributed to such Employee, determined at the closing price for Common Stock as reflected on the New York Stock Exchange--Composite Transactions listing on the Valuation Date applicable to the distribution or withdrawal (or if such Valuation Date falls on a date on which, for any reason, there are no trades of such stock reflected on such listing, the last trading day preceding such Valuation Date). Such amount shall not be increased to reflect interest. (c) As soon as practicable after an Employee makes a repayment described in subsection (b), there shall be credited to the Employee's Company Contributions Account the dollar amount of any amounts forfeited as a result of the withdrawals. The amount repaid under this subsection (c) shall be credited to the Employee's Compensation Deduction Account or, if applicable, his Compensation Deferral Account and shall be allocated to the Investment Funds in the same proportion as the Member's current Compensation Deduction Contributions or Compensation Deferral Contributions. The previously forfeited amount which is credited under this subsection shall subsequently vest as provided in section 8.1. (d) Withdrawals shall be in a minimum amount of $100. A Member who has not yet attained age 59 1/2 may not make a request for a partial withdrawal within 26 weeks of any prior request for a partial withdrawal; provided, however, that this limitation upon the ability of such Member to make a partial withdrawal (including hardship withdrawals pursuant to the provisions of section 9.5) within 26 weeks of any prior request for a partial withdrawal shall be waived by the Plan Administrator for the six-month period immediately following any due declaration by the President of the United States under applicable federal law that a particular occurrence or situation constitutes a national disaster condition, if such partial withdrawal is requested for a reason associated with financial need of the Member resulting from the effects of the said condition. 9.4 Allocation of Withdrawals Among Investment Funds (a) Withdrawals pursuant to sections 9.1 and 9.2 shall be taken from the Member's Accounts in the Investment Funds in a pro rata fashion, based upon the relative size of such Accounts. (b) Notwithstanding the above subsection (a), a Member may elect to have any such withdrawal taken: (1) first from the Member's Accounts in the Boeing Company Stock Fund, with any additional withdrawal amount to be taken on a pro rata basis from the Member's Accounts in the remaining Investment Funds other than the Boeing Company Stock Fund; or. - 43 - 49 (2) first on a pro rata basis from the Member's Accounts in Investment Funds other than the Boeing Company Stock Fund, with any additional withdrawal amount to then be taken from the Member's Accounts in the Boeing Company Stock Fund. 9.5 Hardship Withdrawals from Compensation Deferral Accounts Subject to any restrictions the Plan Administrator may establish pursuant to section 9.6: (a) A Member who has not attained age 59 1/2 may request approval of the Company to withdraw some or all of the Units of his Compensation Deferral Account if the Member demonstrates that the withdrawal is required as a result of a hardship and for payment of any federal, state or local income taxes and penalties reasonably anticipated to result from such withdrawal. (1) For the purposes of this subsection (a) the term "hardship" shall mean an immediate and heavy financial need of the Member for which the amount required is not reasonably available to the Member from other sources and which arises for one of the following reasons: (A) the purchase (excluding mortgage payments) or construction of a principal residence for the Member, or to prevent eviction from, or foreclosure on the mortgage on, the Member's principal residence; (B) the incurring of obligations for: (i) tuition, related educational fees and room and board expenses for post-secondary education for the Member, his spouse or one or more of his children or other dependents (as defined in section 152 of the Code) to be incurred during the 12-month period immediately following the date of his request for distribution; or (ii) expenses not covered by insurance which either have been previously incurred by the Member for, or are necessary in order for the Member to obtain, medical care (as described in section 213(d) of the Code) for himself, his spouse or one or more of his dependents (as defined in section 152 of the Code); (C) any other reason permitted under section 401(k)(2)(B)(i)(IV) of the Code and approved by the Plan Administrator. (2) Any determination of the existence of hardship, the reasonable availability to the Member of funds from other sources and the amount to be withdrawn on account of such hardship shall be made by the Plan - 44 - 50 Administrator on the basis of all relevant facts and circumstances and in accordance with the foregoing rules, as applied in a uniform and nondiscriminatory manner. In making such determination, the Plan Administrator may, if it is reasonable to do so in the light of all relevant and known facts and circumstances, rely on the Member's representation that the hardship cannot be relieved: (A) through reimbursement or compensation by insurance or otherwise; (B) by reasonable liquidation of the Member's assets, to the extent that such liquidation would not itself cause an immediate and heavy financial need; (C) by suspension of Compensation Deferral or Compensation Deduction Contributions; or (D) by other distributions (other than hardship distributions) or loans (which meet the requirements of section 72(p) of the Code) from the Plan and any other plan maintained by an Affiliate or Subsidiary or by any former employer or by borrowing from commercial sources at reasonable commercial rates. (b) Withdrawals pursuant to subsection (a) shall not result in the forfeiture of a Member's interest in his Company Contributions Account. (c) Withdrawals pursuant to subsection (a) shall be taken from the Member's Accounts in the Investment Funds in a pro rata fashion, based upon the relative size of such Accounts. (d) Notwithstanding the above subsection (c), a Member may elect to have any such withdrawal taken: (1) first from the Member's Accounts in the Boeing Company Stock Fund, with any additional withdrawal amount to be taken on a pro rata basis from the Member's Accounts in the remaining Investment Funds other than the Boeing Company Stock Fund; or (2) first on a pro rata basis from the Member's Accounts in Investment Funds other than the Boeing Company Stock Fund, with any additional withdrawal amount to then be taken from the Member's Accounts in the Boeing Company Stock Fund. (e) Withdrawals (including those from the Boeing Company Stock Fund) shall be in cash and for a minimum amount of $100. A Member may not make a request for partial withdrawal within 26 weeks of any prior request for partial withdrawal; provided, however, that this limitation upon the ability of a Member to make a - 45 - 51 partial withdrawal (including hardship withdrawals pursuant to the provisions of subsection (a) of this Section ) within 26 weeks of any prior request for a partial withdrawal shall be waived by the Plan Administrator for the six-month period immediately following any due declaration by the President of the United States under applicable federal law that a particular occurrence or situation constitutes a national disaster condition, if such partial withdrawal is requested for a reason associated with financial need of the Member resulting from the effects of such condition. 9.6 Loans The Plan Administrator shall establish, and may from time to time modify, procedures pursuant to which any Member or other "party in interest" (as defined in ERISA section 3(14)) may apply for and receive a loan from the Plan; provided, however, no loans shall be made pursuant to this section before July 1, 1997. The amount of the loan may not exceed the least of (a), (b), (c), or (d): (a) the aggregate of the balances in the borrower's Compensation Deferral and Compensation Deduction Accounts; (b) an amount which, when combined with all outstanding loans to the borrower from all other plans of all Affiliate or Subsidiary, equals $50,000, reduced by the excess, if any, of (1) the highest outstanding and unpaid balances of all prior loans to the borrower from the Plan and such other plans during the 12-month period immediately preceding the date on which such loan is made, over (2) the outstanding balance of any loan to the borrower from the Plan or such other plans on the date on which the loan is made; (c) one-half of the aggregate of the fully vested and nonforfeitable interests in the balances of the borrower's Accounts; or (d) such amount, not exceeding the amounts described in (a) through (c) above, as the Plan Administrator shall determine. In addition to the above limitation, no such Member or other party in interest shall be permitted to have more than a single loan outstanding at any one time from this Plan and all other plans sponsored by Affiliate or Subsidiary. All such loans shall be made available to all eligible Members and other parties in interest on a reasonably equivalent and non-discriminatory basis and shall be governed by the provisions of Appendix A, as such Appendix is from time to time constituted, pursuant to determination of the Plan Administrator. - 46 - 52 Article 10 Termination of Plan 10.1 Termination of Plan The Company expects to continue the Plan indefinitely but reserves the right to terminate the Plan in whole or in part upon giving prior written notice to the Trustee and the Plan Administrator. 10.2 Procedures Upon Termination of Plan Upon a complete or partial termination of the Plan or upon a complete discontinuance of contributions to the Plan, the interests of the Members in their Company Contributions Accounts (or, in the case of a partial termination, the interests of those Members for whom the Plan has terminated), shall be fully vested. Upon such termination, the Plan Administrator shall perform a valuation of the Plan assets. Upon completion of such valuation, the full balances in the Accounts of Members (or, in the case of a partial termination, the Members for whom the Plan has terminated), shall be distributed to them. - 47 - 53 Article 11 Top Heavy Provisions 11.1 Top-Heavy Plan Notwithstanding any other provision of this Plan to the contrary, this article will apply if the Plan is a Top-Heavy Plan. The Plan will be a Top-Heavy Plan if, as of the Determination Date, the cumulative account balances of Key Employees exceeds 60% of the cumulative account balances under the Plan of all Employees and Key Employees (but excluding the account balances of former Key Employees and individuals who have not performed any services for the Company at any time during the five year period ending on the Determination Date). This percentage will be computed in accordance with Code Section 416(g). In determining whether this Plan is a Top-Heavy Plan, all employers that are aggregated under Code Sections 414(b), (c) and (m) shall be treated as a single employer. In addition, all plans that are part of the Aggregation Group shall be treated as a single plan. In determining present values, mortality shall be based on the 1971 Group Annuity Mortality Table and the interest rate utilized shall be five percent. 11.2 Definition of Terms For purposes of this article only, the following terms shall have the following meanings: (a) "Aggregation Group" means the Required Aggregation Group or, at the election of the Company, the Permissive Aggregation Group. (b) "Compensation" for purposes of this article and 13.9 only means a Member's wages, salaries, fees for professional service and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Company to the extent that the amounts are includible in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, reimbursements, and expense allowances). Compensation will not include the following: (1) Company contributions to a plan of deferred compensation which are not included in the Employee's gross income for the taxable year in which contributed (before the application of the Code Section 415 limitation to that plan) or Company contributions to a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensation; - 48 - 54 (2) amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (3) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (4) other amounts which receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includible in the Employee's gross income). Compensation shall not exceed $150,000 for 1994. On January 1 of each calendar year in which the Secretary of the Treasury prescribes a new dollar limit, this $150,000 limit will automatically be adjusted to that new limit. (c) "Determination Date" means the last day of the preceding Plan Year. This date will also be the valuation date for determining present values. For the first Plan Year, the Determination Date will be the last day of that Plan Year. (d) "Key Employee" means an Employee, a former Employee, or the Beneficiary of a former Employee who, in the Plan Year containing the Determination Date, or any of the four preceding Plan Years, is: (1) An officer of the Company having an annual compensation from the Company greater than 50 percent of the amount in effect under Code Section 415(b)(1)(A) for the calendar year in which any such Plan Year ends. Not more than fifty Employees (or, if fewer, the greater of three Employees or ten percent of the Employees not excluded under Code Section 414(q)(8), as in effect on December 31, 1996), including those Employees included under paragraphs (2), (3) and (4) below, shall be considered as officers for purposes of this paragraph. (2) One of the ten Employees having an annual Compensation from the Company greater than the amount in effect under Code Section 415(c)(1)(A) for the calendar year in which any such Plan Year ends and owning (or considered as owning within the meaning of Code Section 318) both more than a one-half percent interest and the largest interests in the Company. (3) A five-percent owner of the Company. (4) A one-percent owner of the Company having an annual Compensation from the Company of more than $150,000 for a Plan Year. (5) For purposes of this subsection (d), Compensation shall include amounts contributed by the Company pursuant to a salary reduction agreement - 49 - 55 which are excludable from gross income under Code Sections 125, 402(e)(3), 402(h) or 403(b). Whether an Employee is a five-percent owner or a one-percent owner shall be determined in accordance with Code Section 416(i). (e) "Non-key Employee" means an Employee (and any Beneficiary of an Employee) who is not a Key Employee. (f) "Permissive Aggregation Group" means the Required Aggregation Group of plans plus any other plan or plans of the Company which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code Sections 401(a)(4) and 410. (g) "Required Aggregation Group" means: (1) Each stock bonus, pension, or profit sharing plan of the Company in which a Key Employee participates in the Plan Year containing the Determination Date or any of the four preceding Plan Years which is intended to qualify under Code Section 401(a); and (2) Each other such stock bonus, pension or profit sharing plan of an employer which enables any plan in which a Key Employee participates to meet the requirements of Code Section 401(a)(4) or 410. (h) "Top-Heavy Group" means the Aggregation Group if the sum of (1) and (2) below exceeds sixty percent of a similar sum determined for all Employees (excluding former Key Employees and individuals who have not performed any services for the Company at any time during the five year period ending on the Determination Date): (1) The present value of the cumulative accrued benefit for Key Employees under all defined benefit plans included in such group. (2) The aggregate of the accounts of Key Employees under all defined contribution plans included in such group. In a Top-Heavy Group, all plans in the Required Aggregation Group are Top-Heavy regardless of whether or not the individual plans are Top-Heavy. 11.3 Modification of Vesting Schedule If the Plan is Top-Heavy in a Plan Year, a Participant who is credited with an Hour of Service in such Plan Year shall have his vested interest determined in accordance with the following schedule if it produces a higher vesting interest than the schedule in section 8.1. - 50 - 56
Vesting Service Vested Interest --------------- --------------- Less than 2 years 0% 2 but less than 3 years 20% 3 but less than 4 years 40% 4 but less than 5 years 60% 5 or more years 100%
A Participant's vested interest shall not be less than that determined as of the last day of the last Plan Year in which the Plan was a Top-Heavy Plan. If the Plan ceases to be Top-Heavy, each Participant with three or more years of Vesting Service (determined as of the first day of the Plan Year in which the Plan ceases to be Top-Heavy) shall continue to have his vested interest determined in accordance with this section. 11.4 Minimum Contribution If the Plan is a Top-Heavy Plan in a Plan Year, a Member, other than a Key Employee, who is employed in such Plan Year or who is on an authorized period of absence shall be credited with a Company contribution as of the last day of such Plan Year not less than 3% of compensation or, if less, the largest percentage contribution made or required to be made for any Key Employee. Amounts contributed as a result of a salary reduction agreement shall be included in determining the largest percentage contribution made or required to be made for Key Employees. The minimum contribution under this section shall not apply to an Employee during any year in which he is entitled to a minimum benefit under a Top-Heavy defined benefit pension plan maintained by the Company. 11.5 Modification of Maximum Contribution If the Plan is a Top-Heavy Plan in a Plan Year, 13.9(e) shall be amended for such Plan Year by substitution of "1.0" for "1.25" where such factor appears in Code Section 415(e). 11.6 Collective Bargaining Agreements The provisions shall not apply to any Employee who is included in a group of Employees covered by a collective bargaining agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, including the Company, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and such employer or employers. - 51 - 57 Article 12 Administration of Plan 12.1 Administration (a) The Plan Administrator will serve as the named fiduciary pursuant to ERISA. The Plan Administrator will have complete control of the administration of the Plan, subject to the provisions hereof, with all powers necessary to enable it to carry out its duties properly in that respect. Not in limitation, but in amplification of the foregoing, it will have the power to interpret the Plan and to determine all questions that may arise hereunder, including all questions relating to the eligibility of Employees to participate in the Plan and the amount of benefit to which any Member or Beneficiary may become entitled. Its decisions upon all matters within the scope of its authority will be final. (b) The Plan Administrator will establish rules and procedures to be followed by Members and Beneficiaries in filing applications for benefits, in furnishing and verifying proofs necessary to determine age or marital status, and in any other matters required to administer the Plan. (c) The Plan Administrator will receive all applications for benefits and will determine all facts necessary to establish the right of the applicant to benefits under the provisions of the Plan and the amount thereof. (d) The Plan Administrator shall maintain accounts showing the fiscal transactions of the Plan, and shall keep data required for the valuation of the assets and liabilities of the Plan. The Plan Administrator shall also prepare an annual report showing in reasonable detail the assets and liabilities of the Plan and giving a brief account of the operation of the Plan for each year. The Plan Administrator shall make the annual report available to each Member as required by law. (e) The Plan Administrator may appoint such accountants, counsel, consultants, actuaries and other persons the Plan Administrator deems necessary or desirable in connection with the administration of the Plan. (f) The Plan Administrator will have the power to appoint or remove any Investment Manager or Managers and to manage (including the power to acquire and dispose of) any assets of the Plan. (g) The Plan Administrator will have the power to appoint or remove the Trustee. (h) The Plan Administrator will be entitled to rely upon all tables, valuations, certificates and reports furnished by the accountant, consultant or actuary appointed by the Plan Administrator and upon all opinions given by any counsel selected or approved by it. - 52 - 58 12.2 Records All acts and determinations of the Plan Administrator and the Company regarding this Plan will be duly recorded and all such records, together with such other documents as may be necessary for the administration of the Plan, will be preserved in the custody of the Plan Administrator. 12.3 Payment of Expenses Necessary and proper expenses of administration of the Plan shall be paid from assets of the Trust Fund except for those expenses the Company is required by law to pay or chooses to pay. Brokerage and other fees incurred in the purchase or sale of securities will be charged to the Investment Fund in which the transaction occurred. Fees charged by the Trustee for supervision and administration of Plan assets will be charged to the Investment Fund to which such fees are properly allocable. Any expense charged by an insurance company under the provision of an investment contract will be charged to the Investment Fund which holds such contract. 12.4 Delegation of Authority The administrative duties and responsibilities set forth in 12.1 may be delegated by the Plan Administrator in whatever manner and extent it chooses to such person or persons as it selects. It will notify the Company and the Trustee of the authority conferred upon such person or persons. 12.5 Information Available Any Member of the Plan or any Beneficiary receiving benefits under the Plan may examine copies of the Plan description, latest annual report, any bargaining agreement, the Plan, the Trust Agreement or any other instrument under which the Plan was established or is operated. The Plan Administrator will maintain all of these items in its office, or in such other place or places as it may designate from time to time for examination during reasonable business hours. Upon the written request of a Member or Beneficiary receiving benefits under the Plan, the Plan Administrator will furnish a copy of any item listed in this section. The Plan Administrator may make a reasonable charge to the requesting person for the copy furnished. 12.6 Appeal Procedure The Plan Administrator shall adopt procedures for the presentation of claims for benefits and for the review of the denial of such claims by the Plan Administrator. Detailed information regarding such procedures may be obtained by writing to the Plan Administrator, The Boeing Company, M.S. 11-59, P.O. Box 3707, Seattle, Washington 98124. The decision of the Plan Administrator upon such review shall be final, subject to appeal rights provided by law. - 53 - 59 12.7 Fiduciary Capacity Any person may serve in more than one fiduciary capacity with respect to this Plan. 12.8 Committee Liability The members of the Voluntary Investment Plan Committee shall use ordinary care and diligence in the performance of their duties, but no member will be personally liable by virtue of any contract, agreement, or other instrument made or executed as a member of the Committee, nor for any mistake of judgment made by him or by any other member, nor for any loss unless resulting from willful misconduct or failure to exercise good faith. No member of the Committee will be liable for the neglect, omission, or wrongdoing of any other member or of the agents or counsel of the Committee. The Company shall indemnify each member of the Committee against, and hold him harmless from any and all expenses and liabilities arising out of any act or omission to act as a member of the Committee, except such liabilities and expenses as are due to willful misconduct or failure to exercise good faith. - 54 - 60 Article 13 General Provisions 13.1 Amendment of Plan (a) The Company may amend the Plan at any time. Such amendments may include any remedial retroactive changes to comply with the requirements of any law or regulation issued by any governmental agency to which the Company is subject. The Company may delegate to the Voluntary Investment Plan Committee, or to any member thereof, its authority to amend the Plan. No amendment will diminish or adversely affect any accrued interest or benefit of Members or their Beneficiaries, except as may be required to comply with the requirements of any law or regulation issued by any governmental agency to which the Company is subject. (b) If any amendment to the Plan changes the vesting schedule, each Member who is an Employee and has completed three years of Vesting Service may elect to remain under the vesting schedule of the Plan prior to such amendment. If the Member does not make the election within a reasonable time (as may be determined pursuant to governmental regulations from time to time), he will be subject to the vesting schedule under the Plan as amended. In no event will the vesting percentage attained by a Member be reduced below the percentage attained prior to such amendment. (c) If any amendment to the Plan eliminates an optional form of payment, a Member may continue to elect such form of payment with respect to any Account balance earned prior to the effective date of such amendment. 13.2 Qualification Each contribution of the Company to the Trust Fund is conditioned upon the initial qualification of the Plan under Code Section 401. If the deduction of any such contribution is disallowed, it shall be returned to the Company (to the extent disallowed), within one year after the date of such disallowance. 13.3 Employment Status Nothing contained in the Plan will be deemed to give any Employee the right to be retained in the employ of the Company or to interfere with the rights of the Company to discharge any Employee at any time. 13.4 Mergers or Consolidations If this Plan merges or consolidates with, or transfers its assets or liabilities to any other qualified plan of deferred compensation, no Member will, as a result of such merger, consolidation or transfer, be entitled to a benefit on the day following such event which - 55 - 61 is less than the benefit to which he is entitled on the day preceding such event. For purposes of this section, the benefit to which a Member is entitled shall be calculated based upon the assumption that a Plan termination and distribution of assets occurred on the day as of which the Member's entitlement is being determined. 13.5 Provision Against Anticipation No benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge or other legal process, and any attempt to do so shall be void. The preceding sentence will not apply to a qualified domestic relations order pursuant to Code Section 414(p). 13.6 Facility of Payment If any Member or Beneficiary is physically or mentally incapable of giving a valid receipt for any payment due him and no legal representative has been appointed for him, the Plan Administrator may direct the Trustee to make such payment to any person or institution maintaining such Member or Beneficiary and the release of such person or institution will be a valid and complete discharge for such payment. Any final payment or distribution of any Member, to the legal representative of the Member or to any Beneficiaries of such Member in accordance with the provisions herein will be in full satisfaction of all claims against the Plan, the Plan Administrator, the Trustee, the Company and the Parent arising under or by virtue of the Plan. 13.7 Construction The validity of the Plan or any of its provisions will be determined under and will be construed according to federal law and, to the extent permissible, according to the laws of the state of Washington. If any provision of the Plan is held illegal or invalid for any reason, such determination will not affect the remaining provisions of the Plan and the Plan will be construed and enforced as if said illegal or invalid provision had never been included. 13.8 Legal Actions The Plan Administrator will be the necessary party to any action or proceeding involving the assets held with respect to the Plan or the administration thereof. No Employee, Member, former Member or their Beneficiaries, or any other person having or claiming to have an interest in the Plan will be entitled to any notice or process. Any final judgment that may be entered in any such action or proceeding will be binding and conclusive on all persons having or claiming to have any interest in the Plan. 13.9 Limitations on Contributions (a) For purposes of this section only, the following definitions shall apply: - 56 - 62 (1) "Additions" means the sum of (A) Company Matching Contributions, (B) Elective Contributions, (C) forfeitures, if any, allocated to the Member's Accounts, (D) amounts allocated after March 31, 1984, to an individual medical account (defined in Code Section 415(l)(2)) which is part of a pension or annuity plan maintained by the Company (provided that the 25% limitation in 13.9(b) shall not apply), and (E) amounts allocated after December 31, 1985, to the separate account of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit fund (as defined in Code Section 419(e)) maintained by the Company. (2) "Compensation" has the meaning defined in 11.2(b). (3) "Limitation Year" means a Plan Year. (b) The total Additions made to the Accounts of a Member for any Plan Year shall not exceed the lesser of 25% of the Member's Compensation or the greater of $30,000 or one-quarter of the dollar limitation in effect under Code Section 415(b)(1)(A) as adjusted for cost of living increases by the Secretary of the Treasury. (c) If Additions exceed the limitation for any Plan Year as a result of the allocation of forfeitures, a reasonable error in estimating a Member's annual compensation, or under such facts and circumstances as the Commissioner may allow, such excess Additions will be applied in accordance with subdivisions (ii) and (iv) of Treasury Regulation section 1.415-6(b)(6). (d) All defined contribution plans of the Company, terminated or not, will be considered as one plan for purposes of the limitations specified under this section, and all entities of a controlled group of entities will be considered as one employer. (e) In any case in which a person is a Member of both a defined benefit plan and a defined contribution plan maintained by the Company or any Affiliate or Subsidiary of the Company, then the provisions of Code Section 415(e) shall apply. If for any Plan Year, the limits described in Code Section 415(e) are exceeded, the projected annual retirement income benefit under the defined benefit plan shall be limited, to the extent necessary, to reduce the defined benefit plan fraction (as defined in Code Section 415(e)(2)) so that the sum of the defined contribution plan fraction (as defined in Code Section 415(e)(3)) and the defined benefit plan fraction does not exceed 1.0. Notwithstanding the foregoing, if the defined benefit plan of the Company or Affiliate or Subsidiary specifically provides that the defined benefit plan fraction is not reduced, the Member's Additions will be adjusted as described 13.9(c) to the extent necessary, to reduce the defined contribution plan fraction so that the sum of the defined contribution plan fraction and the defined benefit plan fraction does not exceed 1.0. - 57 - 63 13.10 Qualified Domestic Relations Order (a) The Plan Administrator shall promptly notify a Member and any other alternate payee of the receipt of a domestic relations order and of the Plan's procedure for determining whether the order qualifies as a Qualified Domestic Relations Order as defined in Code Section 414(p)(1)(A). Within a reasonable period of time after the receipt of such order, the Plan Administrator shall determine whether such order qualifies as a Qualified Domestic Relations Order and shall notify the Member and each alternate payee of such determination. (b) During any period in which the issue of qualification of a domestic relations order is being determined, the Plan Administrator shall segregate in a separate account in the Plan the amounts, if any, which would have been payable to the alternate payee during such period if the order had been determined to be a Qualified Domestic Relations Order. If the domestic relations order is determined to be qualified, the Plan Administrator shall pay the balance of such account to the person or persons entitled thereto. If within eighteen months it is determined that the domestic relations order is not qualified, or if the issue is not resolved, then, as of the Valuation Date next following the close of such period, the balance in the segregated account shall either be credited to the account of the Member, or, if the Member has terminated employment, distributed to the Member, or, in the event of the Member's death, to his Beneficiary. Any subsequent determination that the domestic relations order is a Qualified Domestic Relations Order shall apply prospectively only. (c) If a domestic relations order is determined to be qualified, then the Plan Administrator shall make distribution to the alternate payee as required by that Qualified Domestic Relations Order. No payment shall be made under this section which is in excess of the balance of a Member's Accounts as determined pursuant to the provisions of the Plan. (d) In the event that the Plan Administrator shall determine that a distribution or a withdrawal of a Member's Account pursuant to Article 7, Article 8, Article 9, or Article 10 has been delayed as a result of a pending or threatened domestic relations order, the Valuation Date immediately preceding the date on which such withdrawal or distribution is approved by the Plan Administrator pursuant to such order shall be substituted for the Valuation Date which would otherwise be applicable to such distribution or withdrawal. 13.11 Pronouns Masculine pronouns as used in this Plan will include both masculine and feminine gender unless the context indicates otherwise. - 58 - 64 13.12 Eligible Rollover Distribution (a) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this section, 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. Prior to effecting such transfer, the Plan Administrator shall required evidence reasonably satisfactory to him that the entity to which such transfer is to be made is, in fact, and eligible retirement plan and such plan may receive the distribution in the forms required under Article 7, Article 8, or Article 9, as applicable. (b) Definitions. (1) Eligible rollover distribution: An 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 Code Section 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (2) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts the distributee's eligible rollover distribution in the forms required under Article 7, Article 8, or Article 9, as applicable. 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. (3) Distributee: A 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 Code Section 414(p), are distributees with regard to the interest of the spouse or former spouse. - 59 - 65 (4) Direct rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. - 60 - 66 Appendix A Procedures, Terms, and Conditions of Loans ELIGIBILITY FOR LOANS. The individuals eligible to obtain loans from the Plan ("Borrowers") are limited to: (1) Employees, and (2) non-Employees who are "parties in interest" (as defined in section 3(14) of ERISA) who have Plan Account balances. An Employee who wishes to obtain a loan must be employed on an active payroll of the Company or an Affiliate or Subsidiary at the time of the loan application. A party in interest who is not an Employee will be eligible to obtain a loan only if an agreement can be provided by the party's current employer to deduct and remit the required loan repayments to the Plan. LIMITATION ON NUMBER AND MINIMUM AMOUNT OF LOANS. Only one loan to a Borrower is permitted to be outstanding from all Company sponsored savings plans at any one time. Any Borrower who has an outstanding loan from the Plan will be required to repay that loan in full before applying for another loan. Each loan which is approved must be for a minimum of $1,000. MAXIMUM AMOUNT OF LOAN. The amount which a Borrower will be permitted to borrow from the Plan is based on the aggregate value of the Borrower's Accounts, determined in accordance with section 6.4 of the Plan, and may not exceed the least of the amounts described in subsections (a), (b) and (c) of section 9.6 of the Plan. The maximum amount of any loan will be further limited to ensure that, after applying the appropriate interest rate and taking into account all applicable deductions, the resulting periodic repayments will not exceed the Borrower's net earnings. The deductions referred to in the preceding sentence include statutory withholdings, deductions for employee benefits and all pre-tax contributions to the Plan, but exclude credit union, savings bond, charitable contribution and other similar deductions. LOAN APPLICATIONS. Loan applications by prospective Borrowers will be made via telephone to the Plan Administrator or such third party administrator as may be designated by the Plan Administrator (either of whom is hereafter referred to as the "Loan Administrator"). The Loan Administrator will then review the telephonic application and determine eligibility for the loan. If the loan is approved, the Loan Administrator will prepare and forward to the Borrower a letter notifying the Borrower of the approval, together with a Truth in Lending Statement and a check for the loan amount, all in the form approved by the Plan Administrator. The Borrower's endorsement of the loan check will be considered to be the Borrower's agreement to the terms of the loan. Failure by the Borrower to endorse the check within 30 days after the date of the check will be deemed to be a withdrawal by the Borrower of the loan application. - 61 - 67 SOURCE OF LOAN FUNDS. Each loan will be funded by withdrawing the required amounts from the Plan Account(s) of the Borrower in the following order: First -- from the Borrower's Compensation Deferral Account; Second -- from the Borrower's Compensation Deduction Account. Subject to the provisions of the following paragraph, the loan amount will be funded by the Borrower's Investment Funds in the applicable Accounts, in a pro rata fashion, based upon the relative size of the balance of each such Fund in the Accounts. Alternatively, a Borrower may elect to have the loan funded first from the Borrower's interest in Stock Fund B, with any additional funding to be on a pro rata basis from the remaining Investment Funds. Any pro rata loan funding from the Borrower's interest in the Guaranteed Return Fund will be taken in reverse sequence by accessing the Fund's contracts on a last-in first-out basis. To the extent a loan is made against the Borrower's Stock Fund B Account, the Borrower will receive cash in lieu of shares of Common Stock. The Trustee will not be permitted to sell shares of Common Stock in order to provide the cash with which to finance loan applications. If, at any time, the Trustee does not have sufficient cash on hand to finance all outstanding loan applications, processing of each application for which sufficient cash is not available will be deferred until sufficient cash becomes available to process such loans on a first-come, first-serve basis. DETERMINATION OF LOAN INTEREST RATE. The interest rate to be charged for loans will be 1% over the prime rate, which is defined for this Appendix as the base rate on corporate loans posted by at least 75% of the largest 30 U.S. banks, as such rate is identified in the edition of The Wall Street Journal published on the last business day of the month prior to the approval of a loan. TERM OF LOANS. Loans will be permitted for terms of 12, 24, 36, 48 or 60 months for loans other than those for the purpose of purchasing a primary residence, which will be permitted for a term of 120 months. REPAYMENTS. Loan repayments by Employees will be deducted from the Employee's pay check each pay period. If a pay check is insufficient to cover the full amount of the loan repayment, no deduction will be made, and the repayment will be deducted from the Employee's next pay check. Loan repayment schedules for Borrowers who are not Employees will be developed on an individual basis, but will parallel as closely as possible the loan repayment schedules for Employees. PREPAYMENTS. The full unpaid balance of a loan may be prepaid at any time by a Borrower. Partial prepayments in excess of scheduled payroll deductions will not be accepted. No - 62 - 68 prepayments will be accepted within 12 months after the date of the loan, unless the Borrower is an Employee and terminates employment within such 12 month period. MISSED PAYMENTS. If any payment is not made, interest will continue to accrue on such missed payment and subsequent payments will be applied first to accrued and unpaid interest on the missed payment and then to principal. A notice will be mailed to the last known address of the Borrower stating that if three consecutive months of payments are missed, the loan will be considered to be in default. TERMINATION OF EMPLOYMENT. If a Borrower who is an Employee terminates employment or is on an unpaid leave of absence, or if a Borrower who is not an Employee is no longer able to repay a loan through payroll deductions, the Borrower may continue to make loan repayments by personal check. Such repayments to the Plan will be made through the Loan Administrator at an address to be provided to the Borrower by the Loan Administrator. DEFAULT. A loan will be considered to be in default after three consecutive months of payments have been missed during the term of the loan or when a Borrower revokes a payroll deduction authorization. In the event of such a default, a distribution of the loan amount, including both unpaid principal and accrued but unpaid interest, will be deemed to have occurred (as described in section 1.401(k)-1(d)(6)(ii) of the Treasury Regulations) and an information return reflecting the tax consequences, if any, to the Borrower will be issued. Upon the occurrence of an event permitting actual distribution of the Borrower's Account pursuant to the provisions of Code Section 401(k) (whether distribution of the Borrower's entire Plan Account will actually be made or will be deferred pursuant to applicable provisions of the Plan), the unpaid balance of a defaulted loan will be charged off against the Borrower's Account. If no distribution event has occurred, which would otherwise permit payment to the Borrower under Code Section 401(k), the unpaid balance of the loan will be retained in the Account until such time as payment would be permitted under that Code Section , at which time the unpaid balance of the loan, including any accrued and unpaid interest, will be charged off against the Borrower's Account. - 63 - EX-99.3 6 NORTH AMERICAN VOLUNTARY PLAN FOR HOURLY EMPLOYEES 1 Exhibit 99.3 APPENDIX A ROCKWELL INTERNATIONAL CORPORATION SAVINGS PLAN FOR CERTAIN REPRESENTED HOURLY EMPLOYEES PREAMBLE The Plan and Effective Date The Plan hereinafter described constitutes a savings plan in the form of a qualified cash or deferred arrangement under section 401(k) of the Internal Revenue Code of 1986, as amended, for employees on the hourly payrolls of the Company who are covered by collective bargaining agreements that provide for participation in the Plan. The effective date of the Plan is November 30, 1985. The Plan as restated herein is effective January 1, 1993. The provisions of the Plan as in effect from time to time prior to January 1, 1993, apply to the related periods prior to such date for all purposes, except as specifically provided in the Plan. 2 ARTICLE I - DEFINITIONS 1.010 "Account" or "Compensation Deferral Account" means the Participant's account maintained under the Plan. 1.020 "Administrative Committee" means the committee appointed by the Plan Committee and assigned power and authority under Sections 2.030 and 5.010. 1.030 "Affiliated Company" means Rockwell International Corporation and: (1) any corporation incorporated under the laws of one of the United States of America of which Rockwell International Corporation, a Delaware corporation, owns, directly or indirectly, eighty percent (80%) or more of the combined voting power of all classes of stock or eighty percent (80%) or more of the total value of the shares of all classes of stock (all within the meaning of section 1563 of the Code); (2) any partnership or other business entity organized under such laws, of which Rockwell International Corporation owns, directly or indirectly, eighty percent (80%) or more of the voting power or eighty percent (80%) or more of the total value (all within the meaning of section 414(c) of the Code); and (3) any other company deemed to be an Affiliated Company by the Board of Directors of Rockwell International Corporation. 1.040 "Beneficiary" means the one or more persons or trusts designated by a Participant pursuant to Article VII of the Plan; provided, however, that notwithstanding the foregoing and any provision to the contrary in Article VII, in the case of a Participant who has been married for a one (1) year period within the meaning of section 417(d) of the Code who dies prior to complete distribution of his Account pursuant to Section 7.010 of the Plan, the Beneficiary shall be deemed to be the Participant's spouse regardless of any contrary designation unless the Participant has filed with the Plan Administrator a written designation of a person or persons other than such spouse as a Beneficiary or Beneficiaries with respect to all or any part of the Participant's Accounts and such written designation is accompanied by the consent of the Participant's spouse or it is established to the satisfaction of the Plan Administrator that such consent cannot be obtained because there is no spouse or the spouse cannot be located or because of other circumstances permitted under section 417(a)(2) of the Code. Such consent shall be in writing on a form furnished to the Participant by the Plan Administrator and shall acknowledge the effect of such consent. The spouse's signature must be witnessed by a notary public not an Employee of the Company. Such consent shall apply only to the signatory spouse. In the event the Participant has a new spouse to whom he has been married for a one (1) year period within the meaning of section 417(d) of the Code, the written designation shall be void, and such new spouse shall be deemed to be the Participant's Beneficiary until such time as the Participant makes a written designation 2 3 of a person or persons other than such spouse in accordance with the provisions of this Section 1.040. 1.050 "Board of Directors" means the Board of Directors of Rockwell International Corporation; provided that any action of the Board of Directors contemplated by Sections 1.030, 1.070, and 1.120, may be taken by the Board of Directors or by any officer or officers of Rockwell International Corporation authorized by the Board of Directors to take such action. 1.060 "Class A Stock" means the Class A Common Stock of Rockwell International Corporation. 1.065 "Code" means the Internal Revenue Code of 1986, as it may be amended from time to time. References to sections of the Code are to such sections as of January 1, 1987, and shall include any subsequent modifications or successor sections thereto. 1.070 "Common Stock" means the common stock of Rockwell International Corporation other than the Class A Stock. 1.080 "Company" means Rockwell International Corporation and any other entity to which the Board of Directors has extended the benefits of the Plan. 1.090 "Compensation" means regular, straight-time base pay received by a Participant from the Company with respect to all hourly-rate employment during a calendar week. The term Compensation shall not include: (a) any premium pay received for overtime hours, night shift or seven-day premiums; (b) payments under patent contracts, employee suggestion programs, tuition refund payments, travel and/or relocation allowances; (c) grievance payments for lost earning (except back pay awarded in cases of reinstatement to a payroll) or any other special payments, fees or allowances; and (d) amounts in excess of $200,000 ($150,000, effective as of January 1, 1994) or such other sum as may be established for any year pursuant to section 401(a)(17) of the Code; provided, however, that the rules of section 414(q)(6) of the Code (which section is incorporated herein by reference) shall apply in determining a Participant's Compensation, except that the term "family" shall only include the Participant's spouse and any lineal descendants of the Participant who have not attained age 19 before the close of the applicable year 3 4 1.100 "Compensation Deferral Contributions" means the amounts contributed to the Plan on behalf of Participants on and after November 30, 1985 pursuant to Participants' elections under Section 2.020(a). 1.110 "Divested Component" means a component of the Company or of an Affiliated Company which ceases to be a component of the Company or of an Affiliated Company, by reason of its divestiture, or any action taken incident thereto. 1.120 "Effective Date" with respect to any hourly payroll described in Section 1.130 means the date set forth in Appendix A with respect to such payroll. 1.130 "Eligible Employee" means any Employee employed on an hourly payroll in a component of the Company or of an Affiliated Company to which the benefits of the Plan have been extended by the Board of Directors pursuant to a collective bargaining agreement which provides for participation in the Plan. Such payrolls and the effective dates on which the benefits of the Plan are extended to such payrolls are listed on Appendix A to the Plan. 1.135 "Eligible Retirement Plan" means: (a) an individual retirement account described in section 408(a) of the Code, (b) an individual retirement annuity described in section 408(b) of the Code, (c) an annuity plan described in section 403(a) of the Code, or (d) a qualified plan (which is a defined contribution plan) described in section 401(a) of the Code; which accepts an individual's eligible rollover distributions; provided, however, that in the case of an eligible rollover distribution to a Participant's surviving Spouse, only an individual retirement account or individual retirement annuity described in (a) and (b) above shall be deemed to be an Eligible Retirement Plan. 1.140 "Employee" means any person who is employed by the Company or by an Affiliated Company, including an Eligible Employee. Employee shall to the extent permitted by section 406 of the Code, be deemed to include any United States citizen regularly employed by a foreign subsidiary or affiliate of the Company. 1.150 "Equity Fund" means the fund established by the Trustee pursuant to Section 8.020(a). 1.160 "ERISA" means the Employee Retirement Income Security Act of 1974 as it may be amended from time to time. 1.170 "Guaranteed Investment Fund" means the fund established by the Trustee pursuant to Section 8.020(b). 4 5 1.180 "Money Market Fund" means the fund established by the Trustee pursuant to Section 8.020(c). 1.190 "Named Fiduciary" means the Plan Committee, the Plan Administrator, the Administrative Committee and the Trustee(s). 1.200 "Participant" means a person who has elected to participate in the Plan in accordance with Article II; provided, however, that such term shall include a person who no longer has an effective election under Article II only so long as he retains, under the provisions of the Plan, a nonforfeited interest in an Account under the Plan. 1.210 "Plan" means the Rockwell International Corporation Savings Plan for Certain Represented Hourly Employees as it may be amended from time to time. 1.220 "Plan Administrator" means the person so designated by name or corporate office by resolution of the Board of Directors. 1.230 "Plan Committee" means the Rockwell International Corporation Employee Benefit Plan Committee. 1.240 "Plan Year" means each twelve-month period ending on the last day of September, except that the first Plan Year with respect to any hourly payroll shall be the period from the Effective Date for such payroll through the last day of September, and the last Plan Year with respect to any hourly payroll shall be the period from the last preceding October 1 to the date on which the Plan shall be terminated with respect to such payroll. 1.250 "Rockwell Stock Fund" means the funds established by the Trustee pursuant to Section 8.020(d), including, effective February 23, 1987, the "Rockwell Common Stock Fund" and the "Rockwell Class A Stock Fund" unless the context otherwise requires. 1.255 "Transfer Contributions" means the amounts described in Section 2.020(c) which are transferred to a Participant's Account in the manner provided in said Section 2.020(c). 1.260 "Trust Agreement" means the trust agreement established pursuant to Section 8.010 of the Plan. 1.270 "Trust Fund" means the fund, including the earnings thereon, held by the Trustee into which all contributions on behalf of the Participant are deposited pursuant to the Plan. The Trust Fund shall be divided into an Equity Fund, a Guaranteed Investment Fund, a Money Market Fund and a Rockwell Stock Fund. 1.280 "Trustee" means the trustee or trustees of the trust to be established pursuant to Article VIII of the Plan. 5 6 1.285 "Unit" means the unit of measurement of a Participant's interest in the Trust Fund. "Common Unit" means a Unit of the Rockwell Common Stock Fund attributable to Common Stock. "Class A Unit" means a Unit of the Rockwell Class A Stock Fund attributable to Class A Stock. Where appropriate, "Units" includes Common Units and Class A Units. 1.290 "Valuation Date" means any business day for which the Trustee shall determine the fair market value of Units of the Equity Fund, the Money Market, the Rockwell Stock Fund and each contract under the Guaranteed Investment Fund. The final stock-trading day of each month shall constitute the Valuation Date for that month. 6 7 ARTICLE II -- PARTICIPATION 2.010 PARTICIPATION (a) An Eligible Employee may elect to participate in the Plan if he has completed at least six months of employment. (b) No contributions shall be made with respect to any Participant after any of the following events until such Participant again makes an election that is effective under subsection (a): (i) The Participant ceases to be an Eligible Employee; (ii) The Participant receives a distribution of the entire balance of his Account under Section 5.010(a) or (b); (iii) Contributions have been suspended under Article VI. (c) No contributions shall be made with respect to any Participant during any period of suspension of contributions described in Section 6.010 or Section 6.020. 2.020 CONTRIBUTION ELECTIONS An Eligible Employee who has notified the Company of his election to become a Participant shall also: (a) Elect to defer receipt of an amount (in whole percentages only) equal to 1%, 2%, 3%, 4%, 5%, 6%, 7% or 8% of Compensation, which amounts shall be contributed as a Compensation Deferral Contribution to the Participant's Compensation Deferral Account; and (b) Elect as provided in Section 2.050 whether the amount of such Compensation Deferral Contributions shall be contributed to one of the following investment options: (i) entirely to the Equity Fund; (ii) entirely to the Guaranteed Investment Fund; (iii) entirely to the Money Market Fund; (iv) entirely to the Rockwell Stock Fund; or (v) one-half to the Money Market Fund and one-half to the Rockwell Stock Fund. (c) (i) With the consent of the Plan Administrator, whose consent (1) shall be given only in connection with the termination of a qualified individual account plan and related trust of a business organization the stock, assets or business of which has been acquired by the Company, and the extension of the Plan to such business organization pursuant to Section 1.130, and 7 8 (2) when given, shall extend to all participants in said individual account plan, an Eligible Employee may, in accordance with and subject to applicable provisions of the Code, cause to be transferred to the Plan and Trust Fund any portion of the balance credited to him in such individual account plan and related trust if any portion of such balance would have been payable to him as a rollover amount under section 402(a)(5) of the Code but for such transfer. Such balance shall be transferred to the Plan entirely in cash and shall constitute a Transfer Contribution. Transfer Contributions shall not constitute Compensation Deferral Contributions under this Section 2.020. (ii) Transfer Contributions shall be credited to the Eligible Employee's Account as follows: (1) that portion of such balance attributable to employer contributions made pursuant to deferral elections under section 401(k) of the Code, which contributions remain subject to the provisions of said section 401(k) following transfer to the Plan, shall be credited to the Eligible Employee's Compensation Deferral Account and shall be designated as such in a manner determined by the Plan Administrator in order to ensure compliance with the requirements of said section 401(k); (d) In addition to the elections and authorization set forth in (a), (b) and (c), the Participant shall elect, as provided in Section 2.060, whether the amount of any such Compensation Deferral Contributions or Transfer Contributions shall be contributed under one of the following investment options: (i) entirely to the Equity Fund; (ii) entirely to the Guaranteed Investment Fund; (iii) entirely to the Money Market Fund; (iv) entirely to the Rockwell Stock Fund; or (v) one-half to the Money Market Fund and one-half to the Rockwell Stock Fund. 8 9 2.030 LIMITATION ON COMPENSATION DEFERRAL CONTRIBUTIONS. (a) Commencing January 1, 1987, with the respect to any Participant, the aggregate amount in any calendar year of: (i) Compensation Deferral Contributions to the Plan, (ii) all elective deferrals under any other cash or deferred arrangement as defined in section 402(g) of the Code which are maintained by an Affiliated Company, and (iii) all elective employer contributions to any simplified employee pension as defined in and pursuant to sections 408(k)(1) and (6), respectively, of the Code which are maintained by an Affiliated Company, may not exceed Seven Thousand Dollars ($7,000.00) or such larger sum as may be established pursuant to section 402(g)(5) of the Code. (b) For purposes of this Section 2.030: (i) the term "Highly Compensated Eligible Employees" means those Eligible Employees who are "highly compensate employees" within the meaning of Code section 414(q), which is incorporated herein by reference. The Plan Administrator may determine those Employees who are "highly compensated employees" for purposes of this Section 2.030 in any manner permitted by the said section 414(q) or by any regulations duly promulgated thereunder, which are together also incorporated herein by reference. (ii) the term "Average Deferral Percentage" for each group of Eligible Employees with deferral elections under Section 2.020(a) shall be the average of the percentages, calculated separately for each Eligible Employee in such group, of each such Eligible Employee's compensation (as such term is defined in section 414(s) of the Code) that he has elected to defer pursuant to Section 2.020(a) for the Plan Year. Eligible Employees who do not elect to make Compensation Deferral Contributions shall be included at zero percent (0%) in the Average Deferral Percentage of each group. (iii) the term "Limitation Deferral Percentage" shall mean the maximum deferral percentage in each Plan Year for the group of Highly Compensated Eligible Employees and shall be that percentage amount which does not exceed the greater of: 9 10 (1) the Average Deferral Percentage for all Eligible Employees other than Highly Compensated Eligible Employees multiplied by one and twenty five hundredths (1.25); or (2) the lesser of (A) an amount which does not exceed the Average Deferral Percentage for all Eligible Employees other than Highly Compensated Eligible Employees by more than two (2) percentage points, or (B) the Average Deferral Percentage for all Eligible Employees other than Highly Compensated Eligible Employees multiplied by two (2). If any Highly Compensated Eligible Employee is a participant in any other cash or deferred arrangement within the meaning of section 401(k) of the Code established or maintained by an Affiliated Company, for the purpose of determining the Limitation Deferral Percentage with respect to such Highly Compensated Eligible Employee such other cash or deferred arrangement shall be a part of this Plan. (c) Prior to the beginning of, and periodically during, each Plan Year the Administrative Committee shall test deferral elections under Section 2.020(a) in order to determine whether the Average Deferral Percentage for Highly Compensated Eligible Employees exceeds the Limitation Deferral Percentage. (d) In the event that the Administrative Committee should determine that Compensation Deferral Contributions made for any Plan Year on behalf of the Highly Compensated Eligible Employees would (if not reduced) cause the Average Deferral Percentage of such Employees to exceed the Limitation Deferral Percentage, the Administrative Committee shall report such determination to the Plan Administrator, who shall refer such determination to the Plan Committee. In such event, the Plan Committee shall reduce the Compensation Deferral Contributions elected by the Highly Compensated Eligible Employees so that the Limitation Deferral Percentage is not exceeded for any Plan Year. Such reduction shall be effective as of the first payroll payment date in the month following such determination and shall be made as set forth in subsection (d)(i) below, and if necessary, subsection (d)(ii): (i) Highly Compensated Eligible Employees electing Compensation Deferral Contributions in an amount equal to 8% of Compensation under Section 2.020(a) shall have their election reduced by 1%; (ii) Highly Compensated Eligible Employees electing Compensation Deferral Contributions in an amount equal to 7% of Compensation (including any 10 11 Highly Compensated Employees whose elections were reduced under subsection (d)(i)) shall have their elections reduced by 1%. This process shall continue until the Average Deferral Percentage for the Highly Compensated Eligible Employees does not exceed the Limitation Deferral Percentage. (e) The reduced election of a Participant under Section 2.030(d)(i) or (ii), as applicable, shall be substituted for the actual election of the Participant under Section 2.020(a) and shall represent the percentage of Compensation that shall be paid into the Plan on his behalf as Compensation Deferral Contributions. (f) The amount representing the additional amount of Compensation that would have been contributed as Compensation Deferral Contributions on behalf of the Participant absent the limitations set forth in the Section 2.030 shall be paid to the Participant. (g) Reductions in Compensation Deferral Contributions made under subsection (d) shall remain in effect for the remainder of the Plan Year unless the Administrative Committee determines that changed circumstances permit an increase in Compensation Deferral Contributions. If the Administrative Committee makes such a determination, the Plan Committee shall determine the amount by which Compensation Deferral Contributions shall be increased for the balance of the Plan Year. (h) The Plan shall comply with the limitation on multiple use of the alternative limitation as described in Treasury Regulation 1.401(m)-(2)(b). (i) If multiple use of the alternative limitation does occur, it will be corrected by requiring reduction in actual contribution ratios of Highly Compensated Eligible Employees who are eligible to participate in both arrangements in accordance with subsections (d) through (g) of this Section 2.030. 2.040 CHANGES IN RATE OF COMPENSATION DEFERRAL CONTRIBUTIONS Upon fifteen (15) days' notice a Participant may from time to time change his rate of Compensation Deferral Contribution. Such change shall be effective on the first payroll payment date following the expiration of the fifteen (15) days' notice period. 11 12 2.050 CHANGES IN INVESTMENT ELECTIONS. A Participant may make an election pursuant to Section 2.020(b) above or change such election effective with the first payroll payment date in April of any year by giving the Company notice thereof during the month of February of that year, and effective with the first payroll payment date in October of any year by giving the Company notice thereof during the month of August of that year. In such election, the Participant may also specify that all or any part of his Account then currently invested in any fund described in Section 8.020 shall be transferred from such fund to any other such fund; provided, however, that no such transfer of existing investments may be made to or from the Guaranteed Investment Fund except under the circumstances set forth in Section 2.060; and provided further, that any transfer from the Rockwell Stock Fund shall first be made from the Rockwell Common Stock Fund. 2.060 CONVERSION OF GUARANTEED INVESTMENT FUND ACCOUNT. A Participant with Units in the Guaranteed Investment Fund may elect, by providing written notice on a form provided by the Company, at least thirty (30) days prior to the Valuation Date upon which any contract under the Guaranteed Investment Fund or any interest guarantee period under any such contract expires, to convert his interest under such contract to Units in the Equity Fund, the Money Market Fund or the Rockwell Stock Fund. Such conversion shall be based on the value of Units in such respective funds as of the date of such expiration or the Valuation Date immediately preceding the transfer of funds, whichever is later. The transfer of funds pursuant to this Section shall be made by the Trustee within a reasonable period after such expiration or receipt of the funds. An election under this Section shall be irrevocable. A Participant making an election under this Section shall also indicate his election under Section 2.020(b) regarding investment of contributions made subsequent to the conversion described in this Section. The interest under a Guaranteed Investment Fund contract of a Participant who does not make an election under this Section shall continue to be invested in the Guaranteed Investment Fund. 2.070 DEPOSITS IN TRUST FUND. Contributions made hereunder shall be deposited in the Trust Fund and credited to the Participant's Account as soon as practicable. 2.080 NON-REVERSION OF CONTRIBUTIONS. At no time shall any part of the Plan revert to or be recoverable by the Company or be used for or diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries. 12 13 ARTICLE III -- MAINTENANCE AND VALUATION OF ACCOUNTS 3.010 PARTICIPANT'S ACCOUNTS. A separate Account representing each Participant's interest in the Equity Fund, the Money Market Fund, the Rockwell Stock Fund and each contract under the Guaranteed Investment Fund shall be maintained by the Trustee (or by such other person or persons as the Plan Committee shall designate). Such separate Account shall contain sufficient information to permit, with respect to the Equity Fund, the Money Market Fund, the Rockwell Stock Fund and each contract under the Guaranteed Investment Fund, a determination of the dollar balance of such Participant's Account at any time in accordance with the provisions of Section 3.020 through 3.040 of this Article. Each such Account shall contain sufficient information to permit such other determinations as may be required to carry out the provisions of the Plan. 3.020 CREDITING OF UNITS TO ACCOUNTS; INITIAL UNIT VALUATIONS. The interest of each Participant in the Equity Fund, the Money Market Fund, the Rockwell Stock Fund and each contract under the Guaranteed Investment Fund shall be represented by Units allocated to his Account. The initial value of each Unit of the Equity Fund, the Money Market Fund and each contract under the Guaranteed Investment Fund shall be equal to the price at which such Units are offered by the Trustee or its affiliates to the public (in the case of the Guaranteed Investment Fund, to institutional investors) as of a date no later than the first Valuation Date following the day on which the initial investment is received by the Trustee in proper form for investment. The initial value of each Unit of the Rockwell Stock Fund shall be ten dollars ($10.00), and the initial number of shares of Common Stock which shall be represented by each Unit in the Rockwell Stock Fund shall be determined by the number of shares of Common Stock purchased by the Trustee with the initial investment in the Rockwell Stock Fund. Effective February 23, 1987: (a) the Rockwell Stock Fund shall be divided into the Rockwell Common Stock Fund and the Rockwell Class A Stock Fund. Effective as of such date and each Valuation Date thereafter until the date on which distribution of the stock dividend to holders of Common Stock of record on February 23, 1987, shall occur, the value of each Unit of the Rockwell Common Stock Fund shall be determined in the manner provided in Section 3.030 as if such stock dividend had been distributed on February 23, 1987. (b) each Participant who has Units of the Rockwell Common Stock Fund shall receive an equal number of Units of the Rockwell Class A Stock Fund which shall be represented by the number of shares of Class A Stock which the Trustee shall be entitled to receive pursuant to the stock dividend to holders of Common Stock of record on February 23, 1987, in respect of the shares of Common Stock held of record in the Rockwell Common Stock Fund on such date. Effective as of 13 14 such date and each Valuation Date thereafter until the date on which distribution of such stock dividend shall occur, the value of each Unit of the Rockwell Class A Stock Fund shall be determined in the manner provided in Section 3.030 as if such stock dividend had been distributed on February 23, 1987. Contributions to and withdrawals from the Participant's Account shall be made by purchasing or selling Units of the Equity Fund, the Money Market Fund, the Rockwell Stock Fund and/or each contract under the Guaranteed Return Fund, as designated by the Participant in the manner provided by the Plan, and dividends on shares of Class A Stock which represent the Participant's interest in the Rockwell Class A Stock Fund shall be used to purchase Units of the Rockwell Common Stock Fund for him in accordance with such interest. The number of such Units which shall be purchased or sold, as the case may be, shall be that number of such Units which have a value as of the last preceding Valuation Date equal to the dollar amount of such contribution or dividend to, or withdrawal from, such fund, as the case may be. 3.030 UNIT VALUATIONS. No later than the first Valuation Date following the date of receipt by the Trustee of each deposit in proper form for investment in the fund concerned (or under the contract concerned, in the case of the Guaranteed Investment Fund) and as of each succeeding Valuation Date an amount equal to the fair market value of all property in such fund (other than dividends received that are attributable to whole shares of Common Stock or Class A Stock that were or are to be transferred to Participants subsequent to the record date for such dividend) or under such contract, in the case of the Guaranteed Investment Fund, shall be determined by the Trustee in such manner and on such basis as it shall deem appropriate, except that Class A Stock shall be deemed to have the same value per share as Common Stock. Such amount shall be divided by the total number of outstanding Units of such fund or under the contract concerned on the particular Valuation Date, thereby establishing a new Unit value. With respect to each fund, each contribution or other payment thereto or payment therefrom (or in the case of the Rockwell Common Stock Fund, each dividend on shares of Class A Stock held in the Rockwell Class A Stock Fund) after such Valuation Date and prior to or on the next Valuation Date shall be converted to Units of such fund by dividing such new Unit value into the amount of such contribution or payment (or, in the case of the Rockwell Common Stock Fund, dividend), and the individual Account of each affected Participant representing his interest in the fund or contract under his Account shall be credited or charged, as the case may be, with the Units so computed. The fair market value of each contract under the Guaranteed Investment Fund shall be equal to the principal amount held in such fund plus accrued interest. 14 15 3.040 BALANCE OF PARTICIPANT'S ACCOUNT. As of any specified date, the dollar balance of the Account of each Participant representing the interest of each Participant in each fund or contract under his Account shall be determined by multiplying the number of Units in his current balance by the Unit value as of the last preceding Valuation Date in accordance with the foregoing. Only those contributions actually received by the Trustee will be considered in making valuations and determining account balances. 3.050 STATEMENTS OF PARTICIPANTS. Twice during each Plan Year the Plan Administrator (or if the Plan Administrator shall so determine, the Trustee) shall forward by mail to each Participant a statement, in such form as the Plan Administrator shall determine, setting forth pertinent information relative to each Participant's Account. Such statement shall, for all purposes, be deemed to have been accepted as correct unless the Plan Administrator (or the Trustee, as the case may be) is notified to the contrary by mail within sixty (60) days of the mailing thereof to the Participant. 15 16 ARTICLE IV -- BENEFITS PAYABLE UPON TERMINATING EMPLOYMENT 4.010 VESTING. Each Participant shall at all times be fully vested in his Account. 4.020 TERMINATION OF EMPLOYMENT. (a) (i) As soon as practicable after the Participant terminates employment with the Company and all Affiliated Companies for any reason, including disability which has continued for a period of at least six (6) months, but in no event later than sixty (60) days after the end of the Plan Year in which such termination occurs, the Participant (or his Beneficiary in the case of death) shall receive all amounts described in paragraph (ii) of this subsection. (ii) The amounts that the Participant (or his Beneficiary in the case of death) shall receive under paragraph (i) shall be as follows: (1) With respect to the Equity Fund, the Guaranteed Investment Fund, the Money Market Fund and, except as otherwise provided in subparagraph (2) below, the Rockwell Stock Fund, the Participant shall receive the full dollar balance of his Account in such funds. Such balance shall be determined in the manner provided by Section 3.040, by reference to the Units in such Participant's Account on the first Valuation Date following receipt by the Trustee of written notice of such termination, or in the case of disability, on the date all documentation determined by the Plan Administrator to be necessary to effect distribution from the Plan shall have been received by the Plan Administrator and the value of each Unit on such Valuation Date; provided, however, that in the case of Participants who hold one or more contracts under the Guaranteed Investment Fund such balance shall be determined in the manner provided by Section 3.040 by reference to the Units in such Participant's Account on the Valuation Date for the first regularly scheduled distribution date from the Guaranteed Investment Fund following receipt by the Trustee of written notification of the Participant's termination and the value of each Unit on such Valuation Date. (2) With respect to the Rockwell Stock Fund, the Participant may notify the Company in writing no later than his effective date of termination of employment, or in the case of disability, the date all documentation determined by the Plan Administrator to be necessary to effect distribution from the Plan shall have been received by the Plan Administrator of his election to receive the 16 17 dollar balances of his account in the Rockwell Common Stock Fund in shares of Common Stock and in the Rockwell Class A Stock Fund in shares of Class A Stock. In such event, the dollar balances that were in such Participant's accounts in such Rockwell Common and Class A Stock Funds as of the Valuation Date described in subparagraph (1) above (determined, in the manner provided by Section 3.040 by reference to the Units in the Participant's Account on such Valuation Date and the value of each Unit on such Valuation Date) shall be applied to Common Stock and Class A Stock, respectively. The Participant shall receive the maximum number of whole shares of Common Stock which could be purchased with such balance of his account in the Rockwell Common Stock Fund, and the maximum number of whole shares of Class A Stock which could be purchased with such balance of his account in the Rockwell Class A Stock Fund, both at the closing price of Common Stock as reflected on the New York Stock Exchange Composite listing on such Valuation Date (or, in the event such Valuation Date falls on a date on which for any reason there are no trades of Common Stock reflected on such listing, the last trading day preceding such Valuation Date). The Participant shall be paid in cash the amount remaining in such balances of his accounts in the Rockwell Common and Class A Stock Funds after reduction by the value, based on such closing price, of the whole shares previously described. In addition, the Participant shall be paid the dollar value of dividends received since such Valuation Date attributable to the number of whole shares of Common Stock and Class A Stock as described in this paragraph (2) and the dollar amount of any contributions to the Rockwell Stock Fund between such Valuation Date and the date of such termination. (iii) A Participant may make an irrevocable election at any time during the thirty (30) day period ending on the day immediately prior to the effective date of his retirement pursuant to a retirement plan of the Company or any Affiliated Company to remain in the Plan without any further Compensation Deferral Contribution until January 1 of the calendar year following the effective date of such retirement, at which time he shall receive all amounts provided in paragraph (ii) above, valued as of the valuation date immediately prior to such January 1. (iv) Notwithstanding the foregoing provisions of this Section 4.020(a) or any other provisions of the Plan, if the aggregate value of a Participant's Account is in excess of Three Thousand Five Hundred Dollars ($3,500) and the Participant shall not have attained age seventy and one-half (70-1/2) at the time distribution of his Account would otherwise be made pursuant to paragraph (i) of this subsection, no such 17 18 distribution shall be made unless the Plan Administrator shall first have obtained the Participant's written consent thereto. In the event such written consent shall not have been so obtained by the time such distribution would otherwise have been made pursuant to paragraph (i) of this subsection, the Participant's Account shall be retained by the Plan and the Participant, from and after the date of his termination of employment, shall be deemed to be a Participant whose Compensation Deferral Contributions have been suspended under Section 6.020, except that the Participant shall not have the right to withdraw any portion of the balance of his Account under Article V. Distribution of the entire balance of the Participant's Account pursuant to paragraphs (i) and (ii) of this subsection shall be made following the earlier of the date on which the Participant's written consent to such distribution shall have been obtained by the Plan Administrator or the date on which the Participant shall have attained age seventy and one-half (70-1/2), in the same manner as if the Participant had terminated employment on such date. (b) Notwithstanding the provisions of Sections 4.020 and 5.010(a) and (b), if an Employee attains age 70-1/2 on or after January 1, 1988, distribution of the amounts described in paragraph (a)(ii) of this Section 4.020 to such Employee shall be made not later than April 1 of the calendar year following the calendar year in which the Employee shall have attained age 70-1/2. If such a Participant shall so request in writing, the Plan Administrator shall cause all or a portion of the amounts and shares of Common and Class A Stock with respect to which the Participant would be taxable under section 402 of the Code (other than amounts and/or shares required to be distributed at that time pursuant to the provisions of section 401(a)(9)(A) of the Code) to be transferred from the Trustee directly to the custodian of an Eligible Retirement Plan specified by the Participant. Such request shall be made by such date as the Plan Administrator shall determine, but in no event later than the said April 1 date. Prior to effecting such transfer the Plan Administrator shall require evidence reasonably satisfactory to him that the entity to which such transfer is to be made is in fact an Eligible Retirement Plan and that such Eligible Retirement Plan may receive the distribution in the forms required under this Section. 4.025 TRANSFER OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT PLAN. If a Participant, a Participant's spouse entitled to distribution pursuant to Article VII in the case of a Participant's death, or former spouse entitled to distribution pursuant to Section 9.150 shall so request in writing, the Plan Administrator shall cause all or a portion of the amounts and shares of Common and Class A Stock with respect to which the Participant would be taxable under section 402 of the Code to be transferred from the Trustee directly to the custodian of an Eligible Retirement Plan specified by the Participant. Such request shall be made, in the case of a Participant, at the time his consent to such distribution shall be given to the Plan Administrator pursuant to Section 4.020(a)(iv), or at such later date as the Plan Administrator shall permit, or, in the case 18 19 of the Participant's spouse or former spouse, at such time as the Plan Administrator shall determine. Prior to effecting such transfer the Plan Administrator shall require evidence reasonably satisfactory to him that the entity to which such transfer is to be made is in fact an Eligible Retirement Plan and that such Eligible Retirement Plan may receive the distribution in the forms required under this Article IV. 4.030 RESUMPTION OF PARTICIPATION. An Employee who has received a distribution under this Article shall be eligible to resume participation in the Plan only as provided in Section 2.010. 4.040 VALUATION DATES FOR WITHDRAWALS AND DISTRIBUTIONS PURSUANT TO DOMESTIC RELATIONS ORDERS. Notwithstanding any other provision of this Article IV or Article V, in the event that the Plan Administrator shall determine that a distribution of a Participant's Account pursuant to this Article IV or Article V has been delayed as a result of a pending or threatened domestic relations order, the Valuation Date immediately preceding the date on which such withdrawal or distribution is approved by the Plan Administrator pursuant to such order shall be substituted for the Valuation Date which would otherwise be applicable to such withdrawal or distribution pursuant to this Article IV or Article V. 19 20 ARTICLE V -- WITHDRAWALS WHILE EMPLOYED; LOANS 5.010 WITHDRAWALS FROM PARTICIPANT'S ACCOUNT. (a) Subject to such restrictions as the Plan Committee may establish pursuant to Section 5.020, a Participant may withdraw all or a portion of the balance of his Account if he has attained age fifty-nine and one-half (59-1/2). (b) Subject to such restrictions as the Plan Committee may establish pursuant to Section 5.020, an Employee who has not attained age fifty-nine and one-half (59-1/2) may request approval of the Administrative Committee to withdraw some or all of the Units of his Compensation Deferral Account attributable solely to his Compensation Deferral Contributions and/or Transfer Contributions, excluding those Units thereof which are attributable to earnings under the individual account plan from which such Transfer Contributions were transferred or distributed. (c) In no event, however, may any Units attributable to income allocated to his Compensation Deferral Account on and after October 1, 1989 be withdrawn pursuant to subsections (b) and (d) of this Section 5.010. (d) (i) The Trustee shall, upon the direction of the Administrative Committee, distribute all or a portion of the Compensation Deferral Account of an Employee requesting a withdrawal under subsection (b) prior to the time such Account is distributable in accordance with Article IV hereof; provided, however, that any such withdrawal shall be made only if, and the amount of such withdrawal shall be limited to the extent that, the Employee demonstrates that the withdrawal is required as a result of a hardship and to pay any federal, state or local income taxes and penalties reasonably anticipated to result from such withdrawal. For the purposes of this subsection (d) the term "hardship" shall mean an immediate and heavy financial need of the Employee for which the amount required is not reasonably available to the Employee from other sources and which arises for one of the following reasons: (1) the purchase (excluding mortgage payments) or construction of a principal residence for the Employee, or to prevent eviction from, or foreclosure on the mortgage on, the Employee's principal residence; (2) the incurring of obligations for (A) tuition, related educational fees and room and board expenses for post-secondary education of the Employee, his spouse or one or more of his children or other dependents (as defined in section 152 of the Code) to be incurred 20 21 during the twelve (12) month period immediately following the date of his request for distribution; or (B) expenses not covered by insurance which either have been previously incurred by the Employee for, or are necessary in order for the Employee to obtain, medical care (as described in section 213(d) of the Code) for himself, his spouse or one or more of his dependents (as defined in section 152 of the Code); (C) any other reason permitted under section 401(k)(2)(B)(i)(IV) of the Code and is approved by the Administrative Committee. (ii) Any determination of the existence of hardship, the reasonable availability to the Employee of funds from other sources and the amount to be withdrawn on account of such hardship shall be made by the Administrative Committee on the basis of all relevant facts and circumstances and in accordance with the foregoing rules, as applied in a uniform and nondiscriminatory manner. In making such determination, the Administrative Committee may, if it is reasonable to do so in the light of all relevant and known facts and circumstances, rely on the Employee's representation that the hardship cannot be relieved: (1) through reimbursement or compensation by insurance or otherwise; (2) by reasonable liquidation of the Employee's assets, to the extent that such liquidation would not itself cause an immediate and heavy financial need; (3) by suspension of Compensation Deferral Contributions; or (4) by other distributions (other than hardship distributions) or loans (which meet the requirements of section 72(p) of the Code) from the Plan and any other plan maintained by an Affiliated Company or by any former employer or by borrowing from commercial sources at reasonable commercial rates. (e) A Participant may elect to have any withdrawal taken from his account in the Equity Fund, the Money Market Fund, the Guaranteed Investment Fund, or the Rockwell Stock Fund, or to have specified portions taken from his accounts in the Equity Fund, the Money Market Fund, the Guaranteed Investment Fund, the Rockwell Stock Fund; provided that any withdrawal from the Rockwell Stock Fund shall first be taken from the Rockwell Common Stock Fund. As soon as practicable after a withdrawal election is made, there shall be paid or transferred 21 22 to the Participant cash determined in the same manner as under Section 4.020 above (except that the date of withdrawal shall be used for such determination in lieu of the date of termination). In the absence of such election, such withdrawal shall be made from his accounts in such Funds in the following order: first, from his account, if any, in the Money Market Fund; next, from his account, if any, in the Equity Fund; next, from his account or accounts, if any, in the Guaranteed Investment Fund; and finally, from his account, if any, in the Rockwell Stock Fund. Notwithstanding the foregoing provisions of this paragraph (e), any withdrawal from his account or accounts in the Guaranteed Investment Fund shall be taken in reverse sequence by first exhausting his accounts in the most recent contracts under such Fund. (f) Withdrawals shall be in a minimum amount of $100 with respect to the Equity Fund, the Money Market Fund, the Rockwell Stock Fund or Guaranteed Investment Fund. A Participant may not make a request for withdrawal within twenty-six (26) weeks of any prior request for withdrawal; provided, however, that this limitation upon the ability of such Participant to make a partial withdrawal (including hardship withdrawals pursuant to the provisions of Section 5.010) within twenty-six (26) weeks of any prior request for a partial withdrawal shall be waived by the Plan Administrator for the six-month period immediately following any due declaration by the President of the United States under applicable federal law that a particular occurrence or situation constitutes a national disaster condition, if such partial withdrawal is requested for a reason associated with financial need of the Participant resulting from the effects of the said condition. Payment of withdrawal requests shall be made to the Participant as soon as practicable. 5.015 TRANSFER OF DISTRIBUTION OR WITHDRAWAL TO ELIGIBLE RETIREMENT PLAN If a Participant entitled to a distribution or withdrawal under this Article V shall so request in writing at the time his election to receive such distribution or withdrawal is made or at such later date as the Plan Administrator may permit, the Plan Administrator shall cause all or a portion of the amounts and shares of Common and Class A Stock with respect to which the Participant would be taxable under section 402 of the Code to be transferred from the Trustee directly to the custodian of an Eligible Retirement Plan specified by the Participant. Prior to effecting such transfer the Plan Administrator shall require evidence reasonably satisfactory to him that the entity to which such transfer is to be made is in fact an Eligible Retirement Plan and that such Eligible Retirement Plan may receive the distribution in the forms required under this Article V. 22 23 5.020 LOANS As soon as practicable after January 1, 1990, the Plan Administrator shall establish written procedures pursuant to which any Employee or other "party in interest" (as defined in ERISA Section 3(14)) may apply for and receive from the Plan loans in accordance with such terms and conditions as the Plan Administrator may prescribe in writing consistent with the provisions of the Plan and applicable provisions of the Code and ERISA. Such procedures, terms and conditions shall require, in addition to such other written procedures, terms and conditions as may be established by the Plan Administrator not inconsistent herewith, that (a) the amount which any Employee or other party in interest shall be permitted to borrow from the Plan shall be based on the aggregate of the value of his Account determined in accordance with Section 3.030; (b) no Employee or other party in interest shall be permitted to obtain a loan from the Plan of less than One Thousand Dollars ($1,000) or in an amount exceeding the lesser of (i) an amount which, when combined with all outstanding loans to such Employee or other party in interest from all other plans of all Affiliated Companies, equals Fifty Thousand Dollars ($50,000), reduced by the highest outstanding and unpaid balances during the twelve (12) month period immediately preceding the date on which such loan is made of all prior loans to such Employee or other party in interest from the Plan and such other plans; (ii) one-half (1/2) the aggregate of the balances of his Account; or (iii) such amount, not exceeding the amounts described in (i) and (ii) above, as the Plan Administrator shall determine. or to have more than a single loan from the Plan and all other "qualified employer plans" (as such term is defined in section 72(p)(4) of the Code) of the Company outstanding at any one time. At such time as the Plan Administrator shall have established such written procedures, terms and conditions the Plan Administrator shall cause (1) an announcement thereof to be disseminated to all eligible Employees and other parties in interest, and (2) a copy of such written procedures, terms and conditions to be attached to and made a part of this Plan as Appendix C. Until the Plan Administrator shall have established such procedures, terms and conditions no Employee or other party in interest shall have any right to obtain a loan from the Plan. Once available to eligible Employees, however, all such loans shall be made available to all eligible Employees and other parties in interest on a reasonably equivalent and non-discriminatory basis. 23 24 ARTICLE VI -- SUSPENSION OF CONTRIBUTIONS 6.010 VOLUNTARY SUSPENSION (a) A Participant may at any time, upon fifteen (15) days' notice, elect to have contributions suspended until further notice. Suspension shall become effective not later than the first payroll payment date following the expiration of the fifteen (15) days' notice period. (b) Subject to Section 2.010 and Section 2.020, a Participant who has elected to have contributions suspended, may elect to have contributions resumed upon fifteen (15) days' written notice to the Company, effective the first payroll payment date following the expiration of the fifteen (15) days' notice period. 6.020 INVOLUNTARY SUSPENSION A Participant's Compensation Deferral Contributions for purposes of the Plan shall be suspended whenever: (a) No payment of Compensation is made by the Company to the Participant. (b) The Participant, although an Employee, is not an Eligible Employee. (c) The Participant is transferred to a component of the Company to which the benefits of the Plan have not been extended. (d) The Participant's employment is terminated in order to accept employment with any subsidiary or affiliate of the Company to which the benefits of the Plan have not been extended. 6.030 GENERAL PROVISIONS APPLICABLE TO SUSPENSIONS (a) Suspensions of a Participant's Compensation Deferral Contributions, whether voluntary or involuntary, shall not affect his benefit and withdrawal rights, which shall be determined in accordance with the provisions of Article IV and V of the Plan. (b) During the period of a Participant's suspension the Trustee shall continue to adjust the Participant's Account as of each Valuation Date during such period in accordance with the provisions of Article III of the Plan. (c) A Participant may not make up suspended Compensation Deferral Contributions. 24 25 ARTICLE VII -- DESIGNATION OF AND PAYMENT TO A BENEFICIARY 7.010 DESIGNATION OF A BENEFICIARY. Subject to the provisions of Section 1.040, (a) if a Participant dies, payment of the benefits provided under the Plan shall be made to such person or persons as he has designated as his Beneficiary to receive such benefits in the event of his death. (b) a Participant may change his designation of Beneficiary at any time by filing with the Plan Administrator (or such other person as is designated by the Plan Administrator) a request for such change. Such change shall become effective only upon receipt of the request by the Plan Administrator (or such other person as is designated by the Plan Administrator) but upon such receipt the change shall relate back to and take effect as of the date the Participant signed such request; provided, however, that neither the Company, the Trustee, the Plan Committee, the Plan Administrator, any other named or unnamed fiduciary, nor the Trust Fund shall be liable by reason of any payment made to the Beneficiary theretofore designated before receipt of such request. (c) if no designation is effective pursuant to this Article or if the Plan Administrator or Trustee shall have any doubt as to the right of any Beneficiary or if the Beneficiary shall predecease the Participant, the amount of such benefits may be paid to the estate of the Participant, in which event neither the Company, the Trustee, the Plan Committee, the Plan Administrator, any other named or unnamed fiduciary, nor the Trust Fund shall be liable to any other person or entity with respect to such payment. 7.020 PAYMENT TO A BENEFICIARY. Upon receipt by the Plan Administrator (or such other person as is designated by the Plan Administrator) of evidence satisfactory to such person of the death of a Participant and of the identity and existence at the time of such death of the Participant's Beneficiary, the Plan Administrator shall direct the Trustee to pay the Participant's Account to the Beneficiary. 25 26 ARTICLE VIII -- TRUST AGREEMENT 8.010 ESTABLISHMENT OF TRUST FUND. The property resulting from contributions made on behalf of all Participants shall be held as a Trust Fund by a corporate Trustee or Trustees selected by the Plan Committee pursuant to a Trust Agreement entered into between such Trustee and the Plan Committee. References in the Plan to the Trustee shall be deemed to be applicable with equal force to co-Trustees or successor Trustees who may be so designated. 8.020 INVESTMENTS. The Trustee shall establish: (a) an Equity Fund which shall include all contributions made with respect to Participants under the Plan and designated as contributions to the Equity Fund, all property purchased therewith and the proceeds and income from such contributions and property, which property may consist of any kind of property (real, personal or mixed) and every kind of investment (specifically including, but not by way of limitation, corporate obligations of every kind and common or preferred stocks); (b) a Guaranteed Investment Fund which shall include the Trust Fund's interest in a contract or contracts providing a guarantee of principal and a defined rate or rates of earnings or interest on principal held pursuant to such contract or contracts for a specified period of time, which guaranteed earnings or interest is accrued monthly, and which interest and principal are repaid to the Trustee in accordance with the provisions of the Plan and such contract or contracts; (c) a Money Market Fund which shall include all contributions made with respect to Participants under the Plan and designated as contributions to the Money Market Fund, all property purchased therewith and the proceeds and income of such contributions and property, which property may consist of treasury bills, treasury notes, treasury bonds, federal agency obligations and other instruments of federal, state or local government debt, all the foregoing to the extent the same have stated maturities of not more than one (1) year; and (d) a Rockwell Stock Fund consisting of all cash contributed to purchase Common Stock, all Common Stock so purchased and the proceeds and income therefrom; provided, that effective February 23, 1987, (i) the Rockwell Stock Fund shall be divided into the Rockwell Common Stock Fund and the Rockwell Class A Stock Fund, (ii) the Rockwell Common Stock Fund shall consist of all cash contributed, and dividends on shares of Class A Stock applied, to purchase Common Stock; all Common Stock so purchased and the proceeds and income therefrom, and (iii) the Rockwell Class A Stock Fund shall consist of shares of Class A Stock received by the Trustee as dividends on shares of Common Stock held in the 26 27 Rockwell Common Stock Fund or on Class A Stock held in the Class A Stock Fund. The Trustee shall use all cash in the Rockwell Stock Fund only to purchase Common Stock. Purchases may be made from or through any source (other than the Company) including a Participant. Rights, options, or warrants offered to purchase Common Stock may be exercised but only to the extent that there is cash available in the Rockwell Stock Fund for investment. To the extent they are not exercised, the same shall be sold on the open market. Rights, options, or warrants to purchase securities of Rockwell International Corporation or its subsidiaries or affiliates other than Common Stock shall be sold by the Trustee on the open market. The Trustee shall keep records so as to segregate with respect to each Participant benefits derived from contributions on behalf of such Participant. 8.030 DUTY OF TRUSTEE AS TO COMMON STOCK AND CLASS A STOCK IN THE ROCKWELL STOCK FUND. (a) Except as otherwise provided in this Section 8.030, the Trust Agreement shall provide that the duty with respect to the voting, retention, and tendering of Common Stock and Class A Stock held in the Rockwell Stock Fund shall be solely that of the Trustee, to be exercised solely in the Trustee's discretion. (b) The Trust Agreement shall provide that, with respect to any matter as to which a vote of the outstanding shares of Common Stock or Class A Stock is solicited by proxies, consents or authorizations: (i) Each Participant shall be entitled to direct the Trustee, and the Trustee shall solicit the direction in writing of each Participant, as to the manner in which voting rights of shares of Common Stock or Class A Stock held in the Rockwell Stock Fund as of the record date fixed for determining the holders of Common Stock or Class A Stock entitled to vote on such matter are to be exercised with respect to such matter, and the Trustee shall exercise the voting rights of such shares with respect to such matter in accordance with the last-dated timely written direction, if any, of such Participant. In connection with the solicitation of written directions from Participants, the Company will cause to be furnished to each Participant and the Trustee notice of each occasion for the exercise of such voting rights, an appropriate form on which such written direction may be given, and a statement containing the information that the Company distributes to stockholders generally regarding the exercise of such voting rights; and (ii) The Trustee shall vote (A) shares of Common Stock held in the Rockwell Common Stock Fund as to which no timely direction in writing has been received pursuant to paragraph (i) of this subsection proportionately in the same manner as the Trustee votes the aggregate of 27 28 all shares of Common Stock held in the Rockwell Stock Fund as to which timely direction in writing has been received pursuant to paragraph (i) of this subsection (b), and (B) shares of Class A Stock held in the Rockwell Class A Stock Fund as to which no timely direction in writing has been received pursuant to paragraph (i) of this subsection (b) proportionately in the same manner as the Trustee votes the aggregate of all shares of Class A Stock held in the Rockwell Class A Stock Fund as to which timely direction in writing has been received pursuant to paragraph (i) of this subsection (b). (c) The Trust Agreement shall provide that, in the event of any Tender Offer (as defined in Section 15.010): (i) Each Participant shall be entitled to direct the Trustee, and the Trustee shall solicit the direction in writing of each Participant, as to the tendering or depositing of any shares of Common Stock or Class A Stock held, and any shares of Common Stock issuable on conversion of Class A Stock held, in the Rockwell Stock Fund which represents the interest of such Participant in the Rockwell Stock Fund as of the Tender Date (as defined herein) with respect to such Participant and, except as limited by paragraph (iii) hereof, the Trustee shall tender or deposit such shares pursuant to any such Tender Offer in accordance with the last dated timely written direction, if any, of such Participant; (ii) Except as limited by paragraph (iii) hereof, the duty with respect to the retention, tendering or depositing of shares of Common Stock or Class A Stock held in the Rockwell Stock Fund as to which no timely direction in writing has been received pursuant to paragraph (i) hereof shall be solely that of the Trustee to be exercised solely in the Trustee's discretion; and (iii) Shares of Common Stock or Class A Stock held, and any shares of Common Stock issuable on conversion of Class A Stock held, in the Rockwell Stock Fund shall not be tendered or deposited by the Trustee pursuant to any such Tender Offer until the earlier of (A) immediately preceding the scheduled expiration of the Tender Offer pursuant to which such shares are to be tendered or deposited or (B) immediately preceding the expiration of the period during which such shares of Common Stock (including shares of Common Stock issuable on conversion of Class A Stock) or Class A Stock will be taken up and paid for on a pro rata basis pursuant to such Tender Offer or (C) the expiration of 30 days from the date of the Trustee's solicitation of Participants' written direction pursuant to paragraph (i) hereof; and (iv) The duty with respect to the withdrawing of, or other exercise of any right to withdraw, shares of Common Stock held, and any shares of 28 29 Common Stock issuable on conversion of Class A Stock held, in the Rockwell Stock Fund which have been tendered or deposited pursuant to any such Tender Offer shall be solely that of the Trustee, provided that the Trustee may solicit the direction in writing of each Participant with respect to whom any such shares of Common Stock (including shares of Common Stock issued on conversion of Class A Stock) or Class A Stock have been tendered or deposited pursuant to any such Tender Offer as to the withdrawing of, or other exercise of any right to withdraw, such shares of Common Stock (including shares of Common Stock issued on conversion of Class A Stock) or Class A Stock, and if such solicitation is made, the Trustee shall act in accordance with the last dated timely written direction, if any, of each such Participant. As used in this subsection (c) with respect to a Participant, the term "Tender Date" means the date on which the Trustee tenders or deposits any shares of the Common Stock (including shares of Common Stock issued on conversion of Class A Stock) or Class A Stock representing interests of such Participant in the Rockwell Stock Fund in accordance with this subsection (c). 8.040 FORM OF TRUST AGREEMENT. The Trust Agreement shall be in such form and contain such provisions as the Plan Committee may deem appropriate (consistent with the provisions of Section 8.020, Section 8.030 and Section 15.030), including, but not limited to, provisions with respect to the powers and authority of the Trustee, the authority of the Plan Committee to amend the Trust Agreement and to terminate the trust, and a provision that at no time shall any part of the Trust Fund revert to or be recoverable by the Company (within the taxable year or thereafter) or be used for or diverted to purposes other than for the exclusive benefit of Participants or their Beneficiaries. The Trust Agreement shall be deemed to form a part of the Plan, and all rights and benefits that may accrue to any person under the Plan shall be subject to all the terms and provisions of the Trust Agreement. The Trustee may deposit amounts held in any of the funds comprising the Trust Fund in an interest bearing account or accounts including short-term fixed income commingled and collective investment funds in a bank or similar financial institution including without limitation the commercial banking department of the Trustee on a temporary basis pending either (1) investment of such amounts or (2) distribution of funds to Plan Participants. 29 30 8.050 RIGHTS IN THE TRUST FUND. Nothing in the Plan or in the Trust Agreement shall be deemed to confer any legal or equitable right or interest in the Trust Fund in favor of any Participant, Beneficiary or other person, except to the extent expressly provided in the Plan. 8.060 TRUST FUND VALUES. Neither the Company, the Board of Directors, the Plan Committee, the Plan Administrator nor the Trustee warrants or represents in any way that the value of Participants' Accounts shall increase or not decrease, each Participant assuming this risk as to his own Account. 8.070 TAXES, FEES AND EXPENSES OF THE TRUSTEE. (a) Except as provided in subsection (b) below, the fees and expenses of the Trustee and expenses of the Trustee's counsel shall be borne by the Company and shall constitute a charge on the Trust Fund until so paid; provided that unless the Board of Directors shall by resolution provide to the contrary the Company shall not, and in no event shall the Trust Fund, pay any such Trustee or Trustee's counsel fees or expenses incurred (1) in preparing for or prosecuting any action against the Company, any member of the Plan Committee or the Plan Administrator or (2) in defending or settling, or satisfying a judgment relating to any proceeding either arising out of any alleged misfeasance or nonfeasance in any person's performance of duties with respect to the Plan or arising out of any alleged wrongful act against the Plan. Neither the Plan Administrator nor the members of the Plan Committee shall be compensated from the Plan but may be compensated for services rendered on behalf of the Plan by the Company. (b) Brokerage fees, investment management fees, commissions, stock transfer taxes and other charges and expenses incurred in connection with the management of the Trust Fund or transactions relating to the acquisition or disposition of property for or of the Trust Fund, or distributions therefrom, shall be paid from the Trust Fund. Taxes, if any, payable by the Trustee on the assets at any time held in the Trust Fund or on the income thereof shall be paid from the Trust Fund. Other expenses incurred hereunder to the extent not paid by the Company, shall be paid from the Trust Fund. 30 31 ARTICLE IX -- ADMINISTRATION 9.010 GENERAL ADMINISTRATION. Authority to control and manage the operation and administration of the Plan shall be vested in the Plan Committee except to the extent that: (1) the Plan Administrator or the Administrative Committee is allocated any such authority under the Plan; or (2) any Trustee appointed pursuant to Section 8.010 may, pursuant to Article VIII, be granted exclusive authority and discretion to manage and control all or any portion of the assets of the Plan. The Plan Committee, the Plan Administrator, the Administrative Committee, and the Trustee(s) shall constitute the Named Fiduciaries of the Plan for purposes of ERISA. 9.020 PLAN COMMITTEE. The Board of Directors shall, from time to time, determine the size of the Plan Committee and appoint its individual members. The Plan Committee shall act, with or without a meeting, in a manner consistent with the rules and regulations adopted pursuant to Section 9.060(c). 9.030 PLAN COMMITTEE RECORDS. The Plan Committee shall keep such records and data as it shall deem appropriate and it shall from time to time file with the Board of Directors such reports as the latter may request. It shall be a function of the Plan Committee to keep records of the assets of the Trust Fund, based upon reports furnished by the Trustee, and the evaluations placed thereon by the Committee shall be final and conclusive. The records of the Plan shall be kept on the basis of a Plan Year beginning October 1. 9.040 FUNDING POLICY. The Plan Committee shall be responsible for determining a funding policy of the Plan consistent with the objectives for the Equity Fund, the Guaranteed Investment Fund, the Money Market Fund and the Rockwell Stock Fund and shall from time to time advise the Trustee of such policy. 9.050 ALLOCATION AND DELEGATION OF DUTIES UNDER PLAN. The Plan Committee, the Plan Administrator and the Administrative Committee shall each have the following powers and authorities: (a) To designate agents to carry out responsibilities relating to the Plan, other than fiduciary responsibilities. (b) To employ such legal, consultant, medical, accounting, clerical and other assistance as it may deem appropriate in carrying out the provisions of the Plan 31 32 including one or more persons to render advice with regard to any responsibility any Named Fiduciary or any other fiduciary may have under the Plan. 9.060 PLAN COMMITTEE POWERS. In addition to any powers and authority conferred on the Plan Committee elsewhere in the Plan or by law, the Plan Committee shall have the following powers and authority: (a) To allocate fiduciary responsibilities (other than trustee responsibilities) to one or more members of the Plan Committee or to the Plan Administrator and to designate one or more persons (other than the Trustee) to carry out fiduciary responsibilities (other than trustee responsibilities). The term "trustee responsibilities" as used herein shall mean responsibilities provided in the Trust Agreement to manage or control the assets of the Plan. (b) To determine the manner in which the assets of the Plan, or any part thereof, shall be disbursed by the Trustee, except that the making and retention of investments shall be solely governed by the Trust Agreement. (c) To establish rules and regulations from time to time for the conduct of the Plan Committee's business and for the administration and effectuation of its responsibilities under the Plan. 9.070 PLAN ADMINISTRATOR. In addition to any powers and authority conferred on the Plan Administrator elsewhere in the Plan or by law, the Plan Administrator shall have the following powers and authority: (a) To administer, interpret, construe and apply the Plan and to decide all questions which may arise or which may be raised by any Employee, Participant, Beneficiary, or other person whatsoever, and the actions or decisions of the Plan Administrator in regard thereto, or in regard to anything or matter otherwise within his discretion, shall be conclusive and binding on all Employees, Participants, Beneficiaries, and other persons whatsoever. (b) To designate one or more persons (other than the Trustee) to carry out fiduciary responsibilities (other than trustee responsibilities). The term "trustee responsibilities" as used herein shall mean responsibilities provided in the Trust Agreement to manage or control the assets of the Plan. (c) To establish rules and regulations from time to time for the administration and effectuation of his responsibilities under the Plan including but not limited to, adoption of forms under Section 9.170. 32 33 (d) The Plan Administrator shall have such other responsibility as is designated by ERISA as the responsibility of the administrator of the Plan and shall have such other power and authority as is necessary to fulfill his responsibilities under ERISA or under the Plan. 9.080 RELIANCE UPON DOCUMENTS AND OPINIONS. The members of the Plan Committee and the Administrative Committee, the Plan Administrator, the Board of Directors and the Company shall be entitled to rely upon any tables, valuations, computations, estimates, certificates and reports furnished by any consultant or firm or corporation which employs one or more consultants, upon any opinions furnished by legal counsel, upon any computation, estimates, and reports furnished by any consultants or consulting firms, and upon any reports furnished by the Trustee, and the members of the Plan Committee, the Plan Administrator, the Board of Directors and the Company shall be fully protected and shall not be liable in any manner whatsoever except as otherwise specifically provided by law for anything done or action taken or suffered in reliance upon any such consultant or firm or corporation which employs one or more consultants, Trustee, or counsel, and any and all such things done or such actions taken or suffered by the Plan Committee, the Plan Administrator, the Board of Directors and the Company shall be conclusive and binding on all Employees, Participants, Beneficiaries, and other persons whatsoever except as otherwise specifically provided by law. The Plan Committee and the Plan Administrator may, but are not required to, rely upon all records of the Company with respect to any matter or thing whatsoever, and to the extent they rely thereon, such records shall be conclusive with respect to all Employees, Participants, and Beneficiaries, except as otherwise provided by law. 9.090 REQUIREMENT OF PROOF. The Plan Committee, the Plan Administrator, the Administrative Committee, the Board of Directors or the Company may require satisfactory proof of any matter under the Plan from or with respect to any Employee, Participant, or Beneficiary, and no such person shall acquire any rights or be entitled to receive any benefits under the Plan until such proof shall be furnished as so required. 9.100 LIMITATION ON LIABILITY. (a) Except as provided in Part 4 of Title l of ERISA, no person shall be subject to any liability with respect to his duties under the Plan, unless he acts fraudulently or in bad faith. (b) No person shall be liable for any breach of fiduciary responsibility resulting from the act or omission of any other fiduciary or any person to whom fiduciary responsibilities have been allocated or delegated, except as provided in 33 34 sections 405(a) and 405(c)(2)(A) or (B) of ERISA. No action or responsibility shall be deemed to be a fiduciary action or responsibility except to the extent required by ERISA. 9.110 INDEMNIFICATION. To the extent permitted by law, the Company shall indemnify the Board of Directors, the Plan Administrator, each member of the Plan Committee, each member of the Administrative Committee and any other employee of the Company with duties under the Plan against expenses (including any amount paid in settlement) reasonably incurred by him in connection with any claims against him by reason of his conduct in the performance of his duties under the Plan. Except in relation to matters as to which he has been guilty of willful misconduct in the performance of such duties, the foregoing right of indemnification shall be in addition to any other right to which any such Plan Committee member, Plan Administrator, Administrative Committee member, or other person may be entitled as a matter of law or otherwise. 9.120 MULTIPLE FIDUCIARY CAPACITY. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan. 9.130 EXPENSES. All costs and expenses incurred in the administration of the Plan including the expenses incurred by the Plan Committee, the Administrative Committee and Plan Administrator shall be paid by the Company. 9.140 MAILING AND LAPSE OF PAYMENTS. All payments under the Plan shall be delivered in person or mailed to the last address of the Participant (or, in the case of the death of the Participant, to that of any other person entitled to such payments under the terms of the Plan) furnished pursuant to Section 9.160 below. If the Plan Administrator cannot, by making a reasonably diligent attempt by mail, locate either the Participant or his Beneficiary, as the case may be, for a period of seven years, such Participant or Beneficiary shall be presumed dead. If payment cannot be made alternately to the estate of either and no surviving spouse, child, grandchild, parent, brother or sister of the Participant or his Beneficiary are known to the Plan Administrator or the Trustee or, if known, cannot with reasonable diligence be located, the amount payable shall be retained by the Trustee until the same can be distributed as required by applicable law. 9.150 NON-ALIENATION. (a) Except as provided in subsection (b), no right or benefit provided for in the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, 34 35 assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void. Except as may otherwise be required or permitted by the Internal Revenue Service, no such right or benefit shall be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to such right or benefit. No such right or benefit shall be subject to garnishment, attachment, execution or levy of any kind. If any Participant or Beneficiary shall become bankrupt or shall attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge such right or benefit, or if the right or benefit to which such person may be entitled should be held by any court to be subject to garnishment, attachment, execution or levy of any kind, then in the discretion of the Plan Administrator such right or benefits shall cease and determine and the same shall be held or applied, in whole or in part, to or for the benefit of such Participant or Beneficiary or his spouse, children or other dependents, or any of them, in such manner and in such proportion as the Plan Administrator shall deem proper. Any payment so made or applied shall be conclusively deemed to have been made for the benefit of such Participant or Beneficiary as the case may be. (b) (i) The non-alienation rule of subsection (a) shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order (as defined in section 414(p)(1)(B) of the Code), except that subsection (a) shall not apply if the Plan Administrator determines that such order is a qualified domestic relations order under section 414(p) of the Code. (ii) Upon receipt of a domestic relations order, the Plan Administrator shall promptly notify the Participant and any other alternative payee of the receipt of such order and the Plan's procedures for determining the qualified status of domestic relations orders. (iii) Within a reasonable period after the receipt of a domestic relations order, the Plan Administrator shall determine the qualified status of such order, and thereafter notify the Participant and each alternate payee of such determination. During any period in which the issue of whether a domestic relations order is a qualified domestic relations order is being determined by the Plan Administrator, the Plan Administrator shall segregate in a separate account in the Plan or in an escrow account the amounts which would have been payable to the alternate payee during such period if the order had been determined to be a qualified domestic relations order. (iv) If within 18 months after issuance of the order, the order is determined to be a qualified domestic relations order, the Plan Administrator shall pay the segregated amounts (plus interest thereon, if any) to the person or persons entitled thereto. If within 18 months (A) it is determined that the order is not a qualified domestic relations order, or (B) the issue as 35 36 to whether such order is a qualified domestic relations order is not resolved, the Plan Administrator shall pay the segregated amounts (plus interest thereon, if any) to the person or persons who would have been entitled to such amounts if there had been no order. Any determination that an order is a qualified domestic relations order which is made after the close of the 18 month period shall be applied prospectively only from the date of such determination. 9.160 ADDRESSES. Each Participant shall be responsible for furnishing the Plan Administrator with his current address and the correct current name and address of his Beneficiary. 9.170 NOTICES AND COMMUNICATIONS. (a) All applications, notices, designations, elections, and other communications from Participants shall be in writing, on forms prescribed by the Plan Administrator and shall be mailed or delivered to such office as may be designated by the Plan Administrator, and shall be deemed to have been given to the Company when received by such office. (b) Each notice, report, remittance, statement and other communication directed to a Participant or Beneficiary shall be in writing and may be delivered in person or by mail, in which latter event it shall be deemed to have been delivered and received by him when so deposited in the United States Mail with postage prepaid addressed to the Participant or Beneficiary at his last address of record with the office designated by the Plan Administrator. 9.180 COMPANY RIGHTS. Nothing contained in the Plan shall be construed as a contract of employment between the Company and any Participant, or as a right of any Participant to be continued in the employment of the Company, or as a limitation of the right of the Company to discharge any Participant. 9.190 PAYMENTS ON BEHALF OF INCOMPETENT PARTICIPANTS OR BENEFICIARIES. In the event that the Plan Administrator or his designee shall find that any Participant or Beneficiary to whom a benefit is payable under the terms of the Plan is unable to care for his affairs because of illness or accident, is otherwise mentally or physically incompetent, or unable to give a valid receipt, the Plan Administrator may cause the payment becoming due to such Participant or Beneficiary to be paid to another person for his benefit without responsibility on the part of the Plan Administrator, the Plan Committee, the Administrative Committee, the Company, or the Trustee, to follow the application of such payment. Any such payment shall be a payment for the account of the Participant or Beneficiary and shall operate as a complete discharge of all liability 36 37 therefor under the Plan of the Trustee, the Company, the Plan Administrator, the Administrative Committee, and the Plan Committee. 9.200 WITHHOLDING OF TAXES. Any payment out of the Trust Fund may be subject to withholding for taxes as required by law. 37 38 ARTICLE X -- PARTICIPANT'S CLAIMS 10.010 REQUIREMENT TO FILE CLAIM. (a) A Participant wishing to make a withdrawal from the Plan under Section 5.010 must file a written claim with the person designated by the Plan Administrator. A claimant who fails to reduce a claim to writing shall be deemed not to have made such claim. (b) Except as otherwise provided by the Plan Administrator, a claimant will not be required to file a claim to be entitled to a distribution under the Plan for any reason other than those identified in subsection (a). However, a person who fails to receive a benefit to which he claims to be entitled under the Plan may file a claim in the manner described in subsection (a). (c) The person designated by the Plan Administrator shall approve or deny in writing within thirty (30) days any claim which has been filed with it. 10.020 APPEAL OF DENIED CLAIM (a) A Participant whose claim has been denied as set forth in Section 10.010(c) may appeal the denial to the Plan Administrator by filing a written appeal within sixty (60) days of the date of the denial. (b) The Participant or his representative shall, for the purpose of preparation of such appeal, have the right to inspect any document relied upon by the person designated by the Plan Administrator in denying the claim. (c) The Plan Administrator or his delegate shall make a final, full and fair review of any such decision which is appealed to him. A decision which is not appealed within the time herein provided shall be final and conclusive as to any matter which was presented to the person making such decision. 38 39 ARTICLE XI -- MODIFICATION, SUSPENSION, MERGER AND TERMINATION 11.010 AMENDMENT. The Board of Directors may, at any time and from time to time, amend the Plan in whole or in part. However, except as provided in Section 14.030 below, no amendment shall be made the effect of which would be: (a) To cause any contributions paid to the Trustee to be used for or diverted to purposes other than providing benefits to the Participants and their Beneficiaries, and defraying reasonable expenses of administering the Plan, prior to satisfaction of all liabilities with respect to Participants and their Beneficiaries; (b) To have any retroactive effect so as to deprive any Participant or Beneficiary of any benefit to which he would be entitled under the Plan if his employment were terminated immediately before such amendment; or (c) To increase the responsibilities or liabilities of any Trustee without its written consent. 11.020 TRANSFER OF ASSETS AND LIABILITIES. The Plan Committee at any time may in its sole discretion without the consent of the Participant or his representative cause the Trustee to segregate part of the assets of the Trust Fund into one or more separate trust funds and designate a group of Participants whose benefits shall be provided solely from each such segregated fund. The Board of Directors may, in its sole discretion without the consent of any Participant or his representative, establish a separate plan to cover any such group of Participants. The initial terms and conditions of any such plan shall be identical to the extent such terms and conditions affect the rights of Participants under the Plan. Amendment to the Plan shall not be necessary to carry out the provisions of this Section 11.020. Any such transfer of assets and liabilities to another plan shall be expressly conditioned on the qualification of such plan and trust under sections 401(a) and 501(a) of the Code. 11.030 MERGER RESTRICTION. Notwithstanding any other provision in the Plan, the Plan shall not in whole or in part merge or consolidate with, or transfer its assets or liabilities to any other plan unless each affected Participant in the Plan would (if the Plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had then terminated). 39 40 11.040 SUSPENSION OF CONTRIBUTIONS. The Company may, without amendment of the Plan and without the consent of any Participant or representative of any Participant, suspend Compensation Deferral Contributions to the Plan as to all or certain Participants by action of the Board of Directors. In any event, the Company will suspend Compensation Deferral Contributions at any time when the amount of any contribution by it would be in excess of the earnings, including retained earnings, of the Company. Upon a suspension, the Plan Committee may, in its sole discretion permit the Trust Fund to continue to be held by the Trustee, or may segregate one or more parts of the Trust Fund, as provided in Section 11.020. 11.050 DISCONTINUANCE OF CONTRIBUTIONS. The Company may, by action of the Board of Directors, without amendment of the Plan and without the consent of any Participant or representative of any Participant, discontinue Compensation Deferral Contributions to the Plan as to all or certain Participants. Upon such discontinuance the Plan Committee may in its sole discretion segregate one or more parts of the Trust Fund, as provided in Section 11.020. 11.060 TERMINATION. The Plan Committee may terminate or partially terminate the Plan at any time. In the event of termination or partial termination the Plan Committee may, without the consent of any Participant or other person, but subject to the rights of Participants and other persons under the Plan, (i) permit the Trustee to retain all or part of the Trust Fund or (ii) distribute all or part of the Trust Fund to the Participants or their spouses or Beneficiaries. 11.070 VESTING UPON PLAN TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS. Upon complete or partial termination of the Plan or upon the complete discontinuance of contributions to the Plan, the rights of all affected Participants to the amounts credited to their Accounts shall be fully vested and nonforfeitable. 40 41 ARTICLE XII -- STATUTORY LIMITATIONS 12.010 ANNUAL LIMITS OF PARTICIPANTS' ACCOUNT INCREASES. The amount allocated in each calendar year to any Participant under the combination of defined contribution plans of all Affiliated Companies cannot exceed the lesser of $30,000.00 (or such larger amount as may be established under section 415(d)(1)(B) of the Code, to reflect an increase in the cost of living) or 25% of the Participant's total compensation. 12.020 LIMITS AS TO COMBINED PLANS. In the case of a Participant who also is a participant in a defined benefit pension plan which is or was maintained by the Company or an Affiliated Company and to which section 415 of the Code applies, the limitation set forth herein shall be further adjusted in compliance with section 415(e) of the Code. In making such adjustment, the maximum benefit allowable shall be paid hereunder before applying the limitations on the defined benefit plan. 12.030 COMBINING SIMILAR PLANS. For purposes of this Article, all defined contribution plans which are required to be aggregated under section 414(b) of the Code shall be so aggregated and the limitation set forth herein shall be applied to the total amounts allocated under all such plans. 12.040 ADJUSTMENT TO COMPENSATION DEFERRAL CONTRIBUTIONS. To the extent the Compensation Deferral Contributions elected by a Participant under Section 2.020(a) would, if made, cause the total amount allocated to a Participant in any calendar year to exceed the limitations set forth in this Article, such amount shall be paid as compensation to the Participant. 41 42 ARTICLE XIII -- MISCELLANEOUS 13.010 BENEFITS PAYABLE ONLY FROM TRUST FUND. All benefits payable hereunder shall be provided solely from the trust, and the Company assumes no responsibility for the acts of the Trustee, except as provided in the Trust Agreement 13.020 REQUIREMENT FOR RELEASE. Any payment to any Participant or his Beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Trustee and the Company, and the Trustee may require such Participant or Beneficiary, as a condition precedent to such payment to execute a receipt and release to such effect. If in the opinion of the Plan Administrator any present, former or future spouse of a Participant shall by reason of the law of any jurisdiction appear to have paid interest in the benefits that might, but for any election made by such Participant pursuant to the Plan, be or become payable to such Participant or his Beneficiary, the Plan Administrator may, as a condition precedent to the making of such an election or revocation of such an election or as a condition of the continued effectiveness of any such election or revocation of such election, require such written release or releases, or such other proof in lieu thereof, as in his discretion he shall determine to be necessary, desirable or appropriate either to protect the rights of any such present, former or future spouse or to prevent or avoid any conflict or multiplicity of claims with respect to the payment of any benefits under the Plan. 13.030 TRANSFERS OF STOCK TO PARTICIPANTS. Transfers of Common Stock and Class A Stock from the Trustee to Participants pursuant to Article IV or V shall be made as soon as practicable, but neither the Company, any Named Fiduciary nor the Trustee shall have any responsibility for any decrease in the value of such stock between the Valuation Date used for determination of the number of shares to which the Participant is entitled and the date of transfer to the Participant by the transfer agent, nor, except as provided in Articles IV and V, shall the Participant receive any dividends, rights, options or warrants on such stock other than those payable to shareholders of record as of a date on or after the date of transfer to the Participant. 13.040 INTERPRETATION. The masculine gender shall include the feminine and the singular shall include the plural unless the context clearly indicates otherwise. 42 43 ARTICLE XIV -- APPROVAL OF THE COMMISSIONER OF INTERNAL REVENUE 14.010 QUALIFICATION OF THE PLAN. The Company intends to preserve the qualification with and approval by the Internal Revenue Service of the Plan as a plan, Company Contributions to which are deductible by the Company for Federal income tax purposes. Should any amendment to the Plan cause the Plan as amended to fail so to qualify and obtain such approval, then in such event, the amendment to the Plan shall be deemed revoked and, as soon as practicable thereafter, the Plan shall be amended to the extent necessary to preserve such qualification and approval. 14.020 CONTINUATION OF THE PLAN. Continuation of the Plan is contingent upon and subject to retaining such approval of the Commissioner of Internal Revenue as the Company may find necessary. 14.030 MODIFICATION OF THE PLAN. Any modification or amendment of the Plan or the Trust Agreement may be made retroactively by the Company, if necessary or appropriate, to qualify or maintain the Plan as a plan and trust, meeting the requirements of applicable sections of the Code and of other Federal and State laws, as now in effect or hereafter amended or enacted. 43 44 ARTICLE XV -- PLAN ADMINISTRATION IN THE EVENT OF THIRD-PARTY TENDER OFFERS 15.010 APPLICABILITY. The provisions of this Article XV shall take effect only as of the date of the first tender or deposit by the Trustee of any share of Common Stock (including any share of Common Stock issued on conversion of Class A Stock) and Class A Stock pursuant to any Tender Offer (as herein defined) in accordance with the Trust Agreement as provided in Section 8.030(c) and shall remain in effect thereafter unless and until (a) each share of Common Stock (including any share of Common Stock issued on conversion of Class A Stock) and Class A Stock held in the Rockwell Stock Fund which has been tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c) pursuant to such Tender Offer or any subsequent Tender Offer commenced while the provisions of this Article XV are in effect has been effectively withdrawn by or otherwise returned to the Trustee and (b) the certificate representing each share is in the possession of the Trustee. As used in this Article XV, the term "Tender Offer" means any tender offer for, or request or invitation for tenders of, the Common Stock and/or Class A Stock subject to Section 14(d)(1) of the Securities Exchange Act of 1934, as amended, or any regulation thereunder, except for any such tender offer or request or invitation for tenders made by the Company or any Affiliated Company. 15.020 ADDITIONAL DEFINITIONS. While the provisions of this Article XV are in effect: (a) the term "Sub Fund" shall mean the fund established by the Trustee pursuant to Section 15.030(a). (b) in lieu of the definition set forth in Section 1.010, the term "Account" or "Compensation Deferral Account" means the account, with respect to a Participant, that is comprised of or attributable to contributions made on behalf of or with respect to the Participant under Article II, including, but not limited to, Transfer Contributions as defined in Section 1.255, adjusted by gains or losses related to the investment of such contributions. (c) in lieu of the definition set forth in Section 1.270, the term "Trust Fund" shall mean the fund, including the earnings thereon, held by the Trustee into which all contributions attributable to the Participant and the Company are deposited pursuant to the Plan. The Trust Fund shall be divided into an Equity Fund, Guaranteed Investment Fund, a Money Market Fund, a Rockwell Stock Fund and a Sub Fund. 44 45 15.030 ESTABLISHMENT AND INVESTMENT OF THE SUB FUND. While the provisions of this Article XV are in effect: (a) the Trustee shall establish a Sub Fund consisting of any cash, securities or other consideration received by the Trustee as payment for shares of Common Stock (including any shares of Common Stock issued on conversion of Class A Stock) or Class A Stock previously held in the Rockwell Stock Fund which were tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c), all property purchased therewith and the proceeds and income therefrom. (b) the Trustee shall use all cash in the Sub Fund only to purchase the kinds of instruments of debt with maturity of not more than one year in which the Trustee may invest and reinvest the principal and income of the Money Market Fund pursuant to Section 8.020(c) and shall so invest and reinvest the principal thereof and income thereon. Dividends, income and other distributions received on, and proceeds from the sale or other disposition of, any securities or other consideration held by the Trustee for Participants in the Sub Fund pursuant to a tender or deposit of shares of Common Stock (including any shares of Common Stock issued on conversion of Class A Stock) or Class A Stock in accordance with the Trust Agreement as provided in Section 8.030(c) shall be similarly invested and reinvested. (c) the funding policy of the Plan determined by the Plan Committee pursuant to Section 9.040 shall be consistent with the objectives for the Sub Fund. 15.040 MAINTENANCE AND VALUATION OF SUB FUND; CORRESPONDING REDUCTIONS OF ROCKWELL STOCK FUND. While the provisions of this Article XV are in effect: (a) a separate account representing each Participant's interest in the Sub Fund shall be maintained. Such separate account shall contain sufficient information to permit with respect to the Sub Fund a determination of the dollar balance of such Participant's Account at any time in accordance with the Unit valuation described in subsections (b), (c) and (d) hereof. Such separate account shall contain sufficient information to permit such other determinations as may be required to carry out the provisions of the Plan. (b) the interest of each Participant in the Sub Fund shall be represented by Units allocated to his Account. The initial value of each Unit to be allocated to his Account in respect of amounts held by the Trustee in the Sub Fund shall be One Dollar ($1.00), and Units shall be credited to each Participant on such basis for amounts received by the Trustee on his behalf prior to the first Valuation Date following the first receipt by the Trustee of cash, securities or other consideration 45 46 for shares of Common Stock (including any shares of Common Stock issued on conversion of Class A Stock) or Class A Stock previously representing his interest in the Rockwell Stock Fund which were tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c). Each receipt on behalf of a Participant of cash, securities or other consideration for shares of Common Stock (including any shares of Common Stock issued on conversion of Class A Stock) or Class A Stock previously representing his interest in the Rockwell Stock Fund which were tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c) or each payment to a Participant from the Sub Fund shall result in a credit or charge to the affected Account of the Participant equal to the number of Units received or paid as the case may be. (c) as of the Valuation Date next following the first deposit into the Sub Fund and as of each succeeding Valuation Date, an amount equal to the fair market value of all property in such fund shall be determined by the Trustee in such manner and on such basis as it shall deem appropriate. Such amount shall be divided by the total number of Units credited to all Participants in each such fund, thereby establishing a new Unit value. With respect to such fund, each receipt therein or payment therefrom after such Valuation Date shall be converted to Units by dividing such new Unit value into the amount of such receipt or payment and the Account of the Participant shall be credited or charged, as the case may be, with the portion of the number of Units so computed properly attributable to such Participant. (d) as of any specified date, the dollar balance of the individual Account of each Participant in the Sub Fund shall be determined in the same manner as under Section 3.040. (but using for such determination amounts received by the Trustee in respect of the Sub Fund in lieu of contributions). (e) the Participant's Account in the Rockwell Stock Fund shall be reduced as of each date on which the Trustee receives cash, securities or other consideration for shares of Common Stock (including any shares of Common Stock issued on conversion of Class A Stock) or Class A Stock previously representing some or all of his interest in the Rockwell Stock Fund which were tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c) by the number of Units which bears the same relation to the number of Units credited to such Account immediately prior to the tender or deposit of such shares as the portion of his interest in the Rockwell Stock Fund in respect of which such shares were tendered bore to his entire interest in the Rockwell Stock Fund immediately prior to the tender or deposit of such shares. 46 47 15.050 BENEFITS PAYABLE FROM THE SUB FUND While the provisions of this Article XV are in effect: (a) For purposes of Section 4.020(a): (i) The full dollar balance of the Participant's Accounts in the Sub Fund shall be deemed to be described in paragraph (2) thereof, and such balance shall be deemed to be an amount that the Participant (or his Beneficiary in the case of death) shall receive under paragraph (1) thereof. Such balance shall be determined, in the manner provided by Section 15.040(d), by reference to the Units in each such Account on the date of the Participant's termination of employment. (ii) The amounts set forth in subparagraph (ii) of paragraph (a) of Section 4.020 shall be amounts that the Participant (or his Beneficiary in the case of death, shall receive under paragraph (1) thereof; provided, however, that no share of Common Stock (including any share of Common Stock issued on conversion of Class A Stock) or Class A Stock representing a Participant's interest in the Rockwell Stock Fund which, as of the date of such Participant's termination of employment, has been tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c) shall be transferred to such Participant (or his Beneficiary in the case of death) pursuant to Section 4.020(a)(i) unless and until such share has been effectively withdrawn by or otherwise returned to the Trustee and the certificate representing such share is in the possession of the Trustee; and provided, further, however, that there shall be paid or transferred to such Participant (or his Beneficiary in the case of death) any and all cash, securities or other consideration received by the Trustee for whole shares of Common Stock (including any shares of Common Stock issued on conversion of Class A Stock) or Class A Stock previously representing such Participant's interest in the Rockwell Stock Fund as of the Valuation Date immediately preceding the date of such termination and which were tendered or deposited in accordance with the Trust Agreement as provided in Section 8.030(c) as soon as practicable after the receipt of such cash, securities or other consideration by the Trustee. 15.060 WITHDRAWALS FROM A PARTICIPANT'S COMPENSATION DEFERRAL ACCOUNT UNDER SECTION 5.010 While the provisions of this Article XV are in effect: (a) for purposes and subject to the provisions of Section 5.010(d), a Participant may elect to have any withdrawal from his Compensation 47 48 Deferral Account taken from any of the funds as set forth in Section 5.010(e) or from his Compensation Deferral Account in the Sub Fund, or to have a specified portion taken from any of the funds as set forth in Section 5.010(e) and a specified portion taken from any two or more of the above funds. Notwithstanding the foregoing provisions of this subsection (2), and subject only to the provisions of Section 5.010(e), any withdrawal from his account or accounts in the Guaranteed Investment Fund shall be taken in reverse sequence by first exhausting his accounts in the most recent contracts under such Fund. (b) partial withdrawals pursuant to Section 5.010 shall be in a minimum amount of $100 with respect to the Sub Fund. 48 49 DESIGNATION OF ADMINISTRATOR ROCKWELL INTERNATIONAL CORPORATION ADVICE OF ACTION To: THOSE CONCERNED Date 7/1/87 Subject: REDESIGNATION OF PLAN ADMINISTRATOR You are hereby notified of action taken as follows: By BOARD OF DIRECTORS Place of Meeting Pittsburgh, PA Date of Meeting July 1, 1987 RESOLVED, that, effective June 1, 1987, the Director, Benefits Administration, be, and he hereby is, appointed for all purposes contemplated by the Employee Retirement Income Security Act of 1974, as amended, the "administrator" of each of the Corporation's employee benefit plans, and in such capacity is hereby designated Plan Administrator. * * * * * I, Charles H. Harff, Secretary of Rockwell International Corporation, hereby certify that the foregoing resolution was duly adopted by the Board of Directors at a meeting held in Pittsburgh, Pennsylvania, on July 1, 1987 and that the same is in full force and effect. /s/ Charles H. Harff Secretary 49 50 APPENDIX A APPENDIX A -- ELIGIBLE PAYROLLS AND EFFECTIVE DATES ELIGIBLE PAYROLL EFFECTIVE DATE UAW Los Angeles Area Unit (Local 887) November 30, 1985 UAW Palmdale Area Unit (Local 887) November 30, 1985 UAW Weedpatch Area Unit (Local 887) November 30, 1985 UAW Manufacturing Planning and Tool Design Unit (Local 887) November 30, 1985 UAW Tulsa Area Unit (Local 952) November 30, 1985 UAW Santa Susana Field Laboratory Area Unit (Local 1519) November 30, 1985 UAW Edwards Field Laboratory Area Unit (Local 1519) November 30, 1985 UAW McAlester Area Unit (Local 1558) November 30, 1985 SMWIA Weldors (Local 461) November 30, 1985 IUOE Operating Engineers (Local 501) November 30, 1985 UIPFA Police & Fireman November 30, 1985 Painters (Local 36) November 30, 1985 Industrial Carpenters (Local 530) November 30, 1985 UPGWA Tulsa Guards (Local 801) November 30, 1985 IBT Teamsters (Locals 578 and 952) November 30, 1985 IBEW Electricians (Local 2295) November 30, 1985 50 51 APPENDIX B PROCEDURES FOR DISTRIBUTIONS TO PARTICIPANTS AGE 70-1/2 This procedure applies only to Participants who have become age 70-1/2 on or after January 1, 1988: 1. Commencing no later than January 31, 1990, each such Participant shall receive a complete distribution of his or her Account in the Plan in accordance with Section 5.020 of the Plan valued as of December 31, 1989. No later than January 31 of each year thereafter, each Participant who, as of December 31 of that year has attained age 70-1/2 will also receive a complete distribution of his or her Account in the Plan valued as of the immediately preceding December 31. 2. Applicable waivers for Federal and State income tax purposes must be completed and returned to the Company's Administrative Services Center by no later than ten (10) days prior to January 31 of each year in order to prevent Federal and, if applicable, state income taxes from being withheld from distributions. 3. Distributions pursuant to Paragraph 1 shall not affect any existing elections by such Participants to continue making contributions to the Plan, all of which shall be invested in accordance with the provisions of Article II. Compensation Deferral Contributions made to the Plan during each calendar year by such Participants, together with earnings thereon, will be distributed the following year in accordance with Paragraph 1. Approved, 12/5, 1990: /s/ L. A. Felix, Jr. ------------------------------------ L. A. Felix, Jr. Plan Administrator 51 52 APPENDIX C PROCEDURES, TERMS AND CONDITIONS OF LOANS Pursuant to Section 5.020 of the Plan, the Plan Administrator hereby adopts the following amended procedures, terms and conditions for the granting and administration of loans from the Plan to be effective October 1, 1993: Eligibility for Loan: To be eligible to obtain a loan from the Plan, an Employee must have an Account balance with the Plan and be employed on an active payroll of an Affiliated Company at the time he applies for a loan. A "party in interest" (as defined in ERISA Section 3(14)) who has an Account balance with the Plan, but who is not an Employee, shall be eligible to obtain a loan only if he can provide an agreement by his current employer to deduct and remit to Savings Plan Loan Administration the required loan repayments. However, an Employee or other party in interest may not obtain a loan from the Plan prior to the expiration of the greater of the following periods of time following a default on another loan from the Plan or any other Company sponsored savings plan: one (1) year or a period of time equal to the original term of the defaulted loan. Number of Loans Permitted at Any One Time; Minimum Amount of Loan: Only a single loan is permitted to be outstanding from all Company sponsored savings plans at any one time. Any Employee or other party in interest who has an outstanding loan with the Plan or any other Company sponsored savings plan will be required to repay the loan in full before applying for another loan from the Plan. Each loan must be in the minimum amount of $1,000. Maximum Amount of Loan: The amount which any Employee or other party in interest shall be permitted to borrow from the Plan shall be based on the aggregate of the value of his Account determined in accordance with Section 3.030 of the Plan and may not exceed the lesser of an amount which, when combined with all outstanding loans to such Employee or other party in interest from all other plans of all Affiliated Companies, equals Fifty Thousand Dollars ($50,000), reduced by the highest outstanding and unpaid balances during the twelve (12) month period immediately preceding the date on which such loan is made of all prior loans to such Employee or other party in interest from the Plan and such other plans; or one-half (1/2) the aggregate of the balances of his Account. The maximum amount of any loan will be further limited to an amount which, at the applicable rate of interest, will result in a monthly repayment collected in four (4) weekly deductions not in excess of the net earnings, after all applicable statutory withholdings, deductions for employee benefits and pre-tax contributions to the Plan, but before other deductions for credit union, savings bond and other savings and charitable deductions, of the Employee or other party in interest for the weeks in which the loan repayment is to be deducted. Loan Applications: Initial loan application forms will consist of an application form and a repayment worksheet, both in form approved by the Plan Administrator, and may be obtained from any Benefits Representative or Payroll Department. The loan application form must be completed and signed by the Employee or other party in interest and returned to the applicable 52 53 Benefits Representative or Payroll Department, which will review the forms to determine eligibility and, if approved, forward them to: Savings Plan Loan Administration Rockwell International Corporation P. O. Box 2837 Seal Beach, California 90740 for processing. If the loan is approved by the Savings Plan Loan Administrator, a promissory note, payroll deduction authorization and Truth In Lending statement, together with a letter notifying the applicant of the approval of the loan, all in form approved by the Plan Administrator, will be prepared and forwarded to the applicant for execution. These forms must be executed by the applicant and returned to Savings Plan Loan Administration within thirty (30) days after the date of the letter approving the loan or the application will be deemed withdrawn. Source of Loan Funds: Each loan will be funded by withdrawing the required amounts from the Plan account(s) of the Employee or other party in interest specified in his loan application form. Each such account will be credited with a receivable equal to the amount withdrawn, the aggregate of which receivables will be evidenced by the promissory note of the Employee or other party in interest for the amount of the loan. Determination of Interest Rate to be Charged for Loans: The interest rate to be charged for loans will be the rate determined by the Plan Administrator as equivalent to the rate of interest charged by Wells Fargo for secured loans comparable to loans from the Plan at the time the loan from the Plan is approved. The Plan Administrator has determined that Wells Fargo's prime rate of interest plus 1% represents an appropriate rate of interest under this standard. Term of Loan: Loans will be permitted for terms of 12, 24, 36, 48 or 60 months for loans other than those for the purpose of purchasing a primary residence. Loans for the purpose of purchasing a primary residence will be permitted for a term of 120 months. Repayments: Beginning with the first payroll payment in October 1993, current loans will be converted from monthly to weekly paycheck deductions, totalling the prior monthly amount. Repayments for loans obtained by Employees beginning October 1993 will be deducted from the Employee's weekly paycheck. If a paycheck is insufficient to cover the full amount of the loan repayment, no deduction will be made, and the repayment will be deducted from the Employee's next weekly paycheck. Loan repayment schedules for parties in interest who are not Employees will be developed on an individual basis, but parallelling as closely as possible the loan repayment schedules for Employees. Prepayments: Subject to the limitations described in this paragraph, a Participant may prepay at any time the full unpaid balance of his loan. Partial prepayments in excess of scheduled payroll deductions will not be accepted. No prepayments will be accepted within twelve (12) months 53 54 after the date of the loan unless the borrower is an Employee and terminates employment within such twelve (12) month period, in which case prepayment may be made at any time following the date written notice is given to him by the Company or an Affiliated Company or by him to the Company or an Affiliated Company and prior to his date of termination. Missed Payments: If a payment is not made in any month, interest will continue to accrue on such missed payment and subsequent payments will be applied first to accrued and unpaid interest and then to principal. A notice will be mailed to the last known address of the Participant on each occasion of a missed payment (until three (3) consecutive monthly payments have been missed) stating the amount of the missed payment(s), that the missed payment(s) will be deducted from his next paycheck, that if three (3) consecutive monthly payments are missed the loan will be considered in default, and that, upon default, the unpaid balance of the loan and all accrued and unpaid interest will be considered as taxable income. Termination of Employment: If an Employee or other party in interest terminates employment so that payroll deductions may no longer be made to effect loan repayments, such person may continue to make loan repayments by personal check to Savings Plan Loan Administration, Rockwell International Corporation, Department LA 21089S, Pasadena, California 91185. In the event that three (3) consecutive monthly payments are missed, the loan will be deemed to be default. Default: A loan will be considered in default after three (3) consecutive monthly payments have been missed during the term of the loan or when a Participant effectively revokes a payroll deduction authorization. When a loan is in default, all accrued and unpaid interest will be capitalized, and a taxable distribution for the purposes of section 72(p) of the Code only will be deemed to have occurred, and a notice will be sent to the Participant advising him of the default and the tax implications thereof. If an event permitting distribution of the Account of the Participant has occurred (whether or not distribution of the Account will actually be made concurrently therewith or has been deferred pursuant to applicable provisions of the Plan, the unpaid balance of the loan, including capitalized interest, will be charged off against such person's Account. If no distributable event has occurred, the unpaid balance of the loan, including capitalized interest, will be retained in the Account and will continue to bear interest until such time as distribution is permitted under section 401(k) of the Code, at which time the unpaid balance of the loan, including all accrued and unpaid interest, will be charged off, and the Participant's promissory note will be marked "Charged in Full Against Account" and returned to the Participant. An appropriate form, as is from time to time required by the applicable taxing authority, reflecting the Participant's taxable income (in the year of default, the unpaid balance of the loan plus capitalized interest and interest accrued and unpaid thereafter; in each subsequent year, interest accrued and unpaid on the loan) will be issued to the Participant as soon as practicable after the end of each calendar year during any part of which a defaulted loan is retained in a Participant's Account. 54 55 Procedure upon Payment in Full or Charge-Off of Loan: Upon receipt of the final, scheduled repayment paying the loan in full, the Participant's promissory note will be marked "Paid In Full" and returned to the Participant. If, as a result of missed payments, the loan has not been paid in full at such time, the Participant will be billed for the remaining balance. If payment of the remaining balance and all accrued and unpaid interest is not received within three (3) months thereafter, the loan will be considered to be in default. Approved, October 1 ,1993 By /s/ A. J. Spigarelli -------------------------- A. J. Spigarelli Plan Administrator 55 -----END PRIVACY-ENHANCED MESSAGE-----